Join Early Retirement Today
Closed Thread
 
Thread Tools Search this Thread Display Modes
Old 12-09-2010, 12:28 PM   #141
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 1,012
Quote:
Originally Posted by ziggy29 View Post
I don't think the huge hole in the budget can be completely fixed with tax increases alone or with spending cuts alone. Well, they could be, but I think the economic impact of that magnitude of tax hike or spending cuts would be devastating.

It needs to be tax hikes AND spending cuts
i agree that we need spending cuts and tax hikes but i think that your implication that this will be less devastating than doing it with either of them separately is incorrect. the hole we have dug is as big as it is however we choose to fill it and tax increases and spending cuts are both just ways for coming up with the money to fill said hole so the devastation should be about the same.



Quote:
Originally Posted by ziggy29 View Post
the pain needs to be broad-based and shared fairly amongst all of us.
please see my above response on fair.
__________________

__________________
jdw_fire is offline  
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 12-09-2010, 12:31 PM   #142
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,265
Quote:
Originally Posted by Gone4Good View Post
A better explanation is that tax rates don't matter as much as we've all been lead to believe.
Agreed, and isn't that what I said? Tax rates are funny numbers, your AGI is manipulated by tax code (municipal bonds for example). What we should look at is actual tax collections.

edit/add: Anyway, my real point is that there is no doubt in my mind that increasing taxes is a de-motivator for a business person to invest and take risk, and those things create jobs. I'll stand by that. I've also said many times, I don't know where we are on the Laffer curve - perhaps increased tax rates would provide more revenue than would be offset by lower investments. I don't know how we can know that. But any discussion of tax rates is pretty meaningless with all the complexities in the tax code.

-ERD50
__________________

__________________
ERD50 is offline  
Old 12-09-2010, 12:38 PM   #143
Thinks s/he gets paid by the post
 
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 3,139
Quote:
Originally Posted by SunsetSail View Post
You are failing to take into account very high corporate level income taxes, state income taxes, state and local sales and use taxes, and property taxes. Add these to the federal level marginal tax rates and you will get a much different picture.
I pay 39% max marginal tax rate on regular income. Many other Canadians pay 46-48% at the margin. Hit this at about $120k per year. We also pay VAT rates ranging from 5-14% on almost all purchases. Also property taxes. I pay about $17k per year on about $3mm in real estate. The only benefit I can offset this with is lower health care expenses. Our corporate tax rates are similar to yours.
__________________
Danmar is offline  
Old 12-09-2010, 12:44 PM   #144
Moderator
Alan's Avatar
 
Join Date: Jul 2005
Location: Eee Bah Gum
Posts: 21,099
Quote:
Originally Posted by SunsetSail View Post
You are failing to take into account very high corporate level income taxes, state income taxes, state and local sales and use taxes, and property taxes. Add these to the federal level marginal tax rates and you will get a much different picture.
In Europe you also have local taxes (called poll taxes in the UK) plus very high rates of VAT (17.5% in the UK, higher in some countries in Europe) and very high taxes on gasoline, diesel, alcohol and others. Plus very few deductions including no deductions for mortgage interest or charitable contributions.

My colleagues in Belgium used to reckon that they paid just over 50% of their gross salaries in taxes.
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Now it's adventure before dementia
Alan is online now  
Old 12-09-2010, 01:02 PM   #145
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Quote:
Originally Posted by ERD50 View Post
Agreed, and isn't that what I said?
No, what you said is that nobody paid those higher rates because of all the loopholes. That is something that is said so frequently it has become common knowledge. But if the results of that study are accurate, that common knowledge is completely wrong. That graph shows "effective" tax rates, meaning the fraction of income actually paid in taxes.

