Author Topic: FairTax-- Flat Tax Comments  (Read 22343 times)

Druid

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Re: FairTax-- Flat Tax Comments
« Reply #50 on: August 10, 2015, 10:50:07 PM »
Unfortunately the Fair Tax (and even Flat Tax) will never come to be.

How do politicians get most of their money?  From lobbyists trying to get new exemptions, deductions, and credits enacted.  Take away the complexity of the tax code, and you take away the main revenue stream of Washington.  Too many people get paid by the current system for it to ever go away w/o violent revolution.

This is the gist of it. The real estate industry likes the mortgage deduction. The finance industry likes 401k deductions. Farmers love their subsidies. Charities rely on the charitable deductions of people. Old people don't mind the social security tax and Medicare. Poor people love the 15 percent bracket. People with a dozen kids love their exemptions.Dramatically Changing the tax code involves a balancing act between keeping the special interests happy enough to support you while not turning the minority poor against you. The flat tax is used by republicans to attract contributions from wealthy people.

Druid

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Re: FairTax-- Flat Tax Comments
« Reply #51 on: August 10, 2015, 11:04:37 PM »

They've gotten them down from 90% to 39%. But they still want them lower. And estate taxes have an exemption for the first $11 million a couple passes on to their kids. But they want that eliminated entirely.

I would go even further. Taxes to the super rich are already significantly lower than what you and I pay.
Last year my wife and I paid a total of approximately 36% (we live in Manhattan), while I'm pretty sure the 0.1 percenters are more around 12-15%

While I hate to say it...the solution is to get rid of favorable capital gain rates. This change alone would clean up the tax code since many of the complexities involve classifying what property and investment transactions qualify for capital gains. Furthermore the top 1 percent will finally be paying the same rate as married couples making a couple hundred grand solely from wages. Some people may argue that investment will go down, but this affect can be offset by eliminating the double taxation structure of c corps that are public ally traded.

Seppia

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FairTax-- Flat Tax Comments
« Reply #52 on: August 11, 2015, 05:07:31 AM »
So what's your point?

That fairness is a subjective value that is not relevant to laws in the United States.

We agree to disagree then.


Mine is: today it's unfair, I'm fine with not changing it but if we do have to change it, let's make sure it's not to make it even more unfair.

I'm not even sure how that would be possible, the massive tax code as it is has been hugely unfair to middle class people for decades.  Just the complexity alone makes it unfair for those who can't afford a tax professional to find those special breaks for them.  I couldn't have done it without mine, he's worth every penny I pay him.

Coming back around to Rand Paul's Fair & Flat tax plan again (where this thread started), you did know that his starting exemption would be higher than it is now right?  Taking the standard deduction from just under $10K per person right now to above $40K for a married couple.  So while the official tax rate on the wealthy would be lower, I'd give it even odds that the actual tax rate would be lower, since the rich can afford to pay a tax professional to find all of their exemptions.

Disagree here also.
In the U.S. you pay very little taxes, I would be against paying less.
While it sounds sexy in theory, if you pay peanuts you get monkeys, and the main reason of some of the issues I see in the U.S. (for example: older infrastructure and insufficient public transport) come directly from the fact that your taxes are so low.
Taxes are/should be a way to redistribute wealth across the population, smoothening out the inequality.

My personal view is that taxes in the U.S. are already low enough, I would just start considering capital gains like ordinary income and keep the progressive taxation in place.
This way you would close the obscene loophole allowing the uber-wealthy to pay less taxes than you and I.

Jack

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Re: FairTax-- Flat Tax Comments
« Reply #53 on: August 11, 2015, 05:27:07 AM »
If it's harder for poor people to move up in quintile than it is for rich people to avoid moving down in quintile,

Statistics about the mobility in the US, across generations, suggest that this is not the case...

"According to a 2012 Pew Economic Mobility Project study[14] 43% of children born into the bottom quintile remain in that bottom quintile as adults. Correspondingly, 40% of children raised in the top quintile will remain there as adults."

https://en.wikipedia.org/wiki/Socio-economic_mobility_in_the_United_States#Intragenerational_mobility

Note the "if:" I wasn't saying that it is the case now; I was saying that if we had a flat tax it would become the case.

Your attempt at a rebuttal (to an argument I didn't actually make) is not evidence that a flat tax would work okay; it's actually evidence that our progressive taxation system is working!

And even then, it's only barely doing so, given that the other results mentioned in that section of the article showed even less mobility than the statement you quoted. Also, that study is for the 1996-2005 time period; I wonder what the percentages were for other time periods (such as 1946-1955).

Quote
then wealth will become increasingly concentrated and society will eventually collapse.

Your conclusion does not follow your assumptions.  The condition that you suggest was the norm in Western Europe for centuries, yet society typically did not collapse as an obvious or direct result.  Now, that may have been a contributing factor in the actual social breakdowns that did occur, but I wouldn't assume that, and you didn't offer any evidence to support your opinion.  You simply stated it as a given.

  • Fall of Rome
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  • Feudalism in general (as an example of the mode where the rich sociopaths maintain their power through violence and oppression)

MoonShadow

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Re: FairTax-- Flat Tax Comments
« Reply #54 on: August 11, 2015, 08:48:11 AM »
So what's your point?

That fairness is a subjective value that is not relevant to laws in the United States.

We agree to disagree then.


Mine is: today it's unfair, I'm fine with not changing it but if we do have to change it, let's make sure it's not to make it even more unfair.

I'm not even sure how that would be possible, the massive tax code as it is has been hugely unfair to middle class people for decades.  Just the complexity alone makes it unfair for those who can't afford a tax professional to find those special breaks for them.  I couldn't have done it without mine, he's worth every penny I pay him.

Coming back around to Rand Paul's Fair & Flat tax plan again (where this thread started), you did know that his starting exemption would be higher than it is now right?  Taking the standard deduction from just under $10K per person right now to above $40K for a married couple.  So while the official tax rate on the wealthy would be lower, I'd give it even odds that the actual tax rate would be lower, since the rich can afford to pay a tax professional to find all of their exemptions.

