Happy Tax Day!

[FORANE]

So at the very least you would need estate taxes in addition to sales taxes, unless we want to create multi-millennia aristocracies.

The second issue is that the wealthy spends more of their money off shore, which won't be subject to sales tax.

Do WE create multi-millennia aristocracies? I thought individuals created wealth and chose to pass their already taxed wealth on to their family. I thought estate taxes took already taxed assets from individuals who have passed on.

With regard to the second issue, while some wealthy may spend money off shore, a national sales tax would bring in tax revenue from foreigners who spend money in the US. It would also bring in tax revenue from the income earned through illegal activity and under the table activity.

 

[deonb]

Do WE create multi-millennia aristocracies? I thought individuals created wealth and chose to pass their already taxed wealth on to their family. I thought estate taxes took already taxed assets from individuals who have passed on.

Yes, it is my and your 401k's and IRA's that creates the Bill Gates's of the world. And people should absolutely be able to do that and gain that level of wealth, but if the uber wealthy doesn't spend the money back into the economy it gets trapped and progressively less and less taxes are earned from them, causing the people who has no choice other than to spend all their money to have to pay more and more in taxes.

Any incentive for the uber wealthy to spend money would be fine, but sitting in a bank account for 2000 years doesn't work. It doesn't need to be taxes - allowing modest inflation (around 5%) would serve the same purpose, but the U.S. economy and aging population isn't really geared well to deal with inflation.

Estate taxes are bad when it impacts already taxed assets. But the proposal under discussion is for the abolishment of an income tax, and replacing it with a sales tax. So then it wouldn't be already taxed assets. Well, unless it's from sales income, but the chances of that for the uber wealthy is pretty slim. It almost always comes from capital gains instead.

With regard to the second issue, while some wealthy may spend money off shore, a national sales tax would bring in tax revenue from foreigners who spend money in the US. It would also bring in tax revenue from the income earned through illegal activity and under the table activity.

Both of those are excellent arguments in favor of a sales tax. I was more referring to assets. If I can buy a yacht from a U.S. company vs. one in Monaco, and the one in Monaco is $1m less because it isn't taxed, I know which one I'm going to buy. Once you're at that level, it's pretty easy to find loopholes in the system. Same reason why it's idiotic to try and tax corporations for money earned abroad.

 

[PaulS]

Envy is a terrible thing, it skews perceptions and causes twisted arguments to justify revenge. I'm always amazed it liberals explaining the concept of fair. It is truly mind blowing, especially when you consider the "wealthy" pay most of the federal income tax. Yet the liberals still claim they aren't paying a "fair" share.

 

[deonb]

Envy is a terrible thing, it skews perceptions and causes twisted arguments to justify revenge. I'm always amazed it liberals explaining the concept of fair. It is truly mind blowing, especially when you consider the "wealthy" pay most of the federal income tax. Yet the liberals still claim they aren't paying a "fair" share.

Not everything everybody do is for self-serving reasons. I pay around 15 times the national average in taxes - talk about a "fair" share. Even a 100% sales tax instead would mean less taxes for me. And yet I STILL don't support it.


But that wasn't really the point - the discussion at hand is about how to simplify the tax code.

My tax return this year was 127 pages for crying out loud! And my tax positions is about as simple as it gets - I can explain it to someone over the phone in under a minute. It shouldn't require 127 pages of documentation.

So the topic of a flat tax came up, and how best to achieve that.

My contention is simply that sales tax isn't flat. It's lopsided to the middle class. (And to the poor if you have sales tax on necessities, but necessities have always been exempted from sales tax.)

 

[Bill]

but necessities have always been exempted from sales tax.)

Depends on the state, here in TN sales tax is on everything. Food, clothes, everything you buy.

 

[SoonerAviator]

Not everything everybody do is for self-serving reasons. I pay around 15 times the national average in taxes - talk about a "fair" share. Even a 100% sales tax instead would mean less taxes for me. And yet I STILL don't support it . . . My contention is simply that sales tax isn't flat. It's lopsided to the middle class. (And to the poor if you have sales tax on necessities, but necessities have always been exempted from sales tax.)

