15% income tax? How is that possible?

[OohPooPahDoo]

Maybe I'm not understanding your question, if an investor such as Warren Buffett makes 100 million bucks in a year and 90% of his/her income is from capital gains, then their tax rate is not going to be too far above the 15% cg rate.

Now if you want to propose that the cg rate be raised, then you have to understand that some investment capital will flow out of the country to places where it'll be taxed less. That tax rate is perhaps the most damaging to the economy if you raise it.

If an investor such as Warren Buffett makes $100 Million through a corporation then the corporation is subject to corporate income tax first, which is 35% at that level. Then he as an investor can take that money for himself and pay a personal capital gains rate of 15%. So if the venture makes $100 Million in a year the actual after tax result is $55.25 Million, for a total federal tax rate of 44.75%.

No. The capital gains tax is only paid on realized gains - whereas corporate income tax is paid on net profit, realized or not. And it doesn't apply just to corporations. For instance - you can buy real estate for $10000, sell it for $20000 - and get taxed only 15% on your $10000 profit.

 

[OohPooPahDoo]

if i can ever reach a stage where I pay no income taxes, then God bless me! I would have no feelings of guilt....not after paying near 30 grand a year in taxes for several years in a row.....during my working years with Matt.

now that i am retired and matt is semi retired (working a little more than part time), with very little income coming in, with deductions, we come close to not having to pay any income tax and every year when doing our income tax return, I shoot for not having to pay any at all....haven't reached it yet, but am trying my hardest!

I feel no GUILT for such, I am not lesser of a human or not lesser of a citizen!

if you do not allow the middle class or the poor their deductions that bring them down to paying nil in income taxes then YOU WILL NOT GET THOSE DEDUCTIONS EITHER, and YOU will be paying much more than now in income taxes...

Is that what you REALLY WANT?

i doubt it.....

No. What I want is a tax code that treats everyone exactly the same. No deductions, no loopholes, no breaks, no progressive rates. If the theory is we all derive benefit from what we pay in taxes then no one ought to be exempt from paying them, regardless of your income or stage in life.

No deductions? How the hell would that even make sense? You're going to tax business on their gross receipts and not their profits? That's absurd!

 

[Bern80]

if i can ever reach a stage where I pay no income taxes, then God bless me! I would have no feelings of guilt....not after paying near 30 grand a year in taxes for several years in a row.....during my working years with Matt.

now that i am retired and matt is semi retired (working a little more than part time), with very little income coming in, with deductions, we come close to not having to pay any income tax and every year when doing our income tax return, I shoot for not having to pay any at all....haven't reached it yet, but am trying my hardest!

I feel no GUILT for such, I am not lesser of a human or not lesser of a citizen!

if you do not allow the middle class or the poor their deductions that bring them down to paying nil in income taxes then YOU WILL NOT GET THOSE DEDUCTIONS EITHER, and YOU will be paying much more than now in income taxes...

Is that what you REALLY WANT?

i doubt it.....

No. What I want is a tax code that treats everyone exactly the same. No deductions, no loopholes, no breaks, no progressive rates. If the theory is we all derive benefit from what we pay in taxes then no one ought to be exempt from paying them, regardless of your income or stage in life.

No deductions? How the hell would that even make sense? You're going to tax business on their gross receipts and not their profits? That's absurd!

But not absurd when that's essentially how we tax individuals?

 

[OohPooPahDoo]

No. What I want is a tax code that treats everyone exactly the same. No deductions, no loopholes, no breaks, no progressive rates. If the theory is we all derive benefit from what we pay in taxes then no one ought to be exempt from paying them, regardless of your income or stage in life.

No deductions? How the hell would that even make sense? You're going to tax business on their gross receipts and not their profits? That's absurd!

But not absurd when that's essentially how we tax individuals?

If you want to kill the economy, go for it. Taxing a business based on its gross receipts is the dumbest thing I've ever heard.

 

[Bern80]

No deductions? How the hell would that even make sense? You're going to tax business on their gross receipts and not their profits? That's absurd!

But not absurd when that's essentially how we tax individuals?

If you want to kill the economy, go for it. Taxing a business based on its gross receipts is the dumbest thing I've ever heard.

