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Old 02-27-2013, 09:09 AM   #41
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I don't disagree, but this thread seems to be drifting away from having much to do with FIRE and it's NOT even the FIRE Related Political Topics forum, this is FIRE and Money.

Believe me, there are plenty of political issues for us to discuss, but we're supposedly confined to FIRE related here. Very hard to call indeed. YMMV
While I agree with the premise of keeping politics out of this forum, it seems that more and more, the political world has a direct (and often dire) impact on those who are FIRE.

It is getting harder to keep politics out of the conversation when so much of our future is being decided within the political arena. Selective memory, maybe, but I don't recall an era when so much of my FI world was being decided in DC.
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Old 02-27-2013, 09:11 AM   #42
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By all means, send in all you want in donation to the US Treasury. Do you need the address?
The notion of whether an individual should donate to the US government is a little like the prisoner's dilemma problem. If everybody sacrificed a little and paid more taxes to the government we'd be much better off w.r.t to deficits, but if each person is left to their own devices the tendency is for everyone to defect (i.e., no player has anything to gain by changing only his own strategy unilaterally -- see Nash equilibrium - Wikipedia, the free encyclopedia )
I keep hearing this response to voluntary donations to the Feds, that 'everyone needs to do it', no one can make a difference on their own.

But how come it doesn't work that way with other voluntary donations? Most of us have donated to Red Cross, Salvation Army, Heifer and/or others, and we didn't need a law that forced the majority to donate to that same charity. How's that work?

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Old 02-27-2013, 09:18 AM   #43
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FYI the 50% paying no taxes is a myth and the actual number is closer to 10% (for federal taxes)
Who Doesn't Pay Taxes? - NYTimes.com

This is a stawman when talking about taxes... payroll taxes and most all excise taxes are spent on specific items... payroll taxes on SS and Medicare, gas tax on bridges and roads etc. etc..

So, the percent of people that do not pay federal income taxes due to IEC and other credits IS close to 50%... and this is the money that pays for most everything that people think of as gvmt... military, education, law enforcement, judiciary etc. etc...
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Old 02-27-2013, 09:21 AM   #44
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Massachusetts has a check box on your taxes where you can pay the old, higher income tax rate.

This was put in place because a lot of folks claimed they wanted to pay the higher rate ..."for the children" as we like to say here.

IIRC out of over 3,000,000 returns only 1000 have done so, contributing less than $200K to the coffers.

Local joke: "if they had a box I could check for my neighbors to pay more taxes......."
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Old 02-27-2013, 09:32 AM   #45
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If we avoid characterizing the views of others in a negative manner and stick to our opinions the thread is more interesting, and also likely to stay open longer.
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Old 02-27-2013, 11:25 AM   #46
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So why not just ignore the thread? Other people may wish to discuss, and I don't see any harm in it, it's all been civil. And certainly the amount that the govt decides to support various activities will affect our taxes, and that affects FIRE. The deeper they have to dig, the more they will look at things like taxing Roths, means based SS adjustments, etc.

I suppose the thread could be moved, I have no view on that as I rarely bother to notice which sub-forum a thread is in, I generally start at the 'portal', that mixes them all in, which is fine for me.

-ERD50
+1 One of the occasional frustrations that I have with these boards is that great dialogues that dance near politics have been closed too soon IMHO. I appreciate the mods discretion in this case. As long as posts are respectful and civil, I like the exchange of views and ideas even if I vehemently disagree with them (like health care should be free and university should be free or heavily subsidized).

And like ERD50, I focus on the portal and pay no attention to what categorization a post is in.

Good stuff.
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Old 02-27-2013, 11:32 AM   #47
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Tax unit?

The first step in oppressing people is to dehumanize them.
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Old 02-27-2013, 12:10 PM   #48
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This is a stawman when talking about taxes... payroll taxes and most all excise taxes are spent on specific items... payroll taxes on SS and Medicare, gas tax on bridges and roads etc. etc..
And to lump SS taxes into the mix greatly obfuscates things. For those on the lower end of the income scale, the benefit formula for SS is very favorable. Is it really a tax if the net expected return is positive?
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Old 02-27-2013, 12:15 PM   #49
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And to lump SS taxes into the mix greatly obfuscates things. For those on the lower end of the income scale, the benefit formula for SS is very favorable. Is it really a tax if the net expected return is positive?
I will say yes, it is a tax... sure, the expected return is positive, but like my dad who died at age 64 some people do not get it...

Also, the pmt is likely to go down in the future, so again a tax...
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Old 02-27-2013, 12:17 PM   #50
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If we avoid characterizing the views of others in a negative manner and stick to our opinions the thread is more interesting, and also likely to stay open longer.

