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Are gains on investments and shares of profit not income???
Are there any arguments for it?
My argument against this is that wages, the income for the majority of Americans, are taxed at a higher rate than investments, which are the income of a minority of Americans - the already wealthy ones.
This is exactly why they're lower, now. They used to be taxed at a higher rate. For that matter, everyone over a basic middle-class income was taxed at a higher rate. The the Bush tax cuts set in, and the country's budget fell apart, and the rich got tax breaks they didn't really need, and here we are now, in a mess.
What percentage of these 1040 filers who owe no net tax (and that IS the number you are talking about) is actually college students filing to get back the taxes they don't owe but that were withheld from the wages of their summer jobs? Did you ever do that by the way? And what percentage of them results from low-income people taking the very same standard deductions and personal exemptions that you take every year? Got an answer for those sorts of questions, or have you actually just never bothered to look into the matter, prefering just to swallow the hook, line, and sinker all at once instead?
No idea, doesn't matter either, does it? The fact remains half the country doesn't pay federal income taxes. You can slice and dice it however you want to slice and dice it but the fact remains. The effective tax rate on income for half the country is 0%, and for a sizable fraction it's actually negative. In terms of what an equitable distribution of taxation looks like, the marginal rate is really quite irrelevant. The only thing that matters is the effective rate.
And no, I think the only periods I paid no federal income taxes were before I was 17 and then 24-26 when I didn't live in the country. Like most traditional college students, I couldn't take a personal exemption or standard deductions.
does it really matter the reason 1/2 the country pays no income tax? if they pay no income tax they pay no income tax.
Did you actually think about that post before you clicked Submit? The poeple who PAY no tax OWE no tax. Are YOU in the habit of paying taxes that you do not owe? No? Then where in the world do you get off expecting that in others? Explain yourself.
Then the Bush tax cuts set in, and the country's budget fell apart, and the rich got tax breaks they didn't really need, and here we are now, in a mess.
Pretty much. It really is that story-book simple on many levels. Trust some morons, experience a train wreck. If we do it again, it will happen again.
No idea, doesn't matter either, does it? The fact remains half the country doesn't pay federal income taxes. You can slice and dice it however you want to slice and dice it but the fact remains.
There's a lot of sand out there. Room for one more head to be stuck in it, I'm sure.
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Originally Posted by Malloric
The effective tax rate on income for half the country is 0%, and for a sizable fraction it's actually negative. In terms of what an equitable distribution of taxation looks like, the marginal rate is really quite irrelevant. The only thing that matters is the effective rate.
And I suppose you realize that the effective tax rate for the the poorest 20% of the population is above 16% when more than just federal income taxes are taken into account. One of the reasons why federal income taxes need to be progressive is that everything else is so highly regressive. The poor are hammered by payroll, excise, and state and local taxes. The rich as usual can simply brush those off.
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Originally Posted by Malloric
And no, I think the only periods I paid no federal income taxes were before I was 17 and then 24-26 when I didn't live in the country. Like most traditional college students, I couldn't take a personal exemption or standard deductions.
If you are a US citizen, you were required to file a 1040 if you had income even though you did not reside in the country. And even though you could have been and no doubt were claimed as a dependent by your parents during your college years, you should have filed your own 1040 for any seasonal work. You would have received a refund of taxes withheld.
Yep kind of like they tax you when its income and then tax you when you spend it. They are taxing more and more transfers of money as time goes by.
That's what happens when you have an out-of-control government that looks at its citizen's money as its own, that they "allow" the citizen to use, once the government has taken whatever it wants.
And I suppose you realize that the effective tax rate for the the poorest 20% of the population is above 16% when more than just federal income taxes are taken into account. One of the reasons why federal income taxes need to be progressive is that everything else is so highly regressive. The poor are hammered by payroll, excise, and state and local taxes. The rich as usual can simply brush those off.
If by hammered you mean actually pay those taxes , then you are correct. I mean, how much do you spend that's subject to sales tax anyway? It's a pretty small percentage of total household spending. So yes, they get hammered on that small percentage just like everyone else gets hammered on it. That's why I'm a big fan of consumption taxes.
On payroll taxes, yes they "get hammered" on those too. Again, because "hammered" means actually paid in your lingo. Of course, payroll taxes are also a big wealth-transfer mechanism, so while they pay them they get a bigger bite out than they otherwise would. For example, a person taking social security at 67 earning $20,000 per year gets $920/month in benefits; earning $40,000, $1382; earning $60,000, $1,845; earning $80,000, $2,135; earning $100,000, $2,352. So yes, they pay taxes (eg, are hammered).
