Monopoly has been around for decades. Even though it is an “old” game my kids still love to play it. They have their favorite pieces of property to own and they are now beginning to use strategy to win. It is truly fun to watch their minds grow.
How many of you know that Monopoly was originally created back in 1903 to illustrate the theory of taxes?
Think back to the last time that you played Monopoly, when you had the misfortune of landing on the Income Tax space, you must choose one of two options: estimate your taxes at $200 and pay to the Bank, or choose to pay 10% of your total assets. This includes: Total cash on hand, printed price of un-mortgaged properties, mortgage value of mortgaged properties, and printed prices of buildings owned. You must decide which option you want before adding up your total assets.
If you stop to think about it, this isn’t an income tax at all – it is a wealth tax. Wouldn’t it have been nice if the federal government gave you, a business owner the option of paying a nominal flat fee vs. a percentage of your total assets?
If you ask people today whether taxes are high – you will get a resounding YES! But if you go back and look at the history of taxes, we are actually in some of the lowest tax brackets over the last 100 years.
Since 1932, there have been 55 years where taxes above 50%. Of those 55 years many of those years had the highest marginal tax brackets at 70%, and even 94%. If you made over $200,000, each additional dollar was taxed at 94%.
Do you think that taxes might go back up? The U.S. Federal Government is heavily laden with social programs – Social Security, Medicare, Medicaid, Obamacare, etc… The leading economists estimate that the unfunded liabilities of our great country lay between $120 trillion and $150 trillion dollars or to put it in layman’s terms roughly $884,517 per every man, woman and child in the United States. If you are a business owner, you are square in the IRS’s cross hairs.
Today, of course, “Monopoly money” has become synonymous with worthless paper. And paying your taxes is about as fun as landing on Boardwalk, with a hotel! But paying less is no game. It takes careful work and planning. There are a staggering number of ways to reduce your taxes legally, but they aren’t being utilized by many business owners and their CPA’s.
We can work with you and your CPA to see what is possible. So call us when you’re ready to play — do not pass Go!