[ucodegen]

[quote gandalf]I don’t think your post really addresses the core issue of what constitutes ‘taxable’ in the first place, which is where most of the avoidance occurs at higher levels, especially in corporate finance/accounting departments.[/quote]
I didn’t want to write a blog post that was as long as the tax code. One thing I do worry about is what makes something ‘taxable’. I have a close relative that deals with Financial Accounting and who started with Corporate Auditing. This person doesn’t always have a good opinion of the ‘knowledge’ of some of the people they have dealt with – even from some of the accounting firms. Most of the dirty games seem to be at the ‘corporate’ level vs personal income tax level. A company making over 100M/year can afford more/better accountants than an individual.

[quote gandalf]I’d be interested in your assessment of this underlying tax policy issue, avoidance strategies at the high-end. And I would dispute your assertion that ‘real tax’ is distributed fairly.[/quote]I never asserted it is fair. I was dealing with the statement

The thing that (rightfully) pisses people off is that the brunt of our nation’s tax revenue is generated by the bottom 80% of citizens who take home about 40% of income.

One of the current problems with tax structures, is that money is ‘mobile’. If you tax too heavily in one locale/state/country, it will move and along with it goes the income it can generate and the associated jobs. Tax too hard and the state/fed will get a boost in tax revenues, but that boost is fleeting because those taxed will adapt to the change(Un-intended consequences of tax policy changes). Too many people feel that the simple solution is just tax them.. but reality is much more complicated.

[quote gandalf]Substantial wealth is accrued by corporations and HNW-individuals without officially reporting the YOY differences as wealth as income or even as gains.[/quote] The problem with doing it YOY is that some of the gains are long term, and could be easily eaten up with just one bad year. Some of these are on owned assets. Should the government be able to tax you on the year to year change in value of object held? Imagine the situation with owning a car. If the value of the vehicle goes up, you will owe tax on it. You did nothing to do cause this, and the value change was most likely due to inflation. Imagine the games with inflation that the government would play if YOY asset value changes were handled as taxable income. This is why it is dependent upon a taxable event, ie sale or conversion to cash.

When I look at the house my parents owned way back in the ’60s and ’70s and know how much they paid($35k) when they bought it and how much it is worth now($2.5M).. is that difference caused by any improvement(not really), others driving up real estate prices(definitely) inflation(definitely). The period involved was quite long (almost 50 years). So is this considered ‘weath’ or is it devaluation of the currency due to inflation?

[quote gandalf]In particular, numbers associated with offshore tax havens are unacceptably large at a time when public budgets everywhere are under duress.[/quote]
There is a lot of statements relative to offshore tax havens. The truth there is that many of the procedures they claim are illegal. The problem is catching them. It is also easy for politicians to claim the problem is due to tax evasion for the purposes of preventing people from looking behind the curtain and seeing that a lot of the behavior is due to the politicians spending behaviors and governmental money allocation and budgeting techniques.

[quote gandalf]. My view is, I think taxes can be lower, and one of the mechanisms for reducing tax rates in a responsible way would be to reform the tax system to reduce avoidance at the high-end.[/quote] I agree they can be lower, but I think that the amount loss to high-end avoidance is less than people think. I do know for a fact, that if you are making more than $100k a year, your taxes get looked at much closer than those at lower incomes.

It should be interesting what happens as the updated requirements with respect to capital gains reporting hits the brokerage companies.

[ucodegen]

[quote gandalf]I don’t think your post really addresses the core issue of what constitutes ‘taxable’ in the first place, which is where most of the avoidance occurs at higher levels, especially in corporate finance/accounting departments.[/quote]
I didn’t want to write a blog post that was as long as the tax code. One thing I do worry about is what makes something ‘taxable’. I have a close relative that deals with Financial Accounting and who started with Corporate Auditing. This person doesn’t always have a good opinion of the ‘knowledge’ of some of the people they have dealt with – even from some of the accounting firms. Most of the dirty games seem to be at the ‘corporate’ level vs personal income tax level. A company making over 100M/year can afford more/better accountants than an individual.

[quote gandalf]I’d be interested in your assessment of this underlying tax policy issue, avoidance strategies at the high-end. And I would dispute your assertion that ‘real tax’ is distributed fairly.[/quote]I never asserted it is fair. I was dealing with the statement

The thing that (rightfully) pisses people off is that the brunt of our nation’s tax revenue is generated by the bottom 80% of citizens who take home about 40% of income.

