actually, a flat tax could be really easy on poor people. you excempt food and clothing, everything else you pay for normally.
Oh you know we would have to impose a regressive cap on that. You eat lobster every night while wearing million dollar suits and get to write it off while I chew on Mac and Cheese and wear thrift store clothes?
And so it begins again....
Flat is flat and that is that. Take it or leave it. If you get into deductions, (and everyone does) then you end up just starting the whole process all over again.
actually, Minnesota excempts food and clothing from state sales taxes. it works just fine. you pay at the register and you either get taxed or not.
ice cream is taxed, cereal is not. it's not that tough of a system, and there are no deductions. not sure about the expensive clothing though, i don't buy stuff that nice.
actually, a flat tax could be really easy on poor people. you excempt food and clothing, everything else you pay for normally.
You must mean a sales tax? I like the idea in some ways, because a) it gives you more control over what taxes you pay and when and b) it taxes consumption rather than income (saving is good and making money is good).
My state has no sales tax, but one of the larger income taxes in the country. I'd love a sales tax, personally, because I'm not a moron with my money who feels the need to buy a new $3000 Mac and $40,000 SUV every couple of years. But the idea that lower-income people wouldn't have it harder under a sales tax is silly. You'd also have to exempt car stereo systems, wide-screen TVs, and trampolines. It's sad, but lower-income people are stupider with their money than high-income people. And even if they weren't, a sales tax would still hit the poor harder than the rich.
The other thing about a sales tax as a replacement for income taxes is that I've seen estimates that it would have to be larger than 50% to make up for the income tax.
But the idea that lower-income people wouldn't have it harder under a sales tax is silly. You'd also have to exempt car stereo systems, wide-screen TVs, and trampolines.
but the great part is, those things you mentioned aren't necessities. you don't need a large screen TV (hell, you don't need a TV period). same with car stereos and trampolines. you don't need those to survive. the truly poor won't be taxed at all.
you could also look into a regular tax and a luxary tax, but then it might start getting complicated again.
but the great part is, those things you mentioned aren't necessities. you don't need a large screen TV (hell, you don't need a TV period). same with car stereos and trampolines. you don't need those to survive. the truly poor won't be taxed at all.
you could also look into a regular tax and a luxary tax, but then it might start getting complicated again.
He was being facetious. He was implying that those things are "necessary" to many poor people.
You must mean a sales tax? I like the idea in some ways, because a) it gives you more control over what taxes you pay and when and b) it taxes consumption rather than income (saving is good and making money is good).
My state has no sales tax, but one of the larger income taxes in the country. I'd love a sales tax, personally, because I'm not a moron with my money who feels the need to buy a new $3000 Mac and $40,000 SUV every couple of years. But the idea that lower-income people wouldn't have it harder under a sales tax is silly. You'd also have to exempt car stereo systems, wide-screen TVs, and trampolines. It's sad, but lower-income people are stupider with their money than high-income people. And even if they weren't, a sales tax would still hit the poor harder than the rich.
The other thing about a sales tax as a replacement for income taxes is that I've seen estimates that it would have to be larger than 50% to make up for the income tax.
Just for the record sales taxes are considered profoundly regressive because under income, property and capital gains taxes, most people pay nothing. So since they pay sales tax it is considered to harm them disportionately. Also if you are like most millionaires (not like say P. Diddy) you consume far less than what you actually earn and thus are limited in your taxation vs. total percent of income.
I will gladly agree that most poor people and even a lot of high income people manage their money badly. Most of them will sign anything they feel they can meet the monthly payment on and leave it at that. They have no concept of growing networth or having assets that appreciate and work for them.
If you live in a state with no income tax, thank your lucky stars. I don't consume much and I don't buy new cars but I still get sick of paying 8% to the government for everything I buy. California raised it from 6.5% I believe after the Northridge Earthquake? Whatever it was it was supposed to be temporary and of course it never turns out that way.
Now we have an 8% sales tax and a 33+ billion dollar hole in our budget. Me, I already did my part by paying $6240 in property taxes this year and last. That is of course on TOP of the sales tax.
When I was first married, my wife was still in grad school and not making any money. Marriage was a tax cut for us. Then when she started working, there was a penalty for being married.
