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Old 10-16-2011, 03:45 PM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,945,286 times
Reputation: 6717

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Quote:
Originally Posted by newenglandgirl View Post
Well you are one of the few well-off who have a conscience. Your soap box is a good one.

FWIW, I guess if we didn't have government providing all that stuff we'd return to the Wild West with everyone carrying guns and shooting it out in the streets...and justice being an eye for an eye...We may well return to that.
It's not so much that I have a conscience as that I hate investing in the so-called "zero interest rate environment". But lots of other people would benefit from what I'd like to see. No problem with that IMO.

People are already shooting it out in the streets in places like inner city Jacksonville (lots of drug fights - drunk fights - etc.). And other parts of the US. But they're basically killing their neighbors. Robyn
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Old 10-16-2011, 03:50 PM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,945,286 times
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Quote:
Originally Posted by GreenGene View Post
2. 9% sales tax - that would replace existing state sales tax - on everything .... food, clothing, housing, medicine, etc. I'm sure that will be welcome by the people living in states without a sales tax, like New Hampshire and Florida.
The 9% - like all other proposals for a VAT - would be on top of state sales taxes. Robyn
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Old 10-16-2011, 04:14 PM
 
Location: Forests of Maine
30,692 posts, read 49,482,998 times
Reputation: 19136
Quote:
Originally Posted by old_cold View Post
I doubt anyone would object at all to a truely fair tax if we were not well aware of what a great deal of tax money is going to.
As ridiculous as this 9/9/9 plan is, why isn't it at the very least 9/9/9/9 with the last 9 representing the reduction in government spending?
It might be thought of as selfish, but folks on small pensions would certainly be hurt by a 9% income tax.

I see others on much smaller pensions than mine, I would have to think that such a tax would be their end.
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Old 10-16-2011, 04:17 PM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,945,286 times
Reputation: 6717
Quote:
Originally Posted by markg91359 View Post
Here's my idea of a fair tax plan. Leave things the way they are except for the following changes:

1. A minimum tax requiring even people with low incomes to pay a rate of 5% regardless of the deductions and credits.

2. An increase of the rate to 40% for all persons or families earning more than $1 million per year.

3. Restoration of the inheritance tax for estates as small as $500,000. I'd like to see how much revenue this one produces. However, my thoughts are if it produced enough revenue that I'd like to use it to lower income tax rates. I'd rather tax people who got a "windfall" than I would tax people who actually earned their money.

4. An annual surcharge of $500 on every American who is 50 and older (includes me) that is specifically there to raise money for Medicare. The idea is that those who are in age approaching the time they will need Medicare should pay more for it than younger people.

5. When an elderly person dies, examine how much they paid into Medicare over their lifetime. Than, examine how much Medicare paid for their healthcare. If the elderly person has an estate, than tax the estate for the difference. All money received should be directed for future Medicare needs.

With the economy in a recession, all these taxes will have to be phased in gradually. Tax increases will slow down economic recovery. As the economy picks up, put them all into place.
I don't have much of a problem with any of this in general - but have thoughts and questions.

Would the inheritance tax apply to charities (that is one - perhaps the only - deduction that Cain leaves in place).

(Note for those of you who aren't lawyers. An estate tax is paid by the estate of the deceased and is based on the amount that the deceased has when he dies. An inheritance tax is paid by a person who receives money after someone dies - a person who receives an inheritance. There is a federal estate tax - but no federal inheritance tax. Some states have no estate/inheritance taxes - some have one or the other - and some have both.)

Instead of a $500 annual payment from people actually on Medicare - I would rather see a 5-20% co-pay on medical services that couldn't be covered by Medigap insurance or Medicare Advantage - up to perhaps your maximum of $500.

I would expand #5 to Medicaid as well. But - in the case of a surviving spouse - would only try to collect when the surviving spouse is dead.

#1 could probably be accomplished by reducing or eliminating the EIC (earned income credit) for many people. But I kind of like the idea of people actually seeing something coming out of their paychecks - as opposed to seeing a reduction in government benefits - from a psychological POV.

Two questions I have about the 40% for incomes over $1 million are what kinds of income would this apply to - and what would the effective tax rate wind up being in high tax states. I have been in 40%+ tax brackets before - but that was in a state with no income tax. If someone earns that much in a state like New York or California - I reckon you're talking about 40% federal - 10% state (and maybe extra in local like NYC) - and 3.8% for Medicare - so that's about 55%. I personally think when government(s) get more money from your work than you do - that's too much. Period. End of discussion. It is kind of a bright line - a stop sign - IMO. I know that state income taxes and the like are deductible on a federal basis - but not for AMT purposes. So the deduction really doesn't help at all. But - living in a no income tax state - I have never dealt with this tax situation. Would you leave the AMT in place?

You see - even when tax stuff looks easy on the surface - it isn't. Unless you're going to throw everything out and start from scratch. Robyn
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Old 10-16-2011, 04:38 PM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,945,286 times
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Quote:
Originally Posted by markg91359 View Post
I don't want to misunderstand you. Are you advocating replacing Social Security with some kind of self-funded retirement plan? I could see this as a supplement to Social Security. As a replacement? You must be kidding.

Case in Point.

We have a 401K plan that I just laugh at. We've had it for twenty plus years. We followed all the standard advice about investing. We never taken anything out of it. We've actually increased the amount going way above the point where the employer matches contributions.

Net result? After twenty plus years a sum of under $100,000. Why? We've had the misfortune to be investing during a time when there have been at least three recessions that I can count--including the latest mega recession.

