Okay...I'll Do It...Fiscal Cliff

vlagrl29

snp605:

vlagrl29:

we will never make $250,000.  that just seems insanely impossible.  I think of families that make that much have 2 very career driven people in it, mainly in the corporate world.  both DH and I have college degrees,  I actually have 2.  I consider us smart people, we are just in fields that don't make that much money.  who knows, maybe one day if DH every buys his photography studio and starts renting it out on the weekends for weddings and rents out some of the rooms to other freelancers as additional income.  but still even with that I don't see it happening.  Also, 2 million republicans did not vote this year.  They only thing I can think of why not is because romney was a mormon and was not conservative enough of a republican for them.  really every vote matters and I guess they were ok with obama winning

 

The problem with this line of thinking is that you are considering this as 2 career (or even 1) driven PEOPLE. Small businesses pay the INDIVIDUAL rate. So let's say my husband earned $250K in his business, his business would pay $62,500 of that in taxes at at 25% tax rate. THEN he would get taxed as an individual on what he brought home of that $250K at a similar tax rate. So on that $250K he would pay over $100K of it in taxes. That probably doesn't sound so bad except a lot of things that people think are deductible are absolutely NOT deductible. When the economy was great business had lots of employees and large workspaces, equipment, etc. As you lose those workers your lease on your large workspace doesn't just go away. If you haven't owned your own business you may not understand that commercial and residential services are much different. A small leases on an office space in my area is typically 5 years not the 6-12 months a residential lease is. You don't go month to month on your phone service. For 2 commercial lines here it is over $300 a month and you have to commit to a 3 year contract etc. Add lines and it goes up around $100 per line per month. So once you lose those workers you still have these exhorbitant expenses and many business borrow to get through it. The payments you make on those loans is NOT, I repeat, NOT deductible from income.

So let's say you make $250K after rent, utilities, payroll, etc. and make $75K in debt payments to cover those loans, you are still taxed as if you brought home $250 and NOT as if you brought home $175K. So you really bring home $175K less the $62500 in taxes so you brought home $112500. THEN since the IRS thinks you brought home $250K less the 62500, you are then taxed again personally as if you brought home $187500 instead of $112500. At a 25% tax rate again on the take home you pay another $46875 making your real net $65,625. Also mind you as the owner of your own business your health insurance is not always tax deductible under the complicated self employment rubric. Our health insurance year before last was $19,200 but since the IRS thinks he brought home $187500 we wouldn't be able to deduct it. We also could not deduct our home mortgage interest and out of $10K in daycare costs we were only able to deduct something like $600. So out of $65625 he also paid $19200 in health insurance which now brings the net down to $46425.00.

 These aren't real numbers but they aren't that far off (our tax rate was 27% last yer and we came NOWHERE close to $250K even in gross profit). Someone earning 50K as a nurse in a hospital has a 7.7% tax rate and likely has some if not most of their health insurance covered for them along with other employee benefits. I

 Please tax us harder. We're greedy rich people and deserve to pay.

we both own our own business and both employee people.  It's weird to me that you couldn't deduct your health insurance or mortgage insurance.  we've always been able to do that.  Is it because you were in a higher tax bracket.  DH wants to either build his own studio or buy one and the bank said its a 15 year term.  If he ever made $250,000 I would never want to be taxed more, that's just not right.  He works hard to make whatever money he makes.  If that ever happened I would hope that our CPA would help us find as many deductions as possible to lower that amount. 

snp605

mrszee2b:

Jan8:

MommyLiberty5013:

NastyAnnie:

MommyLiberty5013:

Well, to be fair that video that was just posted in another thread accused the wealthy Americans of using tax loopholes...not poor or middle class Americans. I've always associated the use of loopholes with the wealthy trying to "get out" of something...like paying taxes.

So, in my mind it made sense, compromise wise for the Reps to say they'd close loopholes as part of compromise with the increased taxes. Loopholes being closed took something away from the wealthy to prevent then from avoiding taxes.

Deductions are things that middle, lower middle, and working class people use to stay afloat. Child tax credit, earned income credit, deductions for mortgages, student loan payments, charitable donations... Loopholes do usually effect the wealthier Americans (because typically they involve storing money offshore) but it's not *just* loopholes, and Middle Class America can take advantage of those too.

