Taxes

[Comrade]

Coming at this as a math disabled person. 100% of my income is spent, because it's so low. Now, in the past, less than 25% of my income was spent, perhaps I should say 'our income'? Anyways, over 75% of income was saved/invested. Would this be taxed? I don't think so.

How is this fair?

Maybe an example:

McJob dude makes 20,000K annually.

Mr. Man makes 500,000K annually.

McJob spends 18,000K to rent, eat, etc... He's taxed at 10% and pays 1,800 annually. He pays a 9.0% tax rate that year on income. The few thousand he saves will likely get spent in a few years.


Mr. Man spends 300K to live, saves 200K. Pays 30,000 tax annually.
Mr. Man pays a 6.0% tax rate that year.

Mr. Man takes 200K a year and invests it, letting that multiply on a pre-tax basis until it grows to a level over 30 years so that now the amount is worth $1,000,000 for each 200K invested annually.

Spending that in retirement, or, more likely, his kids inheriting that same accrued amount, will finally pay the 10% tax. A tax deferred for 30 years, and which although is now $100,000 against an original 200,000, leaving $900,000 of funds left to consume with.


Now I'd like to DISCOUNT that same 100,000 at back 30 years to equate it to the value of the tax Mr. Man WOULD HAVE PAID 30 years ago, at the investment earnings rate, and then divide it by the treasury rate raised to the power of 30, but I don't think anyone is still with me?

Trust me, it's regressive, unfair, not flat, not equal, the rich get richer and all that stuff. Private investment rates always exceed the government 30 year bond rate, so the tax amount paid by Mr. Man with a flat sales tax is going to be less than he'd pay even with a flat INCOME tax.

Because =

The value of tax collected 30 years from now =

Same tax as of today X [(1+Bond rate) ^ 30 / (1 + Investment rate) ^ 30]


I know you know I'm actuary, babe! Don't make me whip out my calculator!

 

[Annie]

Maybe an example:

McJob dude makes 20,000K annually.

Mr. Man makes 500,000K annually.

McJob spends 18,000K to rent, eat, etc... He's taxed at 10% and pays 1,800 annually. He pays a 9.0% tax rate that year on income. The few thousand he saves will likely get spent in a few years.


Mr. Man spends 300K to live, saves 200K. Pays 30,000 tax annually.
Mr. Man pays a 6.0% tax rate that year.

Mr. Man takes 200K a year and invests it, letting that multiply on a pre-tax basis until it grows to a level over 30 years so that now the amount is worth $1,000,000 for each 200K invested annually.

Spending that in retirement, or, more likely, his kids inheriting that same accrued amount, will finally pay the 10% tax. A tax deferred for 30 years, and which although is now $100,000 against an original 200,000, leaving $900,000 of funds left to consume with.


Now I'd like to DISCOUNT that same 100,000 at back 30 years to equate it to the value of the tax Mr. Man WOULD HAVE PAID 30 years ago, at the investment earnings rate, and then divide it by the treasury rate raised to the power of 30, but I don't think anyone is still with me?

Trust me, it's regressive, unfair, not flat, not equal, the rich get richer and all that stuff. Private investment rates always exceed the government 30 year bond rate, so the tax amount paid by Mr. Man with a flat sales tax is going to be less than he'd pay even with a flat INCOME tax.

Because =

The value of tax collected 30 years from now =

Same tax as of today X [(1+Bond rate) ^ 30 / (1 + Investment rate) ^ 30]


I know you know I'm actuary, babe! Don't make me whip out my calculator!

Hey my man, don't whip out calculator! Egads! I know the rich are always better for the country, bottom line? Is it fair? (Actually I don't know that I care all that much, as I think my kids will benefit.)

 

[Comrade]

Hey my man, don't whip out calculator! Egads! I know the rich are always better for the country, bottom line? Is it fair? (Actually I don't know that I care all that much, as I think my kids will benefit.)

The tax scale is progressive because of democracy. The top 5% who pay 50% of the tax are naturally a product of the masses of the lower 95% who vote to continue that policy. A regressive tax (where the poor pay a greater percentage of earnings in tax than the rich) simply cannot happen in a democratic government. They'll never vote to allow that. Only a totalitarian government can effect a regressive tax scale.

 

[Mr. P]

Hi Again. Mr. P. It's late and I am not sure about the tone of your post. If you are trying to bait me, it won't work. I am not an economist, cpa, or tax authority. I am telling you what is fair to me in my opinion. If you are going to be rude, then well........As I said, my opinion of fair is simply using a percent....

I'm not trying to bait you. I was looking for your explanation of why you thought a Flat tax was "fair". You're saying you think flat is "fair" simply because it's an equal % applied to all.

Using your example, if payer "A" has an income of $100,000. he pays $10,000 in tax, while payer "B" has income of $10,000. and pays $1000. in tax.

Now I may be missing something here but I don't think so.
Tell me what benefit does "A" receive for his additional $9,000. in tax that "B" doesn't receive? I'll give ya a clue ZERO, NONE, ZIP. They both receive the exact same services from the Government.

So, do you still think Flat is Fair? If so, why?

 

[pegwinn]

I'm not trying to bait you. I was looking for your explanation of why you thought a Flat tax was "fair". You're saying you think flat is "fair" simply because it's an equal % applied to all.

Using your example, if payer "A" has an income of $100,000. he pays $10,000 in tax, while payer "B" has income of $10,000. and pays $1000. in tax.

Now I may be missing something here but I don't think so.
Tell me what benefit does "A" receive for his additional $9,000. in tax that "B" doesn't receive? I'll give ya a clue ZERO, NONE, ZIP. They both receive the exact same services from the Government.

So, do you still think Flat is Fair? If so, why?

Yup, still fair. Under the current system, if payer B makes 10K, he gets all his government services for nothing. I will give ya a clue ZERO, NONE, ZIP. And Payer A is paying a higher percentage of his 100K than Payer C who made 40K. Under the structure we got now, it is so convoluted that two payers (lets call em D & E) can have identical incomes to the penny and still pay different taxes.

Bottom line is that we can all debate and disagree all we want. Nothing will change because the special interest groups have all teh right people locked up tight in thier pockets. When one loophole closes they will make another one. I actually support the fairtax as the best plan I've seen put before the legislature. I just think that my ideas are better. But, my ideas won't make it to congress.

 

[Mr. P]

Yup, still fair. Under the current system, if payer B makes 10K, he gets all his government services for nothing. I will give ya a clue ZERO, NONE, ZIP. And Payer A is paying a higher percentage of his 100K than Payer C who made 40K. Under the structure we got now, it is so convoluted that two payers (lets call em D & E) can have identical incomes to the penny and still pay different taxes.

Bottom line is that we can all debate and disagree all we want. Nothing will change because the special interest groups have all teh right people locked up tight in thier pockets. When one loophole closes they will make another one. I actually support the fairtax as the best plan I've seen put before the legislature. I just think that my ideas are better. But, my ideas won't make it to congress.

Yeah Okay...