There is no "marriage tax." Any tax consequences of marriage are a by-product of a whole bunch of rules that effect people differently depending on their circumstances. Perhaps everyone can agree that we need a simpler tax system where taxes would be neutral with respect to marriage and lots of other things.
I disagree. Calculate your taxes as if filing single for each of you. Then calculate as a married couple. Subtract the first from the second -- that's the marriage tax. Unless you're broke (or in grad school ~ same thing) it can really add up quick.
I'm all for simplifying the tax system, but I don't want to end up with a new system that's just going to get out of control again. After all, the current, insane system started out pretty simple.
I don't know if this one is good (I'm sure you guys could shoot lots of holes in it ), but I like that it seems to be cognizant of the need to keep it simple so that future law-makers can't as easily screw it up again: FairTax
It's basically a 23% national sales tax and also requires the abolition of the amendment which allows the federal government to tax income. I mention this one, not because I particularly argue for it (I don't know enough about it), but because it has this weird/interesting bit:
Quote:
Perhaps most importantly, to ensure that no American will pay tax on necessities, the FairTax plan provides a prepaid, monthly rebate for every registered household to cover the 23% consumption tax spent on necessities up to the federal poverty level. This is how the FairTax completely untaxes the poor, and lowers the tax burden on everyone else. Can you see how much freer life will be with the FairTax instead of the income tax?
Interesting attempt at a solution to figuring out which necessities to exempt from the tax.
I disagree. Calculate your taxes as if filing single for each of you. Then calculate as a married couple. Subtract the first from the second -- that's the marriage tax. Unless you're broke (or in grad school ~ same thing) it can really add up quick.
It's not a marriage. A single person should pay less because their expenses are greater than for a dual person household. It's not a marriage tax, but exemptions for singles.
Your gas bill doesn't cost twice as much with two people. Your water bill doesn't cost twice as much with two people. Your rent doesn't cost twice as much with two people. Your income is double.
Oh.
So, it's to help offset the cost of living for an individual.
I disagree. Calculate your taxes as if filing single for each of you. Then calculate as a married couple. Subtract the first from the second -- that's the marriage tax. Unless you're broke (or in grad school ~ same thing) it can really add up quick.
But there is no marriage penalty if only one of the couple has income - it's actually a marriage bonus. My point is that calling it the "marriage penalty" makes it sound like Congress passed a tax law that says "if you are married you have to pay $X extra in taxes." In reality, the penalty arises out of a complex set of laws, rather than one single law, and it effects different people very differently.
Another example - it doesn't apply to most high-income people because most of them itemize every time, and a large chunk of the penalty comes from the difference in the standard deduction between marrieds and singles.
That's important IMO because it's not trivial to get rid of the marriage penalty. Which parts of it are you getting rid of? What else are you affecting when you do get rid of it?
I don't know if this one is good (I'm sure you guys could shoot lots of holes in it ), but I like that it seems to be cognizant of the need to keep it simple so that future law-makers can't as easily screw it up again: FairTax
That's one of those that assumes a massive cut in government in order to get to that 23%. See this article.
But there is no marriage penalty if only one of the couple has income - it's actually a marriage bonus. My point is that calling it the "marriage penalty" makes it sound like Congress passed a tax law that says "if you are married you have to pay $X extra in taxes." In reality, the penalty arises out of a complex set of laws, rather than one single law, and it effects different people very differently.
Another example - it doesn't apply to most high-income people because most of them itemize every time, and a large chunk of the penalty comes from the difference in the standard deduction between marrieds and singles.
That's important IMO because it's not trivial to get rid of the marriage penalty. Which parts of it are you getting rid of? What else are you affecting when you do get rid of it?
Your point about deductions is dead on.
The "what else are you affecting" part of your response troubles me. How about this -- you figure your tax as a couple and your tax as two singles, and pay the lower of those two amounts each years. Anything else isn't fair, so what it's affecting doesn't matter anyway.
Well since defense and wars like the one in Iraq cost so damn much, I bet we could trim some of the fat in there to get the costs down.
Yeah and forget that little part of the Constitution where this is actually a primary purpose of the Federal government.
I'm still looking for the Earned Income Tax Credit in the Constitution. Also PBS, Federal Department of Education, and... well I could go on and on I suppose.
