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John Galt?

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#75 : September 23, 2012, 05:33:51 PM

I guess I'll throw in my $0.02 ($0.01 after taxes).

I'll start with CBW since he put out the most comprehensive plan


Refusing to answer the question. Not unexpected as it is the usual response.

LOL, I usually refuse to answer questions? Really? How many other liberals post regularly in the Cove?

Okay fine. Let's pretend that this is going to somehow be a fair and balanced discussion between the one liberal poster and the dozen or so conservative posters on this MB who either support regressive taxation or don't believe in taxation at all....

I would advocate a mixture of the best aspects of the Kennedy/Clinton/Bush tax rates. It would look something like this.

Bracket 1:
Married: $0 $18,000   
Single: $0 $9000
Rate: 10%

I actually think this might be a bit steep. I'd go 5% BUT little to no tax credits and absolutely no negative taxes. IOW, your taxes can be zero but you can't get more back than you paid in. That is welfare and welfare needs to be written and specified in the budget, not hidden in the tax code.



Bracket 2:
Married: $18,001 $71,000
Single: $9,001 $35,500
Rate: 25%

Too wide an income range and I hate that Single vs Married crap. Single person has the nearly the same rent, and other expenses as the married couple. A married couple w/ no kids making $70k is a lot more comfortable than a single parent making $35k.


Bracket 3:
Married: $71,001 $165,000
Single: $35,501 $82,500
Rate: 30%


ugh again on the married vs single thing.

and 30% is steep for a single person making $35k-$49k

Bracket 4:
Married: $165,001 $250,000
Single: $82,501 $175,000
Rate: 35%
 
again too wide a range


Bracket   5:
Married: $250,001 $400,000   
Single: $175,001 $400,000
Rate: 40%

acceptable



Bracket   6:
Married: $400,001 and over
Single: Over $400,001 and over
Rate: 60%


on this bracket I think the question of "tax on what type of income?" is big. Most people in this range have substantial cap gains, dividend and interest income, etc.


John Galt?

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#76 : September 23, 2012, 07:32:46 PM

My Plan:

First I do think a "somewhat" marginal progressive tax is fair because High earners do owe some of their earning ability to the govts. ability to provide for a common defense, insure fair markets, provide for roadways, and assist in creation of infrastructure. But only to a degree. That said:

1. I'd eliminate the multiple brackets depending on filing status. Instead I'd just have 3; Individual, Household, Business/Independent Contractor.. The tax rates would be the same for both, only the number of deductions/exemptions would vary.

2. No negative taxes. You cannot receive more than you paid in regardless of any tax credits. It is the Internal Revenue Service, not the Internal Revenue and Welfare not in the budget Service.

3. Brackets:

under $4,999-------------------0%    The cost of processing the returns would exceed the rev generated.
$5,000------ $22,500---------5%
$22,501-----$50,000--------20%
$50,001-----$85,000--------25%
$85,001----$125,000-------30%
$125,001--$300,000-------35%
$300,001--$500,000-------40%
$600,001--$1 mill-----------45%
$1 mill and up---------------50%

4. Deductions and Exemptions:

Individual- you get 1 exemption for $10,000 if and only if no one else claims you as a dependent. If a dependent, you get $0. Individual only gets deductions directly related to unreimbursed
job expenses, i.e. uniforms, gas for delivery drivers, etc.


HoH: 1 exemption of $10k for the first wage earner, $6500 for 2nd wage earner, $2500 for any additional wage earners but these wage earners cannot file separately.
HOH deductions: Children under 18- $4,500 for first 2, $2500 for each additional up to a max of 5. $4,500 for adults deemed disabled/incompetent up to 2 max.

other deductions:

Mortgage interest: 1 house only, 50% of Interest on mortgage up to a max deduction of $24,000 IOW a person with a fully mortgaged $3 million home gets no more write off than the guy with the $300k home.

Direct Business/Job expenses: 100% deductible ONLY if unreinbursed and ONLY if service or item bought is not used in any way for personal non-business use. No Major Capital or depreciation deductions



Business/IC


Exemptions: 1 exemption for $10,000

Deductions: 100% of all Bus. related expenses ONLY if unreinbursed and ONLY if service or item bought is not used in any way for personal non-business use. Can depreciate or amortize capital expenses of over $5k Straight line only based on average life of item.

5. other taxes:

Capital Gains divided into 3 categories: passive,productive, and Real Estate. Passive = any investment requiring no management. i.e. stocks bonds etc. Productive = machinery or equipment actively used in business or PP&E used solely for business. i.e. forklifts, factory building, restaurant oven, etc.

Passive Cap Gains taxed at ordinary rates.

Productive Cap Gains taxed at flat 15%

RE cap gains taxed at regular rates with a 1 time $500k exemption on a primary residence.


CBWx2

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#77 : September 25, 2012, 05:56:03 PM

My Plan:

First I do think a "somewhat" marginal progressive tax is fair because High earners do owe some of their earning ability to the govts. ability to provide for a common defense, insure fair markets, provide for roadways, and assist in creation of infrastructure. But only to a degree. That said:

1. I'd eliminate the multiple brackets depending on filing status. Instead I'd just have 3; Individual, Household, Business/Independent Contractor.. The tax rates would be the same for both, only the number of deductions/exemptions would vary.