One of the current problems with tax structures, is that money is ‘mobile’. If you tax too heavily in one locale/state/country, it will move and along with it goes the income it can generate and the associated jobs. Tax too hard and the state/fed will get a boost in tax revenues, but that boost is fleeting because those taxed will adapt to the change(Un-intended consequences of tax policy changes). Too many people feel that the simple solution is just tax them.. but reality is much more complicated.

[quote gandalf]Substantial wealth is accrued by corporations and HNW-individuals without officially reporting the YOY differences as wealth as income or even as gains.[/quote] The problem with doing it YOY is that some of the gains are long term, and could be easily eaten up with just one bad year. Some of these are on owned assets. Should the government be able to tax you on the year to year change in value of object held? Imagine the situation with owning a car. If the value of the vehicle goes up, you will owe tax on it. You did nothing to do cause this, and the value change was most likely due to inflation. Imagine the games with inflation that the government would play if YOY asset value changes were handled as taxable income. This is why it is dependent upon a taxable event, ie sale or conversion to cash.

When I look at the house my parents owned way back in the ’60s and ’70s and know how much they paid($35k) when they bought it and how much it is worth now($2.5M).. is that difference caused by any improvement(not really), others driving up real estate prices(definitely) inflation(definitely). The period involved was quite long (almost 50 years). So is this considered ‘weath’ or is it devaluation of the currency due to inflation?

[quote gandalf]In particular, numbers associated with offshore tax havens are unacceptably large at a time when public budgets everywhere are under duress.[/quote]
There is a lot of statements relative to offshore tax havens. The truth there is that many of the procedures they claim are illegal. The problem is catching them. It is also easy for politicians to claim the problem is due to tax evasion for the purposes of preventing people from looking behind the curtain and seeing that a lot of the behavior is due to the politicians spending behaviors and governmental money allocation and budgeting techniques.

[quote gandalf]. My view is, I think taxes can be lower, and one of the mechanisms for reducing tax rates in a responsible way would be to reform the tax system to reduce avoidance at the high-end.[/quote] I agree they can be lower, but I think that the amount loss to high-end avoidance is less than people think. I do know for a fact, that if you are making more than $100k a year, your taxes get looked at much closer than those at lower incomes.

It should be interesting what happens as the updated requirements with respect to capital gains reporting hits the brokerage companies.

[ucodegen]

[quote gandalf]I don’t think your post really addresses the core issue of what constitutes ‘taxable’ in the first place, which is where most of the avoidance occurs at higher levels, especially in corporate finance/accounting departments.[/quote]
I didn’t want to write a blog post that was as long as the tax code. One thing I do worry about is what makes something ‘taxable’. I have a close relative that deals with Financial Accounting and who started with Corporate Auditing. This person doesn’t always have a good opinion of the ‘knowledge’ of some of the people they have dealt with – even from some of the accounting firms. Most of the dirty games seem to be at the ‘corporate’ level vs personal income tax level. A company making over 100M/year can afford more/better accountants than an individual.

[quote gandalf]I’d be interested in your assessment of this underlying tax policy issue, avoidance strategies at the high-end. And I would dispute your assertion that ‘real tax’ is distributed fairly.[/quote]I never asserted it is fair. I was dealing with the statement

The thing that (rightfully) pisses people off is that the brunt of our nation’s tax revenue is generated by the bottom 80% of citizens who take home about 40% of income.

One of the current problems with tax structures, is that money is ‘mobile’. If you tax too heavily in one locale/state/country, it will move and along with it goes the income it can generate and the associated jobs. Tax too hard and the state/fed will get a boost in tax revenues, but that boost is fleeting because those taxed will adapt to the change(Un-intended consequences of tax policy changes). Too many people feel that the simple solution is just tax them.. but reality is much more complicated.

[quote gandalf]Substantial wealth is accrued by corporations and HNW-individuals without officially reporting the YOY differences as wealth as income or even as gains.[/quote] The problem with doing it YOY is that some of the gains are long term, and could be easily eaten up with just one bad year. Some of these are on owned assets. Should the government be able to tax you on the year to year change in value of object held? Imagine the situation with owning a car. If the value of the vehicle goes up, you will owe tax on it. You did nothing to do cause this, and the value change was most likely due to inflation. Imagine the games with inflation that the government would play if YOY asset value changes were handled as taxable income. This is why it is dependent upon a taxable event, ie sale or conversion to cash.

When I look at the house my parents owned way back in the ’60s and ’70s and know how much they paid($35k) when they bought it and how much it is worth now($2.5M).. is that difference caused by any improvement(not really), others driving up real estate prices(definitely) inflation(definitely). The period involved was quite long (almost 50 years). So is this considered ‘weath’ or is it devaluation of the currency due to inflation?

