Dave Barry's Money Secrets (14 page)

The Louisiana Purchase If Gene Weingarten Had Negotiated It

Photography Credits

Which brings us to real estate. Negotiating to buy or sell a house is different from negotiating for a car, because—to name just one factor—most cars do not have bathrooms. Also, your negotiating opponent, instead of being a professional car salesperson armed with a powerful set of ethics capable of reducing

you to a whimpering blob of drooling stupidity, is a regular human just like you. But that is no excuse for decency. There is
never
room for decency in negotiations.

In negotiating for a house, the first thing you need to know is whether you are the buyer or the seller. To determine which one you are, look in your yard. Is there a
FOR SALE
sign? If so, you are probably the seller. If you don’t have a yard, you are probably the buyer.

Now pay close attention here, because we are coming to the meat of real estate negotiations: If you are the
seller,
you want to get the
highest
possible price, which you obtain by presenting the house as a highly desirable property; whereas if you are the
buyer,
you want to pay the
lowest
possible price, which you obtain by suggesting that the house is basically a big house-shaped wad of bison dung. Be sure that, in the heat of negotiations, you do not become confused:

YOU:
I’m sorry, but this house is basically a big house-shaped wad of bison dung.

YOUR OPPONENT:
Wait a minute. Aren’t you the seller?

YOU:
Ohmigod, you’re right! I mean it’s a highly desirable property. Sorry!

YOUR OPPONENT:
Don’t apologize! I do that all the time.

Because real estate negotiations are so confusing, you may want to use the services of a real estate broker. This is a highly trained professional who, in exchange for receiving a commission, relieves you of all the worry and headache of figuring out what you would do with the extra money if you weren’t paying a commission.

The best way to choose a real estate broker is by the quality of the broker’s photograph in the newspaper classified ads. I’m not sure when this happened, but at some point, real estate brokers, at least where I live in South Florida, started running
serious
glamour photos of themselves. The result is that, in many real estate classifieds, you can’t tell for sure what’s being advertised:

Photography Credits

But enough about real estate. This isn’t even supposed to be the real estate chapter. This is the chapter on negotiating, and it is time to sum up what you have learned:

17

INCOME TAXES: BUILDING BLOCKS OF OUR GREAT NATION AND LIFEBLOOD OF OUR SACRED DEMOCRATIC WAY OF LIFE

How to Avoid Paying Them

A
S THE OLD SAYING GOES, “Nothing in life is certain except death and taxes. Also, O.J. was guilty.”

How true these words are. If our government is going to be able to provide for the common good, everybody has to contribute his or her fair share in the form of taxes. And when I say “everybody,” I mean, “not everybody.” Because the truth is that a lot of people don’t pay taxes. Poor people, for example. Also many rich people. Also a fair number of middle-income people.

In fact, when you get right down to it, there is a great big old wad of people who don’t pay taxes. Our goal, in this chapter, is to show you how to become a member of that wad, without winding up in federal prison giving mandatory backrubs to a cellmate known as “Ramrod.”

The trick is to understand the U.S. Tax Code. This is a collection of laws passed by the United States Congress, a legislative body composed of people you hated in high school. Since Congress is responsible for the content of the tax laws, if you ever have a question about your taxes, all you have to do is ask your congressperson, and he or she will be happy to give you a simple, clear, and definite answer.

That was of course a joke.
Congress has
no idea
what’s in the U.S. Tax Code. Members of Congress don’t read the laws they pass, because this would take valuable time away from their congressional duties, such as drinking coffee with people who will give them money so they can get reelected to Congress and continue to carry out their duties.

But let’s not be too harsh on Congress. The truth is that
nobody
understands the U.S. Tax Code. It’s far too difficult even for really smart people. Back in 1955, Albert Einstein, acting on a dare from some fellow geniuses at a genius party, attempted to read the Tax Code, and within minutes he keeled over dead. “His brain looked like tapioca,” the coroner said.

