PILOT SPIN
Spin Zone => Spin Zone => Topic started by: Lucifer on April 18, 2016, 07:05:01 AM
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http://www.marketwatch.com/story/45-of-americans-pay-no-federal-income-tax-2016-02-24
An estimated 45.3% of American households — roughly 77.5 million — will pay no federal individual income tax, according to data for the 2015 tax year from the Tax Policy Center, a nonpartisan Washington-based research group. (Note that this does not necessarily mean they won’t owe their states income tax.)
Roughly half pay no federal income tax because they have no taxable income, and the other roughly half get enough tax breaks to erase their tax liability, explains Roberton Williams, a senior fellow at the Tax Policy Center.
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http://www.marketwatch.com/story/45-of-americans-pay-no-federal-income-tax-2016-02-24
In LibSpeak, Fair Share = Pay My Share Too
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quote from "West Wing""
" Sam : Henry, last fall, every time your boss got on the stump and said, "It's time for the rich to pay their fair share," I hid under a couch and changed my name. I left Gage Whitney making $400,000 a year, which means I paid twenty-seven times the national average in income tax. I paid my fair share, and the fair share of twenty-six other people. And I'm happy to because that's the only way it's gonna work, and it's in my best interest that everybody be able to go to schools and drive on roads, but I don't get twenty-seven votes on Election Day. The fire department doesn't come to my house twenty-seven times faster and the water doesn't come out of my faucet twenty-seven times hotter. The top one percent of wage earners in this country pay for twenty-two percent of this country. Let's not call them names while they're doing it, is all I'm saying."
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quote from "West Wing""
" Sam : Henry, last fall, every time your boss got on the stump and said, "It's time for the rich to pay their fair share," I hid under a couch and changed my name. I left Gage Whitney making $400,000 a year, which means I paid twenty-seven times the national average in income tax. I paid my fair share, and the fair share of twenty-six other people. And I'm happy to because that's the only way it's gonna work, and it's in my best interest that everybody be able to go to schools and drive on roads, but I don't get twenty-seven votes on Election Day. The fire department doesn't come to my house twenty-seven times faster and the water doesn't come out of my faucet twenty-seven times hotter. The top one percent of wage earners in this country pay for twenty-two percent of this country. Let's not call them names while they're doing it, is all I'm saying."
What was the story arc for that guy? Did he get caught with kiddie porn as scriptwriter's "revenge"?
By the way I think votes should be proportional to your financial contribution.
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http://www.marketwatch.com/story/45-of-americans-pay-no-federal-income-tax-2016-02-24
It's been an evolution, but a big part of the blame goes to George Bush. To silence the "rich get all the tax breaks crowd," he added a new lower 10% bracket, and increased the ceilings for the lower brackets.
Consequently, there was a big celebration that nearly 50% of the country didn't have to pay income tax. I saw that as the beginning of the end.
Alexis de Tocqueville wrote "The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money."
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What was the story arc for that guy? Did he get caught with kiddie porn as scriptwriter's "revenge"?
kiddie porn? not even close.
Sam Seaborn was a liberal leftist poster child.
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What was the story arc for that guy? Did he get caught with kiddie porn as scriptwriter's "revenge"?
By the way I think votes should be proportional to your financial contribution.
First the rich have influence and lobby power now you want to legitimize them too????
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First the rich have influence and lobby power now you want to legitimize them too????
The "poor", as a group, have more influence than I have. They elected that Kenyan traitor, not one, but twice,using MY money.
Upper middle class are the most disenfranchised group in the country. "Just pay, and shut the hell up."
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It's been an evolution, but a big part of the blame goes to George Bush. To silence the "rich get all the tax breaks crowd," he added a new lower 10% bracket, and increased the ceilings for the lower brackets.
Consequently, there was a big celebration that nearly 50% of the country didn't have to pay income tax. I saw that as the beginning of the end.
Alexis de Tocqueville wrote "The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money."
The plan was that the Federal Government would be weak, and the states strong. That's where we went wrong.
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Upper middle class are the most disenfranchised group in the country. "Just pay, and shut the hell up."
That's by brilliant design my friend - a wicked dastardly brilliant design that is. Keep the glass ceiling on what you call Upper Middle Class. People with Power, Money and Influence see only 2 classes: Us and Them.
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I'm liking this idea
Straight tax, no deductions, simple (if progressive) rate structure.
There's zero chance that a rich person will pay less than their fair share unless they lie about it.
https://www.tedcruz.org/tax_plan/ (https://www.tedcruz.org/tax_plan/)
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That's by brilliant design my friend - a wicked dastardly brilliant design that is. Keep the glass ceiling on what you call Upper Middle Class. People with Power, Money and Influence see only 2 classes: Us and Them.
