Taxing those who make money

[SpidermanTuba]

From my joint tax return:
$104,080 joint income, $33,604 (S.E.Tax/FED/St.Ind.) = 32.29%
Also paid 7% state sales taxes on say 66% of Gross income = $4,800
Also paid property taxes = $2,500.
And finally about $1,500 in federal and state gas taxes
Total taxes paid $42,404/104,080 = real amount paid in taxes = 40.74%

Still closer to 1/3 than 1/2

The problem is, that the marginal tax rates apply to the next dollar earned. Which means that at a point just above subsistence level, if you add all the taxes you are about to pay on that next dollar it well exceeds 50%.

Take a self employed person in Indiana earning jointly with spouse 100k with AGI of 85k:
Fed SE tax 15.3%
Fed tax rate 25%
Ind tax rate 3.4%
Ind SalesTx 5.25% (7% applied to about 3/4of purchases = 5.25%)
PropTx......... 3.0% ($2500/85k)
F&SGasTx.....1.7% (1,500/85k)
Total......... 53.65%
And here is where the incentive is applied; to earn or not to earn the next $1.00 or the next $10,000 etc.

EDIT; If the Bush tax cuts lapse increase those taxes $2,500 or 3%

Your incentive analysis is flawed considering the SS part of SE Tax only applies to the first 106.8k of income.

 

[SpidermanTuba]

Each citizen should have equal % burden...

What if the duly elected representatives of the people and states disagree with you? Should we just go with whatever you say and make you dictator?

 

[Oldandtired]

Still closer to 1/3 than 1/2

The problem is, that the marginal tax rates apply to the next dollar earned. Which means that at a point just above subsistence level, if you add all the taxes you are about to pay on that next dollar it well exceeds 50%.

Take a self employed person in Indiana earning jointly with spouse 100k with AGI of 85k:
Fed SE tax 15.3%
Fed tax rate 25%
Ind tax rate 3.4%
Ind SalesTx 5.25% (7% applied to about 3/4of purchases = 5.25%)
PropTx......... 3.0% ($2500/85k)
F&SGasTx.....1.7% (1,500/85k)
Total......... 53.65%
And here is where the incentive is applied; to earn or not to earn the next $1.00 or the next $10,000 etc.

EDIT; If the Bush tax cuts lapse increase those taxes $2,500 or 3%

Your incentive analysis is flawed considering the SS part of SE Tax only applies to the first 106.8k of income.

NOt 106 of combined.
106 of each earner.
In this analysis, and all things being equal, there is over 100K of joint income left before SS does not come into play.

 

[SpidermanTuba]

I'd like to know at what time did we cross that line where the money you earn is no longer your property?

You mean when did the federal income tax start, or when did people start bitching and whining like little babies about having to pay it?



The 16th amendment gives congress broad authority to tax income, if you don't like the Constitution either try to amend it or move to another country.

 

[SpidermanTuba]

The problem is, that the marginal tax rates apply to the next dollar earned. Which means that at a point just above subsistence level, if you add all the taxes you are about to pay on that next dollar it well exceeds 50%.

Take a self employed person in Indiana earning jointly with spouse 100k with AGI of 85k:
Fed SE tax 15.3%
Fed tax rate 25%
Ind tax rate 3.4%
Ind SalesTx 5.25% (7% applied to about 3/4of purchases = 5.25%)
PropTx......... 3.0% ($2500/85k)
F&SGasTx.....1.7% (1,500/85k)
Total......... 53.65%
And here is where the incentive is applied; to earn or not to earn the next $1.00 or the next $10,000 etc.

EDIT; If the Bush tax cuts lapse increase those taxes $2,500 or 3%

Your incentive analysis is flawed considering the SS part of SE Tax only applies to the first 106.8k of income.

NOt 106 of combined.
106 of each earner.
In this analysis, and all things being equal, there is over 100K of joint income left before SS does not come into play.

Only if both husband and wife are bringing in over 100k each.


