I think you might have missed one of the key assumptions for that loophole - that you WANT to give that money to someone else (such as a close family member). If you are giving that money either way, then you can either do it in a way where you get taxed fully on that money first, or do it in a way where you pay less tax and get more money as a result. Hence in the first scenario you have $0.65 spending power on that $1 earnt, while in the second scenario it's say $0.75 per $1.

It also doesn't stop there either - if savings are taxed (and they usually are, even though it's a case of double taxation) and you trust someone enough, you can give them your money, have them save it, earn the interest, get taxed on a lower rate than you, and then purchase items on your behalf (although anti-avoidance legislation will usually kick in if you try and do that with too high an amount). Where married couples are able to transfer assets between each other freely yet don't get taxes combined for them (i.e. if one earns $100k and the other earns $10k they'll pay more in taxes than if they both earn $55k) then it proves most effective, with the lower income getting increased income at the expense of the other partner, and then getting savings income that will be taxed at a lower rate as well.

Why the sarcasm? That is the sort of thing that can fit into the seemingly broad and loose definitions of loopholes used by many people, as I pointed out in my first post. In fact if it wasn't for such a more obvious 'good'/'fair' cause, you'd probably have people arguing it's unfair that the rich get given more government money than the poor here (since the rich will get tax relief at a higher rate than the poor).

It's not a loophole.  You don't save more than a dollar for each dollar donated (that would be a loophole) - at most you reduce your taxes by about 50% of the amount donated, but you've still donated 100% of it.

It isn't 'more government money' - it's the taxpayer's money in the first place.  'Relief at a higher rate?'  Nonsense.

rich people never get any money from the government, they give. I don't know where you pulled the idea that they somehow get more money then the poor, the poor get welfare checks, they get college aid, they get food stamps, they get medicaid, they get unemployment benefits, etc. The rich are not eligible for any of that.

Can you please explain to me this "get given government money" thing?

I am not "rich", but I pay taxes and I don't see how I can "get given government money". Somehow it is always _I_ paying money whereas those who don't work _get_ (that same aka my) money.

If you can figure out a way for the "rich" to get money from the government, please tell me how to do that.

That's a huge assumption.  That's like arguing that money given to charity is a loophole or deducting employee wages is a loophole. Those aren't loopholes.

What are you talking about? How is the government "giving" the rich money at all? I don't drive on special roads (our roads suck).

The poor are the ones who get cut checks from the government.  Even that tax rebate check that people got last Summer -- I didn't get one.  

I already pointed out the charity link and he admitted that he considers charity deductions an loophole too. sure you could have kept that 65$ and paid 35$ in tax, but now you get to donate a whole 100$ to charity without tax. obviously that is a loophole for the rich only because they are the only ones who donate enough for this to be a significant amount.

Only if you have no greater interest in the wellbeing of your own children than some charitable cause (such as the wellbeing of someone you don't know). While I haven't seen any statistics for it, I'd be amazed if charities tended to receive a higher proportion of someones wealth from their will than their own children. Similarly I doubt much money is given to current or former employees in wills.

The government takes say $0.35 of every $1 earnt, meaning that money is now the governments. The government then decides to give rich people $0.35 for every $1 spent if that money is spent in a particular way, while poorer people only get say $0.20 for every $1 spent in such a way. Hence the government is giving the rich a greater benefit than the poor.

Sorry to burst your bubble, but actually I made the charity link, and you still don't seem to have bothered to read what I said hence why you keep on making false accusations on what I consider a loophole. I'll spell it out simply for you (and others who seem to be having the same problem):

IF you class tax avoidance as (making use of) loopholes, then:

Giving money to charity -> tax deduction -> avoiding tax -> loophole.

Now please provide a quote to show where I have ever said I personally consider charity deductions a loophole.

aeortar... we are asking for a SPECIFIC EXAMPLE where the government gave 35 to the rich and 20 to the poor out of money that they have taken from the poor.

