The US Government Hates Success
In the mail yesterday I received a letter from the IRS, regarding the Economic Stimulus Act of 2008. Here is a quote of the first paragraph of this letter :
Dear Taxpayer,
We are please to inform you that the United States Congress passed and President George W. Bush signed into law the Economic Stimulus Act of 2008, which provides for economic stimulus payments to be made to over 130 million American households. Under this new law, you may be entitled to a payment of up to $600 ($1,00 if filing a joint return), plus additional amounts for each qualifying child.
That sounds pretty cool, right? An extra $600 isn’t really going to stimulate me to make any purchases, but I’m definitely not going to say no to it. Oh wait, maybe I have to. Here’s a quote from the bottom of the letter :
For taxpayers with adjusted gross income (AGI) of more than $75,000 (or more than $150,000 if married filing jointly), the payment will be reduced or phased out completely).
They might as well have replaced that line with :
If you’re successful at all, you don’t deserve anything. We’d rather give it to individuals that make $3,000 a year and would stimulate our economy by spending the $600 on drug money.
Honestly…what is it with the U.S. government hating on successful people? I understand that those who have a much lower income could use the money to pay off debt or whatever, and $600 isn’t enough to save me; maybe pay off 0.01% of my taxes. Really though, it seems like our government does a swell job at trying to reward those who haven’t accomplished much in their life. Maybe it’s not that, maybe it just seems like the government does a swell job at penalizing wealthy individuals for their success.
It is absolutely absurd how much of a higher percentage the rich pay in taxes. People look down upon the saying “the rich will get richer”. That quote is completely true, and that’s what should happen. If someone has the drive, motivation, and guts to take a risk and start their own company, then more power to them when they succeed. People shouldn’t cry because they chose to go to college and chose to work a 9-5 job in a cubicle for the rest of their life.
The argument against this is “well how many rich people out there are rich from just scamming and lying?” Ok, how many in the middle/lower class scam/cheat/lie/sell drugs just to put food on the table and nothing more? Plenty. There’s rotten fruit on every tree, that doesn’t mean you should chop down the entire tree.
This “economic stimulus” plan is just more icing on the cake. Let’s give money to those making less than $75,000 gross per year, and to the successful let’s just keep taxing the hell out of them. For those of you who are uninformed or are just getting into the world of self-employment, here are what federal tax rates look like :
A person who has a highly successful business ($349,700 income) is paying 25% more in taxes than somebody with an unsuccessful business. The government punishes the successful by taking over 1/3 of their profits. This isn’t even counting state tax, so let’s jack it up even higher.
ABSOLUTELY ABSURD.
Every single time I think about it, I get sick to my stomach. If a person is paying more, they’re naturally going to be paying a lot more in taxes even with a fixed percentage. Someone making $10,000 would pay $1,500 in taxes, while someone making $500,000 would pay $75,000. That’s still 50x as much. But the government likes to take advantage of the successful and jack the metric up to 116x as much, $175,000 in taxes. I would say that’s the biggest negative when entering into the lucrative world of online business.
All in all, this post was one big rant about the government, and if you’re anything like me (pretty much if you’re making money online in the US), you can understand my feelings on the subject.
Let’s go lose some money fellas, we’ll get $600 for it.
That is a very greedy thing to say. Do you know why many third world countries are fucked up? Because the majority of wealth in the country is owned by a very small percentage of people, including the government and a bunch of rich guys who own all the corporations. If America was to allow their rich to easily get richer, that means the poor will be getting poorer. That is exactly what is happening though and they are trying to turn it around to make life better for the poor people.
To complain about it like this is very immature and not accepting the responsibility of being an upper class citizen of the USA. If you want to pay less tax read John Chow’s recent tax avoiding blogs or goto a country where the rich are allowed to get richer more easily and the poor run around in gangs with machine guns and swords and spread aids everywhere.
I couldn’t agree with you more. Our government taxes the more successful to the point that it almost becomes counter-productive to start a business. What even more absurd and moronic is the “myth” the successful pay not taxes. You hear that crap in the media all the time.
To put it in perspective ” When was the last time a poor person created a job? If the gov wants to stimulate the economy give more to those that are creating jobs and opportunities.
Honestly, if you are paying 35% on your taxes and making that much, you need to fire your accountant and get a good one. Look at any tax studies and you’ll see that the most successful you are, the less in taxes you end up paying.
