TAX TAX TAX and more TAX

[Aecetia]

I think it is going to be difficult to define speculative trading from trading and anything that decreases money invested should work as a brake on what I still consider a fragile recovery. If you can show otherwise, then I would like to see how more transaction tax will stimulate Wall Street.

[blahblahblah]

From your Wikipedia link, sentence #1:

“A regressive tax is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases”

I find it sometimes helpful to read past the first sentence of an article. How about the second paragraph:

A value-added tax or other sales tax on food and other essentials such as clothing, transport, and residential rents can be regressive. Since the income elasticity of demand of food is usually less than 1 (see Engel’s law), it tends to take up a higher percentage of the budget of a person or family with a lower income.

Elasticity of demand is key to understanding why sales tax on many common items is regressive. The option not to purchase something is not always a valid one.

[blahblahblah]

From your Wikipedia link, sentence #1:

“A regressive tax is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases”

I find it sometimes helpful to read past the first sentence of an article. How about the second paragraph:

A value-added tax or other sales tax on food and other essentials such as clothing, transport, and residential rents can be regressive. Since the income elasticity of demand of food is usually less than 1 (see Engel’s law), it tends to take up a higher percentage of the budget of a person or family with a lower income.

Elasticity of demand is key to understanding why sales tax on many common items is regressive. The option not to purchase something is not always a valid one.

[blahblahblah]

From your Wikipedia link, sentence #1:

“A regressive tax is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases”

I find it sometimes helpful to read past the first sentence of an article. How about the second paragraph:

A value-added tax or other sales tax on food and other essentials such as clothing, transport, and residential rents can be regressive. Since the income elasticity of demand of food is usually less than 1 (see Engel’s law), it tends to take up a higher percentage of the budget of a person or family with a lower income.

Elasticity of demand is key to understanding why sales tax on many common items is regressive. The option not to purchase something is not always a valid one.

[blahblahblah]

From your Wikipedia link, sentence #1:

“A regressive tax is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases”

I find it sometimes helpful to read past the first sentence of an article. How about the second paragraph:

A value-added tax or other sales tax on food and other essentials such as clothing, transport, and residential rents can be regressive. Since the income elasticity of demand of food is usually less than 1 (see Engel’s law), it tends to take up a higher percentage of the budget of a person or family with a lower income.

Elasticity of demand is key to understanding why sales tax on many common items is regressive. The option not to purchase something is not always a valid one.

[blahblahblah]

From your Wikipedia link, sentence #1:

“A regressive tax is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases”

I find it sometimes helpful to read past the first sentence of an article. How about the second paragraph:

A value-added tax or other sales tax on food and other essentials such as clothing, transport, and residential rents can be regressive. Since the income elasticity of demand of food is usually less than 1 (see Engel’s law), it tends to take up a higher percentage of the budget of a person or family with a lower income.

Elasticity of demand is key to understanding why sales tax on many common items is regressive. The option not to purchase something is not always a valid one.

[all]

[quote=SK in CV][quote=captcha]

As someone whose AGI was to high to qualify for education credit (my wife is doctoral student and I spent $2K on my professional development last year) or child credit (and I have three kids) due to the money I made on a side I feel your frustration. My back of the envelope calculation shows that I got to keep about 30 cent of each $ I earned on a side, partially due to poor tax planning.

[/quote]

I think you did your calculation wrong. I just went through about 10 different scenarios using the facts you provided, and can’t get that number any lower than 42 cents of each dollar. And that’s with including all of your side income subject to self-employment tax, which is unlikely. Probably ought to check your math.[/quote]

That’s possible. I assumed 27% federal tax (some was taxed at 25%, some at 28%), 10% CA, $3K credit for three kids, $6K in education expenses for my wife and $2K for me. I had to pay a small fine since I owed $12K, combined.

It felt bad, the side business has little growth potential, I spent most of my ‘free’ time on it and I probably made less than $10/hour, after taxes.

[all]

[quote=SK in CV][quote=captcha]

As someone whose AGI was to high to qualify for education credit (my wife is doctoral student and I spent $2K on my professional development last year) or child credit (and I have three kids) due to the money I made on a side I feel your frustration. My back of the envelope calculation shows that I got to keep about 30 cent of each $ I earned on a side, partially due to poor tax planning.

[/quote]

I think you did your calculation wrong. I just went through about 10 different scenarios using the facts you provided, and can’t get that number any lower than 42 cents of each dollar. And that’s with including all of your side income subject to self-employment tax, which is unlikely. Probably ought to check your math.[/quote]

That’s possible. I assumed 27% federal tax (some was taxed at 25%, some at 28%), 10% CA, $3K credit for three kids, $6K in education expenses for my wife and $2K for me. I had to pay a small fine since I owed $12K, combined.

It felt bad, the side business has little growth potential, I spent most of my ‘free’ time on it and I probably made less than $10/hour, after taxes.

[all]

[quote=SK in CV][quote=captcha]

As someone whose AGI was to high to qualify for education credit (my wife is doctoral student and I spent $2K on my professional development last year) or child credit (and I have three kids) due to the money I made on a side I feel your frustration. My back of the envelope calculation shows that I got to keep about 30 cent of each $ I earned on a side, partially due to poor tax planning.

[/quote]

I think you did your calculation wrong. I just went through about 10 different scenarios using the facts you provided, and can’t get that number any lower than 42 cents of each dollar. And that’s with including all of your side income subject to self-employment tax, which is unlikely. Probably ought to check your math.[/quote]

That’s possible. I assumed 27% federal tax (some was taxed at 25%, some at 28%), 10% CA, $3K credit for three kids, $6K in education expenses for my wife and $2K for me. I had to pay a small fine since I owed $12K, combined.

