Why we need Equal Taxes

[Penumbra]

Estate tax in the United States - Wikipedia, the free encyclopedia
18% is a lot to a poor family.

That's 18% when they're receiving tens of thousands of dollars.

I agree it's a lot to a poor family, but getting taxed on their payrolls and wages is a far bigger problem in my view than getting taxed on a one-time receipt of tens of thousands of dollars. Taxes on wages are continual taxes that those people pay, and taxes on payroll negatively effect hiring decisions and are regressive.

And I've described the type of estate tax I'd support in my previous post: taxes on large estates. Not estates of a few tens of thousands of dollars, and not taxes on farms (since their asset size relative to their value and liquidity is imbalanced).

 

[Neo-Logic]

If the higher class pays the most taxes, nobody would want to get the most well paying jobs which are usual the most essential ones for our society (eg hospitals)

If the lower class pays higher taxes we will still have the greedy 1%

Mathematical proof that higher taxes won't deincentivize workers from high earning jobs or investors from high netting opportunities.

("high class") $250,000 minus 35% tax rate = $162,500 :newyear:
("middle class") $75,000 minus 25% tax rate =$56,250 :grill:
("low class") $25,000 minus 10% tax rate = $22,500 :camp:

Given the chance, is anyone from the bonfire crowd really going to not want to go grilling because of higher tax rates, or grilling crowd to the champaign and caviar crowd because of even higher tax rates? My scientific guess, the bonfire crowd would murder the grilling crowd to get to the champaign crowd.

 

[Jeremy Mason]

That's 18% when they're receiving tens of thousands of dollars.

Tens of thousands of dollars in debt. You a very smart person and I love your posts, but, the money our government spends (federally) and maybe stately) is primarily debt/interest! I'm no conservative and (not now )a teacher in high school and college. I understand the need, but our cooperate based government is a sham!

I agree it's a lot to a poor family, but getting taxed on their payrolls and wages is a far bigger problem in my view than getting taxed on a one-time receipt of tens of thousands of dollars. Taxes on wages are continual taxes that those people pay, and taxes on payroll negatively effect hiring decisions and are regressive.

This is why I love your posts. I think the poor should not be taxed. Not because they don't share a responsibility towards our future, but because, as poor people, we contribute a large portion to our economy.

And I've described the type of estate tax I'd support in my previous post: taxes on large estates. Not estates of a few tens of thousands of dollars, and not taxes on farms (since their asset size relative to their value and liquidity is imbalanced).

I hopefully state our positions in the above.

 

[Neo-Logic]

I think the poor should not be taxed.

Not be taxed at all? Or to what effect?

 

[Kathryn]

That's 18% when they're receiving tens of thousands of dollars.

I agree it's a lot to a poor family, but getting taxed on their payrolls and wages is a far bigger problem in my view than getting taxed on a one-time receipt of tens of thousands of dollars. Taxes on wages are continual taxes that those people pay, and taxes on payroll negatively effect hiring decisions and are regressive.

And I've described the type of estate tax I'd support in my previous post: taxes on large estates. Not estates of a few tens of thousands of dollars, and not taxes on farms (since their asset size relative to their value and liquidity is imbalanced).

\

Actually the estate tax only kicks in AFTER $5,000,000 (value of the estate) from what I understand.

So the 18 percent tax (lowest rate) is only applicable on assets OVER $5,000,000.

Hardly onerous.

From the link you posted (Wikipedia):

