Is it time to join the 47% of Americans who pay no taxes?

[audreyh1]

But I do think in the interest of fair representation, folks calling out kids as "HUGE" tax savings should specify that they mean huge as a percentage, not necessarily an absolute number, as middle class folks have most of these benefits phase out. But I know what ya mean. It's relatively speaking "HUGE"

Since I was specifically listing the likely groups making up the population who pay very little or no FIT in any given year due to having low incomes, I believe I had already made that qualification.

Audrey

 

[youbet]

The credits were never designed to be HUGE for higher income taxpayers, though. But they can make a "huge" difference for less affluent families.

I agree. And I understand now that I've wasted a morning (where I could have been in the garage tuning the mower - the kids will be home soon and there will be no mower tuning then! ) playing around with TurboTax looking for kiddie related tax breaks that don't exist for middle class filers.

Sigh......

Kiddie tax breaks - much ado about nothing! Although as Audrey said, if the lower income folks receiving them benefit in a way that improves the lives of the kids in a meaningful way, it's a good thing I guess, even if it doesn't apply in my family.

 

[youbet]

Since I was specifically listing the likely groups making up the population who pay very little or no FIT in any given year due to having low incomes, I believe I had already made that qualification.

Audrey

Fair enough. Understand, with folks mentioning 'HUGE" juicy tax breaks for the kiddies, I was chomping at the bit to rake some in for youbet jr. I understand now. We're not talking about "HUGE" absolute dollars. We're talking about "HUGE" percentage tax savings for low income filers.

Gothcha...... But damn, what a disappointment.

 

[Gone4Good]

I'm generally of the view that incentives matter and that people will be more willing to vote for programs if the taxes needed to support those programs are paid by someone else. But I also think this point can be, and often is, overstated. People are not always economically rational. I'm reminded of an unpublished paper Larry Summers reportedly wrote against the "rational expectations theory" in economics. He began . . . "THERE ARE IDIOTS! Look around."

Indeed, there are countless examples of people who seem to vote against their economic self-interest. A quick look at the political map shows many rich states that reliably vote Democratic and many poor states that reliably vote Republican. These people are clearly not voting on tax / benefit issues alone, or even primarily, otherwise the political map would look different.

Here's a site where you can see that visually. The attached screen shot is the traditional "Red / Blue" map by voting district but filtered to show only the counties with the lowest income. There is a lot of Red on that map.

 

[jIMOh]

Absolutely. If everyone had to write a check at the end of the year to pay for the cost of their government, people would think harder before voting for benefit increases (or foreign wars, or tax cuts for those with the highest incomes).

Simple solution to this

Move election day to May 1
or move tax day to October 15.

 

[jIMOh]

True, and a good point, IMO.

But if everyone had skin in the game, maybe there would be enough critical mass of votes to make a difference?

-ERD50

I think the point of the post being replied to was that paying taxes is not "skin in the game".

Whether someone pays a high amount of taxes or low amount of taxes may not change their political views. One of the richest friends I have (a surgeon) is the most liberal person I know as far as politics go.

Not everyone votes based on taxes or more government/less government.

 

[jIMOh]

The question isn't one of direct control of representatives but rather which ones you vote for. Being a tax *payer* instead of only a tax *consumer* means you are more likely to vote for the "fiscal sanity" candidate instead of the "free lunch" candidate. Too many people get elected by promising a lot of people something for "nothing."

So if everyone realized the lunch wasn't free and they knew *they* would be helping to pay for the programs they wanted, IMO that would be a good thing.

Respectfully disagree.

We are all tax consumers
Some consume more than others
Some contribute (pay more than others)... and some contribute nothing, which is the point of thread (would any of us lower income to pay nothing).

but to lump people in one camp or other based on taxes paid (or not paying taxes) is a way to suggest "vote republican" IMO.

Examples- Clinton (either B or H) is a Democrat and I would vote for either one if they ran for President. They might tax more than McCain or Perot or Bush, but history showed that Bill can lead really well, and I believe Hillary would do just as good of a job. Should be noted I voted for Perot both times he ran (against Bill) but history has proven Bill to be a decent to above average President, IMO.

I do not see Obama the same way. Not a leader, not going to vote for him (EVER) and that has nothing to do with how much taxes I pay under one candidate or the other.


