Taxes

[K-S-U-Wildcats!]

The black market issue is a valid concern, and that's one reason why the IRS couldn't be disbanded completely.

that's actually why it would have to be expanded significantly

There's no way to know that with any certainty, but I highly doubt it. In any event, I don't see the black market as a major drawback to the fairtax. Under the current income tax system, there's a huge "black market" in people hiding / not reporting income. We still have plenty of revenue. It would seem that the fairtax is probably easier to enforce, since you can derive income and hide it in any number of ways.

[Emo EMAW]

It's your duty as an American to avoid as many taxes as possible, even if you have to do it unscrupulously. 

[steve dave]

The black market issue is a valid concern, and that's one reason why the IRS couldn't be disbanded completely.

that's actually why it would have to be expanded significantly

There's no way to know that with any certainty, but I highly doubt it. In any event, I don't see the black market as a major drawback to the fairtax. Under the current income tax system, there's a huge "black market" in people hiding / not reporting income. We still have plenty of revenue. It would seem that the fairtax is probably easier to enforce, since you can derive income and hide it in any number of ways.

it's much more difficult/expensive to enforce. the gov. is going from monitoring what is usually 1 or 2 payments a month for most of the salaried US citizenry to having to monitor hundreds of transactions every month for everyone who makes domestic purchases.

[steve dave]

and this REALLY would eff the credit card user wanting to make domestic purchases on the DL 

but you really have to feel good about getting all that additional spend 

[john "teach me how to" dougie]

Rus rents

Well, the mortgage interest deduction also encouraged the subprime/interest-only loans that were a major catalyst for the recession. And higher home ownership rates made the workforce less mobile, thereby making the recession worse. Also it is primarily a benefit for the very rich, especially where I live.

I don't think any of that is true. I'm pretty sure stated income loans and reckless bank investments were the main catalyst for the recession.

Yeah, I guess those two things are completely unrelated to home ownership rates.

LOL. Those two things completely unrelated to the mortgage interest deduction.

[K-S-U-Wildcats!]

The mortgage interest deduction arguably provides some incentive for people to purchase homes, so this could be a very remote contributing factor to all the shitty subprime loans that we originated in the early 2000s, but there were far bigger reasons for the subprime bubble and subsequent collapse. My work touches on this industry.

[michigancat]

Rus rents

Well, the mortgage interest deduction also encouraged the subprime/interest-only loans that were a major catalyst for the recession. And higher home ownership rates made the workforce less mobile, thereby making the recession worse. Also it is primarily a benefit for the very rich, especially where I live.

I don't think any of that is true. I'm pretty sure stated income loans and reckless bank investments were the main catalyst for the recession.

Yeah, I guess those two things are completely unrelated to home ownership rates.

LOL. Those two things completely unrelated to the mortgage interest deduction.

Rus rents

Well, the mortgage interest deduction also encouraged the subprime/interest-only loans that were a major catalyst for the recession. And higher home ownership rates made the workforce less mobile, thereby making the recession worse. Also it is primarily a benefit for the very rich, especially where I live.

I don't think any of that is true. I'm pretty sure stated income loans and reckless bank investments were the main catalyst for the recession.

Yeah, I guess those two things are completely unrelated to home ownership rates.

LOL. Those two things completely unrelated to the mortgage interest deduction.

what were those stated income loans for? What were the risky investments?

The mortgage interest deduction arguably provides some incentive for people to purchase homes,

It arguably provides some incentive to purchase homes? If it doesn't do that, what's the point?

[john "teach me how to" dougie]

Rus rents

Well, the mortgage interest deduction also encouraged the subprime/interest-only loans that were a major catalyst for the recession. And higher home ownership rates made the workforce less mobile, thereby making the recession worse. Also it is primarily a benefit for the very rich, especially where I live.

I don't think any of that is true. I'm pretty sure stated income loans and reckless bank investments were the main catalyst for the recession.

Yeah, I guess those two things are completely unrelated to home ownership rates.

LOL. Those two things completely unrelated to the mortgage interest deduction.

Rus rents

Well, the mortgage interest deduction also encouraged the subprime/interest-only loans that were a major catalyst for the recession. And higher home ownership rates made the workforce less mobile, thereby making the recession worse. Also it is primarily a benefit for the very rich, especially where I live.