Yes, thanks for keeping it open... as others have mentioned it is a good discussion.... I actually learn things on these kind of threads and get disappointed when some of the good ones close...
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Old 02-27-2013, 01:02 PM   #51
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Giving all our money to the "gummit" (even said for effect) seemed a little far afield, but OK, I was wrong - no biggie. Carry on...
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Old 02-27-2013, 01:07 PM   #52
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I suppose it does become political to an extent because we are no longer speaking of personal strategies (e.g., the 4% rule or our own AA) or what we spend our money on (budgets). Instead, we are arguing about what is "fair" or "right" or "good" or even "equal". These value judgements nearly always lead to politics (or religion).

I think the reason such "political" discussions get out of hand is that those of us who disagree begin to assign moral values to our arguments. If there were some way to argue the actual merits of certain strategies (e.g., how DO we solve the health care crisis?) we wouldn't go off track as often. If we start with the assumption that ALL of us (well, 97%) want adequate, affordable health care for all, maybe we could argue about how to get there. Unfortunately, the problem is so complex, we fall back on our personal opinions of "right and wrong". If we disagree, we make the assumption that the other person is "wrong" or even "evil" instead of that s/he has a different opinion of how to get to the same place.

Oh well, I do love bacon YMMV
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Old 02-27-2013, 09:11 PM   #53
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Like I said, what one thinks should be provided free by the government and what is fair are his personal opinions, so do not foist your fair share concept on someone else.
Well this is a discussion board and part of what make discussions interesting is the ability to talk about different viewpoints. Even ones that we disagree with. It would be very boring if everyone had the exact same opinion.


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That example in Boglehead was hypothetical and heavily relied on many deductions and the mathematics practically screamed "torture". To get to a 15% tax rate the couple had a $44000 401k contribution on a 190k salary, $12000 mortgage interest deduction, maximum capital loss carried forward, $8000 charitable donation, and tuition credits etc.
None of the deductions are particularly esoteric or rare. And I as said, my personal tax returns are not hypothetical and I'm paying relatively low tax rates (~20% including federal, state, property, payroll).


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they cited examples that entailed a fair bit more taxes paid, even for people with much lower income than the couple with the hypothetical 200k income.
Sure I have no doubt that many people pay more in taxes at the same income level.
I think this is part of the problem that because of so many deductions you can have people with very high income paying low rates. This goes back to the motivation in the article posted by the OP (cap deductions for high income earners) and also various ideas discussed in the media before the election.

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this thread seems to be drifting away from having much to do with FIRE and it's NOT even the FIRE Related Political Topics forum, this is FIRE and Money.
I think the original thread title of "What else can they take away?" puts the topic more in the Fire & Politics arena than Fire and Money.


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I keep hearing this response to voluntary donations to the Feds, that 'everyone needs to do it', no one can make a difference on their own.

But how come it doesn't work that way with other voluntary donations? Most of us have donated to Red Cross, Salvation Army, Heifer and/or others, and we didn't need a law that forced the majority to donate to that same charity. How's that work?
That's a good question. But if you went and asked those voluntary organizations would they say that donations were sufficient to meet their needs? I know this isn't really fair because nobody says their budget is enough. Realistically though, people don't have positive attitudes toward the government and I think voluntary donations would be way too low.

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So, the percent of people that do not pay federal income taxes due to IEC and other credits IS close to 50%...
The quote I was responding to ("those of us left in the 50% who actually still pay taxes") didn't distinguish between the various types of taxes. Money is fungible so does it really matter what bucket it goes into as long as they are filled?

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I suppose it does become political to an extent because we are no longer speaking of personal strategies (e.g., the 4% rule or our own AA) or what we spend our money on (budgets). Instead, we are arguing about what is "fair" or "right" or "good" or even "equal". These value judgements nearly always lead to politics (or religion).
Good point. When I said "fair" I was speaking about my personal feelings and I certainly don't expect everyone to agree with me. And I don't think worse of anybody if they draw their own "fairness line" at a different point.
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Old 02-27-2013, 09:45 PM   #54
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Well this is a discussion board and part of what make discussions interesting is the ability to talk about different viewpoints. Even ones that we disagree with. It would be very boring if everyone had the exact same opinion.

Good point. When I said "fair" I was speaking about my personal feelings and I certainly don't expect everyone to agree with me. And I don't think worse of anybody if they draw their own "fairness line" at a different point.
That was exactly my point. You are certainly entitled to your own value system and opinions, and to tell everyone your preference, particularly in a discussion board such as this. I was just objecting to the adding the judgement "fair" to your comment. Like you yourself say, it is your personal feeling and judgement, and until you said directly just now, adding that evaluation to your opinion without qualification implies others who have a different take are unfair.
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Old 02-27-2013, 10:35 PM   #55
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Actually I am saying that I think certain policies are fair/equitable/reasonable and others are not. My belief is much stronger than a preference and it is a judgement call. There's simply no way to have a discussion about this if we don't advocate for or against certain positions. We need a term to label what we see as a desirable policy and "fair" seems as good as any.

