Income Taxation

[yo mama]

Seems like either side of this issue has facts they can use point to. I posted this merely to share information. Keep it civil, people.

 

• According to the Congressional Budget Office (CBO), the ten percent of households with the highest incomes pay more than half of all federal taxes, and more than 70% of federal income taxes.

 

• According to the Internal Revenue Service (IRS), in 2009, 1,470 households with incomes above $1 million paid no federal income tax.

 

• According to the Tax Policy Center, in 2011, households making more than $1 million will pay an average of 29.1% of their income in federal taxes.

 

• Households making between $50,000 and $75,000 will pay an average of 15% of their income in federal taxes.

 

• Households making between $40,000 and $50,000 will pay an average of 12.5% in federal taxes.

 

• Households making between $20,000 and $30,000 will pay 5.7% in federal taxes.

 

• The Tax Policy Center also estimates that 46% of households, mostly low- and medium-income households, will pay no federal income taxes this year.

[SEC=UGA]

Oh, yeah, but the wealthy hold something like 1000000% of all the welath in the country and pay nothing for to keep the poor people from starving to death. They just want to keep all their money so they can park their Bentley on top of a homeless person so the tires dont get scuffed. Am I doing it right?

[Azazello1313]

see also

[geeteebee]

• According to the Internal Revenue Service (IRS), in 2009, 1,470 households with incomes above $1 million paid no federal income tax.

 

Any idea how the IRS is defining income? Is it from line 22 on the 1040?

[CaP'N GRuNGe]

And federal taxes = all federal taxes, not just income correct?

[CaP'N GRuNGe]

Let's say we all buy into the fairness argument regarding taxes and agree to a flat tax rate across the board on every dollar of income. What would that rate have to be to merely be revenue neutral, nevermind the increase necessary to get our balance sheet back in working condition?

[Azazello1313]

And federal taxes = all federal taxes, not just income correct?

 

yeah, as spelled out in my link in the other thread, taxes defined here include all federal taxes (income, payroll, estate, corporate) and all income (including cap. gains, etc.).

[Azazello1313]

Let's say we all buy into the fairness argument regarding taxes and agree to a flat tax rate across the board on every dollar of income. What would that rate have to be to merely be revenue neutral, nevermind the increase necessary to get our balance sheet back in working condition?

 

depends how many loopholes and deductions you left in place. keep them all and it would probably have to be 20-25%.

 

I think the best model for a flat tax would be to eliminate most/all deductions and credits, and replace them all with a fairly generous personal exemption (maybe 10 or 12 grand for individuals, double that for couples) and tax every dollar of income above that amount at a flat rate of, say, 25%. then the tax incidence would still be progressive, particularly where it matters most at or near the poverty level.

[Clubfoothead]

And?

[CaP'N GRuNGe]

depends how many loopholes and deductions you left in place. keep them all and it would probably have to be 20-25%.

 

I think the best model for a flat tax would be to eliminate most/all deductions and credits, and replace them all with a fairly generous personal exemption (maybe 10 or 12 grand for individuals, double that for couples) and tax every dollar of income above that amount at a flat rate of, say, 25%. then the tax incidence would still be progressive, particularly where it matters most at or near the poverty level.

 

I actually think everyone that works should pay at least a minimal amt of tax. Even if its just a few bucks.

Edited September 27, 2011 by CaP'N GRuNGe

[yo mama]

I actually think everyone that works should pay at least a minimal amt of tax. Even if its just a few bucks.

Works in concept, but not in practice - at least for the income tax. Government ends up paying a buck to collect ten cents. Sales/consumption taxes are far more effective means of collecting tax from low wage earners.

 

I've gotten to the point where I don't think anyone should have to pay more in taxes unless everyone pays more in taxes. You can't shift the burden of our economic woes one just one segment of society - it's society's burden as a whole. Here's the first six planks of my plan:

- national sales tax, which everyone pays but will disproportionately affect middle income and below;

- gradually higher rates for those with $250,000 of adjusted gross income or more ($500,000 for married couples);

- delete the timing benefit from income earned offshore - it becomes taxable currently just like everyone else's income in the US;

- Bring the estate tax exemption down to $2.5mm per person - $5 million per couple is more than fair; and

- schedule the capital gains and preferred dividends rate to return to 20% - but in two years (watch as people trigger gains now to take advantage);

- all additional tax revenue raised from these measures is earmarked exclusively to: (a) pay down the debt/reduce deficit, and ( create tax credits or similar incentives for US companies that create benefited jobs in the US.

 

Everyone will share the pain, at least until deficit is under control. And there's obviously a "cut spending" side to this equation, but that's beyond the scope of this discussion.

[Puddy]

Wouldn't any tax increase that affects the poor only create a bigger need for them needing assistance?

Edited September 27, 2011 by Puddy

[yo mama]

Wouldn't any tax increase that affects the poor only create a bigger need for them needing assistance?

It's a legitimate point. But you might raise more in tax than you create in need for additional assistance. Even if it's neutral, you take away one of the main objections "the rich" have about paying more - that they shouldn't be the only ones to sacrifice.

[TheGrunt]

Works in concept, but not in practice - at least for the income tax. Government ends up paying a buck to collect ten cents. Sales/consumption taxes are far more effective means of collecting tax from low wage earners.

 

I've gotten to the point where I don't think anyone should have to pay more in taxes unless everyone pays more in taxes. You can't shift the burden of our economic woes one just one segment of society - it's society's burden as a whole.

