Tax Facts What's Your Share?

QUINNSCOMMENTARY · Post by **QUINNSCOMMENTARY** » Tue Jul 22, 2008 7:39 pm

Sometimes if you hear an idea enough times you believe it. If someone talks as if he is spouting facts, they become facts in the minds of those who are listening.

For example, we all know that the rich are getting away with paying too little in taxes and that the lower income earners are paying a disproportionate share. We also know that lower taxes are bad because they lower federal revenue.

Letâ€™s check out the facts. The top 1% of earners with incomes over $388,000 a year pay 40% of all income taxes (while earning 22% of all income), that is the highest it has been in 40 years. The top 10%, those earning over $108,000 pay 71% of all taxes.

Looking it at another way, the bottom 50% of earners pay 2.9% of taxes while the top 50% pay 97.1%

Taxes paid by millionaires more than doubled between 2003 and 2006, a period when tax cuts were put into effect. :-2

So, is the tax system fair? Should we soak the rich more?

One has to wonder if a politician promises he will cut the taxes for lower wage earnings, how much lower than 2.9% it should go.

How much more are you willing to pay in taxes to help the lower 50% pay less (or nothing)? :rolleyes:

And who are all those millionaires, they are people who earned the money rather than inherited it.

Patsy Warnick · Post by **Patsy Warnick** » Tue Jul 22, 2008 9:53 pm

Unfortunately the ones (millionaires) paying are the ones that worked their butts off for it.

Those (millionaires) are the double dippers & spouse now up in their years, trying to enjoy life -worked hard & went thru hell to be punished and pay for the wealthy.

Double dippers will be history soon - everyone will have a stamp book/charge card.

Are taxes fair - has anything ever been fair?

and how much lower can you go @ 2.9%.?

Sad Shape

Patsy

Patsy Warnick · Post by **Patsy Warnick** » Tue Jul 22, 2008 10:31 pm

And speaking of TAXES

1775 the Americans revolted on a tax on tea

I think $ 4.00 a gallon for gas is enough for American to revolt again -

I don't think Americans have the spine to do it..?

How much tax are we willing to pay?

Unfortunately there's no limit

Patsy

yaaarrrgg · Post by **yaaarrrgg** » Wed Jul 23, 2008 10:15 am

Patsy Warnick;926652 wrote: And speaking of TAXES

1775 the Americans revolted on a tax on tea

I think $ 4.00 a gallon for gas is enough for American to revolt again -

I don't think Americans have the spine to do it..?

How much tax are we willing to pay?

Unfortunately there's no limit

Patsy

hmmm ... taxes are not making gas expensive. We've simply run out of cheap oil. Revolting will not bring it back.

yaaarrrgg · Post by **yaaarrrgg** » Wed Jul 23, 2008 10:43 am

@ QUINN

The reason people like Leona Helmsey say that only little people pay taxes is that there's a lot of business-friendly tax loopholes.

For example if you are self-employed, you can pay yourself a salary of 5K/year, and pay the reduced tax rate on that, then run every other expense through the business. If you work it out right, you only pay taxes on your profits. If you make and spend a million a year, that's works out to nothing. So the effective tax rate is a lot lower. Or take the excess and put it towards capital gains, where you are only paying 15% ...

We might also ask, for example, were did Bill Gates get all his money? It largely comes from people like you. Every dollar he is taxed is passed right along to the regular consumer, bundled into the prices of his products. Certainly he doesn't make money out of thin air.

So the effective burden on the middle and lower class earners is not really reflected in your statistics.

QUINNSCOMMENTARY · Post by **QUINNSCOMMENTARY** » Wed Jul 23, 2008 11:05 am

yaaarrrgg;927249 wrote: @ QUINN

The reason people like Leona Helmsey say that only little people pay taxes is that there's a lot of business-friendly tax loopholes.

For example if you are self-employed, you can pay yourself a salary of 5K/year, and pay the reduced tax rate on that, then run every other expense through the business. If you work it out right, you only pay taxes on your profits. If you make and spend a million a year, that's works out to nothing. So the effective tax rate is a lot lower. Or take the excess and put it towards capital gains, where you are only paying 15% ...

We might also ask, for example, were did Bill Gates get all his money? It largely comes from people like you. Every dollar he is taxed is passed right along to the regular consumer, bundled into the prices of his products. Certainly he doesn't make money out of thin air.

So the effective burden on the middle and lower class earners is not really reflected in your statistics.

