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Whats Fair When it Comes to Taxes?

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Old 10-21-2011, 10:50 AM   #16
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Re: Whats Fair When it Comes to Taxes?

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I know that, I still have a problem with it when it's on a smaller scale, though. I'm not saying that I necessarily have a solution to the problem, but I don't know that raising the tax is fair to the people who aren't able to put much in and don't end up earning much, either.

Whatever problem you have with it is unfounded. You have 1k in new income, how you got it is irrelevant. If it helps think of the process investing in stock as having invested in a business and making a profit (exactly what you're doing actually). You will pay and you should pay taxes on those proceeds.
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Old 10-21-2011, 10:52 AM   #17
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Re: Whats Fair When it Comes to Taxes?

To clarify... I know I mentioned I had a problem with Gov. picking on any one group, and by making a "Gas tax" it would only hit drivers, but... they could add a tax to people who ride the trains as well. Taxies and Buses would most likely pass their gas tax down to the common man by raising the rates so they would pay their fair share also.

The only ones not hit would be walkers and bike riders. I can live with that since they are doing their part to keep smog to decent level.
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Old 10-21-2011, 10:58 AM   #18
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Re: Whats Fair When it Comes to Taxes?

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So I need to stay in a lower income bracket because my neighbors decide that they are OK making $35,000 a year? Why should I feel the need to hold myself back because others make the poor or wrong decisions? You also say people are stuck in the back and never catch up. Good thing not all people have this mind set or they would never make it in life. Its sad that people actually think that way because they then tell people on the bottom there is no hope for them only hurting them even more. I was told because I did not have a College Degree I could never get the job I have today. If I listened to those people then I'd be probably be stuck in a dead end job. How come the Chinese lady down the street could come here speaking no english and little to no money and now own three dry cleaners? The only dead end in America is the dead end that people allow to be put in or behind. Is it harder for some then others. Yes, see the chinese lady but if people have the will they can suceed.
Your right. If people were told "you can't" or "never will" then they won't. You didn't listen to them good job. But what about the single mother with 5 kids who can't afford to pay for child care and work at McDonalds... the only place to would hire her? In VA when she goes to Social Services and asks for help or "assistance" they tell her she has a job or she makes too much money due to the job and they can't help her. So what does that mother do? She quits her job and then refiles and gets the full benifits for what they think a mother with 5 kids should get instead of simply supplementing what she was already making.

Our system of Gov. is bad from the top all the way down to the county level.
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Old 10-21-2011, 11:01 AM   #19
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Re: Whats Fair When it Comes to Taxes?

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The bolded portion is the main thing I have a problem with. It's fashionable now to complain about the capital gains tax, but I actually have a real problem with it. Here's an example:

Let's say, for instance, I'm able to invest $10k of my after tax income in a given year. In that year I make $1k on my investments and I sell off my stock. I don't think I should then be taxed again because I earned $1,000 after I already paid taxes on the money I invested, and if I am, I certainly don't believe it should be at the same rate as I already had been for earning the money I invested.

Now, that example doesn't address folks like Warren Buffett who don't really do anything other than invest, but it illustrates the issue that lots of normal people could face. So, what would be a solution to this? Progressively tax higher capital gains earners? I'm not exactly sure, but I can tell you if the capital gains tax rises to the same level as my payroll tax, I'll probably be a little hesitant to invest any of my money.
Yeah i hear you and this is something I really struggled with when I was thinking about tax equality. I decided there are 3 types of jobs in this world. Sales, Sales Support and Government. Everything falls under those 3 categories. Investing is sales, youre buying something in order to sell it to someone else at a higher price. So the deciding factor for me is that the gain someone made from selling the business they started or from a stock they sold is effectively income in my opinion, merely by the fact it can be sold. So just like a vender paying income taxes on the bananas he bought with after tax money and sold for a profit I think a investor selling stocks or ownership in a company for a profit should be treated the same way.
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Old 10-21-2011, 11:11 AM   #20
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Re: Whats Fair When it Comes to Taxes?

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Your right. If people were told "you can't" or "never will" then they won't. You didn't listen to them good job. But what about the single mother with 5 kids who can't afford to pay for child care and work at McDonalds... the only place to would hire her? In VA when she goes to Social Services and asks for help or "assistance" they tell her she has a job or she makes too much money due to the job and they can't help her. So what does that mother do? She quits her job and then refiles and gets the full benifits for what they think a mother with 5 kids should get instead of simply supplementing what she was already making.

