X Greetings! You are not currently logged in, but please don't let that stop you from voting up any videos you like. :)
|
| |
|
bareboards2 Member Profile Member Since: 2009-07-03 Last Power Points used: never • Available: now Max Power Points: 1 • Get More Power Points Now Comments 1 |
Subscribe Navigation
Member Stats Rank: no rank yet Rating: 
0 star pointsVotes Cast: 194 Comments Posted: 65 • browse Comments Applauded: 1 Profile Views: 1501 Highest Ranked Comments |
Videos Submitted by bareboards2
In reply to this comment by bareboards2:
I do taxes for a living, have done 35 years (I started young.) It is, indeed, horrible how complex the system has become during my lifetime.
Being on the "inside" so to speak, I also see WHY it has gotten so complex. A tax law is written, the smart folks figure out how to use it to avoid tax. So that "loophole" is plugged, the smart folks figure out how to work around that, and new laws are generated.
Some of those tax laws that are written were indeed intended to "socially engineer," a complexity that then begats more complexity. I don't think that is a bad thing, necessarily. My uber-conservative brother installed solar panels on his roof because the cost was offset by state and federal tax credits. He is now a net-producer of energy, rather than a consumer of energy (California buys back his unused energy produced.)
Some of the complexity is indeed region specific or industry specific and is a boondoggle of the worst ilk-- you can tell. I can't remember the details, but there was something that was passed a few years back -- some credit for airplanes (or something) built (or sold) for the very specific period of time. It was clearly crap, clearly designed for one company in a Congress member's district.
Can you say line item veto? That would cut down on a huge number of abuses on all levels, and make it clear some of the more egregious backroom deals that are going on.
As far as a flat tax, that is just insane. Example -- a family of four has wage income of $25,000. 10% flat tax is $2,500.
Or you have a family of four with wage income of $250,000 and interest and dividend income of $25,000. Their 10% comes to $27,500. That $2,500 is a much much bigger number to the first family of four than the $27,500 is to the second. How much in savings and stocks do you think $25,000 in interest and dividends represent???
What they don't say in the video is that most tax payers get the lower rates, too. The first chunk you make is taxed at 10%, the next at 15%. So most taxpayers enjoy the lower rates.
What pisses me off right now -- sorry to change the direction of the argument -- is the bowing down to capital at the expense of labor that is embodied in the current code. The last stage of Bush's tax cuts became activated this year.
I ran two scenarios through the tax software at work.
First scenario -- married couple, no children, $80,000 in wages, no itemized deductions (social engineering embodied). Their tax - including payroll taxes -- was $14,000 if memory serves. I know it was 18% of gross -- a tax rate that would be the envy of most other countries.
Second scenario -- married couple, no children, $80,000 in dividends from corporations. Same cash inflow, but from millions in stocks rather than going to work every day for 50 weeks out of the year. Their tax for the year? $200. TWO HUNDRED MEASLY BUCKS. I can't hardly stand it.
Bowing down to capital. Poor poor rich people who are taxed twice on dividends -- once at the corporate level and then again on a personal level. Let's spare them that horrifying situation, poor poor rich people.
Flat tax is horribly regressive. Sales tax is horribly regressive. The current code -- horribly complicated.
But remember, you folks who hate taxes so much -- remember where the internet started. It wouldn't be here without having been developed at the government level first. Roads. Schools. The university you went to.
But I'm not sure if it would work. It seems that my idealized simplicity doesn't exist.
I'm actually in favor of sales taxes. Then it becomes something you can control on a personal level to a degree. I didn't know that clothing was exempt; I thought only most food was exempt. I guess it makes sense, but I see the complexity that can introduce.
Thanks for responding to my question. It's been a pleasure. Welcome to the sift.
In reply to this comment by bareboards2:
bareboards2 about taxes again....
I think Warren Buffet was including payroll taxes -- until your wages get pretty far up there, folks pay 7.65%. I'm not 100% sure though -- the law is, as has been noted, horribly complex.
I don't know what the answer is. The truth is, any system is going to hurt some people more and benefit others. Nothing is perfectly fair. To me, you set the guidelines as best you can to minimize the disparity.
A flat tax and a sales tax I believe are inherently unfair -- unless you start bringing a load of complexity into it. Clothing is exempt -- but what about haute couture? Clothing bought in Europe and brought into our country? You start to create a new level of complexity on that.
Although I have done taxes for a million years, I am not a policy wonk who understands all the ins and outs. I only know what I have seen grow over the years.
Here is one thing that I didn't say before.... it is because of the increasing power and mobility of computers we have the tax laws we have today. If we professionals had to do taxes by hand with the current laws, we could never get them done. Our industry would have screamed bloody murder before the laws would have been brought into practice.
But since we now all have computers on our desks, an embarrassing percentage of professionals don't really understand the law anymore, I think. Certainly when we get new clients and look at the work from prior accountants we see enough evidence of that.
And we worry in our office about what we don't know -- and don't even know it.
It's scary out here. Let me tell you.
I understand what you mean. However, there are two points that I would like to bring up for consideration.
One: Many rich people pay less in taxes as a percentage then less wealthy people do. For example, Warren Buffett found that he paid a less taxes as a percentage than his employees. Part of this issue are tax loopholes. I understand you earlier point about "loophole creep" (where someone finds a loophole and then they have to plug it) being a cause for the complexity of the tax system. A simple flat tax applied to every one could eliminate that.
Two: Apply this rate to the corporations also (tax rate and rebate - using the rebate as a benefit and stimulus for small business.) I don't have the numbers on me, but from what I understand, the corporation, as a whole, have been paying less and less taxes. Some profitable corporations pay zero in taxes. Some corporations move themselves to foreign headquarters, but still call themselves American companies.
These two points would increase the amount of money received. I don't know the numbers, so I can say how it would work out. Also, I know this idea is greatly simplified and would need to address other issues.
I'm fine with a sales tax, but I don't think it needs to be as extreme if you include the money coming in from the above two points. At least consumption is something that is usually relative to the amount of wealth someone has.
In reply to this comment by bareboards2:
Sorry if I am doing this wrong.... I am writing in response to your comment that showed up as an email to me.
Well, I am not that up on how much tax you would have to collect. According to the Senator in the video, he said that a national sales tax would have to make up the difference.
You still have the problem of RELATIVE tax. So you have a deductible that everyone gets. That would solve the problem of truly poor people. The vast majority of our taxpayers are middle class, however. It's still the same problem, as far as I am concerned. 10% tax to a middle class family is still relatively huge compared to the uber-wealthy.
I live in the State of Washington. We don't have an income tax. I can't quite get my mind around Bill Gates. The only tax he pays to the State of Washington is property tax. Granted, it is something like $25K per year or something, maybe more. But as a percentage of his income? It is laughable.
Gates' personal saving grace is that he "taxes" himself through his Foundation, and helps support a huge number of communities' libraries and schools and what-all.
I am one of those nasty liberals that thinks that a progressive tax makes sense -- to share the relative PAIN. Progressive tax rates are there so that all "suffer" the same. 10% at even $100K income is not the same as 10% at $1 million income.
By the way, I really appreciate your respectful tone in the discussions that I have noticed you in on this thread. It is such a relief to read someone disagree without the personal attacks and angry characterizations of others. Thank you.
In reply to this comment by curiousity:
>> ^bareboards2:
lot o' stuff
Thanks for the comment bareboards2.
Do you think that a flat tax would work if it include a deductible? This deductible would be based somewhat on the poverty line and every single person would get it. This way it keeps the simplicity of a flat tax (everything applies to everyone), while also trying to account for low income people and families.
With your experience, does that sound like something that could actually work?