I'm taxed too little

[LondonReign2]

Really.

You read that right: I'm taxed too little. Way too little.

You want to know why the deficit is sky high? Ridiculous tax policies that favor the well-to-do.

Look, I'm not rich. But I do make a good living. And by the time I take the deductions for my 401(k), my wife's IRA, the child tax credit, a stock loss carry-forward, mortgage interest, property taxes, and Texas state income taxes (and we DON'T EVEN PAY state income taxes in Texas, but I still get to take a deduction believe it or not!), I'm taxed at the federal level on barely half my income.

So you know what my effective Federal tax rate was?

8.5%

Yeah. Eight point five percent. Ridiculous.

No wonder the US is $8 trillion in debt.

[Burning Water]

1. Well, mine was

12%, and I'm taxed too much. How 'bout we swap??;)

[Sammy Pepys]

2. You can cut a check

to service the public debt.

And you don't have to take all those deductions you list if you don't want to.

[Xithras]

3. When comparing US with international tax rates...

You really need to combine both your state and federal effective rates. My federal tax rate after deductions was 12%, but my state tax rate was 19% bringing my total income tax burden to 31%. We can debate whether or not 31% is reasonable, but it's far greater than the 12% some would claim.

The dual level taxing system is fairly unique to the US as compared to other western countries, and I've always been hesitant to advocate large tax increases at the federal level without simultaneously stripping the states of their taxing authority. I had a debate with someone here about a year ago who was advocating that the federal tax rate should be at least 40%, and that he preferred it to be at 50%. At that rate, many of us would end up devoting nearly 70% of our income to taxes once state, local, and sales taxes were piled on top of the federal tax rate. A nation cannot be taxed at that level without completely destroying the economy.

[LondonReign2]

8. Eh? How can your state tax rate be 19%?

Unless your state income tax is something on the order of 30%, I'm not sure how your effective rate could be 19%?

Or are you referring to sales tax?

[Xithras]

10. I own a small business.

I have income from both my position as an adjunct professor at a college and from a wholly owned small business. California's tax rates for business owners are a bit above the norm, so my tax rates are a higher than most of yours.

And no, I wasn't referring to sales taxes. California took 19% of my earnings in INCOME taxes last year (sole proprietorship, so I'm personally liable). Sales taxes were on top of that.

[TechBear_Seattle]

11. Must be nice

I live in Washington, where income taxes are prohibited by the state constituiton. Instead, state revenue is generated by sales taxes. We have a state retail sales tax of 6.5%, second highest in the country; 6.8% if I rent a vehicle. We pay 37.5 cents of tax on every gallon of gas, the highest in the country. Natural gas: 3.852% "brokerage" tax. Hard liquor: 20.5% "excise" tax (and then sales tax on top of that.) Tobacco: 129.42% of wholesale price (I kid you not.) We even have a "useage" tax levied on anything bought outside of the state for use within the state: 6.5% minus any sales tax paid on the item in the state where it was purchased.

And being sales taxes, we get no exemptions and no deductions.

[Xithras]

14. 6.5% is not the highest.

California's general sales tax is 4.75%, but they also add on .25% for "fiscal recovery", .5% to generate dispersements for the local governemnts, .25% for a permanently temporary general fund tax, .5% for law enforcement, and 1% for county level transportation and operations costs. Those are just the state mandated sales taxes, and they put our retail sales tax at 7.25%. Local sales taxes are levied on top of that and vary by area, but vary from 7.375% where I live to 9.25% in some parts of Alameda county.

[TechBear_Seattle]

27. Adding in all of the other "specialty taxes"

In the Seattle area, with state, county and city taxes, the added cost can run between 8.8% and 9.4%. The upper range, for eating in a restaurant or renting a hotel room, includes what I call the "public tit tax", to help pay for billionaire Paul Allen's stadium (which was voted down twice by the people until the state legislature passed it as an "emergency" law not subject to a referendum.)

[SoCalDem]

32. 7.75 in my county

:(...

[alarimer]

40. 8.75% in Corpus Christi, Texas

The city adds another penny or part of a penny each time it wants to build a new boondoggle or something. This despite the numerous tax breaks given to businesses to locate here and tax breaks for gazillionaire developers. Some of the highest sales taxes in the country, it looks like. And extremely high property taxes too. All because we have no income tax in the state of Texas.

