Two Different Perspectives on Taxes

[Maurice]

I'm going to have a record tax bill this time around. Believe it or not, I had huge capital gains last year.

[CuppaJoe]

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Originally Posted by stephenandrew .... I decided to look at my my total tax burden (federal income tax, state income tax, FICA/Medicare, and Propert Taxes) relative to my gross income (earned income, investment income---excludes capital gains/losses (all big losses this year) as all of our stocks/bonds are held in tax deferred accounts). My wife and I are employees, do not own a business, own a home (are paying it off anyway), and have two children. Nothing very fancy/complicated with our tax returns. ....

--This is why I wanted to retire ASAP.
--This was one aspect of my "patriotism" for so many years.

[landonew]

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Originally Posted by eridanus 1) If we got rid of corporate taxes or the AMT or the "hidden" taxes, we'd have to raise taxes elsewhere. Or cut services. So,

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Originally Posted by eridanus a) What other taxes would you increase to compensate for the revenue loss? Perhaps, there should be benefit taxes placed on federal entitlements. My favorite federal agency is the USPTO.... Is entirely self sufficient through its imposition of fees on those using its services. 1996 Annual Review - Additional Information Maybe this is not realistic for all government agencies, but some could definitely be handled this way. For instance, If you want to sue someone in federal court..... You pay "court costs" that are commensurate in scope with the actual cost imposed on the government for conducting the trial. Want to build a new highway? Place a toll on that SOB (excuse my French) until it pays for itself. Want to visit a park or lake which consumes government $$$?.... Gotta pay a fee just as if you were going to six flags. How about the salaries of elected public officials (i.e. senators, presidents, mayors, ext)? Perhaps their salaries should be paid by their political parties (standardized of course, $XXX,XXX regardless of political affiliation). Most of these guys aren't doing it for the money, so why pay them out of tax payer $$$. And don't get me started on federal campaign finance. Is this an answer to all the budget problems? No, but every little bit helps. And this has to be the approach. b) What services would you cut? Alot of them. Personally, I see no reason for most of the social programs. The ones that should be kept, should be reduced proportionally. Government programs run efficiently when they are funded efficiently. Additionally, education should be funded at the state level. How about SS/medicare? At 24, I would be more than willing to just pay a flat fee to not be forced to participate in it. Say $15,000, and I don't have to put in and, when the time comes, I won't be permitted to take out. I understand that my generation will have to subsidize SS, that is unavoidable. However, why not just give us a flat fee instead of forcing us to continue to participate in this Ponzi scheme? 2) Income tax is progressive for a reason. If the rich only paid on their usage or need, "fairly," then the burden would increase a lot more on the middle and lower classes. What is your point? I don't think a "progressive" tax system is in question here. While there should be a 'slope'...the current grade (or degree of slope) is entirely too steep. The current system taxes the upper-middle class at the cumulative rate (income, sales, ext.) of 50% (or more). The lower-middle class pays, essentially, a nominal tax (almost as if legislators want them to "feel" as if they are participating)..... and the lower (or underclass as I like to call them) has a negative tax burden (or in other words, are paid federal/state monies to live a life of substance).

Fact: Lower & lower-middle class Americans are ruining this country for the rest of us. They underperform in every aspect of our society. They commit more crimes, consume more public goods, and produce less capital. Hell, they even account for a disproportionate amount of litter. http://en.wikipedia.org/wiki/Litter#Who.27s_to_blame_for_litter.3F

At one time, their unskilled labor allowed them to bear a portion of their own burden (not all, but some). However, now those jobs are being outsourced (or eliminated by mechanization), and as a result the unskilled are truly becoming dead weight.

Humans are the only species on the planet that allows vastly under-performing, yet able-bodied, members of society to feast on the bounty of its hard-working producers. Many species (mammals especially) nurture their young and not-yet-developed with the hopes of a future return on their investment. Others species (primates for instance) support the old and infirm out of appreciation for their past efforts (as well as incentive for the current producers).

Humans, however, are the only species that devote precious resources to the lazy and/or incapable members of society. In fact, we encourage many of the 'genetically capable' to take the path of least resistance, and still further encourage the 'genetically incapable' to procreate rapidly and without consequence.

So, forgive those of us whose hearts don't bleed for the poor and the needy. In a country as great as ours, is it too much for us to expect them to take some degree of personal responsibility for their security and wellbeing?

