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Old 12-29-2015, 08:32 AM
 
136 posts, read 304,314 times
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Quote:
Originally Posted by emm74 View Post
Mitt Romney paid an effective 14% tax rate on almost 22 million in income in 2011, based on tax returned he released while running for president. How is that the tax system working exactly how it's supposed to work? Even if it just the top 10% of of the top 1%, why is it ok that anyone making that much income pays so little of that income in taxes?
Fair enough, but why would you throw out a tax system that works exactly as intended for over 99% of citizens to make fair the top 10% of the top 1%? I don't necessarily think that it's ok for Mitt Romney to pay 14% effective rate, but my point is that you don't throw out the baby with the bathwater. And the average Joe hears about Mitt Romney and Warren Buffet and they think that is reflective of "the rich"...my point is that statistics show that these top of the top richest people are far and away an anomaly. They are not the norm.


If your beef is the top 10% of the top 1%, then enact a rule that would raise the capital gains rate for folks that earn 90% (or whatever) of their income via capital gains/dividends. That would solve the issue without overhauling the rest of the code, which works pretty well.
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Old 12-29-2015, 08:48 AM
 
136 posts, read 304,314 times
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Quote:
Originally Posted by BugsyPal View Post
Consumption and other "inescapable" taxes are far more reasonable than income taxes. For one thing they are just that, inescapable; you cannot hide money, run a cash/underground business and not pay taxes. It just comes when you purchase certain items and or own property (land).

That is just not true. Again, this is the problem with the flat/consumption tax movement - it's based on myths about the current system and narrow view of what the new system would look like. As someone who is lucky enough to have a good deal of disposable income I can give you the number one way to "hide" income from a consumption tax - don't buy anything. And who exactly has the ability to not spend all of their income? It's the people that have the most money. The working class spends everything they make (and usually more).


Take this example:


Let's say I make $200k per year as a single guy and have no desire to live a flashy lifestyle. Under the current system, let's say I'm taxed at an effective rate of 25% for a total of 50K in taxes (not counting payroll taxes). Of the 200k that I make, I only spend $50k on mortgage, groceries, vacation, etc. ($50k is a lot of money to spend in one year...even on a 200k income).


Under a "fair" consumption tax, let's say the rate is 20%. I would only pay taxes on my $50k of consumption so my total tax bill is $10k. That is an effective rate of 5% - which represents a HUGE tax cut for me.


My friend makes $60k per year and has a stay at home wife and 2 kids to support. Similar to most Americans, he unfortunately spends more than he brings in to provide for his family (e.g. $70k of spending per year). Under the current system, he likely pays around 10% effective rate, or $6k per year (not counting payroll taxes).


Under a "fair" consumption tax, with a 20% rate, my friend pays $14k of tax on his $70k of consumption. Not only did his tax bill go from $6k, to $14k, his effective rate went from 10% to 23%. Under a consumption tax, my friend pays more than me both in real dollars as well as in effective rate. That is, by definition, a regressive tax.


Quote:
Originally Posted by BugsyPal View Post

If you broaden and make the US tax code more flat you can also do away with AMT and various other means to address forcing the wealthy to "pay their fair share", that would already be baked into the cake.

Problem with this statement is the wealthy already pay their fair share (relatively speaking). They pay MUCH more in real dollars, as well as more percentage-wise, than those making less. You're combatting a problem that doesn't exist to any large degree, and in doing so creating a completely regressive tax system.
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Old 12-29-2015, 08:51 AM
 
Location: Jamestown, NY
7,840 posts, read 9,150,156 times
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Quote:
Originally Posted by emm74 View Post
Mitt Romney paid an effective 14% tax rate on almost 22 million in income in 2011, based on tax returned he released while running for president. How is that the tax system working exactly how it's supposed to work? Even if it just the top 10% of of the top 1%, why is it ok that anyone making that much income pays so little of that income in taxes?
Check your own effective tax rate. Most people pay a much lower effective tax rate than the rates for their income because of deductions, including personal exemptions.

A person making $65,000 might actually pay $5k in income tax. That's 7.6%. Another person might pay $5700 on $65k in income because of a different set of deductions. That would be 8.8%. Their tax rates would be between about 54 and 61% of Romney's 14% tax rate.

Is that "fair"? I don't know exactly. Maybe Romney gave $3 million to charity, which is not a bad thing, is it?

Is it more "fair" to tax Jane Doe at 10% of her gross income of $65k and Mitt Romney at 10% of his gross income of $22 million? That's what "flat tax" advocates want.

