Taxes: Whose money is it?

American · Feb 8, 2012

Zyphlin said:
Once its taxed it is no longer "your" money but rather America's money (or your states money). Our means of having a say in it is our elected representitives.

Well this certainly supports the left's notion about it being the Govt's money. Because you know damn well elected officials are there to spend it, not guard it.

Government always finds a need for whatever money it gets.
Ronald Reagan

maquiscat · Feb 8, 2012

MoSurveyor;1060182891 Some of us do that already between 1 Feb and 15 Apr each year. Total tax is right there on Form 1040 Line 60* plain as day. That doesn't include any rebates or other tax credits we often receive so said:
*(or 61, depending on year)[/SIZE]

Sadly, it's not a line that many people can recognize or understand. In the end they are only looking at one line, the one that either tells them they got a refund or they still owe. And the worse part about it is that most people, were you to ask how much they paid in taxes, would tell you that because they got a refund that they paid no taxes. Granted there are some to whom that does apply, even to the point that they received more than they put in. Those aside, it's amazing the number of people who receive part of what they paid back thinking they paid no taxes at all.

OhIsee.Then said:
Yup, no credit allowed. If the government wants a road built it has to build it first with its own money before it should ask us to pay taxes for it. Actually, private companies, getting their funding from say form China, should build the road and only its users should pay for its use with tolls. Yup, this would work. Right?

The government has no money of it's own. It is all tax/fee derived. Unless I am missing some kind of not obvious sarcasm?

Temporal · Feb 8, 2012

On paper, it's money put into collective trust that is spent by representatives who are accountable to their constituents.

In reality, the largest wealth transfers in human history have occurred and are continuing to occur from that public trust and into private coffers, with no real promise of return or change in policy.

If there were a movement tomorrow to stop paying taxes that millions of people sign onto simultaneously (and thus the government has to address the grievances), I would join it in a heartbeat. I do not want to support this system anymore. The bad it is doing far outweighs the good, and the corruption and cronyism at the highest levels of governance must be taken to task. I do not want to see anymore money go to private corporations who have mismanaged the entire financial system to our collective detriment. Corporate and bank socialism must end, starting with the de-privatization of the Federal Reserve and Bank of America.

misterman · Feb 8, 2012

American said:
Well this certainly supports the left's notion about it being the Govt's money. Because you know damn well elected officials are there to spend it, not guard it.

Of course they are. I wouldn't want them to take it just to put it in the bank.

OhIsee.Then · Feb 8, 2012

Originally Posted by OhIsee.Then
Yup, no credit allowed. If the government wants a road built it has to build it first with its own money before it should ask us to pay taxes for it. Actually, private companies, getting their funding from say form China, should build the road and only its users should pay for its use with tolls. Yup, this would work. Right?

maquiscat said:
The government has no money of it's own. It is all tax/fee derived. Unless I am missing some kind of not obvious sarcasm?

Don'tyousee, it's just how I see the next logical consequence of how things would work out. Sarcasm? Nooo!

Dpetty · Feb 10, 2012

misterman said:
Of course they are. I wouldn't want them to take it just to put it in the bank.

I will never understand why it has become so unpopular to have money in the bank (savings account for the layperson). Instead spending more money than we earn, on a personal and government level is all the rage lately.

MoSurveyor · Feb 10, 2012

Dpetty said:
I will never understand why it has become so unpopular to have money in the bank (savings account for the layperson). Instead spending more money than we earn, on a personal and government level is all the rage lately.

There are two good reasons not to save money. One is debt. If you have debt then money spent paying down the debt usually has a better return than saving it. Two is taxes. If you're rich interest on savings gets taxed at a higher rate than investing in stocks or bonds. The only people that have a good economic reason to use long-term savings accounts are people that have no debt but aren't rich (unless the government subsidizes savings in some other way like not having to pay taxes on savings for education).

Dpetty · Feb 10, 2012

MoSurveyor said:
There are two good reasons not to save money. One is debt. If you have debt then money spent paying down the debt usually has a better return than saving it. Two is taxes. If you're rich interest on savings gets taxed at a higher rate than investing in stocks or bonds. The only people that have a good economic reason to use long-term savings accounts are people that have no debt but aren't rich (unless the government subsidizes savings in some other way like not having to pay taxes on savings for education).

Debt does pay a better rate of return than most investments, but only the money paid on TOP of your monthly interest because it goes directly toward paying off the principle, thus reducing the overall interest paid over the life of the loan. However, to regard that as a return is misleading. You will still pay more money than you borrowed, which is the only reason lenders give loans in the first place.

Regardless of debt, everyone should have enough money in savings 3 to 6 months worth of bills. Idealy, we should be paying for everything with cash, rather than installment loans because of the huge amount of money we pay in interest. This applies to the government as well. The only difference is that we are expected to pay our loans back, the government thinks they dont have too.

