The current complicated tax code benefits only the wealthy and creates an unfair advantage that penalizes the middle class. The IRS currently gives the wealthy an unfair advantage and as one of the top 1 percent earners in the United States, I take advantage of many of these loopholes.
There are tax breaks buried in the IRS code that require tax attorneys, business advisers and a team of professionals to navigate. The average middle-class earner can't afford to pay a tax attorney to take advantage of the complex code. Look at Apple Computer, headquartered in Silicon Valley. They have a small office in Reno, Nevada, and are incorporated in Ireland in order to avoid millions of dollars in taxes to California and billions to the United States. But what about the smaller businesses?
My sister is a small-business owner. She doesn't know how to set up a company overseas or run her accounting through Reno. Even if she did, she couldn't afford to create that structure or defend it when the IRS bullies challenge her. What small business owner is going to read 73,954 pages of tax code in order to be armed to respond to summons and threats by IRS bullies?
I lived in California for 25 years and loved it, but last year when Gov. Brown raised taxes on the the wealthy I did what many Californians don't have the money or courage to do -- I moved. I sold the house, closed the offices, packed up the kids, relocated the employees and moved my family, businesses and investments to the sparkling beaches of Miami.
The federal government recently raised taxes on top earners from 35 to 39.6 percent (a 15 percent increase), and California Gov. Jerry Brown raised the state income tax from 10.3 to 13.3 percent (a 30 percent increase). This means that if a person earned $1 million of additional income, that person would pay more than half -- $530,000 -- in state and federal taxes, and then would pay property, payroll, health care, and social security taxes.
I am not asking you to feel sorry for me or the wealthy of this country. I am telling you that taxing the wealthy is not helping you. The wealthy will spend $50-75,000 to save paying $400,000 in taxes. Those who can't afford to spend money to save money, the middle and working class, are bullied.
And it gets worse; you are paying the IRS to bully you. The IRS and its 91,000 employees cost American taxpayers $11 billion a year and billions more in unnecessary legal and accounting costs.
Not enough to convince you to write your congressman and demand the IRS be abolished? How about the recent news about how the IRS wasting millions of your dollars on conventions, dressing up like Mr. Spock?
Did you know that the IRS employees who attended those lavish conventions failed to file W-2 forms claiming income benefits? If you did that you could be fined, prosecuted and jailed for tax evasion, yet they get away with it. This is a major problem, people. I'm fired up about this and you should be too.
Not long after our move (and not long after I became publicly critical of rising tax rates) I started receiving demand letters from my friends at the IRS asking me to meet in Long Beach, California. I hired counsel, and told the IRS I was happy to visit Long Beach but that they had to fly me, my wife, kids and nanny out. They refused, so I refused. Then they started burying me with requests and summons demanding I provide copies for every business account, LLC, and personal account since 2005. Think that's a coincidence?
"So what?" you say. "You have money, you should be grateful to pay more -- you are an arrogant elitist and you should pay more." But that is my point -- the wealthy can afford to defend themselves when most cannot. I can afford to move the kids, relocate, sell the house but most of my friends cannot. This is why it is so important that the tax code be simplified and the IRS abolished as the current code only benefits the wealthy.
My friends in Los Angeles ask, "Isn't Miami humid?" Yeah, it's terrible two months of the year. Somehow I'm kept cool by the 13.3 percent of my income that I don't have to pay to California. The money we saved just by leaving Los Angeles allowed us to triple our staff, and double our office space, with money left over to make the largest private acquisition of multi-family real estate in the state. Eighty percent of my staff followed me to Miami, consider that just one family moving from Los Angeles will cost the city millions in lost income, employee, and property taxes. Not to mention what my family and employees spent patronizing L.A. businesses.
Have you ever heard of an obscure benefit called Double Bonus Depreciation? It allows the wealthy tax breaks for buying things like airplanes. I don't even want a jet, but why not? Maybe I'll buy a jet before the end of the year. After all the write-offs afforded the wealthy a jet would cost me almost nothing.
Write your congressman and demand that we abolish the IRS and simplify the tax code to level the playing field. You can also sign my petition at Change.org to Abolish the IRS in favor of a flat tax.
Let's keep America great.