How to Decrease Taxes.

[Roguish Lawyer]

Originally posted by Ockham's Razor
I'm ignoring deductions? WTF?

Do you know what "adjusted gross income" means?

This may help you:

http://www.irs.gov/pub/irs-pdf/f1040.pdf

[Ockham's Razor]

What does that have to do with a flat tax? If we have no deductions we have no adjusted income, right? Or are we going to totally ignore that aspect of finance?

Thanks for the help, it is much appreciated. I thought we were talking about the flat-tax system and not the current tax system. Because you seem to be combining the two. One has deductions one does not. In that model, to answer the flat-tax, it does not have any deductions because none would exist under any flat tax plan I've seen. It's all about the payroll.

Are you talking about a flat tax that actually has deductions?

[Roguish Lawyer]

Originally posted by Ockham's Razor
What does that have to do with a flat tax? If we have no deductions we have no adjusted income, right? Or are we going to totally ignore that aspect of finance?

Thanks for the help, it is much appreciated. I thought we were talking about the flat-tax system and not the current tax system. Because you seem to be combining the two. One has deductions one does not. In that model, to answer the flat-tax, it does not have any deductions because none would exist under any flat tax plan I've seen. It's all about the payroll.

Are you talking about a flat tax that actually has deductions?

The current system allows deductions from adjusted gross income before taxes are calculated. Using your example:

AGI $200,000
Deductions $100,000
Taxable income $100,000

1st layer (15%) $3,750
2d layer (28%) $8,400
3d layer (33%) $14,850
Total tax paid $27,000

Flat tax (20%, no deductions) $40,000

Tax increase from flat tax = $13,000

[Roguish Lawyer]

So:

[Ockham's Razor]

Why are you using the current system? The flat-tax system is totally different. We are scrapping everything, remember? There are no deductions or adjustments under the flat-tax system. Are you suggesting that we combine the two or what? Where is the inclusion of capital gains taxes?

Is there any mention of the increased state taxes that would come with such a tax plan? You save $700 at the federal level and pay $1400 at the state level. That is a cut? How does that work?

Originally posted by Ockham's Razor
[B]
I've looked at the flat tax plans, everyone who makes their living through gains in investment are completely untouched. Perhaps that is why people like Steve Forbes advocate such a system.

Rediculous. If investment generates income, it's taxed.

How in the hell are we going to generate the revenue we need to sustain our government if we exclude all of these sources of revenue. Payroll is BS to this class. Wow, we can tax their cheque from Goldman Sachs as 20% (flat tax) but their real wealth of land and securities are totally off limits.

So, you think we should tax the value of property? Mind if the IRS taxes the value of your car every year?

If we exclude people from paying susbstantial amounts of their wealth into the coffers of our system it will collapse. The funny thing is that pure capitalism would be exactly as effective as pure socialism. We have struck a balance between the two in our system. The wealthy pay more into the system, and we have what we have because of it.

Under any system, the wealthy pay more. Under a flat-tax, they pay under a fairer system, one that is more difficult to cheat. Oh, and taxation has nothing to do with capitilism vs. socialism as a balance except in regards to how we spend those taxes.

I'm going to break down your questions now, but I would like you to tell me how the system is better off with Warren Buffett paying as much as his secretary under such a system because he "pays" himself a small sum and relies on his capital investments.

You seem to be a bit confused here.

[Roguish Lawyer]

Originally posted by Ockham's Razor
Why are you using the current system? The flat-tax system is totally different. We are scrapping everything, remember? There are no deductions or adjustments under the flat-tax system. Are you suggesting that we combine the two or what? Where is the inclusion of capital gains taxes?

If you want to determine whether there is an increase in taxes under a flat tax system, you have to determine what is paid under the current system, then compare that amount to what would be paid under a flat tax system. That is what I did.

Originally posted by Ockham's Razor
Is there any mention of the increased state taxes that would come with such a tax plan? You save $700 at the federal level and pay $1400 at the state level. That is a cut? How does that work?

Losing the first argument, he switches to a new one . . .

We are talking only about federal taxes. State taxes are a separate issue. QRQ's suggestion was that states will increase taxes when federal taxes are cut, because reduced federal support of state programs will require states to make up the shortfall. If the flat tax is revenue neutral or revenue positive, this would not happen. Furthermore, as noted by someone else above, states empirically have not always increased taxes when federal taxes were cut.

[Roguish Lawyer]

Originally posted by Greenhat
You seem to be a bit confused here.

And elsewhere.

Originally posted by Ockham's Razor
You are telling me that people would stop investing?

You want to take away the money that they would invest. Have you ever filed a 1040? Not an EZ, not a short form, but a 1040?

So, those making a million pay $150,000 what about their capital gains and dividends gains? No, nothing? Free money?

Capital gains and dividends are income. Pay the %.


Are you that completely unaware of our current tax code and what it allows?

