How Much More In Taxes Do Liberal Want Me To Pay?

[red states rule]

So far no lib has told me how much MORE in taxes they wnt me to pay

Also, at what income level will a single person become "rich" to a liberal?

How about a married couple?

When will a married couple with 2 kids be "rich" to a liberal?

Please enlighten the rest of us!

 

[Max Power]

Show me.

EDIT: As far as fair being subjective ask around, that 1040 form ain’t so subjective.

Well, say you earn $100K, and the government takes 30K of income tax.

Now, you say we eliminate income tax. So, the government needs to collect 30K to be in the same place.

So, they're goign to set a tax rate, such that when you spend $100K, they still get $30K. The sales tax would be (100/70 - 1) = 43% sales tax, which would be a 30% effective tax rate... exactly the same as before.

"But what about the money I don't spend, what about the money I save"
Same exact thing happens as if you put it into an IRA/401k.

 

[bush lover]

I think our President stopped cutting taxes because of leftist pressure. The fact is, we can cut taxes more and more, and it makes no difference. We simply borrow more. China and Japan will keep buying our debt because they NEED us to buy their stuff. It's that simple. Without the U.S., China and Japan die. Let their people pay the taxes. Let's cut ours! Now if the Federal Reserve would stop raising rates and start lowering them!

 

[Mr. P]

Well, say you earn $100K, and the government takes 30K of income tax.

Now, you say we eliminate income tax. So, the government needs to collect 30K to be in the same place.

So, they're goign to set a tax rate, such that when you spend $100K, they still get $30K. The sales tax would be (100/70 - 1) = 43% sales tax, which would be a 30% effective tax rate... exactly the same as before.

"But what about the money I don't spend, what about the money I save"
Same exact thing happens as if you put it into an IRA/401k.

You have no understanding of the Fair tax.

 

[Max Power]

You have no understanding of the Fair tax.

Sounds like a cop out to me.

The bottom line is, if the government is still drawing the same amount of money, it doesn't really matter where they tax it. Some people will end up ahead, some will end up behind, but on average, we'll be exactly where we are now.

 

[Mr. P]

Sounds like a cop out to me.

The bottom line is, if the government is still drawing the same amount of money, it doesn't really matter where they tax it. Some people will end up ahead, some will end up behind, but on average, we'll be exactly where we are now.

The fair tax provides the same amount of revenue as now, maybe more.
No cop out...read the stuff, you have no clue about the program it's obvious.

 

[Max Power]

I've read it, but a few years ago.

It seems pretty common sense to me, that if they're collecting the same amount of money, it doesn't really matter where they take it. More money here, less money there, that's all. Smoke and mirrors.

 

[Mr. P]

I've read it, but a few years ago.

It seems pretty common sense to me, that if they're collecting the same amount of money, it doesn't really matter where they take it. More money here, less money there, that's all. Smoke and mirrors.

See that's where yer wrong...They won't be taking anything, YOU control what tax you pay.

 

[Max Power]

See that's where yer wrong...They won't be taking anything, YOU control what tax you pay.

Not really.
What is money worth? Little green pieces of paper. I suppose you could blow your nose with it, or wipe your ass with it, but to ACTUALLY use money, you have to spend it. And, the moment you spend it, it gets taxed.

Whether you choose to spend the money, save the money, or invest the money, ultimately, it's either going to end up taxed, or as toilet paper. So, I suppose, you could choose the latter and in that sense, control what taxes you pay. But, if you want to spend the money, then you don't control what tax you pay.

 

[BaronVonBigmeat]

I think our President stopped cutting taxes because of leftist pressure. The fact is, we can cut taxes more and more, and it makes no difference. We simply borrow more. China and Japan will keep buying our debt because they NEED us to buy their stuff. It's that simple. Without the U.S., China and Japan die. Let their people pay the taxes. Let's cut ours! Now if the Federal Reserve would stop raising rates and start lowering them!

Arrrrgh...surely you're not serious, and this is a tongue-in-cheek gimmick post?

First of all, China and Japan will not accept our IOU's forever and ever and ever, like stupid chumps, giving us real goods in exchange for paper. There has already been talk of forming a regional asian currency, perhaps like what europe has done. Then Russia will start selling oil in Rubles, and Iran will sell oil in euros, etc.

Also, when the federal reserve lowers interest rates, they are accelerating inflation. Rates were incredibly low from 2001~2005, and a chart of money supply will show the fed running the printing presses red hot. Not surprisingly, we have had inflation--first, in housing prices, energy, and other things that can't be outsourced; and now in core consumer goods.