Not quite, what you are talking about is tax evasion. You can't take living expenses out of a business and not pay taxes unless you are cheating on taxes. Expenses paid for a business are supposed to be related to generating revenue for that business, not paying for the owners vacation or new pair of shoes.

As far as Gates goes, he made his money through the IPO for Microsoft as did virtually all employees of Microsoft at that time. He takes no salary so none of what he made is reflected in the cost of Microsoft products.

In the process he created tens of thousands of jobs around the world and made a lot of people big and small rich and then he gave $40 billion away and plans to give most of the rest away as well. Sounds like a pretty good deal for mankind to me.

But you are right, there are a number of so called loop holes and they were placed there by politicians for one reason or the other. And everyone should take legitimate advantage of them.

yaaarrrgg · Post by **yaaarrrgg** » Wed Jul 23, 2008 11:14 am

QUINNSCOMMENTARY;927266 wrote: Not quite, what you are talking about is tax evasion. You can't take living expenses out of a business and not pay taxes unless you are cheating on taxes. Expenses paid for a business are supposed to be related to generating revenue for that business, not paying for thw owners vacation or new pair of shoes.

Sure if you take it to the extreme, but there is a lot of grey area. I wouldn't play that game myself, but a lot of people do.

QUINNSCOMMENTARY;927266 wrote: As far as Gates goes, he made his money through the IPO for Microsoft as did virtually all employees of Microsoft at that time. He takes no salary so none of what he made is reflected in the cost of Microsfot products.

Exactly ... he gets taxed on 0$/year on Microsoft income. Somehow money just magically ended up in his bank account though

QUINNSCOMMENTARY;927266 wrote:

In the process he created tens of thousands of jobs around the world and made a lot of people big and small rich and then he gave $40 billion away and plans to give most of the rest away as well. Sounds like a pretty good deal for mankind to me.

Also in the the process, he stole the ideas for his major products from smaller companies, cheated the actual innovators, crushed the competition, all in a rush towards world domination, raking in billions for selling a sub-standard POS buggy product.

People should use open source instead.

gmc · Post by **gmc** » Thu Jul 24, 2008 7:08 am

Letâ€™s check out the facts. The top 1% of earners with incomes over $388,000 a year pay 40% of all income taxes (while earning 22% of all income), that is the highest it has been in 40 years. The top 10%, those earning over $108,000 pay 71% of all taxes.

Statistics are wonderful. Did you know the average man in america has less than two legs and less than one testicle? Factually correct but are you any better informed.

http://online.wsj.com/article/SB1216772 ... od=djemITP

In a new sign of increasing inequality in the U.S., the richest 1% of Americans in 2006 garnered the highest share of the nation's adjusted gross income for two decades, and possibly the highest since 1929, according to Internal Revenue Service data.

[Charts]

Meanwhile, the average tax rate of the wealthiest 1% fell to its lowest level in at least 18 years. The group's share of the tax burden has risen, though not as quickly as its share of income.

posted by quinns commentary

So, is the tax system fair? Should we soak the rich more?

As a non american I have no part in this discussion. But it is entertaining watching an argument we still have ourselves. "squeeze the rich till the pips squeak" You won't hear a british chancellor saying that nowadays.

QUINNSCOMMENTARY · Post by **QUINNSCOMMENTARY** » Thu Jul 24, 2008 9:46 am

[QUOTE=gmc;928375]Statistics are wonderful. Did you know the average man in america has less than two legs and less than one testicle? Factually correct but are you any better informed.

And, if you were on an elevator with Bill Gates and Warren Buffet you would be worth on average about $30 billion, but we are not talking averages here we are talking about the aggregate taxes paid.

gmc · Post by **gmc** » Fri Jul 25, 2008 12:44 am

[QUOTE=QUINNSCOMMENTARY;928692]

And, if you were on an elevator with Bill Gates and Warren Buffet you would be worth on average about $30 billion, but we are not talking averages here we are talking about the aggregate taxes paid.

Now you're being disingenuous. In % terms which section pays of the population the highest proportion of their overall income in taxes? Safe bet it's not the wealthiest.

25% of Â£15,000 sounds the same as 25% of Â£100,000 but the reality hurts a lot more.

I shall butt butt out now. Not being an american my opinions are kind of irrelevant anyway but the difference in attitude is quite striking. I live in a country where we do use progressive taxation and the majority of the voters think it only fair, which is one of the reasons Labour are about to be kicked in to touch. Not being stupid we can grasp that indirect taxation is unfair and hits the lowest paid most.

yaaarrrgg · Post by **yaaarrrgg** » Fri Jul 25, 2008 7:12 am

gmc;929446 wrote:

Now you're being disingenuous. In % terms which section pays of the population the highest proportion of their overall income in taxes? Safe bet it's not the wealthiest.