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If you are a US citizen, you were required to file a 1040 if you had income even though you did not reside in the country. And even though you could have been and no doubt were claimed as a dependent by your parents during your college years, you should have filed your own 1040 for any seasonal work. You would have received a refund of taxes withheld.
Where did I say I didn't file? I said I didn't pay income taxes, which I didn't. The first $80-90k of earned income is excluded, and I didn't earn that much. I still had to file because I had money invested and realized some gains. They were just well below the exemptions. Hence I didn't pay federal income taxes during the period I was working outside of the country.
During college, who said I didn't file? I said I paid federal income taxes, which pretty much all traditional college students who work pay because they have no personal exemption or standard deduction and are not eligible for EITC. I never said I didn't file and get back what was owed to me by excessive withholding. I said I paid income taxes when I was in college. Even if all you did was work a summer job for minimum wage, you'd still most likely pay income taxes. The amount of deductions available to a traditional college student are very, very limited.
If by hammered you mean actually pay those taxes , then you are correct. I mean, how much do you spend that's subject to sales tax anyway? It's a pretty small percentage of total household spending. So yes, they get hammered on that small percentage just like everyone else gets hammered on it.
Stop and think. The higher percentage of household spending subject to excise and state and local sales taxes is found among A) Rich people, or B) Poor people?
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Originally Posted by Malloric
That's why I'm a big fan of consumption taxes.
There are degrees of badness in consumption tax proposals. Some are indeed worse than others, but they are all schemes of the wealthy to shift tax burden off of themselves and onto unsupecting other people like you.
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Originally Posted by Malloric
On payroll taxes, yes they "get hammered" on those too. Again, because "hammered" means actually paid in your lingo.
No, what it means in my lingo is that payroll taxes eat up a huge chunk of the income of poor people and a very tiny and insignificant chunk of the income of wealthy people. That's what tax burden means, you know.
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Originally Posted by Malloric
Of course, payroll taxes are also a big wealth-transfer mechanism, so while they pay them they get a bigger bite out than they otherwise would. For example, a person taking social security at 67 earning $20,000 per year gets $920/month in benefits; earning $40,000, $1382; earning $60,000, $1,845; earning $80,000, $2,135; earning $100,000, $2,352. So yes, they pay taxes (eg, are hammered).
FICA taxes apply to the first $113,700 of earned income only. Is it rich or poor people who tend to make more than that amount and thus have their incomes escape taxation? SS retirement benefits are meanwhile not based on annual anything but on average indexed monthly earnings during peak earning years. Benefits may be collected at or after age 62. In the meantime, it's all about payroll taxes, and those hammer the poor and are barely noticeable to the rich.
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Originally Posted by Malloric
Where did I say I didn't file? I said I didn't pay income taxes, which I didn't. The first $80-90k of earned income is excluded, and I didn't earn that much. I still had to file because I had money invested and realized some gains. They were just well below the exemptions. Hence I didn't pay federal income taxes during the period I was working outside of the country.
I wish to make it clear that I am not your tax advisor and am not implicated in any way in any liability to prosecution that you may have incurred.
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Originally Posted by Malloric
During college, who said I didn't file? I said I paid federal income taxes, which pretty much all traditional college students who work pay because they have no personal exemption or standard deduction and are not eligible for EITC.
Students who work a summer job are rarely obligated to file a return, but that is the only way to get back the income taxes withheld from their pay that they do not in fact owe. About 20% of those despicable free-loaders who have no skin in the game are in fact students who file a 1040 in order to recoup their unowed taxes.
Stop and think. The higher percentage of household spending subject to excise and state and local sales taxes is found among A) Rich people, or B) Poor people?
Poor people. Considering our tax system is too regressive with over half the country not paying any income taxes at all, this is a good thing. Maybe they'll understand how the rest of the country is "hammered" if they get "hammered" on a small percentage of their spending at a low rate.
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There are degrees of badness in consumption tax proposals. Some are indeed worse than others, but they are all schemes of the wealthy to shift tax burden off of themselves and onto unsupecting other people like you.
I agree. It's better to tax alcohol and cigarettes than food.
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No, what it means in my lingo is that payroll taxes eat up a huge chunk of the income of poor people and a very tiny and insignificant chunk of the income of wealthy people. That's what tax burden means, you know.
Only of the very wealthy. The fazeouts on payroll taxes are very high, so for 90% of the country we're actually paying equal taxes for unequal benefits.
