Senate Fiscal Cliff Bill Approved by House

[MysticCat]

Originally Posted by AGDee

People jump on that "47% of the people don't pay federal income tax" and make assumptions.

Originally Posted by UGAalum94

I think the 47% issue is perhaps a different problem that just reducing it to makers and takers, which I know a lot of folks want to do.

And I think the bottom line of using the 47%/half of the people mantra is to create an us-vs-them dynamic.

Originally Posted by PiKA2001

I'd also like to add that most of these "social programs" for the middle and upper class are actually designed to benefit the government in the long run in terms of spurring economic growth and generating higher tax revenues. It's very beneficial for the government to get people owning homes and paying property taxes as well as getting educations and earning higher taxable income than just minimum wage.

I was going to ask if it's the government that benefit or if it's the country and the country's economy that benefit, but others have raised a similar theme in the last few posts.

Not saying government can't be wasteful (or even self-interested), but when that's the case, then as Pogo said, "We have met the enemy and he is us."

[AGDee]

Well, and therein lies the ultimate problem. Nobody wants the "social program", as defined in that article posted earlier, that THEY benefit from directly cut. They just wants the ones that those "lazy" people sitting around collecting welfare while living high on the hog cut.

All these folks who griped about the stimulus package are now griping about the return of the extra 2% Social Security withholding. They weren't in favor of the stimulus package, but they ARE in favor of paying less to Social Security, because they saw a direct benefit.

Ditto with Obamacare. I don't think anybody wants to be excluded from insurance coverage because of a pre-existing condition, nor do they want to have to pay higher premiums because of a pre-existing condition. Also, 2.5 million people between the ages of 19 and 26 are now covered under their parents health insurance when they weren't before.

[PiKA2001]

Originally Posted by AGDee

Well, and therein lies the ultimate problem. Nobody wants the "social program", as defined in that article posted earlier, that THEY benefit from directly cut. They just wants the ones that those "lazy" people sitting around collecting welfare while living high on the hog cut.

All these folks who griped about the stimulus package are now griping about the return of the extra 2% Social Security withholding. They weren't in favor of the stimulus package, but they ARE in favor of paying less to Social Security, because they saw a direct benefit.

Ditto with Obamacare. I don't think anybody wants to be excluded from insurance coverage because of a pre-existing condition, nor do they want to have to pay higher premiums because of a pre-existing condition. Also, 2.5 million people between the ages of 19 and 26 are now covered under their parents health insurance when they weren't before.

I'm going to counter your post by saying that nobody thinks their taxes should go up, but they believe the OTHER guy's should. They want to keep all the social programs, but want somebody else to pay for it... that is the ultimate problem. I can't comprehend how someone who pays little to no fed income tax can point their finger at someone who pays $80,000 in income taxes and say they aren't paying enough, or they aren't paying their fair share.

[AOII Angel]

Originally Posted by PiKA2001

I'm going to counter your post by saying that nobody thinks their taxes should go up, but they believe the OTHER guy's should. They want to keep all the social programs, but want somebody else to pay for it... that is the ultimate problem. I can't comprehend how someone who pays little to no fed income tax can point their finger at someone who pays $80,000 in income taxes and say they aren't paying enough, or they aren't paying their fair share.

There are lots of people in the upper income group who have said raise our taxes, so that's not exactly true. Once the economy is on a better footing, the entire Bush tax cut package should go away since it is a major cause of our deficit and was never a permanent tax cut.

[AGDee]

I know if I had a choice of being in the 1% and paying 50% taxes or making my current salary and paying 25% taxes, I'd choose the 1%...lol. Hands down, no question, I'd choose the 1%.

[AOII Angel]

Originally Posted by AGDee

I know if I had a choice of being in the 1% and paying 50% taxes or making my current salary and paying 25% taxes, I'd choose the 1%...lol. Hands down, no question, I'd choose the 1%.

Of course. Anyone that says otherwise is lying.

[amIblue?]

Originally Posted by AOII Angel

Of course. Anyone that says otherwise is lying.

Well, lying or brainwashed.

[UGAalum94]

Originally Posted by AGDee

I know if I had a choice of being in the 1% and paying 50% taxes or making my current salary and paying 25% taxes, I'd choose the 1%...lol. Hands down, no question, I'd choose the 1%.

Originally Posted by AOII Angel

Of course. Anyone that says otherwise is lying.

Originally Posted by amIblue?

Well, lying or brainwashed.

Do you all see people claiming that or is that a hypothetical for the thread?

What I see is a few people, who may already be in the 1% depending on what we're using for the cut off, say in essence "if I can't expect the same return on my efforts beyond a certain point because of increasing taxes, I'm not going to continue at 100% beyond that point."

There'd be some people at the cusp of the cut-off in that hypothetical who would really take more money home in the 25% tax section, but, as I understand taxes, the scenario is really far removed from the reality of how things work and would be a ridiculous claim to make.

On the other hand, it doesn't seem ridiculous that a small business owner could look at the cost and benefits of a slightly reduced workload and decide to cut back. And it also doesn't seem ridiculous that the business owner's decision could have a negative effect on other people because he or she cuts down on spending as a result.