Again why? I'm not trying to be argumentative (you actually might be on to something). But why is it so absurd for a business (which the law actually treats like a person) to pay taxes on its gross income, when it's so NOT absurd for you to pay taxes on your gross income?

 

[Care4all]

But not absurd when that's essentially how we tax individuals?

If you want to kill the economy, go for it. Taxing a business based on its gross receipts is the dumbest thing I've ever heard.

Again why? I'm not trying to be argumentative (you actually might be on to something). But why is it so absurd for a business (which the law actually treats like a person) to taxes on its gross income, when it's so NOT absurd for you to pay taxes on your gross income.

we as individuals pay taxes on our supposed profit, just like businesses....why do you think there are so many deductions available to use or the standard and personal deductions if filing short form or a gross income and a ''taxable income''?

 

[racewright]

But the investor doesn't pay the corporate taxes, they only pay taxes on the income that is distributed to them via a realized gain.

True, but as has been shown there's more to the story (and much more in taxes) than just the money that Buffett or the Koch brothers collect as dividends. Warren Buffett never mentioned that besides his personal income tax rate of 17% there were all the corporate tax rates he paid through the various corporations that he owns.

The money paid in taxes by the corporation isn't his money. The corporation is a separate entity.

Yes but he can give himself a super large draw/salary and avoid the larger corp tax and pay the smaller personal tax.

Fair tax is the true fair tax system and those who wish to not have a fair tax system are fearful that they might have to pay a fair tax.

 

[Care4all]

True, but as has been shown there's more to the story (and much more in taxes) than just the money that Buffett or the Koch brothers collect as dividends. Warren Buffett never mentioned that besides his personal income tax rate of 17% there were all the corporate tax rates he paid through the various corporations that he owns.

The money paid in taxes by the corporation isn't his money. The corporation is a separate entity.

Yes but he can give himself a super large draw/salary and avoid the larger corp tax and pay the smaller personal tax.

Fair tax is the true fair tax system and those who wish to not have a fair tax system are fearful that they might have to pay a fair tax.

if he gives himself a super large salary, then HE WILL BE the one taxed at the 35% level instead of the 15% level....

the whole reason people like him and most ALL CEO's take stock options in lieu of salary, so they can personally pay less in taxes....

 

[Care4all]

he would have to pay 35% on taxable income each year....with capital gains, he only pays it, when he sells his stock and only on the profit.

in the long run, it comes out better for the individual to take his pay via stocks...

 

[8537]

True, but as has been shown there's more to the story (and much more in taxes) than just the money that Buffett or the Koch brothers collect as dividends. Warren Buffett never mentioned that besides his personal income tax rate of 17% there were all the corporate tax rates he paid through the various corporations that he owns.

The money paid in taxes by the corporation isn't his money. The corporation is a separate entity.

Yes but he can give himself a super large draw/salary and avoid the larger corp tax and pay the smaller personal tax.

The smaller personal tax? The TMR on income is 35%. There are only a couple bands of corporate income taxed above that rate.

 

[OohPooPahDoo]

But not absurd when that's essentially how we tax individuals?

If you want to kill the economy, go for it. Taxing a business based on its gross receipts is the dumbest thing I've ever heard.

Again why? I'm not trying to be argumentative (you actually might be on to something). But why is it so absurd for a business (which the law actually treats like a person) to pay taxes on its gross income, when it's so NOT absurd for you to pay taxes on your gross income?

Why? Do I seriously have to explain this?

A typical business is lucky if they have a 10% margin. That means their cash in exceeds their cash out by 10% - their profit on $1 in gross receipts is 10 cents. If you tax their gross proceeds even at the low low rate of 10% - you've taken all of their profit moron!, Not to mention other businesses with lower margins, like grocery stores with their razor thin margins.

 

[Care4all]

they get stock options as pay/bonus....they pay no taxes when given the options and in 3 months etc when they decide to exercise the option, they pay the company the discounted rate for the stock when it was given to them and pay no taxes until they sell the stock, and then, only on the gain.

every time they exercise these stock options, it dilutes the value of all the other stock holder's stocks, if i understand the scheme correctly....?