You seriously don't get it. The FairTax isn't really lopsided towards anyone, that's why it's called the "Fair Tax". Products that are considered necessities are sold at low or no sales tax, so it doesn't change much for many. However, here in OK (as well as TN apparently) we don't have sales tax exemptions on food/clothing/etc, it's all the same. The rich tend to consume more, so they will pay more in taxes, it's not rocket science. Will they pay a greater percentage of their income in taxes than they do currently? Some will, some won't. However, there is not a better way to ensure that all people are able to control their tax burden, and that it gets applied equitably to all classes/parties. You really need to go to the link I provided to you and read through the bullet points, hell pull up a Wikipedia article on it. It dispels pretty much every point you've tried to make. The end result is that you end up with a few trillion more in tax revenue annually because it expands the tax base (and includes all of the "undocumented workers"). Also, it makes it very easy to see how much you spend/save without having to do tax calculations for deductions and such.

 

[PPC1052]

It's as regressive as you can get. The middle class pays a MUCH higher percentage of their income in sales tax as either the wealthy or the poor.

Don't confuse fairtax with a straight sales tax. It's not the same.

 

[GlennAB1]

I think a bigger problem is people concerned about other people's money and what they do with it.

 

[SoonerAviator]

I think a bigger problem is people concerned about other people's money and what they do with it.

Agreed 100%. After you've earned it, you should be able to do whatever you want with it. If that's save every dime, or give every penny to your children or a charity, so be it.

 

[PaulS]

Not everything everybody do is for self-serving reasons. I pay around 15 times the national average in taxes - talk about a "fair" share. Even a 100% sales tax instead would mean less taxes for me. And yet I STILL don't support it.


But that wasn't really the point - the discussion at hand is about how to simplify the tax code.

My tax return this year was 127 pages for crying out loud! And my tax positions is about as simple as it gets - I can explain it to someone over the phone in under a minute. It shouldn't require 127 pages of documentation.

So the topic of a flat tax came up, and how best to achieve that.

My contention is simply that sales tax isn't flat. It's lopsided to the middle class. (And to the poor if you have sales tax on necessities, but necessities have always been exempted from sales tax.)

My point is "fair" as defined by most in tax discussions isn't actually fair at all. When I go out with the guys and we split the check, we don't adjust for income, we divide the number of people in the party into the check total and each pay our share, our fair share. We don't quibble over Jack, who makes twice as much as Dave because we all enjoyed the meal and drinks and we pay our fair share. If taxes were "fair" then on the federal level, for personal income taxes, we would take the number of people, divide the bill evenly amongst those people and make that the amount each owes. So, keeping the number easy, let's say the total tax levy for the nation is $3 trillion, and the total population is 300 million, each citizen's fair share of income tax would be $10,000.00 . That would be fair, and there would be a revolt as people would understand that the tax burden is oppressive and unnecessary.

As far as your tax situation, I feel your pain, my return is probably close to 1.5 to 2 times the number of pages of yours. Yet if most knew my details they would still think I don't pay my fair share of taxes, even though I also pay many times the average.

 

[JoseCuervo]

How so? You mean unfair as in everyone has to pay it? That sounds really unfair.

Poor people spend 100% of their income buying things. (Food, clothes, etc...)

Rich people spend a smaller portion of their income buying things (Food, clothes, etc...)

Therefore, Sales Tax hits poor people on 100% of their income.

Sales Tax hits rich people on a small portion of the their income.


That is called regressive. And that is not fair.

 

[NHWannabe]

My point is "fair" as defined by most in tax discussions isn't actually fair at all. When I go out with the guys and we split the check, we don't adjust for income, we divide the number of people in the party into the check total and each pay our share, our fair share. We don't quibble over Jack, who makes twice as much as Dave because we all enjoyed the meal and drinks and we pay our fair share. If taxes were "fair" then on the federal level, for personal income taxes, we would take the number of people, divide the bill evenly amongst those people and make that the amount each owes. So, keeping the number easy, let's say the total tax levy for the nation is $3 trillion, and the total population is 300 million, each citizen's fair share of income tax would be $10,000.00 . That would be fair, and there would be a revolt as people would understand that the tax burden is oppressive and unnecessary.

As far as your tax situation, I feel your pain, my return is probably close to 1.5 to 2 times the number of pages of yours. Yet if most knew my details they would still think I don't pay my fair share of taxes, even though I also pay many times the average.