But again, I think only folks in the 1% already are typically able to control their work and compensation this way.

(It's funny to me in a pathetic way: I suppose there could be a ton of people who manage to live in a close to debt free and low expense way who have discretionary income to spare and enormous work related flexibility who could do this at a lower income level. I just have a hard time imagining it.)

[AOII Angel]

Originally Posted by UGAalum94

Do you all see people claiming that or is that a hypothetical for the thread?

What I see is a few people, who may already be in the 1% depending on what we're using for the cut off, say in essence "if I can't expect the same return on my efforts beyond a certain point because of increasing taxes, I'm not going to continue at 100% beyond that point."

There'd be some people at the cusp of the cut-off in that hypothetical who would really take more money home in the 25% tax section, but, as I understand taxes, the scenario is really far removed from the reality of how things work and would be a ridiculous claim to make.

On the other hand, it doesn't seem ridiculous that a small business owner could look at the cost and benefits of a slightly reduced workload and decide to cut back. And it also doesn't seem ridiculous that the business owner's decision could have a negative effect on other people because he or she cuts down on spending as a result.

But again, I think only folks in the 1% already are typically able to control their work and compensation this way.

(It's funny to me in a pathetic way: I suppose there could be a ton of people who manage to live in a close to debt free and low expense way who have discretionary income to spare and enormous work related flexibility who could do this at a lower income level. I just have a hard time imagining it.)

No they wouldn't. You won't take home more money in a lower tax bracket. They are being taxed the same on the income up to that 25% tax bracket level. The income over is then taxed at a higher level. You CANNOT make more money by making less. This is the fallacy. I'm in the 1% already and know people in the 1% so I'll tell you that no one is going to stop making money so they can stop paying taxes. They may find a way to get out of paying taxes, but no one is going to stop making money. Period.

[AGDee]

Wow, I was googling to show an example of the tax brackets and found this web page. It lists tax brackets from 1913-2011. Our tax rates have fluctuated wildly over the years. Check out 1954-1963 when the highest tax bracket was 91%.

http://taxfoundation.org/article/us-...usted-brackets


But, this is the 2013 bracket. So if you make $500,000, you will pay:
Rate Single Filers
10% $0 to $8,925 you pay 10% of 8925= 892.50
15% $8,925 to $36,250 you pay 15% of 36250-8925 = 4098.75
25% $36,250 to $87,850 you pay 25% of 87,850-36,250= 12,900
28% $87,850 to $183,250 you pay 28% of 183,250-87850= 26712
33% $183,250 to $398,350 you pay 33% of 398,350-183,250= 70,983
39.6% $400,000 and up you pay 39.6% of 500,000- 400,000= 39,600

So you add those up and you're paying $155,186.25 which is actually a 31% tax rate when you average it out.

You're only taxed at a 39.6% rate for the money you make over $400,000.

[Psi U MC Vito]

Is it just me, or does that seem needlessly complex to anybodyv else?

[AGDee]

Originally Posted by Psi U MC Vito

Is it just me, or does that seem needlessly complex to anybodyv else?

It is a lot less complex than now than it has been at other points in history. Some of the tax brackets are in 1% increments in some years! It is designed to avoid the exact issue of making LESS money because you are in a new tax bracket.

If you were making $8925 and got a $2/year raise, you would zoom from paying 892.50 in taxes to paying $1339.05, leading to a net loss of $444.55 in pay. That *would* prevent people from wanting to make more money. In reality, you'd only have $.30 more in taxes.

[PiKA2001]

Originally Posted by Psi U MC Vito

Is it just me, or does that seem needlessly complex to anybodyv else?

It's not just you, our tax code is needlessly complex.

[AOII Angel]

It's not like you have to get out a calculator and figure out your tax bill. It makes a lot of sense to do it this way.

[HQWest]

I had a professor once who explained it in terms of Prada. If you make $250K a year, it might be a nice birthday present to get a $1200 Prada bag. If you make $25-30K a year - that bag could be one or two months' rent.

Same goes for the problem with a flat tax. Yes you can eliminate some red tape if you make a 10% flat tax. The Dept. of Treasury is woefully underfunded so the government would not save much in terms of reduced labor costs, but they might gain some because they could audit more and keep track of non-payers. However - to a family that makes $25-30K paying $2.5-3K in taxes is a lot. To that family making $250K - yes, they would pay a lot more in net taxes - $25K, but it would not be the difference between them being able to pay rent or get new coats for the kids that year.

A 10% flat tax would make the net tax paid for half the country go up while cutting taxes for the top one percent down to 1/4 of what they pay now? The 1%ers would also then not have as great an incentive as they have had to give generously to philanthropic projects. Tax deductable donations would go away. There is the possibility that people hiding money off shore would bring that money back - but the flaw in trickle down economic theory is that just because they have the money, doesn't mean they will spend it or invest it in businesses here. In fact, it may lead people to accumulate enough money that they can live off investments, and then under the 10% income tax plan, the very wealthy would pay no taxes.