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| 7/15 |
| 2010/4/12-5/10 [Reference/Tax] UID:53782 Activity:moderate |
4/12 My gf did her taxes. She was unemployed most of last year and only
paid about $500 in federal tax. She is getting a refund of $1300.
We are both rather annoyed at this. How can you get a refund of
more than you paid in?! (This is a rhetorical question. I know
how.) Another acquaintance of mine makes less than half of what I
do, but her take home is only 20% less. Even though I put money into
my 401k (to shelter the income) and have a mortgage interest deduction
(she does not itemize) she just got a huge refund. I got a (little)
bill. I paid about 15x in taxes what she paid. I cannot believe there
are goobers who want to raise taxes. 50% of people aren't paying any
as it is! You want to raise my taxes? Eliminate some bogus credits
first! Those with more income should shoulder more of the bill,
but these free rides are ridiculous. You can't have half of the
country not only not paying taxes, but getting refunds on top of it!
"The bottom 40 percent, on average, make a profit from the federal
income tax, meaning they get more money in tax credits than they
would otherwise owe in taxes. For those people, the government
sends them a payment."
\_ It's call the erosion the middle class.
\_ I made several billion less than GE and apparently paid more
US taxes than they did: http://tinyurl.com/y5tpaoy
\_ Did you also put 323,000 people to work, paying payroll
taxes for all of them and likely millions in sales taxes
and other taxes? If you did then I'm in favor of refunding
any income tax you paid.
\_ It's called the erosion the middle class.
Really rich makes the rules, or at minimum, controls how
the rules are applied, so they don't pay all that much into
the system. No matter, the system is designed to fall
apart eventually because with enough discouragement of the
right thing to do, no one will do the right thing. No
empire lasts forever. As the joke goes, "make your time..."
I only tolerate it because I think of it as paying for my
Mom's benefits in a very indirect way. If you don't have
anyone in your family who can draw from the broken system,
what can I say. Switch to cash business, hide it away, and
retire as soon as possible and become part of the leeches.
I plan to retire fairly early and stop participating in the
broken system, as much as I can, anyway.
\_ Look what I found through Google:
http://www.taxfoundation.org/news/show/1410.html
"These findings raise serious questions about the future of
the U.S. income tax system...."
\_ If you include all taxes, not just income tax, everyone pays
taxes. Overll tax rates including FICA and Sales tax are pretty
flat above about the bottom quintile. Income tax is pretty
progressive (high earners pay more) but most other taxes are
regressive (poor people pay more, as a percentage).
\_ percentage of income, or
percentage of the
particular service or good
or whatever subject to
that tax?
\_ http://www.nytimes.com/2010/04/14/business/economy/14leonhardt.html
\- leonhardt should have also mentioned the giant mortage
interest dedection [~$100bn]. do you think the OP is
stupid or disingenuous?
\_ Is that a rhetorical question?
\_ Rebuttal to some points he makes:
1. I wouldn't call myself "very wealthy". I think the perception
of who is "very wealthy" has changed. I am middle-class,
_maybe_ upper middle class if I lived somewhere less expensive.
Let's be realistic. People who make over $52100 are not
all "wealthy". Saying that $52100 is the statistical
middle class may be true, but you cannot live a
traditional middle class lifestyle on that salary in any
urban part of the country. That doesn't mean people who
make less should pay no tax and it doesn't mean that
people who make more should shoulder the burden of all of
the tax revenue. If you make $100000 per year you are not
John D. Rockefeller.
\_ You can live a middle class lifestyle on $52k/yr in most
of the country. Just not in expensive areas. That is quite
a bit of money in San Antonio, for instance.
2. "It will have to raise taxes even more than it otherwise
would on everybody else. Or it will have to find deep cuts
in Medicare, Social Security, military spending and the
other large (generally popular) federal programs."
I would lobby for either of these options. I think some
deep cuts need to be made and I also think that people
in the bottom 50% need to start paying more than they do
now, even if that means the top 50% also sees an increase.
One cannot just raise taxes on the top 50%. Everyone has
to share in the pain and right now that's just not true.
