I'm sick of paying taxes..

[Irvrobinson]

The vast majority of people who get such benefits only do so temporarily. And you are right, it is generally a good investment, as you went on to pay much more in taxes than that cheese was worth.

Of course, there are always people who play the system and try to get what they can. But that idea applies to the rich at least as much as the poor, and with more significant results when some rich person takes advantage of the system. After all, when a rich person weasels out of paying as much as middle class people, we are generally talking about a lot of money, not the little bit that some poor person might game from the system. So if we are going to be realistic about what matters most, it is the rich who cheat, not the poor, that makes the most difference. But for some strange reason, many people ignore them and just focus on the poor who game the system.

Who are these so-called rich people who cheat?

The top 1% of income earners, according to the iRS, are people who make something like $400,000 per year in adjusted gross income, and there are something like 1.4 million taxpayers in that class. (Which, I might add, includes married people filing jointly.) What do you think, over 90% of the 1% work for a living? You know, get their income reported on a W2? How do you cheat when your income is reported on a W2? Go ahead, play with a copy of TurboTax and try it. What you'll find is that one of two things will happen. You can try to use deductions and credits to reduce your taxes, in which case AMT will kick in, and you'll see a dollar for dollar increase in your taxes as you add deductions, outside of charitable contributions and mortgage interest. One way or another in 2014 you're probably going to pay at least 35% of AGI in federal taxes alone, and perhaps 39.6%, if you're solidly in the top 1%.

Or are we talking about business owners, who can get creative in accounting for expenses, which I think might be a problem, and what that means is that the number of Americans making over $400K per year is really a lot higher than we think it is, and the top 1% is really at a much higher level than $400K. If that's your point, it's entirely possible, though I'm not sure how to estimate it.

My point is, that people who are paid in wages, which probably make up the large majority of the official 1%, can't cheat much.

What Warren Buffet does, and Barak Obama and a lot of other high-income people do is get a substantial portion of income in the form of dividends, capital gains, tax-exempt interest from municipal bonds, royalties and probably a myriad of other obscure income sources I'm unaware of which are taxed at a rate lower than wages. Should they be taxed at lower rates below, say, $1M in personal income, but at the higher rates for wages above $1M? I'm not sure what I think about that, but such a lariat, indexed for inflation, sure would capture a lot of really rich people paying far less income tax than those who work for wages. And it would exempt the vast majority of people who really do work for a living. Hmmm.

 

[psbfan9]

Here is a very enlightening article.

Gregg Easterbrook: "The King Of Sports" | The Diane Rehm Show from WAMU and NPR

I shouldn't have labeled this an article. It's a conversation. I have been called a socialist, communist, and by the really ignorant, a socialist communist for sharing some of the views expressed in this conversation.
I am an unapologetic capitalist. I have owned a few small business's and like making money. But, the way some these corporations operate turns my stomach.
A corporation goes in to a town and says,"Give us a tax abatement, turn around when we dump our waste and pollute the water and air and in return, we will hire 100 people at $10.00 an hour."
Guess who gets to pick up the slack from less tax money being taken in? The hourly workers, towns people, state, etc,... Question them and they say look at the jobs we created. Yeah, whatever.

If you have time, read the conversation I linked. Here's a small example from the conversation. A major league baseball team owed like $30 million in taxes and they only paid $7 million because they threatened to leave the city. It's BS.

Again, I'm only slightly anti corporate. You know, Monsanto, Dupont, Major league sports teams.

 

[Pyrrho]

... A major league baseball team owed like $30 million in taxes and they only paid $7 million because they threatened to leave the city. ...

Think about how many times that sort of thing happens. And then think about how many welfare cheats it would take to eat through the millions that just one such rich bastard screwed the government out of.

Most people have no sense of proportion, and complain about things that are, relatively, trivial.





















By the way, you must be a dirty commie.

 

[Irvrobinson]

Think about how many times that sort of thing happens. And then think about how many welfare cheats it would take to eat through the millions that just one such rich bastard screwed the government out of.

Most people have no sense of proportion, and complain about things that are, relatively, trivial.

The problem wasn't the "rich bastard", he was just negotiating because he could. The city must be making a hell of a lot more than $30M by having them there, or they are just stupid leaders. Lots of companies negotiate with local governments for tax abatements, because they can, and because local tax policies are often ridiculously ambitious anyway. As a stockholder I *want* the companies I invest in to lower their costs as much as practical. If that means moving, so be it.

 

[herbu]

it is the rich who cheat, not the poor, that makes the most difference

Perhaps... but let's be cautious what we call "cheating". If the law permits your activity, it's not cheating. Some things within this discussion might be considered "abuse", but they are not illegal.

