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Thread: Thought regarding a tax system

  1. #71
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    Re: Thought regarding a tax system

    Quote Originally Posted by Kandahar View Post
    Most loopholes are deductions (or credits or exclusions or something similar)...and most deductions can be loopholes if used cleverly. I forget who it was, but I read a columnist who describes the tax code like this: You do the minor housekeeping stuff every year, and regularly make modifications to it. But every 20 years or so, you need to completely overhaul it and essentially start from scratch, simply because a lot of pointless stuff finds its way into the tax code over time. It's now been 25 years since the last time the tax code was overhauled...I think it's overdue. We need to eliminate all or most of the deductions in exchange for lower overall rates. The average person shouldn't need to spend more than about 30 minutes doing their taxes.
    No, loopholes are unintentional holes in the law and deductions are intentional provisions that allow people not t be taxed on certain expenses.



    Meh, I lived comfortably (although not luxuriously) on $20,000 back in the day. It was enough for me to have a cheap apartment in a safe neighborhood in a low-cost part of Ohio, three square meals a day, an old car, internet and two computers, health insurance through my employer, and the occasional cheap night out with friends. Granted, I wouldn't want to live that lifestyle forever (which is part of why I made the decision to go to b-school), but straight out of college I didn't really mind. Living on $20,000 is definitely possible. I can't imagine why it would "cost someone $80,000 to live" unless they had made some very extravagant lifestyle decisions of their own volition.
    Back in the day? You're only 20 something. Back in the day for you was 2005!

    It doesn't matter what you you think it should cost to live. What matters, is that if a person wants a lifestyle that costs 80 grand a year to maintain, they have the right to have that lifestyle. This is still America, afterall.



    I don't think that a modest tax increase would force upper-middle class to lower their standard of living very much. For example, the 28% on $100K isn't too far off from what I currently pay on my income, and I've never had a problem coming up with the money. But ultimately I think this is a moot point...the people who need to be paying more are the people who wouldn't be forced to lower their standard of living much at all, i.e. the very wealthy.
    You pay $28,000+ a year in taxes?
    Quote Originally Posted by Top Cat View Post
    At least Bill saved his transgressions for grown women. Not suggesting what he did was OK. But he didn't chase 14 year olds.

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    Re: Thought regarding a tax system

    Quote Originally Posted by laska View Post
    Here is a tax code I thought of that is similarly structured as OP. expansion of benefits similar to what they receive now in Medicare.
    Interesting but dislike it for a number of reasons...

    1. There's people who have absolutely no stake in income taxes, giving them little disincentive to try and continue to raise taxes on others and increase the free stuff they can get from the government.

    2. There's nothing keeping someone from attempting to just manipulate a single portion of the tax code to help/hurt one particular group of people. A rich person is no less important or more worthy of targeting by the government than a poor person and vise versa. I think a linked code where you either affect everyone or no one would be better

    3. It adds a 10% tax on top of an income tax that is already increased for some of those brackets

    4. It implements single payer health care as a part of a tax measure. Ridiculous in that regard and something I'd be against even on its own

    5. It implements significant government regulation into our personal lives, going way above the current level of telling us what we can and can not eat.

    Essentially your plan offers little for a conservative to like (the fact it lowers taxes for some people is a plus, the fact it simplifies the code by bringing less brackets is a plus) while giving a TON of things that would absolutely make it a non-start (Single payer health care, massive taxes on anything but whole foods, over the top government regulation of food, significant increased taxes on some pay levels, no taxes on some people).

    Its a fine liberal plan...but its just that, a liberal plan, not a compromise one in the least.

  3. #73
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    Re: Thought regarding a tax system

    Quote Originally Posted by apdst View Post
    if a person makes $100,000 a year, it costs them $80,000 a year to live and you hit him with a 28% tax and you're going to send them into the hole.
    Sorry. I'm a conservative. I believe in living within your means. If you know that you're going to get hit with a 28% tax and you've placed yourself so irresponsibly that 80% of your income a year is tied up in costs that are unavoidable then you've made significant and continual irresponsible choices regarding your finances and your life. Its not other tax payers nor the governments fault, nor their job to automatically help your or fix the system for you.

    You want to tie up 80% of your income in fees that absolutely can not be avoided you have to sleep in the bed that made it. The government shouldn't pat you on the head, say its okay, we'll essentially pay you for your schooling (By giving you a tax break). They shouldn't pat you on the head and go "You irresponsibly spent more money on a house than you could afford under the tax system, so we'll be nice to you and give you a deduction thus essentially giving you other peoples money who DIDN'T buy a giant house they couldn't afford and thus aren't getting as big of a deduction".

    But, I understand, sometimes what someone WANTS is more important than principle.

    A tax rate is someone is going to know somewhat in advance. Whether its a good one, or one they don't like, the fact is the RESPONSIBLE and adult thing to do is budget accordingly. And that means managing your finances in a correct way.

    There is 0% chance that I will believe, in any way shape or form, that there's any person making 100k a year that is spending 80% of their income on absolute necessities. Anything over that is bonus, and they're absolutely entitled to that bonus, but at the same time they aren't entitled to the government and other tax payers subsidizing those bonuses through tax breaks.

