Tax the "rich": What do you think about Mr. Hicks?

Discussion in 'Politics' started by Euroconservativ, Jan 10, 2013.

  1. Euroconservativ
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    Euroconservativ Member

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    http://www.nytimes.com/2012/11/30/u...rden-than-in-the-80s.html?pagewanted=all&_r=0



    The self-proclaimed defenders of minorities and equal rights would answer that the vast majority of small businesses fall under the $250,000 threshold and that Mr. Hicks is the exception to the rule :cool:
     
    Last edited: Jan 10, 2013
  2. jwoodie
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    jwoodie Gold Member Supporting Member

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    Actually, those making between $110,000 and $400,000 get a huge tax break in the form of an exemption from Social Security taxes. In case anyone still isn't aware of it, Social Security is nothing more than a huge middle class welfare program dressed up as an "investment" placed in a "trust fund." In addition to providing benefits (SSI) to people who have never paid a penny into the system, it effectively imposes a means-tested scale for benefits paid to those who have contributed all their lives: Those who averaged about $2,000 per month in earnings get back 60% (about $1200 per month), while those who paid in four times as much ($8,000 per month) get back 30% (about $2400 per month).

    But even worse than this inequity is the fact that those making over $110,000 per year get to escape the Social Security completely, leaving the Middle Class to pay for this crumbling system. The new income tax rates will make up this discrepancy for those making over $400,000, but the $250,000 earners will still be getting this huge tax break.
     
  3. ilia25
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    ilia25 I can do math

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    I don't understand how high taxes can prevent Mr. Hicks from renovating his restaurant? Whatever he spends on renovation will be deducted from his taxable income, so what's the problem?
     
  4. jwoodie
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    jwoodie Gold Member Supporting Member

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    If Mr. Hicks spends $100k to renovate his restaurant, his net income will be reduced by $100k. If he is in a 50% tax bracket, he will still be out $50k. In this economy, that may not be worth the risk.
     
  5. ilia25
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    ilia25 I can do math

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    First, nobody is in 50% tax bracket -- the highest bracket is 39.6%, and it starts at 400K, so Mr. Hicks can't be affected by it.
    Second, what do you mean by "he will still be out $50k"? He will not pay a single dime in taxes on the renovation money. Not $50K, not 1 cent -- zero.
     
  6. ilia25
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    ilia25 I can do math

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    Yes, we should deduct payroll taxes from all income, not just from the first $110K.
     
  7. BreezeWood
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    BreezeWood VIP Member Supporting Member

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    first thing would be to fire his accountant ... 40% is above the existing rates, even without deductions.

    "more than $250,000 last year" - who's kidding who ?
     
  8. Oldguy
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    Oldguy Senior Member

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    Good luck with that idea, Pollyanna.
     
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  9. BillyV
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    BillyV Antidisestablishmentarian

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    Well, no; 35% max rate for federal, 5% max for Illinois is 40% (44.6% for 2013). However, his income would have to be in excess of $389,000 (federal) to be subject to the 35% rate, and then only on income over that amount. His average rate could not be that high, but probably like most people, he has no idea what his average tax rate is.
     
  10. BillyV
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    BillyV Antidisestablishmentarian

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    Putting a roof on a building is not immediately deductible; he would get a prorata share of the amount spent over a 39 year period if it is considered part of the building. So for the $100,000 hypothetical outlay, his annual deduction would only be about $2,500. Furniture and fixtures would be recovered faster, but aside from a couple of special potential breaks he may be eligible for, usually is expensed over 7 years. So no, he would not be able to deduct the lion's share of his outlay.
     

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