And while I agree that tax rates dampen incentives to work and invest, it is very easy to overstate the case. And overstating the case seems like the modus operandi of many when this topic comes up. It's pretty clear that a 39.6% top marginal rate in the 90's wasn't enough to flatten growth. Hell, it wasn't even enough to prevent a massive stock market bubble from forming. . . so much for destroying investment incentives.
__________________
Retired early, traveling perpetually.
Gone4Good is offline  
Old 12-09-2010, 01:20 PM   #146
Recycles dryer sheets
 
Join Date: Jul 2010
Posts: 255
Quote:
Originally Posted by Danmar View Post
I pay 39% max marginal tax rate on regular income. Many other Canadians pay 46-48% at the margin. Hit this at about $120k per year. We also pay VAT rates ranging from 5-14% on almost all purchases. Also property taxes. I pay about $17k per year on about $3mm in real estate. The only benefit I can offset this with is lower health care expenses. Our corporate tax rates are similar to yours.
I believe that the max Canadian corporate combined rate for fed and provinces is 32% - it is 51% in the US.
I think the FICA equivalent is less than 2%.
__________________
SunsetSail is offline  
Old 12-09-2010, 01:29 PM   #147
Moderator
Alan's Avatar
 
Join Date: Jul 2005
Location: Eee Bah Gum
Posts: 21,099
Quote:
Originally Posted by SunsetSail View Post
I think the FICA equivalent is less than 2%.
I forgot about FICA.

The UK equivalent (called National Insurance) is 11%, but it it does include the NHS so there is no separate Medicare tax.
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Now it's adventure before dementia
Alan is online now  
Old 12-09-2010, 01:52 PM   #148
Recycles dryer sheets
EllisWyatt's Avatar
 
Join Date: May 2010
Posts: 233
Quote:
Do you have a link to the NYT article? My guess is that the confusion is about the duration. The $900 billion is probably over a two year period, are you sure the other numbers are for two years
Independant:
Here's the link to the NYT : http://www.nytimes.com/2010/12/08/us...%20cuts&st=cse
(Hope I did that right - still a neophyte at this)
Can't find the link to the $336B number I quoted - I've slept since then, but had it in front of me when I typed initially. Was under the impression atthe time that bot #s were two year numbers, but can't guarantee it now.
__________________
EllisWyatt is offline  
Old 12-09-2010, 01:55 PM   #149
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by Danmar View Post
The US must raise taxes- who do you think should pay?
Start with the almost 50% paying NO income taxes.........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline  
Old 12-09-2010, 01:58 PM   #150
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by Danmar View Post
I pay 39% max marginal tax rate on regular income. Many other Canadians pay 46-48% at the margin. Hit this at about $120k per year. We also pay VAT rates ranging from 5-14% on almost all purchases. Also property taxes. I pay about $17k per year on about $3mm in real estate. The only benefit I can offset this with is lower health care expenses. Our corporate tax rates are similar to yours.
Makes sense, you guys have socialiazed healthcare to pay for, taxes have to be high.........

$17K on $3 million of RE is quite low, that's a deal compared to most places in the US. I have a client living on a lake with a mid 6 figure house paying more than that every year in property taxes...........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline  
Old 12-09-2010, 02:13 PM   #151
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,820
Quote:
Originally Posted by Westernskies View Post
Dear old Dad said it best 40+ years ago when I was young and impressionable; we were discussing the rich vs. poor paradigm.

"A poor man never gave me a job or a paycheck, son"
I've seen that before and it's never made sense to me. I'll use "middle" and "high" instead of rich and poor.

Suppose 100 middle income couples buy new houses @ $200k each. That's $20 million of total construction, which provides jobs for some number of plumbers, roofers, etc.

Compare that to one very high income couple that spends $20 million on a single house. That provides jobs for some number of plumbers, roofers, etc.

It looks to me like just as many people were employed building houses for the 100 middle income as for the 1 very high income. So it's clear to me that lots of plumbers and roofers can accurately say "Middle class people gave me a job". (Actually, I don't think anyone "gives" jobs, but that's the common language.)

Looking at actual incomes, 30 years ago the "middle" people in the 2nd, 3rd, and 4th quintiles of income had about 48% of total income, while the "very high" in the top 1% had about 9%. So the middle provided a lot more jobs than the very high.

The ratio has narrowed, the middle's share has dropped to 41% while the top share is up to 18%, but that still means the middle provide more jobs than the top.
__________________
Independent is offline  
Old 12-09-2010, 02:22 PM   #152
Full time employment: Posting here.
BTravlin's Avatar
 
Join Date: May 2010
Posts: 994
Quote:
Originally Posted by Texas Proud View Post
My point is that if you are in the top 1%... or even 5% of income... you are closer to rich than middle class... not matter what you do with your money...
I agree with that.