MoSurveyor · Feb 10, 2012

Dpetty said:
Debt does pay a better rate of return than most investments, but only the money paid on TOP of your monthly interest because it goes directly toward paying off the principle, thus reducing the overall interest paid over the life of the loan. However, to regard that as a return is misleading. You will still pay more money than you borrowed, which is the only reason lenders give loans in the first place.

Given that you have an outstanding loan at 12% and a savings account at 1%. If you take all the "extra" money you make (if you want to call that "discretionary funds" that's fine) over a year and put it into the loan your net worth will be greater at the end of the year than it would have been had you put all the money into the savings account. You can cut that up any way you'd like and stick whatever labels suit your fancy on them but the results will still be the same.

As for having zero debt, I mostly agree with that with one exception, possible two. Housing is the primary exception, at least where I live. It's cheaper for a family to live in a house than an apartment. The second might be a vehicle - but that would depend on the mass transit available in the area as well as other factors, insurance rates for example.

Dpetty · Feb 10, 2012

MoSurveyor said:
Given that you have an outstanding loan at 12% and a savings account at 1%. If you take all the "extra" money you make (if you want to call that "discretionary funds" that's fine) over a year and put it into the loan your net worth will be greater at the end of the year than it would have been had you put all the money into the savings account. You can cut that up any way you'd like and stick whatever labels suit your fancy on them but the results will still be the same.

This is absolutly false. Whatever money you have in the savings account will GAIN a net of 1% interest over the course of that year. Regardless of the interest rate you are paying on an installment loan, that money still represents a LOSS of your overall net worth. Its outgoing money. The 12% represents the money you saved yourself on future interest paid on the loan if you were to only make minimum payments. Its does NOT represent any type of actuall monetary gain on your part, it just means you didnt waste as much as you could have.

For example if you get a $10,000 loan at 12% interest and make only the minimun payments over the term of the loan, you will end up paying closer to $13 to $15,000 depending on term and minimum payment. By paying money toward that loan ON TOP OF your monthly payment, every dollar goes toward the principle without interest, hence that dollar saves you a rate of return equal to the interest rate. It SAVES you money, it doesnt MAKE you money. If you have debt, it makes sense to put all of your extra money into paying that off, but you will get richer faster by saving your money till you can purchase an item rather than borrowing the money and spending exponentially more for that item over the term of the loan, than the person who used cash.

As for having zero debt, I mostly agree with that with one exception, possible two. Housing is the primary exception, at least where I live. It's cheaper for a family to live in a house than an apartment. The second might be a vehicle - but that would depend on the mass transit available in the area as well as other factors, insurance rates for example.

Yes, housing is a very valid reason to get a loan. I dont agree that a car is though. Vehicles are a perfect example of wasting money with loans.

lizzie · Feb 10, 2012

rathi said:
The blessing and curse of representative democracy is that you get the government you deserve.

The same could certainly be said of a direct democracy, except worse in that the majority always rules.

MoSurveyor · Feb 10, 2012

Dpetty said:
This is absolutly false. Whatever money you have in the savings account will GAIN a net of 1% interest over the course of that year. Regardless of the interest rate you are paying on an installment loan, that money still represents a LOSS of your overall net worth. Its outgoing money. The 12% represents the money you saved yourself on future interest paid on the loan if you were to only make minimum payments. Its does NOT represent any type of actuall monetary gain on your part, it just means you didnt waste as much as you could have.

For example if you get a $10,000 loan at 12% interest and make only the minimun payments over the term of the loan, you will end up paying closer to $13 to $15,000 depending on term and minimum payment. By paying money toward that loan ON TOP OF your monthly payment, every dollar goes toward the principle without interest, hence that dollar saves you a rate of return equal to the interest rate. It SAVES you money, it doesnt MAKE you money. If you have debt, it makes sense to put all of your extra money into paying that off, but you will get richer faster by saving your money till you can purchase an item rather than borrowing the money and spending exponentially more for that item over the term of the loan, than the person who used cash.

(emphasis added)

"Absolutely false"? Last time I looked a decrease in liabilities is an increase in net worth.

I've already agreed, with a couple of exceptions, you're better off not getting in debt in the first place but it seems obvious you agree it's better to pay off debt you have than to save money (unless, of course, you can get a higher interest rate on savings than your loan rate).

Dpetty said:
Yes, housing is a very valid reason to get a loan. I dont agree that a car is though. Vehicles are a perfect example of wasting money with loans.

It all depends on where you live and your circumstances. I'm sure in NYC and many other areas cars are a luxury. However, there are many places where they are not - they are an investment in your career. Apparently you've never lived in those communities or your career has not required odd working hours or involved companies located outside the city center.