[quote gandalf]In particular, numbers associated with offshore tax havens are unacceptably large at a time when public budgets everywhere are under duress.[/quote]
There is a lot of statements relative to offshore tax havens. The truth there is that many of the procedures they claim are illegal. The problem is catching them. It is also easy for politicians to claim the problem is due to tax evasion for the purposes of preventing people from looking behind the curtain and seeing that a lot of the behavior is due to the politicians spending behaviors and governmental money allocation and budgeting techniques.

[quote gandalf]. My view is, I think taxes can be lower, and one of the mechanisms for reducing tax rates in a responsible way would be to reform the tax system to reduce avoidance at the high-end.[/quote] I agree they can be lower, but I think that the amount loss to high-end avoidance is less than people think. I do know for a fact, that if you are making more than $100k a year, your taxes get looked at much closer than those at lower incomes.

It should be interesting what happens as the updated requirements with respect to capital gains reporting hits the brokerage companies.

[ucodegen]

[quote lifeizfunhuh]The thing that (rightfully) pisses people off is that the brunt of our nation’s tax revenue is generated by the bottom 80% of citizens who take home about 40% of income (and control a far lesser portion of wealth).[/quote] This is a falsehood. Take a look at your tax payments (total) from your 1040/540s. Now for comparison:
Regan during his governor days was paying more than $240,000/year in federal taxes. How many times your tax payment is that?(don’t have to tell me.. just calculate it).

The U.S. has a progressive tax schedule. Each additional dollar gets taxed at a higher percentage. If you have the 1040 instructional booklet, go to the back of the booklet… or try this link for the 2010 tables:
http://www.irs.gov/pub/irs-pdf/i1040tt.pdf

Go to the last page. Lets take ‘single’ for example.
If you make up to $8,375/yr – you pay 10% federal taxes.
If you make between $8,375 and $34,000 – you pay between 10% and 13.8% in taxes (the first $8375 slid under the tax bar because the 15% applies to the amount over $8375) Plugging the brackets into handy-dandy Excel, gives:
Income, Tax, Total Percent
$5,000.00 $500.00 10.00%
$10,000.00 $1,081.25 10.81%
$15,000.00 $1,831.25 12.21%
$20,000.00 $2,581.25 12.91%
$25,000.00 $3,331.25 13.33%
$30,000.00 $4,081.25 13.60%
$35,000.00 $4,931.25 14.09%
$40,000.00 $6,181.25 15.45%
$50,000.00 $8,681.25 17.36%
$60,000.00 $11,181.25 18.64%
$70,000.00 $13,681.25 19.54%
$80,000.00 $16,181.25 20.23%
$90,000.00 $18,909.25 21.01%
$100,000.00 $21,709.25 21.71%
$110,000.00 $24,509.25 22.28%
$130,000.00 $30,109.25 23.16%
$150,000.00 $35,709.25 23.81%
$170,000.00 $41,309.25 24.30%
$190,000.00 $47,816.75 25.17%
$210,000.00 $54,416.75 25.91%
$230,000.00 $61,016.75 26.53%
$250,000.00 $67,616.75 27.05%
$300,000.00 $84,116.75 28.04%
$350,000.00 $100,616.75 28.75%
$400,000.00 $117,643.75 29.41%
$450,000.00 $135,143.75 30.03%
$500,000.00 $152,643.75 30.53%
$550,000.00 $170,143.75 30.94%
$600,000.00 $187,643.75 31.27%

There are also income based limits to deductions as well.
The truth is that about 20% or less of the population pays 80% or more of the taxes. This above table does not include SS tax or state taxes. Keep in mind that if you are earning more than $35k/yr after retirement – you actually lose a bit on Social Security.

While qualified dividends (US based companies) are not taxed – the company is generally taxed at 35% federal(statutory rate). As a common stockholder, you own the business – much like a partnership but with different liabilities (this means that the income sourced from dividends has already been taxed – at 35%). A partnership/LLCs income is generally ‘pass through’, taxed at the individual rate, which is often lower than the 35%. Dividends are not tax deductible from the aspect of the company.

Capital gains brackets for Long Term are 5%,10%,15%,20% depending upon income. (note: California treats long term and short term capital gains as standard income).
The only exception here is collectables(28%) and Real Estate(first $250k exempt on principle property (500k for married)). Personally, I don’t like the R.E. exemption because I feel it sponsors RE speculation – but also keep in mind that the U.S. government create inflation, which is part of the factor that drives up R.E. prices – and creates the R.E. capital gain.

