Taxes

4consideration said:

Are you in favor of the estate tax as it stands for 2012, and are you in favor of the estate tax as it now stands for 2013?

Why, or why not?

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I'm in favor of the estate tax as it now stands for 2013. The current $5 million exemption is, as far as I can tell, an unprecedented and unnecessary handout, and I suspect people will still survive on the $3 million exemption to take place in 2013, which is more in line with history.

No one wants to hear me blather on again about my tax structure proposals.
I don't even have the remotest effect on policy anyway.
But I can act regarding my participation:
- Hide income.
- Take every deduction. Make some up (properly documented, of course).
- Use freedom dollars (aka "cash") as much as possible.
- Keep up on tax law by regular planning sessions with my CPA
- Shift Schedule C income to Schedule E as much as possible.

Starve the beast!

Im against property taxes.

Iti oj said:

Im against property taxes.

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Join the club.
The Man wants ta bleed us.

Little known fact:
For those of us who invest heavily in collectible things (eg, antique engines, Hummel figurines),
the capital gains tax is the same rate as one's income tax. For me it's over 1/3 of my profit.
So when we hear about the capital gains tax rate in the news, it's only part of the story.

Useful strategy:
Carry forward losses for asset class may be used to offset gains from another asset class.
You betcha I'll take advantage of this bizarre loophole.

Revoltingest said:

Useful strategy:
Carry forward losses for asset class may be used to offset gains from another asset class.
You betcha I'll take advantage of this bizarre loophole.

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Can you please explain how that is a bizarre loophole? It sounds reasonable to me. Perhaps I've misunderstood.

i just read the first page but i go for a flat tax of what you make.so 5% out of a hundred is 5 dollars. 1 million 50,000 dollars. it seems the most far to me. i don't like the terrier system where you make 1 dollar more all of a sudden you pay much more in taxes and take home less...

The Sum of Awe said:

How do you go about taxes:
Free market tax cuts
Flat tax
Rich pays more
Poor pays more
Middle class pays more
Other

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You left out "evasion".
That's my favorite.
Starve the beast!
(They just waste it on someone else anyway.)

Mr Spinkles said:

Can you please explain how that is a bizarre loophole? It sounds reasonable to me. Perhaps I've misunderstood.

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Ref:
- The capital gains tax rate on stock is 15% (for this asset class).
- The capital gains tax rate on antique machinery is 33% (combined state & fed for this asset class).
- Capital losses can only be deducted from capital gains (not from ordinary income).
(Note: I'm ignorance pittance deductions simplicity's sake).

It's 2008. Suppose:
- You sold stock at about a $700,000 loss.
- You had no capital gains.
Result:
- You carry forward a $700,000 loss.

It's 2012. Suppose:
- You sold antique machinery for $500,000.
Result:
- You avoided 33% tax on $500,000 capital gain by using capital losses from an asset class which has a 15% tax rate.
- You still carry forward about $200,000 in capital losses.

Investing in collectibles is riskier & less profitable than stock or real estate because of the more punitive tax treatment.
Typically, they appreciate with inflation, so you only "profit" is just additional dollars required to make up for the loss
of value of currency due to inflation. One must invest carefully, so that appreciation greatly exceeds the inflation rate.
This is one of government's most insidious scams.....the "anti-loophole" or "pitfall" of paying income tax where there
was no actual economic income.

free market
cut taxes
phase out welfare to empower and strengthen the ngo
small government

Shuddhasattva said:

No taxes. No parasitical governance.

Government either makes its own money via the market place, or no government.

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I for one agree! ...aaaannd I would like to take this opportunity to say "Welcome!" to or new corporate overlords. :bow: :bow:



NOT! :slap:

PHOTOTAKER said:

i just read the first page but i go for a flat tax of what you make.so 5% out of a hundred is 5 dollars. 1 million 50,000 dollars. it seems the most far to me. i don't like the terrier system where you make 1 dollar more all of a sudden you pay much more in taxes and take home less...

