2/18/13 - Tax Deductions

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According to the old one liner, there are only two things you can't avoid: death and taxes.

Well, leave it up to Facebook to challenge yet another social expectation. According to an article in Bloomberg Businessweek, Facebook will pay no state or federal taxes on its 2012 profits of 1.1 Billion dollars. In fact, the social media giant will get a refund of more than 400 million dollars. And here is the rub - it's all legal. Facebook is using stock options and other forms of compensation to generate the tax write off.

Although not nearly that obscene, most everyone takes a deduction in one form or another. That is what is wrong with our tax system: too many deductions - far too many loopholes and write-offs. Last year, tax breaks accounted for more than 800 billion dollars. That's about one third of all federal revenue; less than we spend as a nation on Social Security or defense.

If you are like me, each year as you sit down with your stack of receipts and federal forms, you'll find that moment when a flat tax without all of the accounting looks pretty good. When you do, take a break and then go post it on Facebook.

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