Stock options are treated as income for tax purposes, unless held for 1 year after exercising the option. In that case the gain is split between income and capital gains. If restricted stock is granted – the difference between the strike price of the granted restricted stock and current market price is considered income (in money) and gain during holding period is considered capital gains. Above tables and rates apply.

[ucodegen]

[quote lifeizfunhuh]The thing that (rightfully) pisses people off is that the brunt of our nation’s tax revenue is generated by the bottom 80% of citizens who take home about 40% of income (and control a far lesser portion of wealth).[/quote] This is a falsehood. Take a look at your tax payments (total) from your 1040/540s. Now for comparison:
Regan during his governor days was paying more than $240,000/year in federal taxes. How many times your tax payment is that?(don’t have to tell me.. just calculate it).

The U.S. has a progressive tax schedule. Each additional dollar gets taxed at a higher percentage. If you have the 1040 instructional booklet, go to the back of the booklet… or try this link for the 2010 tables:
http://www.irs.gov/pub/irs-pdf/i1040tt.pdf

Go to the last page. Lets take ‘single’ for example.
If you make up to $8,375/yr – you pay 10% federal taxes.
If you make between $8,375 and $34,000 – you pay between 10% and 13.8% in taxes (the first $8375 slid under the tax bar because the 15% applies to the amount over $8375) Plugging the brackets into handy-dandy Excel, gives:
Income, Tax, Total Percent
$5,000.00 $500.00 10.00%
$10,000.00 $1,081.25 10.81%
$15,000.00 $1,831.25 12.21%
$20,000.00 $2,581.25 12.91%
$25,000.00 $3,331.25 13.33%
$30,000.00 $4,081.25 13.60%
$35,000.00 $4,931.25 14.09%
$40,000.00 $6,181.25 15.45%
$50,000.00 $8,681.25 17.36%
$60,000.00 $11,181.25 18.64%
$70,000.00 $13,681.25 19.54%
$80,000.00 $16,181.25 20.23%
$90,000.00 $18,909.25 21.01%
$100,000.00 $21,709.25 21.71%
$110,000.00 $24,509.25 22.28%
$130,000.00 $30,109.25 23.16%
$150,000.00 $35,709.25 23.81%
$170,000.00 $41,309.25 24.30%
$190,000.00 $47,816.75 25.17%
$210,000.00 $54,416.75 25.91%
$230,000.00 $61,016.75 26.53%
$250,000.00 $67,616.75 27.05%
$300,000.00 $84,116.75 28.04%
$350,000.00 $100,616.75 28.75%
$400,000.00 $117,643.75 29.41%
$450,000.00 $135,143.75 30.03%
$500,000.00 $152,643.75 30.53%
$550,000.00 $170,143.75 30.94%
$600,000.00 $187,643.75 31.27%

There are also income based limits to deductions as well.
The truth is that about 20% or less of the population pays 80% or more of the taxes. This above table does not include SS tax or state taxes. Keep in mind that if you are earning more than $35k/yr after retirement – you actually lose a bit on Social Security.

While qualified dividends (US based companies) are not taxed – the company is generally taxed at 35% federal(statutory rate). As a common stockholder, you own the business – much like a partnership but with different liabilities (this means that the income sourced from dividends has already been taxed – at 35%). A partnership/LLCs income is generally ‘pass through’, taxed at the individual rate, which is often lower than the 35%. Dividends are not tax deductible from the aspect of the company.

Capital gains brackets for Long Term are 5%,10%,15%,20% depending upon income. (note: California treats long term and short term capital gains as standard income).
The only exception here is collectables(28%) and Real Estate(first $250k exempt on principle property (500k for married)). Personally, I don’t like the R.E. exemption because I feel it sponsors RE speculation – but also keep in mind that the U.S. government create inflation, which is part of the factor that drives up R.E. prices – and creates the R.E. capital gain.

Stock options are treated as income for tax purposes, unless held for 1 year after exercising the option. In that case the gain is split between income and capital gains. If restricted stock is granted – the difference between the strike price of the granted restricted stock and current market price is considered income (in money) and gain during holding period is considered capital gains. Above tables and rates apply.

