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Author Topic: Taxes
The Pixiest
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quote:
Originally posted by Jesse:
Good luck financing all the prisons that's going to require, Pixiest.

No, you'd start out with a transition. Since no one realizes how much they're throwing down the rathole of government, they wouldn't save enough.

So instead of your withholding going to the government the first few years, it would go into a savings/checking account in your name. You keep the interest, but more importantly, you cut the check for the obscene amount of money the government takes each year. You see it in big numbers and you write them out in long hand.

For extra emphasis, you should have to include your Social Security too. Both your side and your employeers side (Your employeer can pay it into your "Withholding Savings Account")

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Carlotta
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Now that is an idea. As long as people weren't allowed to spend anything in that account till after tax time.
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The Pixiest
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Exactly Carlotta.

After you have paid the government their ton of flesh, you could transfer the funds from your WSA-2007 to any other account, take it in cash or transfer it to your WSA-2008 for use next year.

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hobsen
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That is a very good idea, Pixiest. Politicians would hate you, but it might actually save money.
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Jesse
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jm, fdr...

Go to the IRS website and download the 1040EZ.

Work out taxes for a single person making 14k a year, who has no children and is not a home owner.

They pay Federal Income Tax.

Pixiest-

Not to just be a naysayer, but you realize old Uncle Sam would hike the tax rate to make up for the effective revenue loss resulting from not getting intrest free loans, right?

[ April 02, 2007, 03:37 PM: Message edited by: Jesse ]

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Lobo
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So, in other words, be smart and underpay your taxes while encouraging everyone else to overpay!
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DonaldD
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Jesse, as I understand it, bi-weekly tax payments aren't interest-free loans - that money is available to the government immediately (in practice, since the US is in debt, the government is already borrowing to pay its bills, so payroll taxes are in effect reducing its interest payments on those loans).

The end result is the same, though: getting less money as interest-free loans is equivalent to paying larger amounts in interest - either way, the government will be footing bigger bills.

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The Pixiest
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Jesse: that's why, as part of the plan, we vote on April 16th. Tax 'n Spenders will be very unpopular and they'll actually have to reduce spending to save money.
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Jesse
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The reason it won't just make Borrow and Spenders more popular is.....

FDR, JM

Our 14,000 dollar a year single individual with no kids or home mortage interest pays 558$ in Federal Income Tax.

Please understand when I say you're repeating a Big Lie, I'm not actually calling you a liar.

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Lobo
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Wow, 4% Federal Income Tax.
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Lobo
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$558 on 14K earnings is basically nothing.
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MattP
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That $558 is much harder for that 14K individual to pay than $5000 is for a 90K individual to pay.

After a certain amount if income (much more than 14K) the income becomes more expendable.

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Jesse
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Not entirely relevant if it's hard to pay or not.

The poor pay Federal Income Tax.

On the plus side, it takes about 60 seconds to do their taxes.

[ April 02, 2007, 05:39 PM: Message edited by: Jesse ]

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DonaldD
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558$ means about 3 home-cooked meals every week
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LoneSnark
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Or, since they are illiterate and cannot add, it takes $1000 in penalties for incorrectly filling their returns.
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Lobo
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Hold on. Let's compare apples to apples. A single individual with no kids or home mortgage interest pays $17,000 in federal taxes, not $5000.

Of course it is harder for someone making less $ to pay taxes (or other bills). Should we then tax the guy making 90,000 at a rate that will make his take home equal to the guy making 14k?

Last I checked, we live in a place that rewards hard work AND takes care of those who can't take care of themselves. (Unless Hillary takes over!)

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FiredrakeRAGE
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Jesse -

That all assumes the standard deduction. Most people can come up with a few deductions [Smile]

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Zyne
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I paid my first quarter taxes today (am self-employed). OUCH that's a big check.

I do OK income wise, and I have a spouse who gets paid in beads and whiskey and we've two houses between us. My social security tax this year will be slightly higher than my income tax. THAT is saying something.

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Automath
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Pixiest-

It seems to me another way to achieve what you seem to want out of your idea is to simply get self-employed people into the majority. Australia seems to be heading in this direction, with self employment currently at 20 something percent of total employment.

To me it's a case of employment versus commercial contracting, and making the argument for the latter over the former.

