Wealth - Rich getting richer, faster aka: The Taxman Cometh

[Crazy Cooter]

Interesting read.  I've read it before, but this article has some actual numbers.

http://moneycentral.msn.com/content/invest/extra/P143548.asp

The richest 1% of households -- those with incomes above $237,000 for 2003, the latest year analyzed -- owned 57.5% of all income from capital gains, dividends, interest and rents in 2003, the CBO analysis found. That was up from 53.4% the year before and 38.7% in 1991.

Long-term capital gains were taxed at 28% until 1997, and at 20% until 2003, when rates were cut to 15%. The top rate on stock dividends was cut to 15% from 35% that year.

The poorest fifth [20%] of Americans owned 0.6% of corporate wealth in 2003, down from 1.4 percent in 1991.

The CBO analysis excludes the stock held in retirement accounts such as 401(k)s and IRAs, which isn

[ChadTower]

Tax will never be reformed until it is no longer withheld and people have to write out a weekly check to the gov't.  Most people I know never even think about their withholdings and really have no idea just how much money they drop into the gov't toilet every pay period.

The first month they had to sit and write a check to the gov't for half their pay we would have an armed revolution.

[fredster]

Cooter,

Even though the money is taxed at 15% is it still subject to the tax tables?

At the end of the year you still have to tally up and pay the high rate. It's just the withholding rate correct?

[ChadTower]

No one would do that anyway, if the company went under you'd lose all that money.

[thebrownshow]

Chad, I agree with you 100% about the witholding and whatnot.. that's a HUGE problem in everything from taxes to health insurance.  When you're seperated from the actual cost of something, you don't care what the REAL cost is. 

Biggest problem is that the government has more than enough money... all the do-gooders could help everyone they want with their social programs and whatnot if it wasn't for the waste.  Only way for waste to stop is to make government more efficient.  In much the same way that I have to tighten my belt and adjust my spending when household costs go up, so should the government.  I can't just walk into my boss's office and say "hey, give me more money" -- neither should the government.  Let's lower taxes and actually hold the government accountable for how they spend our money.

[Crazy Cooter]

Cooter,

Even though the money is taxed at 15% is it still subject to the tax tables?

At the end of the year you still have to tally up and pay the high rate. It's just the withholding rate correct?

No.  That's the overall tax rate.  No additional Income tax applies.

http://www.keyfeeonly.com/Dividends_Tax_Rates.html
"Before passage of the Jobs and Growth Tax Relief Reconciliation Act of 2003, all dividends, including stock dividends, were subject to the taxpayer's ordinary income-tax rate. The new act reduced the tax rate to 15 percent for higher-income taxpayers..."

[DrewKaree]

So what would you ACTUALLY like to talk about?  You've thrown out figures and phrases and lumped them all into "taxes".  You've also spit out HALF the figures on some things, conveniently neglecting others which refer to "lower-income taxpayers".  Which would you like to actually deal with:

• long-term capital gains
• interest
• stock dividends
• rents
• monies businesses pay that Joe 28% doesn't have to
• regular business costs
• actual INCOME tax

What is it you ACTUALLY want to talk about, since your articles seem to dismiss actual  figures when talking about "the poor" but have scads of numbers to give us when speaking of "the rich".  It seems as if things are thrown in there in an effort to lump everything together.  Surely that wasn't the intention though, right?

Oh, those "rich" you speak of....does it matter how many kids they have?  Does it matter if their money is made running a small business?  Tell us, those "poor" in Alaska whose incomes are growing faster than "the rich"....at what point do those "poor" become lower class or middle class folk?  And lastly, how's that boom going in Alaska now that the "poor" are getting "raises"?

And your mythical guy making all his money on stock dividends from his company and only paying 15%....tell us what his Social Security payment is.  Is it possible he's paying into a retirement fund of his own? 

Fostering this continued class bunk is giving people a reason to blame others for the position they're in in life.  You wanna make a difference?  Start teaching people how to work with the system instead of giving incentive to keep workING the system. 

Start defining, using the same methods, what "rich" and "poor" are, so people can see how stupid these arguments are and how they prey on emotional responses to someone's perceived way of life.  You make it sound like 20% of America is living in the streets hand to mouth and there's a segment of the population just preying on them and laughing in their ivory towers.  Your "articles" would be more honest in showing what investment is like in that middle ground between the 20% and the 1%, but I suppose that wouldn't make the whole picture look so bleak on one side and heartless and calculating on the other.

Here's a "trick" for everyone.  www.irs.gov  Check it out and see each year if there's something you can DO to keep more of your money.  Stop complaining and DO something about where you stand if you don't like where your life is at.  Libraries have internet access.  If you're READING this you have internet access.  Get off your ass and start doing some actual RESEARCH on what you can do to improve your lot in life.  Here's another "trick".  www.firstgov.gov  Look around there.  If you can't find a SINGLE thing there that can help you save/borrow/find money, either free, a grant, a loan, SOMETHING to help you take an active step in improving your situation....then you deserve what you get. 

Try spraying less half-story misinformation.  It's too hard to keep a reply short when planting useful things in a whole field of manure.

[markrvp]

You are talking about 15% on the dividend you get.  The corporation still has to pay Federal Income Tax.  The government is taxing this money twice - once when the business makes it and then again when it is paid to you.  Double Jeopardy.  Why do you begrudge only having to pay 15% on money which has already been taxed?

[Crazy Cooter]

S-Corporations don't pay corporate income tax  .  It's a "flow-through" method to the shareholders.  I *believe* a LLC is the same.