[ucodegen]

[quote lifeizfunhuh]The thing that (rightfully) pisses people off is that the brunt of our nation’s tax revenue is generated by the bottom 80% of citizens who take home about 40% of income (and control a far lesser portion of wealth).[/quote] This is a falsehood. Take a look at your tax payments (total) from your 1040/540s. Now for comparison:
Regan during his governor days was paying more than $240,000/year in federal taxes. How many times your tax payment is that?(don’t have to tell me.. just calculate it).

The U.S. has a progressive tax schedule. Each additional dollar gets taxed at a higher percentage. If you have the 1040 instructional booklet, go to the back of the booklet… or try this link for the 2010 tables:
http://www.irs.gov/pub/irs-pdf/i1040tt.pdf

Go to the last page. Lets take ‘single’ for example.
If you make up to $8,375/yr – you pay 10% federal taxes.
If you make between $8,375 and $34,000 – you pay between 10% and 13.8% in taxes (the first $8375 slid under the tax bar because the 15% applies to the amount over $8375) Plugging the brackets into handy-dandy Excel, gives:
Income, Tax, Total Percent
$5,000.00 $500.00 10.00%
$10,000.00 $1,081.25 10.81%
$15,000.00 $1,831.25 12.21%
$20,000.00 $2,581.25 12.91%
$25,000.00 $3,331.25 13.33%
$30,000.00 $4,081.25 13.60%
$35,000.00 $4,931.25 14.09%
$40,000.00 $6,181.25 15.45%
$50,000.00 $8,681.25 17.36%
$60,000.00 $11,181.25 18.64%
$70,000.00 $13,681.25 19.54%
$80,000.00 $16,181.25 20.23%
$90,000.00 $18,909.25 21.01%
$100,000.00 $21,709.25 21.71%
$110,000.00 $24,509.25 22.28%
$130,000.00 $30,109.25 23.16%
$150,000.00 $35,709.25 23.81%
$170,000.00 $41,309.25 24.30%
$190,000.00 $47,816.75 25.17%
$210,000.00 $54,416.75 25.91%
$230,000.00 $61,016.75 26.53%
$250,000.00 $67,616.75 27.05%
$300,000.00 $84,116.75 28.04%
$350,000.00 $100,616.75 28.75%
$400,000.00 $117,643.75 29.41%
$450,000.00 $135,143.75 30.03%
$500,000.00 $152,643.75 30.53%
$550,000.00 $170,143.75 30.94%
$600,000.00 $187,643.75 31.27%

There are also income based limits to deductions as well.
The truth is that about 20% or less of the population pays 80% or more of the taxes. This above table does not include SS tax or state taxes. Keep in mind that if you are earning more than $35k/yr after retirement – you actually lose a bit on Social Security.

While qualified dividends (US based companies) are not taxed – the company is generally taxed at 35% federal(statutory rate). As a common stockholder, you own the business – much like a partnership but with different liabilities (this means that the income sourced from dividends has already been taxed – at 35%). A partnership/LLCs income is generally ‘pass through’, taxed at the individual rate, which is often lower than the 35%. Dividends are not tax deductible from the aspect of the company.

Capital gains brackets for Long Term are 5%,10%,15%,20% depending upon income. (note: California treats long term and short term capital gains as standard income).
The only exception here is collectables(28%) and Real Estate(first $250k exempt on principle property (500k for married)). Personally, I don’t like the R.E. exemption because I feel it sponsors RE speculation – but also keep in mind that the U.S. government create inflation, which is part of the factor that drives up R.E. prices – and creates the R.E. capital gain.

Stock options are treated as income for tax purposes, unless held for 1 year after exercising the option. In that case the gain is split between income and capital gains. If restricted stock is granted – the difference between the strike price of the granted restricted stock and current market price is considered income (in money) and gain during holding period is considered capital gains. Above tables and rates apply.

[ucodegen]

[quote lifeizfunhuh]The thing that (rightfully) pisses people off is that the brunt of our nation’s tax revenue is generated by the bottom 80% of citizens who take home about 40% of income (and control a far lesser portion of wealth).[/quote] This is a falsehood. Take a look at your tax payments (total) from your 1040/540s. Now for comparison:
Regan during his governor days was paying more than $240,000/year in federal taxes. How many times your tax payment is that?(don’t have to tell me.. just calculate it).

