What exactly are conservatives conserving?

[BigNBushy]

Because the majority of income the very rich get is capital gains and the reason I pay ~24% of my income in taxes and Mitt Romney only pays ~13% is becuase most of his income is derived from capital gains not a paycheck

Flat tax scamnarios would reduce that burden to 0% on capital gains

Guess who that shortfall in tax revenue will fall on?

Me

well, two things.

How are you calculating what % of your income goes to taxes?

Because if you are in the 24% bracket, you are not paying 24% on all your income, just on what you earn over the threshold for
that bracket. You pay very low per cent on your first several thousand. Then it is lke 15% up to 36k, over 36k then your in the bracket you mentioned.

Second, mitt Romney pays that 13% on all his capital gains, but what about his capital losses? Yeah, he can deduct them from his gains, but he is risking loss. Furthermre, there are millions of folks out there who own stock that aren't uber wealthy. They work too, or did and retired. You want to tax them more also? But most importantly, if Romney invests millions, he might get a decent return. But what has he done? That capital he infused into a company allowed them to expand or do something productive that puts people to work and feeds kids.

Playing the stock market is like gambling to these guys. They might win, even win big, but they could lose also, and quite often do. Why tax investment into extinction? If you had to pay 40% on winnings (gains) then a guy like Romney, or many other people, wouldn't invest that much.

Investment is an activity that needs to be encouraged, not taxed. There shouldn't be any capital gains taxes. I could possibly see a small percentage after a few million dollars of annual profits off capital gains.

Also, capital gains are sometimes taxed as normal income. If the tax payer has had the investment for less than one year it is counted as normal income.


Instead of looking at the rich with envy and spite, look at them and try to do what they do.

 

[beenthere]

Our income is well over a 100k a year bro

Well that means your wife works and you probably file jointly.
So you probably pay about 13-16% in federal income taxes, not saying you don't contribute by any means, but nowhere near the 24% you claimed.

 

[BigNBushy]

yes, Dubs ARE taxed.

the company that made em was taxed, the guy who actually manufactured them on the assembly line was taxed, the trucker who takes them across the country to your local "Spinnahs, Bass N Dubs" Supah Fly Whip Pimpin establishment got taxed, the local franchise of Spinnah Bass N Dubs got taxed, the Fly Whip Pimpah himslef got taxed, and the dubs were subject to sales tax too. all that gets added to the cost of those dubs, and if the taxes werent there, homey prolly coulda dropped the cheddar for 28's

You're having a forest for the trees moment, Dr. K. But Im glad you are. It will help me explain something to you.

Im fully aware that homey could have bought the bigger rims if all those who had a hand in getting those dubs to market had to include the taxes they have to pay the gubment in the cost of the goods or services they provided in getting said dubs to said market.

If you enacted the fairtax, it would ELIMINATE (in other words: get rid of, destroy, make so as to not exist, gone with the dinosaurs) any and all other taxes currently imposed by the united states gubment on every citizen, business, or organization. The fairtax would be the only tax the government used to generate revenue.

So when you argue with me that the fairtax would raise prices, see your quote above. The cost to produce goods and bring them to market, because those doing so would have no tax liability in getting it to market. Competition drives cost down.

Anyway, back to this topic...

The drug dealer buying the dubs currently pays no taxes. His income is illegal, and although the IRS code requires payment of taxes on ALL income, I doubt these guys are going to H&R Block and reporting their earnings. Nope, they escape all income taxes.

So, how would the fairtax include these guys? Well, they buy shit, and since all NEW (used goods are not taxed, YAY THRIFT STORE) goods and services are taxed, the drug dealer, pimp, or what have you, would finally get to start paying taxes because they buy shit that is taxed.

 

[Dr Kynes]

well, two things.

How are you calculating what % of your income goes to taxes?

Because if you are in the 24% bracket, you are not paying 24% on all your income, just on what you earn over the threshold for
that bracket. You pay very low per cent on your first several thousand. Then it is lke 15% up to 36k, over 36k then your in the bracket you mentioned.