 

[code1211]

someone making a hundred grand a year, who ends up paying only $500 bucks in taxes after they have taken all of their deductions or someone making 50 grand a year but pays zero after they have taken all of their legal deductions........are they put in this group you all constantly criticize?

I think everyone should pay taxes. i don't criticize those who do not. I just think the system is rigged incorrectly. It will be rigged to some extent no matter what the system ends up being.

Even if it's only one dollar, everyone should pay something.

A simple graduated table for taxes would be just fine. Income = x. Find x on the tables. Send it in.

Your taxes should be figured on the top half of an 8 1/2 x 11 sheet of paper. The tax tables could be on the bottom half. The IRS could be be retired, replaced by the folks who open the mail and deposit the checks.

 

[code1211]

if i can ever reach a stage where I pay no income taxes, then God bless me! I would have no feelings of guilt....not after paying near 30 grand a year in taxes for several years in a row.....during my working years with Matt.

now that i am retired and matt is semi retired (working a little more than part time), with very little income coming in, with deductions, we come close to not having to pay any income tax and every year when doing our income tax return, I shoot for not having to pay any at all....haven't reached it yet, but am trying my hardest!

I feel no GUILT for such, I am not lesser of a human or not lesser of a citizen!

if you do not allow the middle class or the poor their deductions that bring them down to paying nil in income taxes then YOU WILL NOT GET THOSE DEDUCTIONS EITHER, and YOU will be paying much more than now in income taxes...

Is that what you REALLY WANT?

i doubt it.....

That's exactly what I want. Lower the rate of taxation, eliminate all deductions. Deductions are just the government engineering outcomes. The game is rigged and you can't win. At least allow the rules to be simple and understandable.

 

[Care4all]

if i can ever reach a stage where I pay no income taxes, then God bless me! I would have no feelings of guilt....not after paying near 30 grand a year in taxes for several years in a row.....during my working years with Matt.

now that i am retired and matt is semi retired (working a little more than part time), with very little income coming in, with deductions, we come close to not having to pay any income tax and every year when doing our income tax return, I shoot for not having to pay any at all....haven't reached it yet, but am trying my hardest!

I feel no GUILT for such, I am not lesser of a human or not lesser of a citizen!

if you do not allow the middle class or the poor their deductions that bring them down to paying nil in income taxes then YOU WILL NOT GET THOSE DEDUCTIONS EITHER, and YOU will be paying much more than now in income taxes...

Is that what you REALLY WANT?

i doubt it.....

That's exactly what I want. Lower the rate of taxation, eliminate all deductions. Deductions are just the government engineering outcomes. The game is rigged and you can't win. At least allow the rules to be simple and understandable.

I'm okay with something like that, only I believe we all should be given a standard deduction for the first 10k, for life's necessities...anything above that should be taxed.

what is considered "income" by the IRS(also by the Supreme Court) and labeled "taxable income", is suppose to be Profit....they are taxing our "profit" supposedly, similar to the tax on businesses....this is why there is a standard deduction and personal exemption deductions on our income tax filings, ( or the many deductions if filing long form)....they can not tax us on ALL of the income we make, but supposedly only income that is considered profit....

this would be the same with a flat tax, we would need the 10k deduction or there abouts(tied to COL would be even better), to cover our necessities to live, before the flat tax can apply.

 

[Wiseacre]

What about a 2% consumption tax, on top of the fair tax or flat tax? Exempt food and clothing, if you live here you pay something.

 

[OohPooPahDoo]

they get stock options as pay/bonus....they pay no taxes when given the options and in 3 months etc when they decide to exercise the option, they pay the company the discounted rate for the stock when it was given to them and pay no taxes until they sell the stock, and then, only on the gain.

every time they exercise these stock options, it dilutes the value of all the other stock holder's stocks, if i understand the scheme correctly....?

I think the main issue is how these options are reflected on the balance sheet.

The market value of an options contract almost always trades according to well understood theory - there exists numerical models that can compute - based on a few market factors like volatility of the underlying, interest rates, and expected dividend payments -the expected market value of a given options contract, and in the real world, those options almost always trade close to those theoretical values.