On a side note, the county commissioners decided the county was so flush with money that it wants to give some to ANOTHER COUNTY for a pharmacy school at a local university. Well if Kingsville wants a pharmacy school so damn badly they can pay for it themselves. Not to mention our county could give pay raises to employees and such since they are rolling in it.

But I digress.

[Balbus]

4. You always have the option of giving more....

or not taking deductions if it would make you feel better. :shrug:

[jsamuel]

6. I think the point is that well-to-do people are able to "get out" of

paying what they should, then they also get tax cuts and we wonder why our debt is skyrocketing.

[catmother]

16. you're right. i bet the weathy people in this country after their

deductions pay a much lower rate than we do.

[LondonReign2]

19. Yes, that is what I intended to convey in the OP

Basically, the person slaving away at a $7/hour job probably pays a higher effective tax rate than I do.

[catmother]

20. exactly. and they never make enough to buy a house or put

money into a 401k -- thus no deductions. you didn't say what your income is -- it's probably around the same as ours -- but you get your wife's IRA and a child care deduction. ours is around $160 which includes my social security that i pay tax on. i must say though that during the clinton years we made more. my husband's company was giving commissions that sometimes amounted to $40,000 to $50,000 a year. then it stopped. last year they came back with a commission but it was only a little over $10,000 -- big difference. he says he's getting one next month, but says it probably won't be that much. but we're not complaining. we're doing fine. if he never gets another increase or commission we would not complain. our feeling now is that we're happy that he's working -- that his job has not been outsourced. he's 58 -- could collect a pension -- he has 36 years, but if he can work until 62 the pension would be a little higher but he could get social security at the reduced amount. so that's basically what we're hoping for -- just 4 more years.

[Balbus]

39. But if he himself recognizes he's paying too little...

but doesn't want to do anything about it why put the onus on someone else?

[catmother]

24. i wouldn't. would you? i'd rather pay less and give more to

charities.

[Balbus]

37. Nope.

But I wouldn't complain about paying too little, either.

[catnhatnh]

5. Kudos to you for saying so.....

....and if we could get corporations to pay THEIR fair share then everyone's taxes might be as low.....

[DocSavage]

7. Yup, taxes

could go down, but the price of everything would go up. States would love it, increase in sales tax revenues. Outstanding idea. Bully for you. You do understand that any taxes that a corporation pays is just included in the COGS and passed on to the consumer dont you? If you increase the tax rate, a corporation will ensure that the margin will remain the same, and will increase prices to cover the increased tax burden.

Managerial Accounting, cool course.

[LondonReign2]

9. Bunk

Corporations are paying the lowest percentage of the total tax burden since the Robber Barron days.

Increasing their effective tax rate woould not equate to a pass through on prices. The prices any company sets for their goods or services are NOT based on their tax rate -- they charge what the market will bear, irrespective of the tax rate.

[Sammy Pepys]

13. Sure it could

Increasing their effective tax rate woould not equate to a pass through on prices. The prices any company sets for their goods or services are NOT based on their tax rate -- they charge what the market will bear, irrespective of the tax rate.

Taxes become part of the overhead. And if it overhead costs become too expensive relative to the price they can get for that product on the market, they either have to lower the cost of production (layoffs, cheaper components, outsourcing, etc etc) or find a more profitable line of business before they go out of business altogether.

You just have to tread carefully in these parts of the tax code.

[Solon]

28. So that's what price controls are for...

If a company feels that to preserve their profit margin is to overprice items ABOVE fair market prices, then they are gouging, hence price controls.

[Sammy Pepys]

46. Yeah, good luck with that.

You'll just end up with the same problem. If you remove the market forces and cap the price, companies will just maximize their profits in other ways...outsourcing, layoff, cheaper materials, whatever. Either that, or they'll find a different business to get into.

[pitohui]

30. you're assuming inelastic demand

in many circumstances corporations can't just pass on the increased cost because consumers won't pay it

for instance, taxes go up on airline tickets (as do fuel costs) so consumers cut back on leisure travel so airlines have to cut back on routes so even tho planes are now full the airlines are losing money for every seat sold but if they try to raise the price, then the consumers again cut back and take driving vacations instead, business traveler cuts back and has a video conference instead, so the airline loses even more money...

it goes round and round but it's fair to say that it's completely bogus and merely a libertarian talking point that corporations pass on all taxes, it has nothing to do w. the real world where consumers can decide not to use a product or service at all if the price upsets them

[DocSavage]

47. To increase the corporate

tax rate you would have to do it across the board. So XYZ corporation would have the same tax increase as ABC corporation. They could raise prices to cover the increased expense without the consumer having an alternative. Corporations still have an obligation to the investors to provide a return on their investment. If there is no return, then stock prices fall, less capital for the organization. No matter how you slice it, a corporation passes all costs on to the end user of its product or services. I do not adhere to your argument that it is a libertarian talking point. Just look at any community that puts a high tax burden on business and watch what happens to the business community.

