Taxes... I want your opinions.

Can anyone explain to me why many liberals think the wealthy aren't paying their fair share of taxes?  If you can support it with statistics, I'd much appreciate it.

Also...
1)  How will increasing Federal Income Tax help?  Would you increase it across the board or just for higher income earners?
2)  How will increasing taxes paid by large corporations help?  Keep in mind, corporation implies that it is owned by the people... taxes on corporations ultimately reduce their profits which in turn reduces value of the peoples' ownership in that company.
3)  What should be done with FICA (social security)?  Increase?  Leave the same?  Abolish it?

One of the reasons why you hear people complaining that the wealthy don't pay their share of taxes is because of what kind of income is taxed. Only "earned" income is taxed.  Earned income examples:  salary, wages, prizes, gambling winnings, pensions, a portion of SS over a certain amount, ordinary dividends, ordinary interest. 

The lower income people generally only have wages and salary and maybe a little interest and dividend income.  The wealthy generally have lots of "unearned" income that isn't taxed at all.

I believe it was Warren Buffet who made a statement that his secretary who makes about $60 grand a year pays a larger percent of her total income in taxes than he does as a multi-millionaire.

1) see mooni's reply.

2) as long as 'the people's' corporations are allowed to lay off 'the people' and move jobs offshore, why then 'the people' are allowed to expect that 'their' corporations should at least cough up some of those profits in the form of taxes.

3) Social security will not go away as long as there are voters old enough to collect it. The amount we pay into the system will increase, neccessarily to pay out for the baby-boomers. No choice there.

Well, for the first part (why the wealthy don't pay their fair share) I think that only comes up when there are tax cuts around. With our progressive tax system, the wealthy pay much much more in taxes than the poor, so when taxes are cut wealthy people get most of the benefit.

Personally, I think the entire income tax system should be abolished, and replaced with a consumption tax. It would be so much simpler and cheaper for the government to run (see http://en.wikipedia.org/wiki/Fair_tax ) And it would be harder to aviod, since moving money off shore, or in foriegn bank accounts wouldn't help. I don't think a person or corportation should be punished for being more productive.

And social security is dead. I don't think think you're much older than me, and I seriously doubt that I will ever a dime of that. Even my parents will see very little, certainly not a lot to live off of. I think retirement saving should be done be the indivdual, not this government sponsered pyrimid scheme that gives people the illusion that they will be fine once they retire, when they certainly won't, if that's what they depend on.

Taxes are stealing.

Bleh!.....only people who earn more than (£)$30,000 a year should pay them.

The wealthy generally have lots of "unearned" income that isn't taxed at all.

What are some examples of unearned income? Just curious..

I know that with my earned income and being single with no kids that the amount of taxes I pay is absolutely crazy...I bought a house just so I could have some deductions.

Oh well...the old saying about the only two things you have to do are die and pay taxes is true :)

Original Post by smartjock256:

Well, for the first part (why the wealthy don't pay their fair share) I think that only comes up when there are tax cuts around. With our progressive tax system, the wealthy pay much much more in taxes than the poor, so when taxes are cut wealthy people get most of the benefit.

Personally, I think the entire income tax system should be abolished, and replaced with a consumption tax. It would be so much simpler and cheaper for the government to run (see http://en.wikipedia.org/wiki/Fair_tax ) And it would be harder to aviod, since moving money off shore, or in foriegn bank accounts wouldn't help. I don't think a person or corportation should be punished for being more productive.

And social security is dead. I don't think think you're much older than me, and I seriously doubt that I will ever a dime of that. Even my parents will see very little, certainly not a lot to live off of. I think retirement saving should be done be the indivdual, not this government sponsered pyrimid scheme that gives people the illusion that they will be fine once they retire, when they certainly won't, if that's what they depend on.

I ask because I come from a family in that top 1% of the taxpayers.  I just don't see how increasing the taxes paid by the "wealthy" higher than the current rates will help our gov't or economy.

FairTax is definitely an interesting "solution."  I've read up on it in the past and saw that it is expected to reduce 90% of the output lost or above the tax itself due to inefficiency.  It is also said that it will stimulate the economy.

I don't want to pay social security if I'm not going to see a dime back.  This country wasn't established with a law saying "You have the right to retire at 65 and expect other peoples' incomes to pay for you."  If you can't retire, tough... keep working.

I am curious, moonikins, what denotes "unearned" income? The IRS will get you if you acquire money from anywhere for anything (hell, that's how they got Capone). They'll tax a gift you give a family member or friend, if it's over like $13000 or something like that. I mean, the tax law is ridiculously complicated that it's possible (easy even) for large corporations to hide their money, play games to increase their deductions to reduce their taxable income, and the like, which is one reason why the tax code needs to be drastically changed (and government needs to stop spending a ridiculous amount of money).

And I agree with lippy, taxes are basically state sanctioned robbery. I mean, I understand that government needs money to work, and national defense is important and all that, but it's too much, government has their hands in everything, when they should.

If you can't retire, tough... keep working.

Typical statement from one born with a silver spoon in his mouth.

We need to move from a "me" society to a "we" society ... paraphrased from Michael Moore, but so damn true.

Original Post by yachtracer1977:

If you can't retire, tough... keep working.

Typical statement from one born with a silver spoon in his mouth.

We need to move from a "me" society to a "we" society ... paraphrased from Michael Moore, but so damn true.

 Whats wrong with that?

Examples of unearned income:  there are many ways to invest in interest and dividend bearing accounts that are lawfully tax free, there are many ways to set up accounts overseas that are sheltered from taxes, municipal bonds, you can have very profitable rental income yet shelter the income from taxes via depreciation and other tricks/loopholes. There are many more.