We understand the concept, we just say it doesn't exist. although i don't doubt you will give a misguided and unrealistic example, such as the "loophole" of donating money or giving it to a relative resulting in paying less taxes (but you our out more money).

And btw... the reason we said uncle is because YOUR CHILDREN are a whole different ball game. the government treats children and spouses as special cases.

Sorry, but this is flat out wrong! If you are rich by government standards you do not get to deduct charitable contributions. The more money you make the less you are allowed to deduct until it is all for nothing. If you are a millionare you can't deduct anything for charity, you can't even deduct the interest on the mortgage of your home. If you own a company you can take a charity deduction but not the individual owner of the company so the rich don't have that loophole. This leads to only one conclusion, rich people give because they believe it is the right thing to do, not for making money. What little that could be deducted is eaten away with the AMT which people that make 200k are now finding out. The top tax rate is 35% if i remember correctly. That means the rich only get to keep 65 cents on every dollar earned. This was a great relief because when Mr. Reagan changed the tax code it was at 70%, yup, bust your butt and get rich only to have uncle sam let you keep a 30 cents from each dollar you made. That is unfair and one of the best ways of forcing people not to earn money. Mr. Kennedy bought the tax rate from 92% to 70% and the democrats screamed that the nation would go broke, instead the nation had a surplus. The problem is not the top tax rate but what the Congress wastes the money on.

Amazing to me that some people still think their money 'belongs to the government' once it is paid to the Treasury.  Might call it splittin' hairs, but the distinction is important.

First off I have seen the poor, I lived with the poor, did not know I was poor until I made money. Every Year I take in homeless kids that are at risk and provide a roof over their head, food and clothing, and if they work really hard a job. This last batch I hit 50% one went to jail the other went into the air force. Oh well, people make choices and have to live with them.

No, I am not rich, but would it not seem reasonable that if a person worked really hard and saved up and planned well that they should have a yacht, or a mansion, or buy over priced food? They earned the money, why can’t that person choose to spend it on what they want? I have two sons, one has a MBA and a doctorate in economics. The other has a kid out of wedlock and no prospects for employment. Same family 20 years apart. The difference is the choices they made. By the way my dead beat son has a big screen TV my oldest son the one that makes real money, he does not have a big screen TV he as an old Sony Trinitron I gave him 15 years ago.

Well if someone is poor and their priority is big screen TV, I'd say their priorities are misguided. If anyone can become poor then it should be safe to say that anyone poor can become rich. I agree with you that cell phones can be a necessity these days. They are often cheaper than a hard line. But having the privilege of being near many "poor" folks talking on their cell phones, I'm a bit skeptical they are using them to set up job interviews. The late model Lexus and Acura's with the fancy rims, parked in front of shanties, during work hours, also don't inspire pity. There are folks trying, but a lot aren't. You might think it's right to provide the later with a stipend just because they weren't born rich. I don't. The quickest way to become poor is to give it to someone with no clue as how to manage it.

You only believe this because you believe the lies of the criminals. What you failed to learn is that all the bonuses were approved by Congress prior to getting the money. The bonuses were part of their employment contract. The deal was since the job is temporary, and once they do their job they will be out on the street, if they promise not to get another job or go job hunting, they will be paid a completion bonus. Only after their jobs are completed with certain bench marks they get a bonus. This was not some off the wall Christmas bonus or an, I like you bonus, these bonuses were part of their contract. The bonuses had nothing to do with AIG running out of money it was part of the budget a year before they ran into financial trouble. AIG was contractually obligated to pay the bonuses. You were fooled into believing that the bonuses are the result of excesses.

What you should be angry with is the bonuses paid by Fannie an Freddie when they are 35 billion dollars in debt. The idiots running both Fannie and Freddie were running the companies into the ground and still demanded a bonus that was approved by the Congress. The AIG thing was misdirection so you would not see the friends of Congress getting paid with our money while they are telling us that they are 35 billion in debt and want another 19 billion dollars and that won’t be enough to fix the problem while the Congress says that  Fannie and Freddie are fine.