I don't think any of that is true. I'm pretty sure stated income loans and reckless bank investments were the main catalyst for the recession.

Yeah, I guess those two things are completely unrelated to home ownership rates.

LOL. Those two things completely unrelated to the mortgage interest deduction.

what were those stated income loans for? What were the risky investments?

Just stop.  Whether or not the mortgage interest deduction was available or not had nothing to do with stated income loans or bad bank investments in those loans.

The mortgage interest deduction arguably provides some incentive for people to purchase homes,

It arguably provides some incentive to purchase homes? If it doesn't do that, what's the point?

You're not increasing your wealth with money spent on mortgage interest, so that money shouldn't be taxed as income. The gov wants more people to own homes, not fewer.

[Rage Against the McKee]

You're not increasing your wealth with money spent on mortgage interest, so that money shouldn't be taxed as income. The gov wants more people to own homes, not fewer.

I agree, but I also believe you should be able to apply that same logic to all loans you are paying, even for those who pay credit card interest. Why give special treatment to homeowners?

[michigancat]

You're not increasing your wealth with money spent on mortgage interest, so that money shouldn't be taxed as income. The gov wants more people to own homes, not fewer.

I agree, but I also believe you should be able to apply that same logic to all loans you are paying, even for those who pay credit card interest. Why give special treatment to homeowners?

CC interest actually used to be tax deductible. It got taken away when Reagan was in office because it encouraged over-spending and over-borrowing. Apparently it does not encourage over-spending and over-borrowing on homes.

[GCJayhawker]

Off the subject of home mortgage loans, I heard Mike Huckabee say today we need to do away with the IRS. Solid plan Mike, solid plan.

[06wildcat]

I'm interested to hear why KSU believes he's in the top 5 percent of tax payers with an effective rate of 15 percent, because that's actually pretty damn low for someone still working and being at 5 percent earner.

Effective tax rate is lower than marginal rate. You simply divide total FIT paid by gross income. As you can see below, a 15.6% effective rate is pretty damned high. It's higher than approximately 95% of all Americans.



Because I'm a relateivly high wage earner, I'm in prime fleecing position. Obama would say I'm "rich," but I'm not rich enough to derive most of my income from capital gains or otherwise shelter my income from ordinary income tax rates.

Umm, your chart simply means the average effective tax rate for someone in the 95th income percentile is about 12 percent. Just because you have a higher effective tax rate doesn't automatically put you into the 95 percentile. It's possible to have a higher effective rate and be lower in income.

If you're earning more than $210K/year (according to the chart) then you indeed are in the 95th percentile and are also paying about 3 percentage point higher then your peers on your effective tax rate.

[Rams]

so who would have to pay this sales tax (fair tax)?  I'm assuming it's the end consumer, but how do you determine who the end consumer is?  if that's the case, couldn't you just claim to be a wholesaler and avoid the tax altogether?  How do you make sure each item (and everything used to make it) are only taxed once?

ftr, instituting a national sales tax is the absolute worst idea in history for a consumer based economy like ours.

[K-S-U-Wildcats!]

Umm, your chart simply means the average effective tax rate for someone in the 95th income percentile is about 12 percent. Just because you have a higher effective tax rate doesn't automatically put you into the 95 percentile. It's possible to have a higher effective rate and be lower in income.

If you're earning more than $210K/year (according to the chart) then you indeed are in the 95th percentile and are also paying about 3 percentage point higher then your peers on your effective tax rate.

You are correct, but these are the closest numbers I can find. Those who are in the 95th percentile of income pay, on average, an effective FIT rate of approximately 15%, which is significantly more than most Americans. As you point out, that doesn't necessarily mean that I pay a higher effective tax rate than 95% of the country, but I'd bet that's a pretty close approximation. If you can find the actual numbers, I'd love to see them.

[Rage Against the McKee]

Umm, your chart simply means the average effective tax rate for someone in the 95th income percentile is about 12 percent. Just because you have a higher effective tax rate doesn't automatically put you into the 95 percentile. It's possible to have a higher effective rate and be lower in income.

If you're earning more than $210K/year (according to the chart) then you indeed are in the 95th percentile and are also paying about 3 percentage point higher then your peers on your effective tax rate.

