I guess Obama really dd pay for my gas

[Moliere]

I get the sense you haven't fully thought this one through and got caught up in the popular hyperbole of the day that the rich are somehow, avoiding paying their fair share of taxes. No?

We might be talking past one another. I've done volunteer tax work for VITA and other returns (when asked to by the bishop) and I can tell you the knowledge of taxes and deductions among the classes is a large gap. Many poorer families miss out on many deductions and refundable tax credits just because they don't know where to start or they go to some car dealership that does the return for them and uses the tax refund to apply against a down payment. The poor are more susceptible to missing deductions, that's all I'm saying. The rich have more resources to help them be more accurate in their tax burden.

Also, the rich pay their fair share, but I'm okay with the rich paying a higher percentage as long as it is not too high as to stifle any further investment. For instance, I would never support a 90% tax since most people would decide to no longer work, but 39% is not unreasonable after you have passed $500K or so.

[kccougar]

You need to double check - Alternate Minimum Tax kicks in at $70,950.

AMT in a nutshell - you have to pay a minimum of 26% (28% if you make over $150K) on everything you make above $70,950 - regardless of the total other tax deductions you may have. Basically, if you make $100,000, you're still going to have to pay, at a minimum, 26% of $29,050 in Federal Income Taxes. If the standard tax table, with all your deductions, puts you at an adjusted income that says you have to pay under $7,553 in tax (on $100K base income), you're probably subject to AMT, and whether you know it or not (or whether it's fair or not), you're underpaying your federal income taxes...

Note - If this is misreading of the AMT rules, someone please tell me. Like I said above, I've been paying AMT for the last 12 years - because Turbo Tax says that's what I should be paying, and because after looking into it a couple times, I concluded the same thing.

Also Note - these assumptions are based on viewing the $100K as salary, where there's no significant business expense write-offs possible. If you're on your own and 'making $100K,' that's a lot different than drawing a paycheck and making $100K. The guy working on his own has a lot more options & alternatives than the guy drawing a salary...

I think you ought to re-look at that. $70k sounds awfully low to have to pay AMT.

[byu71]

Well, some people don't know about IRAs, and if they do they misuse them. I would be dumb to invest in a traditional IRA this year since my ETR is basically 0%. A roth IRA is better for me since I will likely have no dependents and be in a higher tax bracket when I retire.

The value comes in where to put your money and when.

Also, many people overpay taxes because they simply don't take deductions they should. That's what happens when you take an incredibly complex income tax code and you force engineers, doctors, teachers, etc. to comply with it.

For instance, I once reviewed the tax return of a friend who is a teacher. He forgot to take the child tax credit, which back then was $600. I basically saved him $600 when I caught that one. He was trying to save money by doing his own taxes, but often times that results in losing money in missed deductions. TurboTax is a good starting point, but you should know the basic tax rules if you are going to use it.

I am in agreement here. Although my tax return is pretty simple, I have a CPA do it and have had for many, many years. Whether I am right or not I think it lessens my chances of an audit. Also as you said, they won't forget anything.

However, our discussion intially involved me "avoiding" taxes the poor can't. My contention is first, the poor don't pay taxes, so how can they avoid something they don't pay.

Second, I take deductions they don't. Please don't tell me you are saying the masses don't take deductions I don't because they don't know about them. Maybe some, but you can't make a generalization like that. Plus, it is their responsibility to make themselves aware of the deductions. There aren't any secret ones, they are pretty well spelled out if you take the time to go and read.

Lastly, deductions are way overrated. If I spend $1,000 on something I can deduct, I am still out the $1,000 less the $350 I get back from the government. Net I am still out $650. There is a good chance the $1,000 went to a charity that could evenutally end up helping the poor.

I prefer people argue not what I owe the poor, but maybe I should pay more because I am receiving more benefits. Maybe the poor don't need the big defense budget because they would be as well off under say the Iranian dictator and it is me that wouldn't be as well off.

That is a better argument than I can afford a CPA and they can't. IMHO of course.