    Not to mention reducing deductions and simplifying the tax code reduces the load on the IRS, thus eliminating the need for some government positions and shrinking a branch of government. It would make the code easier to understand for people so they had a better grasp of how much of their money is truly being taken away from taxes and what the various numbers mean. But pushing for personal responsibility and reducing government size...how silly of me, thinking a very conservative person would like those things.

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    Re: Thought regarding a tax system

    Quote Originally Posted by apdst View Post
    It doesn't matter what you you think it should cost to live. What matters, is that if a person wants a lifestyle that costs 80 grand a year to maintain, they have the right to have that lifestyle. This is still America, afterall.
    They do.

    They don't have a right to have their house subsidized by my tax payer dollars

    They don't have a right to their medical expenses being subsidized by my tax payer dollars

    They don't have a right to their education being subsidized by my tax payer dollars

    Hell, they don't even have a RIGHT to their charitable donations being subsidized by my tax payer dollars.

    They have a right to spend their money. They have the PRIVLEDGE of deducting certain ways they spend that money from the amount of taxes they pay compared to someone else.

    If you make 80K a year and I make 80K a year, we both have equal right to spend our money as we choose. However you for some reason think you have a right to more of your money if you spend it on education and a house while I spend it on a hummer and vacations. Seems you wish to give special treatment and government hand outs to people for doing what the government wants...that's not a "right", that's a government handout.

  5. #75
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    Re: Thought regarding a tax system

    Quote Originally Posted by Zyphlin View Post
    Sorry. I'm a conservative. I believe in living within your means. If you know that you're going to get hit with a 28% tax and you've placed yourself so irresponsibly that 80% of your income a year is tied up in costs that are unavoidable then you've made significant and continual irresponsible choices regarding your finances and your life. Its not other tax payers nor the governments fault, nor their job to automatically help your or fix the system for you.
    You want to tie up 80% of your income in fees that absolutely can not be avoided you have to sleep in the bed that made it. The government shouldn't pat you on the head, say its okay, we'll essentially pay you for your schooling (By giving you a tax break). They shouldn't pat you on the head and go "You irresponsibly spent more money on a house than you could afford under the tax system, so we'll be nice to you and give you a deduction thus essentially giving you other peoples money who DIDN'T buy a giant house they couldn't afford and thus aren't getting as big of a deduction".

    But, I understand, sometimes what someone WANTS is more important than principle.

    A tax rate is someone is going to know somewhat in advance. Whether its a good one, or one they don't like, the fact is the RESPONSIBLE and adult thing to do is budget accordingly. And that means managing your finances in a correct way.[/quote]



    I agree, but think those limits should be dictated by the tax code. I mean, a person that makes $100,000 a year and has to pay $28,000 in taxes is plum rediculus.

    There is 0% chance that I will believe, in any way shape or form, that there's any person making 100k a year that is spending 80% of their income on absolute necessities. Anything over that is bonus, and they're absolutely entitled to that bonus, but at the same time they aren't entitled to the government and other tax payers subsidizing those bonuses through tax breaks.
    I pay for six kids--that I can't claim on my taxes--a house note, buy gas for my truck, put tires on that truck, make repairs on that truck, plus all the other stuff that life requires that we have and you can bet it takes up every bit of 80% of my annual salary.
    Quote Originally Posted by Top Cat View Post
    At least Bill saved his transgressions for grown women. Not suggesting what he did was OK. But he didn't chase 14 year olds.

  6. #76
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    Re: Thought regarding a tax system

    Quote Originally Posted by apdst View Post
    No, loopholes are unintentional holes in the law and deductions are intentional provisions that allow people not t be taxed on certain expenses.
    Fair enough. But whether they were intended or not, most of them are unnecessary and some of them (e.g. mortgage interest deduction, employer-provided health insurance exclusion) are actively harmful to the overall wellbeing of our economy. Not to mention all of these items increase the complexity of the tax code, which itself costs money.

    Back in the day? You're only 20 something. Back in the day for you was 2005!
    Yeah, I lived on $20,000 for a few years in the middle part of the past decade, right after college. It was doable.

    It doesn't matter what you you think it should cost to live. What matters, is that if a person wants a lifestyle that costs 80 grand a year to maintain, they have the right to have that lifestyle. This is still America, afterall.
    I agree...if they're earning $80,000 in post-tax income they can spend it however they like. If they're only earning $72,000 in post-tax income then they shouldn't be spending $80,000 unless they're willing to go into debt. That's not the government's fault for taxing them too highly, it's their own fault for not planning accordingly (even if you consider that tax rate too high). I'm more sympathetic to people who truly CAN'T pare back their spending any more (i.e. the poor), but if someone can't cut back from a lifestyle that requires $80K per year then it sounds like they've made some bad financial decisions.