The U.S. has a progressive tax schedule. Each additional dollar gets taxed at a higher percentage. If you have the 1040 instructional booklet, go to the back of the booklet… or try this link for the 2010 tables:
http://www.irs.gov/pub/irs-pdf/i1040tt.pdf

Go to the last page. Lets take ‘single’ for example.
If you make up to $8,375/yr – you pay 10% federal taxes.
If you make between $8,375 and $34,000 – you pay between 10% and 13.8% in taxes (the first $8375 slid under the tax bar because the 15% applies to the amount over $8375) Plugging the brackets into handy-dandy Excel, gives:
Income, Tax, Total Percent
$5,000.00 $500.00 10.00%
$10,000.00 $1,081.25 10.81%
$15,000.00 $1,831.25 12.21%
$20,000.00 $2,581.25 12.91%
$25,000.00 $3,331.25 13.33%
$30,000.00 $4,081.25 13.60%
$35,000.00 $4,931.25 14.09%
$40,000.00 $6,181.25 15.45%
$50,000.00 $8,681.25 17.36%
$60,000.00 $11,181.25 18.64%
$70,000.00 $13,681.25 19.54%
$80,000.00 $16,181.25 20.23%
$90,000.00 $18,909.25 21.01%
$100,000.00 $21,709.25 21.71%
$110,000.00 $24,509.25 22.28%
$130,000.00 $30,109.25 23.16%
$150,000.00 $35,709.25 23.81%
$170,000.00 $41,309.25 24.30%
$190,000.00 $47,816.75 25.17%
$210,000.00 $54,416.75 25.91%
$230,000.00 $61,016.75 26.53%
$250,000.00 $67,616.75 27.05%
$300,000.00 $84,116.75 28.04%
$350,000.00 $100,616.75 28.75%
$400,000.00 $117,643.75 29.41%
$450,000.00 $135,143.75 30.03%
$500,000.00 $152,643.75 30.53%
$550,000.00 $170,143.75 30.94%
$600,000.00 $187,643.75 31.27%

There are also income based limits to deductions as well.
The truth is that about 20% or less of the population pays 80% or more of the taxes. This above table does not include SS tax or state taxes. Keep in mind that if you are earning more than $35k/yr after retirement – you actually lose a bit on Social Security.

While qualified dividends (US based companies) are not taxed – the company is generally taxed at 35% federal(statutory rate). As a common stockholder, you own the business – much like a partnership but with different liabilities (this means that the income sourced from dividends has already been taxed – at 35%). A partnership/LLCs income is generally ‘pass through’, taxed at the individual rate, which is often lower than the 35%. Dividends are not tax deductible from the aspect of the company.

Capital gains brackets for Long Term are 5%,10%,15%,20% depending upon income. (note: California treats long term and short term capital gains as standard income).
The only exception here is collectables(28%) and Real Estate(first $250k exempt on principle property (500k for married)). Personally, I don’t like the R.E. exemption because I feel it sponsors RE speculation – but also keep in mind that the U.S. government create inflation, which is part of the factor that drives up R.E. prices – and creates the R.E. capital gain.

Stock options are treated as income for tax purposes, unless held for 1 year after exercising the option. In that case the gain is split between income and capital gains. If restricted stock is granted – the difference between the strike price of the granted restricted stock and current market price is considered income (in money) and gain during holding period is considered capital gains. Above tables and rates apply.

[ucodegen]

[quote lifeizfunhuh]The thing that (rightfully) pisses people off is that the brunt of our nation’s tax revenue is generated by the bottom 80% of citizens who take home about 40% of income (and control a far lesser portion of wealth).[/quote] This is a falsehood. Take a look at your tax payments (total) from your 1040/540s. Now for comparison:
Regan during his governor days was paying more than $240,000/year in federal taxes. How many times your tax payment is that?(don’t have to tell me.. just calculate it).

The U.S. has a progressive tax schedule. Each additional dollar gets taxed at a higher percentage. If you have the 1040 instructional booklet, go to the back of the booklet… or try this link for the 2010 tables:
http://www.irs.gov/pub/irs-pdf/i1040tt.pdf