My point is that "rich" is a loaded word and is thrown about pretty freely these days. I think many people in the middle class would assume that someone who is "rich" would be regularly getting and/or doing a lot of the things that were on our didn't list. We've never subscribed to movie channels either. Never bought a first class airline ticket. And I still don't have a smart phone. But I did pay taxes well into five figures.

Tying this back into taxation, we have to be aware that politicians practice class warfare in order to get and maintain power. And with that power they accumulate real wealth doing the bidding of the truly wealthy. Bashing families that make $250k a year and raising their taxes such that they have a much harder time saving for their kids' education, saving for their own retirement and donating to charity isn't really productive for society. I'm not accusing you of doing this but our Congress Critters would be more productive watching over government spending more closely so they don't always have to resort to demonizing the "rich" while inventing more ways to tax them.
__________________
Wherever you go, there you are.
(In other words, no whining!)
BTravlin is offline  
Old 12-09-2010, 02:28 PM   #153
Moderator Emeritus
 
Join Date: Oct 2007
Posts: 4,929
Quote:
Originally Posted by haha View Post
Here's one example- Sen Jim De Mint Republican of SC, says he won't vote for the compromise because it reinstates an estate tax.

Well, on principle I would also oppose any estate tax. But still, in the real world of today, a $5 mln exemption seems more or less reasonable. I don't know if this is indexed, likely not as lawmakers always like a hidden tax increases imbedded in their doings.
I'm eager to see how many politicians are prepared to 'hold their breath until they turn blue' when they can't get just what they want (for many conflicting values of 'want').

"I've got a little list... they'd none of them be missed."
__________________
M Paquette is offline  
Old 12-09-2010, 02:34 PM   #154
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Quote:
Originally Posted by Independent View Post
Suppose 100 middle income couples buy new houses @ $200k each. That's $20 million of total construction, which provides jobs for some number of plumbers, roofers, etc.

Compare that to one very high income couple that spends $20 million on a single house. That provides jobs for some number of plumbers, roofers, etc.

It looks to me like just as many many more people were employed building houses for the 100 middle income as for the 1 very high income.
I'd edit your response this way, to emphasize your point. It's pretty clear that even a $20MM home isn't going to have 100+ bathroom, etc. Many more people are going to be employed serving the millions of average folk than the thousands of high income folk. And I'm not sure that building a Maserati employes more people than a Camry, or that there are more private chefs employed than casual dining employees, or that there are more personal stylists than barbers, etc. etc.
__________________
Retired early, traveling perpetually.
Gone4Good is offline  
Old 12-09-2010, 02:57 PM   #155
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,043
Calling oneself "rich" is tacky. Calling others "rich" is rude. So no one is "rich" and we are all middle class. Some of us are just more "comfortable" than others, that's all.
__________________
FIREd is online now  
Old 12-09-2010, 03:14 PM   #156
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,820
Quote:
Originally Posted by ERD50 View Post
Maybe I'm not following you, but don't your statements contradict?

You say (correctly) that 'a very high proportion... of personal income taxes are collected from the top income earners.'

But then you seem to say that these are the people who should have their taxes raised?

-ERD50
You posted tax shares but not income shares. I think the contradiction resolves itself when you look at both.

The columns in the table below are percentage shares of income, "social insurance" taxes, and individual FIT.
The first four rows are the first four quintiles of families by income. The top two are the highest quintile - I split it into two parts representing 19% and 1% of households.


INC SIT FIT Quintile
04% 04% -3% Lowest
08% 10% -1% Lower Middle
13% 17% 04% Middle
20% 25% 13% Upper Middle
37% 40% 47% 81-99%
19% 04% 39% Top 1%


Anybody who favors a mix of dedicated social insurance taxes and "progressive" general fund taxes will probably find that this result makes some sense. Some people will say the top don't pay "enough", others will say they pay "too much". I think that's pretty much in the eye of the beholder.