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This is a common misconception.
In the U.S., currently, we ALL use a progressive tax system.
-- the numbers in the following example are by no means precise --
The guy earning 45k a year pays nothing on his first 15k earned. Just like Romney (~ 15M / year); Small Business Owner SBO (100k after expenses); and just like that janitor dude earning 14k per year.

45k guy, SBO, and Romney pay 10% on their 16th through 20th K earned....11% on thousands 22 and 23.....12% on grand number 24....13% on etc...etc... Until it levels off at around 35% for the 100k SBO guy or SOME married doctors who earn 240k together each year.

SPOILER: So you, Romney, the doctors, 45k guy, and SBO man are ALL scoffing at their federal income taxes for their first earned 15k, just like that slacker, no-good, liberal elitist, latte sipping janitor. :faint:

People generally consider 'their tax rate' to be the percentage applied to their own highest portion of their own tax ladder. They often believe that they are paying that one percentage rate for every dollar they earn, and therefore, if they get a tiny raise, and accidentally drift into the 'next tax bracket' :cover:, they will actually lose more than their raise was worth. :no: :sorry1: Sorry. Not happening.

Penumbra said:

To make a consumption tax progressive, you just couple it with a prebate or exclude several types of items.

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You just hit the ball out of the park. A national sales tax that excludes food, cars under a certain amount, clothing, appliances that the middle class needs would be progressive and we could eliminate the IRS. Why tax income? Just tax capital gains and expenditures.

People who are struggling would get a larger take home pay and excluded being taxed when buying things their family needs.

Things could be much more simple.

Reverend Rick said:

You just hit the ball out of the park. A national sales tax that excludes food, cars under a certain amount, clothing, appliances that the middle class needs would be progressive and we could eliminate the IRS. Why tax income? Just tax capital gains and expenditures.

People who are struggling would get a larger take home pay and excluded being taxed when buying things their family needs.

Things could be much more simple.

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Has any pointy headed person run the numbers for such a scheme to see if it would take in a comparable amount of revenue?

The one flaw I see is that I could see it becoming a rather unweildy list, full of loopholes and unfathomable ommissions and inclusions. Trying to determine which things are tax free and which aren't would be like figuring out the fine print in health insurance claims.

Falvlun said:

Has any pointy headed person run the numbers for such a scheme to see if it would take in a comparable amount of revenue?
The one flaw I see is that I could see it becoming a rather unweildy list, full of loopholes and unfathomable ommissions and inclusions. Trying to determine which things are tax free and which aren't would be like figuring out the fine print in health insurance claims.

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You're correct that the political process would corrupt this approach, but the complexity couldn't be anywhere near what the IRS poses.

Jesus Falvlun, have you ever filed a long form tax return? My issue is, I am always trusting my accountants to know the ever changing tax laws and charts. We never have a sales tax return. The government cannot go back years and apply penalties and interest.

I can never really know for sure I have paid the correct tax.

This system that is suggested really soaks the rich if you think it through. They get taxed on capital gains because it is not income. Then when they buy a yacht or an expensive car, they get taxed again.

The old person who has capital gains gets taxed, but not again if they use the money to buy food, utilities and such to live on. That seems fair to me.

No one wants to take food out of a person's mouth. If you take a cruise or buy expensive jewelry, you get taxed.

Revoltingest said:

You're correct that the political process would corrupt this approach, but the complexity couldn't be anywhere near what the IRS poses.

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That is one of the things I do fault the government for: Making simple things unnecessarily, extraordinarily, ridiculously complex.

Reverend Rick said:

Jesus Falvlun, have you ever filed a long form tax return? My issue is, I am always trusting my accountants to know the ever changing tax laws and charts. We never have a sales tax return. The government cannot go back years and apply penalties and interest.

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That's a good point. It would nearly eliminate the need fill out long inscrutible forms. Taxes would be paid up front. Well, with the exception of capital gains taxes (and what about estate taxes, inheritence taxes, etc?)

