Some business owners wonder if using the Augusta Rule is “gaming the system.” The truth? The tax code has always been shaped by entrepreneurs finding solutions, and Congress responding with more rules.
In this clip, John Hyre breaks down why the Augusta Rule exists, how the tax code grew into the most complex in history, and why using this provision isn’t a loophole, it’s a strategy Congress intentionally included.
0:03
we’re part if we’re partaking in the
0:04
Augusta rule?
0:05
Absolutely.
0:06
Okay.
0:06
Totally gaming the system. How was the
0:08
tax law made? It’s a hundred years old.
0:10
Mhm.
0:11
Every time an entrepreneur would come up
0:13
with a way around something, the
0:15
government would say, “Darn it, that’s
0:17
not what we had in mind.”
0:18
And they would make the statute larger
0:20
and more complicated to try and ban that
0:22
thing. And then the entrepreneurs, being
0:23
as nimble as they are, would come up
0:25
with, “Okay, well, let’s just tweak it a
0:26
little here.” And so there’s always been
0:28
this ongoing war, but then there were
0:30
other elements added. That was not the
0:32
only thing that caused the code to be
0:33
very large and very complex, more than
0:35
it needs to be. The most complex tax
0:37
code in the history of ever.
0:39
Okay?
0:40
And so then you throw in special
0:43
interests who are going to lobby for
0:45
their little piece and their little
0:46
special exemption.
0:48
And then you throw in the desire for
0:51
social control that politicians nature
0:54
they think they’re smarter and better.
0:55
intellectuals and politicians both think
0:57
they’re smarter and better that other
0:59
people are dumb and it’s for their own
1:01
good. We’re going to force them to I’m
1:02
sorry, not force. That’s such a naughty
1:04
word. We’re going to encourage
1:06
Yep. economically.
1:07
We’re going to reward people for doing
1:09
certain things and we’re going to punish
1:11
them for doing others and we’re going to
1:12
use the tax code to do so.