How is the government spending $.35 of every $1 spent on rich people?

What special programs are there for the rich? Enlighten me please.

Define "nice"?

A person trades their skills/labor for money which in turn is traded for goods and services.  What goods and services a person can acquire is dependent on the value of their skills/labor which is decided by society as a whole by our voluntary purchases.

It's none of my business what a poor person does with the money they make any more than it's my business what a rich person does with their money.

The suggestion that the government - the people with a monopoly on the legal use of violence - should forcibly take money from one person to give to another based on a subjective definition of "nice" is frightening.

Thats what I want to know too, so far I only see anecdotes, and no specific examples.

I just got my pay slip from my agency.

I get them once or twice a month.

According to it I paid 33% taxes on my income for the two weeks covered.

My flat mate only works half-time (I don't blame him, he's on a student visa) and pays no taxes at all.

How is that fair? Where exactly is the money that the government allegedly "gives" to the rich (me compared to my flat mate)?

Ok, I was thinking that if I make 10 million dollars and wish to donate 9 million to charity, I simply donate the whole 9 mil.

Then the remaining million is taxed, so I get 500K and the government takes 500K (just making up numbers here)...

Are you saying that If I make 10 mil and want to donate 9 mil id be taxed for 10 mil, aka 5 million, and end up losing 4 million dollars total that year? (or have to choose and donate less money).

If so than this is even WORSE and means the argument of it as a loophole is more rediculous...

Charity is a loophole when you can donate 1 million dollars and end up paying 1.5 million less in tax.

AKA, earn 10 mil, with no charity pay 5 mil in tax, with donating 1 mil pay 3.5 mil in tax, so you keep 5.5 mil instead of just 5 mil....

THAT is a loophole.

If the government gives tax relief at the marginal rate to people when they spend money on a particular area (charitable donations are a common example) and you have progressive marginal rates, then a rich person gets greater relief than a poor person. So if the marginal rate for a rich person is 35% then for every $1 that person spends on the qualifying area they get to reduce their tax bill by $0.35. A poor person spending that money however would only get to reduce their tax bill by say $0.20 for every $1 they spend. Hence the rich person is being given a greater benefit than the poor person.

and the reason I said children that time was primarily because I hoped maybe it would help you understand how there might actually be situations where you'd want to give money to someone you know (as well as the fact that in some tax jurisdictions transfers to children will not be exempt).

Then I'm not sure you do understand the concept. It [shifting some of your income to someone else to result in less tax paid] wouldn't exist if you didn't have proportional tax rates. Similarly managing to class income as capital gains/capital gains as income wouldn't provide a benefit if the tax rates were the same for both income and capital gains. Meanwhile since taxes will allow expenses (for business) to offset income, if you can get something you are spending money on classed as such an expense you can also save tax. Hence that wouldn't exist if taxes were based on revenue rather than profit. To take the US as an example, you have a progressive tax system with differing tax treatment of income and capital gains, and businesses are taxed on profit rather than revenue.

so... let me get this straight...

If the government would tax a "rich person" 35$ out of a 100$, which he instead donates and pays no tax, and it would have taxed a poor person for 20$ out of 100$ but he chose to donate it so he didn't get taxed, that is "giving the rich more money than the poor"? Are you retarded? do you need someoen to help you use the bathroom? can you feed yourself?

And you can't shift income to your spouse or children as easily as you say, nor is shifting income to another person a loophole.

What do you mean by tax relief? You mean like a tax cut? That's not the government giving me money. That's the government confiscating less. 

You presume that all wealth is owned by a tyrannical government in which it decides how much of that wealth it doles out to people.

If that is indeed your premise, we really have nothing to discuss.

