Tax cuts explained:

[Strelnikov]

(a la J.P. Scanlon)

If you don't understand the Democrat's version of tax cuts (and you are not alone), this should help:

50,000 people went to a baseball game, but the game was rained out. The team was about to mail refunds when the Congressional Democrats stopped them and suggested that they send out refund amounts based on the Democrat National Committee's interpretation of fairness. After all, if the refunds were made based on the price each person paid for the tickets, most of the money would go to the wealthiest ticket holders. That would be unconscionable.

The DNC plan says:

People in the $10 seats will get back $15, because they have less money to spend. Call it an "Earned Income Ticket Credit".

People in the $15 seats will get back $15, because that's only fair.

People in the $25 seats will get back $1, because they already make a lot of money and don't need a refund. If they can afford a $25 ticket, then they must not be paying enough taxes.

People in the $50 luxury seats will have to pay another $50, because they have way too much to spend.

The people driving by the stadium who couldn't afford to watch the game will get $10 each, even though they didn't pay anything, because they need the most help.

Please contact Senator Tom Daschle or Representative Nancy Pelosi if further explanation is needed.



Strelnikov

 

[amk714]

Hate to disappoint ya, Strel, but we liberals don't think like that. 😀

 

[qjakal]

Interesting...

Surprised they didn't want to create a committee to oversee the refunds. So, the secret to life is to find the $15 seats and sit in 'em? Q

 

[venray]

Hate to disappoint ya, Strel, but we liberals don't think like that. 😀

Unfortunately Alexander, that is EXACTLY how the Democratic leaders think...lol..check the history books..


Ven

 

[kurchatovium]

This is one reason I gave up on the Democratic party years ago because the end up defining anyone in the middle income range as being rich. Then they try to snowjob you and tell you that are only taxing the rich people.

Of course they really do ream the people who are really rich. These really rich people in turn raise prices on goods and services for the companies they control or they just lay people off to make up the costs of the higher taxes. This means that people in the middle get screwed again. Rich people always come out on top, that is why everyone wants to be rich. If everyone would quit trying to punish people for being rich we would all be better off.

 

[shark]

A flat rate income tax could easily stop this nonsense.

 

[kurchatovium]

I agree shark a flat rate income tax would definitely fix a lot of these problems.

 

[ShiningIce]

Whoever wrote this joke should be castrated.

 

[kurchatovium]

The truth hurts don't it.

 

[ShiningIce]

Lies hurt even worse.

 

[Haltickling]

A few thoughts about taxes

I’m not too familiar with the American tax system, but I’m quite sure that nobody gets returned more than he paid. If I’m wrong here, please correct me. And Strelnikov’s article here would only be logical if exactly that happens.

A word concerning flat tax rates: It could be an ideal system IF everybody’s income were guaranteed to sustain a minimal standard of life, i.e. no hunger, and no lack of hygienic facilities, water, electricity, or heating. Currently this is not the case, nowhere in the world.

So there are quite a lot of people who drive their old, rusty cars, live in less than minimum-standard housing, have to save every penny off their mouths to pay for a new pair of shoes or a toy for their kids. They need 100 % of their income for a substandard life, sometimes even though they work in 2 or 3 jobs. We’re not talking about state support recipients here, they don’t pay taxes anyway.

Even more people need about 80-90 % of their income for an ‘average’ life-standard (whatever that may mean). They can save some of their money to buy a new car, new clothes, a new fridge, or even finance the mortgage for their own house. They are the real backbone of our economic system, as they represent the real ‘consumers’. They should have to pay a certain minimum tax amount, because then they can consume even more, thus creating jobs (= more taxpayers).

Now let’s take households with a low six-figure income. They usually have their own houses, one car for each adult family member, clothes and gadgets and what not. To sustain their above-average lifestyle, they need 50-70% of their income. The rest goes into real luxury articles or investments. They, too, are important members of the economic system, as they create most investments. But although their contribution as consumers is higher in actual $ amounts, they need less % of their income to achieve this. They can pay a higher tax percentage than the other two groups without getting hurt (if it’s done within reason, of course).