Revert to how taxes were paid for before withholding and people would change their views on "fairness" as too many people are content to overpay weekly and then get a "refund"...let them feel the pain of whatever lump sum payment is required and they will be storming the gates, as it were.

 

[denverpilot]

Depends on the state, here in TN sales tax is on everything. Food, clothes, everything you buy.

I had to go look that one up. Wow. Taxing unprepared food is incredibly regressive.

 

[deonb]

You seriously don't get it. The FairTax isn't really lopsided towards anyone, that's why it's called the "Fair Tax". Products that are considered necessities are sold at low or no sales tax, so it doesn't change much for many. However, here in OK (as well as TN apparently) we don't have sales tax exemptions on food/clothing/etc, it's all the same. The rich tend to consume more, so they will pay more in taxes, it's not rocket science. Will they pay a greater percentage of their income in taxes than they do currently? Some will, some won't. However, there is not a better way to ensure that all people are able to control their tax burden, and that it gets applied equitably to all classes/parties. You really need to go to the link I provided to you and read through the bullet points, hell pull up a Wikipedia article on it. It dispels pretty much every point you've tried to make. The end result is that you end up with a few trillion more in tax revenue annually because it expands the tax base (and includes all of the "undocumented workers"). Also, it makes it very easy to see how much you spend/save without having to do tax calculations for deductions and such.

I'm fairly familiar with the FairTax proposal. Are you? (For starters FairTax doesn't exempt necessities - it addresses taxes of the poor using a prebate instead, which is pretty fundamental to how FairTax works). However, let's do the numbers on that system:

I make about 300% of what my mother in law makes. Under the current system I pay a 20% effective tax rate and she pays 34%. This is the kind of disparity that FairTax is supposed to resolve.

However, if I calculate both of our taxes using FairTax, my tax rate would drop to 10% and hers would drop to 19% (both after the prebate). So the disparity is actually even worse. And I'm not a 1%'r even - when you go higher than that the percentage drops even more.

Ahh... but you say that means I save more money so every 10 years I'll splurge on a big ticket item like a DA62 , and then the taxes kick in. Nope - I'll just fly to Austria to pick it up and avoid paying any sales tax on it. Same if I buy a car. Why pay 40% more for an American car (when including state sales tax), when I can do a BMW ED (European Delivery) tax free?

 

[PaulS]

Poor people spend 100% of their income buying things. (Food, clothes, etc...)

Rich people spend a smaller portion of their income buying things (Food, clothes, etc...)

Therefore, Sales Tax hits poor people on 100% of their income.

Sales Tax hits rich people on a small portion of the their income.


That is called regressive. And that is not fair.

Ah class warfare. If the tax is too high for everyone to afford, lower it so everyone can afford, that would be fair.

 

[PaulS]

I'm fairly familiar with the FairTax proposal. Are you? (For starters FairTax doesn't exempt necessities - it addresses taxes of the poor using a prebate instead, which is pretty fundamental to how FairTax works). However, let's do the numbers on that system:

I make about 300% of what my mother in law makes. Under the current system I pay a 20% effective tax rate and she pays 34%. This is the kind of disparity that FairTax is supposed to resolve.

However, if I calculate both of our taxes using FairTax, my tax rate would drop to 10% and hers would drop to 19% (both after the prebate). So the disparity is actually even worse. And I'm not a 1%'r even - when you go higher than that the percentage drops even more.

Ahh... but you say that means I save more money so every 10 years I'll splurge on a big ticket item like a DA62 , and then the taxes kick in. Nope - I'll just fly to Austria to pick it up and avoid paying any sales tax on it. Same if I buy a car. Why pay 40% more for an American car (when including state sales tax), when I can do a BMW ED (European Delivery) tax free?

Wait a minute, something is wrong with your tax rates, she is making a huge salary if her effective tax rate is 34%.

 

[deonb]

Wait a minute, something is wrong with your tax rates, she is making a huge salary if her effective tax rate is 34%.

Not really. It's over 6 figures, but not substantially so. But I count FICA on both her side & her employer side. And I similarly count self-employment taxes on my side.

 

[PaulS]

Not really. It's over 6 figures, but not substantially so. But I count FICA on both her side & her employer side. And I similarly count self-employment taxes on my side.