Austerity doesn't help economies bounce back, which is being proven right now in Europe. Now isn't the time to cut income from the middle and working classes.  

Agreed. "Now is the time for all good men to come to aid of their country." We need to stop spending. Stimulus. Entitlements. Stop class warfare. Don't gouge any one group. Just cut more spending!

When you say stop class warfare and don't gouge any one group. Just cut more spending!  Where would you like to cut spending from?  Clearly, cutting entitlements is class warfare and going after one group. The poor.  I think we can all agree Romney is rich. Do you think cutting entitlements will hurt him?  Would gouge him?

Why do people think the poor dont work hard enough?  Being poor does not mean you are lazy. Honestly, we all need people to work low paying jobs because someone has to. Since Im not going to do it, I dont mind helping them through entitlements have a decent standard of living.

My pastor preached on this last Sunday. We are doing a month long series on what would Jesus do. It was so good. I just can't imagine Jesus saying lets cut Medicaid, food stamps and Medicare.  That would never happen. I could imagine him saying why are you spending so much on the military. 

ITA!  

I fully believe that the R's strategy of ending/limiting deductions and closing loopholes would increase taxes on the middle class.  I think it's crazy that capital gains are taxed at such a low rate, and I don't believe that raising it to 20% would have a negative effect on investing.  I just don't.

There was a fantastic series in the NYT this week about corporate subsidies.  It was called "The United States of Subsidies".  Very eye-opening.

raising capital gains is just inherently wrong because you are confusing wealth with income. Income is already taxed. People buy things that have gains  and subject to capital gains tax with their after tax income dollars. These increase in value because they have been saved not because of any nefarious underdealings. So essentially you are punishing someone for saving. Also it discourages risk taking because the highest returns on things like investments come from risk taking. Where does the capital to build and expand businesses come from without shareholders willing to pony up and take the risk that this may or may not become a great enterprise?

 Further they are unfair in the way they are calculated. Say you bought a home 40 years ago for $50K and paid on it with income dollars that were earned and paid on the value of the dollar at that time. Now your house is worth $600K. Your gain is $550K. Meanwhile your neighbors own the same house and have mortgaged and borrowed for various expenses over the years as they upgraded from one house to the next staying under the capital gains mark just barely each time then used some of the profit for various expenses and luxuries putting the minimum down payment on the next house each time and getting a mortgage for the rest and they too sell their house for $600K. However when they bought it they mortgaged it so their net "profit" is $150K. Why is the first couple deserving of a 15% percent+ gouging? What makes them so "greedy"? Also since over the years the value of the dollar has decreased steadily the second couple actually made way more profit considering their borrowing entitled them to REAL gains and tax deductions. Capital gains have no consideration or adjustment for inflation.

So while it might feel good to tell people who have a big chunk in their hands to fork over more because they have it right now, they came about it the same way as everyone else in the same amounts. They just chose not to cash it out as early as everyone else did.

LuckyDad

I have absolutely zero sympathy for people who make a lot of money complaining about how high their taxes are/will be.

We grossed over 100K as a family for the first time this year. Our taxes are a hair too low. Anyone who makes more and thinks they are over taxed is silly.

cincychick35

NastyAnnie:

MommyLiberty5013:

Well, to be fair that video that was just posted in another thread accused the wealthy Americans of using tax loopholes...not poor or middle class Americans. I've always associated the use of loopholes with the wealthy trying to "get out" of something...like paying taxes.

So, in my mind it made sense, compromise wise for the Reps to say they'd close loopholes as part of compromise with the increased taxes. Loopholes being closed took something away from the wealthy to prevent then from avoiding taxes.

Deductions are things that middle, lower middle, and working class people use to stay afloat. Child tax credit, earned income credit, deductions for mortgages, student loan payments, charitable donations... Loopholes do usually effect the wealthier Americans (because typically they involve storing money offshore) but it's not *just* loopholes, and Middle Class America can take advantage of those too.

Austerity doesn't help economies bounce back, which is being proven right now in Europe. Now isn't the time to cut income from the middle and working classes.  

I don't believe that eliminating deductions was the plan, just capping the amount.  Besides, how many rich people do you know who claim the Earned Income Credit...I don't think there are any - the income limit to receive the credit is 50K.