Credits against tax
There are several credits against the tentative tax, the most important of which is a "unified credit" which can be thought of as providing for an "exemption equivalent" or exempted value with respect to the sum of the taxable estate and the taxable gifts during lifetime.
For a person dying during 2006, 2007, or 2008, the "applicable exclusion amount" is $2,000,000, so if the sum of the taxable estate plus the "adjusted taxable gifts" made during lifetime equals $2,000,000 or less, there is no federal estate tax to pay. According to the Economic Growth and Tax Relief Reconciliation Act of 2001, the applicable exclusion increased to $3,500,000 in 2009, the estate tax was repealed for estates of decedents dying in 2010, but then the Act "sunsets" in 2011 and the estate tax was to reappear with an applicable exclusion amount of only $1,000,000. However, On December 16, 2010, Congress passed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, which was signed into law by President Barack Obama on December 17, 2010. The 2010 Act changed, among other things, the rate structure for estates of decedents dying after December 31, 2009, subject to certain exceptions. It also served to reunify the estate tax credit (aka exemption equivalent) with the federal gift tax credit (aka exemption equivalent). The gift tax exemption is now equal to $5,000,000.
The 2010 Act also provided portability to the credit, allowing a surviving spouse to use that portion of the pre-deceased spouses credit that was not previously used (i.e. Husband dies and used $3 million of his credit. At his wife's death, she can use her $5 million credit plus the remaining $2 million of her husband's).
If the estate includes property that was inherited from someone else within the preceding 10 years, and there was estate tax paid on that property, there may also be a credit for property previously taxed.
Before 2005, there was also a credit for non-federal estate taxes, but that credit was phased out by the Economic Growth and Tax Relief Reconciliation Act of 2001.
Estate tax in the United States - Wikipedia, the free encyclopedia

 

[Penumbra]

\

Actually the estate tax only kicks in AFTER $5,000,000 (value of the estate) from what I understand.

So the 18 percent tax (lowest rate) is only applicable on assets OVER $5,000,000.

Hardly onerous.

From the link you posted (Wikipedia):

I didn't post any link from wikipedia. I replied to another member that posted a link from wikipedia (and I admittedly only replied to the portion he quoted in his post). You may have gotten my post mixed up with his.

My understanding of estate tax is that it occurs after a multi-million-dollar credit, which is as what you say (with the precise number changing every year in the US; I don't know what it is in other countries). This is the type of estate tax I mentioned in my first reference to estate taxes. I replied to his post, which referenced a tax chart (and apparently not the whole scenario), by saying that I don't support small estate taxes, but even so, I wouldn't consider them nearly as problematic as payroll taxes or taxes on the low-end of wages.

 

[Penumbra]

Tens of thousands of dollars in debt. You a very smart person and I love your posts, but, the money our government spends (federally) and maybe stately) is primarily debt/interest! I'm no conservative and (not now )a teacher in high school and college. I understand the need, but our cooperate based government is a sham!

What is this in reference to? We were talking about taxes on estate transfers. We weren't talking about tens of thousands of dollars in debt, or anything having to do with government spending.

Not be taxed at all? Or to what effect?

The bottom 50% of Americans in terms of wealth, own less than 4% of total American wealth. The top 400 individuals in the US in terms of wealth, own approximately as much as the bottom 50% of the US households (57 million households) combined.

(Even according to the Wall Street Journal which isn't exactly left-leaning).

-There's large wealth inequality in the US compared to other nations.
-There isn't much money to be taxed for among the bottom 50% of Americans, let alone the poorest subset.
-Tax policy in part is what allows this kind of inequality to occur in the first place.

 

[Jeremy Mason]

\

Actually the estate tax only kicks in AFTER $5,000,000 (value of the estate) from what I understand.

So the 18 percent tax (lowest rate) is only applicable on assets OVER $5,000,000.

Hardly onerous.

From the link you posted (Wikipedia):

Credits against tax
There are several credits against the tentative tax, the most important of which is a "unified credit" which can be thought of as providing for an "exemption equivalent" or exempted value with respect to the sum of the taxable estate and the taxable gifts during lifetime.
For a person dying during 2006, 2007, or 2008, the "applicable exclusion amount" is $2,000,000, so if the sum of the taxable estate plus the "adjusted taxable gifts" made during lifetime equals $2,000,000 or less, there is no federal estate tax to pay. According to the Economic Growth and Tax Relief Reconciliation Act of 2001, the applicable exclusion increased to $3,500,000 in 2009, the estate tax was repealed for estates of decedents dying in 2010, but then the Act "sunsets" in 2011 and the estate tax was to reappear with an applicable exclusion amount of only $1,000,000. However, On December 16, 2010, Congress passed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, which was signed into law by President Barack Obama on December 17, 2010. The 2010 Act changed, among other things, the rate structure for estates of decedents dying after December 31, 2009, subject to certain exceptions. It also served to reunify the estate tax credit (aka exemption equivalent) with the federal gift tax credit (aka exemption equivalent). The gift tax exemption is now equal to $5,000,000.
The 2010 Act also provided portability to the credit, allowing a surviving spouse to use that portion of the pre-deceased spouses credit that was not previously used (i.e. Husband dies and used $3 million of his credit. At his wife's death, she can use her $5 million credit plus the remaining $2 million of her husband's).
If the estate includes property that was inherited from someone else within the preceding 10 years, and there was estate tax paid on that property, there may also be a credit for property previously taxed.
Before 2005, there was also a credit for non-federal estate taxes, but that credit was phased out by the Economic Growth and Tax Relief Reconciliation Act of 2001.
Estate tax in the United States - Wikipedia, the free encyclopedia

I stand corrected.

