Paying Their Fair Share - The Myth

[kelpdiver 2]

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Close the deductions, but leave the tax rates the same, or even lower them slightly if it still increases the revenue after taking away the deductions. And don't touch the capitol gains and dividend tax rates or you are going to hurt the working-class more than the super rich and force people to avoid investing their money for retirement.

so that's the new discussion, and lacking specifics so far, it looks like a way to get even more money out of the blue states that contribute far more than their share. I heard the figure of 30 or 40k put out as a maximum - anyone with more deductions then that must be wealthy motherfuckers. And I thought Romney floated an idea about 17k in something (dividend income only, or all deductions?) being protected.

The problem - a typical home owner in California is paying 2k a month in interest. It's a bit better right now with the historically unusual interest rates, but that's still the case for the average home in San Francisco. at 8% (rate in 2000), that was the case for loans at half the amount. Take on property taxes (1.xx % of home purchase price) and a 9.4% marginal tax rate and my deductions for these alone already push 45-50k.

Protecting the dividend/LT capital gain list while implementing a cap on everything else is as bald faced as it gets for protecting the millionaires. The working class don't have even 10k in such income per year. Most of their retirement wealth, for those who have it, is in tax sheltered accounts.

[GQ_jumper 4]

so that's the new discussion, and lacking specifics so far, it looks like a way to get even more money out of the blue states that contribute far more than their share. I heard the figure of 30 or 40k put out as a maximum - anyone with more deductions then that must be wealthy motherfuckers. And I thought Romney floated an idea about 17k in something (dividend income only, or all deductions?) being protected.

The problem - a typical home owner in California is paying 2k a month in interest. It's a bit better right now with the historically unusual interest rates, but that's still the case for the average home in San Francisco. at 8% (rate in 2000), that was the case for loans at half the amount. Take on property taxes (1.xx % of home purchase price) and a 9.4% marginal tax rate and my deductions for these alone already push 45-50k.

Protecting the dividend/LT capital gain list while implementing a cap on everything else is as bald faced as it gets for protecting the millionaires. The working class don't have even 10k in such income per year. Most of their retirement wealth, for those who have it, is in tax sheltered accounts.

Would you be more open to the suggestion of non tax-advantaged accounts for high earners being taxed at the same rate as their income? Lower and middle-class workers maintain the lower rates for dividends and capital gains and upper-class tax payers who, as we have mentioned before get a large sum of their annual income through different types of investments pay the same for their investment income as they do for ordinary income, and put a cap on deductions for them. The class warfare that has been perpetuated for the last few years has created an unhealthy lust for punishment of those with more zeros at the end of their account statements. We need to find a way to correct this issue without the emotion that is usually tied to it.

I'm all for ensuring that high-earners pay more than they are currently putting into the system, but I don't think the proper way to go about it is to increase the tax rate while maintaining the current web of deductions that people can hide behind.

And the deductions for mortgage interest payments, I agree that it can create some unfair tax shelters for those who own multiple expensive homes. Or at least that is what I interpreted your comment to be eluding to, my apologies if I misread it. With regards to that, what about a cap on the mortgage deductions? Take the median amount in mortgage interest paid by middle-income families and there is your cap. If you choose to own four or five homes worth $10 million a piece you shouldn't gets millions in deductions, you are obviously doing find without.

Again, my point is we shouldn't find ways to add to the current tax rate, but to enforce the current rates for those who don't rely on the deductions to make ends meet.

And to throw one more curve ball into the mix just for fun I wouldn't be opposed to a small reduction in rates across the board for ALL tax payers and replace it with a minimal VAT. If only for the purpose of making people who visit our country, or reside here illegally are still contributing.

History does not long entrust the care of freedom to the weak or the timid.
--Dwight D. Eisenhower

[champu 1]

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so that's the new discussion, and lacking specifics so far, it looks like a way to get even more money out of the blue states that contribute far more than their share. I heard the figure of 30 or 40k put out as a maximum - anyone with more deductions then that must be wealthy motherfuckers. And I thought Romney floated an idea about 17k in something (dividend income only, or all deductions?) being protected.