And, a little austerity now may save us from becoming the next Europe. When we (the govt) borrows 40 cents out of every dollar that is spent...you have to slow down the rate of spending...we are on a unsustainable path to Greece. 

CinemaGoddess

LuckyDad:

I have absolutely zero sympathy for people who make a lot of money complaining about how high their taxes are/will be.

We grossed over 100K as a family for the first time this year. Our taxes are a hair too low. Anyone who makes more and thinks they are over taxed is silly.

Bingo.

I read on PCE back when the proboards people were here that under the Eisenhower administration, the wealthiest were taxed at 90%.

They managed to survive. 

The richiest of the rich can quit their biitchin'.

Lastly, $10 says there will be an agreement reached at the very last minute and then all the politicians, Obama included, will spend the next 3-4 weeks patting themselves on the back and running for their next term.

I hope that will enrage the American public to the point that they vote all Ds and Rs out of office by the 2020 presidential election. 

3rd party all the way, baby!

 

MommyLiberty5013

LuckyDad:

I have absolutely zero sympathy for people who make a lot of money complaining about how high their taxes are/will be.

We grossed over 100K as a family for the first time this year. Our taxes are a hair too low. Anyone who makes more and thinks they are over taxed is silly.

Taxes stifle growth. Plain and simple. They reduce the capital of individuals and of companies to hire more employees, maintain the employees they have, keep costs low (so customers pay less), and reinvest for the future to promote growth.

Should the 1-2% just turn over all of their income to the government? Would that make you happy?

Should they be taxed so much that their actual net income is more like a middle class income?

Is this a fair versus not fair issue to you?

 

CinemaGoddess

If the rich want to keep their money to spend on expanding their businesses, they need to sign a document saying as much.  As soon as the government discovers that they're spending their tax cut on personal or non-business related items, they lose it. 

 

MommyLiberty5013

CinemaGoddess:

LuckyDad:

I have absolutely zero sympathy for people who make a lot of money complaining about how high their taxes are/will be.

We grossed over 100K as a family for the first time this year. Our taxes are a hair too low. Anyone who makes more and thinks they are over taxed is silly.

Bingo.

I read on PCE back when the proboards people were here that under the Eisenhower administration, the wealthiest were taxed at 90%.

They managed to survive. 

The richiest of the rich can quit their biitchin'.

Lastly, $10 says there will be an agreement reached at the very last minute and then all the politicians, Obama included, will spend the next 3-4 weeks patting themselves on the back and running for their next term.

I hope that will enrage the American public to the point that they vote all Ds and Rs out of office by the 2020 presidential election. 

3rd party all the way, baby!

 

Fine. But what about the not so richest of the rich who aren't filthy rich, who aren't trust fund babies, who aren't the NBA stars or the Hollywood A-list, or the CEO, or the Mitt Romneys of the USA?

Do the people breaking their backs to make a business run not deserve to moan about this? Gone from their homes all day. No vacations. Etc.

90% is just absurd. It's robbery. No one should ever be forced to give 90% of their income for taxes.

We will never agree on this.

CinemaGoddess

90% got the national highway system created. 

My point about the 90% tax is that people were able to make things work being taxed at a point much much greater than they're being taxed at now and they're biitching about a 2% tax hike?

And the people being taxed aren't just simple Mom n' Pop business owners.  If you focuse solely on those folks then you're missing out on the big picture.

And I think it's absolutely ridiculous to imply that people who are middle class/working class don't work their fingers to the bone and are taking whatever vacations they want and are therefore unworthy of a tax break.   They also don't see their kids often because they're working to simply keep a roof over their head and food on the table, not to run a business. 

Girl, please.   I feel sorry for the people who can't feed their kids because they don't make a living wage.  They are the ones who deserve a tax break. 

So I guess we won't see eye-to-eye on this. 