[Moliere]

My contention is first, the poor don't pay taxes

This point is never brought up in any political debate, but it is true as far as income taxes go. Why is it not brought up in a debate? I have no idea but it would probably sound bad having someone say it so they avoid it.

On the flip side however, the poor pay sales taxes, property taxes, FICA (directly and indirectly), unemployment taxes (indirectly), etc.

They also subsidize a lot of the state lotteries. I've heard (can't produce evidence) that the poor purchase a disproportionate share of lotto tickets. Frankly I love having a lotto because I don't participate and it subsidizes my state taxes, but it is horrible for the class structure.

[byu71]

This point is never brought up in any political debate, but it is true as far as income taxes go. Why is it not brought up in a debate? I have no idea but it would probably sound bad having someone say it so they avoid it.

On the flip side however, the poor pay sales taxes, property taxes, FICA (directly and indirectly), unemployment taxes (indirectly), etc.

They also subsidize a lot of the state lotteries. I've heard (can't produce evidence) that the poor purchase a disproportionate share of lotto tickets. Frankly I love having a lotto because I don't participate and it subsidizes my state taxes, but it is horrible for the class structure.

And yet if we made people present an income statement before they could buy a lotto ticket, the ACLU and other liberal organizations would howl.

It is a tough situation. Some of the poor are there through no fault of their own. Some are there because they make bad choices. I would be willing to pay more in taxes if I knew it went to the "no fault of their own" group.

[statman]

I think you ought to re-look at that. $70k sounds awfully low to have to pay AMT.

It's where it starts. You need to pay 26% of everything you make over that threshold. That still means your effective total tax rate at that point would be very low. Butt hat's the point at which the AMT rates are calculated.

[il Padrino Ute]

This point is never brought up in any political debate, but it is true as far as income taxes go. Why is it not brought up in a debate? I have no idea but it would probably sound bad having someone say it so they avoid it.

On the flip side however, the poor pay sales taxes, property taxes, FICA (directly and indirectly), unemployment taxes (indirectly), etc.

They also subsidize a lot of the state lotteries. I've heard (can't produce evidence) that the poor purchase a disproportionate share of lotto tickets. Frankly I love having a lotto because I don't participate and it subsidizes my state taxes, but it is horrible for the class structure.

Because it demolishes the argument that the rich don't pay their fair share.

[wuapinmon]

This point is never brought up in any political debate, but it is true as far as income taxes go. Why is it not brought up in a debate? I have no idea but it would probably sound bad having someone say it so they avoid it.

On the flip side however, the poor pay sales taxes, property taxes, FICA (directly and indirectly), unemployment taxes (indirectly), etc.

They also subsidize a lot of the state lotteries. I've heard (can't produce evidence) that the poor purchase a disproportionate share of lotto tickets. Frankly I love having a lotto because I don't participate and it subsidizes my state taxes, but it is horrible for the class structure.

The famous, "tax on the poor and the poor at math" quote fails to recognize that it's a willful and willing tax (unless one is addicted). If you're poor, the lottery is a hopeful tax; someday my paying this 'tax' might lead to me striking it rich, or at least someone else in my situation. Income taxes, psychologically, do not carry this promise.


My mom paid more in taxes last year than I make in a year. I'm fine with that. She hates it and raves about it, but then she's happy that my family has had services the way we have (e.g. FEMA, Medicaid). She also likes nice roads, good schools, clean air, safety from enemies, public transportation, the Food Stamp program (not for us), subsidies for farmers to make sure that we can still produce our own food (a national security issue in her mind).

cowboy, thanks for those links. I was convinced otherwise about those stats, but your data is solid. It makes me change my perspective a little.

[Tim]

Another good source for tax info is The Tax Foundation founded during the Great Depression.

http://taxfoundation.org/


Here, you'll learn that...

In 1988 Reagan's last year, the top 5% earned 29% AGI and paid 46% of income taxes.

In 1992, Bush's last year, the top 5% earned 28% AGI and paid 46% AGI of income taxes

In 2000, Clinton's last year, the top 5% earned 35% AGI and paid 56% of income taxes

in 2007, the top 5% of income earners, earn 38% of AGI and pay 61% of income taxes

...and there's lots of other interesting stuff.

