Tom Purcell, 2/19/2007 [Archive]

A Clever Tax Scheme

A Clever Tax Scheme

By Tom Purcell

"Let me get this straight. You've developed a foolproof scheme to dramatically reduce your taxes."

"You got it. I've been working to perfect it for a long time, but, boy, does it work."

"Get to it then."

"In the old days, I dreamed of getting rich. I started my own business and worked my tail off. It was then I learned I had silent partners."

"Silent partners?"

"Yes, the local, state and federal governments. They considered every dollar of profit a dollar of taxable income. When I realized how much my taxes were, I nearly ate my checkbook."

"But of course. When you were an employee, many taxes were hidden from you. When you become self-employed, all those taxes became painfully visible."

"Precisely. My employer had paid half my Social Security and Medicare taxes. My employer paid my workers' compensation, health insurance and other benefits. I had no idea that the total cost of employing me was roughly 30 percent more than my salary."

"At least 30 percent."

"Now I know that Social Security and Medicare eat up 15.3 percent of my income. Add in federal, state and local taxes and my total rate is shocking. The income I earn beyond $31,000 is taxed at 44.67 percent. Income beyond $75,000 is taxed at 47.67 percent."

"Serves you right for being 'rich.'"

"Good one. I never understood why I was punished for making more. If I generated $100,000 in income, for instance, the taxes I'd pay on the first $50,000 would be roughly half as much as on the second $50,000. The higher my income, the higher the percentage taken by my --"

"Silent partners? That's the breaks in a progressive system."

"But why not encourage people to earn more? Why not a flat tax that rewards hard work? Then people work harder, earn more and pump more back into the economy. The economy booms and the government gets higher receipts on lower tax rates. It's not rocket science."

"You're speaking common sense, but when did common sense ever have anything to do with America's tax code?"

"Well, I got tired of working twice as hard to keep half as much. So I stopped working hard altogether. I started working part time. My revenue fell to half what it normally was."

"Half! That's no good."

"But it was great! I got an old car and a cheaper place to live. I spent more time at the park. I read more books at the library. Life was better than ever. And then I got an unexpected gift from my silent partners!"

"A gift!"

"Yes, a tax refund, the first I'd gotten in years. Because my income was down to half, my tax burden dropped significantly. It was then that I stumbled into my tax-reduction scheme."

"Go on."

"According to The New York Times, the top 20 percent of income earners paid 67.1 percent of all federal taxes. But families in the bottom 40 percent paid no federal income tax -- yet they still received money back from the government."

"I'm listening."

"That's when it hit me. I'd worked so hard for so many years. I spent thousands on CPAs, trying to minimize my taxes to a reasonable amount. But the key to low taxes was right under my nose all along: just earn less!"

"Very clever."

"I know it's selfish of me to earn less. I know it's bad for the economy and the government. But that is what my silent partners have encouraged me to do. Democrats in Congress will surely raise taxes -- they'll encourage me to work even less!"

"I hate to admit it, but your ideas are oddly sensible. Where to from here?"

"I'm still perfecting my scheme, but next year I have big plans. My goal is to earn nothing!"


"We all have our dreams."

Tom Purcell is a humor columnist nationally syndicated exclusively by Cagle Cartoons. For comments to Tom, please email him at

RESTRICTIONS: 'Tom Purcell's column may not be reprinted in general circulation print media in Pennsylvania's Allegheny, Beaver, Butler, and Westmoreland Counties. It may appear only in the Pittsburgh Tribune-Review and its sister publications."

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