With a simplified tax, not based upon income, the thought of all that free time and free (file) closet space makes me almost giddy.

And just to remind everyone again, capital gains tax should be indexed for inflation.
It's ridiculous to pay tax on nominal gain which is just extra dollars needed to offset the dollar's loss in value.

Inflation Calculator | Find US Dollar's Value from 1913-2012
Suppose:
You bought an asset in 1990 for 1,000,000.
You sold it in 2012 for $1,770,000.
You would be taxed on $770,000 of gain, even though it hadn't gone up in value at all.

Consider what would happen if gov eliminates the loophole for tax free gain on your home.
Suppose:
Your parents bought a home in 1970 for 100,000.
Your parents sell it in 2012 for $596,000.
They would be taxed on $496,000 of gain which is entirely due to the dollar's having lost most of its value.

Since inflation is created by the fed expanding the money supply faster than the economy grows, this amounts
to wealth confiscation. Moreover, it's imposed only upon those who need to sell. Those who don't sell their
assets, avoid the tax on phantom income.

Note: The above calculations would be much more complicated in the real world.
But this simplified approach fully illustrates the point.

Revoltingest said:

And just to remind everyone again, capital gains tax should be indexed for inflation.
It's ridiculous to pay tax on nominal gain which is just extra dollars needed to offset the dollar's loss in value.

Inflation Calculator | Find US Dollar's Value from 1913-2012
Suppose:
You bought an asset in 1990 for 1,000,000.
You sold it in 2012 for $1,770,000.
You would be taxed on $770,000 of gain, even though it hadn't gone up in value at all.

Consider what would happen if gov eliminates the loophole for tax free gain on your home.
Suppose:
Your parents bought a home in 1970 for 100,000.
Your parents sell it in 2012 for $596,000.
They would be taxed on $496,000 of gain which is entirely due to the dollar's having lost most of its value.

Since inflation is created by the fed expanding the money supply faster than the economy grows, this amounts
to wealth confiscation. Moreover, it's imposed only upon those who need to sell. Those who don't sell their
assets, avoid the tax on phantom income.

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If I understand you correctly, you would adjust capital gains computations adjusted by inflation. Is this correct. For example using your link:
Purchased a asset in 1981 for $80,000.00
Sold the asset in 1997 for $160,000.00
according to the "Inflation Calculator" the value of the 1981 asset in 1997 is $141,254.13.
Under current tax policies I would be paying capital gains on $80,000.00 ($160,000-$80,000)
Under your proposal I would pay capital gains on $18,754.87 ($160,000-$141,254.13)

This is an very interesting proposal. Now, the rate of inflation is based on the CPI and there are those that dispute how the CPI is calculated. From what I understand, the Federal Reserve uses "core CPI" as a measure of inflation. Core CPI is calculated by removing the cost of energy and agriculture from the calculations. Herein lies the problem. What would be the fairest method of computing the real value of a asset based on inflation?
However, I think you have an excellent idea.

Now, back to the Income Tax issue. We all know that the current Federal Tax Code is so complicated that there is not a single person that truly understands it. If you file a complicated federal tax return, you really do not know if it is correct. So, how do you fix it? That is the big question. There have been various ideas suggested, they range from a one tax fits all to a combination of various taxes. These include:
Flat Tax, VAT, Sales Tax, simplified present tax, and combinations of these with probably more ideas than listed here. The only problem is that any tax plan that one comes up with will hurt some and help others; that will be opposed by one group and supported by another, supported by one political party and opposed by another.
Question: Do you think that everyone in the US should pay some Income Tax into the Federal Government? After all, we do live here and shouldn't we help pay for the operation of the country? There is no way that anyone here can come up with a comprehensive tax plan. However, in my opinion everyone that has an income should pay something. Here in Idaho we have something called a "building tax". It is a set amount that anyone filling a return pays, in our case $10.00. What it is, is after completing the State form and computing if you pay or get money back the fixed tax is applied. It is either added to the amount you owe or subtracted from the amount of the return. Everyone has "skin in the game".