More on teacher pay

[samclem]

I'd say it's pretty naive to believe that because you "have it" that you "earned it."

We'd probably difffer a lot in how we define "earned." My guess is that the IRS definition of "earned income" is what you'd consider a fair definition. To me:
- If someone gets an hourly wage from another entity, he earned it
- If someone gets a dividend from a company to recompense them for the risk they tok in becoming part owner of the company, they have earned that money.
- If someone receives money from another in exchange for something, whether it s a lamp at a gargae sale or corporate stock that they bought in hopes it would appreciate, they have earned that money.
- Now, I will not claim that junior "earned" the money that they get from Daddy or Mum. But, he did get it voluntarily. More importantly, Daddy and Mum, or someone else in the past, earned it through one of the methods above. Presumably they paid tax on it at that time. And, they can do as they please with it.

 

[jazz4cash]

We routinely focus on income (earned or unearned), but wealth (i.e. net worth) is a more accurate indication of have vs. have not. The compression of wealth is so significant that income hardly matters. As I quoted before $150k income puts you in the top 5-10% income wise, but for many high cost locales, that figure won't support more than a middle class life-style for a growing family.

 

[bosco]

- Now, I will not claim that junior "earned" the money that they get from Daddy or Mum. But, he did get it voluntarily. More importantly, Daddy and Mum, or someone else in the past, earned it through one of the methods above. Presumably they paid tax on it at that time. And, they can do as they please with it.

yes, I would say this is a source of disagreement between us.

this is probably why Republicans are so eager to eliminate the estate tax.

"voluntarily?" A bank robber got his loot "voluntarily." How often to people get money "involuntarily"?

 

[samclem]

How often to people get money "involuntarily"?

Every nickel of tax the government gets is taken involuntarily.

From Merriam Webster online:
"Voluntary"
Pronunciation: 'vä-l&n-"ter-E
Function: adjective
Etymology: Middle English, from Anglo-French voluntarie, from Latin voluntarius, from voluntas will, from velle to will, wish -- more at WILL
1 : proceeding from the will or from one's own choice or consent.

Anyone saying taxes are "voluntary" is just being obtuse. Sure, folks have a choice--pay or lose their freedom.

 

[Average Joe]

...they are among the few working people in our society whose motivation is to make life better for all of us...

Adam Smith: "It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest."

 

[ERD50]

Quote from: Oldbabe on December 03, 2006, 06:56:34 PM

...they are among the few working people in our society whose motivation is to make life better for all of us...

Adam Smith: "It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest."

AverageJoe - that is a great quote from Adam Smith. I've been waiting for 'oldbabe' to respond to my post as to why she insulted the majority of the population that are not teachers, but I guess she does not want to answer to that.

There sure seems to be a lot more emotion than facts surrounding this topic.

-ERD50

PS - is there some trick to getting embedded quotes - I always have to try editing it and it always comes out badly ? Other forums I post to handle this automatically.

 

[bosco]

Every nickel of tax the government gets is taken involuntarily.

From Merriam Webster online:
"Voluntary"
Pronunciation: 'vä-l&n-"ter-E
Function: adjective
Etymology: Middle English, from Anglo-French voluntarie, from Latin voluntarius, from voluntas will, from velle to will, wish -- more at WILL
1 : proceeding from the will or from one's own choice or consent.

Anyone saying taxes are "voluntary" is just being obtuse. Sure, folks have a choice--pay or lose their freedom.

with this post you have morphed the discussion into something not even remotely resembling the original area, at least as I understood it. It's certainly possible that I misunderstood what you meant.

you made the statement that "haves and have nots" could be accurately understood by substituting "earned" and "earned-not"

I think this is baloney in some cases. There are plenty of haves that did not earn. And earning is not always good, or of benefit to society. Drug dealers, mafioso, Tom Delay to name a few examples. I fail to see how many of the heirs and heiresses have earned what they have, nor do I see why they should not pay taxes on what they have inherited. Your point "at least it was voluntary" seems to mean little other than to basically say "it's taxes so it's bad." Not particularly profound, IMO.

I never said that taxes were voluntary. My point was of course junior is going to volunteer to take mom and dad's money rather than let the government have it. Anybody that gets money generally does so voluntarily--Skilling, Delay, and Abramoff included. So what. That doesn't mean it's desirable to society. I don't pay more taxes than I legally have to either. That doesn't mean I think taxes are bad.

I think I probably know what 'voluntary' means without you citing the dictionary definition of it. Perhaps, if we were misunderstaning the point of each other's posts, the source of the confusion might have been more profitably sought elsewhere?