You are correct, but these are the closest numbers I can find. Those who are in the 95th percentile of income pay, on average, an effective FIT rate of approximately 15%, which is significantly more than most Americans. As you point out, that doesn't necessarily mean that I pay a higher effective tax rate than 95% of the country, but I'd bet that's a pretty close approximation. If you can find the actual numbers, I'd love to see them.

It most likely balances out at the state and local level, where you pay a significantly lower percentage of your income on sales tax and property tax than those less fortunate.

[K-S-U-Wildcats!]

Umm, your chart simply means the average effective tax rate for someone in the 95th income percentile is about 12 percent. Just because you have a higher effective tax rate doesn't automatically put you into the 95 percentile. It's possible to have a higher effective rate and be lower in income.

If you're earning more than $210K/year (according to the chart) then you indeed are in the 95th percentile and are also paying about 3 percentage point higher then your peers on your effective tax rate.

You are correct, but these are the closest numbers I can find. Those who are in the 95th percentile of income pay, on average, an effective FIT rate of approximately 15%, which is significantly more than most Americans. As you point out, that doesn't necessarily mean that I pay a higher effective tax rate than 95% of the country, but I'd bet that's a pretty close approximation. If you can find the actual numbers, I'd love to see them.

Never mind. I found them.



http://taxfoundation.org/blog/least-90-percent-americans-have-lower-income-tax-rate-romney

In 2011, somewhere between 95 and 97 percent of Americans had a lower effective income tax rate than Romney’s 15.4 percent, at least according to the latest IRS data from 2010.

So yeah, I was right.

[K-S-U-Wildcats!]

Umm, your chart simply means the average effective tax rate for someone in the 95th income percentile is about 12 percent. Just because you have a higher effective tax rate doesn't automatically put you into the 95 percentile. It's possible to have a higher effective rate and be lower in income.

If you're earning more than $210K/year (according to the chart) then you indeed are in the 95th percentile and are also paying about 3 percentage point higher then your peers on your effective tax rate.

You are correct, but these are the closest numbers I can find. Those who are in the 95th percentile of income pay, on average, an effective FIT rate of approximately 15%, which is significantly more than most Americans. As you point out, that doesn't necessarily mean that I pay a higher effective tax rate than 95% of the country, but I'd bet that's a pretty close approximation. If you can find the actual numbers, I'd love to see them.

It most likely balances out at the state and local level, where you pay a significantly lower percentage of your income on sales tax and property tax than those less fortunate.

I highly doubt that, especially when it comes to property tax. I did the math this year, and adding FIT, FICA, KS income tax, real and personal property taxes, and (approximate) sales tax, I paid about 35% of my income in taxes.

[sys]

there is tax avoidance and tax cheating in any taxation system.  that wouldn't change, but there's also no reason to assume that the % of the gdp that passes untaxed currently would go up.  if anything, the opposite is probable.  countries with cultures that are largely accepting of tax fraud (the us is nothing close to this), rely a great deal on point of sale taxes because they're a generally easier to collect than are income taxes.

there's no reason to assume that people that don't cheat on their income taxes would suddenly start cheating.  and while, steve dave may think he'd going to be smuggling in his new roof from canada, i think once he evaluates his travel costs, risk of significant fines and jail time, etc he'll probably settle for a new pair of shoes every couple of years.

[sys]

ftr, instituting a national sales tax is the absolute worst idea in history for a consumer based economy like ours.

more developed countries have a vat than don't.

[Rams]

ftr, instituting a national sales tax is the absolute worst idea in history for a consumer based economy like ours.

more developed countries have a vat than don't.

I know.  that doesn't mean it's not a horrible idea.

[michigancat]

A VAT is completely different from the national sales tax proposed in this thread.

[Rams]

A VAT is completely different from the national sales tax proposed in this thread.

well I wouldn't say it's completely different.  they're both taxes that are attached to goods rather than income.  the negative effect on a consumption based economy would be the same.

[michigancat]

A VAT is completely different from the national sales tax proposed in this thread.

well I wouldn't say it's completely different.  they're both taxes that are attached to goods rather than income.  the negative effect on a consumption based economy would be the same.

yeah

[sys]

A VAT is completely different from the national sales tax proposed in this thread.

it's extremely similar.

[sys]

the negative effect on a consumption based economy would be the same.

more likely to be neutral or positive.

http://www.nber.org/papers/w12307.pdf?new_window=1