 

[Kathryn]

I stand corrected.

No problem - it's a very common misconception. I can't tell you how many customers at my bank think when they inherit something they are going to be taxed so much that they lose it. Very unlikely.

And Penumbra, I didn't mean to imply that I was disagreeing with you or that you were mistaken. I just wanted to clarify for the thread that estate taxes are not something the vast majority of people ever even need to worry about - not in 2012 that is.

 

[Jeremy Mason]

What is this in reference to? We were talking about taxes on estate transfers. We weren't talking about tens of thousands of dollars in debt, or anything having to do with government spending.

What I thought you were saying, is the collective taxes that were collected from estate taxes would far out way by tens of thousands of dollars that everyday people use via infrastructure or any projects alike.

What I was saying is all those new projects aren't coming out of estate taxes or income taxes. Most, if not all new projects are simply new loans that are paid off, interest first, by the tax payers. All the money in the form of income tax and estate taxes, etc., goes towards paying the interest on the US debt, not current or future government projects.

 

[Jeremy Mason]

Not be taxed at all? Or to what effect?

I agree with Penumbra.

The bottom 50% of Americans in terms of wealth, own less than 4% of total American wealth. The top 400 individuals in the US in terms of wealth, own approximately as much as the bottom 50% of the US households (57 million households) combined.

(Even according to the Wall Street Journal which isn't exactly left-leaning).

-There's large wealth inequality in the US compared to other nations.
-There isn't much money to be taxed for among the bottom 50% of Americans, let alone the poorest subset.
-Tax policy in part is what allows this kind of inequality to occur in the first place.

 

[Yerda]

If the higher class pays the most taxes, nobody would want to get the most well paying jobs which are usual the most essential ones for our society (eg hospitals)

Is this humour?

 

[Kathryn]

Is this humour?

Surely it must be.

Personally, the more money I can make, the better. So what if I pay higher taxes? It's just a percentage of what I MAKE.

This did backfire on me one year, but just one year. Because of cashing in some sort of investment, I made $700 too much that year, and it pushed me into the next tax bracket. Which meant that I had to send a check into the IRS for $2000 more than I expected to have to send. So the extra $700 cost me $1300. That sucked, but I learned quickly how to avoid that in the future. It hasn't happened since.

 

[Revoltingest]

Surely it must be.

Personally, the more money I can make, the better. So what if I pay higher taxes? It's just a percentage of what I MAKE.

This did backfire on me one year, but just one year. Because of cashing in some sort of investment, I made $700 too much that year, and it pushed me into the next tax bracket. Which meant that I had to send a check into the IRS for $2000 more than I expected to have to send. So the extra $700 cost me $1300. That sucked, but I learned quickly how to avoid that in the future. It hasn't happened since.

It's still just a percentage of what you made....so quite yer complaining.
Let's see.....2000 tax on 700 income is almost a 300% marginal tax rate.

But back in the day, when I calculated my own taxes, the next higher tax bracket's rate applied only to the income
above the lower brackets' income, ie, it was a marginal rate. Are you sure about your additional tax on $700?

 

[Kathryn]

It's still just a percentage of what you made....so quite yer complaining.
Let's see.....2000 tax on 700 income is almost a 300% marginal tax rate.

But back in the day, when I calculated my own taxes, the next higher tax bracket's rate applied only to the income
above the lower brackets' income, ie, it was a marginal rate. Are you sure about your additional tax on $700?

Rereading what I posted, I didn't say it right. In my head it meant sense, but I didn't give all the pertinent information. Sorry, my bad!

It wasn't tax on the $700. It was that when I cashed in that particular investment, it added to my income, and with the increase in my income, it put me $700 over into the next income tax bracket.

Because my tax was then based on that tax bracket, we had to send in a higher percentage.