Second, mitt Romney pays that 13% on all his capital gains, but what about his capital losses? Yeah, he can deduct them from his gains, but he is risking loss. Furthermre, there are millions of folks out there who own stock that aren't uber wealthy. They work too, or did and retired. You want to tax them more also? But most importantly, if Romney invests millions, he might get a decent return. But what has he done? That capital he infused into a company allowed them to expand or do something productive that puts people to work and feeds kids.

Playing the stock market is like gambling to these guys. They might win, even win big, but they could lose also, and quite often do. Why tax investment into extinction? If you had to pay 40% on winnings (gains) then a guy like Romney, or many other people, wouldn't invest that much.

Investment is an activity that needs to be encouraged, not taxed. There shouldn't be any capital gains taxes. I could possibly see a small percentage after a few million dollars of annual profits off capital gains.

Also, capital gains are sometimes taxed as normal income. If the tax payer has had the investment for less than one year it is counted as normal income.


Instead of looking at the rich with envy and spite, look at them and try to do what they do.

thats not how it works.

if he does make over $125K/ year after all his deductions, his rate for all them dollars is 25%, the MARGINAL rate is the rate he must consider when facing a higher income possiblity which can bump him up to the next bracket, which will often (unles the increase is substantial) result in LESS after-tax monies than he would have gotten before he got bumped to the higher bracket.

example: if you make 125450 /year after deductions, you pay 25% on all them dollahs, if you get a $2/year raise, your deductions dont change but now you are paying 28% tax on all them dollahs so your extra $2/year are taxed at a MARGINAL rate of like 50000%, which makes that $2/year raise an effective pay cut of 3% of your previous pay.

the only solution is to donate that $2/year to charity just to keep your rate at the 25% bracket. and thats how accountants make their money.

 

[Dr Kynes]

You're having a forest for the trees moment, Dr. K. But Im glad you are. It will help me explain something to you.

Im fully aware that homey could have bought the bigger rims if all those who had a hand in getting those dubs to market had to include the taxes they have to pay the gubment in the cost of the goods or services they provided in getting said dubs to said market.

If you enacted the fairtax, it would ELIMINATE (in other words: get rid of, destroy, make so as to not exist, gone with the dinosaurs) any and all other taxes currently imposed by the united states gubment on every citizen, business, or organization. The fairtax would be the only tax the government used to generate revenue.

So when you argue with me that the fairtax would raise prices, see your quote above. The cost to produce goods and bring them to market, because those doing so would have no tax liability in getting it to market. Competition drives cost down.

Anyway, back to this topic...

The drug dealer buying the dubs currently pays no taxes. His income is illegal, and although the IRS code requires payment of taxes on ALL income, I doubt these guys are going to H&R Block and reporting their earnings. Nope, they escape all income taxes.

So, how would the fairtax include these guys? Well, they buy shit, and since all NEW (used goods are not taxed, YAY THRIFT STORE) goods and services are taxed, the drug dealer, pimp, or what have you, would finally get to start paying taxes because they buy shit that is taxed.

unless they deal in the black market for their goods... nations with a VAT tax always have a massive black market.

taxing the profits of the producers of goods (at a flat rate, with only actual expenses being deductible) and NOT people, not only bypasses the inflationary pressures of the sales tax scheme, but ensures that each item's cost accurately reflects the taxes applied, and the cat on the street doesnt have to worry about filing his taxes, hiring accountants or sweating the IRS coming to take his shit when gramps dies and leaves him a farm worth a lot on paper but must be sold to pay the taxes leaving him with nothing but a big fat receipt from the IRS to treasure.