The "what else are you affecting" part of your response troubles me. How about this -- you figure your tax as a couple and your tax as two singles, and pay the lower of those two amounts each years. Anything else isn't fair, so what it's affecting doesn't matter anyway.
OK, but here's a problem with that - I'd guess most tax revenue comes from married people in the first place, and so I'd assume that reducing the marriage penalty would represent a significant loss of revenue. So what do you about that. Oh yeah, Republicans don't worry about such things.
BTW, isn't your suggestion basically "married filing separately?" It might not reduce the marriage penalty, but what is it for? All I know is that on my state return, I get a much better deal if I file separately, but on my federal return, I file jointly. Strange.
I'm still looking for the Earned Income Tax Credit in the Constitution.
I'm still looking for the right to ignore "all treaties made, or which shall be made, under the authority of the United States" because they "shall be the supreme law of the land" but I haven't found it in there yet.
I'm still looking for the right to ignore "all treaties made, or which shall be made, under the authority of the United States" because they "shall be the supreme law of the land" but I haven't found it in there yet.
Well I suppose you knew what you were talking about. To bad no one else does...
" It's sad, but lower-income people are stupider with their money than high-income people."
I agree with that for the most part. I don;t agree with your statement on SUV's and new Macs. People choose to spend their money in different ways.
I think what you are aluding to is what I call "poor man's thinking". This type of person is extremely common in modern society. We are talking about a lower to middle income person who believes that he could just make another $5K next year, his budget would be fine. I know A LOT of teacher's like this (and I get to say that because I am one). They are always looking at that salary scale and drooling. The problem isn't with what they make but what they spend and where they spend it. For example, I put a lot of money into my home and my cars...not to mention household appliances, etc. I DON'T blow cash on a big vacation every single year, going to a Phillies game once a month or other disposable uses of cash (except for take-out wings...now THAT is a necessity!). It's "once and done" with those. Yes, cars depreciate..but I'm not getting into that argument again.
These type of people also don't understand some basic cash management strategies. For example, when I purcchased a dining room set last year, I had the money to buy it. But, they offered me zero percent financing for a year. It would be crazy not to take the money. In the interim I was able to use the cash for other things (like building my deck) that added value to my home. I'll have the set for 30 years or more...so I don't mind dropping the $ on it. If one is responsible with debt, one can do very well.
" It's sad, but lower-income people are stupider with their money than high-income people."
I agree with that for the most part. I don;t agree with your statement on SUV's and new Macs. People choose to spend their money in different ways.
I think what you are aluding to is what I call "poor man's thinking". This type of person is extremely common in modern society. We are talking about a lower to middle income person who believes that he could just make another $5K next year, his budget would be fine. I know A LOT of teacher's like this (and I get to say that because I am one). They are always looking at that salary scale and drooling. The problem isn't with what they make but what they spend and where they spend it. For example, I put a lot of money into my home and my cars...not to mention household appliances, etc. I DON'T blow cash on a big vacation every single year, going to a Phillies game once a month or other disposable uses of cash (except for take-out wings...now THAT is a necessity!). It's "once and done" with those. Yes, cars depreciate..but I'm not getting into that argument again.
These type of people also don't understand some basic cash management strategies. For example, when I purcchased a dining room set last year, I had the money to buy it. But, they offered me zero percent financing for a year. It would be crazy not to take the money. In the interim I was able to use the cash for other things (like building my deck) that added value to my home. I'll have the set for 30 years or more...so I don't mind dropping the $ on it. If one is responsible with debt, one can do very well.
I'm a teacher too so I get to add my two cents as well.
I would definately agree with you that it is not what you make and even more so what you manage to keep.
However I would say that it isn't how you manage debt that helps you to do well. (Though having good credit is a must) It is acquiring assets that grow your networth that help you do well. By assets I don't mean cars or even furniture. I mean things that manage to work for you and put money in your pocket.
Check it out...and send E-Mail to your national representatives asking them to explain in plain english why they oppose the plan.
The only reason the plan "doesn't work" or "doesn't make sense" to those who take those positions are because they've been brainwashed to think the tax systems needs to be more complicated than it really does.
Comments
Originally posted by alcimedes
actually, a flat tax could be really easy on poor people. you excempt food and clothing, everything else you pay for normally.
