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Thread: 47% will pay no federal income tax

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    Re: 47% will pay no federal income tax

    Quote Originally Posted by PeteEU View Post
    As I said, people have to feel they are contributing to society via taxes and that everyone around them is in some way contributing. For example your family. If you give them 10k to survive on top of the 10k they earn, and they pay no taxes what so ever, then they would never feel what it is like to pay taxes like the rest of us. They would be leeches on society with no concept on the burden the rest of us have.

    Where as if you gave them 12k and charged them 2k in taxes, they would say.. damn I had to pay 2 k in freaking taxes on a freaking handout.. and they would know how we feel when our taxes go to that handout.
    I think you're really overestimating the impact this has on people. I don't think the added administrative costs and significantly increased risk of people working off the books or not working at all. Think about it - we want to incentivize poor people to go out there and get jobs. If they're working for minimum wage and having to pay a substantial portion of their income in taxes, they're a lot more likely to quit that job or avoid taking it in the first place than they would otherwise be.

    That is lack of accountability. If the companies allow such "off the books" and do not get busted and fined for it, then they will continue to do so. Its the same principle as your illegal immigration problem. In Denmark we also have the problem like everyone else, however it is at the real low level.. pizza bars and stuff, since the consequences of getting caught can be very high. People have actually gone to jail for hiring off the books. The main problem of the "dark economy" is friends giving friends help.. a plummer doing work for a carpenter and visa versa. That is much harder to deal with.
    And that second type of thing is what I'm talking about. It's usually not huge corporations hiring people off the books, but smaller shops or people working on their own. And it's easy for a country like denmark to keep everyone on the books, because they don't have 12-15 million illegal immigrants in their country. (Not to mention that it's a bit disingenuous to imply that the reason illegal immigration isn't a problem in Denmark is because of their rigorous enforcement).
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    Re: 47% will pay no federal income tax

    Quote Originally Posted by Vader View Post
    The scary truth, which no democrat will ever admit, is that federal income tax is only a small (15% or so) part of the national budget. Most funding comes from taxes on sales, liquors, tobacco, and various tariffs.

    Income tax was created to fund World War I and was supposed to be dropped after the war. However, some greedy scumbags decided to make it permanent.

    Federal income tax is not really needed to run the country. It's just a tool of partisan politics.
    Try again. In 2007, personal income tax made up 45% of federal receipts, employment taxes 34% and corporate income tax 14%. Excise taxes only made up 3% of federal receipts.

    It's a flat out lie to say that income tax is only 15% of so of the budget. Between corporate and personal income taxes, they make up 59% of all federal receipts.

    Edited to add: Oops. Didn't see the post by RightinNYC until after I posted.
    Last edited by Cremaster77; 10-04-09 at 06:55 PM.

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    Re: 47% will pay no federal income tax

    Quote Originally Posted by obvious Child View Post
    You do realize that income tax alone does not represent all federal taxes no?

    http://www.cbo.gov/publications/coll...ity_shares.xls
    Yes. But they make up a big percentage of them. And in that same study by the TPC, almost a quarter of population has ZERO tax liability even accounting for payroll taxes like SS and Medicare. The only federal tax liability these people have are excise taxes like gas and telephone which are so incredibly obscured, there is no sense of having skin in the game even if you pay them.

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    Re: 47% will pay no federal income tax

    Quote Originally Posted by RightinNYC View Post
    But if we pretend that SS/Medicare are their own things which are separate from general revenues (humor me), then we shouldn't really be considering those payments in looking at tax burden.
    I suppose, but ignoring close to 50% of the federal budget doesn't suggest a meaningful discussion.

    Even if you don't want to separate those out, another way of looking at what is being linked in the OP is that 47% of the country is not paying any money toward anything other than Medicare/SS. The 53% that is paying taxes is responsible for all other spending as well as their own share of Medicare/SS.
    I guess, but to ignore close to 50% of the federal budget is rather...ludicrous. Conversely, we could argue that the super rich are getting a free ride on FICA when their incomes are not subject to those withholding due to tax structuring.
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    Re: 47% will pay no federal income tax

    Quote Originally Posted by Cremaster77 View Post
    Yes. But they make up a big percentage of them.
    As does the entitlement taxes. Interestingly enough, the CBO data suggests that the level of wealth is somewhat correlated to the level of taxes (with a few exceptions, namely the group between the top 15% and top 5%).

