2009 Federal Income Tax Brackets (Official IRS Tax Rates)
Update: Projected 2010 Tax Brackets Have Been Released!
The following represents the Internal Revenue Service (IRS)’s officially released 2009 federal income tax brackets. Read ‘em and weep – or perhaps rejoice, depending on where you stand on the whole federal income tax bracket sliding scale. Regardless, you’re going to be getting close and personal with the marginal rates when you file your 2009 tax return in early 2010. Let’s have a look at some of the tax changes shall we?
Official IRS Tax Rate Schedule Updates For Tax Year 2009
Via the Wall Street Journal, the following graphical table below gives you the official marginal tax brackets for married couples filing jointly as well as the marginal rates for single filers for 2009. The previous year’s numbers are also provided to give you an idea of some of the more noticeable changes since 2008. The income numbers listed in the chart below are taxable incomes, and thus they have taken into consideration all available personal exemptions as well as any of either the standard or itemized deductions, including all pre-tax above the line 401k and deductible IRA contributions.
As key portions of the marginal tax tables are pegged to inflation, quite a few numbers must be annually revised. Thus you will note that there are quite a few key changes for the 2009 tax year compared to the year prior. However, while overall tax numbers appear to have nominally increased on the whole, taking into consideration the effects of inflation, effective tax rates may actually have remained level or even dipped a bit.
Despite the text below that says “projected”, the official IRS numbers have been released and they now represent official federal income tax rate brackets, locked in for 2009.
To summarize, here is a run through of some of the more notable tax rate changes for 2009 and even a quick blurb about some of the key tax benefits that did not change based on official IRS releases thus far:
- Personal Exemption and Exemption For Dependents – Increased to $3,650 from $3,500 (up $150) from 2008, but is phased out at higher income levels.
- Standard Deduction – The great majority of American taxpayers take the standard deduction rather than itemizing deductions for expenditures such as mortgage interest, charitable contributions, and state & local taxes. The standard deduction increased to $11,400 from $10,900 (up $500) for married couples filing a joint tax return, increased to $5,700 from $5,450 (up $250) for singles and married individuals filing separately, and increased to $8,350 from $8,000 (up $350) for heads of household.
- Overall Tax Bracket Thresholds – Increased across the board for all tax filing statuses. This means that if your annual income did not increase since last year or if you did not receive an inflation based pay raise, you may likely pay a little less in taxes in 2009 than in 2008. As the IRS notes as an example on one of its press releases, in regards to a married couple filing a joint return, the taxable income threshold separating the 15 percent bracket from the 25 percent bracket is $67,900, up from $65,100 compared to tax year 2008.
- Earned Income Tax Credit – Increased to $5,028 from $4,824 (up $204) for low and moderate income workers and working families with two or more children. The income qualification limit to take the earned income tax credit (EITC) for joint return filers with two or more children also increased to $43,415 from $41,646 (up $1,769).
- Annual Gift Tax Exclusion Amount – Increased to $13,000 from $12,000 in 2008 (up $1,000). Often overlooked by people, the gift tax requires the gift giver to pay a special tax on the gift amount if it exceeds a certain amount per year. For 2009, that threshold will be bumped to $13,000.
- Social Security Contribution and Wage Benefit Base – Increased to $106,800 from $102,000 (up $4,800). This means that 2009 income sources over $106,8000 will not be subject to Social Security taxation. With the Social Security tax rate at 6.20%, this also means that the maximum a person will shoulder in Social Security taxes for 2009 is $6,622.
- Traditional and Roth IRA Contribution Limits – No change from 2008. Despite inflationary pressures that increased tax bracket rates across the boards, sadly, IRA and Roth IRA contribution limits will be staying the same – stuck at a crappy and paltry $5,000 per year for those under age 50, and $6,000 per year for those 50 or above.
- Roth IRA Contribution Limits (Income Threshold) – Increased to $166,000 from $159,000 (up $7,000) for married filing jointly couples, and increased to $105,000 from $101,000 (up $4,000) for singles and others.
Watch Out For Possible Upcoming 2010 Tax Bracket and Tax Rate Changes
While official IRS federal income tax brackets are not usually released for the following tax year until the late fall, it’s frankly never too soon to get your hands on the earliest reliable marginal tax bracket predictions. Year after year, a group of private tax experts and economists associated with the Wall Street Journal get together and crunch officially released inflationary data to provide news readers an early bird peak at the following year’s projected income tax brackets. This group, comprised of members from the Tax and Accounting arm of Thomson Reuters, tax analysts from CCH, and an accounting professor from Northern Illinois University – usually releases their annual tax bracket projections and estimations on tax deduction numbers for the following year during early fall (around September), well before the official IRS numbers are issued.