Our system of Gov. is bad from the top all the way down to the county level.
this is the one problem i was addressing in my orig post. when you actually look into all the programs a person is better off not working and collecting all the diff types of govt assistance than working a mcdonalds job or as a cashier at walmart.

a person is much much better off (and probably making the equivalent of 50-60k) if they claim unemployment, etc but work an under the table job. its a windfall really. pay close to nothing for housing, even if you stop paying rent the landlord has a tough time kicking you out b/c your sec 8, sell your food stamps at 50 cents to the dollar, free healthcare and dental for you and your whole family.

unless you make more than 50k why work a job you have to claim income on?
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Old 10-21-2011, 11:14 AM   #21
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Re: Whats Fair When it Comes to Taxes?

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I'm not a smoker and hardly a drinker but what pisses me off more is when they want to raise tobacco tax as if that will solve our problems. Lets make the smokers pay for everything. .
its my understanding that the tax of tobacco goes to help offset tobacco related expenses like lung cancer, cancer research, tobacco use awareness . . .which i think is a good thing. i could be wrong. i imagine it costs us alot of money for the older folks on medicaid who have been smoking for 60 years and get cancer . . .
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Old 10-21-2011, 11:30 AM   #22
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Re: Whats Fair When it Comes to Taxes?

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Whatever problem you have with it is unfounded. You have 1k in new income, how you got it is irrelevant. If it helps think of the process investing in stock as having invested in a business and making a profit (exactly what you're doing actually). You will pay and you should pay taxes on those proceeds.
How should 401k's be handled then? This is before tax income that's earned compound interest for a number of years. I know it's taxed when it is paid out during retirement, but at what rate should it be taxed? Also, how would the "income" portion of it be determined?

I'm pretty ignorant to tax laws and such, so I'm asking for informational purposes, not to be combative.

I suppose I just never really thought about every bit of money I earn as income before; admittedly, I probably should have. It's just a way of thinking that needs to switch, but this is an interesting discussion, to me.
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Old 10-21-2011, 12:03 PM   #23
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Re: Whats Fair When it Comes to Taxes?

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Who told you life is fair? If it was fair we would all be well off, there wouldn't be children that go to sleep hungry at night or homeless veterans, or fund managers who pay 15% CGT on the hard earned money of others.

Get over your pursuit of perfection and fairness and start seeking sensibility and practicality. It doesn't seem fair to me to have the local grocery bagger pay $4 for a loaf of bread and 15% on their income tax and for the CEO of the grocery store to also pays $4 for a loaf of bread and 15% on their income tax. On the surface it looks pretty fair but while the CEO wipes his ass with $100 bills and is unable to notice a measly $4 the grocery store clerk will.

The cost of rent/mortgage and consumable goods are high and unless you want to live like a caveman someone making 30k can barely survive in this country. Bottom line is the clerk will consume most of his income on all the things one need to live a decent life while the CEO can't spend enough to on his neighborhood for eternity. As such they shouldn't be treated the same in matter of taxation.

Some will say, well, why should the CEO have to subsidize other people...to these people I say who is subsidizing the CEO and why shouldn't they pay more considering they benefit the most?
In school I was always taught that the reason people come to America is for opportunity. That America guarantees the pursuit of happiness for everyone but not a guarantee that everyone will be happy.

We are all born into different circumstances but just like you said life isnít fair. Just like its not fair that some people are harder workers then others, smarter, better looking, smooth talking, better athletically, more innovative or...... just good ole rich. Thatís just the way it is, some people are dealt better cards then others. Im not rich and I donít come from a rich family, but I donít think rich people should be punished just like I donít think a hard worker, athlete or model should be punished because of their lack of misfortune.

I think people who earn more money should pay more taxes because like you said they are benefiting the most. Thatís why I think a percentage is fair, as you earn more you pay more. I also think people at the bottom of the economic scale should be given more opportunity, kind of like they are now but through a more controlled process. So instead of giving someone a huge tax refund (relative to their income) at the end of the year to do what they like with, I think it would be more beneficial to provide them with tools through social programs that present individuals with opportunities to climb the economic latter if that what they choose to do. This would replace tax refunds and be in addition to the subsidies like housing vouchers and food stamps that many of us are already receiving. So more oppertunity for poorer people but its up to you to take advantage of it. Things will never be fair for everyone but i think treating everyone equally is start.
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Old 10-21-2011, 12:33 PM   #24
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Re: Whats Fair When it Comes to Taxes?

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How should 401k's be handled then? This is before tax income that's earned compound interest for a number of years. I know it's taxed when it is paid out during retirement, but at what rate should it be taxed? Also, how would the "income" portion of it be determined?

I'm pretty ignorant to tax laws and such, so I'm asking for informational purposes, not to be combative.