Note that the negative FIT numbers in the third column are the result of running a welfare program (EITC) through the FIT system and calling the result "tax". IMO that's deliberately misleading, and both the R's and the D's are to blame. I'd prefer to see the taxes and the welfare split out separately.

http://www.cbo.gov/publications/coll...stribution.cfm
__________________
Independent is offline  
Old 12-09-2010, 03:48 PM   #157
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,265
Quote:
Originally Posted by Independent View Post
Some people will say the top don't pay "enough", others will say they pay "too much". I think that's pretty much in the eye of the beholder.

Note that the negative FIT numbers in the third column are the result of running a welfare program (EITC) through the FIT system and calling the result "tax". IMO that's deliberately misleading, and both the R's and the D's are to blame. I'd prefer to see the taxes and the welfare split out separately.

Congressional Budget Office - Data on the Distribution of Federal Taxes and Household Income
Yes, and it's the complications you mention (mixing welfare credits and taxes) that make it hard to know where we stand, or where we should go. But I think that's intentional.

-ERD50
__________________
ERD50 is offline  
Old 12-09-2010, 04:14 PM   #158
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,265
Quote:
Originally Posted by Independent View Post
I've seen that before and it's never made sense to me. I'll use "middle" and "high" instead of rich and poor.

Suppose 100 middle income couples buy new houses @ $200k each. That's $20 million of total construction, which provides jobs for some number of plumbers, roofers, etc.

Compare that to one very high income couple that spends $20 million on a single house. That provides jobs for some number of plumbers, roofers, etc.

It looks to me like just as many people were employed building houses for the 100 middle income as for the 1 very high income. ....

That seems true, but I don't think that is where the phrase "A poor man never gave me a job or a paycheck, son" is targeted. It's about creating businesses that hire the people to serve that consumption. Yes, the workers are being hired to build houses, but they are not each individually getting their paychecks from the homeowner. A contractor is dealing with their payroll, insurance, scheduling, taking on risk, etc, so that all those workers can be organized to complete a job. For that, I expect the contractor to make more money, even become 'rich' ahead of the laborers.

So in general, it is the 'rich man' and not the 'poor man' providing the paycheck. And most of them earn it, because they are a little more motivated, a little more risk taking, a little more organized to do that kind of work. Many of the laborers just want to show up and do their job and that's fine. But don't expect to get 'rich' that way.

Many other businesses really take an influx of capital to get off the ground. A group of 'poor' people just aren't likely to to get that going.

I think there was a circular discussion on this earlier, with someone saying without all this consumption there are no jobs, but without the business there is no product to consume, and round-round. It seems clear that it takes all the pieces of the puzzle, but I'd wager that on average, employers are richer than employees. Hence the phrase.

-ERD50
__________________
ERD50 is offline  
Old 12-09-2010, 04:45 PM   #159
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Quote:
Originally Posted by ERD50 View Post
It's about creating businesses that hire the people to serve that consumption.
Two sides of the same coin, no? One can't exist without the other. So who gets credit?
__________________
Retired early, traveling perpetually.
Gone4Good is offline  
Old 12-09-2010, 04:47 PM   #160
Thinks s/he gets paid by the post
 
Join Date: Aug 2005
Posts: 2,056
Quote:
Originally Posted by GregLee View Post
Easily? Really? You seem to live in a very different world from mine. My wife and I just retired from being college professors, and our combined income, with 39 years of seniority, never came close to $250,000. It was about a quarter of that. That $250,000 sure sounds rich to me.
Really?! I figured a college professor would make a LOT more than that. Heck, I have a friend who's just a teacher in the public school system, with maybe 13-14 years of service, and HE makes about a quarter of that! And I shouldn't say "just a teacher", as his work is important, and he's probably not paid enough...but I just figured a college professor would make more.
__________________

__________________
Andre1969 is offline  
Closed Thread


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
bush tax cuts - when expire bobbee25 FIRE Related Public Policy 12 12-16-2009 11:57 AM
Obama tax cuts BanDit1 FIRE and Money 14 01-05-2009 09:10 PM
tax cuts are harmful bosco Other topics 19 12-29-2006 02:53 PM
Investment tax cuts in the new tax bill Telly FIRE and Money 1 05-23-2003 02:42 PM

 

 
All times are GMT -6. The time now is 03:08 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.