Is it more "fair" to tax John Doe at 10% of whatever he spends of his $24k retirement income and Mitt Romney at 10% of whatever he spends of his $22 million? Now, to make the national sales tax "progressive", people earning in wages that weren't saved (savings and investment income would be exempted) under $50k might get a 2% rebate. That's what the economist the OP cited wanted to do. Now, you tell me, what part of Mitt Romney's $22 million income do you think came from wages somebody paid him?
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Old 12-29-2015, 08:51 AM
 
1,198 posts, read 1,782,631 times
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Leave the tax code alone.

Yes the rich pay more, they also experience a better America than the poor.

We give those on the fence an incentive to have kids, but trust me those who consider the tax break before having kids are who you want having kids.

The student loan interest deduction has an income cap, so sure MD's lose that benefit and a decade of earnings, but it's a profession that still can do ok for the time being.

Capital gains are taxed twice for those who aren't just given stock options for employment, but that's ok too. I don't mind that 15%.

Sure my family pays a whole lot in taxes, but we get a whole lot of value out of the system too, and I think that's a constant throughout the US.

What would it cost you to ship a single banana from Peru if you couldn't rent a spot on an airplane? What if you had to fly it yourself? Build the runways too? Grow the banana? Own the land? Build the airplane? Make the parts? Mine the materials?

You are part of a collective, like it or not. And I dare say without fail you get out more than you put in, and you'd see this if you could look past these words and what went into making them appear on your screen.

So yes I pay taxes, and at a pretty high marginal rate, but that's a good problem to have.

Sure I react to govt incentives to save for retirement and my kids education, just as I react to many items in the tax code, but I also drive 55 in a 55 on a freeway who's funds are attached to a drinking age of 21, we all respond to carrots/sticks.
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Old 12-29-2015, 08:52 AM
 
136 posts, read 304,314 times
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Quote:
Originally Posted by Linda_d View Post
I can't stand it that so many Americans have been brainwashed into believing that they have to have a tax professional do their taxes when all they have that prevents them from using the 1040-EZ is that they have a mortgage and/or medical expenses that enables them to exceed the standard deduction. I have hired a tax pro twice in my entire working life, both times just to look over my tax return to be sure I had done some complicated stuff correctly. Otherwise, I do them myself, including Schedules A, B, and E, and I've had some complicated stuff like an installment sale of real property, gas well royalties, timber sales, etc.
It's a shame that people think they need a professional to do their taxes. The other side of that, also, is that if people spent a little more time to get informed about the way our government taxes us it would make all of us a more informed electorate. For most of us, the governments most real impact on our everyday lives is through taxation so people really should spend a sliver of time educating themselves about it and understanding, at least at a high level, our tax system. A Wikipedia search could probably take the reflexive fear of taxes from most people.
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Old 12-29-2015, 09:13 AM
 
Location: Jamestown, NY
7,840 posts, read 9,150,156 times
Reputation: 13779
Quote:
Originally Posted by BugsyPal View Post
Consumption and other "inescapable" taxes are far more reasonable than income taxes. For one thing they are just that, inescapable; you cannot hide money, run a cash/underground business and not pay taxes. It just comes when you purchase certain items and or own property (land).

When GB revised their tax structure both post WWI and WWII the government went where the money was; the landed gentry/owning classes. Income tax rates rose but so did taxes on the stuff and things the wealthy held dear and once paid pittance in taxes. Fee entail was ended along with some other trusts IIRC and death/inheritance taxes were raised. Result was the breaking up of large dynastic wealth.

If you broaden and make the US tax code more flat you can also do away with AMT and various other means to address forcing the wealthy to "pay their fair share", that would already be baked into the cake.
People evade consumption taxes all the time right now, and they've been doing so for hundreds of years. They used to evade tariffs on luxury goods by smuggling. They smuggle alcohol and cigarettes across state lines to avoid state taxes. They buy gasoline and cigarettes state tax free on Indian reservations. Merchants give cash customers discounts equivalent to local/state sales taxes.

As for this system forcing the wealthy to automatically "pay their fair share", you have a strange idea of "fair". Various politicians have claimed that a national sales tax would have to be in the 25-30% range to replace income tax revenue, so you basically raise the price of all goods and services by 25-30%. Currently, low-income seniors who get by on SS and maybe a small pension or savings don't pay any income tax, but you would make them pay 25-30% more for everything just so some millionaire didn't have to deal with the AMT. As I said, consumption taxes are just a means of shifting the tax burden down to those who can afford it least.
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Old 12-29-2015, 09:24 AM
 
Location: Jamestown, NY
7,840 posts, read 9,150,156 times
Reputation: 13779
Quote:
Originally Posted by MDrenter223 View Post
Leave the tax code alone.

Yes the rich pay more, they also experience a better America than the poor.

We give those on the fence an incentive to have kids, but trust me those who consider the tax break before having kids are who you want having kids.