As marginal tax brackets track changes in inflation and other economic data fairly closely, the annual tax rate estimations by the Wall Street tax team members have yielded pretty reliable and on par results over the years. If you’re antsy to get a head start on tax year 2010, stayed tuned in very early Fall 2009 for the newest updates on the 2010 projected federal income tax brackets.
Because of the election of Barack Obama as the new President of the United States and the handover of the country to a new political party, there are bound to be substantial changes in the tax code and income tax rates in the coming years. Working on an economic stimulus plan and advocating aggressive social agendas, President Obama has already proposed numerous changes to the ordinary income tax rates, such as raising the top rate from 35% to 39.6% – potentially boosting the tax burdens of higher income earners to new heights. He has also suggested the need to reduce tax deductions for American households earning more than $250,000 annually, and has also made proposals to increase taxes on capital gains and stock dividends. With a political and taxation platform that is decidedly against those those in the higher upper echelons of the U.S. tax code, those who have done well for themselves over the years seemingly have a lot to fear in Mr. Obama. Personally, while I feel Obama is doing a commendable job on the social and foreign policy front, I hope he doesn’t get too carried away with his taxation ambitions. His remarks on taxes always make me nervous.
In the mean time, many of us regular taxpayers can only just ride along and hope for the best. Regardless of what Obama ultimately decides to do and no matter how federal income tax brackets eventually look like in 2010 and 2011, we should try to wisely structure our actions today to reduce our future tax burdens as much as possible, regardless of what happens. Such smart tax moves would include taking advantage of employer sponsored pre-tax perks like flexible spending accounts (FSA), and investing in tax deferred retirement vehicles like 401(k)’s and Roth IRA accounts.
April 22nd, 2009 at 10:27 pm
Ugh I hate paying taxes with a passion! After paying my 2008 taxes, I can’t stand to even look at the new round of taxes for 2009. The Obama government’s wasting our money on these useless bailout packages instead of sending us economic stimulus checks for consumers. When will it be our turn to get bail out? Those of us suffering and unemployed need help too!
April 22nd, 2009 at 11:44 pm
Daniel, allow me to share with you some of my thoughts about taxes and government. I was going to write a personal finance blog post about it…but I guess I can stick it here as a comment….
By no means am I a federal income tax apologist, but while I abhor taxes as much as the next guy, I also understand the underlying reasons why we pay. Underneath the agony and frustration of having to fork over your hard earned money in the form of taxes to Uncle Sam, there is a blessing in disguise. We should all feel blessed and fortunate to have the opportunity to live in this great country, and the ability to work honestly, and pay one’s due.
Many of us Americans hate paying taxes with a passion, but as someone who has visited less developed third world countries before, I think we ought to be somewhat grateful that our taxes wind up going towards productive uses – the majority of the time. Those who live and work overseas, and pay taxes to a foreign government frequently never see any return from the taxes they pay in the form of improved law enforcement, better ambulatory care, better roads and bridges, or even social service benefits. Oftentimes, the money simply disappears into the back pockets of corrupted government officials. At least in the United States, despite our complaints, our tax money counts for something most of the time. Yes certainly there are occasions where tax funds are wasted and spent on crooked pork barrel projects, fruitless industry bailouts, and other useless endeavors, but much of the time, our taxes are used to help fund reliable societal infrastructures such as critical 911 emergency services, subsidized public education for our children, and improved national defense and security. Just one successful emergency response from 911 may be worth a lifetime’s worth of taxes paid. Many of us who have not had the opportunity to experience the other realities in lesser parts of the world take many of these government provided social perks for granted.
But as I discussed in a past post about tax evasion and tax avoidance, while it is our legal duty to pay accurately assessed taxes, it is also within our full right to utilize whatever legal means at our disposal to reduce our individual tax burdens as much as possible. Because “the only things certain in life are death and taxes”, it’s best for us to confront every year’s tax burden with as much early strategic planning and foresight as possible…which is why I am so interested in early federal tax bracket projections…
April 23rd, 2009 at 6:31 am
Are these the official IRS 2009 federal income tax brackets or are these merely projected estimations? I know the IRS has officially released these numbers already, but is that it?
Is there any chance that President Obama’s upcoming legislations and economic proposals result in major tax bracket changes for the upcoming 2009 year…or are these tax bracket rates set in stone at this point? Can any tax experts out there help answer this question for me?
April 23rd, 2009 at 6:50 am
Saran,
The posted tax rates, income numbers, deductions, and federal tax brackets listed above all represent official IRS numbers. Any future changes in the U.S. tax code by Obama and friends will be reflected in future 2010 and 2010 tax brackets than the upcoming 2009 tax year. Besides, it would be patently unfair for the federal government to alter the tax code in mid year and not allow the American public the opportunity and sufficient fair warning to properly structure their tax life ahead of time to comport with tax regulation changes.