There are so many special interests and backroom deals, (and have been forever), that our law is replete with loopholes and workarounds. It makes abuse possible. That's why I like the idea of a flat national sales tax instead of our current system. No deductions, no exemptions, no exceptions. The more you spend, the more tax you pay. Period. What could be more "fair" than everyone paying the same rate?

Of course it will never happen. Too much money is made off of the current tax laws. A TV ad today likes to say that Americans pay $1B/year more in taxes than they have to because they don't take full advanatage of the tax law. Our govt will not be in a hurry to give up that $B. Then think about all the CPAs, lawyers, and others that make their living applying tax law. It has to be billions. That special interest will never support doing away with themselves.

Thus, I don't know what the answer is.

 

[Rickster71]

While there are some great points being made... Chris is the only one really qualified to speak on the subject and chooses not to.

With that being said, here's some of my unqualified $0.02

One thing we all should realize is that "Big Business" and "Big Government" have always been in bed together.
Playing Good Cop & Bad Cop from the beginning.

Tax loop holes for the rich are put there by their equally rich counterparts in Government.

Did you know that Congress is still exempt from insider trading rules?
Despite the big Dog & Pony show (last year) made to the contrary.

 

[Adam]

That's why I like the idea of a flat national sales tax instead of our current system.

What would that rate have to be, though? I'm thinking enormous. I currently pay more in taxes than I spend on goods every year.

For that to work, the current price structure would have to change, IMO. "Rich" people (you all can draw the line for what that means) spend a smaller percentage of their income on any given item versus "poor" people. For example, a $10 blu-ray that costs ~$11 after tax. If that $10 blu-ray then went to $20 after tax, it would be a much bigger deal to the person earning $20k/year than to the person earning $200k/year. "Eh, it's just a blu-ray." Fair, but that tax would hit everything with (I hope) the exception of food.

I think that the emotional response to the sticker shock would be through the roof.

 

[Nestor]

What would that rate have to be, though? I'm thinking enormous. I currently pay more in taxes than I spend on goods every year.

For that to work, the current price structure would have to change, IMO. "Rich" people (you all can draw the line for what that means) spend a smaller percentage of their income on any given item versus "poor" people. For example, a $10 blu-ray that costs ~$11 after tax. If that $10 blu-ray then went to $20 after tax, it would be a much bigger deal to the person earning $20k/year than to the person earning $200k/year. "Eh, it's just a blu-ray." Fair, but that tax would hit everything with (I hope) the exception of food.

I think that the emotional response to the sticker shock would be through the roof.

Sales taxes have several problems:

1. They are regressive. A rich person doesn't care if his milk costs 50 cents more, but you can bet a single mother struggling with a couple of kids will.

2. They discourage spending. The people basing their purchase decisions on whether they can afford the sales tax are generally not the wealthy, and they are the primary drivers of the economy. One only needs to look at the last recession to see what happens when consumers stop spending.

3. They create an underground economy. Those that pay under the table to avoid sales tax also cost the govt business taxes on income, because the sale won't be declared.


Income taxes need to be progressive. Money has gravity, and the more of it you have, the more of it you can make.

Capital gains should be taxed as income. Too many hedge fund managers have been getting away with declaring their management fees as "carried interest" when it is their primary income. A sizeable portion of Mitt Romney's income (31%) was carried interest, which contributed to his net tax rate of 17%. Most hedge fund managers pay even less.

Dropping income tax rates on the rich leads to two results: less govt. revenue and more income inequality.

 

[Pyrrho]

The problem wasn't the "rich bastard", he was just negotiating because he could. ...

Perhaps... but let's be cautious what we call "cheating". If the law permits your activity, it's not cheating. Some things within this discussion might be considered "abuse", but they are not illegal.

...

That same idea applies to poor people who game the system for welfare. This fact does not stop people from complaining about that relatively trivial problem and excusing the more serious problem of rich people manipulating the system.

To put this another way, the more serious problem is what should be dealt with first, and should be the object of more complaints. If you have two holes in your boat, patching the little one first and ignoring the big one is idiotic.

 

[Rickster71]

To put this another way, the more serious problem is what should be dealt with first, and should be the object of more complaints. If you have two holes in your boat, patching the little one first and ignoring the big one is idiotic.

It will never happen.
The big hole caused by rich people bribing rich politicians will never close. Even though we were promised with "Hope & Change"
It never changed.

The small hole will also remain, since rich politicians bribe us poor folks with free government hand outs in exchange for votes, power and influence. And of course more bribe money from special interest groups.
Oh yes, the joys of using other people's money.