Actual Photographs Showing Effects of Reading Tax Code on Albert Einstein’s Brain

SOURCE
: Dan Rather

Photography Credits

And that was fifty years ago, when the Tax Code was only a few million words. It’s
much
bigger now—so big that nobody dares to go near it. It’s kept in a locked, windowless vault in the basement of the Internal Revenue Service building. Every day at 3 p.m. a taxpayer is selected at random, audited, then thrown into this vault. There’s usually a scream, followed by silence, followed by a massive burp. The next day the Tax Code is bigger.

But it’s not just big. It’s also really, really hard to understand. Pick any random sentence from the Tax Code, and it will look something like this:

Biannually adjusted negative graduated monetary yields benefiting ordinary net gross optimization must accrue monthly aggregates.

You have no idea what that means, right? And yet this is a short and fairly clear sentence by Tax Code standards. Most of it is much worse, which means ordinary humans like you have no chance of understanding it. And the reason for this is simple: You’re not
supposed
to understand it. It’s designed specifically to
prevent
you from understanding it. That’s right: The truth is that
the U.S. Tax Code is written entirely in code.
Hence the name “Tax Code.”

It’s filled with secret messages that only certain people are supposed to understand. For example, the sentence printed above was inserted into the Tax Code in 1957 by a Georgia congressman named Henry Hornbucket solely to send a secret message to a secretary with whom he was having an affair. To decode Rep. Hornbucket’s message, read only the first letter of each word:

Biannually adjusted negative graduated monetary yields benefiting ordinary net gross optimization must accrue monthly aggregates.

That’s right: The entire purpose of this sentence—a sentence that, over the decades, has resulted in countless hours of taxpayer anguish, millions of dollars in accounting fees, and numerous bitter, drawn-out legal battles, and ultimately required a ruling by the U.S. Supreme Court—was so that a now-deceased politician could tell his girlfriend, “BANG MY BONGO, MAMA.”

The Tax Code is riddled with such secret messages. The entire purpose of the so-called “Tax Reform Act of 1997”—a document of more than 1,600 pages—was to enable a group of congressional interns to announce a keg party.

But secret personal messages are only one reason why the Tax Code is so huge and confusing. Another one is “loopholes,” which are special provisions that congresspersons stick in there to give special tax breaks to certain people. These loopholes are very hard for ordinary taxpayers to spot. For example, take a look at this section of the Tax Code:

SEC. 249.         LIMITATION ON DEDUCTION OF BOND PREMIUM ON REPURCHASE

Subchapt. B, Part VIII, Sec. 249

Mr. Robert Fringleman of 17 Twitching Sphincter Lane, Greenwich, Connecticut, shall not have to pay any federal taxes at all, ever. Bob, thanks for the large campaign contribution! Please let me know if I can be of any further service to you or Marcia! Love always, your obedient servant U.S. Rep. Darnell P. Lungfluke.

No deduction shall be allowed to the issuing corporation for any premium paid or incurred upon the repurchase of a bond, debenture, note, or certificate or other evidence of indebtedness which is convertible into the stock of the issuing corporation, or a corporation in control of, or controlled by, the issuing corporation, to the extent the repurchase price exceeds an amount equal to the adjusted issue price plus a normal call premium on bonds or other evidences of indebtedness which are not convertible.

Once again, we have a glob of prose that makes no sense to you, a regular human. In fact, this section is specifically designed to cause you to fall asleep by the word “debenture.” That way, you are highly unlikely to notice the loophole. And where, exactly,
is
the loophole? OK, do you see the “line” under the words “
Subchapt. B, Part VIII,
Sec. 249”? That’s not a line:
That’s the loophole.
It’s written in tiny one-point type, which is known in Washington as the “tax loophole font.” When we magnify that little line ten times, here’s what we see:

Mr. Robert Fringleman of 17 Twitching Sphincter Lane, Greenwich, Connecticut, shall not have to pay any federal taxes at all, ever. Bob, thanks for the large campaign contribution! Please let me know if I can be of any further service to you or Marcia! Love always, your obedient servant U.S. Rep. Darnell P. Lungfluke.

The Tax Code contains
thousands
of these loopholes, each one giving a generous tax break to some plugged-in individual or corporation. It goes without saying that none of these loopholes applies to regular dirtbag taxpayers such as you.

So what can you do to reduce your tax burden? The best way is to keep accurate financial records and thoroughly familiarize yourself with the applicable tax laws, so you can avail yourself of every legal advantage. Like you would ever do
that.
This leaves you with Option B: cheating.

