The Obamas paid over $100,000 in taxes. Strategy

[Growth & Learn]

For those of you who smart tax people on here would love to hear your strategy.

The Obamas made $436,065 this year but they paid $130,472 in taxes. That seems incredibly high.

What would you have done differently to lower the same tax bill?

Here's the article and breakdown http://money.cnn.com/2016/04/15/news/obama-tax-return/index.html

 

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[Trivium iz rC]

Not much you can do to lower your taxes if its Earned Income (Aka W2 income).

 

[100k]

You'd think the president of the first world would be pulling at least $1 Million PLUS per annum, when you have CEOs getting paid 10x to 100x times that much but not having any where near the same sort of responsibilities a commander-in-chief has managing a country.

In any case, the Obamas should be making most of their money while not working (bonds, stocks, municipals, shares, real estate, businesses with systems, lending money etc. etc. etc.) , can you believe this retard (sorry for any offence) wants to work at some University after his presidency ends?! Talk about ULTRA F%*(KING SLOW LANE INGRAINED.

 

[mrarcher]

You don't become president for the money. They make money for speeches etc after their term. Someone choosing to go slowlane isn't a bad thing as I'm sure he is aware of the options available. What matters in life is how happy you are. It doesn't matter how you achieve that. As long as you do.

You'd think the president of the first world would be pulling at least $1 Million PLUS per annum, when you have CEOs getting paid 10x to 100x times that much but not having any where near the same sort of responsibilities a commander-in-chief has managing a country.

In any case, the Obamas should be making most of their money while not working (bonds, stocks, municipals, shares, real estate, businesses with systems, lending money etc. etc. etc.) , can you believe this retard (sorry for any offence) wants to work at some University after his presidency ends?! Talk about ULTRA F%*(KING SLOW LANE INGRAINED.

 

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[Digamma]

Is it that high? It's 30%, while he has basically no expenses since his whole life is paid (I assume) with public money.

Where I live it's pretty standard for 40%+ of your paycheck to never see your pockets, and you still have to pay for your expenses.
Is it that much different in the US? Am I in Soviet Europe?

Besides, aren't leftist all around the world always screeching about how we need to pay more taxes?

 

[100k]

You don't become president for the money. They make money for speeches etc after their term. Someone choosing to go slowlane isn't a bad thing as I'm sure he is aware of the options available. What matters in life is how happy you are. It doesn't matter how you achieve that. As long as you do.

What ever floats your boat buddy. But that wasn't really my point. He is running the most powerful and richest country in the world, if he was running the most powerful/wealthiest company in the world he would be getting paid millions per year + company shares. I think the job should pay more IMO.

 

[rc08234]

You'd think the president of the first world would be pulling at least $1 Million PLUS per annum, when you have CEOs getting paid 10x to 100x times that much but not having any where near the same sort of responsibilities a commander-in-chief has managing a country.

In any case, the Obamas should be making most of their money while not working (bonds, stocks, municipals, shares, real estate, businesses with systems, lending money etc. etc. etc.) , can you believe this retard (sorry for any offence) wants to work at some University after his presidency ends?! Talk about ULTRA F%*(KING SLOW LANE INGRAINED.

You realize his budget for the white house is like 500 million right? Including chefs, maids, etc. I think it was rutherford or garfield that use to answer the phone and the door himself. I'd take a ceo spot for 500k a year with a 500mill a year expense account lol

 

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[AgainstAllOdds]

If I was Obama, I'd try to pay the highest taxes possible. Power > Money. He can convert power into money at any point he chooses. Paying the highest taxes - as a figurehead of a country - that protects you from scrutiny, sets a great example, and makes you look like a good leader (aka more power).

"Money" is arbitrary. Value is not. In this case he gets more value from paying higher taxes.

 

[AgainstAllOdds]

You'd think the president of the first world would be pulling at least $1 Million PLUS per annum, when you have CEOs getting paid 10x to 100x times that much but not having any where near the same sort of responsibilities a commander-in-chief has managing a country.

In any case, the Obamas should be making most of their money while not working (bonds, stocks, municipals, shares, real estate, businesses with systems, lending money etc. etc. etc.) , can you believe this retard (sorry for any offence) wants to work at some University after his presidency ends?! Talk about ULTRA F%*(KING SLOW LANE INGRAINED.