You are correct sir! The object of the Progressive Marginal Rate is to keep too many people from accumulating wealth. It punishes financial success. You need to break the "financial sound barrier" to get to the next level, and very few can do that.
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I'm liking this idea
Straight tax, no deductions, simple (if progressive) rate structure.
There's zero chance that a rich person will pay less than their fair share unless they lie about it.
https://www.tedcruz.org/tax_plan/ (https://www.tedcruz.org/tax_plan/)
This is one area that I have trouble with Cruz. And for those of you who claim that I think Cruz is a savior, please take note of this.
Where is the line for business income? Retirement income? Rental income? Royalties? State tax refunds? Bartering? Prizes? Lottery? Lawsuit settlements?
Of this picture from the cabinet above my side desk, how many inches of the Code (red books) and Regulations (blue books) will Cruz' plan save? As a point of reference, that's a FAR/AIM on the far right.
I'm not against simplification, and I'm confident I won't be without tax work if his simplification is passed. Hell, the instructions for the 2015 Federal Form 1040 is 105 pages! Knock that bitch down. But A Flat Tax? I'm all for it. (http://uploads.tapatalk-cdn.com/20160419/488fabb85bc5910884dfc531e800fa32.jpg)
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This is one area that I have trouble with Cruz. And for those of you who claim that I think Cruz is a savior, please take note of this.
Where is the line for business income? Retirement income? Rental income? Royalties? State tax refunds? Bartering? Prizes? Lottery? Lawsuit settlements?
Of this picture from the cabinet above my side desk, how many inches of the Code (red books) and Regulations (blue books) will Cruz' plan save? As a point of reference, that's a FAR/AIM on the far right.
I'm not against simplification, and I'm confident I won't be without tax work if his simplification is passed. Hell, the instructions for the 2015 Federal Form 1040 is 105 pages! Knock that bitch down. But A Flat Tax? I'm all for it. (http://uploads.tapatalk-cdn.com/20160419/488fabb85bc5910884dfc531e800fa32.jpg)
You're all for a Flat Tax but against Cruz's plan? That's essentially what this is, the only difference is that there is a 3 tiered level to tax rates.
The simplicity is that you don't classify income differently...perhaps you're so deep into it that you don't recognize that calling it all "Comes-In" IS the simplicity. As an individual, t doesn't matter if you made the money by an employment contract with someone else, by doing work independently, winning the lottery or any other means. If you take cash in then it's cash in.
There's a little bit of differentiation on the "Goes-Out", but I'm ok with that as long as it doesn't expand.
The total tax due formula is something like ((Sum(Comes-In) - Sum(Goes-Out)) * rate. As a bonus, we ought to be able to compute that down to the penny on the payroll taxes and neither pay nor get a refund every year.
If we adopt this as out tax policy, I expect you would see a great drop in the tax business.
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LIne 4 is for itemized deductions. Yet you say "no deductions".
Which is it?
Do businesses pay tax under this plan?
Do we pay tax on SS?
How about capital gains?
I vote for the FAIR tax.
I'm liking this idea
Straight tax, no deductions, simple (if progressive) rate structure.
There's zero chance that a rich person will pay less than their fair share unless they lie about it.
https://www.tedcruz.org/tax_plan/ (https://www.tedcruz.org/tax_plan/)
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Huh, there are deductions on there. I missed that.
I also missed that it isn't a progressive tax. Both companies and individuals use the same simple form and the same simple rate. Individuals pay 10% tax. Companies pay 16%.
I realize that you have a vested interest in a very complex tax code and it's a threat to your livelihood if this were to pass. You also have a Stockholm Syndrome way of thinking about this - to you it is inconceivable that anything simple could ever work, it must be complex.
Capital gains - I don't know, it isn't addressed specifically but I suspect the answer is that capital gains is income, taxed at the flat 10% or 16%.
https://www.tedcruz.org/tax_plan/ (https://www.tedcruz.org/tax_plan/)
Read for yourself.
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Individuals pay 10% tax. Companies pay 16%.
How about individuals that own small companies, organized now under Subchapter S to avoid double taxation?
I sincerely want tax simplification, and I think the only way to get there is to tear down the present system and start over.
But beware the tendency for complications to sneak back in, under the guise of "fairness".
And also beware unintended consequences. Right now municipalities can borrow money at lower rates buy selling tax-free bonds. If that suddenly went away the value of such bonds would plummet, and going forward they'd have to pay higher, commercial rates to raise capital.