Then there are a few soaring at levels far above all those three groups. High 6 figure income or more. They often need less than 10% of their income to sustain a superior lifestyle, the rest goes into saving accounts, stock portfolios, jewels, luxury cars, yachts, and so on. Yet this group often pays a lesser tax percentage than the other groups, because there’s always a maximum tax level, and their expensive tax advisors and attorneys make sure (sometimes by accounts on the Caymans or elsewhere) that they don’t even have to pay that amount. Why should they have to pay the same flat tax percentage as the medium or low-standard population? Finding that unjust has nothing to do with envy, it’s a matter of common sense.

FYI: the maximum tax rate in Germany is 53%, in the Netherlands over 80%, in Sweden 102%, and all higher incomes have quite a lot of perfectly legal options to write off part of their income as non-taxable. These figures don’t include compulsory social security payments. An average single citizen with a rather mediocre income (ca 40,000 €=$) never sees over 50% of his income on his paycheck, the rest gets ‘confiscated’ automatically. Any more complaints about American taxes? 😛

 

[qjakal]

Perspective...

It's really even far more complicated than that Hal. An income of 20K aftertaxes can support a family of 4 in about half the nation, while in other spots you need 40+ or more. Geography plays a role that's left undiscussed quite often, and if ignored it will create a migration pattern that will eventually harm the overall economy and drive markets to false heights, resulting in inflation and a series of crashes in the financial sectors. My educated guess is that if "X" income supports you in the western part of the Netherlands, it also does the same in the eastern/southern/etc. areas?

The Soviets were an excellent example of geographical economic factoring, and the failure of the central government to address the disparity was a contributing factor to the collapses that finally beset them.....

Just FYI....personally I think the system is pretty good and could be a lot worse. Q

 

[asutickler]

Strel, that's a riot! Sad, true, and funny- simultaneously! 😀


Hal, you actually CAN get back more than you pay in under the American tax system. You can recieve supplemental "credits" to your tax refund (if you meet certain low-income standards) which can increase your refund above and beyond the ammount you paid in in the first place.


I think the American tax system sucks. It's laid out in a "graduated" format, which is patently unfair (and one of Karl Marx's preliminary steps for a State en route to Communism in "The Communist Manifesto," BTW...), however, there are so many loopholes built in, that those with larger incomes can actually wind up paying LESS than their share. That's unfair, too.


Raise the exemption levels and institute a flat tax rate, and EVERYONE'll be better off. 🙂

 

[kurchatovium]

Ice, Ice I was where you were once a loyal democrat blind to the truth. It is likely that as you get older your opinions will change, but your young now and there is a fire in your heart for change. However change without thought or reason leads only to more problems. I know I had the same thoughts when I was younger. Liberals try to spend billions on social programs that never actually help anyone and suck the economy dry with higher taxes. The reason this does not work is simple you can only help someone if you take the time to get to know them. If you give a bum a dollar and he only buys more booze with it have you actually helped him. We have all become a society (me included) where we have substituted money for true compassion. Its easier to just vote for people that say they will give more money to welfare and then just sit back and forget about people that live in the ghetto or slums. They are not many who go down and try to start up bussinesses and talk with the people and actually improve the local economy. Magic Johnson is I think probably one of these few people. Anyway I will get off my soap box now. Please don't take any offense at these remarks they were meant only in the spirit of healthy debate.

 

[kurchatovium]

I think the point of the discussion Hal is to keep the US from ever getting close to a tax laden society like the countries you describe.
The point is as well is that by punishing the rich with excessive taxes you eventually punish poorer people as well. Rich people always come out on top. Thats why people want to be rich, heck thats why I want to be rich. Rich people drive the economy you may not like Bill Gates or people like him but he is the one thats going to give you a job. When was the last time a poor person gave you a job? The more money rich people have the more likely they will expand their companies and create new jobs. If you take away their money they will just pass the expenses down to us poorer folk and they will still be just as happy. A flat tax rate certainly benefits the rich more but as I have said that money is likely to eventually result in more jobs for those less fortunate or towards a better economy. Punishing the rich just doesn't work in my humble opinion.