The problem - a typical home owner in California is paying 2k a month in interest. It's a bit better right now with the historically unusual interest rates, but that's still the case for the average home in San Francisco. at 8% (rate in 2000), that was the case for loans at half the amount. Take on property taxes (1.xx % of home purchase price) and a 9.4% marginal tax rate and my deductions for these alone already push 45-50k.

And the deductions for mortgage interest payments, I agree that it can create some unfair tax shelters for those who own multiple expensive homes. Or at least that is what I interpreted your comment to be eluding to, my apologies if I misread it. With regards to that, what about a cap on the mortgage deductions? Take the median amount in mortgage interest paid by middle-income families and there is your cap. If you choose to own four or five homes worth $10 million a piece you shouldn't gets millions in deductions, you are obviously doing find without.

His point is that "magic numbers" in the tax code (like using a country-wide median mortgage interest as a cap on deductions) screw over (very much not ultra rich) people who live in high cost of living areas like California. It's the overall problem I have with people bringing up Buffet and Romney in the whole "the rich should pay more" discussion because they are paraded out in front of "solutions" that completely miss their target and land on people making low to mid six figures in areas where that doesn't make them rich.

Also, you already can't write off millions in interest from four or five homes. You get two homes and up to $1M in interest you can write off. And, iirc, you can't write off the interest on the second home if you're renting it out.

[GQ_jumper 4]

Also, you already can't write off millions in interest from four or five homes. You get two homes and up to $1M in interest you can write off. And, iirc, you can't write off the interest on the second home if you're renting it out.***

Just a note on this comment, renting a house out comes with an entirely new set of tax benefits. I rented my primary residence out when I was stationed elsewhere and once it became labeled as a "commercial property" I started receiving large write-offs, so multiple properties comes with a lot of benefits! I have also recently ventured into real estate investing as a means to replace my income when I leave the military, and its mind boggling how many new tax benefits I am seeing. Just trying to bring everything to light.

Back to the original point though, I think we have drawn a line in the sand with what is considered a high-earner that is completely misplaced. People pointing to six-figures as being a high earner are off the mark IMO. In the 90's that would have worked, but nowadays we need to adjust the standards, especially as you mentioned for people living in high-cost areas.

While I admit that any idea I come up with is going to be far from perfect as I am not a lawmaker or Economics major(although I might pursue the second major for fun
While I know that for middle and low-income families the tax rebate that is received every year can be critical those at the top are far less reliant on it for survival and need to deductions far less. Me personally, I look at it as a chance to buy new toys, in short I don't need it and don't budget for it. I am far from being a high earner, but I am also in a very stable position, and there are many in my bracket who are on rocky ground and we need to look out for them. Simplifying the tax code, and reducing deductions is a can't fail mission for our government that unfortunately they ARE failing at.

I'm afraid to see where our deficit will be in ten more years.

History does not long entrust the care of freedom to the weak or the timid.
--Dwight D. Eisenhower

[kelpdiver 2]

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Just a note on this comment, renting a house out comes with an entirely new set of tax benefits. I rented my primary residence out when I was stationed elsewhere and once it became labeled as a "commercial property" I started receiving large write-offs, so multiple properties comes with a lot of benefits!

Oh, like any business there are many expenses that can be deducted. But you also give up the key one for home owners - the 250/500k deduction every 2 years. The best you can do is an exchange for another commercial property.

Back to the question at hand - there's nothing wrong with examining the level of deductions or in the portion of income (investment) that gets favorable treatment. But we've already seen what happens when legislators are sloppy, like with the AMT tax that was meant for 155 extreme high earners that paid 0 taxes. Now it catches millions (with a million plus in the
My opinion - any measure intended to more greatly tax higher earners should exclude state income taxes and at a minimum all eligible property taxes and mortgage interest (up to 1 mil loan balance) on the primary home. Or you set a more generous allowance, or somehow attempt to differentiate based on zip code (virtually impossible to do).

But when Lindsey Graham talks about a deduction max at 30 or 40k to raise a trillion dollars, he's doing it on the backs of a few blue states while his South Carolina contributes little. Perhaps not too different from when Reagan cut income tax brackets but let FICA taxes jump considerably to fund a surplus that would be squandered. That was an income transfer too.



