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Post by Deleted on Apr 17, 2011 14:11:50 GMT -5
I keep on hearing fair share when it comes to taxes which means tax the rich more.
I am far from rich and I have no problem with paying taxes... But will increasing taxes really solve the problem? And what is my fair share?
Ex: We made more than 2 times the income of 3 of my cousins combined last year (posted about it actually when I did their taxes). And while we got 3K back (our fault, had withholdings at single and 0 allowances), combined they got over 15k back. Is that fair?
Also, are we going to fix the proplem that got us in this mess to begin with. I mean I might want to pay our 7.3k credit card debt and sending extra money towards it, but if my wife keeps on charging or opening more accounts, I am back to square one.
How come both parties can't get to an agreement? Is it really that hard to understand?
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Gardening Grandma
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Post by Gardening Grandma on Apr 17, 2011 14:20:35 GMT -5
Both parties cannot come to an agreement for a couple of reasons: 1) Philosophically, their priorities are very, very different (like the couple who agree they need to cut back spending. The wife wants the husband to stop playing so much golf. The husband wants the wife to go to the beauty parlor less often). Also, raising taxes will raise revenue. The Pubs believe that cutting taxes for the rich will raise revenue (the "trickle down" theory). The Dems know that cutting taxes increases the deficit. 2) The Pubs want to gain power and they fear looking weak by compromising, so they dig their heels in.
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Post by Deleted on Apr 17, 2011 14:26:01 GMT -5
When almost half are paying no fed income taxes, anything about fair seems weird.
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stats45
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Post by stats45 on Apr 17, 2011 16:44:38 GMT -5
I think that there are too many people with a negative income tax that desirable with a negative income tax, but most of that is because of credits for working parents with children and child tax credits. I don't think these are going away anytime soon. I'd rather see more cost controls on some welfare programs and Medicaid. On the other hand, I also think that not having completely flat tax rates is perfectly fine. Progressive, marginal tax rates make sense to me as long as the top rates are not too much higher than the bottom rates.
I don't like all of the deductions in the system, and I like how both parties seem to want to do away with most of the deductions in favor of lower marginal rates with potentially fewer brackets. The recent deficit comission estimated that if we did away with all of our tax expenditures, we could have a tax system with three brackets 8%, 14%, and 23%.
Optimally, I would support a progessive consumption tax. It would provide powerful incentives for savings and investment, while still keeping a progressive structure.
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Post by Deleted on Apr 17, 2011 17:34:16 GMT -5
What people 'get back' ... has nothing to do with how much they pay in taxes.... grrrrr...
I just went round and round with the neighbor boy on this last night... he's a smart kid... but it just would not sink in...
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whoami
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Post by whoami on Apr 17, 2011 18:16:51 GMT -5
I agree with oped...we "got back" about $2500 but we paid in almost $19.5K. Our tax bill was $17K+ What you get back is meaningless. What the govt keeps from you is the number that counts. I saw an article on CNN talking about the "average" refund. I never did quite understand the point of the article but they made it sound as though people were getting "free" money from the govt beyond what they paid in. Certainly not true in our case even with a refund.
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formerexpat
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Post by formerexpat on Apr 17, 2011 19:24:52 GMT -5
In our governments case, the wife wants the husband to make more money while she sits on her fat ass spending it, but the husband wants to reign in spending because spending 1.75x income is not sustainable [husband gets this concept but wife does not]. He also doesn't want to have to get a second and third job to afford his wife's spending habits. If not corrected soon, both husband and wife are going to be knee deep in shit when the banks revoke their credit cards and they can't spend like there is no tomorrow. Wife, who is used to the luxuries that 1.75x of her husbands used to provide to her, will bitch and moan come the day of reckoning. The husband is going to ditch the wife and will struggle at first digging out of the hole that his wife dug them but will eventually be fine because he lives within his means and has the income to support himself. That is our country in a nutshell. The lower 50% (wife) are going to be SOL soon enough. This was not meant to mean a specific gender is better with money than another, just used the analogy - please don't crucify me, fems.