The SS tax is levied on the actual earner. If the return is married filing jointly but one of the two married people took in more than 106k, the SS tax doesn't apply above that.
For instance if I make 150k and my wife makes 0k, we file jointly, SS tax only applies to my first 106k. If I make 100k and my wife makes 50k, then SS tax applies to all of both our incomes.

This is why there is no joint schedule SE

 

[Oldandtired]

Your incentive analysis is flawed considering the SS part of SE Tax only applies to the first 106.8k of income.

NOt 106 of combined.
106 of each earner.
In this analysis, and all things being equal, there is over 100K of joint income left before SS does not come into play.

Only if both husband and wife are bringing in over 100k each.


The SS tax is levied on the actual earner. If the return is married filing jointly but one of the two married people took in more than 106k, the SS tax doesn't apply above that.
For instance if I make 150k and my wife makes 0k, we file jointly, SS tax only applies to my first 106k. If I make 100k and my wife makes 50k, then SS tax applies to all of both our incomes.

This is why there is no joint schedule SE

Maybe we are saying the same thing. If not correct me.....

If my wife and I both make 150K each....she pays SS up to 106 and I pay SS up to 106....

AM I wrong?.........and isnt THAT why there is no joint schedule SE?

Assuming I am right, our joint return will show 300K income with SS being levied on 212K of that 300K. (not shown that way in the return, but the affect is the same)

Correct?

 

[DiamondDave]

Each citizen should have equal % burden...

What if the duly elected representatives of the people and states disagree with you? Should we just go with whatever you say and make you dictator?

I do not support tyranny of the masses where you can vote away the rights of others... I don't give a rat's ass if 50.001% of the citizens vote to have no taxation on themselves and shift the burden on the other 49.999%

You want equality... accept it in all of its forms.. .not the selective equality you buffoons keep trying to push

 

[SpidermanTuba]

If my wife and I both make 150K each....she pays SS up to 106 and I pay SS up to 106....

AM I wrong?.........and isnt THAT why there is no joint schedule SE?

Assuming I am right, our joint return will show 300K income with SS being levied on 212K of that 300K. (not shown that way in the return, but the affect is the same)

Correct?

Yes - but if you make 300k and your wife made 0k, you'd pay SS on 106k, not 212k.

In other words, what happens to the hypothetical couple bringing in total of 100k earlier mentioned after they exceed 106k depends on who is making what share of the total, not just on the total sum of the money.

 

[SpidermanTuba]

I do not support tyranny of the masses where you can vote away the rights of others...

Good for you. That's why we have an indirect democracy. Its also why it took 2/3 of the Congress and 3/4 of the state legislatures to pass the 16th amendment.

You want equality... accept it in all of its forms.. .not the selective equality you buffoons keep trying to push

You mean accept your version of equality.

I much prefer democracy to making you dictator.

 

[Oldandtired]

If my wife and I both make 150K each....she pays SS up to 106 and I pay SS up to 106....

AM I wrong?.........and isnt THAT why there is no joint schedule SE?

Assuming I am right, our joint return will show 300K income with SS being levied on 212K of that 300K. (not shown that way in the return, but the affect is the same)

Correct?

Yes - but if you make 300k and your wife made 0k, you'd pay SS on 106k, not 212k.

In other words, what happens to the hypothetical couple bringing in total of 100k earlier mentioned after they exceed 106k depends on who is making what share of the total, not just on the total sum of the money.

Yes...I agree...

But i took the past as saying that both were income earners filing...and I assumed both at 50K....but even 75K and 25K....both are paying SS...and one still has 31K more before it max's out and the other has another 81K before it max's out.

 

[American Horse]

Still closer to 1/3 than 1/2

The problem is, that the marginal tax rates apply to the next dollar earned. Which means that at a point just above subsistence level, if you add all the taxes you are about to pay on that next dollar it well exceeds 50%.

Take a self employed person in Indiana earning jointly with spouse 100k with AGI of 85k:
Fed SE tax 15.3%
Fed tax rate 25%
Ind tax rate 3.4%
Ind SalesTx 5.25% (7% applied to about 3/4of purchases = 5.25%)
PropTx......... 3.0% ($2500/85k)
F&SGasTx.....1.7% (1,500/85k)
Total......... 53.65%
And here is where the incentive is applied; to earn or not to earn the next $1.00 or the next $10,000 etc.

