Why is $250,000 the magic number?

[colourfastt]

Originally Posted by Sydde

Most of us would "think" you are mistaken. "Equality in taxation" means you pay for what you get. Wealthy people get a great deal more from the system, the system that supports and fosters their wealth, than the middle-class and poor do, so tax equanimity means the wealthy ought to pay a higher relative rate.

The problem is I don't get what I pay for. I pay roughly $11,000 a year just in real estate taxes, and yet I don't get better service than some welfare queen living in Section 8 subsidized housing and living on welfare. In fact, I'd say that I use far LESS in services.

That's why I'm for a consistent flat tax percentage that everyone pays. Under the current system if it were to be applied to, say, groceries: if you make $18,000 a year (roughly minimum wage) you'd pay $7 for a bag of potatoes, however if you make $60,000 per year that same bag of potatoes would cost you $21.

[thewitt]

The reason we will never see a flat tax with no exemptions is the government uses the tax code to drive social and economic activity.

Flat tax on all money's earned by corporations and individuals would remove the leverage to force behavior that the government enjoys with the current tax code.

[thekev]

Originally Posted by thewitt

The reason we will never see a flat tax with no exemptions is the government uses the tax code to drive social and economic activity.

Flat tax on all money's earned by corporations and individuals would remove the leverage to force behavior that the government enjoys with the current tax code.

You knowingly oversimplify a lot of things while taking a stance on them without even describing its basis. The global nature of the economy necessitates a certain level of interference to maintain basic services to all citizens involved through various economic cycles. Otherwise the potential is there for those who profit most during better economic times to flip their liquid assets into foreign currency and shelter themselves from any kind of economic downturn. It makes it too easy to vulture off the resources of one country or another.

You could tax both corporations and self employed individuals on gross receipts, yet that in itself forces them to maintain a certain margin to cover these costs. Local taxes here is on gross receipts. The percentage varies by business code, so it tends to be less for businesses based on tangible goods rather than services. The first 100k is exempt, and we have some other loosely qualified deductions, although I hate things that are poorly described. I don't find this ideal given the constraints it places on margins and cash flow.

It's not a simple topic when factored against the global nature of economics, and you'd have to accept the potential that many businesses could be wiped out by a move that doesn't factor deductions. It necessitates a static baseline margin, below which you effectively clip any potential for business to be conducted. Also at an individual level flat taxes still tend to be regressive due to the logarithmic nature of cost of living relative to earnings. Higher earnings can mean a better standard of living for some individuals, but they also contribute to inflation in a somewhat localized and weighted manner. Things such as real estate costs are influenced more at a local level, while commodity items aren't driven quite so much at a per city level. Fuel pricing, building materials, and anything from outside the immediate region isn't as directly influenced by the local economy. No matter where you go, gas is more expensive than it was a decade ago. I'm not sure what positive aspects you think would come out of your suggested changes. Cronyism would still find a way to exist.

Originally Posted by colourfastt

The problem is I don't get what I pay for. I pay roughly $11,000 a year just in real estate taxes, and yet I don't get better service than some welfare queen living in Section 8 subsidized housing and living on welfare. In fact, I'd say that I use far LESS in services.

That's why I'm for a consistent flat tax percentage that everyone pays. Under the current system if it were to be applied to, say, groceries: if you make $18,000 a year (roughly minimum wage) you'd pay $7 for a bag of potatoes, however if you make $60,000 per year that same bag of potatoes would cost you $21.

You're essentially talking about fully privatizing basic services, although you've editorialized it more than necessary. A free market system like this doesn't guarantee anything. It means if the electric company that services your area goes out of business, you could be without electricity. The same goes for fire departments, police, and any governmental offices. How is your example involving a tangible item a valid example? If potatoes aren't available, you can purchase some other kind of starch. I suppose you could also hire a private security firm in place of police, but is that really a good way to operate at a societal level?

[colourfastt]

Originally Posted by thekev

You're essentially talking about fully privatizing basic services, although you've editorialized it more than necessary. A free market system like this doesn't guarantee anything. It means if the electric company that services your area goes out of business, you could be without electricity. The same goes for fire departments, police, and any governmental offices. How is your example involving a tangible item a valid example? If potatoes aren't available, you can purchase some other kind of starch. I suppose you could also hire a private security firm in place of police, but is that really a good way to operate at a societal level?

Interestingly, when I lived in Delaware in my 20s I worked for a private security company that was the patrol for one of the smaller towns in the state. No town police department just the private security. So, obviously, it does work. As far as fire departments, and ambulance services by extension, the vast majority of the country (US) is covered by volunteer services not paid, governmental service, so unless you like paying higher taxes there's not necessarily a reason to have a paid service. After living in Del. I moved to Louisiana, fact there: in most of the parishes ambulance service is provided by a private service not the local municipality.

