If Romney Pays Only 13 Percent, Shouldn’t You? How To Legally Avoid Taxes

For the 400 U.S. taxpayers with the highest adjusted gross income, the effective federal income tax rate—what they actually pay—barely crossed over 18 percent in 2008, according to the Internal Revenue Service. That’s higher than would-be President Mitt Romney paid or billionaire heiress and would-be First Lady Theresa Heinz Kerry, both of whom paid approximately 13 percent of their total income in taxes. In fact, a closer review shows that Kerry likely paid about 1 percent of her actual income in reported taxes, with most of her income never showing up on her personal tax return. What are some of the ways they avoid paying taxes? Well, you have the regular retinue — family trusts, capital gains and insurance. But you also the exotic and exclusive – captive insurance, foreign hedge funds, private banks. Just a few listed below in various accessible documented publications have won various levels of acclaim and have been tested in U.S. Tax Court with varying success:

  • monetizing revenue streams through finance-funded structures;
  • tiered partnerships;
  • grantor trusts with debt freezes;
  • unreimbursed casualty losses;
  • specialized deductions for investments in films;
  • goodwill impairment or goodwill recognition in sale of business;
  • sale leaseback options
  • options on shares instead of owning shares;
  • receivable factoring;
  • and theft loss for failed investments involving fraud by others.

And that’s just the more publicly known use of Congressional incentives and potential means to avoid taxes lawfully. These lawful strategies of tax avoidance conform to Congressional intent and Constitutional intention, and apply equally in many instances to a state's franchise tax board or the of equalization.

Now, is it bad to lawfully avoid taxes? Since when is it bad to pay only the tax that you owe? Congress made many deliberate choices to use the tax code to incentivize certain kinds of financial structures of one’s business affairs, as well as Constitutionally-consecrated rights of property, privacy, and protection from unlawful intrusion or unfair taking without just compensation. Following Congressional incentives and honoring Constitutional obligations is no crime, even if the IRS would want it to be so. You’re always free to make charitable donations to the IRS, but aren’t their more worthy causes?