 

[BigNBushy]

thats not how it works.

if he does make over $125K/ year after all his deductions, his rate for all them dollars is 25%, the MARGINAL rate is the rate he must consider when facing a higher income possiblity which can bump him up to the next bracket, which will often (unles the increase is substantial) result in LESS after-tax monies than he would have gotten before he got bumped to the higher bracket.

example: if you make 125450 /year after deductions, you pay 25% on all them dollahs, if you get a $2/year raise, your deductions dont change but now you are paying 28% tax on all them dollahs so your extra $2/year are taxed at a MARGINAL rate of like 50000%, which makes that $2/year raise an effective pay cut of 3% of your previous pay.

the only solution is to donate that $2/year to charity just to keep your rate at the 25% bracket. and thats how accountants make their money.

The best grade I got in law school was the class I took on Federal Income Taxation. Trust me when I tell you this, unless they changed it in the last two years, which I highly doubt because this is how its been done since they started.

Suppose the following:

1) I make $100k a year

2) Tax brackets are as follows; $0-$10k = 10%, $10k-$50k = 25%, $50k-$150k = 30%..... no need for more brackets, Im only making 100k.

So, I got $100 grand to pay taxes on. Here is my tax liability.

- The first $10 grand I make is taxed at 10%, so thats $1,000
- The next $40k (see second bracket) is 25%, so thats $10,000
- The last $50k I make (see third bracket) is going to cost me 30%, so thats $15,000

My total tax liability is $26,000, and that means I am paying 26% of my income in taxes, even though Im in a 30% bracket.

Someone has lied to you about how our tax system works, and you shouldnt have believed them.

 

[Dr Kynes]

The best grade I got in law school was the class I took on Federal Income Taxation. Trust me when I tell you this, unless they changed it in the last two years, which I highly doubt because this is how its been done since they started.

Suppose the following:

1) I make $100k a year

2) Tax brackets are as follows; $0-$10k = 10%, $10k-$50k = 25%, $50k-$150k = 30%..... no need for more brackets, Im only making 100k.

So, I got $100 grand to pay taxes on. Here is my tax liability.

- The first $10 grand I make is taxed at 10%, so thats $1,000
- The next $40k (see second bracket) is 25%, so thats $10,000
- The last $50k I make (see third bracket) is going to cost me 30%, so thats $15,000

My total tax liability is $26,000, and that means I am paying 26% of my income in taxes, even though Im in a 30% bracket.

Someone has lied to you about how our tax system works, and you shouldnt have believed them.

ya know what, imma take your word on that, cuz it's just retarded enough to be true.

fuck all that math, thats why a flat tax is better, but taxing PEOPLE fucks people twice since they gotta pay the tax of everybody above them in the supply chain, taxing business too just fucks them harder, and thats what the issue is all about.

slapping a 23%/32% sales tax on all purchases would fuck everything up, since prices NEVER go down unless somebody else is selling for less, and if the price of everything shoots up by 23%/32% overnight those prices will be locked in forever, with only more price hikes to come.

the only way for your scheme to work would be a simultaneous government forced re-evaluation of the business models of every producer, retailer, shipper etc to offset their now ZERO tax burden since it has all been shifted to retail.

otherwise the taxes they used to pay will simply be pocketed, and all the shit you buy will just go up by 23%/32% and stay there.

99cent stores will become $1.32 stores, and the cats who buy their shit will shoulder the entire burden of taxation.

 

[ChesusRice]

Well that means your wife works and you probably file jointly.
So you probably pay about 13-16% in federal income taxes, not saying you don't contribute by any means, but nowhere near the 24% you claimed.

Only reason I am not paying 24% Is the mortgage interest deduction. As it stands our bracket is 25%. I do my taxes not you

 

[ChesusRice]

ya know what, imma take your word on that, cuz it's just retarded enough to be true.

fuck all that math, thats why a flat tax is better, but taxing PEOPLE fucks people twice since they gotta pay the tax of everybody above them in the supply chain, taxing business too just fucks them harder, and thats what the issue is all about.

slapping a 23%/32% sales tax on all purchases would fuck everything up, since prices NEVER go down unless somebody else is selling for less, and if the price of everything shoots up by 23%/32% overnight those prices will be locked in forever, with only more price hikes to come.

the only way for your scheme to work would be a simultaneous government forced re-evaluation of the business models of every producer, retailer, shipper etc to offset their now ZERO tax burden since it has all been shifted to retail.

otherwise the taxes they used to pay will simply be pocketed, and all the shit you buy will just go up by 23%/32% and stay there.

