U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Economics
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 09-29-2020, 01:45 PM
 
10,521 posts, read 4,589,814 times
Reputation: 14042

Advertisements

Quote:
Originally Posted by oceangaia View Post
What makes a year the right time period for measuring one's financial state?
By definition income is money received over a fixed period of time, as authorized by the 16th amendment. Your net worth is irrelevant to income. If someone makes $15,000 in income this year they will pay the same tax whether they have $1,000 in the bank or $1 million (assuming AMT doesn't kick in).

Quote:
Originally Posted by SuiteLiving View Post
If you lose $100 one year and make $100 the next year, you're no better off (no accession to wealth), why should the government be able to tax you?
It's an income tax, not a wealth tax or net worth tax. Whether your net worth goes up or down is irrelevant.

So you see, within a pure definition of income tax, NOL carryovers don't make sense. Now if we want to base taxes on both income and wealth, then let's have a tax system that does that and dispense with the NOL carryover and AMT nonsense.
Rate this post positively Reply With Quote Quick reply to this message

 
Old 09-29-2020, 01:53 PM
 
2,540 posts, read 1,453,863 times
Reputation: 4045
Quote:
Originally Posted by Elliott_CA View Post
By definition income is money received over a fixed period of time, as authorized by the 16th amendment. Your net worth is irrelevant to income. If someone makes $15,000 in income this year they will pay the same tax whether they have $1,000 in the bank or $1 million (assuming AMT doesn't kick in).



It's an income tax, not a wealth tax or net worth tax. Whether your net worth goes up or down is irrelevant.

So you see, within a pure definition of income tax, NOL carryovers don't make sense. Now if we want to base taxes on both income and wealth, then let's have a tax system that does that and dispense with the NOL carryover and AMT nonsense.
It's an income tax that has an annual accounting period. The NOL rules lessen the impact that has to reduce the chance that a person that hasn't truly earned any income has to pay tax.

Elimination of the NOL carryovers would create a wealth tax.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 09-29-2020, 02:15 PM
 
12,026 posts, read 10,639,711 times
Reputation: 11113
Quote:
Originally Posted by lchoro View Post
The losses are capped by income earned in any year. That's why they stretch out a very long time.

The real question mark is the "consulting" fees he was writing off.

https://www.usatoday.com/story/news/...ax/3557530001/
He was paying his daughter, who was also an employee.

https://www.forbes.com/sites/danalex.../#1f6637992885

He also declared his home an investment property to get around the SALT limit that he created.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 09-29-2020, 02:18 PM
 
Location: Panama City Beach, FL
2,081 posts, read 1,083,413 times
Reputation: 5087
Ditch the income tax and go with the FairTax. Tax consumption instead of labor. Best part is all the international travelers to the US will help kick in by being taxed. Why limit taxes to just 140 million workers when you can tax 325 million US consumers plus millions more tourists.

fairtax.org
Rate this post positively Reply With Quote Quick reply to this message
 
Old 09-29-2020, 02:33 PM
 
21,896 posts, read 10,065,556 times
Reputation: 27392
Quote:
Originally Posted by Chas863 View Post
Perhaps you didn't know that the IRS tax code sets a limit of 39 years for depreciation of most commercial buildings. That means that a commercial building that cost $39 Million dollars could be depreciated at the rate of $1 Million per year for 39 years.

If a person operates this building as a business and fails to make at least $1 Million in profit every year (not counting the depreciation), then that person will have a net loss each year for income tax purposes. Why should the person not be permitted to claim that loss on his taxes?

At the end of that 39 years the company isn't left with a building with a zero market value, in fact it will likely be a $390 million dollar value.


As an individual, I sure wish I could deduct my mortgage and insurance and utilities from my revenue to determine taxable income.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 09-29-2020, 02:34 PM
 
21,896 posts, read 10,065,556 times
Reputation: 27392
Quote:
Originally Posted by Elliott_CA View Post
By definition income is money received over a fixed period of time, as authorized by the 16th amendment. Your net worth is irrelevant to income. If someone makes $15,000 in income this year they will pay the same tax whether they have $1,000 in the bank or $1 million (assuming AMT doesn't kick in).

By definition? In other words, an arbitrary time interval.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 09-29-2020, 03:29 PM
 
Location: Victory Mansions, Airstrip One
5,885 posts, read 3,999,098 times
Reputation: 7499
Loss carryover is not the issue. Rather, it's a tax code which is so complicated and littered with so many loopholes and grey areas that enforcement is impossible, except for returns which only have income sources reported by other entities (W-2 wages, 1099 income, for example).

It should be expected that many businesses will report losses in their early years. But these losses should only be usable to offset future business profits. "Business losses" should not be able to offset wages or any other form of income. Also, being able to operate a business for decades and never pay any income tax does not pass the fairness "sniff test" in my opinion.

Same comment for passive real estate losses. People should not be able to use so-called passive losses to offset other forms of income. And even just the notion of depreciating an asset that generally appreciates is specious at best. Of course there are armies of lobbyists who would fight any change to these laws.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 09-29-2020, 03:40 PM
 
10,521 posts, read 4,589,814 times
Reputation: 14042
Quote:
Originally Posted by Monello View Post
Ditch the income tax and go with the FairTax. Tax consumption instead of labor. Best part is all the international travelers to the US will help kick in by being taxed. Why limit taxes to just 140 million workers when you can tax 325 million US consumers plus millions more tourists.

fairtax.org

Sounds good on the surface but the tax cheating will be off the charts as you will have all kinds of private party sales under the table that will go untaxed. I don't agree with the Fair Tax proposal that exempts all wholesale purchases from the tax, it puts the whole burden on the consumer. This will also induce more tax cheating as people will set up shell companies to make purchases with to evade the Fair Tax. That said, with some adjustments I do think a consumption tax instead of a labor tax has a lot of appeal.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 09-29-2020, 03:51 PM
 
5,778 posts, read 3,901,170 times
Reputation: 13033
Quote:
Originally Posted by oceangaia View Post
At the end of that 39 years the company isn't left with a building with a zero market value, in fact it will likely be a $390 million dollar value.


As an individual, I sure wish I could deduct my mortgage and insurance and utilities from my revenue to determine taxable income.
If the building appreciates that much, it would be sold at a pure gain. 39 years of basis fully depreciated plus the 390 million of proceeds.

Your “revenue” isn’t revenue for one thing. If you’re talking about money from your job, it’s either salary or hourly. And thus, you have no risk of loss. Your mortgage and insurance also has absolutely nothing to do with creating that income.

A business gets to deduct those items because those items are used in the PURSUIT (aka there’s risk)...of profit. You have no such risk as an employee and you’re not putting wear on your assets to pursue that income.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 09-29-2020, 04:01 PM
 
5,778 posts, read 3,901,170 times
Reputation: 13033
Quote:
Originally Posted by lchoro View Post
He was paying his daughter, who was also an employee.

https://www.forbes.com/sites/danalex.../#1f6637992885

He also declared his home an investment property to get around the SALT limit that he created.
Does the article bother to look into what her services were? What level of job she had? If the costs are legit that an arms length buyer of the services would charge there’s not really anything wrong with it.

You can be objective in fact but not objective in appearance. In other words, if she is a highly skilled employee who can get that type of pay elsewhere for those same services, it doesn’t matter if she’s his daughter. It’s a simple transfer pricing type transaction that just needs to be arms length.
Rate this post positively Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:


Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Economics
Similar Threads

All times are GMT -6.

© 2005-2023, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top