Drew, that's what I'm trying to get at.  More of us fall in the 20% than the 1%.  More of us yet are in that middle ground... about 79% of us.

I'm just wondering how we can save some bucks when it comes to taxes.

So with tax season underway, what does everyone think about income tax rates?  What "holes", "tricks" etc, have you found for this year?  How about a flat-tax reform?

[ChadTower]

What they need to do is control local taxes.  Take MA for example.  When the economy tanked MA responded by INCREASING state taxes by nearly a full percentage point.  That really helped the people, didn't it?  Then, a few years later, a supposedly binding ballot question to lower the income tax rate back down to 5% (where it originally was) was APPROVED BY THE VOTERS.  What did the gov't do?  It decided not to follow the mandate of the people and did not reduce the rate until a couple of years after the timeline that was approved, and even then, only about halfway.

Combine this with the constant city/town based Prop 2.5 overrides (where the town can add to your property tax for specific purposes) and the state/local taxes, at least in MA, are what is flying out of control.

[fredster]

I guess the 15% is incentive to continue to invest in Business and keep people working.

Otherwise people would just put the money in CD's and draw the interest.

This is the "trickle down" theory in practice.

Looks like it's working, isn't it?

[Crazy Cooter]

I guess the 15% is incentive to continue to invest in Business and keep people working.

Otherwise people would just put the money in CD's and draw the interest.

This is the "trickle down" theory in practice.

Looks like it's working, isn't it?

A study released last week, from the Center on Budget and Policy Priorities and the Economic Policy Institute, found that the gap between the highest- and lowest-income families is significantly wider than it was 25 years ago.

And an analysis of income-tax data by Congressional Budget Office found that the top 1% of households own nearly twice as much of the nation

[ChadTower]

Well, IRL, and not on paper, I definitely see the gap between the so called middle class and the working poor.  The gap between the people here who can afford a house and the people who are clearly nowhere near getting one is widening by the year.  The cost of living is skyrocketing and anyone that is not in a field keeping pace is being left way behind.

[str1der]

S-Corporations don't pay corporate income tax  .  It's a "flow-through" method to the shareholders.  I *believe* a LLC is the same.

Drew, that's what I'm trying to get at.  More of us fall in the 20% than the 1%.  More of us yet are in that middle ground... about 79% of us.

I'm just wondering how we can save some bucks when it comes to taxes.

So with tax season underway, what does everyone think about income tax rates?  What "holes", "tricks" etc, have you found for this year?  How about a flat-tax reform?

Cooter,
            I don't believe the IRS will let you get away with not paying yourself a reasonable salary. This this example below.

     
Employment Tax: Savings vs. Paperwork

A major factor that differentiates an S corporation from an LLC is the employment tax that is paid on earnings. The owner of an LLC is considered to be self-employed and, as such, must pay a

[Crazy Cooter]

How are the google guys getting away with $1 a year salaries then  ?

http://money.cnn.com/2005/04/08/technology/google_salary/index.htm
"Google's chief executive officer and co-founders are taking a page out of Apple CEO Steve Jobs' book: they are now being paid just $1 as an annual salary.
...
To that end, Schmidt, Brin and Page have all sold chunks of their Google stake during the past few months through pre-determined selling plans. According to filings with the SEC, Brin most recently sold 76,300 shares, generating $14 million in the process, earlier this month while Page sold 400,000 shares in March, raising more than $70 million."

They turned down 6-figure incomes.

[Santoro]

As wacky as Mr Forbes was, I feel the flat tax is the answer to our tax woes in the US.   The tax code is so farking complex, no one can navigate it and it is rife with fraud.

[ChadTower]

But how can they manage to place the burden on the middle class when everyone is paying a flat tax?

[Crazy Cooter]

lol.  That's about it too.

When people were talking about a flat tax, what was the %rate?  Was there ever one that was determined to be right? 

[ChadTower]

"right" is in the eye of the beholder.

Republicans want it way too high.

Democrats want it higher.

[PetitMorte]

If you're married, and filing jointly, you can take the interest paid on your school loans as a deduction.

If you're married, and filing seperately, you're not allowed to take that deduction.

feh.

[Crazy Cooter]

From wikipedia:

The most common flat tax implementation proposition, and the type that has been proposed in the United States by Steve Forbes in his presidential campaign and by Dick Armey to congress, calls for base deductions for people and dependents. For example, the Armey proposition called for deductions of $26,200 for married couples filing jointly, $13,100 for individuals, $17,200 for single head of households, plus $5,300 for each dependent. After those deductions (and no other), each family would pay a 17% post-tax rate (20.5% pre-tax rate) on the difference. Businesses would pay a flat 17% post-tax rate across all profits. Similar proposals have been discussed with different rates and deductions.

Under Steve Forbes

[AllisterFiend]

I'm a supporter of the Fair Tax (also known as a consumption tax), it has been around for a while but has since gained momentum because of a book that has been released.

I've been following this plan for years now and I'm convinced it would change this country for the better, we would get all of our money every paycheck and the IRS would be eliminated, also businesses would relocate back to the USA and many others would follow.

I'm by no means an expert on this subject (I really just Don't feel like spending any time answering questions as I have better things to do  ), so if you have any questions just refer them to the websites I've listed.

http://www.fairtax.org/

http://fairtaxgroups.com/

The book is very good and a quick read, educate yourselves be visiting the websites listed and make sure you get any of your questions answered, either you will like the plan or you will not, you have nothing to lose.

Will this ever happen? probably not, as our government seems to worry more about partisan politics than things that would really help the country.

Allister Fiend