EDIT; If the Bush tax cuts lapse increase those taxes $2,500 or 3%

Your incentive analysis is flawed considering the SS part of SE Tax only applies to the first 106.8k of income.

Sorry Tuba; but not at all; you may assume that the joint income is about 50k+ of income each and there is room in this case for another 54k of taxable income for both parties, which the SS basis apply to.

The point I was aiming for was that the incentives lie in the marginal rates, but the SS rate for SS (aka SE) tax is there also.
(I took this examply by going back to '06 when our incomes were close to $100k for simplicity)

 

[DiamondDave]

I do not support tyranny of the masses where you can vote away the rights of others...

Good for you. That's why we have an indirect democracy. Its also why it took 2/3 of the Congress and 3/4 of the state legislatures to pass the 16th amendment.

You want equality... accept it in all of its forms.. .not the selective equality you buffoons keep trying to push

You mean accept your version of equality.

I much prefer democracy to making you dictator.

As stated.. you support selective equality.. to have equality when it benefits you.. and push inequality on others when it benefits you... funny... that is directly against what this country was set up to be....

It is you supporting tyranny of the masses, whether it be through direct vote or the use of representatives.... I support having limits even on what the representatives can do, as our founders did

 

[Oldandtired]

The problem is, that the marginal tax rates apply to the next dollar earned. Which means that at a point just above subsistence level, if you add all the taxes you are about to pay on that next dollar it well exceeds 50%.

Take a self employed person in Indiana earning jointly with spouse 100k with AGI of 85k:
Fed SE tax 15.3%
Fed tax rate 25%
Ind tax rate 3.4%
Ind SalesTx 5.25% (7% applied to about 3/4of purchases = 5.25%)
PropTx......... 3.0% ($2500/85k)
F&SGasTx.....1.7% (1,500/85k)
Total......... 53.65%
And here is where the incentive is applied; to earn or not to earn the next $1.00 or the next $10,000 etc.

EDIT; If the Bush tax cuts lapse increase those taxes $2,500 or 3%

Your incentive analysis is flawed considering the SS part of SE Tax only applies to the first 106.8k of income.

Sorry Tuba; but not at all; you may assume that the joint income is about 50k+ of income each and there is room in this case for another 54k of taxable income for both parties, which the SS basis apply to.

The point I was aiming for was that the incentives lie in the marginal rates, but the SS rate for SS (aka SE) tax is there also.
(I took this examply by going back to '06 when our incomes were close to $100k for simplicity)

Yes...exactly how I read your post and your analysis...and it is a valid analysis.

Truth is, there are a series of "amounts" where your net will be substantially lower for 1 dollar more earned.

Some may not want to see it...but it is true

 

[American Horse]

This is why there is no joint schedule SE

You might just as well ask why two different people don't have their taxable incomes and witholding on one W-2 form.

The schedule SE calculations flow from schedule C, which is profit or loss from business or self employed person. Sched SE is for self employed persons, which it happens we both are. The SE tax is more useful to consider because the self employed person is paying the whole tax, which is true in any case for the hourly or salaried employed person. The employers part in that case still reflects a part of the cost of compensation for the employee.

 

[SpidermanTuba]

As stated.. you support selective equality.. to have equality when it benefits you.. and push inequality on others when it benefits you...

No, but hey, thanks for asking.

funny... that is directly against what this country was set up to be....

WOW THE WORDS YOU PUT IN MY MOUTH MAKE ME LOOK BAD, HOW SURPRISING

I support having limits even on what the representatives can do, as our founders did

There are limits you moron.

 

[American Horse]

Your incentive analysis is flawed considering the SS part of SE Tax only applies to the first 106.8k of income.

Sorry Tuba; but not at all; you may assume that the joint income is about 50k+ of income each and there is room in this case for another 54k of taxable income for both parties, which the SS basis apply to.

