How many people have been caught in a close down of a company ??

What ? This makes no sense at all.

Who ever heard of "a civil society which discourages job creation while encouraging citizens living off the state" ?

There isn't one country in the world that has this as a goal.


What gets forgotten in the economic picture is easily is how governments distort the 'free market'

Many exports get huge subsidies from their country of origin in order to create jobs. It costs $ .90 to produce a tin of beetroot in Australia, but I can buy an imported tin of beetroot from the other side of the world in a supermarket, for $.74

http://www.smh.com.au/national/dick...s-can-his-aussie-beetroot-20120323-1vpal.html

We have a company in my neck of the woods
http://www.taanntas.com.au/

that sends 7 container loads of timber veneer to Japan every day, but hasn't made a 'profit' in 3 years. ???? Sure - they do it for the love of it.
Transfer Pricing is alive and well.
http://transferpricingreview.com/index.php?option=com_content&view=article&id=19&Itemid=27

 

illusions of grandeur

Paul, maybe those areas could be considered wealth redistribution centers & a kind of cargo cult where the residents aspire to the material aspects of the waterfront mansion etc & but barely look out the window & moor up cruisers & yachts that rarely venture out, the builders, boatbuilders, agents & brokers spend the dough they get whilst the vessels depreciate rapidly to be replaced by the next coolest model, this can only be encouraged if your in line & earn your living from building or servicing the cult...... works fine until money gets tight! I see that on the waterfront here, most boat owners-of larger vessels actually realise very poor value from the money spent on purchasing & looking after their vessel, there is always exceptions & it would be great for all to have heaps of fun but many are just in love with the idea of it or ego stroking, keeping up appearances but actually working their butts off to stay in the grips of the cult............. they might well be happier living in the suburbs & paddling a canoe on the weekend. Jeff.

 

I think if you look into it you will find the Marine Department is not self sustaining. This doesn't even include the costs of dredging, the navigation aids, or the Coast Guard. The local rates have not changed much since the 1970s. If the $/ft rates were charged at at the same rate as they were in the 1970s (taking inflation into account) the wealthy people would scream bloody murder.

It is a similar situation to the muni golf courses. They are on public land, constructed and maintained with public funds, yet they are not open to the public. You have to have a certain income to afford to use them. The fees collected are not self sustaining. They are funded through the Parks and Recreation system. If green fees were raised to a point where the courses could be self sustaining the (not poor) people who play there would scream bloody murder.

No one expects Parks and Recreation to operate with a balanced budget. Most parks are free, generating no income, but have healthy costs. But it is a "public good" to have them.

I like having parks and muni golf and yacht harbors. I think these things do add value to my community. I enjoy using these facilities. But I also understand that I am a "taker" in this. So if I have to pay a bit more in taxes to help pay my share of having these things that I can enjoy, but others in my community cannot, then I don't think I have the right to whine about it.

 

I'm not sure I would use this sort of language, but there is probably some merit to this idea.

While the state run marinas themselves may operate in the red, the area gets developed with the multi-million dollar homes surrounding them. So the state gets to tax those structures, which would not exist without the marinas. I would bet that in the long run the income derived from this taxation would pay for the initial construction of the harbour and the maintenance not covered by the fees collected.

Of course the folks living in those homes are constantly trying to eliminate the taxes, claiming they are unfair.

 

I don't think I'd include that language in the glossy brochure for the developments or the boats especially....... . The depreciation that boats suffer might not be a tax as such but pretty hard to eliminate, however that money has entered & stimulated the economy at a cost to the owner. Jeff.

 

The cost to the owner is not as much as you might expect. A large percentage of the big boats we see in marinas here are corporate assets. The depreciation is written off. So are the maintenance and operating costs.

 

Paul, this is an ignorant statement about "write-offs". You have to have that loss as a business expense to be able to write it off, you can not write off a pleasure yacht unless you can prove it has a legitimate business use (entertaining is not one of them). It is not like they get a tax right-off for nothing. In my own business I can buy new desks and computers every year, and reduce my taxable income by the same amount, but I would be really stupid to spend $1000 on junk I do not need to get a $300 benefit from the write off. NO business that expects to stay open if it ever does that, unless they are really stupid (and there are lots of stupid businesses around too, the fact that they might do it is not proof of legitimacy).

And of course to write it off, that assumes you have to have a profit to write it off from! If you are losing money in a difficult economy, there is no "write-off", it is just another loss to add to your other losses. You do not pay income taxes if you have no taxable income. And there are certainly a lot of businesses, especially in California right now, that are loosing money.

 

Nice to see you have just as little expertise in tax law and the CA economy as you do in sailing skills, mast design, and sailing yacht design.

 

Paul,

I have been self employed for a total of over 20 years, I have been the CEO of two small corporations, and I am currently self employed and also the chair of a non-profit corporation. I have ran a payroll, had many employees, and have bookkeepers and accountants that work for me. This was both in California in the '80's and in my current home state. Over the last 30 years I have been audited 4 times, and NONE of the audits resulted in ANY changes to how my returns were filed. I do not get audited anymore become of it.

That is where my expertise in knowing about tax law comes from, I live it every day. What is yours?