The trick to successful tax cheating, according to the American Society of Crooked Tax Accountants of America, is “Don’t be a moron.” You don’t want to do anything in your tax return that will raise a “red flag” and target you for an audit. Some common mistakes are:

•                  Using a suspicious-sounding nickname on your tax return, such as “Icepick Willy,” “Johnny Two Knuckles,” or “Martha Stewart.”

•                  Writing “YOU’LL NEVER CATCH ME, IRS CUBICLE-DWELLING SLUGS!” in large red letters across the front of your 1040 form.*
 
³⁸

•                  Claiming an absurd refund amount, such as “eleven zillion dollars.”*
 
³⁹

But if you use common sense and cheat in a responsible manner, you have no reason to be concerned. To quote Internal Revenue Service Commissioner Harmon Sneegart: “The odds are really good that we’ll never catch you. How the hell can we? We’re federal employees! We take two hundred fifty-three days off a year!”

So let’s take a look at the standard Form 1040 and see where you should focus your tax-cutting efforts:

Taxpayer name:
Here’s a tax-saving opportunity few taxpayers take advantage of: Instead of simply writing your name, write your name plus the word “DECEASED.” This can save you big money down the road. In case the IRS checks up on you, you should also change your telephone answering-machine message to something like, “Hi, this is [
your name
]. I can’t come to the phone right now because I am currently dead, at least for tax purposes.”

Presidential Election Campaign Fund checkoff box:
If you check this box, $3 of your taxes will be earmarked for a special fund to pay for presidential campaigns. Notice that the government does
not
permit you to earmark money for poor people, or sick people, or national defense. No, the government permits you to earmark money only for the purpose of enabling politicians to produce TV commercials designed to appeal to voters who have the IQ of a Vienna sausage. To make matters worse, some of this federal campaign money goes to candidates who have about as much chance of getting elected president as SpongeBob SquarePants. In 2004, for example, more than $800,000 of earmarked U.S. taxpayer dollars went to Lyndon LaRouche, a convicted felon and complete space loon who has been running for president since 1980, and who has claimed, among other things, that Walter Mondale was a Soviet agent and Queen Elizabeth II is a drug dealer.*
 
⁴⁰
If you check the Presidential Election Campaign Fund box, it won’t affect the amount of tax you owe, but I will lose all respect for you.

Filing status:
Your choices here are Single, Married, Married but Messing Around, Head of Household, Foot of Household, Native American, Presbyterian Filing Jointly, Groin of Household, Biped, and None of the Above. I don’t care which one you check. I’m still pissed off about Lyndon LaRouche.

Exemptions:
This is where you tell the IRS how many dependents you have. In calculating your dependents, you should bear two things in mind:

1.         The more dependents you have, the less tax you owe.

2.         Nowhere in the U.S. Tax Code does it explicitly state, in so many words, that these dependents cannot be imaginary, if you are catching my drift.

Income:
From a tax standpoint, income is the exact opposite of exemptions: The less you have, the better. Smart rich people have understood this for years. For example, on his 2003 tax return, Bill Gates reported a total income of $6,437.62. This was so low that even the IRS became suspicious, but when auditors attempted to examine Mr. Gates’s records, the entire U.S. government computer system (which uses the Microsoft Windows operating system) went berserk—erasing data, generating porn e-mails, launching nuclear missiles at Belgium, etc. Within minutes a high-level federal decision was made not to challenge Mr. Gates on his income, nor his 8,257 children.*
 
⁴¹

Business expenses:
Legitimate business expenses are tax deductible. How do we define the term “legitimate business expense”? We define it—and bear in mind, we are words in a published book—as “pretty much everything.” Be aware, however, that if you claim a large amount of business deductions, the IRS may send an agent around to check you out, and if your business does not, in a strictly technical sense, exist, it’s a good idea to be prepared:

IRS AGENT:
So you’re claiming that last year, you had business expenses totaling $78,473.52 to operate a commercial snail farm?

YOU:
That’s correct. I have over 37,000 head of commercial snail. The veterinary bills alone are
ridiculous.