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FICA taxes apply to the first $113,700 of earned income only. Is it rich or poor people who tend to make more than that amount and thus have their incomes escape taxation? SS retirement benefits are meanwhile not based on annual anything but on average indexed monthly earnings during peak earning years. Benefits may be collected at or after age 62. In the meantime, it's all about payroll taxes, and those hammer the poor and are barely noticeable to the rich.
FICA benefits, which are regressive, also cap out at $113,700. While barely noticeable to a 1%er earning $10,000,000 a year, said 1% also only benefits from the first $113,700. But don't worry, he'll have to pay FICA taxes on the rest of it next year. For the other 90% of the country, FICA taxes are actually equal. Of course, the benefits aren't, but in a land where half the people don't even pay income taxes having an equal payroll tax is pretty amazing.
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I wish to make it clear that I am not your tax advisor and am not implicated in any way in any liability to prosecution that you may have incurred.
Thanks. Personally I don't take financial advice from people who can't spell adviser. That and I've actually worked as a tax preparer for both individuals and corporations so I'm quite confident I incurred no liability to prosecution by taking a standard income exclusion that's clearly noted in IRS publication 54. But thanks for the "advico" anyway.
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Students who work a summer job are rarely obligated to file a return, but that is the only way to get back the income taxes withheld from their pay that they do not in fact owe. About 20% of those despicable free-loaders who have no skin in the game are in fact students who file a 1040 in order to recoup their unowed taxes.
Just because you file to recoup the excess withholding doesn't mean you didn't pay income taxes. The majority work at least part-time while about a quarter worked full-time. At the graduate level, over half worked full-time jobs. All the full-time and many of the part-time workers are going to be over the standard deduction. Even if it were true, there's still another 40% who aren't paying any income taxes that aren't students who will hopefully graduate and become economic contributors.
Maybe they'll understand how the rest of the country is "hammered" if they get "hammered" on a small percentage of their spending at a low rate.
Bad math award. The poor get hammered by a 6.2% hit on 100% of their incomes. The wealthy escape such taxation on everything above $113,700. When the 1983 payroll tax adjustments were done, 90% of all wages were below the cap. Thanks to income redistribution upward along the income scale since then, the level has fallen to 83%.
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Originally Posted by Malloric
Only of the very wealthy. The fazeouts on payroll taxes are very high...
The Spelling Police didn't fare so well with "fazeouts", did they. Not to mention that advisor and adviser are each accepted spellings of the word. Just one slip-up after another on your part here.
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Originally Posted by Malloric
FICA benefits, which are regressive, also cap out at $113,700.
Social Security taxes end at $113,700. There is no limit for Medicare taxes.
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Originally Posted by Malloric
While barely noticeable to a 1%er earning $10,000,000 a year...
You are making my point for me, and in recent years, the AGI floor for the top 1% has been a little over $400K.
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Originally Posted by Malloric
But don't worry, he'll have to pay FICA taxes on the rest of it next year.
Really? Under what authority do you expect that to occur?
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Originally Posted by Malloric
For the other 90% of the country, FICA taxes are actually equal.
No, they are not, as you seem not to undertsand that the burden of losing a dollar to any tax declines as income rises. The dollars lost by low-income workers are the most painful. Twice the loss by a higher income worker would not result in twice the pain.
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Originally Posted by Malloric
Of course, the benefits aren't, but in a land where half the people don't even pay income taxes having an equal payroll tax is pretty amazing.
SS benefit formulas assure that low-income workers receive a higher percentage of their pre-retirement incomes than higher income workers do. Of course, so much has been done to depress the wages of low-income workers over the years that even this higher percentage doesn't serve them very well.
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Originally Posted by Malloric
That and I've actually worked as a tax preparer for both individuals and corporations so I'm quite confident I incurred no liability to prosecution by taking a standard income exclusion that's clearly noted in IRS publication 54.
Seasonal worker at H&R Block? Impressive. As a US citizen, your global income is subject to US taxation regardless of where you live. You are on your own for the legality of your filings.
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Originally Posted by Malloric
Just because you file to recoup the excess withholding doesn't mean you didn't pay income taxes. The majority work at least part-time while about a quarter worked full-time.
Right off the tracks. The point is that about 20% of all those no-skin-in-the-gamers you so want to flog for their indigence are in fact students filing a 1040 only to recoup the withholding of taxes that they do not owe. That you could dream up some scenario in which a student actually did owe tax is not in the slightest way material. Then again, there isn't any material avenue actually open to you here, so I can understand the sloppy attempt at diversion.
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