Tax cuts explained:

[milagros317]

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

You may well not think like that, Alexander. The people who identify themselves as liberals around here (I live in NYC) do think exactly that way.

And they pass laws that way. Look at the NY City income tax portion of the NY State income tax form, if you don't believe me.

 

[Oblesklk]

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.

Hehe, you're not going to get much of a fight from me on this. I don't think there's many Americans out there that believe our government is using its resources to its full potential, no matter what side of the fence you're on.

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.

Sure, people are helped all the time. But it's still a fraction of the people out there that need it. I think everyone needs the advise of an expert once in awhile, just for ease of mind, if nothing else. But we're getting close to 300 million taxpayers in this country, using round numbers, and how many of those folks do you think have a GOOD idea of where their tax situation stands? Maybe as many as 10-20% ? A good idea being defined as knowing exactly where each number comes from, knows exactly which code sections apply to them, etc.

You can still get tax advice from 5 "experts" and still come up with different theories and strategies.

You're speaking in generalities, but I have no doubt it happens all the code. The code is usually black and white in about 99% of the issues out there. It's the INTERPRETATION of a person's situation into the code that creates problems.

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.

Depends on the specific situation. I have no doubt you can get wrong answer from IRS agents. But they aren't always experts either, believe it or not. Many IRS employees don't know any more about tax code than anyone else. They act in the capacity of data entry or an equivalent. And several of those who answer the phones to give advise I've found are rarely CPA's or attorneys themselves. Just folks that went through training programs meant to answer the simplest and most often asked tax questions. If you have a complex situation, you're best off going to an expert that can research it for you (i.e. someone you will pay to find an answer for you 🙂 )

By going to a flat rate, you don't change the current code,you abolish it.

Oh my. You don't want this, trust me. Strel and I had this discussion earlier. You don't want a simplified tax code. I know a lot of folks that would go out of their way to find wealthy clients just so they'd never have to pay a dime of tax again. Just think of how much you can get paid as a consultant to avoid taxes because the tax is so simplisitc it doesn't even define the concept of income properly. There's literally thousands of court cases, regulations, publication, and laws debating very simple concepts like income. If you throw all that out, we start from scratch. And you will have any CPA worth his weight in salt planning his clients finances so that they never recognize any income in their tax year.

Then what will happen? People will get pissed that all these higher income folks aren't paying what they "should" pay, and you have all the exact same court cases, publications, guildelines, regulations, and addendums to the law to fix all the "loopholes."

Then after 100 years, guess what? The tax code looks exactly like it does today, except that you've just changed the rates.

The tax code is complex for a reason. People will go out of their way to make sily arguments, and take silly positions, just to avoid taxes. The complexity lies in the fact that at some point, someone got greedy with something that wasn't defined, and decided to go to town on it.

 

[Oblesklk]

I think the point of a flat tax rate system is it gets rid of the need to hide your earnings

I think I got lost on this point a little bit 🙂

Let's assume a flat tax rate of 15%.

Let's assume I make $300,000/year taxable wages. I therefore pay $45,000 in income taxes to the government.

I decide that's too much, and the taxes should be spent how I think they should be spent. I hire an attorney/CPA to come in and fix my return for next year so that I'm making $0. I now owe the government $0, and the attorney/CPA for legal fees.

I'm confused about why the flat tax would prevent this, whereas the progressive system would allow it.

 

[asutickler]

Under the flat tax proposals I've heard about, the only way for your CPA to "fix" your income is by committing fraud.

The flat tax reduces the American tax system to one rule:


You must pay 15% of your total income (I) minus your one personal exemption of "X" ammount.

15% * (I - X)= Your taxes.


No special exemptions, no loopholes, no BS. 🙂 Most 12 year olds could do their own taxes in 10 seconds under THAT system.

 

[Oblesklk]

No special exemptions, no loopholes, no BS. 🙂 Most 12 year olds could do their own taxes in 10 seconds under THAT system.

I guess the only thing to keep in mind is the fact that reality never mirrors theory. Heck in theory both capitalism and communism work. But in reality neither one would ever fly for very long, in pure theoretical form. They have to be fine tuned to mesh with how business life and human nature really performs.

And a system that doesn't allow any deductions wouldn't last long, either. You try explaining the system to a 70 year old destitute couple. They make $40,000 in taxable wages and retirement benefits. They spent over $30,000 in medical expenses this year. So you'd want to tax them on the full $40,000? Maybe. I know it wouldn't be doing society much good to do so. And the older members of the population tend to vote in record numbers, they wouldn't put up with it for long.

And you wouldn't want to give incentives to people to buy their own home by deducting real estate taxes and mortgage interest? Maybe.

What about charitable deductions? Shark mentioned above that in his system, it would be good to deduct these. Well, if you can deduct charitable contributions, what about a thousand other things that are worthy of a tax break? Pretty soon, the code ends up looking...not surprisingly, like it does today. There's just too many special interests out there and people lobbying to change this or that.

