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How Taxes Really Work

Old 01-07-2011, 12:02 PM
  #11  
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Originally Posted by dbrault17 View Post
What if the guy who pays the most for beer, drinks the most beer? In your example you assuming each man benifits the same amount. In reality the higher earners are the ones using more of the system.

In 26 years of my life I have used the court system one time which took a total of 15 minutes. Any boss I have had used it several times a year including multi year litigations.

I rely on the public transporation system generally for my own personal needs only. A higher earner or business may need that same system a thousand fold for customers, venders, employees, etc.

If China invades us tomarrow all I have to lose is pretty much what can fit into my car. A higher earner has much more to lose in real estate, businesses, material wealth, status, power etc.

Pursing a higher income is a choice and it cost money to establish and maintain an enviroment where an individual can obtain that higher income. The more money you make the more responsible you become to that system.
If you want to use the court system more, just hire a law firm-that is not free in case you have not noticed.

You are just like Bill Gates in that both of you can only ride one bus at a time.

The defense of your life and security is the same for all, unless you happen to think some lives are more valuable than others.

The other side of the coin is that you want one half of the group to be responsible, but have no problem letting half the group be completly irresponsible by paying nothing at all.

In a flat tax system, everyone would pay the same rate, higher earners would still pay the bulk of taxes, but it would allow everyone to pay their fair share.
The bottom line is that higher earners will always contribute more to the services you receive and to the economy, in fact just half of American taxpayers provide about 97% of what we all equally enjoy.
Thank one today.
Feel free to buck up and pay your fair share anytime.

Last edited by jungle; 01-07-2011 at 12:35 PM.
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Old 04-17-2011, 07:02 AM
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The Internal Revenue Service tracks the tax returns with the 400 highest adjusted gross incomes each year. The average income on those returns in 2007, the latest year for IRS data, was nearly $345 million. Their average federal income tax rate was 17 percent, down from 26 percent in 1992.
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Old 04-17-2011, 07:32 AM
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Originally Posted by NWARet View Post
The Internal Revenue Service tracks the tax returns with the 400 highest adjusted gross incomes each year. The average income on those returns in 2007, the latest year for IRS data, was nearly $345 million. Their average federal income tax rate was 17 percent, down from 26 percent in 1992.
Actually that is due to the top 400 making most of their income through capital gains, it is not Federal income tax rates.

Take a look at the overall picture:http://economix.blogs.nytimes.com/20...-pay-in-taxes/

But the REAL effective rate for most of us is around 40%, this is including all taxes at the State, Federal and Local level.

http://articles.moneycentral.msn.com...TaxRate40.aspx

Even with a defacto flat tax the top 1% are still contributing about 40% of the Federal tab, and the top 50% are kicking in about 97% of the Federal tab.

Bottom line, spending is so far out of control that taxes cannot possibly cover it. Edging above that 40% real rate would cripple most people, ergo the prolific use of the printing press, which will cripple them in a completely democratic fashion.

Simple calls of injustice of this or that particular rate are a favorite of the media, and a good way to distract from the reality of the overall system we are forced to deal with, which is in fact very close to most socialist countries in percentage of overall take.
The simple answers are almost always wrong. When about half of us pay no Federal tax, it creates a system only willing to be halfway responsible and completely ignorant of the consequences. That half so dependent on the other is getting nailed anyway, one way or the other.

The machinery is cruel and complex, but it grinds quite finely and completely.

Last edited by jungle; 04-17-2011 at 08:04 AM.
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Old 04-17-2011, 07:57 AM
  #14  
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Originally Posted by jungle View Post
Actually that is due to the top 400 making most of their income through capital gains, it is not Federal income tax rates.

Take a look at the overall picture:How Much Americans Actually Pay in Taxes - NYTimes.com

But the REAL effective rate for most of us is around 40%, this is including all taxes at the State, Federal and Local level.

Your real tax rate: 40% - MSN Money

Even with a defacto flat tax the top 1% are still contributing about 40% of the Federal tab, and the top 50% are kicking in about 97% of the Federal tab.
I only claim one exemption, and my breakdown for 2010 is as follows:

Federal - 13.4%
State - 4.7% (GA)
Medicare - 1.5%
SS - 6.6%

Income tax liability (I'm overpaying, by the way) is 26.2%... Taking the easy way out, TurboTax (I don't file flight crew tax deductions, but based on the returns I've heard I think I'll start), my return was 19% of the total amount paid... so, my effective rate for 2010 was 21%

Judging by the numbers of similar longevity pilots at my company, I could have had an effective tax rate of 13.1% approximately, based on the available deductions for flight crew...
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Old 04-17-2011, 08:18 AM
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Originally Posted by cencal83406 View Post
I only claim one exemption, and my breakdown for 2010 is as follows:

Federal - 13.4%
State - 4.7% (GA)
Medicare - 1.5%
SS - 6.6%

Income tax liability (I'm overpaying, by the way) is 26.2%... Taking the easy way out, TurboTax (I don't file flight crew tax deductions, but based on the returns I've heard I think I'll start), my return was 19% of the total amount paid... so, my effective rate for 2010 was 21%

Judging by the numbers of similar longevity pilots at my company, I could have had an effective tax rate of 13.1% approximately, based on the available deductions for flight crew...
Exceptions exist at both ends of the spectrum. The real cost of medicaid and SS is 15.3 %, it is just that your employer pays about half of that very real tax. That is money you don't get as a result.