What I expect to happen is for folks to say I disagree with you (or agree as case may be) and say i think alternative X,Y,Z is fairer/better/superior policy and here's why. What I don't expect is for folks to take it as a personal attack because we disagree on what policy we think is best.
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Old 02-28-2013, 04:18 AM   #56
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That's all fine-and-good, photoguy, but in the end, it is quite difficult to see happen in reality. The pursuit of FI can be undertaken devoid of morality, aiming for whatever is best for one's self and one's own - period. That's a valid perspective which people are entitled to hold to. On the other hand, many folks temper the pursuit of FI by discounting the value of actions that might serve them well, personally, but only at the expense of something vital - in effect, their humanity. Given that, the only way to achieve the manner of interchange you described is to establish a general consensus that the practices of Scrooge and Gandhi, and of everyone in between, are equal in regard.
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Old 02-28-2013, 07:56 AM   #57
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Is that better or worse than being called "headcount?"
There's also the companion word when you have an open position - "backfill". To me that word evokes the image of a backhoe filling a hole in the ground. I'll let you guess what (or who) is in the hole.
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Old 02-28-2013, 08:21 AM   #58
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None of the deductions are particularly esoteric or rare. And I as said, my personal tax returns are not hypothetical and I'm paying relatively low tax rates (~20% including federal, state, property, payroll).
Just the little that I see for the example, it is not that typical...

What income level do you have to get this 20% I know that my boss pays about 27% just in federal taxes... I, on the other hand pay close to 6% due to deductions and education credits... (it will go up to about 13% when I lose some of these credits)..


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Sure I have no doubt that many people pay more in taxes at the same income level.
I think this is part of the problem that because of so many deductions you can have people with very high income paying low rates. This goes back to the motivation in the article posted by the OP (cap deductions for high income earners) and also various ideas discussed in the media before the election.
One of the problems that I see with people that talk about how someone who makes big money pays 'little' taxes... is that the gvmt thought that giving these breaks were a good investment.... again, as an example I will use my boss.... he spent money on research so he could get a research credit... but guess what? The AMT got in the way... he has over $60K of credits that he can not use... so he stopped doing this kind of research... because he can not use this tax break, people are no longer working...

Also, itemized deductions ARE capped for high income earners... the example given had them reducing their taxable income prior to it even becoming 'wages'.... that is a whole different ballgame than capping deductions...

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The quote I was responding to ("those of us left in the 50% who actually still pay taxes") didn't distinguish between the various types of taxes. Money is fungible so does it really matter what bucket it goes into as long as they are filled?
When most people say 'taxes', they are talking about income taxes... and for gvmt accounting, yes it does matter which bucket it goes into...
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Old 02-28-2013, 10:32 AM   #59
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.....The quote I was responding to ("those of us left in the 50% who actually still pay taxes") didn't distinguish between the various types of taxes. Money is fungible so does it really matter what bucket it goes into as long as they are filled?....
I think it is very different. IMO SS "taxes" are more premiums to a government mandated life insurance/disability insurance/retirement pension program than a tax. If you die, your dependents get benefit payments; if you become disabled, you get benefit payments; if you live to retirement age, you and your spouse get pension benefits. One way or another you get something for what you contributed (and it may be much more or much less than what you contributed, depending on your circumstances, so it has an insurance angle to it in that risks are pooled).

With income taxes the "benefits" are much less direct and much more shared (national defense, infrastructure, etc).
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Old 02-28-2013, 09:27 PM   #60
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Just the little that I see for the example, it is not that typical...

What income level do you have to get this 20% I know that my boss pays about 27% just in federal taxes... I, on the other hand pay close to 6% due to deductions and education credits... (it will go up to about 13% when I lose some of these credits)..
I agree it's probably not the typically case, but I don't think it's that rare either. Just imagine all of the two income couples in CA with a huge mortgage and property tax deduction and also maxing out their 401ks. It would be even easier states like WA.

I also suspect that once you get into the very wealthy segments, it becomes relative easy because of the low rates on investment gains/income.


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One of the problems that I see with people that talk about how someone who makes big money pays 'little' taxes... is that the gvmt thought that giving these breaks were a good investment....
I think many of these deductions are good investments in the sense they are popular, but I'm not sure that folks are always better off in the long run. For example, does increased funding for student loans help make a college education affordable? or it does it simply lead to price inflation?


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When most people say 'taxes', they are talking about income taxes... and for gvmt accounting, yes it does matter which bucket it goes into...
I think when people say 'taxes' they mean anything they have to pay to the government (i.e., income, property, sales, payroll). Otherwise we wouldn't need the term "income tax".

The statement has much less impact if we say 50% paid no federal income tax but still paid payroll, property, and sales taxes.
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