Anyone who owns a big screen TV and a mobile phone is _not_ poor.

I know because I was once poor and I didn't own a TV or a mobile phone, I couldn't afford either.

I am positive that I would have noticed if there had been a (morally acceptable) way to own all these things without working hard and becoming rich.

That is exactly what I am saying. I used to own an accounting firm and once you cross the 200k bracket you have to be very careful what you do with your money or IRS takes a healthy wet bite out of your butt. This is why most wealthy people own a business of some kind. Take Rush Limbaugh for instance. He signed a contract where his company makes 100 million a year for the next 4 years, that company pays him a salary. He can then make donations in the name of the company for the company to get a tax break, his employees give him a tax break of a sort, and so on. I am willing to bet his salary is somewhere around 190k a year. His company owns some of his cars, his jet, his homes.

You need to check out the tax codes, once you reach a certain income you don't get any of what you wrote above. It starts to diminish at 200k becaue of the AMT and all deductions that you get go away at a million dollars. If you made ten million dollars and gave it all away to qualified charities, you would still owe taxes on the ten million dollars earned. The interest on your mortgage, something poor people can deduct from their taxes is not available to a person that earns a million dollars a year. The only thing I see that is progressive is the amount of money you lose as you earn more. The tax bite gets progressively bigger. The only way to beat this is to do like the Kennedy family does and park thier millions in offshore banks. Funny how the Kennedy's are worth over a hundred million dollars but pay no taxes. But I forgot they are in politics and write the laws that keep people from doing what they do.

You are allowed to make a once in a lifetime gift of up to 200k to a spouse or your child tax free. After that you pay and the spouse or child pays taxes on anything you give them.

I can see by this statement you will never be rich, I am not cutting you down I am just stating a fact. If you tax on revenue rather than profit all business will go bankrupt in three to five years. If that is the case why go into business? There is the cost of doing business, To make a dollar I may have to spend three dollars because we are in a down cycle. I have to have a computer, I have to have a car, I have to have a telephone, To get started in a business it could cost me 15k and I won't see a profit for three years, by deducting the cost of doing business I break even and can keep the business going, if I paid taxes on money earned I go broke. That means I can't buy a computer, a car, a phone, or gas. The economy goes into the toilet because no one can buy anything and people lose jobs. This is what is happening now. Because of the new administration business people are afraid to spend any money until the new tax code comes out. They are getting rid of employees because they are trying to keep thier business afloat. We are seeing panic in the form of unemployment numbers. It is not that the economy is bad it is fear that the stupid ideas you are using might be used by the new administration so all growth and expansion stops until they see what will happen next. The reason the economy was growing so quickly under the Bush administration is because business people were not afraid that the government was going to take so much money from them in order to help the poor. The best way to help the poor is to let business make a profit. We hire people, those people spend money, more tax dollars come in because everyone is working. Working people buy things which causes other business to hire people to make the things people want to buy. I work in real estate, among other things and homes are still being bought and sold, rented and leased. The housing bubble burst and now it is almost fixed and the government has not done anything to help it. It will as with all business self correct usually in under a year. By the time legislation comes out the problem is already fixed. The bail out money did nothing to help the situation only hurt it. To try to save a few thousand jobs they fixed the problem and lost 4 million jobs. Why would you want to fix a problem like that?

I can see by this statement you are an idiot and/or can't read or comprehend (I'm erring more towards the latter at the moment). I am not cutting you down, I am just stating a fact. In your defence though, general reading comprehension doesn't seem to be a strong point on these forums given the number of times people seem to have completely misconstrued what I've been saying.

No but I'm starting to wonder if you are given your inability to understand the simplist of concepts. If you spend $100 on X, the government will give you more money if you are rich than if you are poor (with rich and poor being based on taxable income). For some reason, you are having great difficulty understanding that getting $35 is more than getting say $20. There's nothing retarded about pointing out that $35 is more than $20.