99cent stores will become $1.32 stores, and the cats who buy their shit will shoulder the entire burden of taxation.

Flat tax is stupid becuase it doesnt cover capital gains. I worked for a millionaire that made 30k a year. Of course he rode the company harley and had 2 company cadillacs and rented his mansion from the company. But the company wasnt nothing either as the building was leased from his son and daughter, the machines rented from another company he owned. If you asked him for a raise he claimed he was a pauper

 

[Dr Kynes]

Flat tax is stupid becuase it doesnt cover capital gains. I worked for a millionaire that made 30k a year. Of course he rode the company harley and had 2 company cadillacs and rented his mansion from the company. But the company wasnt nothing either as the building was leased from his son and daughter, the machines rented from another company he owned. If you asked him for a raise he claimed he was a pauper

so, he only paid taxes on his "income" and the rest of his money was at work in the markets, and when he DID cash something out it was TAXED at 13%...

sounds like he was obeying the laws as written.

why so much hate?

the flat tax i am proposing would tax his business on it's profits, and people not at all (until you bought something, then you pay the tax in the price of the goods).

right now you pay his company's taxes, his taxes, and your own. thats how "progressive" taxes work.

if you can lay your taxes off on the guy who buys your shit, YOU DO, so the only people who actually pay taxes are "consumers" which are, ironically enough, the people who actually PRODUCE all the shit we eat, wear, live in and use.

progressive income tax schemes have never paupered a rich man, never made a poor man richer, and in reality simply drive inflation for the goods we use.

the tax is always layed off on the next guy in line, until it hits the bottom, where the poor scrabble for a meager existence, and when they start to better their lives economically, the tax man comes in and starts pushing them back down the hole.

 

[BigNBushy]

Flat tax is stupid becuase it doesnt cover capital gains. I worked for a millionaire that made 30k a year. Of course he rode the company harley and had 2 company cadillacs and rented his mansion from the company. But the company wasnt nothing either as the building was leased from his son and daughter, the machines rented from another company he owned. If you asked him for a raise he claimed he was a pauper

No regular tax covers cap gains, its not ordinary income. It has, and always will be treated differently.

Im calling bullshit on your story too. I read plenty of cases where a taxpayer would try that shit. The IRS brought them to trial, and the courts ALWAYS took the IRS side. Its form over substance with respect to reporting the revenue and taking their deductions and calculating deprecation. Its vastly complicated and its damn near impossible to keep the wool over the eyes of the IRS for long.

If you start up something like that these days, your ass is in tax court within 5 years.

or you are really old and this was in 1930.

@ Dr. k

All I can tell you is do your self a favor and read the book. I see all the questions you have, and all the points you raise. I had them too. They are so well explained in the book with facts, and lots and lots of facts from a wide range of places.

Suppose on Jan 1 we switch to the fairtax. Costs would probably go up, initially. Why? Its a new ballgame. New price points for EVERYTHING would need to be found. Not just for the company selling, but the consumer buying.

If the company you work for no longer had to pay their share of your FICA taxes, and didnt have any taxes to pay themselves, well shit, you might just get a raise after a bit. If you're worth a fuck, that is.

So on day 1, things are kind of a mess. But its day one and you just got your prebate card in the mail. Over time, and it would be different for different things, some markets are more competitive than others, over time, prices would come down.

Why? Because suddenly, if they did what you say, they are going to have a profit margin of 23/32% higher, right? Well, their competitors do also. I dont know of any business that aint got competition, if you do tell me and Im going to open one up.