I agree with this point too. The presidency is compensated for in pride and power. However, the best leaders could care less about power.

According to Jim Collins' studies, the optimal leader is one that is "humble, but driven to do what's best for the company." Personally, I can't see how a humble individual can get into politics. Some sort of compensation other than pride and power is necessary.

 

[JustAskBenWhy]

Yes - majority of their income is his salary, which is earned income, and there is nothing much that ca be done. Of course, Bernie would love to do something about that...hahah Right, @JScott ?

 

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[mrarcher]

The problem with the left view is that they just see the rich with their money and they dont see taxes for what they are :
Suppose that every day, ten men go out for beer and the bill for all ten comes to £100...
If they paid their bill the way we pay our taxes, it would go something like this...

The first four men (the poorest) would pay nothing.
The fifth would pay £1.
The sixth would pay £3.
The seventh would pay £7..
The eighth would pay £12.
The ninth would pay £18.
The tenth man (the richest) would pay £59.

So, that's what they decided to do..

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball.

"Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by £20". Drinks for the ten men would now cost just £80.

The group still wanted to pay their bill the way we pay our taxes.

So the first four men were unaffected.

They would still drink for free. But what about the other six men?
The paying customers?

How could they divide the £20 windfall so that everyone would get his fair share?

They realised that £20 divided by six is £3.33. But if they
subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man's bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.

And so the fifth man, like the first four, now paid nothing (100% saving).

The sixth now paid £2 instead of £3 (33% saving).

The seventh now paid £5 instead of £7 (28% saving).

The eighth now paid £9 instead of £12 (25% saving).

The ninth now paid £14 instead of £18 (22% saving).

The tenth now paid £49 instead of £59 (16% saving).

Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.

"I only got a pound out of the £20 saving," declared the sixth man.

He pointed to the tenth man,"but he got £10!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a pound too. It's unfair that he got ten times more benefit than me!"

"That's true!" shouted the seventh man. "Why should he get £10 back, when I got only £2? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison, "we didn't get anything at all. This new tax system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and government ministers, is how our tax system works.

The people who already pay the highest taxes will naturally get the most benefit from a tax reduction.

Tax them too much, attack them for being wealthy, and they just may not show up anymore.

In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.
Professor of Economics.

Something I came across a while back and found it rather enjoyable. Suppose the president was paid millions how do you think the people would feel about that? I would argue outraged. What does a soldier get paid in the USA? Here it is 17,000 GBP or there about. Thinking about that. You get paid more to work as a cashier than you do to get shot at in the name of the country. That is the problem with wages. You are not in control.

 

[Growth & Learn]

Lol...how the heck did I not realize this was going to become a political post?

Anyway, I understand there's a lot of current and future leverage in him not taking tax deductions right now (i.e. power, image, future windfalls coming but he just needs to tow the line now). Lots of great points here...

Lets just say it was "Regular Joe Schmo" and not Obama. What should our friend Joe Schmo have done to reduce his taxes/preserve his wealth under the financial scenario above?

 

[biophase]

For those of you who smart tax people on here would love to hear your strategy.

The Obamas made $436,065 this year but they paid $130,472 in taxes. That seems incredibly high.

What would you have done differently to lower the same tax bill?

Here's the article and breakdown http://money.cnn.com/2016/04/15/news/obama-tax-return/index.html

Where does it say he paid $136k?

 

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[Deleted35442]

For those of you who smart tax people on here would love to hear your strategy.

The Obamas made $436,065 this year but they paid $130,472 in taxes. That seems incredibly high.

What would you have done differently to lower the same tax bill?

Here's the article and breakdown http://money.cnn.com/2016/04/15/news/obama-tax-return/index.html

It's just politics. As if Obama didn't figure out how to minimize his tax bill. Lol. And on that topic, @Vigilante I have a "political figure" being spoken about here in this thread for you to come police.

 

[Growth & Learn]

Where does it say he paid $136k?

They paid $81,472 in federal and they also paid nearly $49,000 in state and local income and property taxes.

Beginning of article and end of article respectively.

 

[Jake]

If he was a business owner we could think about it, get creative, learn. As a President the last thing he should do is attempt to lower his tax burden.