Oh you know we would have to impose a regressive cap on that. You eat lobster every night while wearing million dollar suits and get to write it off while I chew on Mac and Cheese and wear thrift store clothes?
And so it begins again....
Flat is flat and that is that. Take it or leave it.
Nick
ice cream is taxed, cereal is not. it's not that tough of a system, and there are no deductions. not sure about the expensive clothing though, i don't buy stuff that nice.
Originally posted by alcimedes
actually, a flat tax could be really easy on poor people. you excempt food and clothing, everything else you pay for normally.
You must mean a sales tax? I like the idea in some ways, because a) it gives you more control over what taxes you pay and when and b) it taxes consumption rather than income (saving is good and making money is good).
My state has no sales tax, but one of the larger income taxes in the country. I'd love a sales tax, personally, because I'm not a moron with my money who feels the need to buy a new $3000 Mac and $40,000 SUV every couple of years. But the idea that lower-income people wouldn't have it harder under a sales tax is silly. You'd also have to exempt car stereo systems, wide-screen TVs, and trampolines. It's sad, but lower-income people are stupider with their money than high-income people. And even if they weren't, a sales tax would still hit the poor harder than the rich.
The other thing about a sales tax as a replacement for income taxes is that I've seen estimates that it would have to be larger than 50% to make up for the income tax.
But the idea that lower-income people wouldn't have it harder under a sales tax is silly. You'd also have to exempt car stereo systems, wide-screen TVs, and trampolines.
but the great part is, those things you mentioned aren't necessities. you don't need a large screen TV (hell, you don't need a TV period). same with car stereos and trampolines. you don't need those to survive. the truly poor won't be taxed at all.
you could also look into a regular tax and a luxary tax, but then it might start getting complicated again.
Originally posted by alcimedes
but the great part is, those things you mentioned aren't necessities. you don't need a large screen TV (hell, you don't need a TV period). same with car stereos and trampolines. you don't need those to survive. the truly poor won't be taxed at all.
you could also look into a regular tax and a luxary tax, but then it might start getting complicated again.
He was being facetious. He was implying that those things are "necessary" to many poor people.
Nick
Originally posted by BRussell
You must mean a sales tax? I like the idea in some ways, because a) it gives you more control over what taxes you pay and when and b) it taxes consumption rather than income (saving is good and making money is good).
My state has no sales tax, but one of the larger income taxes in the country. I'd love a sales tax, personally, because I'm not a moron with my money who feels the need to buy a new $3000 Mac and $40,000 SUV every couple of years. But the idea that lower-income people wouldn't have it harder under a sales tax is silly. You'd also have to exempt car stereo systems, wide-screen TVs, and trampolines. It's sad, but lower-income people are stupider with their money than high-income people. And even if they weren't, a sales tax would still hit the poor harder than the rich.
The other thing about a sales tax as a replacement for income taxes is that I've seen estimates that it would have to be larger than 50% to make up for the income tax.
Just for the record sales taxes are considered profoundly regressive because under income, property and capital gains taxes, most people pay nothing. So since they pay sales tax it is considered to harm them disportionately. Also if you are like most millionaires (not like say P. Diddy) you consume far less than what you actually earn and thus are limited in your taxation vs. total percent of income.
I will gladly agree that most poor people and even a lot of high income people manage their money badly. Most of them will sign anything they feel they can meet the monthly payment on and leave it at that. They have no concept of growing networth or having assets that appreciate and work for them.
If you live in a state with no income tax, thank your lucky stars. I don't consume much and I don't buy new cars but I still get sick of paying 8% to the government for everything I buy. California raised it from 6.5% I believe after the Northridge Earthquake? Whatever it was it was supposed to be temporary and of course it never turns out that way.
Now we have an 8% sales tax and a 33+ billion dollar hole in our budget. Me, I already did my part by paying $6240 in property taxes this year and last. That is of course on TOP of the sales tax.
Be careful what you wish for....
Nick
Originally posted by BRussell
When I was first married, my wife was still in grad school and not making any money. Marriage was a tax cut for us. Then when she started working, there was a penalty for being married.
