Dodging taxes is so much fun more people seem to be getting into the game each day. That may be because almost all the old loopholes were carefully preserved in the tax legislation passed last summer, and plenty of new ones were added.
To play the game to full advantage, you really need to incorporate. Everybody's doing it--lawyers, doctors, writers. Then you can buy some important things for yourself with before-tax rather than after-tax dollars, things like full medical coverage and a hefty pension for your old age.
There is, of course, the bothersome possibility that, despite all your deductible expenses, you'll still show a profit that would be subject to both corporate and individual income tax. With the new generous tax breaks for businesses however, that inconvenience is easily avoided. All that is needed is a little effort and a good tax lawyer.
Perhaps you've always wanted a foundry-- not to run, of course, but just to be able to point to and say it is yours. Ford Motor Co. will probably be glad to sell you one under an arrangement that will cost neither you nor Ford anything but will produce a very nice tax break for you to share. Your tax adviser can work out the relatively simple details. You borrow some money and buy the foundry. The company agrees to buy it back in several years at a fixed price and to lease it in the interim. The rent Ford pays will cover all your financing and other costs less some share of the valuable tax break that you can now get by claiming big asset depreciation deductions on your tax return--you have to give Ford part of the tax- break lucre or it won't want to play.
This pleasant arrangement is possible because Ford will be eligible for enormous tax deductions arising from its continuing purchases of plant, equipment and other assets. These deductions are useless to Ford as long as it's not making a taxable profit. By selling and leasing back its assets on favorable terms, Ford can get some of the benefit from the tax deductions while the purchaser-lessor gets the rest. It's sort of a "negative income tax" for poor corporations--the thing we wouldn't think of giving to poor people.
If a foundry is too rich for your blood, you might try something smaller--a computer, perhaps, or a robot. If Ford is already leased-up, you won't have trouble finding another partner. Apart from the profit-bloated oil companies, there is hardly a business buying much property or equipment that won't have depreciation deductions to spare.
If you're really clever you may be able to avoid not only corporate taxes but most of your personal income tax as well. Once you've covered all your corporate earnings with deductions, your company will look on paper as if it's not making any money at all. Of course, you'll still have on hand the money that you and your associates get from whatever it is you really do for a living. When your company pays this out to you, you can treat it in part as a pay-back of invested capital--not taxable at all--and the rest as a capital gain--now taxable at a maximum rate of 20 percent.
One last tip. You'll enjoy doing all this a lot more if you don't think about the fact that it's being made possible by reducing money for welfare families, lunches for school kids and jobs for the poor.