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Post by Deleted on Apr 17, 2011 20:36:31 GMT -5
What people 'get back' ... has nothing to do with how much they pay in taxes.... grrrrr... I just went round and round with the neighbor boy on this last night... he's a smart kid... but it just would not sink in... My bad... I should have quoted my previous thread. In our case we overpaid by about 3K for the year so got a refund(combined income 93K) federal taxes: 11,675 state taxes : $5,324 Social Security : 3,906 Medicare: 1,348 and in my cousin case: So again what is fair?
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Gardening Grandma
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Post by Gardening Grandma on Apr 17, 2011 21:15:26 GMT -5
In our governments case, the wife wants the husband to make more money while she sits on her fat ass spending it, but the husband wants to reign in spending because spending 1.75x income is not sustainable [husband gets this concept but wife does not]. He also doesn't want to have to get a second and third job to afford his wife's spending habits. If not corrected soon, both husband and wife are going to be knee deep in shit when the banks revoke their credit cards and they can't spend like there is no tomorrow. Wife, who is used to the luxuries that 1.75x of her husbands used to provide to her, will bitch and moan come the day of reckoning. The husband is going to ditch the wife and will struggle at first digging out of the hole that his wife dug them but will eventually be fine because he lives within his means and has the income to support himself. That is our country in a nutshell. The lower 50% (wife) are going to be SOL soon enough. This was not meant to mean a specific gender is better with money than another, just used the analogy - please don't crucify me, fems. Actually, the wife has been caring for the couple's mentally retarded daughter and elderly grandma. The husband wants to throw grandma under the bus because she's too expensive to maintain, and he figures the mentally retarded daughter doesn't need an education. He wants to pass on the cost of their health care to their other children. The important thing is for him to work less and play more golf.
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Post by Deleted on Apr 17, 2011 21:35:00 GMT -5
Cawiau... you aren't letting them both claim head of household are you?
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Opti
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Post by Opti on Apr 17, 2011 22:22:01 GMT -5
Both parties currently want to be seen as the winners of the tax debate more than they want to solve the problem. Interestingly around this time of year there's all the discussion of the huge portion of people not paying federal income tax but most of the discussion centers around making the rates higher instead of the main reasons these people are not paying federal income tax.
Its not just the EITC, but child tax credits, mortgage deductions, student loan interest deductions etc. IMHO, its not that tax rates that need to be adjusted as much as the social engineering of supporting other people's children, housing choices, and student loan choices should be looked at.
In Cawaiu's example's at least two of the cousin's get roughly the equivalent of 50% of their income back from the federal government whereas a single person with the same income would be giving at least 1K in taxes to the feds. As much as I love children and feel they are important to a country I also don't like the idea of funding their existence for possibly 18 years with my taxes just because the government thinks I should. At least with most of social secuirty and medicare I am funding people who gave into the system. With EITC and child credit credits these people could choose to fund their lifestyles on the federal income tax paying public's dime for 36 to 40 years or more depending on how they space out their children. I'd be willing to guess that the majority of those who don't pay taxes have children.
Again given Cawiau's example of Cousin1 and Cousin2, why should tax payers be supporting four children of low income couple? I would love to see a phased approach where we, the federal tax paying public, only support one. That way, with the rampant abuse we should support at most two per couple and have a lot more money to fund the rest of government's obligations.
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Post by Deleted on Apr 17, 2011 22:27:14 GMT -5
My fair share is 14%. Toss all my deductions and just charge me 14%. I should be able to go to the IRS website and fill all my information in one short form and be done.
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whoisjohngalt
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Post by whoisjohngalt on Apr 18, 2011 9:38:35 GMT -5
The wife has also been very concerned about her adult, able-bodied sister who is still "trying to find herself" and can't possibly have a job, so she keeps giving her money every month. The wife's first cousin, who was suppose to stay with the couple for a month have been living with them for 5 yrs, during which time he had plenty of time to father 5 children, but no time to find a job. The husband has nothing but respect for elderly gradma and never said or implied that he wants to throw her out, but he doesn't understand why he the grandma, who never saved a dime and never cared about it before, all of a sudden thinks she deserves all kinds of things. And just bc it's his own daughter, husband is realistic enough to understand that not everyone needs to get the same kind of education and thinks that instead of public spending millions to educate this child that may be there are other, less expensive options.