We are having a terminology issue here. Most of fica caps out and becomes insignificant as salary goes up. The 39% bracket starts at around $400k, money above that is taxed at 39%. It would take much more than $400 k income to bring her effective tax rate to 34%. Also, "over 6 figures" means over $999,999.00 for her, is that what you mean?

 

[deonb]

We are having a terminology issue here. Most of fica caps out and becomes insignificant as salary goes up. The 39% bracket starts at around $400k, money above that is taxed at 39%. It would take much more than $400 k income to bring her effective tax rate to 34%. Also, "over 6 figures" means over $999,999.00 for her, is that what you mean?

No, let's take $100'000 as an example. First take off the 7.65% FICA ($7650) and then you're taxed on the $92'350. The tax table lookup for that is $18'936. Then add both sides of FICA ($15300), getting to a total tax burden of $34236. Or 34% of $100'000*. It did seems high to me as well - but I've seen her return, and it really does add up to 26% without the employer side of FICA.

Where mine is 20% even including the self-employment tax (which is basically both sides of FICA).

Sorry, yes, I can see "over 6 figures" can ambiguously mean 7 figures. I didn't mean that - I meant over $100k.


* Ok, I'll admit - technically, it's 32% of $107'650.


Also, PS: my deepest condolences on this:

My return is probably close to 1.5 to 2 times the number of pages of yours

 

[SoonerAviator]

Poor people spend 100% of their income buying things. (Food, clothes, etc...)

Rich people spend a smaller portion of their income buying things (Food, clothes, etc...)

Therefore, Sales Tax hits poor people on 100% of their income.

Sales Tax hits rich people on a small portion of the their income.


That is called regressive. And that is not fair.

Lol, there is no way, short of communism, that you will be able to steal enough in taxes from the wealthy to make them spend the same percentage of income on food/clothing as the poor person does. It's not even a point worth debating. The very nature of being wealthy assumes that you would spend a smaller portion of earnings on necessities. The prebate portion of the FairTax addresses the necessities issue.

 

[deonb]

My point is "fair" as defined by most in tax discussions isn't actually fair at all. When I go out with the guys and we split the check, we don't adjust for income, we divide the number of people in the party into the check total and each pay our share, our fair share. We don't quibble over Jack, who makes twice as much as Dave because we all enjoyed the meal and drinks and we pay our fair share. If taxes were "fair" then on the federal level, for personal income taxes, we would take the number of people, divide the bill evenly amongst those people and make that the amount each owes..

I often split checks with other people on income disparity lines. Otherwise I don't get to do the things I want to do with the people I want to do it with. I bet most people on here have done the same.


But regardless, there are 2 points of view on "fair". Regressive tax can be considered "fair" since the rich don't (substantially) use more resources than the poor. If you pay 10 times the average, you don't get 10 times the votes, the fire department doesn't come to your house 10 times faster, and your water isn't 10 times cleaner (well... this one used to be true).

On the other side, a progressive tax (at least a flat one) can be considered "fair" since the rich has more of their income supported by the government. If you earn 10 times more than Joe, you've had 10 times more customers at your place of business, who used 10 times the number of roads, educated by 10 times more schools, and had their assets protected until they can use it to buy your stuff by 10 times more police.

Neither is really "fair" in all situations, which is what leads to endless debate.

From my point of view, the government has no business doing anything that can be funded with regressive taxes. If it can be funded that way, the private sector can do it as well. What the private sector can't do however is to charge a progressive rate for the same thing (won't work for obvious reasons).

 

[denverpilot]

I often split checks with other people on income disparity lines. Otherwise I don't get to do the things I want to do with the people I want to do it with. I bet most people on here have done the same.

Like, going out to dinner and splitting the check on income level? Umm... no... can't say I've ever done that. I've offered to just buy dinner outright and didn't expect any reciprocation before, but actually splitting a check on income lines? No... that's weird.

Plus, the "split checks" seems to indicate the only "things you want to do with people you want to do it with" is go out to dinner? I'd rather have them over and cook something for them. I can't think of other activities where "split checks" makes any sense.

Why do I have a feeling you're just kinda making this crap up just for the purposes of the post? LOL...

 

[deonb]

Like, going out to dinner and splitting the check on income level? Umm... no... can't say I've ever done that. I've offered to just buy dinner outright and didn't expect any reciprocation before, but actually splitting a check on income lines? No... that's weird.