April 25th, 2009 at 2:18 pm
Why didn’t President Obama authorize an increase in the Roth IRA or the regular IRA contribution limits? Why do they even place a cap on these contributions. Why don’t they increase the cap higher to something like $10,000 or even $20,000 a year….why limit the Roth contribution to a mere $5,000? I don’t understand the government anymore. ~~Frustrated in Georgia
April 29th, 2009 at 12:06 pm
A very good question I’ve always wondered about. At least for the debt-laden crowd, which I’m concerned with giving advice to, making the contributions while revolving credit card debt is one of the bad ideas.
May 1st, 2009 at 5:35 am
I have no idea why contributions limits for the Roth or IRA were not increased to comport with inflationary changes. But I suspect the government’s trying to implement plans to stimulate greater consumer spending not promote greater retirement savings at the moment. Makes some sense I suppose – we are still in a global economic recession at the moment.
May 7th, 2009 at 3:47 am
So it looks like the WSJ experts and tax projection pundit heads release their 2010 federal tax brackets in early Fall – early September 2009 perhaps?
Any idea what Prez Obama plans to introduce into the new tax code for 2010 and 2011? His Robin Hood talks of robbing the rich and giving it to the poor frankly alarm me. I’m all up for helping the less fortunate, but not at the expense of destroying our capitalist system. What are we, the Soviet Union?
May 12th, 2009 at 8:31 am
Can someone help me out with a couple questions?
1.) Obama is in one breath saying he is going to let the Bush tax cuts expire. I think he mentions the top 2 income brackets in this comment. THEN he says in the next breath that people who make under 250K will not see their taxes go up one cent. So what am I missing here? The top 2 income brackets are starting at 208K.
2.) Next question??? When it says “taxable income”, is that my gross or my adjusted total after my deductions?
I’m trying to see how much I can make this year without being in the targeted group BUT I don’t even know what it is since he is talking out of both sides of his mouth on this.
Thanks!
May 13th, 2009 at 5:29 pm
“Taxable income” is ALWAYS the amount upon which your tax liability is calculated, i.e., AFTER your deductions and any credits are applied.
Regarding Obama’s tax plans, we have ALREADY seen a tax cut implemented for the majority of workers. In fact, those reductions were required to be implemented by employers in their employee tax withholdings by April 1 of this year. If you are an hourly or salaried employee making less than about $250,000 annually, you should have already seen a slight increase in your take home pay already, due entirely to that small tax cut.
As far as Obama “talking out of both sides of his mouth on this,” I suggest perhaps you are listening to some shaded information. Are you a Fox News devotee by any chance?
May 14th, 2009 at 5:56 pm
Thanks Steve
When you are talking about a tax cut, are you talking about that $8 a pay they were were talking about?
Soooo, what does Obama mean when he says that for the top 2 brackets they will see the Bush Tax cuts expire? Wouldn’t that include people making under 250k? The 2nd highest tax bracket begins at 208K. To me “raising taxes and letting tax cuts expire” are the same thing. I am going to be bring home less. What am I missing here?
And NO I am not a Fox devotee. I work 14 hr days. I have no time to watch any news. What is the problem with Fox? I hear Obama talk about them all the time. They seem to be feared for some reason. Very Odd.
Thanks
May 15th, 2009 at 11:08 am
Hello, Jenny:
Well, this discussion could obviously get fairly involved. And I wouldn’t mind that at all, except that, like you, I work fairly hard for my living and time is limited!
Last things first. I don’t think anyone “fears” FOX News. I don’t know why they would. Similarly, I don’t know why anyone would be so concerned about “the liberal media” or MSNBC or CNN or Rush Limbaugh or any other entertainment or opinion or news outlet. I believe nowadays most all of them are all biased to one degree or another and it’s only a matter of how much they show it. Jim Lehrer’s news hour on PBS may be one of the few “clean” news shows left anywhere.
Still, the light of day is the best thing for all these views. The more people talk, the more we can all see what they are really about, long-term. That’s the beauty of freedom of speech.
I think it’s been made abundantly clear that Fox News has taken direction from elements of the Republican Party to provide “talking points” on Republican issues throughout their programming. For example, although all the anchors vehemently denied any interest in promoting the recent “Tea Party” protests, saying they were only “reporting the news,” the fact is the whole thing was mentioned many, many times on their programming over the course of the last couple of days leading up to it. This was done with great anticipation and excitement, including many promotional ads on-air regarding all the on-the-spot coverage Fox was going to provide at various locations.
Regarding Obama’s statements about the top two tax brackets, I personally have not heard him say that. Since I haven’t heard that myself, and therefore don’t know the context, I will defer to your knowledge on that topic!
Regarding the INITIAL tax cut, mine equated to around $30 every two weeks. All I can say is, I’m glad to have it, but I’d also be very happy to forego it if it would help reduce the annual federal deficit.