So if a company has the market value of the options they have given to employees marked as a liability on their asset sheets, then the shareholders can use this knowledge to appropriately value the stock. For instance, if the company issues X number of options contracts worth $10 each to employees, and they put this on their balance sheet, then the shareholders can take this into account. If the value of the stock goes up and the contract expires in the money, by that time, the effect of stock dilution will have already been taken into account.

 

[OohPooPahDoo]

they get stock options as pay/bonus....they pay no taxes when given the options and in 3 months etc when they decide to exercise the option, they pay the company the discounted rate for the stock when it was given to them and pay no taxes until they sell the stock, and then, only on the gain.

every time they exercise these stock options, it dilutes the value of all the other stock holder's stocks, if i understand the scheme correctly....?

I think the main issue is how these options are reflected on the balance sheet.

The market value of an options contract almost always trades according to well understood theory - there exists numerical models that can compute - based on a few market factors like volatility of the underlying, interest rates, and expected dividend payments -the expected market value of a given options contract, and in the real world, those options almost always trade close to those theoretical values. This can be done for any company whose stock trades at more than a few thousand shares daily (below a certain volume threshold, the market for that stock ceases to be efficient, and the options pricing models no longer apply - as they assume perfect market efficiency)

So if a company has the market value of the options they have given to employees marked as a liability on their asset sheets, then the shareholders can use this knowledge to appropriately value the stock. For instance, if the company issues X number of options contracts worth $10 each to employees, and they put this on their balance sheet, then the shareholders can take this into account. If the value of the stock goes up and the contract expires in the money, by that time, the effect of stock dilution will have already been taken into account.

 

[PLYMCO_PILGRIM]

All this back and forth doesn't change the fact that Warren Buffet was dishonest and Obama sat there ran with Buffet's his dishonesty when Buffet claimed to pay less than his secretary in income taxes.

Yes his capital gains tax rate is lower than his secretary's personal tax rate, before deductions, but his personal income tax rate is higher than his secretaries.

Hence the point of the thread, you guys are on some wild tangent now but its nice reading .

 

[code1211]

if i can ever reach a stage where I pay no income taxes, then God bless me! I would have no feelings of guilt....not after paying near 30 grand a year in taxes for several years in a row.....during my working years with Matt.

now that i am retired and matt is semi retired (working a little more than part time), with very little income coming in, with deductions, we come close to not having to pay any income tax and every year when doing our income tax return, I shoot for not having to pay any at all....haven't reached it yet, but am trying my hardest!

I feel no GUILT for such, I am not lesser of a human or not lesser of a citizen!

if you do not allow the middle class or the poor their deductions that bring them down to paying nil in income taxes then YOU WILL NOT GET THOSE DEDUCTIONS EITHER, and YOU will be paying much more than now in income taxes...

Is that what you REALLY WANT?

i doubt it.....

That's exactly what I want. Lower the rate of taxation, eliminate all deductions. Deductions are just the government engineering outcomes. The game is rigged and you can't win. At least allow the rules to be simple and understandable.

I'm okay with something like that, only I believe we all should be given a standard deduction for the first 10k, for life's necessities...anything above that should be taxed.

what is considered "income" by the IRS(also by the Supreme Court) and labeled "taxable income", is suppose to be Profit....they are taxing our "profit" supposedly, similar to the tax on businesses....this is why there is a standard deduction and personal exemption deductions on our income tax filings, ( or the many deductions if filing long form)....they can not tax us on ALL of the income we make, but supposedly only income that is considered profit....

this would be the same with a flat tax, we would need the 10k deduction or there abouts(tied to COL would be even better), to cover our necessities to live, before the flat tax can apply.

Why have a deuction? Why not just start the tax tables at $10,000? However, there should be some charge to all who enjoy the benefits of the protections afforded by the society. Even if it's ony one dollar, it should be something.

Everytime you implement a deduction of any type, you are opening the door for more and all they are is attempts to shape society into something desired by the rules makers.

Are taxes a necessary evil tolerated by the people used to support government or are they a tool of government used to control the people and the actions of the people?

The answer to that one question will define where on the political spectrum you reside from Conservative to Liberal.