 

Everyone will share the pain, at least until deficit is under control. And there's obviously a "cut spending" side to this equation, but that's beyond the scope of this discussion.

I think the cut spending part is a much larger part of the equation that needs to be done first, before any plans go into motion for your suggested tax increases. Tax increases now, in the Great Recession, would further impede economic growth. We need to stop the bleeding before putting the bandaids on.

[yo mama]

I think the cut spending part is a much larger part of the equation that needs to be done first, before any plans go into motion for your suggested tax increases. Tax increases now, in the Great Recession, would further impede economic growth. We need to stop the bleeding before putting the bandaids on.

We can waste time arguing about which should be done first, or just get to work doing both. The only point in debating which single-issue approach is better to start first is to stall having to do anything. Both now.

[CaP'N GRuNGe]

Works in concept, but not in practice - at least for the income tax. Government ends up paying a buck to collect ten cents. Sales/consumption taxes are far more effective means of collecting tax from low wage earners.

 

I've gotten to the point where I don't think anyone should have to pay more in taxes unless everyone pays more in taxes. You can't shift the burden of our economic woes one just one segment of society - it's society's burden as a whole. Here's the first six planks of my plan:

- national sales tax, which everyone pays but will disproportionately affect middle income and below;

- gradually higher rates for those with $250,000 of adjusted gross income or more ($500,000 for married couples);

- delete the timing benefit from income earned offshore - it becomes taxable currently just like everyone else's income in the US;

- Bring the estate tax exemption down to $2.5mm per person - $5 million per couple is more than fair; and

- schedule the capital gains and preferred dividends rate to return to 20% - but in two years (watch as people trigger gains now to take advantage);

- all additional tax revenue raised from these measures is earmarked exclusively to: (a) pay down the debt/reduce deficit, and ( create tax credits or seimilar incentives for US companies that create benefited jobs in the US.

 

Everyone will share the pain, at least until deficit is under control. And there's obviously a "cut spending" side to this equation, but that's beyond the scope of this discussion.

 

I agree with all of this in concept but would have to see the rates.

[CaP'N GRuNGe]

I think the cut spending part is a much larger part of the equation that needs to be done first, before any plans go into motion for your suggested tax increases. Tax increases now, in the Great Recession, would further impede economic growth. We need to stop the bleeding before putting the bandaids on.

 

Just to be intellectually honest here, spending cuts also kill growth. At least those dollars spent here and not overseas.

[TheGrunt]

We can waste time arguing about which should be done first, or just get to work doing both. The only point in debating which single-issue approach is better to start first is to stall having to do anything. Both now.

I think your plan increases taxes in new areas without enough decreases in other taxes currently in place -- such that can be seen in Herman Cain's 999 plan. Once you implement a national sales tax, it'll be nearly impossible to get rid off. Wiithout guarantees that this and other taxes will get out of control, it wouldn't fly with me.

 

Now where should we start cutting? And I mean by the Trillions.

[SEC=UGA]

You guys should read the "Fairtax" Book by Boortz and Linder. It pretty much lays everything out for converting to a national sales tax. It gives you the rates, info on how pre-bates work for the poor, etc...

 

Or, go to fairtax.org

Edited September 27, 2011 by SEC=UGA

[Caveman_Nick]

You guys should read the "Fairtax" Book by Boortz and Linder. It pretty much lays everything out for converting to a national sales tax. It gives you the rates, info on how pre-bates work for the poor, etc...

 

Or, go to fairtax.org

 

I am not a fan of that. Too may ways around the tax.

 

Get rid of taxes paid by employers that are paid solely on the basis of having employees. Takes away most of the incentive to pay people under the table.

 

Establish a minimum income threshold. Under that threshold no income taxes are paid.

 

Above that threshold all income taxes are paid at a flat rate. Just pick the number that works.

 

Fixed.

[SEC=UGA]

I am not a fan of that. Too may ways around the tax.

 

Get rid of taxes paid by employers that are paid solely on the basis of having employees. Takes away most of the incentive to pay people under the table.

 

Establish a minimum income threshold. Under that threshold no income taxes are paid.

 

Above that threshold all income taxes are paid at a flat rate. Just pick the number that works.

 

Fixed.

 

Please tell me all the ways around it. Or one solid example will be fine.

[Caveman_Nick]

Please tell me all the ways around it. Or one solid example will be fine.

 

Black market good

 

Goods sold off the register tape

 

Second hand goods.

 

Unreported services performed but paid

 

just to name a few.

 

EDIT TO ADD: Sales tax is also (theoretically) a much less reliable way of collecting taxes. Real estate tax is probably the most reliable, as property ownership is stable/increasing. Income tax would follow, being dependent on employment levels. Sales tax is dependent on spending behavior, which fluctuates dramatically with economic trends.

Edited September 27, 2011 by Caveman_Nick

[TheGrunt]

You guys should read the "Fairtax" Book by Boortz and Linder. It pretty much lays everything out for converting to a national sales tax. It gives you the rates, info on how pre-bates work for the poor, etc...

 

Or, go to fairtax.org

This site makes a lot of sense to me.

[CowboyGal2011]

Black market good

 

Goods sold off the register tape

 

Second hand goods.

 

Unreported services performed but paid

 

I would gather the underground economy that would become a tax contributor would DWARF all your straw man examples by a factor of ten.

[Caveman_Nick]

I would gather the underground economy that would become a tax contributor would DWARF all your straw man examples by a factor of ten.

 

Perhaps. Go back to my first post and see that I also recommend removing any incentive for companies to pay employees under the table. That would create the same effect.