25% of Â£15,000 sounds the same as 25% of Â£100,000 but the reality hurts a lot more.

I shall butt butt out now. Not being an american my opinions are kind of irrelevant anyway but the difference in attitude is quite striking. I live in a country where we do use progressive taxation and the majority of the voters think it only fair, which is one of the reasons Labour are about to be kicked in to touch. Not being stupid we can grasp that indirect taxation is unfair and hits the lowest paid most.

If I'm not mistaken, someone like Gates is paying around %15 (on stock) which is lower than middle income earners that might be paying around 25%.

Your opinion is just as valid as any American's (we're all too close to the storm to be unbiased anyway).

QUINNSCOMMENTARY · Post by **QUINNSCOMMENTARY** » Fri Jul 25, 2008 7:45 pm

gmc;929446 wrote: [QUOTE=QUINNSCOMMENTARY;928692]

Now you're being disingenuous. In % terms which section pays of the population the highest proportion of their overall income in taxes? Safe bet it's not the wealthiest.

25% of Â£15,000 sounds the same as 25% of Â£100,000 but the reality hurts a lot more.

I shall butt butt out now. Not being an american my opinions are kind of irrelevant anyway but the difference in attitude is quite striking. I live in a country where we do use progressive taxation and the majority of the voters think it only fair, which is one of the reasons Labour are about to be kicked in to touch. Not being stupid we can grasp that indirect taxation is unfair and hits the lowest paid most.

Any income over about $350,000 is taxed at 35% so in no case do lower income pay a greater percentage in taxes. The average American pays between 15% to 18% of income. Capital gains taxes are 15% for all so many people in the middle class who own stocks pay 15% as well.

Our Social Security tax is 6.20% up to $102,000 in earnings so there lower income pay a greater percentages of their total income, but on the other hand the ultimate benefit is also a greater percentage of pre-retirement income. But our Medicare (senior health care) is 1.45% with no cap on income which is taxed so wealthy people pay a greater percentage and ultimate pay three times as much for the coverage at age 65. High income pay 75% of the premium and the vast majority pay 25%.

Is it possible to have a large income and pay little or no taxes, yes if your income is derived from nterest on municipal bonds which are tax free. Why, so that states an local communities can issue public bonds at a lower interest rate thus benefiting the middle class by not having to raise state and local taxes. So, if you invest $10 million in municipal bonds you could have about $400,000 in tax free income.

Bottom line is that tax system is progressive so unless one believes that high income people should carry the burden for all of society the system is quite fair.

Why should anyone pay more than 35% of earned income in taxes (plus of course in many cases additional incomes taxes for each state - in my case up to an additional 9%). Then after taking the money the state provides property tax rebates, but not to people earning $200,000 or more so once again they are subsidizing the middle class.

yaaarrrgg · Post by **yaaarrrgg** » Fri Jul 25, 2008 9:40 pm

QUINNSCOMMENTARY;930906 wrote: Bottom line is that tax system is progressive so unless one believes that high income people should carry the burden for all of society the system is quite fair.

True, it's progressive for income. But as I mentioned, if someone is smart, they don't have any income.

I believe Steve Jobs gets paid $1/year salary, putting him in the lowest income tax bracket as well (no income tax for income < $600!). People like Gates and others are paid in bulk through stocks.

So I'm estimating both pay around 15% on their respective stock options, which is according to you around what the average American pays 15%-18%. (not including SS, along with sales tax on top of that)

How is that progressive? It's flat at best in these cases, if not downright regressive.

QUINNSCOMMENTARY · Post by **QUINNSCOMMENTARY** » Sun Jul 27, 2008 6:27 pm

yaaarrrgg;930949 wrote: True, it's progressive for income. But as I mentioned, if someone is smart, they don't have any income.

I believe Steve Jobs gets paid $1/year salary, putting him in the lowest income tax bracket as well (no income tax for income

Not correct, when one exercises stock options the value gained is taxed as ordinary income, not at capital gains rates. So, if I get options at $10.00 a share and exercise them at $50.00 I have gained $40.00 a share and I am taxed at full earned income rates. Now, if I keep the shares after I exercise them and they grow in value from $50.00 to $60.00 I pay capital gains on that $10.00. Gates earned his money not just from options, but mostly from the initial IPO for Microsoft. So as a founder perhaps he received 10 million shares (i don't know the exact number) and over the years they grew in value.

Trust me, executive compensation is my business.