Playing golf is the only thing that husband can do to get away from all that nonsense, and since he is the only one in that big company with the actual job, why shouldn't he???
Lena
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marvholly
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Post by marvholly on Apr 18, 2011 9:41:14 GMT -5
I am beginning to think a flat rate tax of about 10-15% on individuals w/NO allowable deductions is fair. They people making 10,000 pay 1000, the people making 50,000 pay 5000, people making 200,000 pay 20,000. I suspect this is revenue neutral AND would need far less IRS staff to monitor, enter, audit……..
If somebody want to have 4,5,10 kids that is THEIR decision. If somebody wants to own a home that is THEIR decision. If somebody wants to pay for daycare to have a dual income that is THEIR decision. If somebody wants/needs a higher education that is THEIR decision to take loans.
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whoisjohngalt
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Post by whoisjohngalt on Apr 18, 2011 9:46:55 GMT -5
Holly, You are leaving way too much for "them" do decide. Govt can't have that. Lena
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Post by Deleted on Apr 18, 2011 10:40:37 GMT -5
Cawiau... you aren't letting them both claim head of household are you? No answer to my question?
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Post by Deleted on Apr 18, 2011 11:11:50 GMT -5
Cawiau... you aren't letting them both claim head of household are you? No answer to my question? Yes they did since for mose of last year they were seperated and actually went to court for visitations/child support/etc. His w2 and other papers still have his parents address as his home address and while they are back together (for now at least), he still get child support taken out of his paycheck. And from the court papers he does get to file with 2 of the kids per their agreement as long as he is up to date on his child support.
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Post by Deleted on Apr 18, 2011 14:00:28 GMT -5
If he was living with his parents, he STILL is inelibible to claim head of household.
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Post by Deleted on Apr 18, 2011 14:06:34 GMT -5
Did you let Cousin 3 claim head of household? Because if she lives at home, she does not qualify either...
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Post by Deleted on Apr 18, 2011 14:21:54 GMT -5
I hate the whole idea of "Tax Cuts For The Rich Cost us...." or "Tax Loopholes Cost The Gov't...". Any time I hear that, I denounce the person as an idiot. The premise being that it's the gov't's money to begin with, so letting you keep it, costs them money.
It should be the other way around.....I should just say "Stupid gov't spending costs ME $50K in taxes each year".
I also hate on the Sunday morning shows where you have some guy like David Gregory say "Well, revenues do need to go up in order to tackle the deficit".
I don't know if they are ignorant, or stupid. But do they really think raising tax rates, in this existing system, will really do anything? You'd need to scrap the entire system and start over. Tax code is way too complicated at this point.
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Post by Deleted on Apr 18, 2011 14:27:57 GMT -5
If he was living with his parents, he STILL is inelibible to claim head of household. He is since: A) it is a multi-family home B) leaving on the second floor with his brother /roommate C) paying rent Actually has receipts for rent payment from his mom which I found weird (paid rent to my parents when I rented out their basement but never got a receipts) but I don't know how his relationship is with his parents. Last I've heard, he technically still lives there and pays his share of the rent but sleeps at his old apartment (guess they have money to waste).
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stats45
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Post by stats45 on Apr 18, 2011 14:45:04 GMT -5
The overwhelming majority of people with no personal income tax payments are low or lower-middle income households with children. The rest are usually low income households without children.
To put numbers on this, the no personal income tax households are making $30,000 to $50,000 with two plus kids, $10,000 to $30,000 with one plus kids, or $10,000 or less with no kids. These households make up a solid percent of all households.
They overwhelmingly benefit from EITC and child tax credits rather than mortgage interest deductions, charity deductions, etc. It is very rare that a household with two kids making $35,000 a year has enough deductions to beat the standard deduction. They benefit from all the tax credits in the system.
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Post by Deleted on Apr 18, 2011 14:49:33 GMT -5
I do not think it is ok for two parents to claim head of household. For that matter, with roomates, i'm not sure he could even say he pays more than 50% of the upkeep of the household? Even paying rent, that isn't enough to determine 50%, did you use the worksheet?... And did the kids actually live with him, this isn't just about claiming them... Head of household criteria are NOT the same as dependent criteria.