A candidate is more likely to lose votes by taking away a handout than to gain votes by promising more handouts (IMO). Social security is a prime example- if any candidate ran on SS reform, it would lose them more votes than they would gain- because anyone expecting a SS check would be nervous as to the uncertainty.

 

[jIMOh]

Plus 1 to everything Leonidas posted, also -

Well, a little anecdotal evidence that could probably be backed up by some study/survey (maybe the Freakonomics guys?):

I recall a company picnic that offered free hot dogs. The organizers were appalled at the waste. Then they switched to charging a token amount (10 cents, 25 cents or something), and the waste went way down. So in this case, a token amount did make a big difference in behaviors.

I don't know if it would help in politics, but I tend to think so. And we might actually get a better selection of candidates (or better behavior from the current ones), if they knew the majority of their constituents actually cared about fiscal responsibility because they now had some 'skin in the game'.

-ERD50

Comparing politics to hot dogs...
would you run for office on this platform?

In fairness, when we coached soccer, we NEVER gave anyone anything for free- even if a tournament (fundraiser) paid the bill, we would charge players $5 or $10 for extra training, just to confirm the signups and get the right resources (number of trainers) ahead of time.

 

[donheff]

Fair enough. Understand, with folks mentioning 'HUGE" juicy tax breaks for the kiddies, I was chomping at the bit to rake some in for youbet jr. I understand now. We're not talking about "HUGE" absolute dollars. We're talking about "HUGE" percentage tax savings for low income filers.

Gothcha...... But damn, what a disappointment.

Don't give up yet Youbet. Can't you just make up a few of those traditional cheats your friends were bragging about.

 

[jIMOh]

It's kinda like school taxes for me. I have no children. So why do I have to pay school taxes? If someone can ever logically explain this to me, I'm all ears.
I get steamed about school taxes because I actually had to set up a special bond fund to provide top cover for this extremely high involuntary expense in my FIRE budget. I don't mind paying county property taxes because I am the recipient of county services (road plowing, waste management, LE, emergency services, etc).
But what do I get for my school taxes? Nada.

End of rant.

I disagree on the school taxes only for those with kids in schools for 4 main reasons

1) If you own property, your property value is a function of the value of those properties around you.
2) If you own property, your property value is set to be within a given school district
3) People will pay a premium on a property (value) to be in a given school district
4) The property value will change based on quality of school district changing

Meaning- if you do nothing to property (other than mow lawn), but school district goes to crappers, your property lost value. The opposite is also true, if the school district improves, your property value goes up. If I pay school taxes and you do not, and my school taxes raise the value of your property, I want you to pay that tax too.

You don't have to agree with me, that is the logic I use to justify why everyone within a given school district pays school taxes.


Some communities within Ohio have passed "move in taxes" which means the people which buy property pay a tax the existing homeowners do not have to pay. Its was there way of not raising property taxes on the whole community. This works best if the community is "underdeveloped" land wise I think.

 

[Leonidas]

But I also think this point can be, and often is, overstated. People are not always economically rational. I'm reminded of an unpublished paper Larry Summers reportedly wrote against the "rational expectations theory" in economics. He began . . . "THERE ARE IDIOTS! Look around."

I wonder what Summers would say about guys like this:

One of the richest friends I have (a surgeon) is the most liberal person I know as far as politics go. Not everyone votes based on taxes or more government/less government.

Either the people in both cases are idiots for voting against their economic self-interest, or they are basing their political beliefs on something else.

While pondering this, I cruised the net looking for views on "why poor people vote Republican". Among the finds were two stories by Brit political scientists (one for BBC and the other, a black man, for the Guardian - self-described as a platform for left-wing opinion). It's interesting to see how outsiders view this issue: From David Runciman, a UK political scientist VIA the BBC:

If people vote against their own interests, it is not because they do not understand what is in their interest or have not yet had it properly explained to them.

They do it because they resent having their interests decided for them by politicians who think they know best.

There is nothing voters hate more than having things explained to them as though they were idiots.

As the saying goes, in politics, when you are explaining, you are losing. And that makes anything as complex or as messy as healthcare reform a very hard sell.

This is a culture war but it is not simply being driven by differences over abortion, or religion, or patriotism. And it is not simply Red states vs. Blue states any more. It is a war on the entire political culture, on the arrogance of politicians, on their slipperiness and lack of principle, on their endless deal making and compromises.