So the guy across town wants to get more business, he lowers his price, I lower mine, he lowers his, until neither of us cant anymore and still have it be worth our time to do, like we have now.

But the economic impacts that are so greatly explained in the book is what you would really like. Srsly, get the fucking book.

http://www.amazon.com/The-Fair-Tax-Book-Goodbye/dp/0060875496/ref=sr_1_1?ie=UTF8&qid=1387767101&sr=8-1&keywords=fairtax+book

Best couple bucks you can ever spend.

 

[ChesusRice]

That pauper business owner sold his business for 60 million. The new owners went out of business in 2 years. because after he sold the business the fake leasing company that owned the machines (he owned) tried shaking them down for more money. Now he is back in business with his son

And no it wasnt 1930 it was 8 years ago

 

[BigNBushy]

That pauper business owner sold his business for 60 million. The new owners went out of business in 2 years. because after he sold the business the fake leasing company that owned the machines (he owned) tried shaking them down for more money. Now he is back in business with his son

And no it wasnt 1930 it was 8 years ago

Well, the way I interpreted what you had described cant happen.

My dad was a small business owner, very small company, might have done $5 million dollars a year, gross, not profit. That sounds like a lot, its not. He might have only made 200-300k on a good year. That is a pretty tight margin.

Anyway, he had to endure a IRS audit about ever 4-5 years. They cost him a lot of money.

 

[beenthere]

The best grade I got in law school was the class I took on Federal Income Taxation. Trust me when I tell you this, unless they changed it in the last two years, which I highly doubt because this is how its been done since they started.

Suppose the following:

1) I make $100k a year

2) Tax brackets are as follows; $0-$10k = 10%, $10k-$50k = 25%, $50k-$150k = 30%..... no need for more brackets, Im only making 100k.

So, I got $100 grand to pay taxes on. Here is my tax liability.

- The first $10 grand I make is taxed at 10%, so thats $1,000
- The next $40k (see second bracket) is 25%, so thats $10,000
- The last $50k I make (see third bracket) is going to cost me 30%, so thats $15,000

My total tax liability is $26,000, and that means I am paying 26% of my income in taxes, even though Im in a 30% bracket.

Someone has lied to you about how our tax system works, and you shouldnt have believed them.

You are correct when it comes to the progressive tax brackets, but there is one thing that is left out of your equation, if I may.

If someone makes $100k (gross income) 9 out of 10 times, if not more, this is not their taxable income. In almost every case it's much lower.
Your taxable income is generated after deductions, like childcare, healthcare expenses, interest on you mortgage, state and local income taxes to name a few, and there are tax credits that may also come into play.

So, someone earning $100k is not going to come close to being taxed on $100k, maybe closer to $75k or even less.

 

[UncleBuck]

You are correct when it comes to the progressive tax brackets, but there is one thing that is left out of your equation, if I may.

If someone makes $100k (gross income) 9 out of 10 times, if not more, this is not their taxable income. In almost every case it's much lower.
Your taxable income is generated after deductions, like childcare, healthcare expenses, interest on you mortgage, state and local income taxes to name a few, and there are tax credits that may also come into play.

So, someone earning $100k is not going to come close to being taxed on $100k, maybe closer to $75k or even less.

i see you have decided to make a gigantic ass out of yourself once again, apparently the first time was not enough.

why do conservatives refuse to learn from history?

why do they actively try to get everyone to forget history when it shines badly on them? (<-----boooooosh)

 

[cannabineer]

View attachment 2936080

They sure seem like a bunch of nice people.

They certainly know how to have a buddy's back.

 

[tokeprep]

you cant buy bread or cheese with stock certificates.

his stock options ARE taxed when he sells them. transactions and commerce are taxed, not "standing wealth". a pasture full of beef cattle is tax free until you sell em.

That's the point, that he's never going to sell them. Buffett is escaping taxation by donating the stock, which is why I'm complaining. You already said you didn't think the tax break should exist, and that's my point.

so youre a grave robber.