Back to the original point though, I think we have drawn a line in the sand with what is considered a high-earner that is completely misplaced. People pointing to six-figures as being a high earner are off the mark IMO. In the 90's that would have worked, but nowadays we need to adjust the standards, especially as you mentioned for people living in high-cost areas.

While I admit that any idea I come up with is going to be far from perfect as I am not a lawmaker or Economics major(although I might pursue the second major for fun
While I know that for middle and low-income families the tax rebate that is received every year can be critical those at the top are far less reliant on it for survival and need to deductions far less. Me personally, I look at it as a chance to buy new toys, in short I don't need it and don't budget for it. I am far from being a high earner, but I am also in a very stable position, and there are many in my bracket who are on rocky ground and we need to look out for them. Simplifying the tax code, and reducing deductions is a can't fail mission for our government that unfortunately they ARE failing at.

I'm afraid to see where our deficit will be in ten more years.

[lawrocket 3]

People use the word "fair" as if it gives some idea of definite objective truth.

My wife is hotter than your wife.

[davjohns 1]

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People use the word "fair" as if it gives some idea of definite objective truth.

As I've said before, 'fair' never means what it purports to mean anymore.

I've asked Andy twice to give me an objective definition of 'equivalent burden' since I consider this another soft term like 'fair' that is really emotion based. He seems to drop out of discussions about the time I ask. (NOT implying he is avoiding. I truly think we are missing each other) I tried to PM him, but he doesn't accept PMs. I really want to get a definition. Nobody else has come forward to defend the term, either.

I know it just wouldnt be right to kill all the stupid people that we meet..

But do you think it would be appropriate to just remove all of the warning labels and let nature take its course.

[lawrocket 3]

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I've asked Andy twice to give me an objective definition of 'equivalent burden'

Right. Equal to what? "Fairness" and "equality" and the like are all based upon subjective belief and what is important to that individual.

It's like whenever I hear "best for everybody." Number one, there is no "best." It's "this is the best car on the lot." And the second thing is, no. Nothing is ever "best" for everybody. It's going to be worse for some.

My wife is hotter than your wife.

[champu 1]

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People use the word "fair" as if it gives some idea of definite objective truth.

As I've said before, 'fair' never means what it purports to mean anymore.

People often times have a hard time saying what they mean. Sometimes it's because they don't know how to say what they want to say in a way that people that disagree with them will understand it. Sometimes it's because they want to say something else that more people agree with even if it's not what they really mean, because they don't want to defend saying what they really mean.

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I've asked Andy twice to give me an objective definition of 'equivalent burden' since I consider this another soft term like 'fair' that is really emotion based. He seems to drop out of discussions about the time I ask. (NOT implying he is avoiding. I truly think we are missing each other) I tried to PM him, but he doesn't accept PMs. I really want to get a definition. Nobody else has come forward to defend the term, either.

I think this term is somewhat qualitative in nature too, but it's still better than "fair" which, as Kallend points out, doesn't really enter into making your finances work as a country. Unfortunately some people will spin it to mean, "from each according to..." but that's not really honest given the actual marginal rates people are arguing about here. Anyway... If you want to tap money out of the economy, the "equivalent burden" idea is that you do it in a way that affects everyone's life in roughly the same (hopefully small) amount. 10% means a lot more to a "poor person" than to a "rich person" because life's needs and wants are non-linear (one could argue they're affine and if that were the case then a flat tax with a large standard deduction could work.)

[Channman 2]

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People use the word "fair" as if it gives some idea of definite objective truth.

As I've said before, 'fair' never means what it purports to mean anymore.

I've asked Andy twice to give me an objective definition of 'equivalent burden' since I consider this another soft term like 'fair' that is really emotion based. He seems to drop out of discussions about the time I ask. (NOT implying he is avoiding. I truly think we are missing each other) I tried to PM him, but he doesn't accept PMs. I really want to get a definition. Nobody else has come forward to defend the term, either.

My poor/very poor attempt to provide you a possible answer to Andy's term, "Equivalent Burden".