Disagree here also.
In the U.S. you pay very little taxes, I would be against paying less.
While it sounds sexy in theory, if you pay peanuts you get monkeys, and the main reason of some of the issues I see in the U.S. (for example: older infrastructure and insufficient public transport) come directly from the fact that your taxes are so low.
Taxes are/should be a way to redistribute wealth across the population, smoothening out the inequality.

My personal view is that taxes in the U.S. are already low enough, I would just start considering capital gains like ordinary income and keep the progressive taxation in place.
This way you would close the obscene loophole allowing the uber-wealthy to pay less taxes than you and I.

I don't think you are paying attention to what I've been saying. There is nothing that could be done to make the 'progressive' tax system in the US worse than it is now, because the rich already don't pay hardly anything.  And it is not really possible for them to pay less than I do.  That was my point.  I've set up my finances in such a way, that I, personally, pay zero income taxes to the federal government.  And I do so quite legally, by taking advantage of the numerous exemptions and deductions that both parties have carved out for their special interests.  I pay nothing beyond my FICA taxes, which is less than what Rand Paul's Fair&Flat plan would cost me.  It's not material if the top tax rate is 38% or 90%, if even the wealthiest of people can avoid those rates with massive exceptions and deductions.  There are entire sections of this forum dedicated to the concept of paying zero taxes in retirement!  No, that's not fair; but it is so.

BTDretire

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Re: FairTax-- Flat Tax Comments
« Reply #55 on: August 11, 2015, 08:48:56 AM »

My personal view is that taxes in the U.S. are already low enough, I would just start considering capital gains like ordinary income and keep the progressive taxation in place.
This way you would close the obscene loophole allowing the uber-wealthy to pay less taxes than you and I.

  I think the capital gains tax treatment enables the middleclass to build wealth,
if that is what they put effort into. Most Americans spend all they get.
« Last Edit: August 11, 2015, 09:12:46 AM by Qmavam »

BTDretire

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Re: FairTax-- Flat Tax Comments
« Reply #56 on: August 11, 2015, 09:10:09 AM »

Let's talk about just Federal income taxes. gross income/fed tax paid= are you sure it's 36%?
 I think I had one year I paid less than 2%. If I get some time tonight I'll pull some 1040's and check.
If you figure deductions (this year), Standard -$12.6k,  4-exemptions $16k, 2-SEP's $15k, HSA $7.5k,
this totals $51.2k.  Then I had some deductible college expenses, and  capital losses. That's all subtracted
from gross income. if I grossed 70k, the tax would be $1845. Or 2.6%.
 My big nut is SS and Medicare tax, 15.2%* of the gross, couple of little adjustments but not much.
 Things will be worse this year, two of my exemptions are gone and no college expenses.
*I'm self employed.

Sorry but I am a simple man and still do math the simple way.
So for me tax % = total amount of taxes I pay / my income.
So if you pay $1850 + SS and Medicare you are not paying 2.6%, you are paying around 18%.
If it seems fair to you that while making $70 k per year you pay slightly more  compared to the 0.1% (not sure about their numbers, but I assume they make at least 30 times what you do) then good for you.

I still consider the math to be slightly weird.

 Yes, I thought someone would throw SS into the tax basket.
In my case, assuming I live a full life, I will get back more than I paid into the SS system.
My numbers need updating and are somewhat generous, But, I've paid about $100k to SS.(including employers)
At retirement I'll receive $21k per year, so in 5 years I will get back all the money I paid in.
 I do understand if I had kept the money I would have earned interest over those many years,
and would have much more money. I also have a disability policy lumped into my SS payments and
payments to my kids if I die early.
 I place SS payments into a different position than Federal income taxes.
 Not that I like the system, but it has helped many, many people who would have been destitute without it.
(My parents)
  Your same argument is used to say the poor pay high payroll taxes, no, the pay for a disability policy and a retirement policy.
Then many get money back as the earned income tax credit.

Seppia

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FairTax-- Flat Tax Comments
« Reply #57 on: August 11, 2015, 09:14:37 AM »
I don't think you are paying attention to what I've been saying. There is nothing that could be done to make the 'progressive' tax system in the US worse than it is now, because the rich already don't pay hardly anything.  And it is not really possible for them to pay less than I do.  That was my point.  I've set up my finances in such a way, that I, personally, pay zero income taxes to the federal government.  And I do so quite legally, by taking advantage of the numerous exemptions and deductions that both parties have carved out for their special interests.  I pay nothing beyond my FICA taxes, which is less than what Rand Paul's Fair&Flat plan would cost me.  It's not material if the top tax rate is 38% or 90%, if even the wealthiest of people can avoid those rates with massive exceptions and deductions.  There are entire sections of this forum dedicated to the concept of paying zero taxes in retirement!  No, that's not fair; but it is so.

Then you and I have a different idea of math.
I personally do not care what the name of the tax is, just the total % of income.
If I recall correctly in a previous post of yours you were stating that your income tax is 2.6% and the other (such as SS) accounted for 15% and change.
Total: 18% of what you make goes in taxes.
The super rich pay less than that, because SS taxes are capped to an amount that is trivial to them (not to you).
Saying that you pay "nothing" and conveniently forgetting the 15% and change is... Uh... Strange?
Plus: I am happy you manage to do that but most employees (like me) pay significantly more than the "nothing" you pay, rendering the comparison with the uber wealthy (who ALL pay much lower %) even more obscene.

We agree on the fact that today's system is unfairly rigged (to favor the very rich), I would just avoid any new system that would further lower their % of taxation.

