quote:

Originally posted by Shakka I don't think that is necessarily the proper conclusion. Capitalizt pointed out that the revenue gap is closed because of the loopholes that get eliminated. Itemized tax deductions would be a thing of the past in the Fair Tax (i.e. those evil rich millionaires in their McMansions would no longer be able to deduct hundreds of thousands in mortgage interest from their taxable income among other things). Also the savings from eliminating red tape and administrative overlap would be significant.

that's why i said if someone with an EFFECTIVE tax rate of over 26%. Someone can be in the 35% bracket with respect to his income, but not pay an effective rate of 35% because of the progressivity of the tax. The simple fact is that you can't reduce everyone's effective tax rate and expect to receive the same income. Even McCain should be able to understand that simple economic concept.

In any event, most of the complication for compliance doesn't come from the personal income tax loopholes, it comes from auditing underreporting of income and complications from the corporate system. Neither would be eliminated by reducing deductions and implementing a standard flat rate.

EDIT: i'm sure we can both agree that a person's ETR will be closer to the top 35% rate as the wages increase past 357K. Someone who earns 1M a year in wages will have an ETR pretty damn close to 35%. If that person now has a 26% rate imposed on his wages will his ETR increase or decrease? Who will fill that gap if the government income on individual taxes is to stay the same? Forget about deductions for a minute because a person can't have deductions so large as to eliminate taxes, thanks to the AMT.

Last edited by jerZ07002 on Oct-29-2008 at 14:19

quote:

Originally posted by jerZ07002 Forget about deductions for a minute because a person can't have deductions so large as to eliminate taxes, thanks to the AMT.

I hope you cringe when you utter the words, "thanks to the AMT!" I got snagged by that little butt****** last year. It needs to be eliminated, and the sooner the better before it starts buttfucking the middle-class you guys are so concerned about.

Interestingly, I can say fucking, but not fu_ker.

quote:

Originally posted by Shakka I hope you cringe when you utter the words, "thanks to the AMT!" I got snagged by that little butt****** last year. It needs to be eliminated, and the sooner the better before it starts buttfucking the middle-class you guys are so concerned about. Interestingly, I can say fucking, but not fu_ker.

it's ironic you're supporting a flat 26% tax system with minimum deduction, however, you are railing against the AMT which essentially does exactly that. AMT eliminates many deductions, and taxes 26% on the first 175K of AMT taxable income and only 28% over that.

so, what is your position? deductions with progressivity, or no deductions with a flat rate? you don't seem to really want either.

Last edited by jerZ07002 on Oct-29-2008 at 15:10

quote:

Originally posted by jerZ07002 it's ironic you're supporting a flat 26% tax system with minimum deduction, however, you are railing against the AMT which essentially does exactly that. AMT eliminates many deductions, and taxes 26% on the first 175K of AMT taxable income and only 28% over that. so, what is your position? deductions with progressivity, or no deductions with a flat rate? you don't seem to really want either.

I'm for the least amount of taxation necessary for everyone. I think that arguing for greater progressivity in a system that clearly puts the lion's share of the overall tax burden on the "rich" is a bunch of bull. I think a simple system that is not riddled with loopholes, exceptions and complexities would be ideal. The AMT is just a way to make sure everyone is paying a "fair" share, but it's been written about ad nauseum over the last several years as it captures more and more middle-class folks as it's not indexed for inflation (and it's a bullshit tax mechanism anyway because you know some money hungry pork-****** congressman just had to make sure everyone pays a chunk).

I was personally frustrated by the AMT last year because I pay my full income tax liability, I gave a not-insignificant amount of money to charity, and I claimed legitimate mortgage interest tax deductions. I played by the book, did nothing to avoid my "fair" share of the tax burden, and still got fucked in the end. I just think as a concept the AMT sucks ass, particularly nowadays when it does to more and more people what it did to me last year. Perhaps there was a time when it worked better, but it is clearly not working as originally intended nowadays.

quote:

Originally posted by Shakka I'm for the least amount of taxation necessary for everyone. I think that arguing for greater progressivity in a system that clearly puts the lion's share of the overall tax burden on the "rich" is a bunch of bull. I think a simple system that is not riddled with loopholes, exceptions and complexities would be ideal. The AMT is just a way to make sure everyone is paying a "fair" share, but it's been written about ad nauseum over the last several years as it captures more and more middle-class folks as it's not indexed for inflation (and it's a bullshit tax mechanism anyway because you know some money hungry pork-****** congressman just had to make sure everyone pays a chunk). I was personally frustrated by the AMT last year because I pay my full income tax liability, I gave a not-insignificant amount of money to charity, and I claimed legitimate mortgage interest tax deductions. I played by the book, did nothing to avoid my "fair" share of the tax burden, and still got fucked in the end. I just think as a concept the AMT sucks ass, particularly nowadays when it does to more and more people what it did to me last year. Perhaps there was a time when it worked better, but it is clearly not working as originally intended nowadays.

it's not working for you. it is clearly working as intended because the intent was to prevent excessive deductions from significantly reducing the tax burden. the fact that it was enacted because of 150-something specific instances of tax avoidance doesn't mean it wasn't intended to cast a larger net, especially since the amount in those instances wasn't even significant on the grand scale (those taxpayer's generally had taxable income of around 200K with zero tax liability - hardly excessively rich individuals). the only reason the AMT worked before, but does not work now is because before you weren't subject to the AMT but now you are.

why is the mortgage interest deduction legitimate other than because congress allows it? if they permit that deduction shouldn't they also be allowed to condition it?

the fair share is what is legally determined. since the AMT is part of that legal determination you are paying your 'fair share' under the AMT. stop with the BS that the AMT isn't fair because it is fair. those deductions you get, which you claim complicate the code and should be eliminated, are presents from congress. you aren't entitled to them as a matter of absolute right.

Last edited by jerZ07002 on Oct-29-2008 at 16:09

Was this obvious to anyone else?

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Last edited by {b.s.e.} on Oct-29-2008 at 21:50

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Originally posted by jerZ07002 the fair share is what is legally determined. since the AMT is part of that legal determination you are paying your 'fair share' under the AMT. stop with the BS that the AMT isn't fair because it is fair. those deductions you get, which you claim complicate the code and should be eliminated, are presents from congress. you aren't entitled to them as a matter of absolute right.

Which takes us back to the Fair Tax, or something like it...a simple, easy to apply standard that gets around all of the loopholes and complexities that only serve to worsen the current code. My point above was that I played completely within the rules and did not take "excessive" deductions (particularly since TurboTax told me that I was taking far fewer deductions than most people comparable to me in filing). I paid full income taxes. I would expect that, if the current code is clean and functional, that someone with a pretty standard return like my own would not get hit with some alternative "gotcha" tax as I did nothing to try to minimize or lower my tax liability.

For the record, I still got a refund (which is stupid anyway, but is another topic), but was deducted on my refund b/c some "fair minded" congressman decided I should take an incremental hit.

Hypothetically, what is wrong with someone taking a bunch of itemizations on things like donations and the like, provided they are legitimate and properly accounted for, to minimize their taxable liability? Is it simply unfair because the government didn't explicitly receive a revenue contribution? Did said person not part with an amount of their property in the name of the common good? Doesn't this fill a hole that would otherwise be filled, or possibly ignored, by government funding from taxes? Isn't it a social contribution? Why is it less significant?

Do you believe that "fair" is simply whatever some authoritative figure in Washington says it is?

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Originally posted by Shakka Hypothetically, what is wrong with someone taking a bunch of itemizations on things like donations and the like, provided they are legitimate and properly accounted for, to minimize their taxable liability? Is it simply unfair because the government didn't explicitly receive a revenue contribution? Did said person not part with an amount of their property in the name of the common good? Doesn't this fill a hole that would otherwise be filled, or possibly ignored, by government funding from taxes? Isn't it a social contribution? Why is it less significant? Do you believe that "fair" is simply whatever some authoritative figure in Washington says it is?

the begs the question. is it unfair because they take a present away which you used to have? or it it unfair that they never give you a present to begin with?

fair is whatever we accept. i admit that our utlization of taxes is severely mismanaged. so i can understand if you think your taxes are unfair given taxes aren't currently being utlized for the best social purposes.