It felt bad, the side business has little growth potential, I spent most of my ‘free’ time on it and I probably made less than $10/hour, after taxes.

[all]

[quote=SK in CV][quote=captcha]

As someone whose AGI was to high to qualify for education credit (my wife is doctoral student and I spent $2K on my professional development last year) or child credit (and I have three kids) due to the money I made on a side I feel your frustration. My back of the envelope calculation shows that I got to keep about 30 cent of each $ I earned on a side, partially due to poor tax planning.

[/quote]

I think you did your calculation wrong. I just went through about 10 different scenarios using the facts you provided, and can’t get that number any lower than 42 cents of each dollar. And that’s with including all of your side income subject to self-employment tax, which is unlikely. Probably ought to check your math.[/quote]

That’s possible. I assumed 27% federal tax (some was taxed at 25%, some at 28%), 10% CA, $3K credit for three kids, $6K in education expenses for my wife and $2K for me. I had to pay a small fine since I owed $12K, combined.

It felt bad, the side business has little growth potential, I spent most of my ‘free’ time on it and I probably made less than $10/hour, after taxes.

[all]

[quote=SK in CV][quote=captcha]

As someone whose AGI was to high to qualify for education credit (my wife is doctoral student and I spent $2K on my professional development last year) or child credit (and I have three kids) due to the money I made on a side I feel your frustration. My back of the envelope calculation shows that I got to keep about 30 cent of each $ I earned on a side, partially due to poor tax planning.

[/quote]

I think you did your calculation wrong. I just went through about 10 different scenarios using the facts you provided, and can’t get that number any lower than 42 cents of each dollar. And that’s with including all of your side income subject to self-employment tax, which is unlikely. Probably ought to check your math.[/quote]

That’s possible. I assumed 27% federal tax (some was taxed at 25%, some at 28%), 10% CA, $3K credit for three kids, $6K in education expenses for my wife and $2K for me. I had to pay a small fine since I owed $12K, combined.

It felt bad, the side business has little growth potential, I spent most of my ‘free’ time on it and I probably made less than $10/hour, after taxes.

[SK in CV]

[quote=Aecetia]I think it is going to be difficult to define speculative trading from trading and anything that decreases money invested should work as a brake on what I still consider a fragile recovery. If you can show otherwise, then I would like to see how more transaction tax will stimulate Wall Street.[/quote]

I think the mistake here is the assumption that any stock trading increases the output of the economy. Other than when corporations go to market to raise capital (IPO’s or secondary offerings), it doesn’t. To bring it closer to this blog’s topic, it’s like looking at increased resale activity in the residential real estate market and saying the economy is growing. Other than brokerage commissions, it’s not. When I sell my 1,000 shares of Ford and you buy it, the economy hasn’t gotten any better. If I pay a 1/4 of a point to sell and/or you pay 1/4 of a point to buy, it probably won’t dissuade us from making the trade.

Probably different for day traders. But I think you’d be hard pressed to come up with an argument that that industry improves the economy as a whole.

[SK in CV]

[quote=Aecetia]I think it is going to be difficult to define speculative trading from trading and anything that decreases money invested should work as a brake on what I still consider a fragile recovery. If you can show otherwise, then I would like to see how more transaction tax will stimulate Wall Street.[/quote]

I think the mistake here is the assumption that any stock trading increases the output of the economy. Other than when corporations go to market to raise capital (IPO’s or secondary offerings), it doesn’t. To bring it closer to this blog’s topic, it’s like looking at increased resale activity in the residential real estate market and saying the economy is growing. Other than brokerage commissions, it’s not. When I sell my 1,000 shares of Ford and you buy it, the economy hasn’t gotten any better. If I pay a 1/4 of a point to sell and/or you pay 1/4 of a point to buy, it probably won’t dissuade us from making the trade.

Probably different for day traders. But I think you’d be hard pressed to come up with an argument that that industry improves the economy as a whole.

[SK in CV]

[quote=Aecetia]I think it is going to be difficult to define speculative trading from trading and anything that decreases money invested should work as a brake on what I still consider a fragile recovery. If you can show otherwise, then I would like to see how more transaction tax will stimulate Wall Street.[/quote]

I think the mistake here is the assumption that any stock trading increases the output of the economy. Other than when corporations go to market to raise capital (IPO’s or secondary offerings), it doesn’t. To bring it closer to this blog’s topic, it’s like looking at increased resale activity in the residential real estate market and saying the economy is growing. Other than brokerage commissions, it’s not. When I sell my 1,000 shares of Ford and you buy it, the economy hasn’t gotten any better. If I pay a 1/4 of a point to sell and/or you pay 1/4 of a point to buy, it probably won’t dissuade us from making the trade.

Probably different for day traders. But I think you’d be hard pressed to come up with an argument that that industry improves the economy as a whole.

[SK in CV]

[quote=Aecetia]I think it is going to be difficult to define speculative trading from trading and anything that decreases money invested should work as a brake on what I still consider a fragile recovery. If you can show otherwise, then I would like to see how more transaction tax will stimulate Wall Street.[/quote]

I think the mistake here is the assumption that any stock trading increases the output of the economy. Other than when corporations go to market to raise capital (IPO’s or secondary offerings), it doesn’t. To bring it closer to this blog’s topic, it’s like looking at increased resale activity in the residential real estate market and saying the economy is growing. Other than brokerage commissions, it’s not. When I sell my 1,000 shares of Ford and you buy it, the economy hasn’t gotten any better. If I pay a 1/4 of a point to sell and/or you pay 1/4 of a point to buy, it probably won’t dissuade us from making the trade.

Probably different for day traders. But I think you’d be hard pressed to come up with an argument that that industry improves the economy as a whole.

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