 

[shark]

ASU is talking about the earned income tax credit,among others.There
have also been instances where multibillon dollar businesses wound up paying nothing (Chase Manhattan Bank was one),or less than their employees.

One of the reasons for the high taxes in European countries is the cost of socialized medicine.This is not a slam,just an observation that everything will cost something,and these countries chose an expensive option.We can argue this point in another thread,as it will hijack this one in a second.

A flat rate can make certain that every "entity" pays a percentage that is commensurate with what they have gained from being in the system.You may, or may not,allow deductions to some degree,but too many would kill the purpose of the flat rate.

While we argue taxes,let's not forget our benevolent bureaucracies.
The IRS,at last count,had NO IDEA what their costs were.We have entire bureaucracies that do next to nothing.Federal assistance can cost the recipient up to 95% of the funding to comply with federal regulations.Much of this can be done at the state level far more efficiently,and the 10th amendment is constantly ignored in such instances.

Anyway,a properly administered flat rate will insure that all pay at the same rate,and that each will contribute an amount that is justified by their earnings.A person making $10,000 will pay the same percentage as someone making $1,000,000,but the person making the higher earnings will pay 100 times more,since they made 100 times more.This supposes there are no deductions,which might cause problems for charitable groups,so you might want to look into that.
It would also provide a more stable fiscal base,as the wages and earnings taxes would be more easily calculated than the current system,in which a person's tax liability can change drastically from year to year.

Hidden tax changes would not be so readily covered up.The flat rate would apply to all,not like the system we have now,where a tax change,interpretation,or new program can create huge windfalls or shortages without anyone,except those directly affected,being any the wiser.

 

[ShiningIce]

Blind to the truth??? Riiiiiiiiiiiiiiight. Who said I was a democrate??? This joke is NOT true, now I could come up with a bunch of outlandish jokes about Republicans and have every single right winger yell back with massive amounts of insults and smart ass comments but I wont. I think Ill wait for someone ELSE to do the conservative version of this little joke then see how many of you get insulted and pissed which usually ALWAYS happens when someone critisizes you. 🙄

 

[Strelnikov]

I've favored a flat tax system for years. Unfortunately, it will never happen. There's no constituency to mobilize (and tap for campaign contributions) for the idea. OTOH, everyone who benefits from a particular tax dodge will fight like a panther (and pay thru the nose in an election year) to keep it. Multiply that by the current number of such dodges and you get the present rotten system.

I do think that everyone, even the poorest, should pay taxes in a visible way. Otherwise, some of them get the idea that government benefits are free. Cost/benefit analysis of a new program looks a lot different when the money is coming out of your own pocket, not just someone else's.

Strelnikov

 

[Oblesklk]

Yes, Hal, as others pointed out, it is possible for an American taxpayer to get back more income taxes than he paid in, through use of credits. Some credits take a taxpayer's TI to nothing, some will refund money. However, I will tell you right now that people that are eligible to take the EIC would probably not be able to afford an attorney, or accountant to do their taxwork. That's the real silliness of the system. I know that Clinton and most of the Democrats were frustrated at the final results. So you basically have all the middle and higher income taxpayers screaming that all the low income taxpayers are getting these insane deals, and then you have all the low income taxpayers not taking any of these credits because they don't know they exist. Nobody really wins, just a bunch of wasted energy, for the most part.

In my experience (I am young by my own admission, but it is my area of expertise), there's only two types of people that support the flat tax system:

1. Those who don't really know what the true ramifications are
2. People that are fairly selfish, and want only to guard their own wealth.