If you think it’s bad now, wait and see what happens if Barak or Hillary win….
Paul,
I just wanted to point out a few things about the letter you received from the IRS.
First off, everyone should know that it cost the IRS over $42 Million Dollars (Yes: $42,000,000.00+) to send that form letter out to everyone who may or may NOT qualify for the rebate. Talk about a waste of money — should have just let the media tell the masses they have some petty cash coming their way.
Second, in response to WHY the IRS is not giving rebate checks to those of us who are filing taxes with too high of a gross income, the reasons are many but the main component is due to the overwhelming true statistic that “middle class” (and more recently the new so-called “upper lower-class” — those who make over $3k gross income — any lower and you don’t get a rebate either…) all spend most of their disposable income on everyday consumer goods, eating out and entertainment. Statistics show that those making over $75k per year spend FAR LESS, on those specific categories, and are most often very frugal with their more expensive purchases. They spend almost all of their “disposable” money wisely and will opt to invest such monies right back into their own businesses, if self-employed, or into real estate / stocks / mutual funds.
So, even though at first glance it might seem unfair to some of us, the reality is that the IRS and the Fed are putting this “stimulus” money right into the hands of those who will gladly hand it right back to the “rich” — and therefore bringing truth to the quip of the “rich getting richer.” The divide between the rich and the lower/middle classes will continue to broaden as long as they remain fiscally uneducated and unable to control their basic desires to spend money as if it will go bad, like a coupon with an expiration date.
There are several other reasons why the 2008 Stimulus Package actually helps the most wealthy 1% of America, yet also attempts to help those who allowed themselves to be swallowed up by the “irrational exuberance” (quote from Alan Greenspan, ex-Chairman of the Fed) of the last decade or so. But this is intended as a comment to your post, not a book, so we won’t go into all the details now.
I’m glad to hear you aren’t receiving your “rebate check” — it means you’ve done better than 95% or so of all American citizens this last year in gross income.
Have a great night!
– Michael, halfhourworkweek.com
P.S. Also, keep in mind, the IRS knows most individuals earning over $75k AGI will claim their income and file their taxes accordingly and they don’t really care about those making under $3k. So, they’ve just provided an “incentive” for everybody else to quickly file their taxes on time to get that rebate and, in effect, get more tax dollars into the hands of the Fed… faster.
Just be glad you aren’t from Canada. 50% of your income would be gone. Although, they do manage to operate their country in a surplus most years…
I think the bill getting rushed through is the cause of most of the problems (anywho can be claimed a dependent gets nothing). I think the fair tax would be such a great thing for everybody.
I agree with the government on this one. Like you really need another $600. People who are more successful should be able to help out those who are less fortunate. That used to be the American way. Now it is all about ME.
By the way not every poor person is on drugs. Oh and I don’t think I will get a check either.
If you open a corporation you don’t have to pay taxes on the corporations income only your personal income? Or you could buy real estate and get tax benefits..
I had a nice response comment written, but I am afraid it might have been too long to appear under the post here. I’ve posted the comment as a response on my blog, though. Hopefully Paul will be able to revise this comment with my intended comment! This is an important issue for all of us earning over $75k p/yr.
http://www.halfhourworkweek.com/2008-economic-stimulus-package/
Nevermind! Just saw it post. Great job Paul. (feel free to delete this message & parent)
Obviously you don’t know why the poor stay poor even though they have opportunities to become rich. Throwing money at them won’t do anything. Absolutely nothing. People think money will solve problems, but in reality, it doesn’t.
Ok, granted, there may be some poor, genuine people who are working their ass off to just survive. If most of the poor were like that, I’d be willing to give money to them any day. However, I am not going to give them money if all they do is waste it. O wait, I have no choice. The US Government says so.
I’m like you (making really good money online), but I disagree with your post almost entirely.
The fact that you would even say “the government rewards failure and punishes success’ tells me you haven’t put much objective thought into all of this.
dude, you are way wrong. The tax code is setup to help small business owners.