3. Focusing on payroll taxes is a distraction unless you
own a company. This is not money coming out of my (or
your) pocket. In fact, this is another way of saying that
the wealthy (who own the companies) are also bankrolling
other benefits for the poor. State tax is a red herring. Some
states have none at all and we can choose to move there if we
wish. Mortgage deduction is also irrelevant. If the bottom
50% had huge mortgage deductions they would still pay 0 (or
get a refund). It's just a way for homeowners to keep from
getting _really_ reamed compared to the bottom percentiles.
Without it the gap would be even worse.
\_ you're a (wordy) idiot.
\_ Nice rebuttal. You obviously have no counter.
\_ you obviously have no clue, so why bother?
\_ Pathetic.
\_ You don't understand what "payroll taxes" are. This is
another name for FICA, which everyone pays, though it is
only taxed on the first $100k or so of income.
\_ Everyone pays less than _half_ of. (Example: only
the employer contributes to FUTA). Further, money that
"you pay" (the other half) is mandated by law to be
withheld by your employer. Since it is mandatory
and it comes out of your paychecks (and not out of,
say, your capital gains on stock or other income
you make outside of your employment) you could make a
good argument that it's really your employer paying all
of it. This is slightly different from income taxes
(which you pay out of your salary also) because with
income taxes some people pay more and others pay less
depending on their situation. So that's money that, if
your tax situation allows, you may get to keep. Not so
with payroll taxes (unless you switch jobs in the middle
of a year and overpay). It's never really "yours" to
begin with unless you are an independent
contractor/business owner. For example, I cannot lower
my FICA withholding, invest it for the year, make a
profit on it, and pay the amount due at the end of
the year. So how is this money really "mine"? What
it is is money paid by my employer on my behalf.
\_ It's yours because it comes out of *your* salary.
When someone gives you a job offer and says you'll
be paid $100K/year, you will claim your salary is
$100K/year, it will go down as $100K/year on your
tax forms, but the amount you get to spend is
less FICA. Sales tax is mandatory, too, that doesn't
mean it's money paid on your behalf by the business
you're buying from.
Returning to: you're an idiot.
\_ Semantics. It's your employer paying it. As
I said, you have no chance of retaining your
_half_. Sales tax is not at all mandatory in any
way. I can live a lifestyle in which I pay no
sales tax at all or I can end up paying 100%
of my salary in sales tax depending on my
situation and my choices. Not so with "payroll
taxes". Instead of calling me names, realize
that "you" are not paying these payroll taxes.
These are employer contributions in your name
under the guise of salary.
\_ Guess what: If you don't have a salary, you
don't pay payroll tax.
\_ True. This is just another way of saying
that employers always pay for it. If
you don't have an employer, you don't
pay it. Ever. Not so with income tax or
sales tax. The evidence is strong that
this is a tax employers pay. Employees
may pay it in legal terms, but the
reality is that employers pay it all
unless you are an independent contractor,
which 90+% of people are not.
\_ There is no such thing as "employer
paying for ***" as they'll just pass
the cost to the employee. There is no
such thing as free beer. !op
\_ I would argue the opposite. There
is no such thing as "employee
paying for ***" as it is because
of the employer that the employee
has any money at all. Of course,
the employer also relies on
employees, but it's much easier
to find a janitor to work at Microsoft
than to found Microsoft.
\_ Do you think your employer pays
for your health care because it
comes out of your paycheck? How
about unemployment?
\_ How do you get the money to pay
for it if not from your
employer? And if you quit
your job you will stop
paying unemployment and
_really_ start paying for
your health care in earnest.
\_ What kind of insane logic
is that? You got the money
from your employer, therefore
your employer paid for it?
Your employer gives you
a *salary*. That salary
belongs to *you*. Deductions
from that salary are things
that *you are paying for*,
just as surely as if you
spent the money on a
cheeseburger. -tom
\_ Some deductions, yes.
Others, no. You are
forced to pay for
unemployment insurance.