Did you consider property tax? Even if you rent, you are paying it. Did you consider the hidden costs of corporate tax? You are paying those too, every time you buy something. Once you get beyond the simple methodology of turbo whatever, you will find many things you may not be aware of at all. They like it that way.

By contrast, many large metro area residents pay a real rate near 50% when all taxes are considered.

Tax In the U.S.A. - 6+ Months to Government
The following is an example of an actual individual's tax rate. The graphic artist's salary was $45K, effectively $48K when you add the extra charges from the government. For more than six months of the year she effectively worked for the state - politicians who represent maybe 20% of the populous, if they are lucky, then decided what to do with more than six months of her labor.

CALCULATING REAL TAX RATES
Annual
Monthly

Gross Employee Pay
$ 48,443
$ 4,037

Salary
$ 45,000
$ 3,750

Federal Withholding Tax
$ 8,184
$ 682

Medicare Employee Tax
$ 653
$ 54

Social Security Employee Tax
$ 2,790
$ 233

CA Withholding Tax
$ 2,335
$ 195

CA Disability Employee Tax
$ 360
$ 30

TOTAL Withheld From Employee
$ 14,322
$ 1,193

Net Take Home Pay
$ 30,678
$ 2,557

Federal Unemployment - Employer Tax
$ -
$ -

Medicare Employer Tax
$ 653
$ 54

Social Security Employer Tax
$ 2,790
$ 233

CA Unemployment Employer Tax
$ -
$ -

TOTAL Employer Tax
$ 3,443
$ 287

TOTAL Wages TAX
$ 17,764
$ 1,480

Tax Rate On Wages
37%
37%





Other Taxes



8% Sales Tax on 60% of Net Take-home Pay
$ 1,473
$ 123

1% Property Tax Ave Home Value of $500K
$ 5,000
$ 417

Telephone Tax
$ 230
$ 19

Road Tax
$ 375
$ 31

Gas Tax
$ 347
$ 29

Other Tax Total
$ 7,425
$ 619

Tax Rate on Other Taxes
15%
15%

TOTAL TAX
$ 25,189
$ 2,099

Actual Total Tax Rate
52%
52%

Last edited by jungle; 04-17-2011 at 09:14 AM.
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Old 04-18-2011, 06:44 AM
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A simple solution to the "head in the sand" affliction of the general populace would be to stop automatically withholding taxes from one's paycheck. Make everyone write a check for your taxes at the end of the month. And I can sit back and watch the explosive growth of my "Torch and Pitchfork" franchise.
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Old 05-09-2011, 09:40 AM
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Originally Posted by Dougdrvr View Post
A simple solution...Make everyone write a check for your taxes at the end of the month.

How about having the federal government assign each of us (who are actually paying the income tax) specific people to support/sponsor with our hard earned money. Each member of the non-income-tax paying group (47% of the population!!) could have a "sponsor".

In the memo section of the check, allocate the money specifically to your sponsorees along with dollar amounts assigned by the government.

That way we would know exactly who our money is going to and it would even cut out some of the middle men (big govt) allowing us to sponsor even more!
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Old 06-12-2011, 03:13 PM
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This is an article done by a national news agency (not just some blogger) showing that raising taxes on the rich does not make them move to another place where there are more "entitlement programs" for them.

Studies: Rich Don't Flee High-Tax States : Planet Money : NPR
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Old 06-12-2011, 04:31 PM
  #19  
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Originally Posted by Badgeman View Post
This is an article done by a national news agency (not just some blogger) showing that raising taxes on the rich does not make them move to another place where there are more "entitlement programs" for them.

Studies: Rich Don't Flee High-Tax States : Planet Money : NPR
Do yourself a favor and read up on the Laffer Curve and Hauser's Law before you quote inane "studies" that contradict reality.

Take a look at all of the large corporations threatening to leave Illinois and understand that taxes effect both movement within the US and outside the US.

Take a look at all the US corporations moving to Switzerland and why.

People and corporations don't ever stand still when they are shot at, they react in a logical manner. Boeing and Charleston? Always.

NPR does not have a very good reputation for sound financial advice, they are very good at following a party line though.

Japanese and German car manufacturers picked the Southeastern US as a location largely based on taxes.

The truth is always a tough nut, but it is inescapable.

Last edited by jungle; 06-12-2011 at 04:43 PM.
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Old 06-13-2011, 08:15 AM
  #20  
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Originally Posted by Badgeman View Post
This is an article done by a national news agency (not just some blogger) showing that raising taxes on the rich does not make them move to another place where there are more "entitlement programs" for them.

Studies: Rich Don't Flee High-Tax States : Planet Money : NPR
If this were true, California jobs and businesses wouldn't be flooding Texas, the populations of IL, NY, and MA wouldn't continue to decline while lower tax or tax free states continue to grow.
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