[catmother]

12. i haven't had my 2005 tax done yet. but i just looked at 2004 and

the accountant said we saved $4,000 in tax by putting $16,000 in the 401k, home interest saved us $1,673. contributions saved us $1,032. it said our marginal tax rate was 25%, but our effective tax rate was 14%.

i know that we paid $18,472 to the feds and $2,227 to the state and over $800 to minnesota because my husband worked there for a few months.

i'm not going to apologize because when we lived in new york we did not own a house, could not afford to put money into a 401k -- one year our income was around $100,000 and we paid $48,000 in taxes -- that included FICA. our accountant said "you're paying too much -- you've got to buy something". so here we are in arizona 16 years later -- doing much better -- the cost of living here is no where near what it was in new york.

i would say we're paying our fair share.

we also got a deduction for medical which is rare because it's subject to 7.5% of AGI, but my husband had surgery and there were quite a few medical bills even after insurance. also quite a bit of dental work.

[Sammy Pepys]

15. I think our effective rate was somewhere around 14-15%

We almost ended up owing nearly $700 on state income taxes, but we changed the filing status and eeked out a very tiny refund. We could've covered it (either from our federal refund or through savings), but we're trying to save up for a house and that would've set us back a few months. We don't have a mortgage (obviously), and our IRAs are Roths so they aren't deductible. My wife has a 403(b), so I'm pretty sure that knocked off a few $$$.

We were able to get some student loan interest deducted, and that was about it. We had some charitable donations, but not enough to make itemizing worth it so we just took the standard deduction. Got a pretty good refund all things considered...but most of it was federal.

[catmother]

17. the last time i got a refund from the feds was when i moved cross

county in 1989. we always owe more than is taken out of his pay. on the up side we usually get a refund from the state so if that's enough to cover what we owe the feds i'm not complaining.

we get taxed on 85% of my social security. i'm older than my husband, but arizona does not consider the social security income. also the medical is not subject to the 7.5% that the federal is. and if you give to certain approved charities they give you a break on that too. our real estate taxes have gone up to $2700, but we live on 2 1/2 acres. my sister in law has a little shit house on long island and she pays $10,000 in real estate taxes.

so i think arizona is a good place to live as far as taxes.

[Sammy Pepys]

18. This was actually the first time in a long time...

I didn't owe state taxes.

Last year, I basically broke even on federal ($72 refund), but owed about $400 for state. Year before that I owed something like $23 state, and got maybe a couple hundred back on federal.

[Left Is Write]

21. After our deductions this year...

including medical bills and tuition, we were taxed at just less than half of our income.

[catmother]

22. that's high. guess you don't have a house or anything else to

deduct. may your life get better.

[Left Is Write]

23. Being taxed at less than half our income is high?

Yes, we do have a house. We deducted medical expenses, tuition, charitable contributions, and mortgage interest. We also have three dependent children, two of whom qualified for the child tax credit.

[catmother]

26. yes. less than half your income. half is 50%. so what do you

mean by less than half? it could be 8% or 49%.

[Left Is Write]

31. What I mean is that our taxable income was less than half

of our gross income.

[catmother]

33. okay i took me a minute -- but know i understand.

:blush:

[pitohui]

25. well send me some $$$

i'm glad you make a good living but bragging abt it in public is not especially attractive, thank you

why shouldn't you get deductions for those things, my friend lost everything he had to worldcom, and i know for a fact that you only get to carry forward a pee-pickin amt of money from stock losses every year so that example is bogus right there

and i would like to see the schedule A that entitles you to deduct for state income tax you didn't pay, funny it don't work that way in my state

don't have kids or don't retire if you object to tax credits for those things, most of us could never afford to do either if not for tax breaks, same w. the home mortgage deduction, if it's such an issue, buy a house for cash, see how stable your community is when only people who have cash can buy homes

jeez

if you are so eff-all worried about the public debt, they let you donate money to alleviating the debt you know, writing a check takes 5 minutes and a stamp is still 39 cents so what's stopping you except it's more fun to gripe?