In fact, not only are
you forced, but your
employer hands the
money over for you. You
are not forced to buy a
cheeseburger. If my
employer took out $3
of my salary every
month and gave me a
cheeseburger instead
and I could not
change this then I
would say that my
employer bought me a
cheeseburger, not
that he paid me $3
with which I bought a
cheeseburger. I
might be vegetarian
and I don't even want
that cheeseburger. I
just want my $3 to go
buy a nice salad, but
no dice. So how is
that $3 mine? In the
case of health
insurance, I can opt
out of that and go
get my own if I wish,
but most employers heavily
subsidize health
insurance and if you
opt out you do not
get their subsidy in
cash, although I worked
somewhere where I did.
\_ Let me put it this way:
if tomorrow they
stopped requiring
employees to pay
unemployment taxes,
I'm pretty sure you'd
expect the money saved
to go to you rather
than your employer.
Because it's part
of your salary. -tom
\_ I see your point.
Do you see mine?
If you quit your job
to live off of
your large
inheritance do you
still owe the
payroll tax?
How can that be
if you're the
one that owes
it and pays it?
It's a payment
on your behalf.
If it's no longer
mandated you may
see a gain at first,
but I would argue it
would be mostly
competed away
long-term as people
were willing to work
for just a little
more take home than
before even if
it means a smaller
salary. E.g., Joe
who made $50K and
took home $40K
(but now takes
home $50K) is now
finding his job at
risk from the new
college grad willing
to work for $45K (and
take home $45K).
The new equilibrium
will see some of the
windfall with the
employer and some
with the employee
calling into
question whose it
was to begin with.
\_ there's really
no question
whose it is.
The fact that
you can avoid
payroll tax by
not being on
payroll doesn't
mean that someone
else is paying
it. You can
avoid sales tax
by not buying
anything, but
when you buy
something, you're
still paying
sales tax. -tom |
| 7/15 |
|
| tinyurl.com/y5tpaoy -> www.washingtonsblog.com/ FRAME: http://www.georgewashington2.blogspot.com Washington's Blog http://washingtonsblog.com/ |
| www.taxfoundation.org/news/show/1410.html However, one aspect of federal income taxes they may not be aware of is the growing number of Americans who pay zero federal income tax after taking advantage of deductions and credits. That's out of a total of 136 million federal tax returns that will be filed. Using IRS data, we are able to create a profile of these individuals who are outside the federal income tax system. As Table 1 shows, those who file as single or head-of-household are much more likely to be non-payers. One-third of single filers pay nothing in federal income taxes, and almost two-thirds of those who file as head of household pay nothing. In contrast, just 22 percent of married filers are non-payers. One reason is that single filers tend to be younger and earn lower incomes than married filers--especially single parents who file as head-of-household. As a result, married taxpayers pay roughly 75 percent of all federal income taxes, despite filing only 40 percent of returns. Non-Payers by State The number of Americans who face zero federal income tax liability varies widely by state. Table 2 illustrates the number of projected non-payers for 2006 by state. There are two primary reasons why some states have a disproportionate share of non-payers. First is that average household income varies by state, and those with lower-than-average incomes will have a larger share of non-payers. Second, some states have a high number of single parents--who typically file as head-of-household--whose tax liabilities are reduced through tax credits such as the $1,000 per child tax credit and the Earned Income Tax Credit. The estimates in Table 2 do not take into account the likely increase in the number of non-payers in Gulf Coast states as a result of Hurricanes Katrina and Rita. Large Number of Non-Payers Make Tax Reform Difficult Federal tax reform requires that the base of the federal income tax be widened, so that overall tax rates can be reduced. However, because of the large number of Americans currently paying zero federal income tax, any attempt to broaden the tax base will be a difficult sell for lawmakers. The millions of Americans who have no federal income tax liability will either be indifferent about tax reform or will positively oppose it, as it would require bringing them into the federal tax base. The Effect of Recent Tax Cuts on Non-Payers As President Bush pushed through his two major tax bills in 2001 and 2003, opponents focused on the dollar amounts saved by high-income individuals. What many critics have ignored is the number of people who were removed from the tax rolls as a result of the expansion of the child tax credit, which was a key provision of the President's Economic Growth and Tax Relief Reconciliation Act of 2001. As Figure 1 illustrates, the number of tax returns with zero or negative tax liability has risen steadily over the past decade. However, it accelerated sharply between 2000 and 2004 due to the effects of tax changes during President Bush's first term of office. Conclusion These findings raise serious questions about the future of the US income tax system, and the possibility of base-broadening tax reform when the majority of the federal tax burden is borne by a shrinking pool of taxpayers. As Congress considers tax reform proposals during the coming year, this is an issue lawmakers should begin to debate. Footnotes 1 Those who are claimed as dependents on a tax return with positive tax liability are defined as "in the tax system." |
