Meffert Supplements Income with Company Credit Card

A classic way people with business control cheat the government (and you)!

For easy computation, let's say I get paid $1 and I'm in a 25% income tax bracket.

I take home $.75 and the government gets $.25. The company pays nothing to the government - $1 is labor expense. Now I can afford a $.75 sno-ball.

Instead of having to work for $1 to buy a $.75 sno-ball, let's say I charge the same sno-ball to my corporate card. Now, the company pays the $.75 bill as an expense, so they pay taxes on the new $.25 profit at their rate (usually lower than my rate - or they can spend that extra $.25 on something else for the company and pay the government NOTHING NEW overall), but I only pay 25% of the $.75 as taxes on my "compensation".

So the government is already losing out here, then let's add on the other employer and employee taxes paid on income and the income which is now simply a business expense doesn't generate and taxes.

Taxes which have to be made up by people's payroll taxes.