• Tax System

o Average tax rate: Total tax divided by total money

o Marginal tax rate: How much tax on the next dollar
 Top MTR in the USA: 35% for corporations. Over 50% with state
and Medicare taxes.
o Fixed cost of living: Make some money with out paying taxes on it
o Progressive tax system: The more money you make the more taxes you
pay
o Flat tax system: some income excluded from tax, then a flat rate after that
 Still a progressive tax system
o Tithing system is the most equal tax system
o 16th Amendment says taxes are bases off of income not population.
o The Laffer Curve:
• Tax Planning
o Shift income from one time period to another
 Get your December income taxed in January so you can get the
interest on that money.
• 401(k): My Employer matches contributions to some
extent, Tax free until withdrawal
• Traditional IRA: Just like a 401(k) but no one matches the
money you put in. ($4,000 max each year)
• Roth IRA: Taxed up front, none when you pull out. (4,000
max each year)
o Shift income from one pocket to another
 State Taxes in NY but not in Texas… say your income in from
Texas
 Make taxes in your child’s name (lower taxes on kids).
o Change the character of the income
 Changing from ordinary income to…
• Loophole: Legal way of avoiding taxes.
• Your objective is not get lowest taxes, it is to get the most money after taxes.
• Tax Evasion
o Al Capone
 Killed people… didn’t pay his taxes… off to jail.
o Make money in China, USA doesn’t know… tell them you did.
o 1 and 3 chance, that someone says that is how the taxes should be.
• Careers in Taxation
o 55,000 a year
o Women go with taxes, very flexible, only 3 months a year.