Corporations dont pay their fair share of taxes. Its the poor and middle class. Like Robert Kiyosaki’s “Cashflow Quadrant” Those who make the laws keep the gold” Read that book. Its an eye opener. Why do you think Deleware corporations were so popular back in the 90’s. Congressional lawmakers new that corps can pay 15% taxes of the 1st 50K of income. The Lawmakers needed ways to protect all the income the were making from lobbyist my incorporating in deleware. C-corps will always pay the least amount of taxes regardless of whos president, a democrat or a republican. The only guy they have to worry about is if Nader/Camejo and the green party takes the white house. They know how the system is unfair to the lower class and will force increases in taxes to corporations. But even then they’d still have an uphill battle to get their legislations passed by congress. Bottom line, read cashflow quadrant…and see why c-corps will prosper years to come. Heck…start a c-corp, and use that EIN to signup with all the cpanetworks. Take all the LEGAL tax deductions you can to show the IRS you made $49K for the year of 2008. Rinse Repeat….and build your wealth.
God help us if Barack or Hillary win.
That 35% tax bracket will disappear, only to be replaced with a 45-55% one.
…….”stimulate our economy by spending the $600 on drug money”
Dude, I really like your blog….but, you are completely way off in left field here. Please take a look at a few of your campaigns and tell me which people are your target audience!!! I’m going to guess that a great majority will be receiving these checks and possible buying the products that you market. If this is the case are you then the “drug pimp” by default.
Keep up the good work! Cheers!
“If you’re successful at all, you don’t deserve anything. We’d rather give it to individuals that make $3,000 a year and would stimulate our economy by spending the $600 on drug money.”
What an ignorant thing to say. The money is going to people who are most likely to spend it…
You said, “An extra $600 isn’t really going to stimulate me to make any purchases…”
That’s why you aren’t getting the money. You said it yourself.
“To complain about it like this is very immature and not accepting the responsibility of being an upper class citizen of the USA.”
Not accepting responsibility? Upper class individuals are the driving force behind the success of our country, that should be more than enough to fulfill their social responsibilities. Why in the world should those who make our country great through their enterprise and ambition have more social responsibility than those who haven’t done nearly as much?
Great comment Michael. I’m going to go check out your blog :)
“..Not accepting responsibility? Upper class individuals are the driving force behind the success of our country ..”
As a part time affiliate marketer, I’d have to say that we as affiliate marketers are just highly skilled advertising pros who know how to get cheap clicks on the internet. I wouldn’t say that affiliate marketing really contributes anything to society other than matching customers with business that offer products and services. It’s not as if we are doctors, construction workers, etc. who actually produce something or perform truly needed services for society! Sorry guys, the world would still turn without us!
The government will always give money to those who don’t deserve it. Ever heard of WIC? It’s a (theoretically good) program that helps under-privileged mothers feed their kids by giving them food stamps. Sounds good, right?
Well, back in high school, I worked in a grocery store that accepted WIC checks. The mothers that would come through would use the WIC checks on food, and their real money on alcohol, makeup, and cigarettes. I can’t stand people who abuse the system.
surrender your passport and become a citizen of monaco
I don’t mean to be rude or anything but I just want some clarification on your statement about the poor creating jobs themselves. Let me ask you. WHat are the rich going to do with the added benefits and services from the government? Probably not much because they can already have or can find the best things for them and/or what suits them best. So they probably would not appreciate governmental opportunities as much as a poor person would or the working class. For example, health care or a $600 stipend.
Lol, I just checked out his blog and hasn’t been updated for 3 months. haha
This blog has some great articles but this is the first one that shows a lack of experience. Yes, the rich pay more taxes, they can usually afford to. As someone said, earlier, the recepients of this “stimulus money” will likely just spend it, but grouping them as drug users is a bit harsh.
Is the US government great? No. But no government is – hell, you could have grown up in places experiencing genocide. Frankly, just being born in the US or Canada is like winning the lottery, people here generally don’t have to fight for survival or basic needs like shelter and food.
I think most people agree the stimulus package is useless but the generalizations in this article are very short sighted. Visit the world, get some experience, I’m guessing your view would change slightly in 10-15 years.
Greedy fucking pig. I’ve been meaning to prune my rss reading list for a while. Thanks for reminding me to get started. Unsubscribed.
I think you’re a good affiliate marketer, but what a whiner you are! You should be thanking your lucky stars that you’re making the type of money you make, and on the internet, no less! If you were living in a dumpster in India, I could understand the bitching, but this is ridiculous. Weathier people whining about paying taxes (without wondering where their next meal is coming from or even missing the money that much) is so 2002. If you were a minority, everybody’d think that you were just another complainer railing against The Man. What a luxury to be able to bitch about paying taxes on the money that you earn – and in a recession too…
I agree that the graduated income tax is terrible. It is a crucial part of socialism/communism and part of Karl Marx’s Communist Manifesto. Unfortunately many liberals that are ignorant about economics believe that somehow social welfare programs that take from the rich and give to the poor help America, instead of make more people dependent on handouts.