Grendel · Feb 11, 2012

Zero debt policies aren't effective for most people. Borrowing money to increase your longterm value is usually a good idea. For example, loans for education or vocational training, which will leave you with a debt that grows interest, but the interest may be (depending on your vocation) less than the increase in your starting salary. Also, buying a reliable car (in most areas) increases your range for job hunting, giving you better negotiating leverage. Buying a house is usually the long-term benefit over renting, especially if you plan to stay for 5 years or more. Borrowing to improve infrastructure, so to speak, is important for a lot of tradesmen -- tools and equipment now may bring in more in immediate earnings than the cost of interest. Other odd stuff can be worth the debt, as well. Once I had to borrow money (against a credit card) to buy a few suits, but it landed me a job that paid far, far more than the interest I paid on the suits.

Borrowing money to go on vacation or something frivolous like that is stupid, but the idea of a firm no-debt policy isn't always effective.

Dpetty · Feb 11, 2012

MoSurveyor said:
(emphasis added)

"Absolutely false"? Last time I looked a decrease in liabilities is an increase in net worth.

Yes, a decrease in liability is increasing your net worth because you have less debt to income and so forth, but having a positive net worth (money in saving, stocks, bonds, etc) is still better than having debt in loans, even if that debt is being paid off ahead of schedule. So considering decreased liability as a net worth increase, is only from the pervue that you shouldnt have taken the liability in the first place.

It all depends on where you live and your circumstances. I'm sure in NYC and many other areas cars are a luxury. However, there are many places where they are not - they are an investment in your career. Apparently you've never lived in those communities or your career has not required odd working hours or involved companies located outside the city center.

Actually i grew up in a pretty rural area. Ive had jobs requiring me to drive 30 to 40 miles to work each way. Simply because one is required to drive does not mean they should go head over heals in debt to get a car. My first car was a 1966 for truck. It cost $500 and got lousy mileage. I also had a 1981 Honda civic that had 5 gears, but i could only find 4. I have had 3 or 4 cars that cost under a grand because that is what i could afford at the time. As i saved money, i got better cars. That is the way its supposed to work. To many people think they need to skip those steps and go straight to the Cadillac Escelade, even if they cant afford it. Newly weds go up to their eyeballs in debt to get all the things their parents have, even though it took them 30 years to accumulate it. Debt is killing us. The attitude that everyone DESERVES a flat screen tv, or a car less than 5 years old, is responsible for that. Whatever happened to saving and THEN buying?

MoSurveyor · Feb 11, 2012

Dpetty said:
Whatever happened to saving and THEN buying?

I don't know. Like I said, I tend to believe that's the better route as well. But I also don't want to dissuade people from using credit to get what they need, either, and that doesn't include the $300 Bar-B-Q grill or the $1500 TV. If your $500 truck was reliable then that's all the matters. If it was a POS that needed fixing every other week and occasionally made you late for work then it may not have been worth it or even been a bad investment. Over-indulgence isn't a good thing - especially if you're not paying cash for it - but relying on others for support or back-up except in the most extreme situations isn't a good thing either. There is a balance to be had.

radcen · Feb 11, 2012

Dpetty said:
Actually i grew up in a pretty rural area. Ive had jobs requiring me to drive 30 to 40 miles to work each way. Simply because one is required to drive does not mean they should go head over heals in debt to get a car. My first car was a 1966 for truck. It cost $500 and got lousy mileage. I also had a 1981 Honda civic that had 5 gears, but i could only find 4. I have had 3 or 4 cars that cost under a grand because that is what i could afford at the time. As i saved money, i got better cars. That is the way its supposed to work. To many people think they need to skip those steps and go straight to the Cadillac Escelade, even if they cant afford it. Newly weds go up to their eyeballs in debt to get all the things their parents have, even though it took them 30 years to accumulate it. Debt is killing us. The attitude that everyone DESERVES a flat screen tv, or a car less than 5 years old, is responsible for that. Whatever happened to saving and THEN buying?

I agree with you to a point (regarding vehicles). You are absolutely correct when many people THINK they need an Escalade or a Lexus when a simple used Chevy or Toyota will do just fine. However, a small loan for a reasonable and reliable used car (in the $4-5K range) is not the end of the world. And then, yes, building up from there.

radcen · Feb 11, 2012

MoSurveyor said:
I don't know. Like I said, I tend to believe that's the better route as well. But I also don't want to dissuade people from using credit to get what they need, either, and that doesn't include the $300 Bar-B-Q grill or the $1500 TV. If your $500 truck was reliable then that's all the matters. If it was a POS that needed fixing every other week and occasionally made you late for work then it may not have been worth it or even been a bad investment. Over-indulgence isn't a good thing - especially if you're not paying cash for it - but relying on others for support or back-up except in the most extreme situations isn't a good thing either. There is a balance to be had.

This is pretty much what I was getting at in my post above.

molten_dragon · Feb 11, 2012

I voted 3, but it's really sort of a mix between 2 and 3. Once it is collected as taxes, the money belongs to the government. However, since we live in a democracy, we still have some sort of control over what happens to it.

Taxes: Whose money is it?