If the flat tax proposal is to treat capital gains like income then count me in, that would mean a significant increase in taxation for the super rich.
I don't know why but I'm not super confident that's the proposal.
« Last Edit: August 11, 2015, 09:16:27 AM by Seppia »

MoonShadow

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Re: FairTax-- Flat Tax Comments
« Reply #58 on: August 11, 2015, 11:53:46 AM »
I don't think you are paying attention to what I've been saying. There is nothing that could be done to make the 'progressive' tax system in the US worse than it is now, because the rich already don't pay hardly anything.  And it is not really possible for them to pay less than I do.  That was my point.  I've set up my finances in such a way, that I, personally, pay zero income taxes to the federal government.  And I do so quite legally, by taking advantage of the numerous exemptions and deductions that both parties have carved out for their special interests.  I pay nothing beyond my FICA taxes, which is less than what Rand Paul's Fair&Flat plan would cost me.  It's not material if the top tax rate is 38% or 90%, if even the wealthiest of people can avoid those rates with massive exceptions and deductions.  There are entire sections of this forum dedicated to the concept of paying zero taxes in retirement!  No, that's not fair; but it is so.

Then you and I have a different idea of math.
I personally do not care what the name of the tax is, just the total % of income.
If I recall correctly in a previous post of yours you were stating that your income tax is 2.6% and the other (such as SS) accounted for 15% and change.
Total: 18% of what you make goes in taxes.


Actually, my net tax rate, including everything that goes to the federal government, is just over 7%.  That includes FICA as well as state income taxes, but does not include my property taxes, which are substantial, honestly.

Quote
The super rich pay less than that, because SS taxes are capped to an amount that is trivial to them (not to you).

The Fair&Flat tax would effectively remove that cap as well.

Quote
Saying that you pay "nothing" and conveniently forgetting the 15% and change is... Uh... Strange?
Plus: I am happy you manage to do that but most employees (like me) pay significantly more than the "nothing" you pay, rendering the comparison with the uber wealthy (who ALL pay much lower %) even more obscene.


And that is exactly my point.  As a net total tax rate, the average wealthy person pays less than the FICA rate.  I know this because I use many of the same tricks to do the same thing.  I can't say with any certainty that the wealthy will pay more on net or not, but they won't pay less.

Quote

We agree on the fact that today's system is unfairly rigged (to favor the very rich), I would just avoid any new system that would further lower their % of taxation.


It also favors the very (income) poor, which is one reason it so favors the early retiree.  Agree with it or not, it's basicly the middle class that pays for everything that matters, from infrastructure to education.

Quote
If the flat tax proposal is to treat capital gains like income then count me in, that would mean a significant increase in taxation for the super rich.
I don't know why but I'm not super confident that's the proposal.

I am.  It's right there in the press release.  The Fair and Flat tax is exactly what you are looking for, and that is what I've been trying to tell you....

"I devised a 21st-century tax code that would establish a 14.5% flat-rate tax applied equally to all personal income, including wages, salaries, dividends, capital gains, rents and interest. All deductions except for a mortgage and charities would be eliminated. The first $50,000 of income for a family of four would not be taxed. For low-income working families, the plan would retain the earned-income tax credit."

https://randpaul.com/news/rand-pauls-fair-and-flat-tax

This would effectively double my net tax rate.

EricP

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Re: FairTax-- Flat Tax Comments
« Reply #59 on: August 11, 2015, 12:10:20 PM »
If it's harder for poor people to move up in quintile than it is for rich people to avoid moving down in quintile,

Statistics about the mobility in the US, across generations, suggest that this is not the case...

"According to a 2012 Pew Economic Mobility Project study[14] 43% of children born into the bottom quintile remain in that bottom quintile as adults. Correspondingly, 40% of children raised in the top quintile will remain there as adults."

https://en.wikipedia.org/wiki/Socio-economic_mobility_in_the_United_States#Intragenerational_mobility

Note the "if:" I wasn't saying that it is the case now; I was saying that if we had a flat tax it would become the case.

Your attempt at a rebuttal (to an argument I didn't actually make) is not evidence that a flat tax would work okay; it's actually evidence that our progressive taxation system is working!

And even then, it's only barely doing so, given that the other results mentioned in that section of the article showed even less mobility than the statement you quoted. Also, that study is for the 1996-2005 time period; I wonder what the percentages were for other time periods (such as 1946-1955).

Quote
then wealth will become increasingly concentrated and society will eventually collapse.

Your conclusion does not follow your assumptions.  The condition that you suggest was the norm in Western Europe for centuries, yet society typically did not collapse as an obvious or direct result.  Now, that may have been a contributing factor in the actual social breakdowns that did occur, but I wouldn't assume that, and you didn't offer any evidence to support your opinion.  You simply stated it as a given.

  • Fall of Rome
  • French Revolution
  • Soviet Revolution
  • Feudalism in general (as an example of the mode where the rich sociopaths maintain their power through violence and oppression)

And were the French and Soviet revolutions the exception, not the norm?  Every other country moved from feudal monarchy to a democratic country with a lot fewer heads on spikes, sure you had the 1848 revolutions and such, but those are hardly "societal collapse" and "dystopia."   Yes there were some big wars in there that facilitated a change by an outside party, but I'm still sticking with my proposition that as long as the masses are moving up in absolute terms, then it's irrelevant what the wealth disparity is doing, because America today is one of the most inequal places that has ever existed and yet we're still a long way from heads being on spikes.  And it's primarily because QoL is still going up for the majority of the population.

nobodyspecial

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Re: FairTax-- Flat Tax Comments
« Reply #60 on: August 11, 2015, 12:32:57 PM »
Quote
"I devised a 21st-century tax code that would establish a 14.5% flat-rate tax applied equally to all personal income, including wages, salaries, dividends, capital gains, rents and interest. All deductions except for a mortgage and charities would be eliminated.
The problem is that you have to make it global or the really rich don't pay anything.

I simply renounce my  US citizenship, visit my US home for 182 days each year and have all my income paid into my Swiss bank.

Or I have only $50K income but my $MM home is owned by my Swiss corporation who employs me as a corporate ambassador so that everything I do and everywhere I go is a marketing activity and they pick up the tab.