If you want a simple no-jargon layman's account of what's going on, Warren Buffet's "Squanderville" speech is pretty good:

I'm about to deliver a warning regarding the U.S. trade deficit and also suggest a remedy for the problem. But first I need to mention two reasons you might want to be skeptical about what I say. To begin, my forecasting record with respect to macroeconomics is far from inspiring. For example, over the past two decades I was excessively fearful of inflation. More to the point at hand, I started way back in 1987 to publicly worry about our mounting trade deficits -- and, as you know, we've not only survived but also thrived. So on the trade front, score at least one "wolf" for me. Nevertheless, I am crying wolf again and this time backing it with Berkshire Hathaway's money. Through the spring of 2002, I had lived nearly 72 years without purchasing a foreign currency. Since then Berkshire has made significant investments in -- and today holds -- several currencies. I won't give you particulars; in fact, it is largely irrelevant which currencies they are. What does matter is the underlying point: To hold other currencies is to believe that the dollar will decline.

Both as an American and as an investor, I actually hope these commitments prove to be a mistake. Any profits Berkshire might make from currency trading would pale against the losses the company and our shareholders, in other aspects of their lives, would incur from a plunging dollar.

But as head of Berkshire Hathaway, I am in charge of investing its money in ways that make sense. And my reason for finally putting my money where my mouth has been so long is that our trade deficit has greatly worsened, to the point that our country's "net worth," so to speak, is now being transferred abroad at an alarming rate.

A perpetuation of this transfer will lead to major trouble. To understand why, take a wildly fanciful trip with me to two isolated, side-by-side islands of equal size, Squanderville and Thriftville. Land is the only capital asset on these islands, and their communities are primitive, needing only food and producing only food. Working eight hours a day, in fact, each inhabitant can produce enough food to sustain himself or herself. And for a long time that's how things go along. On each island everybody works the prescribed eight hours a day, which means that each society is self-sufficient.

Eventually, though, the industrious citizens of Thriftville decide to do some serious saving and investing, and they start to work 16 hours a day. In this mode they continue to live off the food they produce in eight hours of work but begin exporting an equal amount to their one and only trading outlet, Squanderville.

The citizens of Squanderville are ecstatic about this turn of events, since they can now live their lives free from toil but eat as well as ever. Oh, yes, there's a quid pro quo -- but to the Squanders, it seems harmless: All that the Thrifts want in exchange for their food is Squanderbonds (which are denominated, naturally, in Squanderbucks).

Over time Thriftville accumulates an enormous amount of these bonds, which at their core represent claim checks on the future output of Squanderville. A few pundits in Squanderville smell trouble coming. They foresee that for the Squanders both to eat and to pay off -- or simply service -- the debt they're piling up will eventually require them to work more than eight hours a day. But the residents of Squanderville are in no mood to listen to such doomsaying.

Meanwhile, the citizens of Thriftville begin to get nervous. Just how good, they ask, are the IOUs of a shiftless island? So the Thrifts change strategy: Though they continue to hold some bonds, they sell most of them to Squanderville residents for Squanderbucks and use the proceeds to buy Squanderville land. And eventually the Thrifts own all of Squanderville.

At that point, the Squanders are forced to deal with an ugly equation: They must now not only return to working eight hours a day in order to eat -- they have nothing left to trade -- but must also work additional hours to service their debt and pay Thriftville rent on the land so imprudently sold. In effect, Squanderville has been colonized by purchase rather than conquest.

It can be argued, of course, that the present value of the future production that Squanderville must forever ship to Thriftville only equates to the production Thriftville initially gave up and that therefore both have received a fair deal. But since one generation of Squanders gets the free ride and future generations pay in perpetuity for it, there are -- in economist talk -- some pretty dramatic "intergenerational inequities."

Let's think of it in terms of a family: Imagine that I, Warren Buffett, can get the suppliers of all that I consume in my lifetime to take Buffett family IOUs that are payable, in goods and services and with interest added, by my descendants. This scenario may be viewed as effecting an even trade between the Buffett family unit and its creditors. But the generations of Buffetts following me are not likely to applaud the deal (and, heaven forbid, may even attempt to welsh on it).

Think again about those islands: Sooner or later the Squanderville government, facing ever greater payments to service debt, would decide to embrace highly inflationary policies -- that is, issue more Squanderbucks to dilute the value of each. After all, the government would reason, those irritating Squanderbonds are simply claims on specific numbers of Squanderbucks, not on bucks of specific value. In short, making Squanderbucks less valuable would ease the island's fiscal pain.

That prospect is why I, were I a resident of Thriftville, would opt for direct ownership of Squanderville land rather than bonds of the island's government. Most governments find it much harder morally to seize foreign-owned property than they do to dilute the purchasing power of claim checks foreigners hold. Theft by stealth is preferred to theft by force.