You make ridiculous claims about the Rockefellers, etc. but do you really think the Estate tax touches them? Trust funds, corporate home ownership, all the other loopholes that being able to afford a competent lawyer bring means that they leave estates worth nothing.... but all their wealth continues in their family. So who gets hammered by the estate tax? Farmers and lower and middle income families. You are helping what you claim is so awful, not restricting it.

Tax exemption of certain investments, various types of holdings means that those with the money to invest and the lawyers to research it pay very little on capital gains or on dividends. The people paying tax on those things are the ones selling a home, or owning a few hundred or thousand shares.

Flat tax is simple. All income, (gross income) is taxed at a flat %. No deductions (beyond the initial amount that is tax exempt). Simple, workable, fair.

[Roguish Lawyer]

Originally posted by Greenhat
Capital gains and dividends are income. Pay the %.

You feeling OK, buddy?

[Ockham's Razor]

Originally posted by Greenhat
[B]Rediculous. If investment generates income, it's taxed.

Really? Under the flat-tax plan how is it taxed when the only thing considered is the payroll tax?

So, you think we should tax the value of property? Mind if the IRS taxes the value of your car every year?

Welcome to my world. I have to pay taxes on the valuation of my vehicle every single year in the state of where I live. Yes, they should tax the valuation of all property every year.

Under any system, the wealthy pay more. Under a flat-tax, they pay under a fairer system, one that is more difficult to cheat. Oh, and taxation has nothing to do with capitilism vs. socialism as a balance except in regards to how we spend those taxes.

I've already admitted that the word "fair" really does not apply here. The wealthiest will pay more, and will always do so, so that we have the revenue we need to propagate our system. The wealthy should, do, and will pay more under all systems. It is they who have the wealth to pay for the systems we have in place that make up our government. If they do not pay, we wind up losing the system that has seen America as the greatest power in the world over the last 40 years.

You seem to be a bit confused here.

How am I confused. Warren admitted this to the world when he was talking about how the system is morally corrupt. Under even the present system he paid less in taxes than his secretary. Yet we think a flat-tax system is even more fair when the currenct system does not ask the second richest man in the world to pay more into the kitty? I don't understand the logic of that. Those that have more should pay more, it allows us the great country we live in. None of us all agree on all the programs, yet they exist and must be paid for. Without the proper revenue how can we do this?

[Roguish Lawyer]

Originally posted by Ockham's Razor
If they do not pay, we wind up losing the system that has seen America as the greatest power in the world over the last 40 years.

Ah, here's the crux of your problem. You think this country is great because of the government.

Greenhat and I (and Ronald Reagan and probably TR) think this country is great in spite of the government.

Originally posted by Ockham's Razor
Really? Under the flat-tax plan how is it taxed when the only thing considered is the payroll tax?

That's only your take on it. Haven't seen anyone else suggest that only payroll is taxed. Would be great for those who are self-employed.

Welcome to my world. I have to pay taxes on the valuation of my vehicle every single year in the state of where I live. Yes, they should tax the valuation of all property every year.

What happens if you can't pay the tax? Lose your property? Read the 5th Amendment. Actually, read the entire Constitution. The federal government does not have the right to tax property.

I've already admitted that the word "fair" really does not apply here. The wealthiest will pay more, and will always do so, so that we have the revenue we need to propagate our system. The wealthy should, do, and will pay more under all systems. It is they who have the wealth to pay for the systems we have in place that make up our government. If they do not pay, we wind up losing the system that has seen America as the greatest power in the world over the last 40 years.

You actually think that our tax code is what made us the greatest power? You need to read more history and learn a bit about what actually drives America. It isn't the government and it sure isn't taxes.

How am I confused. Warren admitted this to the world when he was talking about how the system is morally corrupt. Under even the present system he paid less in taxes than his secretary. Yet we think a flat-tax system is even more fair when the currenct system does not ask the second richest man in the world to pay more into the kitty? I don't understand the logic of that. Those that have more should pay more, it allows us the great country we live in. None of us all agree on all the programs, yet they exist and must be paid for. Without the proper revenue how can we do this?

Under a flat-tax, he couldn't pay less than his secretary. You have a basic failure here to comprehend what currently exists and what is being proposed. Funny thing is that this part of your argument supports my point, not yours.

Originally posted by Roguish Lawyer
Ah, here's the crux of your problem. You think this country is great because of the government.

Greenhat and I (and Ronald Reagan and probably TR) think this country is great in spite of the government.

Bingo.

[The Reaper]

Originally posted by Roguish Lawyer
Ah, here's the crux of your problem. You think this country is great because of the government.

Greenhat and I (and Ronald Reagan and probably TR) think this country is great in spite of the government.

Concur.

To paraphrase my line from another thread, does anyone here think that the governent defines America, or do the American citizens (not subjects) do that?

The Government is the servant of the people, not the other way around.

TR