There is no "marriage tax." Any tax consequences of marriage are a by-product of a whole bunch of rules that effect people differently depending on their circumstances. Perhaps everyone can agree that we need a simpler tax system where taxes would be neutral with respect to marriage and lots of other things.
I disagree. Calculate your taxes as if filing single for each of you. Then calculate as a married couple. Subtract the first from the second -- that's the marriage tax. Unless you're broke (or in grad school ~ same thing) it can really add up quick.
I don't know if this one is good (I'm sure you guys could shoot lots of holes in it
It's basically a 23% national sales tax and also requires the abolition of the amendment which allows the federal government to tax income. I mention this one, not because I particularly argue for it (I don't know enough about it), but because it has this weird/interesting bit:
Perhaps most importantly, to ensure that no American will pay tax on necessities, the FairTax plan provides a prepaid, monthly rebate for every registered household to cover the 23% consumption tax spent on necessities up to the federal poverty level. This is how the FairTax completely untaxes the poor, and lowers the tax burden on everyone else. Can you see how much freer life will be with the FairTax instead of the income tax?
Interesting attempt at a solution to figuring out which necessities to exempt from the tax.
Originally posted by finboy
I disagree. Calculate your taxes as if filing single for each of you. Then calculate as a married couple. Subtract the first from the second -- that's the marriage tax. Unless you're broke (or in grad school ~ same thing) it can really add up quick.
It's not a marriage. A single person should pay less because their expenses are greater than for a dual person household. It's not a marriage tax, but exemptions for singles.
Your gas bill doesn't cost twice as much with two people. Your water bill doesn't cost twice as much with two people. Your rent doesn't cost twice as much with two people. Your income is double.
Oh.
So, it's to help offset the cost of living for an individual.
Originally posted by finboy
I disagree. Calculate your taxes as if filing single for each of you. Then calculate as a married couple. Subtract the first from the second -- that's the marriage tax. Unless you're broke (or in grad school ~ same thing) it can really add up quick.
But there is no marriage penalty if only one of the couple has income - it's actually a marriage bonus. My point is that calling it the "marriage penalty" makes it sound like Congress passed a tax law that says "if you are married you have to pay $X extra in taxes." In reality, the penalty arises out of a complex set of laws, rather than one single law, and it effects different people very differently.
Another example - it doesn't apply to most high-income people because most of them itemize every time, and a large chunk of the penalty comes from the difference in the standard deduction between marrieds and singles.
That's important IMO because it's not trivial to get rid of the marriage penalty. Which parts of it are you getting rid of? What else are you affecting when you do get rid of it?
Originally posted by spotcatbug
I don't know if this one is good (I'm sure you guys could shoot lots of holes in it
That's one of those that assumes a massive cut in government in order to get to that 23%. See this article.
Originally posted by BRussell
That's one of those that assumes a massive cut in government in order to get to that 23%. See this article.
Well since defense and wars like the one in Iraq cost so damn much, I bet we could trim some of the fat in there to get the costs down.
Originally posted by BRussell
But there is no marriage penalty if only one of the couple has income - it's actually a marriage bonus. My point is that calling it the "marriage penalty" makes it sound like Congress passed a tax law that says "if you are married you have to pay $X extra in taxes." In reality, the penalty arises out of a complex set of laws, rather than one single law, and it effects different people very differently.
Another example - it doesn't apply to most high-income people because most of them itemize every time, and a large chunk of the penalty comes from the difference in the standard deduction between marrieds and singles.
That's important IMO because it's not trivial to get rid of the marriage penalty. Which parts of it are you getting rid of? What else are you affecting when you do get rid of it?
Your point about deductions is dead on.
The "what else are you affecting" part of your response troubles me. How about this -- you figure your tax as a couple and your tax as two singles, and pay the lower of those two amounts each years. Anything else isn't fair, so what it's affecting doesn't matter anyway.
Originally posted by bunge
Well since defense and wars like the one in Iraq cost so damn much, I bet we could trim some of the fat in there to get the costs down.
Yeah and forget that little part of the Constitution where this is actually a primary purpose of the Federal government.
I'm still looking for the Earned Income Tax Credit in the Constitution. Also PBS, Federal Department of Education, and... well I could go on and on I suppose.
Nick
Originally posted by finboy
Your point about deductions is dead on.