Lets see if I break it down:

EQUIVALENT: Equal, as in value, similar or identical effects, Being essentially equal.

BURDEN: that which is carried, load or obligation.

So it appears the term "Equivalent Burden" means: "My pain should be shared by others so that my pain and or obligation is no greater than another. One should be made equal and or have an equal outcome not based on personal industry or output." Or simply; "What is yours is mine and I'll take it".

[lawrocket 3]

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10% means a lot more to a "poor person" than to a "rich person" because life's needs and wants are non-linear

This is a common line for people that have not had to make payroll. It’s also a common idea for those who don’t understand that when a business owner has ten concrete mixers and twenty drivers and runs a 5% profit, that 10% is going to be a huge difference.

How far apart do you think the Bakers Union and Hostess were on their numbers? 10%? Less than that? More than that?

It is not NEEDS that make the economy hum. Like it or not, the markets for food and energy usually manage to weather economic downturns. What happens when the cost of gasoline spikes? An economic shock, of course. And where does the economic shot hit? Yep. An individual’s discretionary spending. So they don’t spend much for Christmas. They don’t go out to eat. They don’t buy Twinkies. They don’t go to the car wash. They forgo vacation. The money stagnates. Economy slows. Layoffs ensue. They spend their money on the essentials.

To deny the probable effect of this is head-in-the-sand. Plenty out there simply want to stick it to the rich, even though increasing those taxes won’t even cause a dent in the deficit. A scratch, maybe.

What is the purpose behind raising taxes on the wealthy? Seriously – what is the purpose? All I hear is “fairness” which is entirely debatable. I also hear, “close the deficit” which is won’t do.

Provide a cogent and clear reason for raising taxes on the wealthy and I’ll pay heed. But if “fairness” is the reason, look elsewhere. It effects far more than just the wealthy.

My wife is hotter than your wife.

[SkyDekker 1,465]

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So it appears the term "Equivalent Burden" means: "My pain should be shared by others so that my pain and or obligation is no greater than another. One should be made equal and or have an equal outcome not based on personal industry or output." Or simply; "What is yours is mine and I'll take it".

I had to copy this logic...it is priceless.

[Southern_Man 0]

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10% means a lot more to a "poor person" than to a "rich person" because life's needs and wants are non-linear

This is a common line for people that have not had to make payroll. It’s also a common idea for those who don’t understand that when a business owner has ten concrete mixers and twenty drivers and runs a 5% profit, that 10% is going to be a huge difference.

Counselor you are conflating business and personal taxes here. I usually expect more reasoned and better arguments from you.

"What if there were no hypothetical questions?"

[champu 1]

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So it appears the term "Equivalent Burden" means: "My pain should be shared by others so that my pain and or obligation is no greater than another. One should be made equal and or have an equal outcome not based on personal industry or output." Or simply; "What is yours is mine and I'll take it".

I had to copy this logic...it is priceless.

As I said, some will chose to spin it in that direction. As it happens, someone was spinning it in that direction as I was writing my post.

[billvon 2,989]

>It is not NEEDS that make the economy hum. Like it or not, the markets for food and
>energy usually manage to weather economic downturns. What happens when the cost
>of gasoline spikes? An economic shock, of course. And where does the economic shot
>hit? Yep. An individual’s discretionary spending. So they don’t spend much for
>Christmas. They don’t go out to eat. They don’t buy Twinkies. They don’t go to the car
>wash. They forgo vacation. The money stagnates. Economy slows. Layoffs ensue.
>They spend their money on the essentials.

Exactly. So what's the solution? Cut taxes! That way they can spend their own money at stores. And increase spending! That way that poor soldier gets a well-deserved pay increase - and he spends more at the stores, too.

We are now looking at what 20 years of that has done to the US.

[DiverMike 5]

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Counselor you are conflating business and personal taxes here. I usually expect more reasoned and better arguments from you.

There are far more Subchapter S corporations than 'C' corporations, not even taking into account DBA companies. Both Subchapter S and DBA income are taxed on the same 1040 form you submit if you are an employee receiving a wage. His argument is well founded.

For the same reason I jump off a perfectly good diving board.