The student loan interest deduction has an income cap, so sure MD's lose that benefit and a decade of earnings, but it's a profession that still can do ok for the time being.

Capital gains are taxed twice for those who aren't just given stock options for employment, but that's ok too. I don't mind that 15%.

Sure my family pays a whole lot in taxes, but we get a whole lot of value out of the system too, and I think that's a constant throughout the US.

What would it cost you to ship a single banana from Peru if you couldn't rent a spot on an airplane? What if you had to fly it yourself? Build the runways too? Grow the banana? Own the land? Build the airplane? Make the parts? Mine the materials?

You are part of a collective, like it or not. And I dare say without fail you get out more than you put in, and you'd see this if you could look past these words and what went into making them appear on your screen.

So yes I pay taxes, and at a pretty high marginal rate, but that's a good problem to have.

Sure I react to govt incentives to save for retirement and my kids education, just as I react to many items in the tax code, but I also drive 55 in a 55 on a freeway who's funds are attached to a drinking age of 21, we all respond to carrots/sticks.
Agreed. Some people seem to expect a free ride, that they should get all the benefits of being in a group but not have to pay the costs to support the group. They frequently brag how the government does nothing for them and that they're so self-sufficient ... while they're living a country that is remarkably safe, that has remarkably widespread and reliable utility systems, and that allows them a remarkable amount of person freedom to be as stupid jackasses as they want to be.
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Old 12-29-2015, 09:40 AM
 
8,170 posts, read 6,006,366 times
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Quote:
Originally Posted by freemkt View Post
According to the National Association of Realtors, 83 percent of renters would like to own a home. (They actually said this last week on their weekly radio show, Real Estate Today (retradio.com)

The fact that 0 percent of renters actually own a home suggests that tens of millions of Americans can't qualify for a mortgage.
I never said that renters don't want to own a home. I said that they have no income or lousy credit and can't. My renter falls under the bad credit category. I would love for her to buy my house but even with me giving her the downpayment, financing is an issue.
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Old 12-29-2015, 10:12 AM
 
20,577 posts, read 19,240,861 times
Reputation: 8174
Quote:
Originally Posted by Linda_d View Post
Check your own effective tax rate. Most people pay a much lower effective tax rate than the rates for their income because of deductions, including personal exemptions.

A person making $65,000 might actually pay $5k in income tax. That's 7.6%. Another person might pay $5700 on $65k in income because of a different set of deductions. That would be 8.8%. Their tax rates would be between about 54 and 61% of Romney's 14% tax rate.

Is that "fair"? I don't know exactly. Maybe Romney gave $3 million to charity, which is not a bad thing, is it?

Is it more "fair" to tax Jane Doe at 10% of her gross income of $65k and Mitt Romney at 10% of his gross income of $22 million? That's what "flat tax" advocates want.

Is it more "fair" to tax John Doe at 10% of whatever he spends of his $24k retirement income and Mitt Romney at 10% of whatever he spends of his $22 million? Now, to make the national sales tax "progressive", people earning in wages that weren't saved (savings and investment income would be exempted) under $50k might get a 2% rebate. That's what the economist the OP cited wanted to do. Now, you tell me, what part of Mitt Romney's $22 million income do you think came from wages somebody paid him?

That isn't how the government really taxes you. The government taxes you the most when it assigns a licence to someone. If you look at our economy in the last 20 years its all gone to the FIRE sector. That is why it seems neither side can make sense of it because on side does not see more of a tax burden but the other sees a middle class squeeze.

Neither of you are looking at the right place.
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Old 12-29-2015, 10:26 AM
 
20,577 posts, read 19,240,861 times
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Quote:
Originally Posted by Linda_d View Post
Agreed. Some people seem to expect a free ride, that they should get all the benefits of being in a group but not have to pay the costs to support the group. They frequently brag how the government does nothing for them and that they're so self-sufficient ... while they're living a country that is remarkably safe, that has remarkably widespread and reliable utility systems, and that allows them a remarkable amount of person freedom to be as stupid jackasses as they want to be.
Agreed on so called self sufficiency.

Here we have some empty land. Perhaps someone could explain to me the difference between what it means to have a functional society with a functional government and one that does not.
[

http://abc7chicago.com/news/city-of-chicago-selling-vacant-lots-for-$1/443991/

9234 Kildare Avenue, Skokie, IL, 60076 For Sale

I think government might be more important to certain business models.

Microsoft Intellectual Property and Licensing


The legal system isn't free. So again why wouldn't those who make money on software patents pay fees to support the system that makes them billions? Why do we need this to come from income taxes? Hunters pay for a hunting licence. People who fish also purchase a licence.
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