Not at all saying I'm opposed, but the transition/simplification has to be handled very carefully to avoid disruptions on many different levels.
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And also beware unintended consequences. Right now municipalities can borrow money at lower rates buy selling tax-free bonds. If that suddenly went away the value of such bonds would plummet, and going forward they'd have to pay higher, commercial rates to raise capital.
Perhaps municipalities should compete in the capital markets just like everyone else.
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How about individuals that own small companies, organized now under Subchapter S to avoid double taxation?
I sincerely want tax simplification, and I think the only way to get there is to tear down the present system and start over.
But beware the tendency for complications to sneak back in, under the guise of "fairness".
And also beware unintended consequences. Right now municipalities can borrow money at lower rates buy selling tax-free bonds. If that suddenly went away the value of such bonds would plummet, and going forward they'd have to pay higher, commercial rates to raise capital.
Not at all saying I'm opposed, but the transition/simplification has to be handled very carefully to avoid disruptions on many different levels.
You'd have to wait for the implementation but from my knowledge an individual proprietorship or LLC will be taxed at the 10% rate because all the income flows straight to the individual. All corporations would be taxed at 16%.
You'll have to explain the connection between municipal bonds and the federal tax rate. I have a better than average knowledge of economics and the financial system but I'm drawing a blank on why these two would be connected.
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You'll have to explain the connection between municipal bonds and the federal tax rate. I have a better than average knowledge of economics and the financial system but I'm drawing a blank on why these two would be connected.
Imagine a 50% fed tax rate.
$100,000 invested in a 3% municipal bond would yield $3,000/yr in tax free dividends.
$100,000 invested in a 6% corporate bond would pay $6,000/yr in taxable dividends. After taxes you'd be left with exactly the same $3,000.
Adjusting the federal rate up or down would change the effective yield of the corporate bond, making the tax free either more or less desirable.
Right?
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I respectfully disagree that companies should pay any tax whatsoever. Eliminate the business tax completely and watch the economy boom like never before.
Employees will make more money which, in turn, will bring more money into the coffers offsetting the elimination brought on by the lack of biz tax.
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Imagine a 50% fed tax rate.
$100,000 invested in a 3% municipal bond would yield $3,000/yr in tax free dividends.
$100,000 invested in a 6% corporate bond would pay $6,000/yr in taxable dividends. After taxes you'd be left with exactly the same $3,000.
Adjusting the federal rate up or down would change the effective yield of the corporate bond, making the tax free either more or less desirable.
Right?
Wouldn't that only be true if you are taxed at a 50% rate?
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Wouldn't that only be true if you are taxed at a 50% rate?
Change the rate, the math changes somewhat, but the advantage of tax-free munis remains.
It's basically the feds subsidizing municipal government.
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Change the rate, the math changes somewhat, but the advantage of tax-free munis remains.
But the point is that the statement is only true if one is taxed 50% at the Federal level. Nobody is, so the statement is false"
It's basically the feds subsidizing municipal government.
That sound like a Democrat talking. You are saying that if the Feds don't tax someone as much, they are subsidizing them.
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But the point is that the statement is only true if one is taxed 50% at the Federal level. Nobody is, so the statement is false"
You need to work on reading comprehension. He said "Imagine a 50% rate".
The principle doesn't change with the rate but using 50% for the example makes the math easy to demonstrate the principle.
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You need to work on reading comprehension. He said "Imagine a 50% rate".
The principle doesn't change with the rate but using 50% for the example makes the math easy to demonstrate the principle.
You're right, I missed that party.
But I still think that pointing out a result that changes with the rate, using a rate that doesn't exist, is misleading.
Of course though, depending on who wins the upcoming election, we may be longing for 50% Federal rates to come back.
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You're right, I missed that party.
But I still think that pointing out a result that changes with the rate, using a rate that doesn't exist, is misleading.
Of course though, depending on who wins the upcoming election, we may be longing for 50% Federal rates to come back.
So, what rate would you like it recalculated for? It's very straightforward math.
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The principle here is that a grand bargain was struck at some point so that income from state and municipal bonds weren't taxed by the Feds, and income from federal bonds weren't taxed by the states. The result is a lower cost of borrowing at the state and local level, lowering the cost of infrastructure. I'm good with that.
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The principle here is that a grand bargain was struck at some point so that income from state and municipal bonds weren't taxed by the Feds, and income from federal bonds weren't taxed by the states. The result is a lower cost of borrowing at the state and local level, lowering the cost of infrastructure. I'm good with that.
Actually, it also means higher cost borrowing for private businesses, as they compete for limited investment with subsidized competition.