[Frugality_of_Apathy]

[QUOTE=eridanus;777237]1) If we got rid of corporate taxes or the AMT or the "hidden" taxes, we'd have to raise taxes elsewhere. Or cut services. So,

a) What other taxes would you increase to compensate for the revenue loss?[/qoute]
None, I would also cut all income taxes. The only thing I would have would be tariffs. 5% in interstate commerce and 10% on international commerce.

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b) What services would you cut?

Nearly all of them. We are not supposed to have a standing army thus the constitutional provision that no money may be granted for more than two years at a time to that purpose.
Social security and medicare should be sold to any company stupid enough to buy it and made voluntary. I'd much rather buy some Aflac insurance than wait the 4 months to get denied and resubmit for disability pay from SSI. I'd get a better return on my social security contributions by buying 1.5% bonds. By removing those three things from the government I just reduced our yearly obligations by by 74%. If we stunmbled on for 8 more years just with the cut programs and noit adjusting the taxes our debt would be paid off and we could then reduce our income by 82% instead of just 74%. All while still providing every other program out there, most of which should be cut. Quibbling about a couple hundred million dollar programs is pointless when they are tossing 1.4 trillion dollars out the window on non-constitutional behemoths.

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2) Income tax is progressive for a reason. If the rich only paid on their usage or need, "fairly," then the burden would increase a lot more on the middle and lower classes.

Maybe McDonalds should be collecting most of their money from those fatcats who have the most money and never eat there?

I mean just because you never use or benefit from a service doesn't mean you shouldn't pay more than the person that does use it right?

[landonew]

[quote=Frugality_of_Apathy;777655]

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Originally Posted by eridanus 1) If we got rid of corporate taxes or the AMT or the "hidden" taxes, we'd have to raise taxes elsewhere. Or cut services. So, a) What other taxes would you increase to compensate for the revenue loss?[/qoute] None, I would also cut all income taxes. The only thing I would have would be tariffs. 5% in interstate commerce and 10% on international commerce. Nearly all of them. We are not supposed to have a standing army thus the constitutional provision that no money may be granted for more than two years at a time to that purpose. Social security and medicare should be sold to any company stupid enough to buy it and made voluntary. I'd much rather buy some Aflac insurance than wait the 4 months to get denied and resubmit for disability pay from SSI. I'd get a better return on my social security contributions by buying 1.5% bonds. By removing those three things from the government I just reduced our yearly obligations by by 74%. If we stunmbled on for 8 more years just with the cut programs and noit adjusting the taxes our debt would be paid off and we could then reduce our income by 82% instead of just 74%. All while still providing every other program out there, most of which should be cut. Quibbling about a couple hundred million dollar programs is pointless when they are tossing 1.4 trillion dollars out the window on non-constitutional behemoths. Maybe McDonalds should be collecting most of their money from those fatcats who have the most money and never eat there? I mean just because you never use or benefit from a service doesn't mean you shouldn't pay more than the person that does use it right?

Thank you for writing. That last quote made my day.

[Independent]

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Originally Posted by Rustic23 ERD50 I think we are in agreement as to hidden taxes. I will not vote for any politician that talks about raising Corporate Taxes, as if we don't pay those. Either the politician is stupid or deceitful. Either way, they do not get my vote.

Interesting. Dex also says that Corporate income taxes are paid by consumers. The CBO (here: http://www.cbo.gov/ftpdocs/88xx/doc8...alTaxRates.pdf)
assumes they are paid by stockholders (really, all capital owners). But in a separate research paper (which I can't find right now) a couple analysts say the corporate tax is split 70/30 between workers and owners.

I think the workers/owners split is the best view.

Note that Table 1 in the link provides a good overview of the CBO's view on ratios of total taxes to total income by quintile.

[Rustic23]

I can see why the CBO would assume that. Do they also assume that stockholders pay sales tax? I think they would be laughed at if they did. Business seeks a return on investment. Stock holders seek a return on investment. Corporate taxes are an expense just like everything else and must be included in the cost of the product or service being sold. Where does the money come from? The people that buy there products, just like sales tax.

You can dress a pig up, but it is still a pig! And, people pay taxes.

[OAG]

Who is going to pay BAC and CITI, since the dividend is virtually 0 and the stock price hovers around $5 and the capitalization, if they payback the taxpayers is also 0 or -$?

What about companies that do not have stock (Privately Held)?

Companies IMHO "price in" taxes to the product.