 

The way yachts work


" One legal manuever allows a yacht’s owner to sell it to a charter company set up by a bank, which holds the sale price on deposit. The charter company rents the boat back to the owner by the week, said Paddy Behan, director of Behan & Co., a British tax consulting firm. As a charter business, the boat gets sales tax breaks on fuel and other marine products — and along the way, the bank pays the owner interest on the cash deposit. The owner gets cheap use of a yacht, exploits tax advantages and ultimately can buy the yacht back from the charter company at a depreciated price, Mr. Behan said. "

 

michael,

there are similar tax schemes here too, but it still costs you to set it up and do it. If you are going to buy a yacht anyway, this allows you to write some of the expenses against your income to lower your tax burden. But you still have to incur the expense, and you have to have taxable income to write it off against. There is no benefit to buy a commercial vessel just to have a write-off. that is the point. You have to lose money to write it off against your income.

Washington state attempted a really stupid "investment" scheme with some of its state ferries. I do not remember the numbers exactly, but on one ferry it went something like this: They had a 50 year old ferry refurbished for $50 million, than sold it to a leasing company for $12 million. the leasing company charged the state $4 million a year to lease the ferry back to the state. Eight years into this agreement, the ferry had to be scraped because it degraded enough that a new ferry was cheaper than rebuilding the old one again. So it was finally scrapped and they ended up buying a new one for $65 million.

Total cost to the state for the refurbished ferry: $50 mil + 8 x $4 mil - $12 mill = $70 million for 8 years worth of use.

I do not know what financial genius talked the state into selling a refurbished ferry, that they owned free and clear, to a leasing company for $12, and than to have to pay $4 mill a year to use it, but it looks like a good deal for the leasing company since the state was stupid enough to do it. I think there was an idea that it allowed the state to "free up" part of their investment in the rebuilt ferry. Obviously there is no "tax" benefit to a government agency since they do not make a profit on anything a state does. So the tax payers once again get to pay for the mismanagement of state officials. That btw, was not counting the cost of leasing another ferry from another state for the time it took to get the new ferry delivered.

 

It's a rule for me that when someone starts talking about how many years they've been doing this or that, the red flag goes up.

I have never been audited, but you have managed to get audited once every 5 years or so.

Small corporations have CEO's?

LOL. Expertise. LOL.

 

why red flags? I do not go around boasting of my accomplishments, I was responding to Paul B. unwarranted attack on me. Of course I can not speak for others, but I can say what happened to me. For what ever reason Paul B. always thinks I make things up, as if there was any benefit to me to do so.

it does not work that way, it not an average, it was one audit of 4 years worth of returns, happened once in 30 years. If you have never been audited it just means you never fell outside the IRS's "normal" range for income/write-off range. Occasionally they randomly audit someone but they usually look for much higher income individuals or corporations since that is where the money is. I had 4 years in a row audited because I lost money in a business and that loss carried forward to a different career that paid much better. The rules allowed it at the time, but this triggered the audit because it put me outside the normal range, so they wanted to go back to examine all of the previous years losses. It is extremely rare to have no changes, that is never what they want because they assume there is always cheating going on. I represented myself, presented reams of documents proving the loses, held firm against their relentless threats, through 3 levels of review by the IRS, and finally had a judge order that my tax returns will stand as filed. I learned latter from a former IRS agent this almost never happens. Mostly it was my stubbornness in insisting the returns were accurate, most do not realize they can not force you to change them, they can only make threats so most people will agree to changes out of fear. They have to have a judge order the adjustments if the taxpayer refuses to agree to changes. The judge, and the IRS attorney, agreed to accept them as filed (after two years btw). It did not cost me a thing. They wasted a lot of time and money on me, one of the reasons I suspect I have not been audited since than in 1989. so far so good anyway. I take every deductions I am entitled to, but always have means of proving the expense. I do not make up the rules, but the IRS is just as bound by the same rules as I am (of course that does not stop them from criminal acts, but usually if you quote their own rules to them they back down). I was not that big a fish, so their time was better spent elsewhere anyway, there was not even $3,000 at stake. I did lose money in a legitimate business and it simply lowered my later years tax burden.

But my statement above stands: there is no benefit to incur large expenses just for the tax benefit. You have to have a real loss to write it off against any taxable income.

 

Well, if your tax returns are similar to those two statements, it's a wonder you haven't been audited more.

When did Paul B's unwarranted attack on you occur, was it before or after you called him ignorant?

You seem to relate to this tax write off stuff at a personal involvement level, as in they were your small corporations and it's profit or loss affected your bank account personally. The SBA defines a small business as having up to 500 employees. I think when you get to a size like that, you just collect a salary and don't care much whether it's a wise decision for the company to buy a boat. What counts is the company buys it and pays for all the costs of dockage, maintenance, fuel and insurance and you get to use it for free. Whether it's a sound investment or not is irrelevant.

 

Wow 500 employees is a small business, wonder where I fit in being a 1 man show ?
From what I have seen the IRS doesn't make or brake a business they only come into play when you start making a good profit, what makes or breaks you is the % rate goes up a lot with the more you make , say you make 200k profit in a year then your income taxes are going to be around 40% + or - . Start living high on the hog blowing all your money cause you think your making money and bingo you get hit with an 80k tax bill
Usually when someone is whining about the IRS putting them out of business it is this type of situation that has caused it