    And in that same study by the TPC, almost a quarter of population has ZERO tax liability even accounting for payroll taxes like SS and Medicare.
    That is a misunderstanding of what it actually said:

    "When considerising federal income taxes in combination with payroll taxes, the percent of households with a net liability of zero or less is estimated to be 24% th year, according to the Tax Policy Center's estimates."

    They have a tax liability that is initially positive. They still have to file. Except that they qualify for enough refundable taxes to have income from the government.
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    Re: 47% will pay no federal income tax

    Quote Originally Posted by Harshaw View Post
    Correct. My company is an S corporation, and I am taxed directly, as personal income, on my half of the yearly profits. This is on top of the income tax on the salary that I pay myself.
    It's not like the first tax is on top of the second tax for the same dollars though. The money received as salary is taxed as a salary and allowed as a deduction for the s-corporation. You only pay tax on your share of the remainder of the S corporation income after deducting the salaries. In fact, one of the reasons people form S-corps is to reduce their tax liability, because shifting income off the W-2 eliminates the social security/medicare taxes on that income.

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    Re: 47% will pay no federal income tax

    Quote Originally Posted by obvious Child View Post
    I suppose, but ignoring close to 50% of the federal budget doesn't suggest a meaningful discussion.


    I guess, but to ignore close to 50% of the federal budget is rather...ludicrous. Conversely, we could argue that the super rich are getting a free ride on FICA when their incomes are not subject to those withholding due to tax structuring.
    I say that because there are many on here who argue that SS/Medicare are their own entities that should be evaluated separately from general revenues. I do not believe this, but if we take their argument to its logical conclusion, then the top half of the country is paying for everything else while the bottom half simply covers their share of SS/Medicare.

    Quote Originally Posted by vvx View Post
    It's not like the first tax is on top of the second tax for the same dollars though. The money received as salary is taxed as a salary and allowed as a deduction for the s-corporation. You only pay tax on your share of the remainder of the S corporation income after deducting the salaries. In fact, one of the reasons people form S-corps is to reduce their tax liability, because shifting income off the W-2 eliminates the social security/medicare taxes on that income.
    But that corporate income would still be classified as "gross income," which is the reason why that article is absolutely misleading. They even make an effort to acknowledge it:

    But the GAO report is misleading and unfair to U.S. businesses, according to Tad D. Ransopher, assistant professor in the School of Accountancy at Georgia State University's J. Mack Robinson College of Business. For example, take a company with $100 million in gross income, says Ransopher. Figure the company has $80 million in legitimate deductions, including wages paid and cost of goods sold. That leaves $20 million in taxable income. If the company pays tax on 30 percent of that income, that's a $6 million tax bill, or 6 percent of its total income. If the company can achieve a 20 percent tax rate, something most people try to get, then it pays $4 million in taxes, or 4 percent of its gross income in taxes.
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    Re: 47% will pay no federal income tax

    Quote Originally Posted by vvx View Post
    It's not like the first tax is on top of the second tax for the same dollars though. The money received as salary is taxed as a salary and allowed as a deduction for the s-corporation. You only pay tax on your share of the remainder of the S corporation income after deducting the salaries. In fact, one of the reasons people form S-corps is to reduce their tax liability, because shifting income off the W-2 eliminates the social security/medicare taxes on that income.
    I don't mean to imply it's a double taxation. In fact, one of the reasons to set up as an S corp is to avoid that.
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    Re: 47% will pay no federal income tax

    Quote Originally Posted by obvious Child View Post
    As does the entitlement taxes. Interestingly enough, the CBO data suggests that the level of wealth is somewhat correlated to the level of taxes (with a few exceptions, namely the group between the top 15% and top 5%).
    Except it's not correlated to income. The top earners have a higher amount of wealth because they can accumulate it without spending all of their income. Yet taxation, particularly in the top percentages follows the percentage of wealth owned, not the income earned. To look at wealth as the measure by which taxes should be correlated means you are taxing the same earned dollars multiple times. For example, the top 1% pay 40% of income taxes, hold 40% of the wealth, but earn 20% of the income.


    That is a misunderstanding of what it actually said:

    "When considerising federal income taxes in combination with payroll taxes, the percent of households with a net liability of zero or less is estimated to be 24% th year, according to the Tax Policy Center's estimates."

    They have a tax liability that is initially positive. They still have to file. Except that they qualify for enough refundable taxes to have income from the government.
    I didn't misunderstand anything. I didn't say a quarter of people didn't file. I said they have ZERO tax liability, which is exactly what happens. In fact, a good number of those people not only have no tax liability, they are actually paid back by the US government. Rather than paying any income tax, they are given money by the US government simply for filling out their taxes.

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