[thekev]

Originally Posted by colourfastt

Interestingly, when I lived in Delaware in my 20s I worked for a private security company that was the patrol for one of the smaller towns in the state. No town police department just the private security. So, obviously, it does work. As far as fire departments, and ambulance services by extension, the vast majority of the country (US) is covered by volunteer services not paid, governmental service, so unless you like paying higher taxes there's not necessarily a reason to have a paid service. After living in Del. I moved to Louisiana, fact there: in most of the parishes ambulance service is provided by a private service not the local municipality.

I'm aware of ambulance service, and those were examples. Your story is interesting. Did the private security firm service the entire town? While I've driven through and stayed in smaller towns, I've only lived in larger cities. Fire departments in them may have included volunteers, yet the potential for millions of dollars in property damage fire probably minimizes the use of volunteer services.

[eric/]

Originally Posted by P-Worm

The median household income between 2006 and 2010 is $51,914. $250,000 is FIVE TIMES that. So yes, to many people it is a lot of money.

P-Worm

Again, depends on where you live.

$51,914 is a ton of money in Mississippi.

To maintain that same standard of living in NYC or DC you need a lot more.

[PracticalMac]

Maybe it is arbitrary number dividing middle class and wealthy?

[eric/]

I'm in favor of a flat tax, but the problem is that 10% of an income of $16,000 is a lot bigger of a deal than 10% of the income of $60,000.

So idk how to get around that.

[iJohnHenry]

Originally Posted by eric/

I'm in favor of a flat tax, but the problem is that 10% of an income of $16,000 is a lot bigger of a deal than 10% of the income of $60,000.

So idk how to get around that.

A Basic Personal Exemption, like we have up here, for all, including the rich.

You pay zero tax on that amount, and it changes each year with the COLA factor.

It's not unlike a poverty line that you cannot transgress for taxation.

[colourfastt]

Originally Posted by thekev

I'm aware of ambulance service, and those were examples. Your story is interesting. Did the private security firm service the entire town? While I've driven through and stayed in smaller towns, I've only lived in larger cities. Fire departments in them may have included volunteers, yet the potential for millions of dollars in property damage fire probably minimizes the use of volunteer services.

1) Yes, we patrolled the entire town; in fact, we were the de facto police department.

2) I gathered from your responses that you live in an urban area. Those who do generally assume that the government will provide services, e.g., ambulance, fire, etc. I, however, grew up and ran EMS (all volunteer, as was the fire service) in a rural area. It was not unusual for it to take us 30 to 40 minutes to get to the scene of service after we got the call (in addition to the up to 5 to 10 minutes it took to get to the station from wherever we were). Then another 30 to 45 minutes from the scene to the nearest hospital.

Urban/suburban viewpoints are vary different from the "fly over" part of the country.

[eric/]

Originally Posted by iJohnHenry

A Basic Personal Exemption, like we have up here, for all, including the rich.

You pay zero tax on that amount, and it changes each year with the COLA factor.

It's not unlike a poverty line that you cannot transgress for taxation.

Seems pretty reasonable to me

[colourfastt]

Originally Posted by iJohnHenry

A Basic Personal Exemption, like we have up here, for all, including the rich.

You pay zero tax on that amount, and it changes each year with the COLA factor.

It's not unlike a poverty line that you cannot transgress for taxation.

I like that. Say a 15% tax on all income over $20,000. Do away with all state and local taxes, and have ONE tax. The tax would be individual, so no married, married filing separately, head of household nonsense. Finally, no deductions or exemptions, e.g., mortgage interest, childcare, etc.

[Ugg]

Originally Posted by colourfastt

I like that. Say a 15% tax on all income over $20,000. Do away with all state and local taxes, and have ONE tax. The tax would be individual, so no married, married filing separately, head of household nonsense. Finally, no deductions or exemptions, e.g., mortgage interest, childcare, etc.

I thin Sweden or Norway does something like this.

For example

$0-$10,000 tax free for everyone

$10,000-$40,000 taxed at 15%

$40,000-$100,000 taxed at 20%

Etc. this means everyone pays the same rate on income earned. This way the poorest pay according to their ability as do the richest but the important part is everyone pays the same amount on the same level of income.

[citizenzen]

Originally Posted by colourfastt

I like that. Say a 15% tax on all income over $20,000. Do away with all state and local taxes, and have ONE tax. The tax would be individual, so no married, married filing separately, head of household nonsense. Finally, no deductions or exemptions, e.g., mortgage interest, childcare, etc.

