You Have Absolutely No Patriotic Duty To Pay High Taxes

I don’t want to pay higher taxes then what the law mandates.  In fact a large part of my day is spent helping people plan for the Federal and State Estate Tax and I love my job.  I am not sure why I get so excited helping people plan to lower their tax bill.  If I had to guess it is based on my political ideology.  I have this constant gut feeling that a large portion of my federal tax dollars are wasted on ridiculous government projects or the crazy amount of agencies that currently exist instead of supporting those that should be supported (armed forces and veterans are the easiest examples of those that get put on the back burner when it comes to the bureaucracy).

I distinctly remember where I was when I read one of my favorite non-political quotes of all time.  I was sitting at a desk/cubby tucked away in a random ancillary library at my law school and I must have read the short quote 3 or 4 times before finally formulating the thought, “Woah, this is exactly how I feel.”  The quote was written by Judge Learned Hand (one of the best names for a judge ever) in a tax case titled Helvering v. Gregory (1934),

Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes and public duty to pay more than the law demands.

Whether I Make $46,000, $460,000 or $4,600,000 per Year Planning for Taxes Is Important

Currently, I take advantage of only very simple ways to reduce my taxes like contributing to my 401(k), my IRA, categorizing and track my expenses for my corporation, moving more and more income towards lower dividend rates, etc.  However, there seems to be this feeling that once you start making what we’ll refer to as REAL MONEY you shouldn’t take advantage of those legal loopholes.  I call that class warfare and is just deplorable in my opinion.

If I can help a business owner defer a hundred thousand in income taxes by using a deferred benefit pension plan that does not make him or I bad people. If I help a high net worth individual save millions in federal estate taxes why should he vilified?  He has no patriotic duty to pay more taxes than what is mandated regardless of how many zeroes are on his 706 or 1040 form.

As long as someone is playing by the rules (i.e. the law) at the time then taking advantage of every single loop hole morally tolerable to that tax filer should be encouraged and should not have any negative stigma associated with such an act.  If someone wants to pay more in terms of the federal income tax they can easily make a donation to fund the treasury.

20 Responses to You Have Absolutely No Patriotic Duty To Pay High Taxes

  1. Totally agree! The crap Romney is getting lately is just BS, and I’m not even voting for the guy. There is nothing wrong with playing the game according to the rules and maximizing tax efficiency. If you want people to pay more, CHANGE THE CODE.

  2. I agree completely – we play by the rules of the game. Just because someone knows the rules better doesn’t mean they should be vilified.

    Of course, if someone is feeling charitable, you can decide to pay down the country’s deficit. Have fun!

  3. Agree with this – you dont even need to hire someone (though it’ll probably help) as long as you’re willing to read the tax rules and put in the time to do it, you should be able to lower your rate. Anyone else has the save chances.

  4. I know plenty of people who defer taxes today, but I always think it’s fun to try and also eliminate taxes down the road. If I can have a tax plan that does both, I just accomplished something spectacular. Example: 401k investment pushes taxes down the road, while a 401k + Roth investment strategy lets me play the tax bracket game while I’m taking money out of my plans later.

  5. That’s right. Anyone who feels the federal government a superior job can just write a check, and forget about all that silly charitable giving.

  6. Forget making a donation to the Treasury, they can make the donation to me. I’ll even split it with you even though you only pretend to like me!

    The thing that gets me is that there are a lot of ways which people can avoid paying taxes ( very different from evading taxes which is illegal). With all of the deferral options, credits and deductions available, it may take some work to tax plan throughout the year, but it is a very viable option.

    But, if people aren’t aware of their options they won’t get to take advantage and therein lies the danger of thinking you can do it all yourself. You may not know what you are missing out on until it’s pointed out.

  7. Unless you are Buffett or Gates or in the Billionaire’s club, I think it’s not very intelligent to ignore tax breaks… especially since we use a progressive tax structure… and if we aren’t careful with who we elect, potentially an aggressive tax structure!

  8. Tax-planning is a very important part of any financial plan. I agree that strategies should be used to minimize taxes (as long as they are within the law).

  9. Tax planning is definitely something I’m doing more and more reading on lately (as my income diversifies). As I read more and more tax code I get more and more angry how ridiculous the system is to try and figure out. Ridiculous. Ron Paul appears to make more sense to me all the time and I’m a small c conservative Canadian (which makes me a pinko Commie by American standards). Great post.

  10. I believe it is your duty to pay what you owe, no more and no less. And it’s just smart to try and legally reduce ones taxes.

  11. I completely agree with every point you made. My teenagers manage their money better than the government that we pay taxes to, and it burns me up to see how much the government squanders. We play by the rules, but we make sure that we take any legitimate deductions that we can, in order to pay only what we have to.

  12. I’d have a look at a youtube clip about once Australia’s richest man and what he said to a Senate Committee over there about why he “minimises his tax” absolutely classic. Basically he tells the politicians that if they did a decent job in the first place he wouldn’t have to worry about “minimising his tax”

  13. We should have a flat tax and be done with it. So much human effort is wasted on non productive things (ie trying to minimize taxes). Just imagine how much human capital would be freed to do more productive things in the world.

    For now though we MUST minimize our taxes to the maximum amount allowed by law.

    Everyone does it. If you complain about Romney, then stop adding money to your 401k and IRA.

  14. Anyone who thinks “we” should pay more taxes is free to do so. However, he may not deduct more than 50% as a “charitable” donation, even to the IRS (a “charitable” organization?!?!?!?!!?!?), so to pay the most taxes or money to the IRS without repercussions, don’t take any allowances/deductions at all. Arrange your financial affairs for the maximum tax liability. THEN, after paying as much in actual taxes as you can manage, donate 50% of what is left to the IRS.
    You will make up for some of us who don’t pay anything.

    • Love it Bob! But they won’t do that…instead they’ll bitch that everyone should be forced to pay for spending that doesn’t seem to be slowing down at any time.

  15. My opinion is that anyone who pays more taxes than the law requires is a party to the sins of the minions of government.
    If you know that you can reduce your taxes (I’m not talking organizing your entire life to avoid taxes) without penalizing yourself, and you don’t do it, you are VOLUNTARILY promoting evil, for the actual amount needed to run the government is that minimum required by law.
    If you think the county assessor is over-assessing you, and you don’t appeal to the board of equalization, you are a party to the evil done by the county officials.
    Extra money in the hands of government officials is always wasted at best and usually spent taking away our rights.

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