    You pay $28,000+ a year in taxes?
    Not quite...I think my total federal tax burden will be about $24,000 this year, and I don't anticipate it being a problem. The other thing to keep in mind is that 28% is the MARGINAL tax rate for people earning $100K...what they pay on their last dollar of income. Most of their income is taxed at less than that.
    Last edited by Kandahar; 10-19-11 at 11:18 PM.
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  7. #77
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    Re: Thought regarding a tax system

    Quote Originally Posted by Kandahar View Post
    Fair enough. But whether they were intended or not, most of them are unnecessary and some of them (e.g. mortgage interest deduction, employer-provided health insurance exclusion) are actively harmful to the overall wellbeing of our economy. Not to mention all of these items increase the complexity of the tax code, which itself costs money.
    Allowing the private sector to keep it's hard earned money is never harmful to the economy. Putting that money into the hands of the government does nothing to help the economy.



    Yeah, I lived on $20,000 for a few years in the middle part of the past decade, right after college. It was doable.
    Didn't say it wasn't doable, but do you really think it's a good idea to encourage people to live on 20 grand a year?



    I agree...if they're earning $80,000 in post-tax income they can spend it however they like. If they're only earning $72,000 in post-tax income then they shouldn't be spending $80,000 unless they're willing to go into debt. That's not the government's fault for taxing them too highly, it's their own fault for not planning accordingly (even if you consider that tax rate too high). I'm more sympathetic to people who truly CAN'T pare back their spending any more (i.e. the poor), but if someone can't cut back from a lifestyle that requires $80K per year then it sounds like they've made some bad financial decisions.
    Do you have kids? Ol' lady? House note? Car note? Been divorced? Call me in 20 years. I'm sure your tune will change.



    Not quite...I think my total federal tax burden will be about $24,000 this year, and I don't anticipate it being a problem. The other thing to keep in mind is that 28% is the MARGINAL tax rate for people earning $100K...what they pay on their last dollar of income. Most of their income is taxed at less than that.
    I'm talking the scenario of taxing people on their gross, with no deductions, as you're suggesting should be done.

    Did you take any deductions?
    Quote Originally Posted by Top Cat View Post
    At least Bill saved his transgressions for grown women. Not suggesting what he did was OK. But he didn't chase 14 year olds.

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    Re: Thought regarding a tax system

    Quote Originally Posted by apdst View Post
    Welcome to our current tax code.
    The current tax code doesn't operate that way. If you move from the 15% tax bracket into the 25% bracket only the income that exceeds the 15% limit is taxed at 25%, not all of your income.

    Any replacement should probably operate in a similar fashion. If there's a tax rate at income up to $75,000 and a different tax rate at $75,000 - $125,000 the higher tax rate should only apply to income over $75,000 not all of your income. Otherwise it does create a disincentive to earn more. (A major problem with most of our welfare programs.)

  9. #79
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    Re: Thought regarding a tax system

    Generally speaking, I actually really like the idea. But, I have two concerns.

    First, I would be more comfortable doing this if the single plan included ALL taxes. Eliminate every other tax and roll it into this one. Otherwise you have the problem of all these regressive taxes lurking around messing up the progressive nature of the system. For example, sales, property and FICA are all regressive. So if you still had sales and property and FICA taxes PLUS this tax, then what you actually get is:

    1) baseline * 1 + baseline * 7
    2) baseline * 2 + baseline * 6
    3) baseline * 3 + baseline * 5
    ...

    See what I mean? Those other taxes undermine the plan because they are cut in the opposite direction- you pay a higher percentage the less you make. That's the reason the federal income tax is basically tweaked so you pay none if you're in the lower half- because those are the folks getting hit the hardest with the regressive taxes. So, if you roll all taxes together, so everybody's total tax burden really goes like you describe in the OP, that would work. Otherwise it won't. Obviously including state taxes in a federal plan would be weird... We could just say have the states follow the same scheme or whatever though for the sake of discussion.

    Second, I think capital gains income would just need to be treated as every other kind of income. I see no reason somebody making $1m/year in income by actually working should pay double the taxes of somebody making $1m/year just by investing. If you want, you can eliminate the corporate income tax if you make investors pay the same rate as on other types of income.
    Last edited by teamosil; 10-19-11 at 11:41 PM.

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    Re: Thought regarding a tax system

    Quote Originally Posted by Zyphlin View Post
    They do.

    They don't have a right to have their house subsidized by my tax payer dollars

    They don't have a right to their medical expenses being subsidized by my tax payer dollars

    They don't have a right to their education being subsidized by my tax payer dollars

    Hell, they don't even have a RIGHT to their charitable donations being subsidized by my tax payer dollars.

    They have a right to spend their money. They have the PRIVLEDGE of deducting certain ways they spend that money from the amount of taxes they pay compared to someone else.

    If you make 80K a year and I make 80K a year, we both have equal right to spend our money as we choose. However you for some reason think you have a right to more of your money if you spend it on education and a house while I spend it on a hummer and vacations. Seems you wish to give special treatment and government hand outs to people for doing what the government wants...that's not a "right", that's a government handout.
    So, what are you saying, you don't take any deductions when you file your taxes?
    Quote Originally Posted by Top Cat View Post
    At least Bill saved his transgressions for grown women. Not suggesting what he did was OK. But he didn't chase 14 year olds.

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