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Colin JM0397
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Jesse, I was simply repeating the 14k figure someone threw out. Whether it's 14, 12, or whatever, my point has nothing to do with the amount, so I didn't even bother to check.

To reword what I should have put more succinctly: There is a point where a person has no income liability. But it doesn't change my speculation - that someone scraping by with little to no federal tax liability still pays more in taxes percentage-wise than someone making more and paying more to federal taxes.

What I was getting at, I suppose, is those folks ought to get a break that goes beyond little to no federal liability.

Ewww. Now I need a shower. You made me talk like a socialist!

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The Pixiest
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Automath: The goal is to reduce taxes. The means is to remove the fraud (on the government's part) from the tax system.

When you spread out and hide taxes, it has the same effect as spreading out your vegetables on your plate when you're a child. It looks like a lot less than there really is. It's an effort to deceive. Pay in a huge lump sum and everyone sees it.

Encouraging more people to be entrepreneurs would not work. America is more densely populated than Australia and I suspect that most of your self employed people are some sort of farmer/rancher? With an increase in city-folk, you won't have nearly the percentage of self-employed.

But in a way, you're right. The reason I think this way is because I saw the checks my parents cut the IRS during the handful of good years their small business had.

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IrishTD
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quote:
My social security tax this year will be slightly higher than my income tax. THAT is saying something.
The joy of being self-employed and having to pay both parts [Smile]
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The Pixiest
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Irish: Really you pay both sides anyway. Your "Employer Contribution" is just more government smoke and mirrors. That's money you could be being paid if it wasn't going to the government. It weighs down any raise you get because your "Employer Contribution" goes up too. It's just more fraud.

Being self employed means they don't have a rock to hide it under.

Pix

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Colin JM0397
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Just call your business a religion, the tax laws are pretty liberal to what can be a "religion". Then set up a, IIRC, 501c3 tax exempt organization, and pay yourself as the priest or grandpoobah.

IIRC, you only need like 4 members and certain jobs fulfilled like a board of directors and treasurer. All your costs of living can be paid by the curuch as expenses, and you draw a salary of very little or none.

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Jesse
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FDR-

Most folks making 14k a year can't [Smile]

Seriously. If I'm correct, you lose part of the 8,450 standard living deduction the second you try to itemize anything, and few people that poor have enough deductions to make up that difference.


jm-

I threw out the 14k 'cause it was something I figured we could agree was "poor"...at least for anyone not living with mommy and daddy.

Of course, we have the insanity of the EIC being available to single people over 25...how that hasn't resulted in an age discrimination suit is beyond me.

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Zyne
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quote:
Pay in a huge lump sum and everyone sees it.
Cause addition is too hard to expect citizens to do.
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IrishTD
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Pix: I know. That's why I included both parts when I did the computations on the previous page. It's just far more obvious how expensive it is when you are self employed.
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The Pixiest
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Zyne: Obviously, or people wouldn't be so stoked about how much money they're getting back.
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Jesse
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Pixiest?

You do realize several million Americans get far more back than they paid in, right?

The rest of them aren't saying "I'm Happy, I got free money". They're saying "I'm happy that my tax burden was actually slightly lower than what I thought it was."

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Greg Davidson
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If you assume that a big chunk of the federal budget goes to pay for national defense, you might make the case that wealthy people are getting more protection services than poorer people( [Wink] ).

My father always taught me that if ever I had to pay outrageously high taxes, I should be grateful for the opportunity to contribute.

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The Pixiest
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Jesse: I would be interested in seeing stats on that. Especially once you include both sides of social security.

Do you have a link? or are you postulating?

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Zyne
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quote:
Do you have a link? or are you postulating?
P -- I'm interested in seeing stats on this: Got a link to support people being "so stoked about how much money they're getting back"? Or are YOU postulating?

[ April 04, 2007, 10:35 PM: Message edited by: Zyne ]

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Jesse
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I assume that you're asking if I'm postulating about the EITC ?

quote:
The same data, in words: Currently for tax year 2006, for a family with two dependent children, the credit is equal to 40 percent of the first $11,340 earned, plateaus at a maximum credit of $4,536, begins to phase-out when earnings increase beyond $14,810, and reaches zero when earnings pass $36,348.
http://en.wikipedia.org/wiki/EITC

40% of the first 11,340 earned is a lot more than social security, medicare, ect.