However, I have to disagree with the emphasis you seem to place on money. Not everyone that is poor is a drug addict with no work ethic. I live in the poorest major city in America (Cleveland), and I know a lot of people that have been laid off in the last decade from jobs that they worked at their entire lives (steel workers, auto workers, etc.). Now they are left working at crap jobs just to get by. Not everyone is smart enough to be on the cutting edge of technology and able to acquire the skills to do a 180 degree job switch. I can respect a man who works with his hands to put food on the table for 25+ years. I’m not saying the government should give handouts to these people, just that there are a lot of hard-working, honest people who don’t make a lot of money.
“Someone making $10,000 would pay $1,500 in taxes, while someone making $500,000 would pay $75,000. That’s still 50x as much.” Do you know why you’re being taxed 50x times more? Because you’re making 50x as much!
You act as if you can from the bottom of the bottom to where you are today. You lived at home with your parents where all your basic needs were met and you were able to take a little risk. I do mean little; you went into negative your checking account right? Big entrepreneur we have here. Easy to talk big on your accomplishments when you were spoon-fed your whole life.
Would you still be where you are today if you were living all alone in a mud and tin house somewhere in Mississippi (Yes they do exist in America), or project complex in Brooklyn, New York? Fuck no! Your state of mind would be completely different. Why did you even sponsor a child? By reading your post I believe that you have no sympathy for the poor.
You and I are the same age but I did decide to stay in school . One thing I learned as I began to make money is that there is no reason to get greedy. “When you have money it attracts more money” – me.
Check this out when you have a chance
http://en.wikipedia.org/wiki/Maslow's_hierarchy_of_needs
try moving to Australia.
Earn over 75k – 40% tax rate
Earn 150k+, 47%
I wish we had your tax brackets. i might still have some cash left over.
Taxation without representation… my favorite subject. Paul you kind of make me laugh… you think all your hard earned tax money is going to go to poor people (who spend all their money on crack and prostitutes I presume) when in reality its going to finance that fun war we started based on misinformation. I would actually be happy if all my tax payer money went to constructive and humanitarian purposes. As for you tax problems, move offshore like Haliburton (Dick Cheney’s company). They moved to Dubai, you can setup something similar. I know a couple of internet entrepreneurs who have done the same!
Paul, I think this is the first time I can say that you have been wrong. The richest man in the world, Warren Buffet was talking about the tax burden of the rich. http://www.cnbc.com/id/21543506 .
Long story short, he paid 17% tax on his millions and he tried to find anyone in his office that paid less of a percentage than him, and even the secretaries making 35K a year paid 35%. So he’s calling for the rich to pay more taxes.
Yeah, it sucks to pay taxes, but the system we built has created the possibility for your financial prosperity, so you should just suck it up and pay.
Flat tax = Fair tax.
Finally somebody comes to put some sense into the argument. Thank you
You live in a capitalist society? Guess what, you’re going to get taxed like it.
Put yourself in the shoes of the government. What makes more sense? Tax the rich or tax the poor? Even if you say it makes more sense to have a flat tax, that’s kind of retarded. For instance, if there’s a 34% flat tax, what happens to the poor people who are living paycheck to paycheck?
And what makes you think the rich won’t find a loophole to get out of it anyway?
Exactly. No matter how you stack it, it’s better to tax the rich; they have more to burn.
I say this as a victim, of course. >:]
The philosophy behind your post is right on- though some of the math isnt (not taking into account marginal rates for example).
Also, most successful business people use legal tax avoidance schemes and many pay a very low actual % of income.
I would also say comparing personal income to a successful business is a little weird. I have had VERY successful years in business where my personal taxable income was below the poverty line- and I was living well. Of course that can work the other way- high personal income and a low or negative biz income. and so on.
A fair tax system would probably be Flat and have ZERO deductions for anyone. But as it is now most successful people are intelligent enough to take advantage of the tax code and pay as little in taxes as possible. Most of us just pay our “rent” and go on with our business.