So what does all this island hopping have to do with the U.S.? Simply put, after World War II and up until the early 1970s (gee golly Mr. Buffet, what event happened in the early 70's?--Baron) we operated in the industrious Thriftville style, regularly selling more abroad than we purchased. We concurrently invested our surplus abroad, with the result that our net investment -- that is, our holdings of foreign assets less foreign holdings of U.S. assets -- increased (under methodology, since revised, that the government was then using) from $37 billion in 1950 to $68 billion in 1970. In those days, to sum up, our country's "net worth," viewed in totality, consisted of all the wealth within our borders plus a modest portion of the wealth in the rest of the world.

Additionally, because the U.S. was in a net ownership position with respect to the rest of the world, we realized net investment income that, piled on top of our trade surplus, became a second source of investable funds. Our fiscal situation was thus similar to that of an individual who was both saving some of his salary and reinvesting the dividends from his existing nest egg.

In the late 1970s the trade situation reversed, producing deficits that initially ran about 1 percent of GDP. That was hardly serious, particularly because net investment income remained positive. Indeed, with the power of compound interest working for us, our net ownership balance hit its high in 1980 at $360 billion.

Since then, however, it's been all downhill, with the pace of decline rapidly accelerating in the past five years. Our annual trade deficit now exceeds 4 percent of GDP. Equally ominous, the rest of the world owns a staggering $2.5 trillion more of the U.S. than we own of other countries. Some of this $2.5 trillion is invested in claim checks -- U.S. bonds, both governmental and private -- and some in such assets as property and equity securities.

In effect, our country has been behaving like an extraordinarily rich family that possesses an immense farm. In order to consume 4 percent more than we produce -- that's the trade deficit -- we have, day by day, been both selling pieces of the farm and increasing the mortgage on what we still own.

To put the $2.5 trillion of net foreign ownership in perspective, contrast it with the $12 trillion value of publicly owned U.S. stocks or the equal amount of U.S. residential real estate or what I would estimate as a grand total of $50 trillion in national wealth. Those comparisons show that what's already been transferred abroad is meaningful -- in the area, for example, of 5 percent of our national wealth.

More important, however, is that foreign ownership of our assets will grow at about $500 billion per year at the present trade-deficit level, which means that the deficit will be adding about one percentage point annually to foreigners' net ownership of our national wealth. As that ownership grows, so will the annual net investment income flowing out of this country. That will leave us paying ever-increasing dividends and interest to the world rather than being a net receiver of them, as in the past. We have entered the world of negative compounding -- goodbye pleasure, hello pain.

We were taught in Economics 101 that countries could not for long sustain large, ever-growing trade deficits. At a point, so it was claimed, the spree of the consumption-happy nation would be braked by currency-rate adjustments and by the unwillingness of creditor countries to accept an endless flow of IOUs from the big spenders. (Mr. Buffet took Economics 101 a good while before we went off the gold standard in 1971. It used to be that trade imbalances were self-regulating and took care of themselves--Baron) And that's the way it has indeed worked for the rest of the world, as we can see by the abrupt shutoffs of credit that many profligate nations have suffered in recent decades.

The U.S., however, enjoys special status. In effect, we can behave today as we wish because our past financial behavior was so exemplary -- and because we are so rich. Neither our capacity nor our intention to pay is questioned, and we continue to have a mountain of desirable assets to trade for consumables. In other words, our national credit card allows us to charge truly breathtaking amounts. But that card's credit line is not limitless.

http://www.dailyreckoning.com/Squanderville.html

 

[bush lover]

Mr. Big Meat, the last paragraph of Mr. Buffet's speech proves my point! Our credit card isn't limitless, but will go on for decades! And at a lousy 5% interest rate! Let's cut taxes more! Your worry about inflation is a crock. There is no inflation. If anything, prices are far cheaper than 30 years ago. Cut interest rates now! Get that credit card rate down to 3% like when our President took office.

 

[Max Power]

Mr. Big Meat, the last paragraph of Mr. Buffet's speech proves my point! Our credit card isn't limitless, but will go on for decades! And at a lousy 5% interest rate! Let's cut taxes more! Your worry about inflation is a crock. There is no inflation. If anything, prices are far cheaper than 30 years ago. Cut interest rates now! Get that credit card rate down to 3% like when our President took office.

...
There is no inflation
...
(dumbfounded)

 

[Mr. P]

Not really.
What is money worth? Little green pieces of paper. I suppose you could blow your nose with it, or wipe your ass with it, but to ACTUALLY use money, you have to spend it. And, the moment you spend it, it gets taxed.

Whether you choose to spend the money, save the money, or invest the money, ultimately, it's either going to end up taxed, or as toilet paper. So, I suppose, you could choose the latter and in that sense, control what taxes you pay. But, if you want to spend the money, then you don't control what tax you pay.

We're talking income tax, not money tax. Spend what you will of your income and pay the tax on goods not income. It's totally up to you. BTW...It's not all taxed.