MoonShadow

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Re: FairTax-- Flat Tax Comments
« Reply #61 on: August 11, 2015, 01:14:04 PM »
Quote
"I devised a 21st-century tax code that would establish a 14.5% flat-rate tax applied equally to all personal income, including wages, salaries, dividends, capital gains, rents and interest. All deductions except for a mortgage and charities would be eliminated.
The problem is that you have to make it global or the really rich don't pay anything.


If said rich are US citizens, it's already global.  US tax law doesn't give a rat's ass where the money exists, or what nation also claims it. Even renoucing doesn't work, because there is a huge exit tax.

nobodyspecial

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Re: FairTax-- Flat Tax Comments
« Reply #62 on: August 11, 2015, 02:09:57 PM »
Even renoucing doesn't work, because there is a huge exit tax.
Presumably the IRS should watch out for anybody looking like Charlton Heston and carrying stone tablets - "Let my people go"
Although parting the Caribbean on their way to an offshore tax haven would be cool.

birdman2003

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Re: FairTax-- Flat Tax Comments
« Reply #63 on: August 12, 2015, 09:35:59 PM »
For those of you in favor of "poor" people (are there really poor people in the USA compared to other countries?) getting more money, instead of favoring a government that takes it by force from those with money; why not just work extra hard and then give your extra money directly to them?  Why do you need a government involved to transfer money to "poor" people?

Oh that's right.  It's not your money you want to give to them, you want to give them other people's ("rich" people's) money.

Also good to remember that wealth is not a zero-sum game.

Druid

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Re: FairTax-- Flat Tax Comments
« Reply #64 on: August 12, 2015, 09:41:31 PM »

My personal view is that taxes in the U.S. are already low enough, I would just start considering capital gains like ordinary income and keep the progressive taxation in place.
This way you would close the obscene loophole allowing the uber-wealthy to pay less taxes than you and I.

  I think the capital gains tax treatment enables the middleclass to build wealth,
if that is what they put effort into. Most Americans spend all they get.

99 percent of the middle class cannot afford to invest more than the $18500 and $5500 allowed for retirement accounts. The capital gain rates help very little middle class people. Early retirees represent 0.000001 percent of the middle class population(yes I pulled that number from my ass). The average middle class person works pay check to pay check. Capital gain rates mainly help the rich.

Runge

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Re: FairTax-- Flat Tax Comments
« Reply #65 on: August 12, 2015, 10:01:03 PM »

My personal view is that taxes in the U.S. are already low enough, I would just start considering capital gains like ordinary income and keep the progressive taxation in place.
This way you would close the obscene loophole allowing the uber-wealthy to pay less taxes than you and I.

  I think the capital gains tax treatment enables the middleclass to build wealth,
if that is what they put effort into. Most Americans spend all they get.

99 percent of the middle class cannot afford to invest more than the $18500 and $5500 allowed for retirement accounts. The capital gain rates help very little middle class people. Early retirees represent 0.000001 percent of the middle class population(yes I pulled that number from my ass). The average middle class person works pay check to pay check. Capital gain rates mainly help the rich.

Can the "99%" not afford it because of "the system" or is it because of their own personal choices in life? I'd have to say primarily the latter for the vast majority of cases.

Seppia

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Re: FairTax-- Flat Tax Comments
« Reply #66 on: August 12, 2015, 10:03:05 PM »

For those of you in favor of "poor" people (are there really poor people in the USA compared to other countries?) getting more money,

Yes there are poor people in the U.S. , which planet do you live on?

instead of favoring a government that takes it by force from those with money; why not just work extra hard and then give your extra money directly to them? 

Who tells you some don't do this already?

Why do you need a government involved to transfer money to "poor" people?

Because of people like you

Seppia

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Re: FairTax-- Flat Tax Comments
« Reply #67 on: August 12, 2015, 10:06:05 PM »


My personal view is that taxes in the U.S. are already low enough, I would just start considering capital gains like ordinary income and keep the progressive taxation in place.
This way you would close the obscene loophole allowing the uber-wealthy to pay less taxes than you and I.

  I think the capital gains tax treatment enables the middleclass to build wealth,
if that is what they put effort into. Most Americans spend all they get.

99 percent of the middle class cannot afford to invest more than the $18500 and $5500 allowed for retirement accounts. The capital gain rates help very little middle class people. Early retirees represent 0.000001 percent of the middle class population(yes I pulled that number from my ass). The average middle class person works pay check to pay check. Capital gain rates mainly help the rich.

Can the "99%" not afford it because of "the system" or is it because of their own personal choices in life? I'd have to say primarily the latter for the vast majority of cases.

Seems like a dangerous way to go about it.
We could tax capital gains above $100000 per year 90% and then say "hey they could get by anyways, do they really need the mega mansion in the hamptons?"

Runge

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Re: FairTax-- Flat Tax Comments
« Reply #68 on: August 12, 2015, 10:30:20 PM »


My personal view is that taxes in the U.S. are already low enough, I would just start considering capital gains like ordinary income and keep the progressive taxation in place.
This way you would close the obscene loophole allowing the uber-wealthy to pay less taxes than you and I.

  I think the capital gains tax treatment enables the middleclass to build wealth,
if that is what they put effort into. Most Americans spend all they get.

99 percent of the middle class cannot afford to invest more than the $18500 and $5500 allowed for retirement accounts. The capital gain rates help very little middle class people. Early retirees represent 0.000001 percent of the middle class population(yes I pulled that number from my ass). The average middle class person works pay check to pay check. Capital gain rates mainly help the rich.

Can the "99%" not afford it because of "the system" or is it because of their own personal choices in life? I'd have to say primarily the latter for the vast majority of cases.

Seems like a dangerous way to go about it.
We could tax capital gains above $100000 per year 90% and then say "hey they could get by anyways, do they really need the mega mansion in the hamptons?"

Yeah, that's not at all what I'm saying. Current tax code rewards those who invest long term, but large amounts of people would rather spend $1500+ a month on food, gas, coffee, tv, and overly large vehicles.

Cathy

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Re: FairTax-- Flat Tax Comments
« Reply #69 on: August 12, 2015, 10:46:57 PM »
...Even renoucing doesn't work, because there is a huge exit tax.