It's clear we won't agree, nor do we have to. I just get a little tired of misleading statistics being cited to try to justify large tax windfalls for the well-to-do. At least your position seems to be honest--taxes are bad and to be reduced and avoided if possible. No need for bogus statistics. I believe that I understand your point of view. I just disagree with it. To me, the table should be slanted a bit more toward the welfare of the many. To you, apparantly, it is more important to protect the interests and assets of the individual and his family even if it means stepping over bodies in the street. Or maybe you wouldn't take it this far. Either way, I would call what we have a valid difference of opinion. I too get frustrated over what seems to be many people's inability to take personal responsibility. I just see other solutions to the problem. These people have children, and those children don't need to be punished because their parents are f**kwits. Also, jails are not cheap, and must be funded with taxes. When you create a huge class of poor, guess what you get....lots of crime.

 

[samclem]

Okay, I'll let it go. We did get off track. I think I poorly expressed my point about the exchange of funds between parents and their children. The point is this: When the money was earned (by Daddy, Mommy, ther parents, etc) it was, presumably, taxed. Once Mommy and Daddy have the money, they are free to do with it as they want. If they give it charity, the charity pays no tax. They can give it all to the government if they choose. I believe they should be free to give this already-taxed money to their kids without the kids having to pay tax on it.

 

[donheff]

Okay, I'll let it go. We did get off track. I think I poorly expressed my point about the exchange of funds between parents and their children. The point is this: When the money was earned (by Daddy, Mommy, ther parents, etc) it was, presumably, taxed. Once Mommy and Daddy have the money, they are free to do with it as they want. If they give it charity, the charity pays no tax. They can give it all to the government if they choose. I believe they should be free to give this already-taxed money to their kids without the kids having to pay tax on it.

I haven't thought about the gift tax before but my gut says Samclem is right on this one. It is a lot different than the estate tax. Money I give to my kids has already been taxed. Heck people can give money to churches and charities and get a tax deduction - the recipients pay nothing. Give to your kids and they pay income tax? What is that about? I can see why you would be expected to pay capital gains on equities or property that you give to kids, but why money that has been taxed?

 

[ERD50]

donheff, gift tax and estate tax are essentially the same. One is paid on money gifted while the 'gifter' is alive, the other is paid by the 'gifter's estate on money gifted at death.

For 2006, $12K per year per recipient can be gifted w/o tax. Beyond that, the gifter pays tax, or taps into the exclusion (which takes away from the exclusion for the estate tax).

The reciever of the gift pays NO income tax on it - at any level. See link below for more 'fun facts' - ERD50

http://www.irs.gov/businesses/small/article/0,,id=98968,00.html

 

[FinanceDude]

I haven't thought about the gift tax before but my gut says Samclem is right on this one. It is a lot different than the estate tax. Money I give to my kids has already been taxed. Heck people can give money to churches and charities and get a tax deduction - the recipients pay nothing. Give to your kids and they pay income tax? What is that about? I can see why you would be expected to pay capital gains on equities or property that you give to kids, but why money that has been taxed?

ALl the more reason to do annual gifting BEFORE you die, or use a bypass trust to make sure your unified credit is being applied correctly.........

 

[SolidA]

WHEW!! I am happy today to read that this thread has morphed into a "rich people" bashing instead of just teacher bashing!!! Now I can be done with my morning break and get back to teaching my students!!

 

[FinanceDude]

WHEW!! I am happy today to read that this thread has morphed into a "rich people" bashing instead of just teacher bashing!!! Now I can be done with my morning break and get back to teaching my students!!

What grades?? Good luck!!

 

[bbuzzard]

Okay, I'll let it go. We did get off track. I think I poorly expressed my point about the exchange of funds between parents and their children. The point is this: When the money was earned (by Daddy, Mommy, ther parents, etc) it was, presumably, taxed. Once Mommy and Daddy have the money, they are free to do with it as they want. If they give it charity, the charity pays no tax. They can give it all to the government if they choose. I believe they should be free to give this already-taxed money to their kids without the kids having to pay tax on it.

I have never understood this arguement. Everything that I spend gets sales tax applied, but it has already been taxed with income tax AND SS tax. The money I pay my lawyer is taxed, but he has to pay tax on it anyway. The same is true for money I spend anywhere. Why are your children different? All the elimination of inheritance tax will accomplish is to create a special class of family businesses for which the employees (family) effectively do not have to pay income tax.

The point of taxes is to pay for government, and we pay for government primarily through as assessment on personal income. The fact that your income comes from your parents should not limit your obligation to help out. BTW, if the US people did not want to pay taxes, at current voter participation rates it would only take about 25% of eligible voters to eliminate taxes and the associated spending. However, they have never chosen to do this. Amazingly, they keep voting for taxing and spending. Thus, I would argue things are voluntary for the most part.

 

[Texas Proud]

Hmmmm....

I have not read it all, but there are some wrong statements in some of these posts...

You can give money all day long to your kids and your kids NEVER have to pay income tax... and they do not have to pay gift tax either... if there is gift tax, YOU pay it...

so, why is there some discussion on the kids paying taxes

 

[SolidA]

Thanks for asking FinanceDude! I teach 6th and 8th Grade English and Math. I teach alternative classes in a regular school setting - in other words, most of my students have probation officers and other assorted issues...