 

[Rickster71]

Just to check something; I added up my yearly local property taxes.
In less than 28 years I will have paid $150,000 in local taxes. Not including State, or Federal Taxes... with never having kids using the school system.
That's also my home's original price.
That to me is excessive taxation.

 

[GranteedEV]

As an outsider looking in to USA's economics, perhaps I'm in a bad place to comment. I do know that we pay more tax here than you guys do yet we don't seem to be as hurt by it nor is the middle class willing to give up the health care or other government funded stuff for a more free-for-all system. I mean our town is an oil town so you'd think capitalist sentiment would be rampant but it isn't apparant to me whether i talk to people with either white or blue collar backgrounds.

I think, and correct me if i'm wrong - that the difference is that USA has a history of projects and ghettos which have become status quo whereas Canada's parallel is a lot smaller in scale even in major cities. Simply put people are resistant to a shift away from the status quo more than they are actually affected. I mean on average you'll be paying that same 35-40% tax here even in middle income brackets but because that is the status quo, it's not outrageous at all. It just "is what it is".

 

[Rickster71]

I think part of it is the USA's vast population vs Canada. Not to sound flippant, but there isn't anyone in Canada comparatively speaking.
Our one state of California has a greater population than all of Canada. So with that comes more call for services, etc.
Oh, and more corruption and waste.

 

[Pyrrho]

Just to check something; I added up my yearly local property taxes.
In less than 28 years I will have paid $150,000 in local taxes. Not including State, or Federal Taxes... with never having kids using the school system.
That's also my home's original price.
That to me is excessive taxation.

You still benefit from the schools. Those schools teach other people, who become your doctor, lawyer, plumber, whatever.

I don't have children either, but I certainly don't want to live in a society where other people's children are not taught anything. We would soon devolve into a third world country if people did not get any education. Sure, the educational system we have has more than its share of problems, but it is far, far better than nothing.

 

[Pyrrho]

As an outsider looking in to USA's economics, perhaps I'm in a bad place to comment. I do know that we pay more tax here than you guys do yet we don't seem to be as hurt by it nor is the middle class willing to give up the health care or other government funded stuff for a more free-for-all system. I mean our town is an oil town so you'd think capitalist sentiment would be rampant but it isn't apparant to me whether i talk to people with either white or blue collar backgrounds.

I think, and correct me if i'm wrong - that the difference is that USA has a history of projects and ghettos which have become status quo whereas Canada's parallel is a lot smaller in scale even in major cities. Simply put people are resistant to a shift away from the status quo more than they are actually affected. I mean on average you'll be paying that same 35-40% tax here even in middle income brackets but because that is the status quo, it's not outrageous at all. It just "is what it is".

I think there is a fundamental difference in attitude in Canada versus the U.S., though obviously, such a generalization is going to have many exceptions. In the U.S., many people have the [ridiculous and false] idea that they stand alone, getting what they have with no help from others, whereas Canadians seem to understand that they live in a society, a group, and what happens to others matters for the individual. So, I think it might be good to have a different perspective than what many people are exposed to in the U.S. Besides, it's a free country, and you can say almost anything you want.

 

[Rickster71]

You still benefit from the schools. Those schools teach other people, who become your doctor, lawyer, plumber, whatever.

I don't have children either, but I certainly don't want to live in a society where other people's children are not taught anything. We would soon devolve into a third world country if people did not get any education. Sure, the educational system we have has more than its share of problems, but it is far, far better than nothing.

Nowhere did I say any of that.
I simply did the math and the taxation is excessive.

 

[markw]

As if it's not heating up enougth as it is...

This link should provide a bit of fuel to the fire. See? It's not just here, it's all over.

Here's another link that might surprise some people.

 

[Pyrrho]

Nowhere did I say any of that.
I simply did the math and the taxation is excessive.

Simply doing the math cannot possibly lead to the conclusion that the taxation is excessive. That "taxation is excessive" is a judgement that is not a question of mathematics at all.

 

[ImcLoud]

Simply doing the math cannot possibly lead to the conclusion that the taxation is excessive. That "taxation is excessive" is a judgement that is not a question of mathematics at all.

You lost me at "simply"...

 

[ImcLoud]

Just to check something; I added up my yearly local property taxes.
In less than 28 years I will have paid $150,000 in local taxes. Not including State, or Federal Taxes... with never having kids using the school system.
That's also my home's original price.
That to me is excessive taxation.

So $150K in property tax for over 25 years, not too shabby, I pay more than that in one year, lol... they also tax us on our cars every year here, some other states just get taxed once, we get annual vehicle property taxes... my 2013 rubicon taxes were $1280 for last year, I think it has 1900 miles on it, I paid sales tax on almost $40K when we bought it {$2800} so to date it has cost me over $2 per mile just in taxes!!!!!!