And when the politicians say to the people protesting: 'But we're doing this for you', that just makes it worse. In fact, that seems to be what makes them angriest of all.

And from Gary Younge at the Guardian (written in 2006):

[FONT=Arial, Helvetica, sans-serif]In his book What's The Matter With Kansas?, Thomas Frank described the tendency of working-class people to vote Republican as a form of derangement. He said that the working class had been hoodwinked into voting against its economic interests by "values" issues such as abortion and gay rights. [/FONT]

[FONT=Arial, Helvetica, sans-serif]There were two main problems with this argument. First, it suggested that poor people are incapable of working out what's best for them. Second, it gave undue emphasis to economic interests, as if they should always take primacy at the ballot box. My guess is that Frank, along with many readers of this paper, vote against their economic interests when they vote for a government that will raise taxes and redistribute wealth. It doesn't follow that, because poor people also put different priorities (opposing gay marriage or abortion) with which we disagree ahead of financial wellbeing, we are principled and they are patsies.

[/FONT][FONT=Arial, Helvetica, sans-serif]...In other words there is a clear racial attachment that white voters have to the Republican party that does not override income but certainly qualifies it. No understanding of why so many of them vote Republican can examine class as though it is distinct from race. [/FONT]

[FONT=Arial, Helvetica, sans-serif]Second, they assume a greater class attachment to the Democrats than the party deserves. Unlike the Republicans, who openly lobby for the class interests of their supporters and deliver on them, Democrats do not promise substantial changes to the lives of ordinary working people in America and rarely deliver even on the symbolic ones. [/FONT][FONT=Arial, Helvetica, sans-serif]
[/FONT]
[FONT=Arial, Helvetica, sans-serif]Which brings us to the final problem. The strongest correlation between income and voting is not whom you vote for but if you vote at all. The more you earn, the more likely you are to turn out. According to the census, 81.3% of those who earned $100,000 or more turned out in 2004; the figure for those who earned less than $20,000 was 48%. [/FONT][FONT=Arial, Helvetica, sans-serif]
[/FONT]
[FONT=Arial, Helvetica, sans-serif]That's because the rich have something to vote for. They have two parties; the poor here have none. Ultimately, the question of what's the matter with Kansas or any other state must in no small part be answered by yet another one: what's the matter with Democrats? [/FONT]

BBC News - Why do people vote against their own interests?

What's the Matter with Voting Republican If You're Poor?

 

[jIMOh]

Other than child care credits, which phase out with income, what "per child" tax credits are you referring to?

EIC has kids attached to it
Child tax credits
Additional child tax credits (you cannot take both, but this one is refundable, other is non refundable).
Additional exemptions

edit to add
child care tax credit

 

[jIMOh]

I see many issues going in a few different directions...

here are some direct opinions of my own, which I have not seen directly articulated (yet):

1) Property taxes are a method of social engineering. Meaning we choose to live in a place with similar people and much of this is controlled (or influenced?) by property taxes. If property taxes were removed, what would stop the gangs in LA from moving to Beverly Hills? The property tax is way of "funding" the police protection, the schools and the "social" climate of the area.

In addition, if the people which used the schools paid for the schools (and not the land owners pay for the schools), then what happens if a person is too poor to pay? Now the government is mandating education, requiring everyone to pay for it (even renters) and then this resembles the health care debate to me (I have to go to school and pay for it, I have to have health care and pay for it)


2) The demographics of who does not pay FIT (the 47%) is too diverse, and is not a "majority" in too many senses of the word. What I mean by this, is its not like 75% of the 47% are african americans, its not that 66% of the 47% are inner city folks, its not that 52% of the 47% are anything other than American citizens (and they are American taxpayers).

3) One of my favorite concepts is "the absence of data is not data itself". What I mean by this is you cannot correlate the voting behavior of the 47% which do not pay FIT to voting for (liberals) which keep them in office. If anything I would believe its the other way around- once elected, a person will recognize their constituency and try to support or deny programs to keep themselves in office... so if a Democrat has to turn republican to stay in office, or a republican has to turn democrat to stay in office, that trumps people (voters) voting based on whether they receive a handout or not. Once a person is elected, they will keep their constituents happy, and whether they "support" handouts is more a function of their constituents than their actual personal beliefs.