The point I was aiming for was that the incentives lie in the marginal rates, but the SS rate for SS (aka SE) tax is there also.
(I took this examply by going back to '06 when our incomes were close to $100k for simplicity)

Yes...exactly how I read your post and your analysis...and it is a valid analysis.

Truth is, there are a series of "amounts" where your net will be substantially lower for 1 dollar more earned.

Some may not want to see it...but it is true

Elucidate?

 

[DiamondDave]

As stated.. you support selective equality.. to have equality when it benefits you.. and push inequality on others when it benefits you...

No, but hey, thanks for asking.

funny... that is directly against what this country was set up to be....

WOW THE WORDS YOU PUT IN MY MOUTH MAKE ME LOOK BAD, HOW SURPRISING

I support having limits even on what the representatives can do, as our founders did

There are limits you moron.

Not enough.. as evidenced by the way government has bastardized itself and expanded exponentially from what was intended... and using it to promote inequality, as evidenced in the tax code and so many other things

moron

You support taxing some more than others and having still others not taxed at all.. that is, by definition, supporting inequality, because it benefits YOU... I.E. selective equality

 

[SpidermanTuba]

The SE tax is more useful to consider because the self employed person is paying the whole tax, which is true in any case for the hourly or salaried employed person. The employers part in that case still reflects a part of the cost of compensation for the employee.

Indeed true, I'm not denying that, but that's not the whole story. Why not throw other mandated employer costs into it - such as worker's compensation? I used to do barge inspections on the Mississippi river, my boss used to bitch because he paid $12 for every job I did for worker's comp.

The SS "tax" is actually just forced purchasing of disability and retirement insurance. And after the cutoff (106k per earner) - what you pay for that insurance is the same as what everyone else above the cutoff pays.

The reason it exists is quite simple - when the great depression hit, lots of people too old to work or disabled from work had no bread to eat. So the government had to take care of them anyway - which is exactly what would happen to a lot of people if there was no SS insurance.

 

[Oldandtired]

Sorry Tuba; but not at all; you may assume that the joint income is about 50k+ of income each and there is room in this case for another 54k of taxable income for both parties, which the SS basis apply to.

The point I was aiming for was that the incentives lie in the marginal rates, but the SS rate for SS (aka SE) tax is there also.
(I took this examply by going back to '06 when our incomes were close to $100k for simplicity)

Yes...exactly how I read your post and your analysis...and it is a valid analysis.

Truth is, there are a series of "amounts" where your net will be substantially lower for 1 dollar more earned.

Some may not want to see it...but it is true

Elucidate?

By no means directed to you, But I see why you would think it was....I would have thought the same if the tables were turned.

You obviously have a grasp on the topic and I am sure you see the point being made.....and you offered your opinion showing how it may not have as great an impact as some may believe.

I was referring to those that simply dismiss it as "conspiracy".

It is fact. The true impact is yet to be seen...but there are, and will be certain gross income numbers where a dollar more earned may mean many more dollars less in in net.

And for smaller business owners...and s-coprs.....there may be those that will decide when to "halt sales" to prevent taking home less....

And you cannot deny that it would not be in the best interest of the economy nor the need to maximize tax revenue to help remedy the deficit.

 

[SpidermanTuba]

Yes...exactly how I read your post and your analysis...and it is a valid analysis.

Truth is, there are a series of "amounts" where your net will be substantially lower for 1 dollar more earned.

Some may not want to see it...but it is true

Elucidate?

By no means directed to you, But I see why you would think it was....I would have thought the same if the tables were turned.

You obviously have a grasp on the topic and I am sure you see the point being made.....and you offered your opinion showing how it may not have as great an impact as some may believe.

I was referring to those that simply dismiss it as "conspiracy".

It is fact. The true impact is yet to be seen...but there are, and will be certain gross income numbers where a dollar more earned may mean many more dollars less in in net.

And for smaller business owners...and s-coprs.....there may be those that will decide when to "halt sales" to prevent taking home less....

And you cannot deny that it would not be in the best interest of the economy nor the need to maximize tax revenue to help remedy the deficit.

I'd like to see the specific law that does this.