I can understand your desire for simplification, I really do. But in practice, I've yet to hear a good comprehensive system that comes even close to what we have today. And yes, I'm saying that with a straight face 😱

 

[kurchatovium]

Oblesklk, I am no expert on taxes. So I don't know how easy it is to fix your income the way you said but it can't be that simple otherwise nobody who was rich would be paying any taxes. Currently I think its something like the top 10% pay about 50% of the taxes. I'm not certain on those numbers but it is something like that. I think the point is the present system tries to punish the rich and the rich just pass the expenses down to us poorer folks. Maybe you can still cheat in a flat tax rate system although with the simplified rules I think it would be much harder but I think the rich would be more likely to use the additional money to grow new companies or improve old ones. If your already worth a billion dollars your pretty much set for life in terms of any material possessions but what you want to set for yourself is a legacy or make your mark in the history books. So I guess it boils down to the rich get what they want no matter what, let them have more of the money they have earned in the hopes they are going to invest it back into the country. I think the present system just tries to bleed the rich as a sort of punishment and really the only people who truly suffer is the rest of us.

 

[amk714]

I don't think anyone should get back more than they pay in taxes. However, I support a progressive tax system (as long as the rates are reasonable) because a flat tax system will increase income inequality. Ironically, during the economic booms in our nation's history, taxes have been HIGHER, not lower. Read about it here:

http://home.att.net/~resurgence/L-taxgrowth.htm

 

[kurchatovium]

Amk I think we should have tax reform but I think tax cuts are the answer. I haven't quite been able to figure out the website you gave yet, but I have listed a "few' of my own. I could list more but I'm getting tired.

Intuitively increasing taxes to improve the economy just does not make sense. If you goto the idiotic extreme where the goverment takes all your money then no one has any incentive to make money since the goverment takes it all. On the other hand the US functioned pretty well before the advent of taxes. I fail to see how taking money from people and companies to support bloated goverment projects will grow the economy.





Here are a few refences of my own:

http://www.manhattan-institute.org/cr_20.pdf

http://www.youdebate.com/DEBATES/REAGANOMICS.HTM

http://www.ncpa.org/pd/pdint74.html

http://www.ncpa.org/iss/tax/2002/pd031302b.html

http://www.ncpa.org/pi/taxes/pdtx1198a.html

http://www.ncpa.org/pi/taxes/pdtx65.html

http://garnet.acns.fsu.edu/~cskipton/JEC_post/Reagan legacy -- staff.pdf

http://www.bigjweb.com/michnews/benC11.asp

 

[giggledude]

This has been an interesting debate. Personally I've never been convinced that any particular policy makes much long-term difference in an oppositional democracy. All fiscal policies taken far enough have good and bad consequences, and there's enough natural rebound when the bad effects of any given policy come into effect that I've never even considered fiscal policies or positions in determining how to cast a vote. But that's just me; nothing against people who have short-term considerations at stake.

I've seen something illustrative of the principle that it all depends on who gets to define the terms. Several people said something to the effect of, "All liberals think X/Y/Z," to which the response was, "I'm a liberal and I don't think X/Y/Z," to which the reply was, "Well, all the liberals here do." Where can people go with that? It seems to shut down dialogue; maybe some people have that as an object. Define all liberals as tax-and-spenders who want to soak the rich, sexualize all children and keep every member of any minority on welfare for life, or define all conservatives as Bible-thumping fundamentalists who want all social programs to be run exclusively by and for Southern Baptists, starve the old and poor and execute or at least imprison all homosexuals, and the terms of the debate are so slanted that one gets nowhere productive. Yet that's the level of much if not most of the political debate going around the airwaves in general these days.

I've noticed a trend, though, and wonder if I'm right. It seems to me that the right wing calls radical positions "liberal," succeeding to some extent at creating "the L word" as a sort of instant death for anyone tarred by it. The left wing, on the other hand, seems to go the other way. Instead of defining extreme positions as being more or less the mainstream of the other side, they try to define mainstream conservative principles as extreme, creating "vast right-wing conspiracies" and "right-wing extremists". That strategy seems to have reached the point of diminishing returns. Of course this is a vast overgeneralization, but I wondered if anyone else had been struck similarly.

 

[sole seeker]

The difference between a Democrat and a Republican

Stren, I loved your example. Right on the mark.

As long as we are discussing politics, I feel the need to help those who feel they should choose to be strictly conservative or liberal, or one party or the other:



A man in a hot air balloon realized he was lost. He reduced the altitude and spotted a man below. He descended a bit more and shouted. "Excuse me, can you help me? I promised a friend I would meet him an hour ago, but I don't know where I am."

The man replied, "You are in a hot air balloon approximately 30 feet above the ground. You are between 40 and 41 degrees north latitude and between 59 and 60 degrees west longitude."

"You must be a republican," said the balloonist.