Social Security may not pay much, but its a defined benefit. Its guaranteed. That's why no private investment plan that relies on private investments will ever be a realistic replacement. One day the people in Chile will find that out too.
Maybe people don't save enough. Perhaps we should be allowed to save more tax-free or tax-deferred during our working years - and take it out tax free at retirement age. Note that I was self-employed during most of my working years - and was able to put away big chunks of money (25% of gross earnings) into qualified pension and profit sharing plans. I invested it conservatively for decades - and now have a nice nest egg.

BTW - have you ever computed your rate of return on your contributions? If you haven't - do it and tell me what it is. Mine is relatively modest.

Note that I retired when I was about 40 - and when I started to collect SS at age 62 - I figured that my rate of return on the money I'd paid into the system (both ends) was about 7%. For most people who are paying into the system now at or anywhere near maximum payment levels - even one end of it - and who will be working until at least age 62 - they can expect their rate of return to be 0% or less. Just takes a simple financial calculator to make the computations.

Also - and this isn't mentioned as much as it should be. Most families have 2 adult wage-earners these days. So you have 2 people paying into SS. When a spouse dies - the other spouse can inherit all of the "family savings" (if that's the estate plan). But when the spouse dies - a lot of the SS money from the dead spouse is pretty much gone. SS is a really bad deal for middle or higher income families where both spouses work. Robyn
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Old 10-16-2011, 05:20 PM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,945,286 times
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Quote:
Originally Posted by JRR View Post
Under 9-9-9 someone can make a few mouse clicks on a stock trade and make $2000 and pay zero taxes because it is a capital gain. Another person has to work 200 hours at $10 an hour for that same amount, and gets taxed 9%. I guess I'm crazy, but that doesn't seem right to me.
Actually the fast mouse clicks would - if a gain - be a short term capital gain - and subject to ordinary income tax rates (not long term capital gains tax rates). Robyn
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Old 10-16-2011, 05:37 PM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,945,286 times
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Quote:
Originally Posted by forest beekeeper View Post
It might be thought of as selfish, but folks on small pensions would certainly be hurt by a 9% income tax.

I see others on much smaller pensions than mine, I would have to think that such a tax would be their end.
Well one thing to consider is whether their small pensions are their only source of income - and why.

I may be crazy - but it seems like an awful lot of people here have opted for early retirement. They are not seniors (65+). They are not even 62 (eligible for early SS). For the people who can afford it - or were forced into it as a result of disability - fine. For the people who did it voluntarily - and then ***** about everything from not having enough money to rich people not paying "their fair share" (whatever that is) - not so fine IMO.

FWIW - although I "retired" early - I spend about 20-30 hours a week doing portfolio management for me and my husband and other family members (my late FIL and my father). It is kind of like a real job - except I don't have to get dressed up and go the office in the morning. So I don't have much empathy for someone retiring early on a voluntary basis - and then bitching about money. Robyn

P.S. I am directing this message in general - not specifically to you.
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Old 10-16-2011, 05:58 PM
 
29,789 posts, read 34,889,516 times
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Quote:
Originally Posted by Robyn55 View Post
Well one thing to consider is whether their small pensions are their only source of income - and why.

I may be crazy - but it seems like an awful lot of people here have opted for early retirement. They are not seniors (65+). They are not even 62 (eligible for early SS). For the people who can afford it - or were forced into it as a result of disability - fine. For the people who did it voluntarily - and then ***** about everything from not having enough money to rich people not paying "their fair share" (whatever that is) - not so fine IMO.

FWIW - although I "retired" early - I spend about 20-30 hours a week doing portfolio management for me and my husband and other family members (my late FIL and my father). It is kind of like a real job - except I don't have to get dressed up and go the office in the morning. So I don't have much empathy for someone retiring early on a voluntary basis - and then bitching about money. Robyn

P.S. I am directing this message in general - not specifically to you.
Robyn, this is a thread in itself. When are you really retired by ability to be and when are you retired by circumstance. The line is blurred these days. It is interesting because retiring young now is perceived differently based on your life style and longevity of that life style. I know folks in all categories and those who thought they were suppose to be able to retire in their late 50's and when they got there realized it required effort on their part.
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Old 10-16-2011, 06:44 PM
 
48,516 posts, read 83,989,888 times
Reputation: 18050
One only has to look at what a VAT could bring in by taxing by spensing insteqad of reproted incoem alone. The last estiamte on losss revenues by IRS I saqww was 195 billion per year in loss revnues.One alos has to look as most plans that propose it also redcue othertax rates. i can easily see that we could see realy growth in revenies with just a consumption based tax but hsi plan goes further to portect the poor. I his plan the SS taxes would ahve to be change and i would still pay on 85% of my SS becauwse of other income.Attacking unreported income may for those who reprot income be the answer to not losing so mnay subsidises and actually paying more taxes.Mnay taxes are just apsed on indirectly ;remember.
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Old 10-16-2011, 06:54 PM
 
Location: Wisconsin
21,542 posts, read 44,060,337 times
Reputation: 15155
A consumption based tax on essentials like food, medical care, energy, is a regressive tax for low-income people who have virtually zero discretionary income. These items should not be taxed. Period.

Anyone ever notice how so many of the basic costs are the same. It seems from what I read on this board, bare bones living for one person is probably $1,000-$1,200 month. $200 food, $150 utilities, $150 transportation, $50 medical care, $500 rent, clothing/misc $150. There is a subsistence line below which no one lives well. Food should not be taxed.
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