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Looks like the 2 top brackets will get a 3-5% increase but many in those brackets and lower will feel the effects of the Alternative Minimum Tax if the threshold is not changed.
I am not a financial professional, and a lot of this escapes me, but I have a simplistic question about these taxes, as well as Social Security.
I cannot fathom why the highest tax rate starts at $375,000. It seems to me that in these days, people who are making $350K-$500K aren't REALLY that much better off than those making $150K. Why aren't there further tax brackets, going up the chain? It would make a lot more sense to me, if there were higher tax brackets for those who earn more than $1M, then higher for $2M, and so on. Why lump people who are "HENRYs" (see Are you a high earner but not rich yet? Higher taxes ahead - Oct. 26, 2008) in with those who are TRULY rich ... those who don't even need to work to have high earnings?
Similarly, the past administrations have spoken about "fixing" Social Security. In MY simple mind, the easiest "fix" would be to get rid of the ceiling altogether, and have everyone pay a percentage for every dollar they earn. Why stop at a bit over $100K per year? Of course, this would only have a negative impact on the highest earners ... but isn't this where the system falls apart?
I am not a financial professional, and a lot of this escapes me, but I have a simplistic question about these taxes, as well as Social Security.
I cannot fathom why the highest tax rate starts at $375,000. It seems to me that in these days, people who are making $350K-$500K aren't REALLY that much better off than those making $150K. Why aren't there further tax brackets, going up the chain? It would make a lot more sense to me, if there were higher tax brackets for those who earn more than $1M, then higher for $2M, and so on. Why lump people who are "HENRYs" (see Are you a high earner but not rich yet? Higher taxes ahead - Oct. 26, 2008) in with those who are TRULY rich ... those who don't even need to work to have high earnings?
Similarly, the past administrations have spoken about "fixing" Social Security. In MY simple mind, the easiest "fix" would be to get rid of the ceiling altogether, and have everyone pay a percentage for every dollar they earn. Why stop at a bit over $100K per year? Of course, this would only have a negative impact on the highest earners ... but isn't this where the system falls apart?
Agree with the ceiling on SS earnings..but that wouldn't totally fix the problem.
One way that you could "fix" the predicted SS deficit is to tax the gains off capital gains, ie sale of stocks, mutual funds.
Just bump up the short term gains up 5%. (more incentive then to make the gains longer
I am not a financial professional, and a lot of this escapes me, but I have a simplistic question about these taxes, as well as Social Security.
I cannot fathom why the highest tax rate starts at $375,000. It seems to me that in these days, people who are making $350K-$500K aren't REALLY that much better off than those making $150K. Why aren't there further tax brackets, going up the chain? It would make a lot more sense to me, if there were higher tax brackets for those who earn more than $1M, then higher for $2M, and so on. Why lump people who are "HENRYs" (see Are you a high earner but not rich yet? Higher taxes ahead - Oct. 26, 2008) in with those who are TRULY rich ... those who don't even need to work to have high earnings?
Similarly, the past administrations have spoken about "fixing" Social Security. In MY simple mind, the easiest "fix" would be to get rid of the ceiling altogether, and have everyone pay a percentage for every dollar they earn. Why stop at a bit over $100K per year? Of course, this would only have a negative impact on the highest earners ... but isn't this where the system falls apart?
Because the politicians work for the rich. It is not about solving the problems, it is about the top 1% getting the lions share of the pie.
The first and foremost problem is that we don't really pay any taxes. Seriously, what's your gross income and how much taxes do you pay? After my tax accountant goes through it, I end up paying way less than 5% on my gross income. I paid more in taxes when I was a college student making a measly $21/hr.
The tax code let's us get away without paying taxes. That's the problem.
The first and foremost problem is that we don't really pay any taxes. Seriously, what's your gross income and how much taxes do you pay? After my tax accountant goes through it, I end up paying way less than 5% on my gross income.
I come to about the same.
I would gladly pay 20% of my gross income towards income, social security and medicare taxes in exchange for a very simple tax return process, no deductions, no credits, no complicated formulas and myriad forms to learn and fill out.
And maybe, just maybe, we'd have better real social services like public transportation, more energy-efficient zoning and education, including preventive health-care education (like teaching people how to eat right and do a little exercise).
But that will never happen because it would put hundreds of thousands of IRS employees, accountants and lawyers out of business, forcing them to do something actually productive rather than sucking off the production of those who do work that actually adds value to the economy.
Not to mention it may end subsidies to oil & gas and car companies, reduce business for pharmaceutical companies and doctors, and help remedy the sheer general idiocy that is necessary so that a critical mass of people do not question and move against the prevailing system.
Probably even more important than that, since the tax laws are infinitely more complicated than the effective tax rate is onerous, it would deprive the powers that be, and their minions in the bureaucracy, with the legal excuse to persecute any citizen should the need arise on a whim for political or simply selfish material reasons.
The first and foremost problem is that we don't really pay any taxes. Seriously, what's your gross income and how much taxes do you pay? After my tax accountant goes through it, I end up paying way less than 5% on my gross income. I paid more in taxes when I was a college student making a measly $21/hr.
WE?!?!?!? Wow! Lucky YOU! How's it feel to get your roadways, fire and police protection, and everything else "for free"? And you do this year after year without the slightest pang of guilt? Now THAT would be an amazing feat I could never master.
To briefly answer your question, I wind up paying about 28% to Federal and State Income taxes. Not everyone is being a leach on society.
Quote:
Originally Posted by NJBest
The tax code let's us get away without paying taxes. That's the problem.
I guess it IS, as long as there exist people who will take advantage of them. And I guess that's why they were written the way they are. So sad, really!
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Now THAT would be an amazing feat I could never master. 