OF COURSE THE GOVERNMENT SHOULD TAX THE RICH, BECOZ THE RICH GOT ALL THE MONEY WHILE THE POOR GOT NO MONEY TO EAT
The Government doesn’t do it to help people. the reason they don’t give it to successful people is because they wont spend it right away, successful people invest it, and it takes longer, poor people go out and spend it instantly!
Hey Paul,
I’ve been following your blog for a while and really like it – keep it up! :-)
Regarding this tax post, I just wanted to say that as a marketer living in the US, you really are fortunate compared to most other countries in the western civilization.
I live in the 2nd richest country in the world (Norway. The US is currently ranked 7th), and here – entrepreneurs REALLY are not encouraged to succeed. The government deliberately makes it hard for entrepreneurs to build a business because they want everyone to work 9-5 jobs for reasons of “equality”. We also have 50% tax for the wealthier and a fixed sales tax of 25% on ALL goods and even services. Granted, my country is strongly socialistic but the US has always been the “land of opportunity” in comparison.
I think you will be hard pressed to find another country that will cut you as much slack as the US does when it comes to building your own wealth. In a lot of European countries, the taxes are much higher than the US, and we have higher sales tax on top of that. I’m not against paying taxes, nor am I against helping out the poor. But just know that your country actually is pretty good compared to the alternatives. Like someone else said – the only other places you probably could get away with more money are the ones where ammo is the currency of the poor.
If you don’t wanna report all your earnings to the IRS, you can always sign up with some foreign affiliate networks that will pay in different other ways (abroad accounts, etc). ;)
Just my 20 cents. (Would be 2 cents if I lived in the US, lol)
Looks like everyone is on my side now. I bet Paul is a spoilt little rich kid. His daddy probably made his websites for him.
freaking stipid idea about these $600. Everyone aware of it, so prices will jump up. Gov has printed around 100B green papers (out of nowhere) to make these $600-givea ways. So there would be 100B bucks more in the economy, so the prices will jump up once again. You guys in the U.S. may face high inflation soon 8(
As to gov. taxes. Do You know what pro-poker players do? They say “FUCK YOU mr.Sam”, and then move to other countries with comfortable tax rates. 8)
Yes, how f’ed up is the tax system where someone can earn a million bucks a year, live lavishly, and pay less tax than a homeless man.
Wow you hit a hot topic here I see. Taxing to redistribute wealth is a pretty set concept. The world understands the benefits and any basic economics text book will explain it if you dont.
Tax is always a big deal at election time, but most of us are wise enough to know that if we want certain things we have to pay for them.
Give him a break – he is only 19 – still a kid, not an adult, come on!
In your statement, “They might as well have replaced that line with :
If you’re successful at all, you don’t deserve anything. We’d rather give it to individuals that make $3,000 a year and would stimulate our economy by spending the $600 on drug money.”
As you create this visual for your readers, I sure hope you’ve included working college students and stay at home moms, many of whom who fit this economic profile of earnings of $3,000 or slightly more.
Are you saying that these people would spend their $600 on drugs? How foolish if you really do.
Based upon your generalization, it seems perhaps you’re stereotyping by economic class.
At the end of the day, if affiliate marketing is your business model, your revenue largely still depends upon other companies and the crumbs they decide to throw your way.
I couldn’t agree with you more. Did you know that if your Gross (Page 1 On Tax Return) Income exceeds $150,000 (Married Filing Jointly) you are no longer eligible top fund a Roth IRA? So now you make too much money to be eligible for the same retirement savings account (THAT YOU FUND WITH YOUR OWN MONEY) that any other family making less then $150,000 is eligible for. You have to hate the governments fiscal policy. (especially if your able to make some money)
B-Man
kids… great linkbait. Here are a few quotes that have always been interesting.
“If you don’t like the US, move” and “Support the troops, by paying taxes” and “Welcome to the real world” and “Balanced budget” etc…
I really like the take that Mark Cuban has on this at his blog. Maturity shows.
pops is a doctor/dentist… second generation atleast…
About the discount itself. It should be called something to the like, gas expense makeup money…
Just rough numbers, 52 weeks in a year, 15 gallons in gas a week, two cars a house hold, 40 cent increase in gas over the last to years, you get $624 a year extra in gas… So realistically this money is going back to the wealthy.
Not to mention with more disposable income for the lower-middle class your income should be boosted from ppc, no?