[Rhodes22-list] Reduce your federal income tax (political humor)

[DCLewis1 at aol.com]

Brad,
 
I think you and I are in total agreement except the part about claiming an  
expense for labor costs.  If you need to claim an expense your right, but I  
think there are a variety of contractors out there that don't claim  expenses, 
or even income.  They make a bid, they do the job, and  it's over.  Not 
claiming expenses and not paying taxes helps them with  a low bid.  This will not 
work in a formal contracting environment  where your costs are reviewed and 
audited - but in a small business personal  business/personal services environment 
I suspect it works great. Common  examples:
 
- A guy shows up at your door and wants $500 to take some trees down - he  
hires a few guys for the day, takes your $500, pays his laborers, and pockets  
the difference.  The guy claims nothing to no one.
 
- You pay your maid to clean (if you have a maid), do you think she's  
reporting that income?   Do you claim an expense?  Does she claim  income? Is she 
paying taxes on that money?  What do you think?   Could she handle the paperwork 
to figure out how to pay taxes on that  money?  Does she want to part with 
the $?
 
- You contract to have your house remodeled, the last step is to gather up  
the debris and haul it all away.  The contractor goes to the local 7/11  
hangout, hires 3 guys to load the truck, does he claim the expense?  Do the  guys 
claim  that income?  Would the guys know how to handle the  paperwork to declare 
that income?  Or does the contractor just pay the bill  from other funds and 
forget it?
 
What I'm describing is the cash, or underground, economy.  In the  aggregate 
it's big.  I think it's widely populated  by relatively unskilled manual 
laborers who can't (for example because they  are illegal)  get into the formal 
labor market that  will provide them with some benefits (workmans comp, 
unemployment  ins, Soc Sec,  etc).  Instead these guys, and gals, live outside  the 
formal labor market and rely on social services  that are paid for  by everyone 
else.
 
Note:  Nothing in the above would characterize the workers as lazy,  
undesirable, etc.  They are hard working, conscientious, etc, or they  wouldn't be 
hired.  They may be fine people, I'm sure many/most are.   But they are a burden 
to the rest of the community because they use  services they don't remotely 
begin to pay for (e.g. schools, emergency  rooms, ....).
 
Dave