Go to the last page. Lets take ‘single’ for example.
If you make up to $8,375/yr – you pay 10% federal taxes.
If you make between $8,375 and $34,000 – you pay between 10% and 13.8% in taxes (the first $8375 slid under the tax bar because the 15% applies to the amount over $8375) Plugging the brackets into handy-dandy Excel, gives:
Income, Tax, Total Percent
$5,000.00 $500.00 10.00%
$10,000.00 $1,081.25 10.81%
$15,000.00 $1,831.25 12.21%
$20,000.00 $2,581.25 12.91%
$25,000.00 $3,331.25 13.33%
$30,000.00 $4,081.25 13.60%
$35,000.00 $4,931.25 14.09%
$40,000.00 $6,181.25 15.45%
$50,000.00 $8,681.25 17.36%
$60,000.00 $11,181.25 18.64%
$70,000.00 $13,681.25 19.54%
$80,000.00 $16,181.25 20.23%
$90,000.00 $18,909.25 21.01%
$100,000.00 $21,709.25 21.71%
$110,000.00 $24,509.25 22.28%
$130,000.00 $30,109.25 23.16%
$150,000.00 $35,709.25 23.81%
$170,000.00 $41,309.25 24.30%
$190,000.00 $47,816.75 25.17%
$210,000.00 $54,416.75 25.91%
$230,000.00 $61,016.75 26.53%
$250,000.00 $67,616.75 27.05%
$300,000.00 $84,116.75 28.04%
$350,000.00 $100,616.75 28.75%
$400,000.00 $117,643.75 29.41%
$450,000.00 $135,143.75 30.03%
$500,000.00 $152,643.75 30.53%
$550,000.00 $170,143.75 30.94%
$600,000.00 $187,643.75 31.27%

There are also income based limits to deductions as well.
The truth is that about 20% or less of the population pays 80% or more of the taxes. This above table does not include SS tax or state taxes. Keep in mind that if you are earning more than $35k/yr after retirement – you actually lose a bit on Social Security.

While qualified dividends (US based companies) are not taxed – the company is generally taxed at 35% federal(statutory rate). As a common stockholder, you own the business – much like a partnership but with different liabilities (this means that the income sourced from dividends has already been taxed – at 35%). A partnership/LLCs income is generally ‘pass through’, taxed at the individual rate, which is often lower than the 35%. Dividends are not tax deductible from the aspect of the company.

Capital gains brackets for Long Term are 5%,10%,15%,20% depending upon income. (note: California treats long term and short term capital gains as standard income).
The only exception here is collectables(28%) and Real Estate(first $250k exempt on principle property (500k for married)). Personally, I don’t like the R.E. exemption because I feel it sponsors RE speculation – but also keep in mind that the U.S. government create inflation, which is part of the factor that drives up R.E. prices – and creates the R.E. capital gain.

Stock options are treated as income for tax purposes, unless held for 1 year after exercising the option. In that case the gain is split between income and capital gains. If restricted stock is granted – the difference between the strike price of the granted restricted stock and current market price is considered income (in money) and gain during holding period is considered capital gains. Above tables and rates apply.

[ucodegen]

[quote=gandalf]We could argue about tax rates…

But that isn’t the issue.

They don’t pay any tax.

That’s the issue.[/quote]
So you propose that they get taxed even when they don’t make any money? When they are operating at a loss like a startup?

The 57% number quoted had a caveat. It is for a one year period within a 7 year window. It includes the year periods between 2000 and 2003 when we were entering into recession-1. It also does not mention size of businesses.

During that time corporate sales in the United States totaled $2.5 trillion, according to Democratic Sens.

And what is their cost of doing business during the same period? Nice to quote the sales.. but that is gross, not net. If you have a margin of 4%, of every $100 of sales, you have $4 of income.

The report did not name any companies.

Nice.. it prevents people from double checking their figures. NAME THEM!!! particularly the ones not paying any taxes (foreign and domestic).

The study showed about 28 percent of large foreign corporations, those with more than $250 million in assets, doing business in the United States paid no federal income taxes in 2005 despite $372 billion in gross receipts, the senators said.

Again.. using a gross number, not a net.

[ucodegen]

[quote=gandalf]We could argue about tax rates…

But that isn’t the issue.

They don’t pay any tax.

That’s the issue.[/quote]
So you propose that they get taxed even when they don’t make any money? When they are operating at a loss like a startup?

The 57% number quoted had a caveat. It is for a one year period within a 7 year window. It includes the year periods between 2000 and 2003 when we were entering into recession-1. It also does not mention size of businesses.

During that time corporate sales in the United States totaled $2.5 trillion, according to Democratic Sens.

And what is their cost of doing business during the same period? Nice to quote the sales.. but that is gross, not net. If you have a margin of 4%, of every $100 of sales, you have $4 of income.

The report did not name any companies.

Nice.. it prevents people from double checking their figures. NAME THEM!!! particularly the ones not paying any taxes (foreign and domestic).

The study showed about 28 percent of large foreign corporations, those with more than $250 million in assets, doing business in the United States paid no federal income taxes in 2005 despite $372 billion in gross receipts, the senators said.

Again.. using a gross number, not a net.

[ucodegen]

[quote=gandalf]We could argue about tax rates…

But that isn’t the issue.