4) Those which live in good school districts should be able to sell houses "quickly" relative to lower priced/lower school tax markets. I have a friend which sends kids to private schools, but he lives in a high tax area (he pays double the taxes I do). In the most recent real estate issues our areas had, two things held true- his property value did not fluctuate as much as mine did, and the houses in his neighborhood sell faster- to extent some houses sell within 48-96 hours of being put on market (still). If school taxes are high, but the schools are not "as good" as other areas, that is a different problem.

 

[scrabbler1]

I disagree on the school taxes only for those with kids in schools for 4 main reasons

1) If you own property, your property value is a function of the value of those properties around you.
2) If you own property, your property value is set to be within a given school district
3) People will pay a premium on a property (value) to be in a given school district
4) The property value will change based on quality of school district changing

Meaning- if you do nothing to property (other than mow lawn), but school district goes to crappers, your property lost value. The opposite is also true, if the school district improves, your property value goes up. If I pay school taxes and you do not, and my school taxes raise the value of your property, I want you to pay that tax too.

I disagree.

(1) My property is a studio apartment in a large co-op complex, a complex which consists of mostly childfree residents. The value of my apartment is based a lot on the value of other apartments in my complex and in nearby co-ops, places which are also mostly childfree.

(2) People who buy apartments in these co-ops have no desire to pay a premium for something (i.e. schools) they have no plans to use.

(3) I bought my apartment back in 1989. This was just before the real estate market tanked in the early 1990s. If I sold my place in the early 1990 I would have lost nearly 50% of what I paid. The schools were not going down the drain at any point. But things rebounded over the years, and not because of anything special in the schools (in fact we had some exam grading scandals in the late 1990s). The high level of the school taxes is a constant drag on the sales price here the same way high interest rates are a drag on home sales - it increases the carrying costs of owning a place. Nearly nobody in my complex gains from having good schools but we are all penalized by having high local school taxes. Declining school quality would have no effect on anyone in my complex trying to sell because the new buyer(s) will be similarly childfree, the same way I did not give a damn about the quality of the schools when I bought my apartment.

(4) I said it before, but paying a premium for something you can't use is not limited to just schools. Our co-op is located close to the local commuter train station, something valuable to me and many others who use it. Someone who moves here but doesn't use the train is paying a premium for something they can't use (or they live someplace away from the station). But with schools we can't as easily avoid paying a premium if we have no kids.

I don't suggest we childfree pay zero local school taxes but we should receive a no-kids property tax credit the same way income tax filers receive per-kids tax credits.

 

[Gone4Good]

Either the people in both cases are idiots for voting against their economic self-interest, or they are basing their political beliefs on something else.

I think in a lot of cases its the "something else" that matters. Economic issues are not the be-all, end-all. Many people choose political parties because of non-economic issues that are important to them . . . cultural, religious, etc.

I also seem to detect a phenomenon where people join a group for one reason (say religious) but then adopt the groups other views (economic) that are of secondary, or tertiary importance to them. I think that is one way you get people supporting economic policies that don't benefit them personally.

 

[jIMOh]

I disagree.

(1) My property is a studio apartment in a large co-op complex, a complex which consists of mostly childfree residents. The value of my apartment is based a lot on the value of other apartments in my complex and in nearby co-ops, places which are also mostly childfree.

(2) People who buy apartments in these co-ops have no desire to pay a premium for something (i.e. schools) they have no plans to use.

(3) I bought my apartment back in 1989. This was just before the real estate market tanked in the early 1990s. If I sold my place in the early 1990 I would have lost nearly 50% of what I paid. The schools were not going down the drain at any point. But things rebounded over the years, and not because of anything special in the schools (in fact we had some exam grading scandals in the late 1990s). The high level of the school taxes is a constant drag on the sales price here the same way high interest rates are a drag on home sales - it increases the carrying costs of owning a place. Nearly nobody in my complex gains from having good schools but we are all penalized by having high local school taxes. Declining school quality would have no effect on anyone in my complex trying to sell because the new buyer(s) will be similarly childfree, the same way I did not give a damn about the quality of the schools when I bought my apartment.

(4) I said it before, but paying a premium for something you can't use is not limited to just schools. Our co-op is located close to the local commuter train station, something valuable to me and many others who use it. Someone who moves here but doesn't use the train is paying a premium for something they can't use (or they live someplace away from the station). But with schools we can't as easily avoid paying a premium if we have no kids.