Plus, the "split checks" seems to indicate the only "things you want to do with people you want to do it with" is go out to dinner? I'd rather have them over and cook something for them. I can't think of other activities where "split checks" makes any sense.

Why do I have a feeling you're just kinda making this crap up just for the purposes of the post? LOL...

I'll give you an example. I often go to the French Laundry in Napa, which works out to around $500 per person - depending on wine, extras etc. However, you virtually can't ever get a reservation if you're just 1 or 2 people, you have to be a group of 3 or 4. So going there means inevitably dragging someone else with - which don't get me wrong, people I love spending time with, but this is not an activity they would generally spend that much money on.

Family members are generally ok if you just pay for them, but friends and colleagues tend to insist on paying, even though I know they can't afford that. Or maybe they can just about make it, but they'll be very unhappy about it after. So we work out an arrangement - the easiest one is "let's each put in one days earnings".

It helps that the French Laundry will print a menu without prices on it if you call them up before and ask for it .

 

[denverpilot]

I'll give you an example. I often go to the French Laundry in Napa, which works out to around $500 per person - depending on wine, extras etc. However, you virtually can't ever get a reservation if you're just 1 or 2 people, you have to be a group of 3 or 4. So going there means inevitably dragging someone else with - which don't get me wrong, people I love spending time with, but this is not an activity they would generally spend that much money on.

Family members are generally ok if you just pay for them, but friends and colleagues tend to insist on paying, even though I know they can't afford that. Or maybe they can just about make it, but they'll be very unhappy about it after. So we work out an arrangement - the easiest one is "let's each put in one days earnings".

It helps that the French Laundry will print a menu without prices on it if you call them up before and ask for it .

Haha. Wow. First World Problems.

 

[Mason]

Myth #2: Businesses only "collect tax for the State".

This is the ultimate koolaid, a brilliant ploy to soften the blow and make the burden of paying business taxes more palatable.

Example: The "payroll withholding" tax is the ultimate sham, in which the government tells us that your employer is merely "withholding" taxes from their employees paychecks. Thus, the myth that you are making (for example) $10/hour is maintained.

In real life, you are being paid $7.50/hour, and your employer is paying a $2.50/hour "employee tax" -- the most regressive, anti-employment tax ever devised.

Jay, this seems to come up every year about this time. Fact is, "You" are not paying this tax, your employee is paying it. You hold it back from his prescribed pay rate and you send it in. It is HIS money, not yours. And it is reflected on his W-2 as such.

 

[PaulS]

Jay, this seems to come up every year about this time. Fact is, "You" are not paying this tax, your employee is paying it. You hold it back from his prescribed pay rate and you send it in. It is HIS money, not yours. And it is reflected on his W-2 as such.

Actually not totally true. Jay has to pay fica, plus states usually take a cut too. That comes out of Jay's pocket.

 

[James331]

I think a bigger problem is people concerned about other people's money and what they do with it.

X100000

Nail on the friggin' head!

 

[Jay Honeck]

Jay, this seems to come up every year about this time. Fact is, "You" are not paying this tax, your employee is paying it. You hold it back from his prescribed pay rate and you send it in. It is HIS money, not yours. And it is reflected on his W-2 as such.

Mmm, koolaid is yummy!

Seriously, I'm not "holding back" anything. I'm just paying the bill, and paying my employees commensurately less, while lying to them about their actual wages.

It's sort of the same farce as "owning property". If you have to pay ever-increasing property tax for all eternity on "your" land, do you actually own it? I would contend that you are merely renting it from the government.

Most of what people think they know about our tax system is wrong. The entire system is built on a web of lies, half-truths, and innuendo, designed to obscure and soften the burden.

 

[JoseCuervo]

Ah class warfare. If the tax is too high for everyone to afford, lower it so everyone can afford, that would be fair.

How is that "class warfare"?

That is simple math and economics. I was just defining and providing an example of how a Sales Tax is a terribly regressive tax.

 

[JoseCuervo]

Mmm, koolaid is yummy!

Seriously, I'm not "holding back" anything. I'm just paying the bill, and paying my employees commensurately less, while lying to them about their actual wages.

It's sort of the same farce as "owning property". If you have to pay ever-increasing property tax for all eternity on "your" land, do you actually own it? I would contend that you are merely renting it from the government.