They don’t pay any tax.

That’s the issue.[/quote]
So you propose that they get taxed even when they don’t make any money? When they are operating at a loss like a startup?

The 57% number quoted had a caveat. It is for a one year period within a 7 year window. It includes the year periods between 2000 and 2003 when we were entering into recession-1. It also does not mention size of businesses.

During that time corporate sales in the United States totaled $2.5 trillion, according to Democratic Sens.

And what is their cost of doing business during the same period? Nice to quote the sales.. but that is gross, not net. If you have a margin of 4%, of every $100 of sales, you have $4 of income.

The report did not name any companies.

Nice.. it prevents people from double checking their figures. NAME THEM!!! particularly the ones not paying any taxes (foreign and domestic).

The study showed about 28 percent of large foreign corporations, those with more than $250 million in assets, doing business in the United States paid no federal income taxes in 2005 despite $372 billion in gross receipts, the senators said.

Again.. using a gross number, not a net.

[ucodegen]

[quote=gandalf]We could argue about tax rates…

But that isn’t the issue.

They don’t pay any tax.

That’s the issue.[/quote]
So you propose that they get taxed even when they don’t make any money? When they are operating at a loss like a startup?

The 57% number quoted had a caveat. It is for a one year period within a 7 year window. It includes the year periods between 2000 and 2003 when we were entering into recession-1. It also does not mention size of businesses.

During that time corporate sales in the United States totaled $2.5 trillion, according to Democratic Sens.

And what is their cost of doing business during the same period? Nice to quote the sales.. but that is gross, not net. If you have a margin of 4%, of every $100 of sales, you have $4 of income.

The report did not name any companies.

Nice.. it prevents people from double checking their figures. NAME THEM!!! particularly the ones not paying any taxes (foreign and domestic).

The study showed about 28 percent of large foreign corporations, those with more than $250 million in assets, doing business in the United States paid no federal income taxes in 2005 despite $372 billion in gross receipts, the senators said.

Again.. using a gross number, not a net.

[ucodegen]

[quote=gandalf]We could argue about tax rates…

But that isn’t the issue.

They don’t pay any tax.

That’s the issue.[/quote]
So you propose that they get taxed even when they don’t make any money? When they are operating at a loss like a startup?

The 57% number quoted had a caveat. It is for a one year period within a 7 year window. It includes the year periods between 2000 and 2003 when we were entering into recession-1. It also does not mention size of businesses.

During that time corporate sales in the United States totaled $2.5 trillion, according to Democratic Sens.

And what is their cost of doing business during the same period? Nice to quote the sales.. but that is gross, not net. If you have a margin of 4%, of every $100 of sales, you have $4 of income.

The report did not name any companies.

Nice.. it prevents people from double checking their figures. NAME THEM!!! particularly the ones not paying any taxes (foreign and domestic).

The study showed about 28 percent of large foreign corporations, those with more than $250 million in assets, doing business in the United States paid no federal income taxes in 2005 despite $372 billion in gross receipts, the senators said.

Again.. using a gross number, not a net.

[ucodegen]

[quote=CA renter]It is NOT “free” healthcare. They negotiate for wages and benefits, and they take lower wages in exchange for healthcare benefits and pensions. It’s all part of their compensation package. None of it is free.[/quote]

True.. but in a way.. half-true.
1) The health care ‘benefits’ that are part of their package are not listed as part of Soc Security taxable income, as if you were paying for it through tax deferred dollars. Teachers in Los Angeles are covered to 80%, carried by the state – even in retirement.
2) Many counties, the teachers do not pay into Soc Security – they have their own pension/retirement fund. (They also can’t pay into a 401, but they do have a 403b) SS tax is not taken out in these cases.
3) When teachers are complaining about how they are paid, they forget to mention #1 and #2.

[ucodegen]

[quote=CA renter]It is NOT “free” healthcare. They negotiate for wages and benefits, and they take lower wages in exchange for healthcare benefits and pensions. It’s all part of their compensation package. None of it is free.[/quote]

True.. but in a way.. half-true.
1) The health care ‘benefits’ that are part of their package are not listed as part of Soc Security taxable income, as if you were paying for it through tax deferred dollars. Teachers in Los Angeles are covered to 80%, carried by the state – even in retirement.
2) Many counties, the teachers do not pay into Soc Security – they have their own pension/retirement fund. (They also can’t pay into a 401, but they do have a 403b) SS tax is not taken out in these cases.
3) When teachers are complaining about how they are paid, they forget to mention #1 and #2.

[Author]

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