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Guys,
The 50% tax rate was just a thought exercise.
Use 39.6% if you like. Or 90%. Or any figure. Doesn't matter. 50% just made the math easier.
The point was, as federal tax rates go up, the real return on taxable investments go down, making the return on municipals more inviting by comparison. Also affects their value, as people will pay more for a bond when it has more of an advantage over a taxable investment.
I thought it was obvious what I was going for, but I guess that's what happens when you assume.
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Guys,
The 50% tax rate was just a thought exercise.
Use 39.6% if you like. Or 90%. Or any figure. Doesn't matter. 50% just made the math easier.
The point was, as federal tax rates go up, the real return on taxable investments go down, making the return on municipals more inviting by comparison. Also affects their value, as people will pay more for a bond when it has more of an advantage over a taxable investment.
I thought it was obvious what I was going for, but I guess that's what happens when you assume.
I apologize for misunderstanding your point as pertaining to the floating market value of bonds.
I thought the topic was how Federal taxes are impacted by municipal bonds.
As Jeff politely put it, I sometimes have a reading comprehension problem. Especially when the thoroughness of my reading will have little impact on my financial or personal circumstance.
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Actually, it also means higher cost borrowing for private businesses, as they compete for limited investment with subsidized competition.
I'm not so sure about that. The potential individual and institutional investors for muni bonds are generally different than those for IPOs and corporate bonds.
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I respectfully disagree that companies should pay any tax whatsoever. Eliminate the business tax completely and watch the economy boom like never before.
Employees will make more money which, in turn, will bring more money into the coffers offsetting the elimination brought on by the lack of biz tax.
If companies pay zero taxes, watch how fast every person in America suddenly becomes a "company". Everybody's Mom, uncle, grandma, etc would rapidly become LLCs.
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If companies pay zero taxes, watch how fast every person in America suddenly becomes a "company". Everybody's Mom, uncle, grandma, etc would rapidly become LLCs.
That won't wash because Sub-s and LLC corporations profits go towards the owner's taxable income.
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That won't wash because Sub-s and LLC corporations profits go towards the owner's taxable income.
And for other corporations, it would become regular income when paid to the owner as salary or dividends.
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If companies pay zero taxes, watch how fast every person in America suddenly becomes a "company". Everybody's Mom, uncle, grandma, etc would rapidly become LLCs.
You really don't understand how LLCs function from a tax perspective.
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If companies pay zero taxes, watch how fast every person in America suddenly becomes a "company". Everybody's Mom, uncle, grandma, etc would rapidly become LLCs.
Number7 and Jeff beat me to the response. As a sole proprietorship, all of our profit goes on our 1040 as personal income.
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Just for clarification, let me ask this:
Let's say that businesses were to pay no tax, and I therefore decide to "turn myself into a business" by calling my hobby a business.
Now let's say I have major expenses to deduct, but very little revenue. Would I get to deduct those "business expenses" from my other income sources to avoid paying tax?
Now let's say that my hobby actually becomes quite profitable with revenue exceed expenses. Since that "net profit" does that net profit roll into my personal income to increase my personal tax liability?
Dav8or, I am especially interested in your answer. How would I benefit from turning myself into an LLC?
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I think the IRS currently will look askance at a "hobby business" that does not turn a profit over 3 years.
I don't know if that is written, or just a rule of thumb that can trigger an audit.
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I think the IRS currently will look askance at a "hobby business" that does not turn a profit over 3 years.
I don't know if that is written, or just a rule of thumb that can trigger an audit.
Then how else could I take advantage of zero business taxes to save on my personal taxes, as Dav8or said?
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Just for clarification, let me ask this:
Let's say that businesses were to pay no tax, and I therefore decide to "turn myself into a business" by calling my hobby a business.
Now let's say I have major expenses to deduct, but very little revenue. Would I get to deduct those "business expenses" from my other income sources to avoid paying tax?
Now let's say that my hobby actually becomes quite profitable with revenue exceed expenses. Since that "net profit" does that net profit roll into my personal income to increase my personal tax liability?
Dav8or, I am especially interested in your answer. How would I benefit from turning myself into an LLC?
That one scenario has a number of points of tax law to consider: the definition of "gross income" of Code Section 61; the "hobby loss" rule of Sec. 183, the "passive activity loss" rules of Sec. 469, the substantiation rules of Sec. 274, and "self employment tax" of Secs. 1401 to 1403. Off the top of my head.
The Code is full of anti-abuse provisions, and as evidenced by the ideas from the smart folks here, would not go away even with a flat tax.