I suppose I just never really thought about every bit of money I earn as income before; admittedly, I probably should have. It's just a way of thinking that needs to switch, but this is an interesting discussion, to me.
401k contributions aren't taxed at all until they are withdrawn and there a lot of rules around it. For one thing you can borrow against it and not pay taxes or penalty on it so long as you pay it back within 5 years (except when buying a home). You are required to withdraw a minimum amount of it when you turn 70.5 (this requirement was suspended by congress for 2009 because of the economic downturn).

You are technacally suppose to be taxed on it at the tax bracket you were in at your last income generating position before retirement (It doesn't mean you can go get a job at McDonald's though to lower your tax bracket). There are some strategies you can employ to lower your taxes. For example, if you don't anticipate your tax bracket to be lower as you get older and near retirement it might be wise to convert your 401k to Roth IRA before you retire since isn't subjected to minimum distribution rules which could cost you in the long run.


Bottom line is the rules around 401k are quite generous and if you combine it with other financial instruments (i.e. whole life insurance) you can definitely lower your tax bill when you retire.
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Old 10-21-2011, 12:59 PM   #25
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Re: Whats Fair When it Comes to Taxes?

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In school I was always taught that the reason people come to America is for opportunity. That America guarantees the pursuit of happiness for everyone but not a guarantee that everyone will be happy.

We are all born into different circumstances but just like you said life isnít fair. Just like its not fair that some people are harder workers then others, smarter, better looking, smooth talking, better athletically, more innovative or...... just good ole rich. Thatís just the way it is, some people are dealt better cards then others. Im not rich and I donít come from a rich family, but I donít think rich people should be punished just like I donít think a hard worker, athlete or model should be punished because of their lack of misfortune.
You seem to be missing historical context and profound misunderstanding of America. Land owners and the wealthy have always paid the most taxes since the inception of this country. In fact, today's rich pay much less than Thomas Jefferson or George Washington paid and with them being the founders you can hardly make the case that we are all of a sudden punishing anyone that's rich.

Those who are here or those who recently came here are free to leave at any time and take their belief and build their dream nation elsewhere.

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I think people who earn more money should pay more taxes because like you said they are benefiting the most. Thatís why I think a percentage is fair, as you earn more you pay more. I also think people at the bottom of the economic scale should be given more opportunity, kind of like they are now but through a more controlled process. So instead of giving someone a huge tax refund (relative to their income) at the end of the year to do what they like with, I think it would be more beneficial to provide them with tools through social programs that present individuals with opportunities to climb the economic latter if that what they choose to do. This would replace tax refunds and be in addition to the subsidies like housing vouchers and food stamps that many of us are already receiving. So more oppertunity for poorer people but its up to you to take advantage of it. Things will never be fair for everyone but i think treating everyone equally is start.
A percentage is not fair for the simple fact that consumable goods and housing are expensive. A percentage wouldn't only punish the poor but the middle class. They are the biggest consumers of good....they will have to make decisions about whether to buy that 30K car + 17% sales tax or send their kid to college for another year. If these people have to make choices like that American would have a revolution brewing in no time.

Flat Tax advocates always present the bright side and positive numbers, they never present the potential pitfalls and ramifications. Any proposal to change the tax code shouldn't be a one page or three pages, it should be like a Form 10-K.
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Old 10-21-2011, 01:13 PM   #26
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Re: Whats Fair When it Comes to Taxes?

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Thats such a stupid rule. They allow people to dig into their retirement so they can buy a home they cannot afford.

You're too grown to say stupid stuff like this. You know they can't afford it how? Because they are tapping into their 401k? I tapped into my 401k to buy a home I can afford. Why? because it's kinda smart to maximize your 401k investment, borrow money against yourself for 10 years and pay yourself back with interest.
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Old 10-21-2011, 01:23 PM   #27
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Re: Whats Fair When it Comes to Taxes?

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401k contributions aren't taxed at all until they are withdrawn and there a lot of rules around it. For one thing you can borrow against it and not pay taxes or penalty on it so long as you pay it back within 5 years (except when buying a home). You are required to withdraw a minimum amount of it when you turn 70.5 (this requirement was suspended by congress for 2009 because of the economic downturn).

You are technacally suppose to be taxed on it at the tax bracket you were in at your last income generating position before retirement (It doesn't mean you can go get a job at McDonald's though to lower your tax bracket). There are some strategies you can employ to lower your taxes. For example, if you don't anticipate your tax bracket to be lower as you get older and near retirement it might be wise to convert your 401k to Roth IRA before you retire since isn't subjected to minimum distribution rules which could cost you in the long run.