The old saying that it takes money to make money is often very true. Someone with 2 kids who makes $50,000 a year isn't going to have extra money at the end of each month to set aside into tax-free accounts.  Yet the guy who makes a million a year can set aside funds into tax-free accounts.  He gets income from those accounts while retaining his original investment. He probably doesn't need to spend this income, so it goes back into the account so the following year he makes even more tax-free income.

Whenever the more liberal crowd tries to tax this kind of income, you see a huge outcry about how the rich will just quit investing their money if it is taxed and it will hurt everyone. Reagan started the whole "trickle down" theory (or at very least made it hugely popular). The problem is that the income from these investments don't seem to ever trickle down very far.  Quite the sham in my opinion.

I honestly believe that municipal bonds should be the only tax-free investment vehicle. If you're buying bonds to build a road, hospital, school, bridge, etc., then yeah, let the income be tax free.

I just realized I wasn't using the terms earned and unearned income quite correctly. Technically earned income is from salary and wages, basically income from working.  Unearned income is income from sources other than work, i.e., rental income, interest, dividends, capital gains, prizes, gambling, gifts.

There is a whole subset of tax-free unearned income. Most are done legally through investment type of accounts.

Then there are ways to hide unearned income from being taxed. Some ways are legal and some are not (money laundering is the easiest example of this).

In #11 I gave rental income as a good way to hide profits. You can legally hide the profits of rental income through many tricks/loopholes available, so you are legally claiming less profit which means you pay less taxes.

Yes there are loopholes, yes something needs to be done about it. But things like muni-bonds and stuff like that, most people can get into that. Not everyone can live like the wealthy, someone with $50,000 a year and 2 kids can save enough to be well off, but they can't go around spending like crazy, just like someone making a couple hundred grand can end up old and poor because they didn't save right. That's more the determining factor if someone retires well off or not, not if they make a lot of money to begin with.

As a middle class individual (and I stress, individual, we're not ants, this is not a "we" society), I fully agree with what was said, if you can't retire, keep working. I don't expect anyone else to take care of me, and I don't expect to take care of anyone else (family and friends are possible exceptions, but that's my choice, not the government's). Also, it's the wealthy, the big corporations, are what provides the jobs for average people, we need them more than they need us.

think of it like this

earned income - you are physcially working to receive money

unearned income - your money is working for you, or you won something, you did no actual labor

One of the big flaws in a consumption tax is that once again, the poor will pay a higher percentage of their income in taxes than the wealthy. Why?

A family of 4, with 2 kids, both parents working, $50,000 income, will spend almost all of their income each year just to live. Now some of this is frivolous spending, but most of it is going for food, clothes, housing, utilities, fuel, insurance, etc.

A similar family of 4 with a household income of $200,000, will have more frivolous spending, but will also pay a lesser percent of the income in consumption taxes.

A flat consumption tax is always harder on those who make less money.

A good simple example of this is to use a state that has sales taxes on food. I live in Ohio, my ex's family is from Washington. In Ohio almost no food items are taxable. In Washington, food is taxed.

So a poor family in Washington has to pay sales tax just to eat. They then have even less money left over from their paycheck to pay for housing, utilities, etc.

I can tell you from personal experience how shocking it was to go to the grocery store in Washington when we visited and to see how much higher the grocery bill was because all the food was taxable.

Original Post by smartjock256:

I fully agree with what was said, if you can't retire, keep working. I don't expect anyone else to take care of me, and I don't expect to take care of anyone else (family and friends are possible exceptions, but that's my choice, not the government's).  

When you're 90 years old, wheelchair bound, and have huge medical bills, where exactly are you supposed to work?

Being a "we" society is not synonymous with "ants."  All that means is giving a damn about our fellow citizens, rather than living a pathetic "ME ME IT'S ALL ABOUT ME" existence.

someone with $50,000 a year and 2 kids can save enough to be well off

Yes, it can be done, but it means that they live a very very frugal meager existence for a very long time. Very few people want to live that way.

just like someone making a couple hundred grand can end up old and poor because they didn't save right

This scenario is more common than the first.

Original Post by moonikins:

One of the big flaws in a consumption tax is that once again, the poor will pay a higher percentage of their income in taxes than the wealthy. Why?

A family of 4, with 2 kids, both parents working, $50,000 income, will spend almost all of their income each year just to live. Now some of this is frivolous spending, but most of it is going for food, clothes, housing, utilities, fuel, insurance, etc.

A similar family of 4 with a household income of $200,000, will have more frivolous spending, but will also pay a lesser percent of the income in consumption taxes.

A flat consumption tax is always harder on those who make less money.

A good simple example of this is to use a state that has sales taxes on food. I live in Ohio, my ex's family is from Washington. In Ohio almost no food items are taxable. In Washington, food is taxed.

So a poor family in Washington has to pay sales tax just to eat. They then have even less money left over from their paycheck to pay for housing, utilities, etc.

I can tell you from personal experience how shocking it was to go to the grocery store in Washington when we visited and to see how much higher the grocery bill was because all the food was taxable.

 The flat tax idea also makes it impossible to provide tax incentives of any sort, and makes it impossible to use taxes to make the cost of a good reflect the real cost (as opposed to the cost of production).

Original Post by floggingsully:

Original Post by smartjock256:

I fully agree with what was said, if you can't retire, keep working. I don't expect anyone else to take care of me, and I don't expect to take care of anyone else (family and friends are possible exceptions, but that's my choice, not the government's).  

When you're 90 years old, wheelchair bound, and have huge medical bills, where exactly are you supposed to work?

 I think the "compassionate conservative" answer to that is:

you should have thought of that before

or in other words, too damn bad, sucks to be you