Even if you include employer contributions.

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The Pixiest
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Where does it say how many million fit the bill?
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Jesse
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Do I really have to do all your homework?
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Omega M.
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Whoa, Lisa and Tommy, your parents fill out your taxes for you? I've always had to do my own taxes, even while I was in college---though of course my parents helped me understand them the first few times. Are you never home to have access to the forms?
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0rnery
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quote:
Originally posted by jm0397:
Ok, now this does really piss me off.

There was this bill proposed last year, but it died: http://www.govtrack.us/congress/bill.xpd?bill=h109-6057

To summarize, this bill, if passed, was going to revise the capital gains tax to allow for indexing of inflation against the original cost/price invested.

Capital gains work like this right now: If you bought a stock for $100 20 years ago, then sold it for $125 today, you have to pay tax on that $25. Yet, in real dollar terms, you actually lost money. $100 from 1987 is probably more like $200 today, so you’d have to sell the stock for $200 or more to realize any true capital gain. So you take a loss, and then suffer the further indignity of being forced to pay a tax on money you never gained.

I was thinking about this because I was pissed when I looked at the calculations on my old house I sold last year. I bought it in 1997, lived in it until 2002, and then rented it out and sold it in May 06 because we needed the money to fix up our current house and maintaining an out of state rental is a pain in the ass. I was peeved when the taxes calculate off the original price I paid, not the adjusted real value, or even the appraised value when I converted it to a rental.

With improvements done before it was a rental (so not tracked as capital improvements) and inflation, I really didn’t make much money at all on the sale, yet now I owe $5000? WTF!! If that bill had passed, I probably wouldn’t owe any! We usually get a return of several $1000 so I’m out more than the $5000 owed!

I’m sure the bill died because it was a “just another tax cut for the rich”. Rich, poor, or just plain old middle class and smart enough to keep an old house as a rental for a while, what difference does it make? How fair is it to be taxed on a gain that isn’t really a gain, and is even sometimes a loss?

[Mad] [Mad] [Mad]

Hah, that made you mad, eh? Look what Barack Obama has in mind:

Obama hinted at a targeted hike...
quote:
"It's like throwing ice water on the little camp fire that we have going and the domino effect of the decline in housing is hurting every segment of the economy," says Kathleen Clifford, a Marin County realtor.
Too early to kick this around? [Wink]
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munga
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Ornery,

I am curious, do you know which side sponsored that, the Republicans or the Democrats?

That was a really great bill, whoever floated it deserves to be re-elected.

EDIT: Ah. Just checked it myself. It was a Republican beast, and it was, for a change, a really good one. It should have passed, and I hope we can persuade the incoming Democrat President to champion it!

[ April 21, 2008, 12:30 PM: Message edited by: munga ]

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LetterRip
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munga,

that idea has been floated for at least 10 years. I'd be surprised if there hasn't been a bill with it quite a few times before.

LetterRip

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G2
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quote:
Originally posted by LoneSnark:
BTW: I am single and earn $18k a year and I paid about $1k in taxes last year. What did I do wrong?

You need more deductions.

Donate old clothing or unused items to charities like Goodwill. You can claim $400 deduction without any real proof (you get a receipt from Goodwill you fill out yourself and it cannot be tracked). I think it's $400 - the exact number escapes me right now for some reason.

Got any medical expenses? You need quite a bit to get this but at $18K you might be able to take some off for this.

Claim a dependent. If you'd had kids or some other dependent, I'm almost 100% certain you'd have paid nothing.

Put money in an IRA. I know you don't have much to spare but even a few hundred dollars a year will make an enormous difference in a decade or two for your retirement. It's about a $125 reduction in taxes for every $500 put in the IRA (wide variability there but it's a reasonable rule of thumb).

There are a *lot* of other things you can do to reduce your tax liability that, when all added together, will make a big difference.

Don't forget the stimulus package money coming back to you in the next few weeks. You'll get $600 IIRC so you really will end up paying only $400. A chartable donation claim could have been a big deal for you.

[ April 21, 2008, 02:02 PM: Message edited by: G2 ]

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