Quote:
Originally Posted by strelnik
It would seem that the only guy getting screwed is the little guy who works for someone else.
The little guy who starts his own little guy business could get some of this back, right? Just use the same ploys that the big guys do. No?
Except he wouldn't have enough money to hire lobbyists.  |
Correct. You don't have to be a GE or an AT&T to take advantage of the rules. You can be just a sole proprietor and it would be OK.
The lobbyists are a different story.
The main difference between the business owner and employee is control.
As sole proprietor, you can control your REALIZED income as opposed to EARNED income. You only get taxed on realized income. There's a ton of ways to minimize your realized income legally. The biggies are the Section 179 expenses and the contributions to your retirement plan.
As long as you show a profit in 2 out of the last 5 years (not sure about that rule anymore), you can continue as a 'business'. This is obviously a rule to guard against hobbyists who deduct everything year after year for the sake of saving taxes while operating at a loss.