The "what else are you affecting" part of your response troubles me. How about this -- you figure your tax as a couple and your tax as two singles, and pay the lower of those two amounts each years. Anything else isn't fair, so what it's affecting doesn't matter anyway.
OK, but here's a problem with that - I'd guess most tax revenue comes from married people in the first place, and so I'd assume that reducing the marriage penalty would represent a significant loss of revenue. So what do you about that. Oh yeah, Republicans don't worry about such things.
BTW, isn't your suggestion basically "married filing separately?" It might not reduce the marriage penalty, but what is it for? All I know is that on my state return, I get a much better deal if I file separately, but on my federal return, I file jointly. Strange.
Originally posted by trumptman
I'm still looking for the Earned Income Tax Credit in the Constitution.
I'm still looking for the right to ignore "all treaties made, or which shall be made, under the authority of the United States" because they "shall be the supreme law of the land" but I haven't found it in there yet.
Originally posted by bunge
I'm still looking for the right to ignore "all treaties made, or which shall be made, under the authority of the United States" because they "shall be the supreme law of the land" but I haven't found it in there yet.
Well I suppose you knew what you were talking about. To bad no one else does...
Nick
I agree with that for the most part. I don;t agree with your statement on SUV's and new Macs. People choose to spend their money in different ways.
I think what you are aluding to is what I call "poor man's thinking". This type of person is extremely common in modern society. We are talking about a lower to middle income person who believes that he could just make another $5K next year, his budget would be fine. I know A LOT of teacher's like this (and I get to say that because I am one). They are always looking at that salary scale and drooling. The problem isn't with what they make but what they spend and where they spend it. For example, I put a lot of money into my home and my cars...not to mention household appliances, etc. I DON'T blow cash on a big vacation every single year, going to a Phillies game once a month or other disposable uses of cash (except for take-out wings...now THAT is a necessity!). It's "once and done" with those. Yes, cars depreciate..but I'm not getting into that argument again.
These type of people also don't understand some basic cash management strategies. For example, when I purcchased a dining room set last year, I had the money to buy it. But, they offered me zero percent financing for a year. It would be crazy not to take the money. In the interim I was able to use the cash for other things (like building my deck) that added value to my home. I'll have the set for 30 years or more...so I don't mind dropping the $ on it. If one is responsible with debt, one can do very well.
Originally posted by SDW2001
" It's sad, but lower-income people are stupider with their money than high-income people."
I agree with that for the most part. I don;t agree with your statement on SUV's and new Macs. People choose to spend their money in different ways.
I think what you are aluding to is what I call "poor man's thinking". This type of person is extremely common in modern society. We are talking about a lower to middle income person who believes that he could just make another $5K next year, his budget would be fine. I know A LOT of teacher's like this (and I get to say that because I am one). They are always looking at that salary scale and drooling. The problem isn't with what they make but what they spend and where they spend it. For example, I put a lot of money into my home and my cars...not to mention household appliances, etc. I DON'T blow cash on a big vacation every single year, going to a Phillies game once a month or other disposable uses of cash (except for take-out wings...now THAT is a necessity!). It's "once and done" with those. Yes, cars depreciate..but I'm not getting into that argument again.
These type of people also don't understand some basic cash management strategies. For example, when I purcchased a dining room set last year, I had the money to buy it. But, they offered me zero percent financing for a year. It would be crazy not to take the money. In the interim I was able to use the cash for other things (like building my deck) that added value to my home. I'll have the set for 30 years or more...so I don't mind dropping the $ on it. If one is responsible with debt, one can do very well.
I'm a teacher too so I get to add my two cents as well.
I would definately agree with you that it is not what you make and even more so what you manage to keep.
However I would say that it isn't how you manage debt that helps you to do well. (Though having good credit is a must) It is acquiring assets that grow your networth that help you do well. By assets I don't mean cars or even furniture. I mean things that manage to work for you and put money in your pocket.
It is a very important distinction.
Nick
Check it out...and send E-Mail to your national representatives asking them to explain in plain english why they oppose the plan.
The only reason the plan "doesn't work" or "doesn't make sense" to those who take those positions are because they've been brainwashed to think the tax systems needs to be more complicated than it really does.
-- Ensoniq