[HASHTAG]#landfill[/HASHTAG] and try again

 

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[eliquid]

OK, lets switch this around.

We all know that with earned income, there is almost nothing he can do. I am sure someone will say Im wrong and point out like 1-2 things, but for the majority of stuff his earned income prevents him from saving a lot in taxes.

What if this was $400k as a LLC ( an American with an American LLC ) and it's all coming through as pass-through now.

Lets see how the discussion changes now. I think this would be far more valuable info....

 

[JustAskBenWhy]

OK, lets switch this around.

We all know that with earned income, there is almost nothing he can do. I am sure someone will say Im wrong and point out like 1-2 things, but for the majority of stuff his earned income prevents him from saving a lot in taxes.

What if this was $400k as a LLC ( an American with an American LLC ) and it's all coming through as pass-through now.

Lets see how the discussion changes now. I think this would be far more valuable info....

Not a CPA. But, a nominal LLC is flow-through, so would change nothing. If taxed as an S Corp, or a C Corp, this could change a lot. However, that's an impossibility, since you can't outsource personal service of presidency to a corporate entity

 

[eliquid]

Not a CPA. But, a nominal LLC is flow-through, so would change nothing. If taxed as an S Corp, or a C Corp, this could change a lot. However, that's an impossibility, since you can't outsource personal service of presidency to a corporate entity

OK, change it to a S corp and he's not a president

 

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[Growth & Learn]

OK, change it to a S corp and he's not a president

Now we're talking! Looking forward to the responses.

 

[JustAskBenWhy]

OK, change it to a S corp and he's not a president

Then:
The income can be broken down into earned salary, and distributions, which is the S Corp sorta equivalent of C Corp dividend. In doing this remember that the salary has to be seen as reasonable within the marketplace.

But, doing this, in the most basic terms, provides relief in several ways:
1. Distributions are not subject to FICA taxes, and are only taxed at the marginal rate.
2. By lower earned income, you would be lowering the marginal bracket. This would result in savings not only on the earned portion, but distributions as well

But, at $400,000 of income, a C Crp may make a lot of sense. While double taxation is an issue, so you have to be careful, a lot of costs, mainly medical and retirement, can be absorbed against the income.

Not a CPA, but this is the gist...

 

[RHL]

You'd think the president of the first world would be pulling at least $1 Million PLUS per annum, when you have CEOs getting paid 10x to 100x times that much but not having any where near the same sort of responsibilities a commander-in-chief has managing a country.

Salary actually hasn't kept up with inflation. When Roosevelt was president the president's Salary was the equivalent of someone making 1.5m/yr today.

 

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[OldFaithful]

If I was Obama, I'd try to pay the highest taxes possible. Power > Money. He can convert power into money at any point he chooses. Paying the highest taxes - as a figurehead of a country - that protects you from scrutiny, sets a great example, and makes you look like a good leader (aka more power).

"Money" is arbitrary. Value is not. In this case he gets more value from paying higher taxes.

You are likely correct that this protects him from scrutiny, and translates into power. Excellent points. But this is only true in a country that considers it a good thing to tax the wealthy in a punitive manner. I consider it a shame that anyone pays such high taxes.

He is running the most powerful and richest country in the world, if he was running the most powerful/wealthiest company in the world he would be getting paid millions per year + company shares. I think the job should pay more IMO.

Apparently the country thinks that CEOs provide more value to the lives of it's citizens...

 

[Ninjakid]

That's hilarious that he has to pay a portion of his salary in taxes, when his salary is tax payer money.

That's like paying a kid in cookies to do chores and saying, "here little Jeremy, I'll give you five cookies to cut the grass. But if you don't give me two of those cookies back, I'll lock you in the closet."

 

[biophase]

They paid $81,472 in federal and they also paid nearly $49,000 in state and local income and property taxes.

Beginning of article and end of article respectively.

Yeah but that doesn't make any sense. You can't just add property taxes to his taxes paid and compare that to somebody else.

Imagine that I own 10 single family homes free and clear and the taxes on them are $2000 each. I retire and make only $30,000 a year. But my property taxes are $20,000 a year. The property taxes come off my income, so I made $10,000 this year and I paid $1500 in regular taxes and $20,000 in property taxes, so I paid $21,500 in taxes or 215% tax rate?

 

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