GeraldoRivera

snp605:

vlagrl29:

we will never make $250,000.  that just seems insanely impossible.  I think of families that make that much have 2 very career driven people in it, mainly in the corporate world.  both DH and I have college degrees,  I actually have 2.  I consider us smart people, we are just in fields that don't make that much money.  who knows, maybe one day if DH every buys his photography studio and starts renting it out on the weekends for weddings and rents out some of the rooms to other freelancers as additional income.  but still even with that I don't see it happening.  Also, 2 million republicans did not vote this year.  They only thing I can think of why not is because romney was a mormon and was not conservative enough of a republican for them.  really every vote matters and I guess they were ok with obama winning

 

The problem with this line of thinking is that you are considering this as 2 career (or even 1) driven PEOPLE. Small businesses pay the INDIVIDUAL rate. So let's say my husband earned $250K in his business, his business would pay $62,500 of that in taxes at at 25% tax rate. THEN he would get taxed as an individual on what he brought home of that $250K at a similar tax rate. So on that $250K he would pay over $100K of it in taxes. That probably doesn't sound so bad except a lot of things that people think are deductible are absolutely NOT deductible. When the economy was great business had lots of employees and large workspaces, equipment, etc. As you lose those workers your lease on your large workspace doesn't just go away. If you haven't owned your own business you may not understand that commercial and residential services are much different. A small leases on an office space in my area is typically 5 years not the 6-12 months a residential lease is. You don't go month to month on your phone service. For 2 commercial lines here it is over $300 a month and you have to commit to a 3 year contract etc. Add lines and it goes up around $100 per line per month. So once you lose those workers you still have these exhorbitant expenses and many business borrow to get through it. The payments you make on those loans is NOT, I repeat, NOT deductible from income.

So let's say you make $250K after rent, utilities, payroll, etc. and make $75K in debt payments to cover those loans, you are still taxed as if you brought home $250 and NOT as if you brought home $175K. So you really bring home $175K less the $62500 in taxes so you brought home $112500. THEN since the IRS thinks you brought home $250K less the 62500, you are then taxed again personally as if you brought home $187500 instead of $112500. At a 25% tax rate again on the take home you pay another $46875 making your real net $65,625. Also mind you as the owner of your own business your health insurance is not always tax deductible under the complicated self employment rubric. Our health insurance year before last was $19,200 but since the IRS thinks he brought home $187500 we wouldn't be able to deduct it. We also could not deduct our home mortgage interest and out of $10K in daycare costs we were only able to deduct something like $600. So out of $65625 he also paid $19200 in health insurance which now brings the net down to $46425.00.

 These aren't real numbers but they aren't that far off (our tax rate was 27% last yer and we came NOWHERE close to $250K even in gross profit). Someone earning 50K as a nurse in a hospital has a 7.7% tax rate and likely has some if not most of their health insurance covered for them along with other employee benefits. I

 Please tax us harder. We're greedy rich people and deserve to pay.

Sounds like you need a new accountant. 

GeraldoRivera

Also, nobody was ever taxed at 90%. It was the top marginal bracket, set at $400,000 (which is a lot in TODAY's money, and it was a hell of a lot more in 1954 dollars).

 

ETA: adjusted for inflation, the top tax bracket in 1954 was 91% for those making $1,668,250 a year for a single person, $2,502,375 for head of household. That's INCOME not wealth. 

 

http://taxfoundation.org/article/us-federal-individual-income-tax-rates-history-1913-2011-nominal-and-inflation-adjusted-brackets

LuckyDad

MommyLiberty5013:

Taxes stifle growth. Plain and simple. They reduce the capital of individuals and of companies to hire more employees, maintain the employees they have, keep costs low (so customers pay less), and reinvest for the future to promote growth.

It's definitely not as simple as you make it sound. There's also a lot of good evidence when you cut taxes for the rich it just gets stuffed into offshore bank accounts, while the poor spend their tax cuts, which stimulates growth. If you're familiar with the Laffler Curve, I'm of the opinion we're at a point where we can still increase taxes and increase revenues without stifling growth. The fact is, the Bush Tax cuts have clearly not been stimulatory or grown the pie for anyone but the 0.1%

MommyLiberty5013:

Should the 1-2% just turn over all of their income to the government? Would that make you happy?

Should they be taxed so much that their actual net income is more like a middle class income?

Is this a fair versus not fair issue to you?

Of course not. You are either speaking in hyperbole or trying to set up a Straw Man. The nature of marginal tax brackets is as you go up in tax brackets you will ALWAYS net significantly more income than those below you.  Rich people were hardly handing over all their income to the government under Bill Clinton. The sky won't collapse if we go back to the Clinton tax rates for the wealthiest Americans.

This is a fair vs. not fair issue to me. For me fairness involves taking money from those who can afford it and not taking it from those who have the least. Just call me Robin Hood.