It also says specifically that they can't have lived with the spouse in the home in the last six months... meaning they are outright lying...
So yeah... i guess if they milk the system, they will get back more than they should...
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Sum Dum Gai
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Post by Sum Dum Gai on Apr 18, 2011 15:15:26 GMT -5
With how arbitrary and complicated the current system is, does anyone honestly think people aren't going to milk it? I mean, lets be real here, our current system is set up perfectly to be taken advantage of. Lower income people know that the odds of getting audited are about the same as winning the lottery, even if they are audited trying to prove they lied to take head of household or something similar is pretty hard, and they could really use the extra money. That's kind of the problem with social engineering through the tax code, you either need a massive army of people to audit returns and investigate liars, or you have to accept that a bunch of people will lie to claim credits for the "good" behavior you're trying to subsidize.
It seems a lot more rational to get the federal government out of the social engineering business, but maybe that's just me. I agree with the earlier posters in that I'd like to see a tax system without all the BS; no credits, no deductions, no loopholes. It doesn't necessarily have to be flat, we could keep a progressive structure, but straight tax rates for each income bracket and that's it. If you make $50k you pay $X, whether or not you choose to have kids, buy a house, go to college, put in efficient appliances, weatherstrip your windows, drive a new car, or any of that other crap should be none of the government's freaking business, and it sure as hell shouldn't be subsidized by other taxpayers.
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stats45
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Post by stats45 on Apr 18, 2011 15:15:51 GMT -5
The government takes almost as much in Social Security and Medicare taxes as in personal income taxes, so it is not like these people pay no taxes. SS and Medicare make up about 40% of the budget and these social insurance taxes make up about 40% of the revenues.
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stats45
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Post by stats45 on Apr 18, 2011 15:17:33 GMT -5
I agree Dark, and Ryan's budget, President Obama's budget, and the Bowles-Simpson deficit plan all recommend/state a shift to three progressive brackets with few (if any) deductions.
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Post by Deleted on Apr 18, 2011 15:20:17 GMT -5
I'm fine with that, as long as it remains progressive.
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runewell
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Post by runewell on Apr 18, 2011 15:21:58 GMT -5
I make six figures (and donate five figures) and only pay about $6,000 in federal taxes. I believe I should be paying more than that, but I don't.
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Sum Dum Gai
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Post by Sum Dum Gai on Apr 18, 2011 15:28:40 GMT -5
Oh, and before I get off my soapbox, could we get somebody to propose tying the tax brackets to something measurable? Just once. The federal poverty rate, some basket of goods that gauges cost of living, whatever, just pick something. They always pick some random dollar amount then get lazy about changing it. Like the AMT. When it was proposed the dollar amount chosen would only affect the upper income folks, then they left it there and inflation started pushing more and more middle class folks into paying a tax that was designed to hit the wealthy. It's not freaking rocket science.
You could do something like; Bracket 1) $0 - federal poverty rate taxed at 0% Bracket 2) Federal poverty rate - 3x the poverty rate taxed at 10% Bracket 3) 3x poverty rate - 5x the poverty rate taxed at 15% Bracket 4) 5x the poverty rate - unlimited taxed at 20%
No deductions, no credits.
There ya go, a one freaking paragraph income tax code that even a moron can figure out, that will adjust with inflation automagically. I refuse to believe that Congress is so stupid they can't come up with something workable that's clean, simple, and palatable.
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Mardi Gras Audrey
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Post by Mardi Gras Audrey on Apr 18, 2011 15:35:55 GMT -5
I refuse to believe that Congress is so stupid they can't come up with something workable that's clean, simple, and palatable. Dark, Come on... You were in the military and you work for a govt contractor. You can't believe Congress is too stupid to come up with something simple and easy? Your own experience should tell you ootherwise... Look what you had to go through last week with the "Will we have a budget/won't we?" "Am I essential/am I not?" debacle.... A bunch of monkeys with a chalk board could do a better job of budgeting... hell, any 6 year old that has a piggy bank and a lemonade stand could do a better job... BTW, your post was right on and I totall agree with you!
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