I don't suggest we childfree pay zero local school taxes but we should receive a no-kids property tax credit the same way income tax filers receive per-kids tax credits.

We are going to disagree

my single counter point would be this

if the people in the school district moved out and were not replaced (like houses foreclosed on) your property values would go down in the apartment complex.

the decrease may not be in proportion to anything.... but it would be tough for you to convince me if the schools went bad (as in inner city ghetto bad), that the surrounding property values within that district would not suffer.

I do agree it's possible your apartment values would not go up if school improved... but the counter point to that (to me) is you still live in the district. If you did not want the tax, you were not forced to live in the district (the way we are "forced" to get health care in 2014). You have freedom to live in an area which has less property tax by selling current unit.

 

[Leonidas]

I think in a lot of cases its the "something else" that matters. Economic issues are not the be-all, end-all. Many people choose political parties because of non-economic issues that are important to them . . . cultural, religious, etc.

I also seem to detect a phenomenon where people join a group for one reason (say religious) but then adopt the groups other views (economic) that are of secondary, or tertiary importance to them. I think that is one way you get people supporting economic policies that don't benefit them personally.

You do have a point, but you forgot to include people who belong to "groups" because of where they were born - or their ancestry. There are a lot of people in this country who learned from their parents, neighbors, etc., that a strong central government is not to be trusted too far. That a government that is so big and rich that it wants to "give" you things, is a government that is too big and rich and will one day want to take things away from you. And more often than not, I'm one of those people. Given a choice between somebody who says "vote for me I support limited government involvement in your life", and "vote for me and I'll make sure you get your fair share" - I'll vote for the first guy all day long. Sure, I know they're both lying, but why vote for the liar whose telling me lies that I wouldn't support if they were true?

 

[scrabbler1]

We are going to disagree

my single counter point would be this

if the people in the school district moved out and were not replaced (like houses foreclosed on) your property values would go down in the apartment complex.

No. When appraisers do their comparables for appraising purposes, they use similar residences. So, when I refinanced the mortgage on my place, it was compared to other studio apartments in the area, not to the more expensive houses.

the decrease may not be in proportion to anything.... but it would be tough for you to convince me if the schools went bad (as in inner city ghetto bad), that the surrounding property values within that district would not suffer.

We did have that test grading scandal in the late 1990s, not as bad as a ghetto but you are still using an extreme example just to try to make a point.

I do agree it's possible your apartment values would not go up if school improved... but the counter point to that (to me) is you still live in the district. If you did not want the tax, you were not forced to live in the district (the way we are "forced" to get health care in 2014). You have freedom to live in an area which has less property tax by selling current unit.

Ugh. The "love it or leave it" argument, the last stand for those who have nothing else to argue.

Let me tell you how this affects people. First, the elderly get taxed out of their homes because they can't afford the sky-high school taxes once their kids (if they had any) move out. This breaks up families, forcing them to relocate, often far away (from this area, Long Island, New York) from the friends and relatives they have lived near for decades. Second, the young people can't afford to move back here because of the sky-high school taxes, causing a "brain drain" and further breaking up families. They often have to move away, far away. Many of my relatives have moved far away because they can't afford to live here. This is also bad for the local economy because local businesses don't have access to hiring these young, college-educated people if they live elsewhere.

In the elderly case, they stayed and fought the system which taxed them excessively and unfairly. This resulted in the creation of the Enhanced STAR program which provided state school tax rebates for those homeowners over age 65 with low incomes. This way, they were not taxed out of their homes and could continue to live here.

However, this Enhanced STAR program does nothing for non-elderly, low-income childfree people, the ones who also pay school taxes but, like the elderly, are no burden on the local schools. Instead, we are told to pay up or get out, the same way the elderly were forced to do until the Enhanced STAR program came along for them. Why can't the Enhanced STAR program apply to non-elderly, childfree people with similarly low incomes?

And where can non-elderly (under age 55, at least) childfree people live so they can pay less (or zero, perhaps) in local school taxes without breaking apart families? I would love to have some low-enrollment school districts become a childfree zones in which all the schools would be shut down and replaced with taxpaying residential properties. The kids in the district would be bussed to neighboring districts until they graduate, and childed families would be prohibited from moving in. After 10 or 15 years, this would be a childfree, school-free, school-tax-free zone within the larger county.

Can I have the freedom to create such an area within my own county to live in?