But has our economy grown in spite of the increase in taxes paid by the rich? Haven't the rich gotten richer? The poor are getting poorer, and our economy has grown tremendously over the years, so it must be that the rich are getting richer.

[Indy Coug]

But has our economy grown in spite of the increase in taxes paid by the rich? Haven't the rich gotten richer? The poor are getting poorer, and our economy has grown tremendously over the years, so it must be that the rich are getting richer.

Holy cow, there are so many generalized statements and nonsequiturs in here I'm not sure where to start.

[Moliere]

But has our economy grown in spite of the increase in taxes paid by the rich? Haven't the rich gotten richer? The poor are getting poorer, and our economy has grown tremendously over the years, so it must be that the rich are getting richer.

Can you please tell me what this means? This has essentially become a liberal tagline.

There are a lot of poor people in this country but are they really getting poorer? Many of them are buoyed up by social programs, which is great that we have a safety net, but I hear they are getting poorer all the time but I have never heard any explain why and back it up with data.

Also, they are poorer compared to what? Haiti? The poor during the depression? The poor during the Clinton years?

[byu71]

But has our economy grown in spite of the increase in taxes paid by the rich? Haven't the rich gotten richer? The poor are getting poorer, and our economy has grown tremendously over the years, so it must be that the rich are getting richer.

Tim, I sympathize with you in some ways. I wish we could tax the hell out of those who get rich on trivial things. Movie stars, talk show hosts, sports figures and entertainers in general. CEO's of companies like Goldman Sachs who are up for a $100 million bonus.

However, for people like a guy I know who was broke on his butt in 1982 due to the Carter BS policies. He started a company and drove around in a motor home trying to sell his product while his partner and receptionist held down the fort. They struggled for 2-3 years before things started to work. They now have about 300 employees. Provide them with a great health care plan. They provide the employees with a great 401K plan.

Sure he is rich and now you want to tax the crap out of him because he went from being poor to being rich on his own. No government aid. No government bailout. Yet you label him because he is rich.

No offense, but too often progressives and their wonderful ideas of how to cure everything are just to simplistic. Poor equals the screwed and rich equals the screwer.

[cowboy]

The famous, "tax on the poor and the poor at math" quote fails to recognize that it's a willful and willing tax (unless one is addicted). If you're poor, the lottery is a hopeful tax; someday my paying this 'tax' might lead to me striking it rich, or at least someone else in my situation. Income taxes, psychologically, do not carry this promise.


My mom paid more in taxes last year than I make in a year. I'm fine with that. She hates it and raves about it, but then she's happy that my family has had services the way we have (e.g. FEMA, Medicaid). She also likes nice roads, good schools, clean air, safety from enemies, public transportation, the Food Stamp program (not for us), subsidies for farmers to make sure that we can still produce our own food (a national security issue in her mind).

cowboy, thanks for those links. I was convinced otherwise about those stats, but your data is solid. It makes me change my perspective a little.

While you and I probably vote different sides of the ticket nowdays, we see a lot of these issues the same. I'm a fiscal moderate. I see the need for a social safety net and good infrastructure, and I think that a progressive tax structure is a good thing. However, there is a limit to the burden that the 'rich' can bear, and we cannot continue to borrow at current levels to fund our government.

[mUUser]

I wish we could tax the hell out of those who get rich on trivial things. Movie stars, talk show hosts, sports figures and entertainers in general. CEO's of companies like Goldman Sachs who are up for a $100 million bonus.

I'd rather allow the market to decide what's trivial, not some govt bureaucracy. If people don't want to spend their money on movies -- they'll disappear. If Goldmans isn't market competitive -- it'll wither away. Someone else will fill the void.

[byu71]

I'd rather allow the market to decide what's trivial, not some govt bureaucracy. If people don't want to spend their money on movies -- they'll disappear. If Goldmans isn't market competitive -- it'll wither away. Someone else will fill the void.

Agreed, I would rather the market decide than the alternative. Politicians deciding who should be rich and who shouldn't. BY the way, it is my opinion Goldman would do just fine under either situation.