[ERD50]

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Originally Posted by Independent Interesting. Dex also says that Corporate income taxes are paid by consumers. The CBO (here: http://www.cbo.gov/ftpdocs/88xx/doc8...alTaxRates.pdf) assumes they are paid by stockholders (really, all capital owners). But in a separate research paper (which I can't find right now) a couple analysts say the corporate tax is split 70/30 between workers and owners. I think the workers/owners split is the best view. Note that Table 1 in the link provides a good overview of the CBO's view on ratios of total taxes to total income by quintile.

Are you going to accept financial information from people who don't know how to balance a "checkbook", or some random internet poster?

Here is my simple (but fairly accurate, I think), take on it,

For simplicity, let's say that if a business can't make a 10% profit they will look to put their efforts elsewhere. So, they need to charge $110 for something costing them $100 to produce (including paying their payroll, dividends, etc, etc, etc). If the govt imposed a tax of 50% on profits, then they would need to charge $115 to make that same $10 after-tax profit.

So I don't see how shareholders, or laborers are *directly* affected. Of course there are secondary effects. At $115, they will sell fewer products than they would at $110. But again, if you figure the tax is collected somewhere along the line, it could also mean that w/o that corp tax, people would have less money to spend, so that might equal out sales.

Bottom line, it seems to me that the corp taxes are paid by the consumers, with the corp just acting as a "conduit" for that money. Another side effect is that increased corp taxation makes products less attractive overseas, which could hurt sales. Of course, that gets offset to a degree by having to collect those taxes domestically.

But I would think we would be better off producing more stuff to sell, than to just tax what we produce more. If we aren't creating value, everything else is just a shell-game, no?

-ERD50

[eridanus]

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Originally Posted by landonew Fact: Lower & lower-middle class Americans are ruining this country for the rest of us. They underperform in every aspect of our society.

They probably built your apartment, senor.

As for the rest of that tirade, thankfully there are enough bleeding hearts to balance out the heroic and independent John Gaults who are so prevalent in our society.

It's time for Keynesian economics again.



Edit: I should say that some of your ideas are good. Toll roads are something to be considered. I won't get SS either but how do we ensure that if you've "bought out" you won't come back in 40 years? Do we just say, "Tough!", and put you in a debtor's prison? Because we don't want any elderly market failures haunting the streets.

Litter...'Prototype research by the state of Texas "profiled" litterers being males, youth under age 25, smokers, and frequenters of bars, parties and fast food restaurants.' You're under 25 and go to bars, right? Hmm. You should be paying more for litter removal than the rest of us!

"Men, youth, rural dwellers and live-alone peoples litter more than women, seniors, urban dwellers and multi-person households." I see nothing in this wiki about the poor littering more per capita.

[eridanus]

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Originally Posted by Texarkandy Reagan already did that in 1984. Would you cut those for military retirees also? Have you any idea how much of the federal budget federal pensions & retiree health benefits represent? (6% - and that includes military veterans) Where Do Our Federal Tax Dollars Go? Perhaps instead we should consider cutting things that are not akin to contractual obligations to employees & do not destroy federal employees faith & trust in their employer - causing them to go to higher paying positions in the private sector & being replaced by civil servants with the morals & work ethic of civil servants in Mexico. If you really want to cut federal expenses related to employees - let's cut the number of departments & employees. Ummm, ok now - what was this thread about?

It was a joke but it's obvious we found a sacred cow.

[Maurice]

We should start side bets on when this thread gets moved to the soapbox.

[Frugality_of_Apathy]

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Originally Posted by Maurice We should start side bets on when this thread gets moved to the soapbox.

I'll bet everything I have against it.*





*assuming the moderators don't decide to reopen the soapbox just to put this thread in it.

[dex]

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Originally Posted by Independent Interesting. Dex also says that Corporate income taxes are paid by consumers. The CBO (here: http://www.cbo.gov/ftpdocs/88xx/doc8...alTaxRates.pdf) assumes they are paid by stockholders (really, all capital owners). But in a separate research paper (which I can't find right now) a couple analysts say the corporate tax is split 70/30 between workers and owners. I think the workers/owners split is the best view. Note that Table 1 in the link provides a good overview of the CBO's view on ratios of total taxes to total income by quintile.

Corporations are pass through entities.
They incur expenses - includes taxes
Collect revenue for what they sell
Results in a profit or a loss.
The people who buy their product pay the taxes as they are included in the purchase price.
The taxes a corporations pays is similar to that of an individual - from real estate taxes to social security. All the taxes a corporation pays are regressive taxes as the rich and poor pay the same amount of taxes which are included in what they purchase. Rich and poor pay the same amount for a loaf of bread in the supermarket.