The expatriation tax is widely misunderstood. It essentially requires you to "settle up" with the US by paying tax on unrealised capital gains and deferred tax items. Subject to conditions, part or all of the tax can be deferred until the income is actually realised. There is also a generous deduction that you can take against the amounts subject to the expatriation tax ($680,000 for 2014). See 26 USC § 877A.

...I simply renounce my  US citizenship, visit my US home for 182 days each year...

(Emphasis added.)

Watch out for the following:
  • If you "renounce" US citizenship "for the purpose of avoiding taxation", you might not be able to enter the US ever again, let alone for 182 days each year. See 8 USC § 1182(a)(10)(E). (Note that that only applies to renunciation, not other ways of relinquishing US citizenship.)
  • If you spend 182 days per year in the US, subject to certain exceptions you will in due course be a resident of the US within the meaning of 26 USC § 7701(b)(3) and be subject to income tax on worldwide income, unless you can establish, among other things, that your "tax home" is in another country and that you have a closer connection to that foreign country than to the US. See 26 USC § 7701(b)(3)(B)(ii). This is not based on counting days. Given that your hypothetical plan involves your "home" being in the US, you might have trouble with this test.

There are also other potential issues, not discussed here, to consider with the proposed plan.
« Last Edit: August 12, 2015, 10:55:13 PM by Cathy »

birdman2003

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Re: FairTax-- Flat Tax Comments
« Reply #70 on: August 12, 2015, 11:08:25 PM »

For those of you in favor of "poor" people (are there really poor people in the USA compared to other countries?) getting more money,

Yes there are poor people in the U.S. , which planet do you live on?

instead of favoring a government that takes it by force from those with money; why not just work extra hard and then give your extra money directly to them? 


Who tells you some don't do this already?

Why do you need a government involved to transfer money to "poor" people?

Because of people like you

I noticed that you did not respond at all to my concluding points that

1. What you really want is for other people's money to be given to the "poor"

and

2. Wealth is not a zero-sum game
« Last Edit: August 12, 2015, 11:10:54 PM by birdman2003 »

Seppia

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FairTax-- Flat Tax Comments
« Reply #71 on: August 13, 2015, 05:49:04 AM »
1 yes of course I do. Not only "other people's" though. I live in the U.S. and I paid 37% total taxes last year.
I would just like those that make $10 millions per year (a little more than 50 times what my wife and I make combined) to pay something similar to what I pay and not 1/3
Being rich takes skill and persistence but also a certain amount of luck (being born in the right Country, or from the right parents, or other stuff).
Similarly, being poor is not only the result of laziness.
I bet if I were born in the projects from a couple of drug addict parents the odds of me doing what I do for a living would be significantly lower.
So yes, as I said in an earlier post, taxes should definitely be a mean to redistribute wealth across society.

2- transferring 1000$ from a person who would keep them in a bank account and giving them to someone who would immediately spend them to meet basic needs would actually help the economy.
On The Price Of Inequality, Stiglitz argues that a very unbalanced distribution of wealth within a Country is actually harmful for the economy, mainly because 1- the same money if kept by someone who doesn't need it at all would not be spent and thus reintroduced in the economy and 2- the hidden costs of poverty (health, police, etc).

I've always said this, the day I pay 5 million dollars in taxes I will be a very happy man.
« Last Edit: August 13, 2015, 06:36:59 AM by Seppia »

Druid

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Re: FairTax-- Flat Tax Comments
« Reply #72 on: August 13, 2015, 08:08:14 AM »

My personal view is that taxes in the U.S. are already low enough, I would just start considering capital gains like ordinary income and keep the progressive taxation in place.
This way you would close the obscene loophole allowing the uber-wealthy to pay less taxes than you and I.

  I think the capital gains tax treatment enables the middleclass to build wealth,
if that is what they put effort into. Most Americans spend all they get.

99 percent of the middle class cannot afford to invest more than the $18500 and $5500 allowed for retirement accounts. The capital gain rates help very little middle class people. Early retirees represent 0.000001 percent of the middle class population(yes I pulled that number from my ass). The average middle class person works pay check to pay check. Capital gain rates mainly help the rich.

Can the "99%" not afford it because of "the system" or is it because of their own personal choices in life? I'd have to say primarily the latter for the vast majority of cases.
.

I would say that a lot of middle class cannot afford to put away much more than that. That would be close to a 50 percent saving rate for a couple making 100k and a 33 percent saving rate for a couple making $150000 k a year .People who make more than that may be able to save more,but I think when you get to the $150,000 k range your considered wealthy. I don't think we should design a tax system based on everyone following the frugal life style.

The point I was trying to make was that  the 401k and Ira benefits alone provide enough opportunities for the middle class to save for a lavish retirement. Capital gains will not impact the TYPICAL middle class retiree who is drawing income from Roth and traditional retirement plans. I would say that favorable capital gain rates do not help the middle class to an extent that helps them climb out of poverty or to a level that affects their quality of life(early retirees aside). The major exception being a home owner selling a home here and there.

When you have salaries taxed at a higher rate then investments there is inequality. Moreover income is a arbitrary thing to tax. The fairest tax system would tax wealthy people who generate their wealth from investments at a rate that is at least as high as the income tax of a middle class family. The 1 percent are not taxed fairly because they are only taxed on a the income component of their wealth generation, which is often the smallest component of their wealth building tools. In the meantime billions of dollars are sitting in investments compounding. At some point the heirs of these people  will be able to buy and own most everything.
« Last Edit: August 13, 2015, 08:34:04 AM by Druid »

tjalexander

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Re: FairTax-- Flat Tax Comments
« Reply #73 on: August 13, 2015, 08:17:46 AM »
.
I bet if I were born in the projects from a couple of drug addict parents the odds of me doing what I do for a living would be significantly lower.
So yes, as I said in an earlier post, taxes should definitely be a mean to redistribute wealth across society.