Most of what people think they know about our tax system is wrong. The entire system is built on a web of lies, half-truths, and innuendo, designed to obscure and soften the burden.

Are any taxes acceptable to you?

 

[Mason]

Actually not totally true. Jay has to pay fica, plus states usually take a cut too. That comes out of Jay's pocket.

Well yes, that is correct with regard to half of FICA. But not Income tax. Jay has no way of knowing his employee's total tax situation. It is quite possible the employee has a refund of all that and in effect pays no income tax at all.

 

[PaulS]

Well yes, that is correct with regard to half of FICA. But not Income tax. Jay has no way of knowing his employee's total tax situation. It is quite possible the employee has a refund of all that and in effect pays no income tax at all.

Payroll tax generally refers to fica and medicare taxes.

 

[John Baker]

How can any of us who reap the wonderful rewards and the many services that having a large government provides to us, how can we possibly not be willing to contribute our fair share to its support and growth?

-John

 

[James331]

How can any of us who reap the wonderful rewards and the many services that having a large government provides to us, how can we possibly not be willing to contribute our fair share to its support and growth?

-John

Uhh, are you a indigent or government worker?

I maybe see maybe 10% of my tax dollars in what I "enjoy" in my daily life.

 

[John Baker]

I was going to put that in green print for sarcasm, but then I figured what the heck, see if anyone bites.

I'm wondering that if one were to do a personal evaluation of government, you know, make a list of all the good things then a list of all the bad things that affect you personally....... oops, better not go there.

-John

 

[deonb]

Uhh, are you a indigent or government worker?

I maybe see maybe 10% of my tax dollars in what I "enjoy" in my daily life.

Social Security & Medicare make up 60% of the federal budget. You may not enjoy it now, but it's yours.

As for the rest, no way it's 10% that you "enjoy" in your daily life unless you're in the military. There is only 11% of your money left after social security, military & debt interest!

So unless you're retired, you'd literally have to be using 91% of all of the remainder of government services to have 10% enjoyment. Farmer, living in HUD, going to school, working for NASA, and getting SNAP at the same time?

 

[Jay Honeck]

Are any taxes acceptable to you?

Yes. I like honest taxes.

Just 'fess up and call it like it is:

1. If you want to tax hotels as some sort of luxury tax, just tax the hotel owners 13% of their gross, and quit lying about it being merely a "pass-through" tax on guests. It's like saying that I'm not really paying an electric bill because I'm merely withholding it from my guests, which insults my intelligence.

2. If you want to tax goods and services, fine, just tax the owners 8% (or whatever your state charges) on all their gross income, and quit lying about it merely being a "pass-through" tax on consumers.

3. If you want an employment tax, fine, just tax employers 25% of the gross they are paying each employee, and quit lying about how we are simply "withholding".

4. If you want income tax on top of employment tax, fine, send every citizen a post card that says they owe 10% (or whatever) of their take-home pay.

I just want government to QUIT LYING.

An aside: As we approach a cashless society, the government will soon have the ability to make the so-called "pass-through" taxes (described above) truly pass-through by instantly collecting the tax each time you swipe your card. This will completely remove the businesses from the equation (which I will initially welcome) and will open the door to an endless array of initially small but ultimately egregious micro-taxes.

We are already at the point where we rarely see cash in our business. It won't be long until the bureaucrats, in conjunction with the (already uber-powerful) credit card companies, figure this one out. If you think taxes are crazy-high now, just WAIT till they get that ability.

 

[deonb]

3. If you want an employment tax, fine, just tax employers 25% of the gross they are paying each employee, and quit lying about how we are simply "withholding".

You must have held only 1 job in your life, with only 1 employer at a time, that started on the 1st of January of some year.

 

[steingar]

How can any of us who reap the wonderful rewards and the many services that having a large government provides to us, how can we possibly not be willing to contribute our fair share to its support and growth?

-John

To be honest, living in a secure society where I can invest in my property without worrying about it being bombed tomorrow and knowing I can't be victimized for expression of my thoughts is actually a really big deal. Our government and society does a crapload for us, most of which we blithely take for granted.

 

[hindsight2020]

I often wonder what our Country would look like if we canx'd Medicare/SS entirely and dropped DOD budget allocation by a cool 50%?


If not this pie, which then?