"I am," said the man. "How did you know?"

"Well", answered the balloonist, "everything you told me is technically correct, but I have no idea what to make of your information, and the fact is I am still lost. Frankly, you've not been much help so far."

The man below responded. "You must be a democrat."

"I am" replied the balloonist, "but how did you know?"

"Well," said the man, "You don't know where you are or where you are going. You have risen to where you are due to a large quantity of hot air. You made a promise which you have no idea how to keep, and you expect me to solve your problem. The fact is you are in exactly the same position you were in before we met, but now, somehow, it's my fault."

 

[Deleted member 2452]

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

YOU may not think this way amk, but your elected liberal democrate reps, and senators sure do think this way.
steve

 

[Deleted member 2452]

so i'm selfish?

because i want to keep a little more of what i worked very hard to earn? i take umbrage at your insult oblesklk. you are way out of line!
under our present system the more a person makes of them self, and accomplishes, the more is taken from him, on the basis of how he must have been unfair to have earned so much. our present tax system is based on the principle of "redistribution of wealth". that is the offical policy. this was developed by the democrats many years ago when they had control of all government.
back to your insult .i do know the ramifications of a flat tax! i came up with the idea more than 20 years ago! i sent a letter to my rep in congress, he never replied (he was a democrat). some of us just want real fairness, and that would be for all to pay the same rate!
you obviously disagree, but you are wrong, and rude!
steve

 

[Iggy pop]

First, the Earned Income Tax Credit is for people who have extremely low low income. As a single person to qualify for an earned income tax credit your yearly income has to be under 10,000$ which is well below the poverty level. The idea of the earned income tax credit is give people an incentive to keep on working instead of just collecting welfare.

As for the flat tax what income levels would be exempt from paying taxes, or do you believe that every income level should pay the flat tax? So if someone is making 17,000 year that person should be taxed 25% or whatever the flat tax is?

One last thing I've net met someone who made six figure salary wanting to switch places with someone making 8,000$ year so they could collect an earned income tax credit?

 

[kurchatovium]

One thing I have noticed it seems that there is a desire to punish those that are rich and people who don't like the flat tax rate seem to worry more about how much more money rich people will make in it rather than how it will benefit the economy. The point that seems to be missed if you are rich you will be rich no matter what. If the US comes up with a 99% tax rate for the wealthy they will simply move their money out of the country. The country will then suffer in terms of lost jobs and lost revenue. The wealthy will always have better stuff so get use to it its not going to change no matter what tax system gets inacted.

 

[Iggy pop]

One thing I have noticed it seems that there is a desire to punish those that are rich and people who don't like the flat tax rate seem to worry more about how much more money rich people will make in it rather than how it will benefit the economy. The point that seems to be missed if you are rich you will be rich no matter what. If the US comes up with a 99% tax rate for the wealthy they will simply move their money out of the country.

No, I have no desire to punish the rich, but I certainly do not want to punish the poor eithier. I'm not totally against a flat tax if their is a resonable low income exemption level. I do not think the Us will ever come up with 99% tax rate.

 

[kurchatovium]

Well just before he Kennedy admin. I do believe there was a 90% level for the very rich but regardless that was an extreme example to illustrate that such a tax rate would punish the rest of us more than it would the rich.

I think a low income level exemption is doable and would not hurt the merits of a flat tax rate at all. The ideal here is as well is that the more money thats in the private sector and not in the hands of the goverment the more I think the standard of living would be raised for everyone.

 

[august spies]

in a society where a billion people suffer from malnutrition because of greed, there is nothing wrong with punishing the rich, when all that really means is giving the poor what the rich unjustly took

 

[kurchatovium]

The rich did not unjustly take anything they got off their butts for the most part and earned whatever they got. You are operating on the "big bag of money" principle which is that there is only so much money in the world and we must try to redistibute the wealth. Well that doesn't work because there is not a limited amount of money, only people with limited ambition. When people make a lot of money and if you make it easy for them to reinvest it then the country prospers as a whole. The standard of living increases for everyone.

Most of the malnutrition in the world is do to mismanagment of resources by the goverments themselves. Many of these countries have astronomical tax rates so no business would ever want to start there, so no money gets into the economy to improve anything. If we could lower the amount of goverment and red tape around the world the increase in prosperity would solve many of these problems in my humble opinion.

 

[Deleted member 2452]

in a society where a billion people suffer from malnutrition because of greed, there is nothing wrong with punishing the rich, when all that really means is giving the poor what the rich unjustly took

i'm sorry mr. spies, but we're talking about america, not red china, or india (those being the only countries in the world with a billoin population) so would you like to join us?

next. the flat tax as proposed by dick armey had a threshhold line of $25000 income. with a family of 6 like mine we wouldn't have had to pay tax on the first 46,000 we earned. his proposed rate was 15%.
so, as any can see, the poor would have paid nothing, just as they do now!
steve