Has anyone done the math to determine how much this would generate?

And it would be interesting to see the system necessary to determine state and local needs and distribute these funds to them.

[MacNut]

Originally Posted by citizenzen

Has anyone done the math to determine how much this would generate?

And it would be interesting to see the system necessary to determine state and local needs and distribute these funds to them.

I don't know if there will ever be enough to satisfy state needs. CT had a huge increase in an attempt to raise money and they are still 300 million in the hole. Money just seems to go into a bottomless pit.

[Peace]

Originally Posted by citizenzen

Has anyone done the math to determine how much this would generate?

And it would be interesting to see the system necessary to determine state and local needs and distribute these funds to them.

It would also be very much against the constitution .

[colourfastt]

Originally Posted by citizenzen

Has anyone done the math to determine how much this would generate?

And it would be interesting to see the system necessary to determine state and local needs and distribute these funds to them.

That wouldn't be difficult. Using the 15% in my example, 10% retained at the federal level, 3% to the state (a state code on your return), and 2% to the county, or independent city if you live in Virginia (also a code on your return). If you lived in an incorporated municipality (town, city, except Virginia) then the county and municipality split the 2%: 1% & 1%.

[spork183]

Originally Posted by Rodimus Prime

I would also say we need to add some more higher tax brackets that have even higher rates.

So we do a steady tax rate increase incrementally. Why have an arbitrary stoppage point? By the time you earn 100million, you should be in the 103% tax bracket. Then we'd really make a dent in that deficit. Come on, the uber right (er, rich) can afford it...

(Don't get me wrong. We need tax reform, but be careful what you wish for. What happens when some politician crunches the numbers and figures out how much more money they could bring in if they dropped that $250K limit to $175K? or $100K? If you can't live on $100K, you must be doing something wrong. But why stop there? $75K is a nice number and people who make that can live comfortably...)

[citizenzen]

Originally Posted by spork183

(Don't get me wrong. We need tax reform, but be careful what you wish for. What happens when some politician crunches the numbers and figures out how much more money they could bring in if they dropped that $250K limit to $175K? or $100K? If you can't live on $100K, you must be doing something wrong. But why stop there? $75K is a nice number and people who make that can live comfortably...)

Slippery slope is a logical fallacy.

You're falling down one.

[spork183]

Originally Posted by citizenzen

Slippery slope is a logical fallacy.

You're falling down one.

that 103, that was sarc-- aw forget it...

[citizenzen]

Originally Posted by spork183

that 103, that was sarc-- aw forget it...

That wasn't the part I quoted or referred to.

No biggie.

[splitpea]

Originally Posted by Ugg

I thin Sweden or Norway does something like this.

For example

$0-$10,000 tax free for everyone

$10,000-$40,000 taxed at 15%

$40,000-$100,000 taxed at 20%

Etc. this means everyone pays the same rate on income earned. This way the poorest pay according to their ability as do the richest but the important part is everyone pays the same amount on the same level of income.

This is EXACTLY how income tax works in the US. The first $8500 or so is taxed at the lowest rate, the next $10k or whatever of the same persons income is taxed at x+y%, the next chunk is taxed at x+y+z%, etc.

It is a common fallacy to assume that someone making $250k pays the top tax rate on every dollar of their income. That's not the case. It's only the amount over whatever the highest tax bracket threshold is that gets taxed at the top rate.

Wikipedia explains it better than I can, with numbers.

I do agree that income below the poverty line or so really shouldn't be taxed, although iirc the earned income tax credit essentially has that effect.

[NickZac]

Originally Posted by Zombie Acorn

Does the 1% really start at $250,000 per year? Personally I think people who are pulling in $250,000 are going to be really well off and a small tax increase will not hurt them. The problem is the way the tax system is setup as many small businesses are ran and reported through individual tax returns. I don't want small businesses to be increasingly taxed, especially in the face of corporations getting bailouts, welfare, and everything else under the sun spoon fed to them.

Excluding families making 250,00-500,000 bracket from a 'rich tax' would have little affect given how heavily wealth is concentrated in the US, and be a good counter point for tax increases. The rich, rich, rich is where it is concentrated at and if we are going to ask people to 'pay more', it fiscally makes sense to focus at the top of that 1% given how concentrated wealth is. The top 1% own around 35% of wealth, but of that 35%, the overwhelming majority of it is the top 1% of the top 1%. It's interesting how this has worked in the US because European nations never saw such a concentration.