 

[Max Power]

We're talking income tax, not money tax. Spend what you will of your income and pay the tax on goods not income. It's totally up to you. BTW...It's not all taxed.

I know, there would be exemptions on unprepared food and whatnot.

But still, you'd end up paying the same amount in taxes. And if you choose not to spend your money, you're simply choosing deferred taxation... just like with an IRA.

 

[Mr. P]

I know, there would be exemptions on unprepared food and whatnot.

But still, you'd end up paying the same amount in taxes. And if you choose not to spend your money, you're simply choosing deferred taxation... just like with an IRA.

Ok, tell me how 40%+ in tax now equals 27%.
Gotta hear this.

 

[Max Power]

Ok, tell me how 40%+ in tax now equals 27%.
Gotta hear this.

Do you mean the sales tax vs effective tax rate that I mentioned earlier?

 

[Mr. P]

Do you mean the sales tax vs effective tax rate that I mentioned earlier?

Effective rate would be 23-27% maybe 30% max, depending on who calls the numbers. This is about INCOME TAX, not total tax. My (income tax) runs about 40% now.
That doesn't include all the imbedded tax I pay in product prices. Figure imbedded tax of about 20% on a product price. People would shit about what they pay in tax if they really knew. You don't think companies pay tax do you?

So let me see, I pay near 40% income tax now + 20% imbedded tax on products, hummm 60%..I really like the 30% total MUCH better. You?

 

[Max Power]

Effective rate would be 23-27% maybe 30% max, depending on who calls the numbers. This is about INCOME TAX, not total tax. My (income tax) runs about 40% now.

I don't know if I really believe you there... but anyway.
I hope you aren't including state income taxes, because we are talking mostly about federal taxes, yes?

That doesn't include all the imbedded tax I pay in product prices. Figure imbedded tax of about 20% on a product price. People would shit about what they pay in tax if they really knew. You don't think companies pay tax do you?

Embedded (Sorry, I'm a little OCD).
Companies pay tax on profits, not cost, so your 20% is probably way off. You buy a TV from Best Buy for $1000, they aren't paying tax on $1000, they are paying tax on their $200 profit (if the TV cost them $800), and they aren't paying 100% of that to the government.

So let me see, I pay near 40% income tax now + 20% imbedded tax on products, hummm 60%..I really like the 30% total MUCH better. You?

Math's not your forte, eh?
You have $100K
Pay 40% in taxes, you have 60K left
Spend it, 20% goes to taxes = 12K.
That's 52% taxed, not 60%, but I digress.

Your numbers are off. I find it highly unlikely that you pay 40% income tax (and I KNOW you don't pay 40% federal income tax), I doubt that 20% of what you purchase goes to the government, and you didn't add them together properly. In any event, the numbers are closer than you think... and if they're STILL different, then the government will still raise the tax rate on retail sales such that (on average) they get the same amount of money.

 

[Mr. P]

I don't know if I really believe you there... but anyway.
I hope you aren't including state income taxes, because we are talking mostly about federal taxes, yes?


Embedded (Sorry, I'm a little OCD).
Companies pay tax on profits, not cost, so your 20% is probably way off. You buy a TV from Best Buy for $1000, they aren't paying tax on $1000, they are paying tax on their $200 profit (if the TV cost them $800), and they aren't paying 100% of that to the government.


Math's not your forte, eh?
You have $100K
Pay 40% in taxes, you have 60K left
Spend it, 20% goes to taxes = 12K.
That's 52% taxed, not 60%, but I digress.

Your numbers are off. I find it highly unlikely that you pay 40% income tax (and I KNOW you don't pay 40% federal income tax), I doubt that 20% of what you purchase goes to the government, and you didn't add them together properly. In any event, the numbers are closer than you think... and if they're STILL different, then the government will still raise the tax rate on retail sales such that (on average) they get the same amount of money.

Actually the numbers are much closer than you will admit. Believe me I know what I pay in income tax. Enough of the round an round in a circle chit, your fair solution to unfair tax would be what?

We did this months ago and you never did answer.

 

[Max Power]

Actually the numbers are much closer than you will admit. Believe me I know what I pay in income tax. Enough of the round an round in a circle chit, your fair solution to unfair tax would be what?

We did this months ago and you never did answer.

I don't see changing the method of tax collection as the answer.

Obviously the tax code is too complicated. To make it much simpler would make it much more fair. Perhaps even getting rid of the progressive income tax, and leaving a flat income tax would be fair.
Right now, the biggest problem (IMO) is that the poor pay, umm, NOTHING, in income tax. IIRC, the bottom 48% recieve more in refund than they pay in. That's only 3% away from a majority... pretty scary in a democracy.

Oh, and I'd cut government spending by about 90%. . Okay, maybe not that much, but a lot.