 

[freebird5825]

Two extremes...but what we have in common is our school taxes are way too high and we derive no direct benefit.
scrabbler1 lives in one of the highest taxed areas of NYS, besides perhaps Westchester County or metropolitan NYC.
I live in a much lower taxed area, i.e. out in the country with a dairy farm right nearby, but still a lot to pay for a single gal. dh2b helps as best as he is able to, but that is not the point. I should be able to afford this myself.
I can right now, but with NY in financial trouble and cutting education funding left and right, I know what is coming my way. Moving out of my home is not an option I think is "fair" for any reason.
The good news is I can afford it because I anticipated this situation and planned for it.
Seniors trying to live on lower end fixed incomes will not be able to afford the inevitable increases.

 

[ERD50]

So, what aspects of FIT that are unique to kids bother you? (Don't include personal exemptions as those are not unique to kids but rather apply to any dependent.)

I'm just not aware of these HUGE tax breaks for kids people keep whining about. Yes, low income parents probably have significantly lower taxes, as a percentage - trivial in absolute dollars, due to the child care credit if they use it. But for a middle class couple, say a couple engineers both working, the delta in taxes due to kid specific tax reductions seems minimal.

I'm guesing you're confusing the lower rate for MFJ vs single and the use of personal exemptions with savings from kids. Neither of those are kid specific.

I was planning to answer this when I got back today, I see it has taken on a life of it's own....

I had to go back through this thread, and now I see the details behind what I posted were in another thread (though I think they got mentioned here). In that thread, ( here and here ) I was specific that the credits I received were based on an ~ $84,000 AGI. You seem to be applying this comment to a couple with a much higher AGI, but I didn't comment on that, I commented on people who fit my profile.

And after all I've read, I still think that someone with~ $84,000 AGI should be on the hook for more than $24 in FIT. And I'd say that whether it was the kids getting the edu credit, or the adults. People can disagree with that, but it is how I feel.

I went back to check, yes, $4500 in credits. I'd say (even though I didn't) that $4,524 is HUGE compared to $24.

-ERD50

 

[jIMOh]

No. When appraisers do their comparables for appraising purposes, they use similar residences. So, when I refinanced the mortgage on my place, it was compared to other studio apartments in the area, not to the more expensive houses.

Not talking appraisal, talking selling the unit

I agree an appraisal used similar residences (similar style house and location)
however what a buyer pays for it will be proportional to quality of community, and if the school system went downhill, it will affect all properties in community, and if members of community left (even other style residences), your price would be affected.

Two good examples (one real, one fictional)

When GM left Flint MI, did not matter what type of residence existed, they all went downhill as far as price goes. I make similar analagy to good school district- if something in district (high foreclosures?) forced people to move out and lower tax base, all properties in that district will see a lower cost.

If Disney had to pull out of Orlando Florida, it would have a negative impact on real estate prices for everyone.

My real point is this- in most towns in tiny town USA, there is no GM or Disney which exist keeping people in the area. Its usually a combination of the schools, safety (police, fire, hospitals) and other minor conveniences (like grocery stores, bars and public transportation).

If any of those things pull out (for example the bus stop closes, the police department lays people off or the schools decrease in quality), the real estate values of that area drop- regardless of who paid how much property taxes or who used the schools, the local economics affects housing prices of everyone.

It is not proportional though

Meaning just because the value of my house dropped 25% does not mean the condo 2 miles away dropped 25%. Its possible one holds value better than other, but the prices of all will drop some degree if community goes to crapper.

edit to add-
I am reasonably familiar with long Island locations- having consulted there about 5-10 times over a 8 year span. My sister lives on Long Island and my brother went to school at south hampton (when it existed).

I understand the "high" taxes of the area, and my opinion is that there is something else entering into equation other than just school taxes- like a corrupt NYS political and budget system which misuses funds thru the whole state.

I agree your taxes on LI are sky high (my house in Ohio would probably sell for 3X what I paid for it on Long Island where my sister lives). And I know I could not afford taxes on my Ohio house if I lived in NYS either (I am from Rochester, but know things out your way are even worse).

I probably don't comprehend the nature of the problem until I live it, but its not up to the tax code to keep families together or allow them to live close to one another. That is social engineering at its worst IMO.

 

[youbet]

I went back to check, yes, $4500 in credits. I'd say (even though I didn't) that $4,524 is HUGE compared to $24.