| www.nytimes.com/2010/04/14/business/economy/14leonhardt.html Enlarge This Image Daniel Acker/Bloomberg News About three-quarters of households pay more in payroll taxes than in income taxes. That's the portion of American households that owe no income tax for 2009. With Tax Day coming on Thursday, 47 percent has become shorthand for the notion that the wealthy face a much higher tax burden than they once did while growing numbers of Americans are effectively on the dole. Given that taxes are likely to be one of the big political issues of the next few years -- and maybe the biggest one -- it's worth understanding who really pays what in taxes. Once you do, you can get a sense for our country's fiscal options. How, in other words, will we be able to close the huge looming gap between the taxes we are scheduled to pay and the services we are scheduled to receive? The answer is that tax rates almost certainly have to rise more on the affluent than on other groups. Over the last 30 years, rates have fallen more for the wealthy, and especially the very wealthy, than for any other group. So a much greater share of income is now concentrated at the top of distribution, while each dollar there is taxed less than it once was. It's true that raising taxes on the rich alone can't come close to solving the long-term budget problem. But if taxes are not increased for the wealthy, the country will be left with two options. It will have to raise taxes even more than it otherwise would on everybody else. President Obama -- have increased the number of households that receive enough of a tax credit to wipe out their federal income tax liability. But the modifiers here -- federal and income -- are important. Income taxes aren't the only kind of federal taxes that people pay. There are also payroll taxes and investment taxes, among others. Even if the discussion is restricted to federal taxes (for which the statistics are better), a vast majority of households end up paying federal taxes. About three-quarters of all American households pay more in payroll taxes, which go toward Medicare and Social Security, than in income taxes. Focusing on the statistical middle class -- the middle 20 percent of households, as ranked by income -- underlines this point. Households in this group made $35,400 to $52,100 in 2006, the last year for which the Congressional Budget Office has released data. That would describe a household with one full-time worker earning about $17 to $25 an hour. A good number of people, in fact, paid no net income taxes. But the picture starts to change when you look not just at income taxes but at all taxes. This average household would have paid 08 percent of its income in corporate taxes (through the stocks it owned), 09 percent in gas and other federal excise taxes, and 95 percent in payroll taxes. I realize that it's possible to argue that payroll taxes should be excluded from the discussion because they pay for benefits -- Social Security and Medicare -- that people receive on the back end. People do not receive benefits equal to the payroll taxes they paid. Those who die at age 70 will receive much less in Social Security and Medicare than they paid in taxes. The different kinds of federal taxes are really just accounting categories. At the end of the day, the government has to cover the cost of all its operations with revenue from all its taxes. Kim Rueben of the Tax Policy Center notes, state and local income taxes and property taxes are less progressive than federal taxes, while sales taxes end up being regressive. The typical family pays a lot of state and local taxes, too -- almost half as much as in federal taxes. There is no question that the wealthy pay a higher overall tax rate than any other group. than in the past is that their pretax incomes have risen so rapidly -- which hardly seems a great rationale for a further tax cut. So why are those radio and television talk show hosts spending so much time arguing that today's wealthy are unfairly burdened? Well, it's hard not to notice that the talk show hosts themselves tend to be among the very wealthy. No doubt, like the rest of us, they don't particularly enjoy paying taxes. They are happy with the tax cuts they have received lately. They would prefer if other people had to pick up the bill for Medicare, Social Security and the military -- people like, say, firefighters, preschool teachers, computer support specialists, farmers, members of the clergy, mail carriers, secretaries and truck drivers. com A version of this article appeared in print on April 14, 2010, on page B1 ofthe New York edition. |