Because more or less, the government is going to spend what it thinks it needs to. Let's call that X. Somehow the government is going to need its taxpayers to cover X. Right now we live under a graduated income taxation structure, where the effective tax rate rises as your TI rises.

So if you went to a flat tax rate, who pays more? You and I. Anyone not currently in the highest tax brackets would be paying much, MUCH higher taxes than they do now. When I say you and I, I'm assuming of course you make less than 125k or so, around 200k married. Maybe you don't. In which case the flat tax would be perfect for you. But just a little selfish, in my opinion.

I do agree with Qjakal very much...our tax system could be a LOT worse. There's bits and pieces of it that are direct results of various lobbies, but I think our lawmakers usually have pretty good intent on overall fairness when constructing it.

 

[Oblesklk]

Hidden tax changes would not be so readily covered up.The flat rate would apply to all,not like the system we have now,where a tax change,interpretation,or new program can create huge windfalls or shortages without anyone,except those directly affected,being any the wiser.

You'd have a difficult time convincing me of this. If you change the current system to a flat tax system, you're not doing anything to the code itself, except changing the rates. All the other million little issues that come up would still be there, you haven't simplified anything.

If you can hide income now, you could hide it just as easily under a flat tax system. And the current higher income brackets would have TONS of new cash pouring in (which would be made up in the tax base by the current low income taxpayers) to hire even better attorneys/accountants to hide their earnings 🙂

 

[ForgottenTcklr]

Strel,

I was expecting a long and true theory (which is still great!_)

But this is GREAT. I don't think anything's funnier than a good liberal joke!!!!!

Thanks for the laugh Strel... and for all of you who disagree... real liberals DO think this way. Unfortunate but true!

 

[kurchatovium]

Ice, I think there have been many jokes posted here about Republicans and conservatives and I for one have not hurled any insults at anyone as far as I know. Also people have criticized me up, down and backwards as well and I think I've maintained my cool fairly well. Like I said I did not mean my remarks in an offensive way merely that when I was younger I was much more liberal than I am now. From my observations in life this has often been the case. Anyway I'm sorry if anything I said offended you.

PS. I am actually still registered as a Democrat I just have been too lazy to get it changed. Although I kind of like the role of a maverick so I just might leave it this way.

 

[kurchatovium]

I think the point of a flat tax rate system is it gets rid of the need to hide your earnings and thus make it more likely that you would invest that money in other companies or expand companies you already own, or start new companies. The reason rich people hide their money is too avoid high taxes in general, if you eliminate the need to hide it they are more likely to use it and earn more money for themselves in the long run. The money when used this way would improve the standard of living for everyone.

 

[shark]

Oblesklk,first try rereading my post.I said nothing about hiding income.What I said was "hidden tax changes".....word for word.
By going to a flat rate, you don't change the current code,you abolish it.Those million little problems you are talking about are
then nonexistent,save for charitable contributions which I might allow exemptions for.

There also have been theories about exempting the first so many thousand dollars of income to help the poorer people.That can also be an option,if that's your worry.

Another way to read your one post is that supporters of a flat rate are either misinformed or selfish.I don't see where you have any idea what situation I'm in,so your opinion is flawed.

I guess you've never heard that the poorer can get tax advice without
contacting attorneys or consultants.Aside from which,there are however many tax preparers who do work that is reasonably priced for anyone,especially if they are seeing refund anyway.

Area of expertise? I am not going to start a flame,but the area of taxes is always chaotic BECAUSE of the current tax code.You can still contact the IRS and stand a 20% chance of a wrong answer.You can still get tax advice from 5 "experts" and still come up with different theories and strategies.

Aside from our disagreement,your line about the government spending what it thinks it needs points out a major cause of the problem.If we ran our homes and businesses the way the government runs itself,we'd all be in debt up to our necks.

 

[ShiningIce]

real liberals DO think this way. Unfortunate but true!

NO we dont. However real conservatives think we do. Unfortunate but true.