2. No negative taxes. You cannot receive more than you paid in regardless of any tax credits. It is the Internal Revenue Service, not the Internal Revenue and Welfare not in the budget Service.

3. Brackets:

under $4,999-------------------0%    The cost of processing the returns would exceed the rev generated.
$5,000------ $22,500---------5%
$22,501-----$50,000--------20%
$50,001-----$85,000--------25%
$85,001----$125,000-------30%
$125,001--$300,000-------35%
$300,001--$500,000-------40%
$600,001--$1 mill-----------45%
$1 mill and up---------------50%

4. Deductions and Exemptions:

Individual- you get 1 exemption for $10,000 if and only if no one else claims you as a dependent. If a dependent, you get $0. Individual only gets deductions directly related to unreimbursed
job expenses, i.e. uniforms, gas for delivery drivers, etc.


HoH: 1 exemption of $10k for the first wage earner, $6500 for 2nd wage earner, $2500 for any additional wage earners but these wage earners cannot file separately.
HOH deductions: Children under 18- $4,500 for first 2, $2500 for each additional up to a max of 5. $4,500 for adults deemed disabled/incompetent up to 2 max.

other deductions:

Mortgage interest: 1 house only, 50% of Interest on mortgage up to a max deduction of $24,000 IOW a person with a fully mortgaged $3 million home gets no more write off than the guy with the $300k home.

Direct Business/Job expenses: 100% deductible ONLY if unreinbursed and ONLY if service or item bought is not used in any way for personal non-business use. No Major Capital or depreciation deductions



Business/IC


Exemptions: 1 exemption for $10,000

Deductions: 100% of all Bus. related expenses ONLY if unreinbursed and ONLY if service or item bought is not used in any way for personal non-business use. Can depreciate or amortize capital expenses of over $5k Straight line only based on average life of item.

5. other taxes:

Capital Gains divided into 3 categories: passive,productive, and Real Estate. Passive = any investment requiring no management. i.e. stocks bonds etc. Productive = machinery or equipment actively used in business or PP&E used solely for business. i.e. forklifts, factory building, restaurant oven, etc.

Passive Cap Gains taxed at ordinary rates.

Productive Cap Gains taxed at flat 15%

RE cap gains taxed at regular rates with a 1 time $500k exemption on a primary residence.

I don't hate it. I'd work with you in congress, JG?.


NovaBuc

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#78 : September 25, 2012, 07:31:54 PM


~snip~

Mortgage interest: 1 house only, 50% of Interest on mortgage up to a max deduction of $24,000 IOW a person with a fully mortgaged $3 million home gets no more write off than the guy with the $300k home.

 ~snip~

 I'd quibble a bit with the brackets you have but overall no major complaints.

 Do have to point out that there is already a limit on mortgage interest, the person with a $3 million dollar mortgage doesn't get to write the full thing off as it stands now (the mortgage amounts over $1 million total are disregarded).To do this properly, you likely would have to eliminate the deduction for investment interest, the current way some folks get around the two home limitation of the current mortgage interest limitation. Just call the other homes beyond the second (or the first if you run into the million dollar limitation) investment properties. Yes, you need investment income for it to offset, but a bit of long-term planning to eliminate the effects of capital gains never hurts since the investment interest deduction carries forward until you use it.

 The current tax code does treat single parents better than straight single folks. Not quite as good as married, but the big disparity there happened when Congress removed the misnamed "Marriage Penalty". The brackets for HoH vs Married Filing Joint could be a little closer to each other, but the HoH filing status is also the one most abused by fraud these days. Not only due to earned income credit/child tax credit, but that's a large part of it. Part of the problem with Married Filing Jointly is it doesn't really account for both spouses working vs one spouse working. The 'bracket' status/deduction is based on the idea of one bread winner in the family. Not sure how to really fix it fairly in a progressive system off the top of my head however.

 Deductions for charity should still remain as well I think - especially donations of property as I think it encourages people to donate still usable old clothes and furniture they'd otherwise throw away.

 My personal feeling is that if we keep the current progressive framework of our tax system, there needs to be another bracket above the current top tier and eliminate the loophole that allows all income to be taxed at a capital gains tax rate as opposed to the rate of your bracket.

 Also, it seems some folks aren't aware of how the progressive system works. If you are in the 28% tax bracket, you don't pay 28% on your entire income, just the income in that bracket. Each dollar you earn within a particular bracket is taxed at that bracket's rate regardless of what your total income is, which is why CBW's brackets based upon our current system don't add up to the totals some pointed out.


spartan

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#79 : September 25, 2012, 09:37:28 PM

I like a lot of thought processes currently running through this thread, particularly JG but I hate his tax brackets.

I personally do not think anybody should pay more than 30% of their income in taxes. In the absence of a fair tax, I guess .....


under $24,999 = 2%
$25,000 -----34,999 = 10%
$35,000 -- $49,999 = -20%
$50,001----- $999,999 = 25%
$1 mill and up = 30%

And, this where I think it could work. Zero deductions for anyone.
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