[Maurice]

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Originally Posted by Frugality_of_Apathy I'll bet everything I have against it.* *assuming the moderators don't decide to reopen the soapbox just to put this thread in it.

I'm sure if I offer them half of what you have I could have it opened right away...

[stephenandrew]

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Originally Posted by Maurice We should start side bets on when this thread gets moved to the soapbox.

LOL--never intended for this to move in this direction

[Texarkandy]

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Originally Posted by Frugality_of_Apathy I'll bet everything I have against it.* *assuming the moderators don't decide to reopen the soapbox just to put this thread in it.

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Originally Posted by Maurice I'm sure if I offer them half of what you have I could have it opened right away...

They might want to know if you are talking about "pre-tax" or "after-tax" before accepting that offer

[Frugality_of_Apathy]

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Originally Posted by Maurice I'm sure if I offer them half of what you have I could have it opened right away...

Don't be so sure, right now my largest asset is debt as technically my house is worthless until the bathroom is remodeled.

[NW-Bound]

My Libertarian friends with whom I often discuss politics got really bent out of shape on progressive taxes. I, who considers himself an enlightened-self-interest individual, think that a mildly progressive tax is good to build or maintain a pleasant society for me to live in.

The above said, I can see why some people have the attitude of "socking it to the rich". When they say that, they may not be thinking about people who work to earn a living like the majority of the forum members here. With a progressive tax, the harder or longer we work, the less compensation per hour we bring home. My pay per hour is going way down once I pass the comfortable cost-of-living level. What incentive is there for me to toil past that level? For people like ourselves, whose income is more or less proportional to our effort, a straight tax would be fair, I think. Of course, the pay scale of $X/hr varies with the individual's knowledge, skill, and experience.

The problem arises because there are so many people at the very top who may not deserve their pay. We all know of CEOs and Wall-St type who pocket tens or hundreds of million of dollars for screwing their shareholders and taking down our economy at the same time. Haven't you all been following the news?

Because we have no way of telling who deserves such high compensation, we decide to tax them all heavily. But two wrongs do not make it right!

I do not know how this problem can be solved. I don't want the government to set limits on private company compensations, but corporate governance in Corporate USA is a joke. Just today, Obama was speaking out about how the WallStreeters awarded themselves with $18.4 BILLION in 2008. And I thought these guys should thank their lucky star that we no longer have public torture and execution.

Obama slams Wall Street on bonuses - U.S. business- msnbc.com

Even when no shenanigan was involved, Taleb in his "Black Swan" book made a very interesting point about how financial rewards are distributed in modern society. Nowadays, because of transportation and communication advances, we tend to have the phenomenon of "winner takes all". The top singers, actors, ball players, or what have you, take 99% of the prize. There's nothing left for the runner-ups. And in many cases, it is disputable whether the top recipient is really that much better, or it is simply a matter of dumb luck. I am sure many of us know the story behind MSDOS vs. CPM86.

In short, I don't know how we are going to solve this problem of "unfair" income inequality. As much as I hate socialism, I believe the current system of capitalism as we know it is definitely not what Adam Smith had in mind.

[dex]

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Originally Posted by NW-Bound My Libertarian friends with whom I often discuss politics got really bent out of shape on progressive taxes. I, who considers himself an enlightened-self-interest individual, think that a mildly progressive tax is good to build or maintain a pleasant society for me to live in.

Take a look at Hong Kong - they have an almost flat tax system - max rate 20%. Very few deductions. The people there are very pleasant.

The exchange rate is apx 8HK$ = 1US$

Hong Kong Taxation

These progressive rates were:

• Nil to HK$30,000 - 2%
• HK$30,000 to HK$60,000 – 8%
• HK$60,000 to HK$90,000 – 14%
• HK$90,000 upwards – 20%

Tax rates are extremely low by OECD standards. (See below for further details). Taxation case law is minimal since the low tax rate means that the costs associated with challenging a decision of the revenue authorities usually outweigh any monetary gain.

• Taxes are levied according to the "territorial principle" meaning that taxes are only levied on income "derived from or arising in" Hong Kong and not on income sourced outside the Territory.
• A number of taxes that exist in most jurisdictions do not exist in Hong Kong. Thus there are no capital gains taxes, no withholding taxes, no sales taxes, no VAT, no annual net worth taxes and no accumulated earnings taxes on companies which retain earnings rather than distribute them. In the long term it is intended to completely phase out stamp duty on the sale and issue of shares and securities and to reduce direct taxes further.