Bottom line is the rules around 401k are quite generous and if you combine it with other financial instruments (i.e. whole life insurance) you can definitely lower your tax bill when you retire.
Interesting. Thanks for that info!
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Old 10-21-2011, 01:27 PM   #28
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Re: Whats Fair When it Comes to Taxes?

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Why do you have to use billionair to make your point? Any investor who risk their money in the market benefiits with lower taxes for taking the risk. It also pumps money into corporations so they can expand and hire new people and help grow the ecomony. So its not just the rich that makes out. How about the plumer who has work his entire life and now wants to sell his small book (clientell) of business for $300,000 so he has a retirement. If it was not for the lower tax he would get hit with a very high tax (remember that considered rich) for that year taking 1/3 $99,000 in taxes. Same with me. A large part of my retirement will be the value of my book of business and I cannot afford to give the fed gov. 1/3 of $600,000. That would be $200,000 from my retirement to the federal gov for selling a business I worked 20 to 30 yrs to build.
It can be a millionaire...these people only need a few hundred grand to live a lavish lifestyle and their is hardly any long term risk unless you're investing with Maddof. At the end of the day the risk you take means nothing. If you lose money, you get a tax dudction, if you make money you get taxed. Pretty simple stuff.


As for the business owner wanting to sell his business, why shouldn't he get taxed at the highest bracket if he is going to make out 300k? Why does it matter the years who has put into it? Was he not paying himself all those years? I would advise you to start paying yourself (at least 15% of revenue) and putting a chunk of that money you pay yourself away. If you can't, your business isn't doing as well as it should and you might be in trouble when retirement rolls around. Don't blame your piss poor planning on the government, plan better.
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Old 10-21-2011, 01:34 PM   #29
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Re: Whats Fair When it Comes to Taxes?

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No I'm correct. Your too smart to know people don't do this all the time. You used your 401 to save the money to buy a home. Most people do not think that far out and they decide to buy a home and because they have no savings they tap into their 401. Thats money they will never pay back.


Umm, you're required by law to pay back that money within 10 years....and the consequences for not doing so is that it will be treated as a withdrawal with you owing Uncle Sam taxes on the distribution plus a 10% penalty on top of it.

Do you have statistics that shows most people don't pay back and that you are right?
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Old 10-21-2011, 03:08 PM   #30
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Re: Whats Fair When it Comes to Taxes?

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You seem to be missing historical context and profound misunderstanding of America. Land owners and the wealthy have always paid the most taxes since the inception of this country. In fact, today's rich pay much less than Thomas Jefferson or George Washington paid and with them being the founders you can hardly make the case that we are all of a sudden punishing anyone that's rich.

Those who are here or those who recently came here are free to leave at any time and take their belief and build their dream nation elsewhere.
I dont know what i said to make you think land owners or wealthy shouldnt be paying the most taxes on their income? I think they should be paying the most but through a flat percentage not a progresive tier. I did not know that Washington Or Jefferson paid higher taxes then today's rich (and wouldnt mind seeing a source that says so), but was it because they paid taxes on property they owned while others didnt own anything?

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A percentage is not fair for the simple fact that consumable goods and housing are expensive. A percentage wouldn't only punish the poor but the middle class. They are the biggest consumers of good....they will have to make decisions about whether to buy that 30K car + 17% sales tax or send their kid to college for another year. If these people have to make choices like that American would have a revolution brewing in no time.

Flat Tax advocates always present the bright side and positive numbers, they never present the potential pitfalls and ramifications. Any proposal to change the tax code shouldn't be a one page or three pages, it should be like a Form 10-K.
Im not really advocating the Fair Tax if thats what youre alluding to here. Im just saying the federal income tax should be an equal percentage for all. But I donít think thatís possible to do overnight and thatís what I like about 9 9 9. Im assuming your 35k + 17% in state and federal sales tax is a 999 reference? Thatís a misleading example as many people donít understand that the car is currently 35k + 8% + A Portion of the Money You Already Paid in Federal Income Taxes . A lower and equal tax on business will also reduce the price of the goods businesses produce since prices will reflect a lower tax amount embedded in the final product, so it may now be a 34k car + 8% +9%.

For some households that may be more than they would have paid in aggregate federal income taxes beforehand but for most it will be less. Also most poor people buy used cars, which wont be subject to federal taxes. While 999 lowers taxes for most it does raise it for some, but most importantly it gets rid of the loopholes for the richÖ.. except for capital gains which is partly why I think they should be taxed equall as well. Although Cain is promoting this as a jobs bill so not taxing capital gains will be a positive for the economy.
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