How tax breaks work

Remove all ads!

I think Chandos's point with his first fairly aggressive post was that the article is old and nothing but a misleading propaganda tool. I am sure it is possible to make up some similar piece making the sterilization of illegal immigrant sound perfectly logical and the only right thing to do (not that I compare the two I just wanted an extreme example). You can bend words and numbers in very creative ways to make almost anything overwhelmingly appealing and your argument seem like the only natural thing if people just read it briefly.

 

They should, they're supposed to, but they don't. It's not like they're paying nothing, but they're still not paying as much as they should. On the other hand, it could be significantly worse, so I'm not that unhappy with how things are taken care of now. I just have a problem with people running to the defense of the bullies.

 

Considering that the top 1% has something like 33% of America's networth and the top 10% has 71%, they're not taxed nearly enough.

Note that I'm talking about wealth, not income, here.

 

No. Outright no. Taxing wealth (or even with wealth in mind) is double-dipping. It got taxed once as income, and that's where it should stop. When you begin taxing wealth, you're headed toward a communist state. Not that it's necessarily a bad thing, but the ideal doesn't work too well with human nature for the most part.

 

So you're saying that the more you save the more you should be taxed? Not to mention that the top 10% owning 71% is a little off. Companies are included in that yet the 'owership' is granted to the majority share holder. All the other people's wealth is considered his wealth for that survey and thus the results aren't exactly balanced.

 

That is the money quote. The thing you are forgetting is that you have to pay taxes to get tax relief.

Now to address who is rich and who pays the taxes I'm going to list some data from here.

All data is based on the individual tax returns filed in the U.S. for 2003.

Percentage of taxes paid by people in the top 50% of income- 96.54%. My only comment is Wow!

Income split point to put you in the top 10% of income- $94,891. Congratulations, many people are "rich" and don't even know it.

Percentage of taxes paid by the top 10% "Rich" people- 65.84%

Percentage of taxes paid by the top 1% and the income split point- 34.27% and $295,495.

 

Coming out of closet Chandos? It seems we have a budding republican....

 

"There are lies, damn lies, and then there are statistics." P.T. Barnum

I think we need to drastically simplify the tax code. Everyone should pay 10% of their gross annual earnings, maybe less if you earn less in a year than a certain ammount (I'm talking $10,000 here), and no more attempts to effect social change through tax cuts. If you want to drive a high-efficiency vehicle, you get rewarded by not buying as much gas, not by a tax cut. If you want to give to the poor, a tax cut is the worst way to encourage this.

And in a world where the rich can still afford to buy TWO $20 million estates, I somehow can't seem to find any tears for them.

 

I might agree if it weren't for little things such as the abolition of the estate--sorry, I meant "death"--tax. I might agree if the social security tax applied to all income brackets, not just the lower-end ones. I might agree if it weren't for sales tax. I might agree if it weren't for the loopholes that are unavailable to the average citizen but easily available to those with money and the desire to keep it.

I might agree, in short, if the present system weren't broken--weren't regressive (in the economic sense of the word). But it is. So I don't.

That's the conventional wisdom, certainly. It was also my view until oh, three months ago. It's also mistaken. I suggest reading about the Soviet state in the period between the end of the Russian civil war and the beginning of Stalin's reign. I further suggest reading about just what Stalin did during his reign. You will likely be rather surprised; at the very least, I was.

That data doesn't actually address who is rich and who pays taxes; it addresses income tax. Those things are not necessarily linked.

Now, if you want to start providing data about who pays all taxes, not just income tax, and compare that to who has what wealth levels, I might start paying attention.

And while you're at it, why not consider the different effects taxes have on different people; if you're a millionaire, taxes won't make a whit of difference to your life, provided you have enough neurons to form a synapse. If you're a working-class person, well, even 10% of your income being taxed can hit hard--really hard.

 

Hell, yeah. My accountant teacher (already an old man back then) told us in class how many proponents of communism à la USSR in the 60's promoted ther view by pointing to the obviousl (yet only superficially) superior tax-system. So simple, so ruinous.

 

But they don't the rich (and upper middle class) pay 40% of their income. That is quite a bit of money, is it not?

 

No way! A Jeffersonian, T2.

 

First up, Maybe not smaller governments, but a responsible one. Not scandals, no stupid legislation...

Second, any form of tax relief will benefit the higher income earners more than the rest. That's okay with me, as long as there's something to take the pressure off the working class.

The way I understand taxes (income and sales in particular, but there are other taxes that workt he same way) is that they syphon off a percentage of the money that flows through the economy. If they take too little, the government can't do what they are supposed to do, but if they take too much, they choke out the economy.

I find that a sales tax is the fairest of all. The more stuff you buy, the more tax you pay. The ones with the money pay more than those that don't.

 

The best example here is the current Social Security system. As it stands now, most people pay 6.2% of their income into the Social Security system. However, the amount you can pay in each year is capped. The number changes every year, and currently that number is somewhere around $95,000. Therefore, anyone with an annual income of $95,000 or less pays 6.2% of their salary into Social security. However, anyone making more than $95,000 per year still only pays the same as someone who makes $95,000 per year. So someone making $200,000 only pays about half of what other people pay (in terms of a percentage of their total income), and people making $1 million pay only about one tenth as much (in terms of a percentage again). Strangely, people also pay 1.45% of their total income into Medicaid, and this is NOT capped.

 

Nope. The amount you receive is directly proportional to how much you pay in. A guy working for minimum wage for his entire life receives a lesser benefit than someone who earns $100,000 per year on average during his career. So those who pay less into the system also receive less out of the system.

That being said, the other major factor of how much total money you receive from SS is also linked to how long you live. Someone who receives a small benefit but lives to be 90 will likely receive more in total money than someone who receives a larger benefit but dies at 75.

My point being is that someone who makes $1 million per year only ends up paying about 0.6% of his income into SS, while someone like me pays about 6%. If I can afford 6%, how come the people that make 20 times what I make cannot afford to pay this much?

 

@Aldeth

You answered your own question. Since the payouts are based on the pay-ins. If it was 6% (it is actually 6.2%) on everything you made, the payouts would jump dramatically.

 

@TGS: My main point was that people with the highest income don't ALWAYS pay the most in taxes. Generally, yes, but always, no. And I still say they should remove the cap. That act alone would make SS solvent for an additional 25 years.

 

Simple, don't give tax breaks. period. Set taxes at the correct level in the first place, if something changes and you don't need so much immediate money you can use the extra revenue to pay off some of the national debt.

 

I realize this is an old thread. However, it is new to me and I would like to make a couple of comments about Snook's post. Firstly, the message is exceedingly smug and patronizing. Secondly, the "richest man" will ALWAYS show up to the table because it's the rest of us who facilitate his wealth by buying his buggy operating system. And if I did beat Gates up after dinner it wouldn't be because he saved seven bucks but because I had such a hassle playing some of my old beloved computer games on XP. What does $59 or even $59,000,000 mean to Bill Gates? Screw him...let him pay.