I think you and I have gross differences of opinion on what the definition of fair is.

I can appreciate your analogy to a "present," though I don't think I view that as a fair or unfair element. It is part of the rules in place, and as I said I play by the rules. I think that people who do not play by the rules are not necessarily playing fairly, however that does not mean that I think the rules in and of themselves are "fair" in an absolute sense. I hope that makes sense.

Edit: Since I am still steamed about it: A case in point of rules being fine to adhere to, but sometimes displaying their unfairness. Last weekend the Falcons played the Eagles. The Falcons were down by 6 points with a little over 2 minutes to go in the game. They put up a tremendous 3 down stand, forcing Philly to punt, giving them a shot at scoring on a final possession. The Falcons used their final timeout to stop the clock in order to maximize the amount of time they'd have to control the ball. When Philly punted, the Atlanta returner started to attempt to catch the punt, but at the last second, decided against it and backed off. The ball hit the ground and the refs (incorrectly) thought that the Atlanta receiver touched the ball. Philly proceeded to recover the ball, the punt was ruled a muff, and Philly gained possession only to score 2 plays later, effectively ending Atlanta's hopes for a comeback.

The catch: Since Atlanta had used its final timeout, they were ineligible to use any of their remaining challenges. Since there were more than 2 minutes left in the game, there was no chance that the booth upstairs would review the play. Upon review several times on TV from many angles, it was obvious that the Atlanta receiver did NOT touch the ball and that therefore Atlanta SHOULD have regained possession of the ball at the point where Philly touched it. Unfortunately, with no way to challenge the play within the rules, there was no way to overturn a blatantly poor call. Thus everybody played perfectly by the rules, but the rules resulted in a horribly unfair outcome.




But at least we got this in there for good measure.


/rant.

Last edited by Shakka on Oct-29-2008 at 18:02

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Originally posted by George Smiley If you introduce a flat rate of income tax, those previously in the top bracket will pay less of a % meaning they take more money home than before. Those previously in the bottom bracket will have to pay more so they will take less home than before. The gap between rich and poor therefore increases

I would propose that the gap grows because socialist-like tax policies ironically push the coveted top 5% into hiding, leaving the middle-class holding the bag (yet again).

Clinton had this exact same problem when he promised a middle tax cut in 92' only to raise the taxes on the middle class in 93'.
Anyone care to guess what will happen with Obama's 'promise'?

___________________
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The grey rain-curtain of this world rolls back, and all change to silver glass...and then you see it...
...white shores...and beyond...the far green country under a swift sunrise."

quote:

Originally posted by Fir3start3r I would propose that the gap grows because socialist-like tax policies ironically push the coveted top 5% into hiding, leaving the middle-class holding the bag (yet again). Clinton had this exact same problem when he promised a middle tax cut in 92' only to raise the taxes on the middle class in 93'. Anyone care to guess what will happen with Obama's 'promise'?

Wrong on all counts...

Clinton signed the Omnibus Budget Reconciliation Act of 1993 in August 1993, which passed Congress without a Republican vote. It cut taxes for fifteen million low-income families, made tax cuts available to 90% of small businesses, and raised taxes on the wealthiest 1.2% of taxpayers. Additionally, through the implementation of spending restraints, it mandated the budget be balanced over a number of years. CLICK

The Taxpayer Relief Act of 1997 (Public Law 105-34) reduced several federal taxes in the United States. Subject to certain phase-in rules, the top capital gains rate fell from 28% to 20%. The 15% bracket was lowered to 10%. Starting in 1998, a $400 tax credit for each child under age 17 was introduced, which was increased to $500 in 1999. This credit was phased out for high income families. The act exempted from taxation profits on the sale of a personal residence of up to $500,000 for married couples filing jointly and $250,000 for singles. The $600,000 estate tax exemption was to increase gradually to $1 million by the year 2006. Family farms and small businesses could qualify for an exemption of $1.3 million, effective 1998. Starting in 1999, the $10,000 annual gift tax exclusion was to be corrected for inflation. The act also provided tax relief for education savings and retirement accounts. Some expiring business tax provisions were extended. It was signed into law by President Bill Clinton on August 5, 1997. CLICK

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