Hey, all I know is that we recalculated and refigured and tried our best to rework the paperwork but it had to be done.

Oh - this is important - that investment had not yet been taxed. So that was also the tax on that investment.

And the investment income was more than $700. But the $700 was what we went OVER into the next income tax bracket. That's my point. Sorry if I said it in a confusing way.

So it was the tax on the investment, as well as the additional tax because of jumping into the next tax bracket, that added up to $2000 extra in taxes.

One final point - I'm not complaining. It was just ironic. I didn't know what all the ramifications would be when I liquidated that investment, and this was before I went into banking. I wouldn't do it again if given the option.

 

[Penumbra]

What I thought you were saying, is the collective taxes that were collected from estate taxes would far out way by tens of thousands of dollars that everyday people use via infrastructure or any projects alike.

What I was saying is all those new projects aren't coming out of estate taxes or income taxes. Most, if not all new projects are simply new loans that are paid off, interest first, by the tax payers. All the money in the form of income tax and estate taxes, etc., goes towards paying the interest on the US debt, not current or future government projects.

Currently about 6% of federal spending goes towards interest on debt (varying to a certain extent on what time period we use in calculations). The other 94% goes to medicare, medicaid, social security, defense, and other mandatory and discretionary spending.

Depending on what year one goes by for calculations, for every dollar the federal government spends, about 2/3rds of it comes from their tax revenue of various sorts, and the other 1/3 comes from the addition of new debt. That's not sustainable and needs to be reduced, but it's not accurate to say that all money from income taxes and estate taxes goes towards paying the interest on US debt.

 

[Penumbra]

Currently, income tax is the largest type of tax for US federal revenues, payroll tax is the next largest, and corporate tax is third. All other taxes, including excise taxes and estate taxes, are rather small contributors to federal revenue.

 

[InformedIgnorance]

Import duties should be considerably higher, yes this is a problem because the US has signed treaties about the issue - if the Americans want their economy out of the toilet, then this is probably the best way to do it. Personally if I were an American I would pressure my government to get out of those free trade agreements (which are often heavily skewed in American favour, but towards only the very wealthy corporations).

An estate tax is an excellent way to ensure people remain committing to society rather than simply inheriting fortunes and then simply sitting on their ***** doing nothing, yet somehow still 'making money'.

A consumption tax is a great way to gather revenue from people, particular with some goods and services targeted for a higher rate either due to their negative outcomes for society or else as a means of addressing social inequalities (though I personally prefer a higher estate tax for this).

Corporate taxes, in particular dividends + share repurchases should form the majority of taxes at a high flat rate, with clearly defined and transparent tax benefits for certain types of business activities.

Income taxes are nasty disgusting things and should only be minimal - however care should be taken that other sources of income are not being classified as income through bogus 'jobs' to avoid taxes.

 

[Penumbra]

Corporate taxes, in particular dividends + share repurchases should form the majority of taxes at a high flat rate, with clearly defined and transparent tax benefits for certain types of business activities..

Corporate taxes and dividend taxes are different things. Dividends are a form of income, and are a type of income tax on individuals. Corporate taxes are taxes on corporate profits.

The US already has among the highest corporate tax rates in the world. Now, in practice, there are many loopholes, so corporations don't generally pay that very high rate, but they still pay pretty substantial tax rates.

The problem with corporation taxes is this: they affect everyone. There's not really a way to make them progressive. They affect the employees and customers of the company to a certain extent, since profit of the company is reduced (and therefore to get the same returns the company either has to charge higher prices or pay lower wages), and they affect the owners of the company. The owners of the company consist of both small investors and mega-rich investors, and it affects their returns equally.

So I'm in favor of no corporate taxes. Now, I've dealt with the accounting of publicly traded partnerships which I own and that are tax free at the business level, and it's rather messy. So in the current system, I think we need to retain some taxation at the corporate level for simplicity, but with a complete tax overhaul, I think corporate taxation could be dropped completely. Get the tax from people at a progressive rate; not from corporations directly. I say, let business flourish, and attract new businesses, but tax the rich substantially.

 

[InformedIgnorance]

Ahh i see, Australian accounting english vs American accounting english issue... I was referring to taxes on corporations, businesses etc... hence I used the word corporation, maybe i should have said business taxes then.