[catmother]

29. the public debt. i saw dennis miller's last HBO special. now i

don't particularly care for his politics. but he made an interesting joke about the deficit. he said "i'll pass it down to my son". when he asked his son what he would do the son said "shit, i'll pass it down to my children". at which point dennis miller answered him with "don't say shit".

[pitohui]

35. the public debt is a republican issue

it is their excuse for everything as to why we should not help hurricane victims, why old people should not get medicine, why poor people should be stuck in slum housing and in schools so dangerous they have metal detectors at the door

hey, we do not have a gold standard, paper is cheap, and last time i checked they had no trouble printing money to buy the stuff they want, such as war on iraq

i'm not surprised that the public debt talking point would come from dennis miller, they are harping on it these days specifically in hopes of creating hysteria and to deny hurricane victims, how many times have i heard we can't afford to rebuild, yet funny thing they can afford to take our oil and gas and chemicals and sugar all right

i say if the public debt is such a great concern to republicans, time for them to tackle this issue, clinton seemed to do a great job w. it and to what purpose, so that halliburton could steal it, it's stupid to put aside money for future so that your enemy can then put it in his pocket, the GOP leaders know this, the democrats still don't get it

the surplus clinton put aside, would have been better if he'd spent every penny on our causes or just on infrastructure, oh well, hindsight is 20-20

we played right into GOP hands and gave them more to steal by balancing the public debt

next time, i hope there will be less concern abt public debt and more concern abt spending as long as we have the power on improving this country and this world

[catmother]

38. i totally agree with you. but busco needs that money to fight and

rebuild iraq. don't you remember "we have to fight them there, so we don't have to fight them here". well screw rebuilding iraq. let's rebuild new orleans and mississipi. and bushco, don't you dare ask us to cut back our programs to pay for things in our own country.

this administration has screwed up everything so badly -- i don't know if we'll ever recover. :dilemma:

[LondonReign2]

36. Dude, have you got the wrong end of the stick

Saying I make a good living is not bragging. Did I include any specific dollar amount?

Further, Bush changed the tax code so that, instead of limiting tax loss carry forwards to three years, you can now carry them forward until used up. So not only do they offset my capital gains, I carry forward $3,000 in losses (all from one bad internet stock bet). But thanks for calling me a liar without having a clue.

Further, Google "2005 Optional State and Certain Local Sales Tax Tables" to see how I deduct "state tax" that I don't pay. But thanks for calling me a liar without having a clue.

Further, I'm pointing out that the tax code is unfair to folks who struggle to make ends meet. But thanks for being a jackass.

[SoCalDem]

34. Who remembers the 10% Luxury Tax (on top of the sales tax)

When I was young, I worked for my Aunt at her boutique. Any item that was a "luxury" had an automatic 10% tacked onto it. Stuff like jewelry, perfumes, cosmetics over a certain dollar amount, furs, etc.

The tax was eventually repealed, but it almost seems like a good idea again, when one consideres the overconsumption we have going on these days..

States could sure use the money:)

[SmokingJacket]

41. I'm self-employed, and I pay way more than that.

Varies year to year, haven't done this year's yet...

But I wouldn't even mind, if so much weren't getting lost or blown up in Iraq.

In fact, I'd pay more if I could get health insurance.

[joe_sixpack]

42. Most of those deductions you mention

are what tends to level the playing field and help low to middle income families. The child tax credit that helps families with young children, the IRA deduction helps those of us who aren't wealthy plan for retirement. The property tax and mortgage deductions mean more people can own their own homes. I don't think they're necessarily bad just because the wealthy might benefit from them as well. I know those kind of deductions certainly have helped my family. I don't know Texas tax issues, but man, if you can get a deduction for a tax you don't even have to pay, that's pretty bizarre.

[LondonReign2]

44. I'm not agruing for or against any specific deduction

I'm arguing that the tax playing field is tiled the wrong way!

Buffet has made the same argument; he has stated that he pays about the same marginal tax rate as his assistant.

[im10ashus]

43. Holy crap!!!

I won't even tell you what I pay. Do you need an adoptive 40 year-old son? :-)

[LondonReign2]

45. Are you tax deductible?

:)