2- transferring 1000$ from a person who would keep them in a bank account and giving them to someone who would immediately spend them to meet basic needs would actually help the economy.
On The Price Of Inequality, Stiglitz argues that a very unbalanced distribution of wealth within a Country is actually harmful for the economy, mainly because 1- the same money if kept by someone who doesn't need it at all would not be spent and thus reintroduced in the economy and 2- the hidden costs of poverty (health, police, etc).
Great, I just gave you $1000 and now you will do drugs with it (since you were born to drug addict parents).

Seppia

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Re: FairTax-- Flat Tax Comments
« Reply #74 on: August 13, 2015, 08:56:20 AM »

.
I bet if I were born in the projects from a couple of drug addict parents the odds of me doing what I do for a living would be significantly lower.
So yes, as I said in an earlier post, taxes should definitely be a mean to redistribute wealth across society.

2- transferring 1000$ from a person who would keep them in a bank account and giving them to someone who would immediately spend them to meet basic needs would actually help the economy.
On The Price Of Inequality, Stiglitz argues that a very unbalanced distribution of wealth within a Country is actually harmful for the economy, mainly because 1- the same money if kept by someone who doesn't need it at all would not be spent and thus reintroduced in the economy and 2- the hidden costs of poverty (health, police, etc).
Great, I just gave you $1000 and now you will do drugs with it (since you were born to drug addict parents).

This is probably one of the stupidest comments I have read in my life.
The $1000 in taxes serve (for example) the purpose of paying schools, so that the kid of drug addict parents gets an education and hopefully escapes the negative spiral.

Jeremy E.

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Re: FairTax-- Flat Tax Comments
« Reply #75 on: August 13, 2015, 01:24:14 PM »
The "fair" and "flat" tax proposals are just different code words for dramatically cutting taxes on the rich and significantly increasing taxes on the poor and middle class. It's the same agenda but dressed up with different words.

Ding, ding we have a winner. IMHO the only republican who has a legit shot to win the presidency is John Kasich due to the fact that he chaired the finance committee that balanced the budget under Clinton (works with opponents) and he accepted Medicaid expansion in Ohio (pragmatist) as well as took a $5 billion Ohio deficit and turned it into a $2 billion surplus while lowering taxes and lowering unemployment below the national average and raising median income. His record is pretty much as stellar as possible.
$8 billion Ohio deficit***

wienerdog

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Re: FairTax-- Flat Tax Comments
« Reply #76 on: August 13, 2015, 07:28:24 PM »

Buffett himself was saying that it's pretty ridiculous that his tax rate is around HALF what his secretary's is (or something similar).

Remember this was done for nothing more than politics and this was hardly true. Don't fall for politics as they never speak the truth.  They only want to to get people to act on emotion.  If a politician is showing you numbers... they are only showing you the numbers they want you to see.  Why didn't he include the $1.6 billion he paid in taxes as 34% stake holder in Berkshire?  If you want to take it a step farther he also paid ~$400 million for his employee share of FICA that he as company owner has to match.   In reality he pays 10 to 15 percentage points more of his income in taxes than his employees or secretary.

Just wondering why you think the government can do better with all that money he pays in taxes than Warren can himself?  I would rather see him inject that capital into the real economy that is going to create jobs with something like Precision Castparts.  People like Warren create jobs with their money not the government that takes the money.  In 2010 he also donated $1.9 billion to charities. 

“The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of Socialism is the equal sharing of miseries.”  Winston Churchill

matchewed

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Re: FairTax-- Flat Tax Comments
« Reply #77 on: August 13, 2015, 07:33:48 PM »

Buffett himself was saying that it's pretty ridiculous that his tax rate is around HALF what his secretary's is (or something similar).

Remember this was done for nothing more than politics and this was hardly true. Don't fall for politics as they never speak the truth.  They only want to to get people to act on emotion.  If a politician is showing you numbers... they are only showing you the numbers they want you to see.  Why didn't he include the $1.6 billion he paid in taxes as 34% stake holder in Berkshire?  If you want to take it a step farther he also paid ~$400 million for his employee share of FICA that he as company owner has to match.   In reality he pays 10 to 15 percentage points more of his income in taxes than his employees or secretary.

Just wondering why you think the government can do better with all that money he pays in taxes than Warren can himself?  I would rather see him inject that capital into the real economy that is going to create jobs with something like Precision Castparts.  People like Warren create jobs with their money not the government that takes the money.  In 2010 he also donated $1.9 billion to charities. 

“The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of Socialism is the equal sharing of miseries.”  Winston Churchill

Because Buffett is not the same entity as Berkshire Hathaway...

Telecaster

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Re: FairTax-- Flat Tax Comments
« Reply #78 on: August 13, 2015, 11:20:01 PM »
Just wondering why you think the government can do better with all that money he pays in taxes than Warren can himself?  I would rather see him inject that capital into the real economy that is going to create jobs with something like Precision Castparts.  People like Warren create jobs with their money not the government that takes the money.  In 2010 he also donated $1.9 billion to charities. 

And note that the guy who is creating jobs and donating to charities disagrees with you. 

Seppia

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Re: FairTax-- Flat Tax Comments
« Reply #79 on: August 13, 2015, 11:35:57 PM »
Additional point: if everybody were like Buffet I would indeed lower taxes.
The guy is out there to create real value (not speculate) and has pledged to give back something around 99% of his net worth when he dies.
He will eventually redistribute much more than the most punitive tax system would ever do.
Issue is: there's very few people like him, on every possible level.

wienerdog

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Re: FairTax-- Flat Tax Comments
« Reply #80 on: August 14, 2015, 08:57:13 AM »

And note that the guy who is creating jobs and donating to charities disagrees with you.

You should study American politics a little more.  They all do scratch my back and I'll scratch yours.  Buffet buying buying Burlington Northern for $34 billion at the time he did was no fluke.