Was ALL of that $4500 related to kiddie-exclusive credits? Or was some of it available to no-kiddies folks as well, such as the ecucation credit?

My point is, and remains, that the blanket statement that ALL families with kids get HUGE tax credits available only to families with kids is a bit broad. In fact, many of the credits are available to no-kiddie folks and many phase out as incomes rise into middle-middle class.

As far as your $24 in FIT for a $84k AGI, that does seem low. But I guess I'd need to take each case like that individually. It's a real stretch to extrapolate your situation to say that the only reason folks with mid-level AGI's pay close to zero tax is because they have HUGE kiddie-exclusive tax credits and deductions. Was it only because of kid-exclusive credits? What were the other deductions and credits? Any of the dreaded loopholes utilized? There might be a number of things that need fixin' !

I'd be in favor of some sort of flat tax, FAIR tax or whatever ERD50. That would work out well for us here as far as I can tell. Assuming a 15% rate, you would have paid $12.6k, a much more reasonable number than $24! We'd both be happy then.

 

[ERD50]

Was ALL of that $4500 related to kiddie-exclusive credits? Or was some of it available to no-kiddies folks as well, such as the ecucation credit?

Depends on your perspective, I guess. I was reporting on my personal experience, so for me it was kiddie edu credits. To be honest, I don't recall if there were any age restrictions to those (I don't think so though), and taxes are complex and time consuming enough just to figure out what I do qualify for, so I didn't take the time in this case to find out the clauses on who else would qualify.

My point is, and remains, that the blanket statement that ALL families with kids get HUGE tax credits available only to families with kids is a bit broad. In fact, many of the credits are available to no-kiddie folks and many phase out as incomes rise into middle-middle class.

I'm in total agreement. I guess this is where I'm a bit confused. I don't know if you are attributing that broad-blanket to me, or speaking about some other groups of people? There's a lot of posting and cross-posting going on, so it does get confusing to remember who said what - at least it is for me!

As far as your $24 in FIT for a $84k AGI, that does seem low. But I guess I'd need to take each case like that individually. Was it only because of kid-exclusive credits? What were the other deductions and credits? Any of the dreaded loopholes utilized? There might be a number of things that need fixin' !

$3,500 in edu credits across two kids (3 semesters only) plus $1,000 Child Tax Credit. No fancy loopholes, and I'm not including their exemptions, or any portion of contributions to Schedule A deductions or anything like that.

I'd be in favor of some sort of flat tax, FAIR tax or whatever ERD50. That would work out well for us here as far as I can tell. Assuming a 15% rate, you would have paid $12.6k, a much more reasonable number than $24! We'd both be happy then.

In some ways, what I'm asking for (in concept, not the same way they implemented it), is an AMT that goes much lower. I do think that $24 on $84K is too low, and there should be a floor on these credits. But since I'm a fan of simplification, I say change the credit system rather than put another layer of 'fixes' on top of it.

Oh well, time to gas up the mower! Spring has hit Northern IL!

-ERD50

 

[IndependentlyPoor]

This isn't about rug-rats, but...

From Top 400 Taxpayers | The Big Picture

The IRS puts out an interesting tax document each year, looking at the returns of the nations wealthiest 400 people. The most recent year of complete data is 2007, when 143 million individuals filed tax returns.
Some of the data is quite astonishing:

• The top 400 U.S. individual taxpayers got 1.59% of the nation’s household income in 2007 — 3X the p% they got in the 1990s.
• The top 400 paid 2.05% of all individual income taxes in 2007.
• Only 220 of the top 400 were in the top marginal tax bracket.
• Average tax rate of the 400 = 16.6% — the lowest since the IRS began tracking the 400 in 1992.
• Minimum annual income to make the top 400 = $138.8 million.
• Top 400 reported $137.9 billion in income; they paid $22.9 billion in federal income taxes.
• 81.3% of income was from capital gains, dividends or interest. Salaries and wages? Just 6.5%.
• The top 400 list changes from year to year: 1992-2007, it contained 3,472 different taxpayers (out of a maximum 6400).
​

And they all would still fit in Lady Astor's ballroom.

 

[dex]

• The top 400 U.S. individual taxpayers got 1.59% of the nation’s household income in 2007
• The top 400 paid 2.05% of all individual income taxes in 2007.
​

Are they paying too much in taxes?
​