Two Different Perspectives on Taxes

[stephenandrew]

I think you missed a few:
Sales tax
Corporate paid taxes embedded in the things you buy
Transfer taxes on the stock/bond trades you make

Yes---you are of course correct--I omitted those only becasue I don't really know the precise amount. I always find reading my cell phone bill amusing--all sorts of taxes and fees

Good observation. Reminds me of the part of the Woody Allen movie:

Q. How often do you have sex?
Man: Hardly ever; about two times a week.
Woman: All the time; about two times a week.

LOL---I agree--if I am not mistaken this is from Annie Hall. Another good line from that movie occurs after Annie parallel parks the car on a NYC street, Woody gets out, and says "Its fine--I can walk to the curb from here."

 

[Rustic23]

Eridanus,
So lets follow your logic. Bill Gates, Warren Buffet, and all the other billionaires will send in all their wealth except lets say $65,000 about the average household income. Problem solved.

let's see... how do you spell SOCIALISM?

The only thing in your argument and the one above is where do we set the boundaries!

 

[Bikerdude]

Is: Incentives Matter. Your CT neighbors have been incentivized to move to a low income tax state - Florida.

That was my point.

 

[Texarkandy]

The rich pay a lot of taxes. Let's have them pay less. Ok, now the government is short even MORE money. Do you intend to then raise the taxes on the middle and lower classes? What services/functions do you intend to cut?

I guarantee that what I want to cut is your sacred cow and vice versa.

There are very few cows that are truly sacred.

As regards Federal spending, my "sacred cows" only extend as far as those items enumerated in a somewhat restrictive reading of the Constitution. (which I believe to be more of a restraining document than an enabling one)

The States, I believe, have a greater authority to tax & spend. I pay my State & local Property & sales taxes with much less resentment than I do my Federal taxes.

(Kind of a funny position for a fed employee, huh.)

 

[unclemick]

Eridanus,
So lets follow your logic. Bill Gates, Warren Buffet, and all the other billionaires will send in all their wealth except lets say $65,000 about the average household income. Problem solved.

let's see... how do you spell SOCIALISM?

The only thing in your argument and the one above is where do we set the boundaries!

Socialism = file single. Starting my Turbo Tax for the year. By the time I finish it's best I not post on any thread involving taxes.

Cause I will be against everything.

heh heh heh -

 

[eridanus]

Eridanus,
So lets follow your logic. Bill Gates, Warren Buffet, and all the other billionaires will send in all their wealth except lets say $65,000 about the average household income. Problem solved.

let's see... how do you spell SOCIALISM?

The only thing in your argument and the one above is where do we set the boundaries!

You gonna answer the questions or continue to dodge it by putting words in my mouth?

If you cut taxes on the rich to be fair,

1) Where and on whom will you raise taxes?

2) If you don't wish to raise taxes, what will you cut?

 

[eridanus]

As regards Federal spending, my "sacred cows" only extend as far as those items enumerated in a somewhat restrictive reading of the Constitution. (which I believe to be more of a restraining document than an enabling one)

The States, I believe, have a greater authority to tax & spend. I pay my State & local Property & sales taxes with much less resentment than I do my Federal taxes.

(Kind of a funny position for a fed employee, huh.)

We can start with cutting the pensions and retiree health benefits of federal employees.

 

[Rustic23]

OK, well I did, give you a link as a place to start, and I doubt that we would agree on much. But here goes:

Everybody should pay income tax. Lower class, middle class, upperclass and all in between. And, before you say it, I don't count payroll tax!

Cut government spending. While it is not the smart way, just cut every agency a percentage. A better way is to say the Federal budget must be cut by X% and force the agency to live within strict budgets. If you can't live with that just cut everything 10%. Everyone of the agencies will survive and thrive.

Cut duplicate programs. As pointed out in the article there are 27 different agencies/programs dealing with teen pregnancies. Certainly we can get by with 26!

Re-examine the entire roll of Federal government. Education is not a federal job. Unless you are one that can find just about anything in the constitution. For the first 200 years or so, education was the purview of local government, not even the state. The education bureaucracy continues to grow every year.

Cut out Federal subsidies. Yep, farm, air line, energy, wooden arrows, you name it, stop spending my and your money on it. I can live with my cow dying, and I'll bet you can live with it when yours does.

Curtailing Federal spending hurts only one group of people. POLITICIANS!

Your and my representatives and senators believe it is their duty to bring home the pork, and they are rewarded for it. Your fault and mine.

Do you really think that the Federal Government can't get by on last year's budget with no increase, not even for inflation? Do you really think the 850B is going to create jobs? Do you really think it has to be passed in the next 3 days when most of the money will not be spent for about 2 years? Do you really think the country can go on stealing from the rich to give to the not so rich?

Stop spending Federal Dollars on State projects. If Las Vegas wants a museum to Gamblers let them build it. Why did Texas dollars go to build the Rock and Roll Hall of Fame in IL. Why did CA money go to build a theater in TX. If the states want stuff, let them tax and build it. The federal gov. has, IMHO, some specific duties. Protect the people. Promote Commerce. Regulate trade, and maybe a few other's I missed in government. IMO, all others are Politicians buying votes to remain in power. Roads and Bridges, tough question, but if they are in cities, the are State projects, If you want to designate the 'Federal Road System' OK, but it does not include roads that are obviously not interstate roads.

And, my taxable income was $13,300. So if yours was higher, then I will expect a check. Let me know and I'll send you the address.