BTDretire

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Re: FairTax-- Flat Tax Comments
« Reply #81 on: August 14, 2015, 09:55:19 AM »
Seems like a dangerous way to go about it.
We could tax capital gains above $100000 per year 90% and then say "hey they could get by anyways, do they really need the mega mansion in the hamptons?"

 Hey, my daddy and his coworkers built that house in the Hamptons!
 You want to take away my daddy's middleclass income?

Seppia

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FairTax-- Flat Tax Comments
« Reply #82 on: August 14, 2015, 11:52:36 AM »
Seems like a dangerous way to go about it.
We could tax capital gains above $100000 per year 90% and then say "hey they could get by anyways, do they really need the mega mansion in the hamptons?"

 Hey, my daddy and his coworkers built that house in the Hamptons!
 You want to take away my daddy's middleclass income?

Mine was clearly a hyperbole.
As already pointed out in other threads though, the argument "taxes de-incentivize consumption and/or additional worked hours" is pretty obvious, but it's clearly the wrong way to look at it.
OBVIOUSLY people would spend more if they paid zero taxes.
Thing is, taxes are needed for stuff that's kind of fundamental for many things, including a flourishing economy (example: we all pay zero taxes but since the government has no money they do not build roads, so we can't transport the goods farther than 20 miles from production site), a safe Country (police, which by the way is kinda needed also for a good economy, ask people in mafia states like Kosovo how they're doing) etc.

So again "hey if we lifted taxes people would have more to spend" isn't really a compelling argument per se

Jeremy E.

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Re: FairTax-- Flat Tax Comments
« Reply #83 on: August 14, 2015, 12:00:33 PM »
Seems like a dangerous way to go about it.
We could tax capital gains above $100000 per year 90% and then say "hey they could get by anyways, do they really need the mega mansion in the hamptons?"

 Hey, my daddy and his coworkers built that house in the Hamptons!
 You want to take away my daddy's middleclass income?

Mine was clearly a hyperbole.
As already pointed out in other threads though, the argument "taxes de-incentivize consumption and/or additional worked hours" is pretty obvious, but it's clearly the wrong way to look at it.
OBVIOUSLY people would spend more if they paid zero taxes.
Thing is, taxes are needed for stuff that's kind of fundamental for many things, including a flourishing economy (example: we all pay zero taxes but since the government has no money they do not build roads, so we can't transport the goods farther than 20 miles from production site), a safe Country (police, which by the way is kinda needed also for a good economy, ask people in mafia states like Kosovo how they're doing) etc.

So again "hey if we lifted taxes people would have more to spend" isn't really a compelling argument per se
Yes roads, schools, military (not as big as what we have), police, libraries, etc. are necessary. But Social Security (of course you can't stop it immediately, but you can phase it out over time), Obamacare, a HUGE military, subsidizing companies, bailouts, most government workers (we do need a few) and many other things are not. We could decrease are taxes while also spending so much less that the government could have a balanced budget and stop going into debt. States can then have their own entitlements if they choose, that way if someone wants to be a socialist they can move to california and have the state charge the crap out of you, or you can move to a capitalist state and have the bare minimum covered and pay for everything yourself.

Seppia

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Re: FairTax-- Flat Tax Comments
« Reply #84 on: August 14, 2015, 12:04:07 PM »
I'll just point out that the U.S. is one of the civilized Countries with the lowest amount of taxes around.

Jeremy E.

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Re: FairTax-- Flat Tax Comments
« Reply #85 on: August 14, 2015, 12:14:51 PM »
I'll just point out that the U.S. is one of the civilized Countries with the lowest amount of taxes around.
Yep, I think that's the exact reason MMM came here, less taxes = more money in his pocket, and he can provide for himself the socialist crap that the government of canada supplies for him for cheaper than the taxes. Same with most entitlements in the US for most people I'd say.

Seppia

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Re: FairTax-- Flat Tax Comments
« Reply #86 on: August 14, 2015, 12:41:28 PM »
?
It's exactly what I was saying.
I wouldn't complain about the tax level in the U.S., it's already super low.
I'm not the one complaining about how high taxes are here, because they are obviously not

MoonShadow

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Re: FairTax-- Flat Tax Comments
« Reply #87 on: August 14, 2015, 01:21:58 PM »

Yes roads, schools, military (not as big as what we have)

As far as actual numbers of people, our active military is about as small as it has ever been since WW2.  Still the second largest standing army on Earth, but still...

Jeremy E.

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Re: FairTax-- Flat Tax Comments
« Reply #88 on: August 14, 2015, 01:38:07 PM »

Yes roads, schools, military (not as big as what we have)

As far as actual numbers of people, our active military is about as small as it has ever been since WW2.  Still the second largest standing army on Earth, but still...
Okay? Regardless, in my opinion, are budget is bigger than it should be.

MoonShadow

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Re: FairTax-- Flat Tax Comments
« Reply #89 on: August 14, 2015, 02:02:24 PM »

Yes roads, schools, military (not as big as what we have)

As far as actual numbers of people, our active military is about as small as it has ever been since WW2.  Still the second largest standing army on Earth, but still...
Okay? Regardless, in my opinion, are budget is bigger than it should be.

Oh, I agree with that.

wienerdog

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Re: FairTax-- Flat Tax Comments
« Reply #90 on: August 14, 2015, 03:24:56 PM »

I wouldn't complain about the tax level in the U.S., it's already super low.


Not corporate before all the deductions.  That is why GE employs 1000 "specialist" (read former government IRS employees) to work on their tax bill to make it competitive with the rest of the free world.  It takes lobbyists to get deductions and specialist to weed through the US tax code.

http://www.reuters.com/article/2015/08/14/us-usa-tax-c-corp-idUSKCN0QI2LK20150814

Edit: employees to employs
« Last Edit: August 14, 2015, 03:27:14 PM by wienerdog »

Cathy

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Re: FairTax-- Flat Tax Comments
« Reply #91 on: August 14, 2015, 10:13:14 PM »
...Yep, I think that's the exact reason MMM came here, less taxes = more money in his pocket, and he can provide for himself the socialist crap that the government of canada supplies for him for cheaper than the taxes. ...

