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Old 10-31-2013, 10:40 PM   #81
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Originally Posted by imoldernu View Post
ERD50 said...

Hmmmm...
So if I earn $50K and you earn $1Million:
I'll be paying 6% of my pay for food... $3K Will you pay 6% or $60K?
I'll pay $2000 for gasoline... How much will you be spending?
The most popular national sales tax proposal contains a fairly large "prebate" that would be sent to every family, it represents the amount of tax that would be paid on purchases up to the national poverty level. This is a way to make the tax more "progressive." In effect, any expenditures made up to the poverty level are untaxed.

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So if I spend 70% of my salary on taxable items, will Jamie Dimon do the same?
Well, what would Jamie do with his earnings? If he spent it on consumable "stuff", then it would be taxed. If he chose to put it back to work in the economy (stocks, bonds, savings accounts) then it wouldn't be taxed--and would presumably be helping us all. It just requires a new mindset--it doesn't matter what you earn, it's what you spend that gets taxed.

I like the concept of a national retail sales tax, but I don't want it added to our present income tax as just another way to siphon money from the private sector to the government. And I think it would be difficult to collect, plus the high rates necessary to make it work would be a big incentive to cheating. With the income tax, there's an incentive for the payer to report the payment to the government, that's less clear in the case of a sales tax.
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Old 10-31-2013, 10:47 PM   #82
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Quote:
ERD50 said... [quotes got a little jumbled here - but this was in response to me talking about a Federal Sales Tax - taxing actual spending]
Hmmmm...
So if I earn $50K and you earn $1Million:
I'll be paying 6% of my pay for food... $3K Will you pay 6% or $60K?
I'll pay $2000 for gasoline... How much will you be spending?
My Internet and phone cost $2K or 4%... Will you be paying $40K
If my car costs $20K, will you be paying $400,000?

For a while, I had a neighbor who was earning a rather high base salary... over $600K... His spending was more than mine, but nowhere near THAT much more...

So if I spend 70% of my salary on taxable items, will Jamie Dimon do the same?

Or maybe I'm missing something... A change to Sales tax seems to be a favorite option for many members of congress.
I am certain that on average, someone earning $1M is spending much more than someone earning $50K. Now maybe they don't spend all $1M (although from the stories we read of actors and sports stars in BK, some seem to spend lots more than they make), but I don't think that matters much.

It will get spent at some point, and taxed then. And what isn't taxed is invested, and hopefully growing businesses, etc.

And the actual plans that I have read about include a 'pre-bate' of the sales tax, about equal to the current standard deduction. So that means that the $50K earner will in effect be paying low (to no? I'd need to look it up) Fed sales tax.

I suppose any real support for this in Congress means adding a sales tax on top of everything else. As I said earlier, this is more a mental exercise, I expect nothing will really change.

edit - oooops, cross-posted with samclem!


-ERD50
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Old 10-31-2013, 11:23 PM   #83
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Well, not really. All of my neighbors with similar sized homes pay 1/3-1/2 what I do in property tax. The reason is that property tax here is assessed at the time of purchase or building completion. We built. All in, we spent about $850k to buy the land and build. When completed it was assessed at a cool million. It keeps going up with CPI. When original builders and homeowners in the neighborhood started leaving due to short sales and foreclosures, homes started selling for $325k-425k. Values are back up to maybe $600-650k now, but I'm still paying twice as much as most of the neighborhood. That's fine when my home is REALLY that much more valuable, but when it is arbitrary and automatic based on original price instead of current value, that is a problem. I'd challenge mine, but word is that there are very few successful challenges around here. I don't mind paying my fair share, but we do need a better system of figuring out "fair".

R
I don't know how it works where you live but there are attorneys who will challenge you property tax for "free." If they don't succeed you pay and lose nothing by challenging. If you end up saving with the challenge the lawyer takes half the savings. Half of something is better than all of nothing.
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Old 10-31-2013, 11:34 PM   #84
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In my own case, it would hurt, as because of our financial structure, we have not had to pay income tax for the past 24 years..
What about the state income tax? I realize how it can be structured to not pay FEDERAL income tax but doesn't Illinois just have a 5% tax of income no matter if dividend, interest, etc...
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Old 10-31-2013, 11:45 PM   #85
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Rambler lives in California, and perhaps due to Proposition 13 it is difficult to raise RE taxes hence assessors do not want to let anybody get off the hook easily.

A relative of mine lived in a town in the LA area. The houses in this neighborhood were of modest size of 1,500-1,600 sq.ft, with values around $550K according to Zillow. Because of Prop.13, one house had an annual tax of $900, while its neighbor paid $3000+ $5000+. One can just browse around with Zillow on any California subdivision to see this disparity.

PS. Prop.13 became law in 1978 and written into the CA constitution as Article 13A. It was upheld by the US Supreme Court in 1992.
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Old 11-01-2013, 07:44 AM   #86
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What about the state income tax? I realize how it can be structured to not pay FEDERAL income tax but doesn't Illinois just have a 5% tax of income no matter if dividend, interest, etc...
Income?

Actually, calculation begins at the Federal Return...
Some folk, like me don't have much income... depends how your monetry situation is structured.
Back to the OP:
Quote:
By the same token, if Warren Buffet bequeathed his fortune to every member of his extended family, two generations hence, not one single person would ever have to work, contribute to society in any way, or... ever pay income taxes.
Theoretically, keeping a few Billion dollars in a large vault, and using it to sustain your lifestyle, results in NO income tx.

BTW... my "vault" is not very big!
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