Much better that than a life robber.

Protip: it's NOT your wealth

I agree while the people are alive. Once dead, though, the wealth shouldn't belong to the dead. Every person alive is inheriting the property of the past.

if i choose to keep my money in a coffee can buried under the porch, thats MY choice if i want to buy gold silver or land, thats MY choice, if i want to spend every dime as soon as i get it thats MY choice

whether you think my choices are efficient or not is irrelevant.

you have swung from econo-loon leftism to confsicatory taxation leftism in a startling short time frame.

but then i guess thats what happens when you listen to dipshit "economists" who believe the economy runs on magic moneydust, and 300% inflation in 30 years is the bomb ass plan.

1) I'm all for encouraging spending. One of the effects of this confiscation would be encouraging people to spend their money, which would generate substantial additional economic activity. In the present environment of high automation and high unemployment, I think this would be a very positive development. The tax would realistically need to be paired with some kind of small national consumption tax in order to ensure that tax isn't entirely avoiding by spending everything.

2) Your right to make choices ceases upon your death.

3) Life with all of that inflation is pretty damn good. Why whine about it?

 

[tokeprep]

Well sir, neither. What is your problem with capital gains? Investments are the engine of economic growth.

Instead, the fair tax taxes money spent above the poverty level.

You'll whine about savings... There is no such thing as savings, because all savings are is deferred spending. Eventually the money will be spent, and when it is, it is taxed.

@ dr k...

When I said it taxed the black market, I should have said it taxes those who make their living in the black market. Drug dealers sell drugs, keep money, IRS gets nothing. Under the fair tax, their shiney 22 inch rims get taxed, where they don't currently.

There is little empirical evidence that the last batch of capital gains tax cuts had much impact on economic growth. This article suggests that has long been true: http://www.forbes.com/sites/leonardburman/2012/03/15/capital-gains-tax-rates-and-economic-growth-or-not/.

This makes sense. When you start a business or buy an investment, you don't say "Damn, I'll only have $75 million for pulling this off instead of $85 million. Nevermind!" What the rates really affect is the structuring of compensation packages. When capital gains rates are low, companies generate tax savings by transitioning management pay into equity grants. When capital gains rates are high, the money is shifted back to ordinary income.

For the record, I think some form of corporate tax is a necessity given the grant of limited liability to corporations. Think of it as an insurance premium. Society agrees to limit the losses of corporate investors in exchange for a payment.

 

[ChesusRice]

All you need to know about the flat tax is guys like Steve Forbes are pushing for it.
And it is not out of some sense of altruism

 

[BigNBushy]

There is little empirical evidence that the last batch of capital gains tax cuts had much impact on economic growth. This article suggests that has long been true: http://www.forbes.com/sites/leonardburman/2012/03/15/capital-gains-tax-rates-and-economic-growth-or-not/.

This makes sense. When you start a business or buy an investment, you don't say "Damn, I'll only have $75 million for pulling this off instead of $85 million. Nevermind!" What the rates really affect is the structuring of compensation packages. When capital gains rates are low, companies generate tax savings by transitioning management pay into equity grants. When capital gains rates are high, the money is shifted back to ordinary income.

For the record, I think some form of corporate tax is a necessity given the grant of limited liability to corporations. Think of it as an insurance premium. Society agrees to limit the losses of corporate investors in exchange for a payment.

Ok, I get that it might give you warm and fuzzys to tax a large corporation. But all that happenes when you do is the cost of that tax becomes imbeded in the price of the good or service being provided.

A tax on a business is nothing more than a tax on the businesses customers.

If you want to tax the wealthy, put a large tax on items only rich people buy. High end cars, large boats, air planes, or anything else ordinary people cannot afford. Even then, I'm not sure that this would not somehow put a burden on the ordinary people beneath them.

There will always be an upper crust of society, and not much you can do to keep them from shitting on you. Just accept it and move on.