[Southern_Man 0]

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Counselor you are conflating business and personal taxes here. I usually expect more reasoned and better arguments from you.

There are far more Subchapter S corporations than 'C' corporations, not even taking into account DBA companies. Both Subchapter S and DBA income are taxed on the same 1040 form you submit if you are an employee receiving a wage. His argument is well founded.

Yes, there are a lot of Subchapter S or pass through taxable entities. You still only pay tax on net income.

"What if there were no hypothetical questions?"

[lawrocket 3]

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Counselor you are conflating business and personal taxes here

I don't believe you understand how many DBAs there are out there. I picked that subject because it's a DBA that I know of.

I believe that your lack of understanding of this issue is evidence of the failure to grasp the breadth of the issue.

My wife is hotter than your wife.

[Southern_Man 0]

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Counselor you are conflating business and personal taxes here

I don't believe you understand how many DBAs there are out there. I picked that subject because it's a DBA that I know of.

I believe that your lack of understanding of this issue is evidence of the failure to grasp the breadth of the issue.

I confess I may be confused (I have been confused before) but after reading it again, it still appears you are using an example of profit margin (5%) and conflating that with tax rate (that 10% might be the difference) in a way that is nto helpful or illuminating. Also your named example is hostess, which is not a DBA. I have a small busines myself so I understand what pass through income is on a 1040. I will await further clarification.

"What if there were no hypothetical questions?"

[lawrocket 3]

There are differences. And I myself am overly simplifying.

But I wanted to point out that "10%" is a rather large number and will affect anybody's budget.

On the other hand I did write:
"Provide a cogent and clear reason for raising taxes on the wealthy and I’ll pay heed. But if “fairness” is the reason, look elsewhere. It effects far more than just the wealthy."

That's the question that is not answered. It really hasn't been by anyone.

My wife is hotter than your wife.

[SkyDekker 1,465]

Plus profit margin is realtively easily manipulated.

[Southern_Man 0]

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Plus profit margin is realtively easily manipulated.

Indeed, although people usually manipulate it downward to minimize taxes.

"What if there were no hypothetical questions?"

[SkyDekker 1,465]

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Indeed, although people usually manipulate it downward to minimize taxes.

Exactly, hence the argument posted above is somewhat meaningless.

[champu 1]

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10% means a lot more to a "poor person" than to a "rich person" because life's needs and wants are non-linear

It is not NEEDS that make the economy hum. Like it or not, the markets for food and energy usually manage to weather economic downturns. What happens when the cost of gasoline spikes? An economic shock, of course. And where does the economic shot hit? Yep. An individual’s discretionary spending. So they don’t spend much for Christmas. They don’t go out to eat. They don’t buy Twinkies. They don’t go to the car wash. They forgo vacation. The money stagnates. Economy slows. Layoffs ensue. They spend their money on the essentials.

To deny the probable effect of this is head-in-the-sand. Plenty out there simply want to stick it to the rich, even though increasing those taxes won’t even cause a dent in the deficit. A scratch, maybe.

What is the purpose behind raising taxes on the wealthy? Seriously – what is the purpose? All I hear is “fairness” which is entirely debatable. I also hear, “close the deficit” which is won’t do.

Provide a cogent and clear reason for raising taxes on the wealthy and I’ll pay heed. But if “fairness” is the reason, look elsewhere. It effects far more than just the wealthy.

I'm sorry if my comment wasn't clear. I didn't mean it as an argument to arbitrarily raise taxes on anyone by 10% if that's how it was interpreted. Sometimes when posting here I assume my audience has a conversational knowledge of my stance on a few of the issues I write about most, and that assumption doesn't always work out so well.

I intentionally put "poor person" and "rich person" in quotes to indicate they are woefully ill-defined terms.

[Andy9o8 2]

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've asked Andy twice to give me an objective definition of 'equivalent burden' since I consider this another soft term like 'fair' that is really emotion based. He seems to drop out of discussions about the time I ask.

In court all week. 9:43 and just got home. Prepping for tomorrow. And my glass of wine is more important than repartee. You can wait.

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I tried to PM him, but he doesn't accept PMs.

Not even God can PM me.