bsrsharma, I think you need a little bit of tax education. (just kidding you :)).
The problem with this country is few people understand that the rich have many ways of legally avoiding taxes.
I work for the corporation. I need to pay payroll and income taxes on my salary (although I’m the largest shareholder).
I need to find a way to get the corporation’s money into my own pocket while minimizing taxes. Under the mortgage debt forgivess plan, the corporation gives me $1 million home equity loan. I default. I still have $1 million and pay zero in income or payroll taxes. The corporation gets to deduct $1 million as an expense. Uncle Sam is the loser.
This would work great for estate planning purposes as well to transfer wealth the next generation.
Say I have $10 million I want to transfer to my heir free of estate taxes. I give him a $10 million mortgage on his POS house. He defaults, still has the $10 million but neither he nor I paid any estate tax.
Sure they can limit the amount to $10,000. But smart people will find a way to profit.
I have a maid who makes $25k per year. Instead, I can just pay her $15k in salaray and give her $10k home equity loan. She defaults, keeps the $10k. The $10k in “effective compensation” is tax free. She pays no income taxes and I pay no payroll taxes. What a great deal!!!
I’m working on it right now, just in case they pass such a scheme for mortgages up to a certain date.
I’m Democrat because I believe in fairness. But the law is the law, and I see nothing wrong with following the letter of the law.