 

[FinanceDude]

Thanks for asking FinanceDude! I teach 6th and 8th Grade English and Math. I teach alternative classes in a regular school setting - in other words, most of my students have probation officers and other assorted issues...

Ouch.......do you get combat pay?? Man, 6th and 8th grade........so you got "know-it-alls" with "street smarts" and "rap sheets"..............wow................

 

[samclem]

So, the tax code is even crazier than I thought. Mom and Dad can give the money to charity--no taxes are paid by anyone. They can bury it in the back yard--no taxes paid by anyone. They can even burn the currency in a bonfire--no tax is due at all. BUT--if they try to give the money to their children, then Mom and Dad have to pay tax on it--again. This certainly isn't an "income tax," it is an "outgo tax."

 

[Patrick]

They can bury it in the back yard--no taxes paid by anyone.

There's an idea: bury it in the back yard and tell the kids where it is before you croak!

 

[bosco]

So, the tax code is even crazier than I thought. Mom and Dad can give the money to charity--no taxes are paid by anyone. They can bury it in the back yard--no taxes paid by anyone. They can even burn the currency in a bonfire--no tax is due at all. BUT--if they try to give the money to their children, then Mom and Dad have to pay tax on it--again. This certainly isn't an "income tax," it is an "outgo tax."

Spare us the drama. If they bury it in the back yard, they effectively pay 100% tax. If their kids dig it up, then the kids owe the tax, or they get to practice tax evasion. Bonfire = 100% effective tax (although it does help fight inflation ). It might make you happy since the government (you know, teachers, bureaucrats etc.) don't get it, but it seems like a waste to me.

I think the 'taxing it again' argument has already been effectively refuted. Isn't this the basis of the "tax cuts stimulate the economy" argument--that the same money will circulate and be taxed over and over? The government really isn't that evil. It might be bumbling (Iraq, for example), it might be wasteful (Iraq, for example), it might trample on people's rights (Patriot Act, for example), but taxes--are they really THAT much of an evil bogeyman?

 

[donheff]

donheff, gift tax and estate tax are essentially the same. One is paid on money gifted while the 'gifter' is alive, the other is paid by the 'gifter's estate on money gifted at death.

For 2006, $12K per year per recipient can be gifted w/o tax. Beyond that, the gifter pays tax, or taps into the exclusion (which takes away from the exclusion for the estate tax).

The reciever of the gift pays NO income tax on it - at any level. See link below for more 'fun facts' - ERD50

http://www.irs.gov/businesses/small/article/0,,id=98968,00.html

I may have misunderstood "gift taxes." I always thought gifts over $10,000 were taxed on the recipient at the recipient's income tax rate. Do they actually use the same scale as estate taxes? I.e. do gifts of say $20,000 carry a tax equaling the estate tax on the first $10,000 over the estate limit?

 

[Martha]

I may have misunderstood "gift taxes." I always thought gifts over $10,000 were taxed on the recipient at the recipient's income tax rate. Do they actually use the same scale as estate taxes? I.e. do gifts of say $20,000 carry a tax equaling the estate tax on the first $10,000 over the estate limit?

The current gift limit is $12,000 per person in a year, so a husband and wife could anyone up to $24,000 per year. There is no gift tax until the total gifts exceed a million dollars. Before you hit the $1,000,000 maximum, gifts in excess of the $12,000 gift limit will just effect your taxable estate.

Payments for tuition or medical care and medical insurance are exempt from gift tax if the money goes directly to the provider.

Here are the rates for gifts totally over a million and not exempt under the $12,000 rule:
http://www.irs.gov/formspubs/article/0,,id=112782,00.html

 

[donheff]

The current gift limit is $12,000 per person in a year, so a husband and wife could anyone up to $24,000 per year. There is no gift tax until the total gifts exceed a million dollars. Before you hit the $1,000,000 maximum, gifts in excess of the $12,000 gift limit will just effect your taxable estate.

Payments for tuition or medical care and medical insurance are exempt from gift tax if the money goes directly to the provider.

Here are the rates for gifts totally over a million and not exempt under the $12,000 rule:
http://www.irs.gov/formspubs/article/0,,id=112782,00.html

I am not sure I understand this Martha. I think I get the $12,000/yr bit. It is not taxed and never counts as part of your estate. But If I gave my son $1,212,000 this year (fat chance) would I be able to do that without me or my son paying any tax on the $1M part (other than CGs if I liquidated equities). Then when I died that $1M is already exhausted under the estate tax limit? If so, I have no problem with this structure.

 

[Martha]

You got it right Don.

 

[donheff]

You got it right Don.

Great, I can replace my liberal tax hat in confidence. Rich bastards like me need to be taxed more (than the current Bush estate tax cuts provide) not less I think what confused me is the newspaper advice on helping kids out with real property (like "selling" them a house cheap) always cautioned that you have to sell it at full market or risk a tax penalty. In reality you could sell it for whatever you wanted or give it to them as long as you counted the "free" portion against your estate tax limit.