This was true when MMM left Canada, but shortly after, the federal government and every province reformed their various tax laws. For most of the last decade, assuming one's income is sufficiently high, the total tax burden in the province of Alberta has been lower than anywhere in the US, even states with no income tax. Most other provinces are competitive with the US, and some are lower at various income levels.

A big part of the reason that healthcare is relatively cheap in Canada is that every province has established a regime of price controls for medical services within that province. In Alberta, every physician is deemed to opt into a collective bargaining price scheme, unless they act to opt out within strict timelines. Alberta Health Care Insurance Act, RSA 2000, c A-20 ("AHCIA"), § 8(1). Physicians who have opted in cannot charge more than the government-prescribed prices. AHCIA § 9(1). For emergency services, a physician can only charge the government-negotiated prices even if the physician has otherwise opted out of the plan. AHCIA § 10. Physicians who have opted out must advise prospective patients, prior to providing any services, that the services will not be covered by insurance and that the patient must pay out of pocket. AHCIA § 15(1). A private insurance company cannot offer coverage that would cover costs at a physician who has opted out of the government-negotiated prices. AHCIA § 26(2).

I think it's fair to call the above scheme "socialist", but the key observation is that it works by keeping prices down through a regime of government intervention. As such, the actual cost of the system is low, and it does not require high taxes to sustain. As mentioned, Alberta has had lower taxes than anywhere in the US for the last decade, for people whose income exceeds a certain threshold.

That all said, the US is still arguably a better place to accumulate money than Canada because tax rates are not the only relevant variable.
« Last Edit: August 14, 2015, 11:00:29 PM by Cathy »

BTDretire

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Re: FairTax-- Flat Tax Comments
« Reply #92 on: August 15, 2015, 12:35:28 PM »
Seems like a dangerous way to go about it.
We could tax capital gains above $100000 per year 90% and then say "hey they could get by anyways, do they really need the mega mansion in the hamptons?"

 Hey, my daddy and his coworkers built that house in the Hamptons!
 You want to take away my daddy's middleclass income?

Mine was clearly a hyperbole.

OK, my daddy didn't really build the mansion either, so mine also was hyperbole.
But he was a carpenter!

clarkevii

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Re: FairTax-- Flat Tax Comments
« Reply #93 on: August 16, 2015, 07:35:20 PM »
I for one LOVE the tax code in this country. My wife and I will make +110k this year. We will pay about 3.5% in taxes. We both contribute heavily to a 403b and 457. We do not even have to contribute to social security and no state income taxes either!

Our tax code rewards middle class savers and punishes consumers. IMOP that is exactly how it should be. You basically choose your tax rate. How can it get any better than this?

nobodyspecial

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Re: FairTax-- Flat Tax Comments
« Reply #94 on: August 16, 2015, 08:32:29 PM »
OK, my daddy didn't really build the mansion either,
But he was a carpenter!
It thought it was the father's house that had many mansions - the son was a carpenter.

See I didn't sleep through every sunday.

okonumiyaki

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Re: FairTax-- Flat Tax Comments
« Reply #95 on: August 16, 2015, 11:01:45 PM »
I live & work in HK, that has a very simple flat tax rate (and no tax on dividends or capital gains)

But - it is a city, not a country, and there is massive subsididy for anyone below median income (50% of HK population live in govt housing, and by law the maximum rent is 10% of median family income, so about 200 USD a month)  Even then, we are starting to see real cracks in society (the occupy movement)  For the first generation immigrants, yes, everyone started with zero.  But after couple of generations, a few mega rich families now have the city sewn up, and are pulling up the ladder behind them.

MoonShadow

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Re: FairTax-- Flat Tax Comments
« Reply #96 on: August 17, 2015, 12:30:28 PM »
I live & work in HK, that has a very simple flat tax rate (and no tax on dividends or capital gains)

But - it is a city, not a country, and there is massive subsididy for anyone below median income (50% of HK population live in govt housing, and by law the maximum rent is 10% of median family income, so about 200 USD a month) Even then, we are starting to see real cracks in society (the occupy movement)  For the first generation immigrants, yes, everyone started with zero.  But after couple of generations, a few mega rich families now have the city sewn up, and are pulling up the ladder behind them.

Do dividends or capital gains count at income for the subsidy?   Or can a rich HK resident who has only dividends and/or capital gains get that subsidy also?

Jack

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Re: FairTax-- Flat Tax Comments
« Reply #97 on: August 17, 2015, 12:39:15 PM »
I for one LOVE the tax code in this country. My wife and I will make +110k this year. We will pay about 3.5% in taxes. We both contribute heavily to a 403b and 457. We do not even have to contribute to social security and no state income taxes either!

Our tax code rewards middle class savers and punishes consumers. IMOP that is exactly how it should be. You basically choose your tax rate. How can it get any better than this?

First of all, at $110K household income you are above the 80th percentile and thus not actually "middle class." (I think a lot of people on this site fail to realize just how poor the real American middle class actually is: the 20th percentile -- the dividing line between middle class and "the poor" -- is just barely above $25K.)

Second, you can't assume everyone even at your income level is as lucky as you when it comes to taxes. My wife and I might end up making a similar amount of money this year (it's too uncertain to tell yet), but while you have two reasonably-good jobs with excellent benefits (allowing you to defer $83000), our income comes from one good job (mine) and a patchwork of relatively crap jobs (hers) and only I get benefits. That means we're only eligible to defer one 401K, one HSA, and our IRAs for a best-case total of $35650. That's a difference of several thousand dollars in taxes on the same gross income.

nobodyspecial

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Re: FairTax-- Flat Tax Comments
« Reply #98 on: August 17, 2015, 03:27:33 PM »
If middle class in America is $25K - who are the working class?

MoonShadow

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Re: FairTax-- Flat Tax Comments
« Reply #99 on: August 17, 2015, 03:49:17 PM »
If middle class in America is $25K - who are the working class?

The "working class" is the three middle quintiles.