 

[ERD50]

Just to be clear - I didn't send this thread down the old "redistribution of wealth" path (at least not *this* time ). I'm taking a vacation from that subject, for an undetermined time.

I only said that the amount of tax spending should be no greater than the need, we shouldn't spend just because we can collect it.

ERD50

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.

Rustic23, you are underestimating our politicians. They can be *both* stupid and deceitful.

Our current (as of 8:52PM CT today) Governor of Illinois appears to be on the high end of the deceit scale, and he also tried to increase corporate taxes in our State, as if it was some kind of free lunch. Amazingly, he was taken to task for that - which seems inconsistent with the general view of "tax those mean old greedy corporations" (that provide us our jobs and products we buy, and pass the cost of taxes onto us anyway).

Oh well, I gotta go work on my taxes...

-ERD50

 

[Rustic23]

I actually had a CPA tell me that it was OK, if they increased Corporate Taxes, just as long as they did not increase her income tax. She was serious!

 

[Texarkandy]

OK, well I did, give you a link as a place to start, and I doubt that we would agree on much. But here goes:

Everybody should pay income tax. Lower class, middle class, upperclass and all in between. And, before you say it, I don't count payroll tax!

Cut government spending. While it is not the smart way, just cut every agency a percentage. A better way is to say the Federal budget must be cut by X% and force the agency to live within strict budgets. If you can't live with that just cut everything 10%. Everyone of the agencies will survive and thrive.

Cut duplicate programs. As pointed out in the article there are 27 different agencies/programs dealing with teen pregnancies. Certainly we can get by with 26!

Re-examine the entire roll of Federal government. Education is not a federal job. Unless you are one that can find just about anything in the constitution. For the first 200 years or so, education was the purview of local government, not even the state. The education bureaucracy continues to grow every year.

Cut out Federal subsidies. Yep, farm, air line, energy, wooden arrows, you name it, stop spending my and your money on it. I can live with my cow dying, and I'll bet you can live with it when yours does.

Curtailing Federal spending hurts only one group of people. POLITICIANS!

Your and my representatives and senators believe it is their duty to bring home the pork, and they are rewarded for it. Your fault and mine.

Do you really think that the Federal Government can't get by on last year's budget with no increase, not even for inflation? Do you really think the 850B is going to create jobs? Do you really think it has to be passed in the next 3 days when most of the money will not be spent for about 2 years? Do you really think the country can go on stealing from the rich to give to the not so rich?

Stop spending Federal Dollars on State projects. If Las Vegas wants a museum to Gamblers let them build it. Why did Texas dollars go to build the Rock and Roll Hall of Fame in IL. Why did CA money go to build a theater in TX. If the states want stuff, let them tax and build it. The federal gov. has, IMHO, some specific duties. Protect the people. Promote Commerce. Regulate trade, and maybe a few other's I missed in government. IMO, all others are Politicians buying votes to remain in power. Roads and Bridges, tough question, but if they are in cities, the are State projects, If you want to designate the 'Federal Road System' OK, but it does not include roads that are obviously not interstate roads.

You've got my vote
(of course so did Ron Paul - in the Texas Primary anyway - my conscience forced me to throw away my vote on the Libertarian in the General - the Republicans are welcome to try to win me back anytime)

And, my taxable income was $13,300. So if yours was higher, then I will expect a check. Let me know and I'll send you the address.

My fed income taxes alone this year are higher than that. (However I'll be sending the check in to Uncle Sam on Apr 15 for further redistribution in lieu of making direct payments to individuals myself.)

 

[Texarkandy]

We can start with cutting the pensions and retiree health benefits of federal employees.

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) http://www.cbpp.org/4-14-08tax.htm

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?

 

[target2019]

Not sure who is right (I hate to admit it, but normally she is about most things), but it reinforced to me that two reasonable (I think) people can see the same facts and have two vastly different reactions.

Over the past weekend I looked at family income statistics for the US. My wife and I are in the 89th percentile. My son is on his own, and his first job has him in the 75th percentile. I could go on and on with reasons why I don't mind paying taxes. Sure, I'd like to pay less, but know disabled vets, single mothers, working poor and members of my own family who've benifited from gov't loans, state subsidies for drugs, and so on.

 

[Rustic23]

This thread would be quickly heading for the Soap Box, well if there was a Soap Box.

On one side are folks that believe it is OK, in fact desirable for Government to take ones money and give it to someone else, and the more money that person makes the more the government should take.

On the other side are folks that believe that Government does not have that right, and that, in fact, it is not desirable.

Old saying. 'Don't tax you, Don't tax me, Tax that other guy behind the tree!'

 

[Texarkandy]

....
On one side are folks that believe it is OK, in fact desirable for Government to take ones money and give it to someone else, and the more money that person makes the more the government should take.

On the other side are folks that believe that Government does not have that right, and that, in fact, it is not desirable.
......

And of course there are those in the middle.

For now it seems a slight majority of the citizenry has decided to try out a government of the first of those two - for awhile at least.

So the real question for me then is - how do I work that system to my advantage in the pursuit of personal FI/RE?

 

[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]

.... 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]

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?

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]

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.

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.

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]

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]

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/doc8885/12-11-HistoricalTaxRates.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]

Interesting. Dex also says that Corporate income taxes are paid by consumers. The CBO (here: http://www.cbo.gov/ftpdocs/88xx/doc8885/12-11-HistoricalTaxRates.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]

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.