Regarding letting a tax cut lapse being the same thing as a tax increase, I think our differences are bacisally semantic in nature on that topic.
Let me just say I am a fiscal conservative, but with a social conscience. I have been a dues paying member of the Concord Coalition for decades now. You should visit their web site some time if you are interested in receiving unbiased, non-political information about the federal government’s spending and its impacts on generational issues. Their web address is http://www.concordcoalition.org
For now, Peace! And don’t work TOO hard. I made the mistake of not allowing a proper balance in my own life for years. Be certain you know what you are chasing, and why.
steve
May 19th, 2009 at 5:10 pm
Prez Obama needs to cut taxes for everyone rather than picking and choosing. We need to all stop pointing fingers accusing each other of being communist, socialist, or whatever, and get down to the business of stimulating this economy. The best way is to lower taxes for low income, middle income, and small businesses so that they start hiring again. Low taxes should be lower taxes for everyone, not just a chosen slice of the population. No more games…let’s get those federal tax brackets back down and keep them low.
And no…I’m not a Fox News devotee either, but I do enjoy their programming. MSNBC has a tendency to irk me. CNN is more moderately acceptable. But I guess television programming is inherently biased depending on who’s running the show. The bias swings both ways.
May 19th, 2009 at 5:30 pm
Yes, the bias definitely swings both ways, as I said myself. Even you, Elaine, admit you prefer Fox over some of the others. Swap “Fox” for “MSNBC” in your own sentence, and you’d be speaking for me. So we all have our biases. The key, as you mentioned, is to work through those differences for the overall good.
I’m about as bi-partisan as it gets nowadays. I referenced Concord Coalition as being a favorite organization of mine. Visit them, and you will see what I mean. I’m a pragmatist. I want what works.
One question, tho’. How did the tax cuts of the Bush presidency “stimulate” our way to MORE than doubling the national debt (from around $4.3-trillion when he and the Republicans took control, to over $10-trillion when they left)? In my opinion, tax cuts are over-rated, relatively speaking, as a means of stimulating the economy and spurring growth. Even in the most highly taxed regions of the developed world they have growth. Productivity, as an example, is a much stronger influence on growth than mere tax cuts.
But wanting tax cuts is “easy.” Everybody would like to keep more of what they earn, myself included. I just don’t believe that’s all there is to it.
May 24th, 2009 at 11:10 pm
Taxes are great. They are the main contributions that are made the the US communist parties that actually run the show in Washington D.C.
May 24th, 2009 at 11:29 pm
Frankly I don’t care who runs the show in Washington D.C. It can be the Democrats with President Barack Obama at the helm or the Republicans with (Insert one of: John McCain, Rush Limbaugh, Dick Cheney, or Michael Steele), or even the fledgling Communist party of the United States. It wouldn’t really matter to me on a day to day level. What really matters to me and to most people is the amount of money that we get to keep in our pockets and how we are allowed to support and take care of our families. In this rough economy, we must get lower taxes. Either that, or some form of economic stimulus check payment (like the one we received in 2008 – only for a much larger amount).
Lower federal taxes will stimulate this economy – I guarantee you. I don’t want any more funny tax bracket shifting games by the administration and Congress. Lower taxes for all right now and do away with the pointless games.
May 28th, 2009 at 10:30 am
Richard, we could argue about the impact of lower taxes. I don’t believe anything is “guaranteed.”
However, in my opinion, this economy does not need more stimulus at this point. The ship is turning. Look at Treasury rates. The yield curve is beginning to steepen dramatically. The yield on the 10-year is up around 25% in the last month, while the 1-Year has remained relatively constant. New home sales volumes are stabilizing. New jobless claims are dropping. Durable goods orders are picking up. Inventories are falling.
As for who’s in charge, I don’t much care, either, so long as the public good is being served. However, we have a continually exploding national debt. You know, the one that increased from around $4.2-trillion when George Bush and the Republicans took power in 2000 to over $10-trillion in early 2008….by far the most explosive growth in the national debt in our nation’s history. This WILL lead to higher interest rates, competition for available capital, and potentially significant inflation…..a much more depressing prospect for the economy and your and my wallet over the long term than mere taxes. The annual deficits and the burgeoning national debt are this nation’s next big problem, and we’ve got to address it. It will require comprehensive changes in entitlements, as well as prudent investments in cost-saving technologies.
In my opinion, now is not the time to be cutting federal income taxes dramatically.
May 29th, 2009 at 5:54 pm
So what do you guys think about the upcoming 2010 federal tax bracket projections in the fall? Do you think Obama and the Dems are going to keep tax rates as they are now or are they going to drop for us middle class types. Isn’t he supposed to jack up the tax rates on the poor so that us ordinary little people can have a chance in this economy?
I certainly hope so. The rich and privileged few have ruled this country under Bush for far too long. It’s time they paid up!
May 31st, 2009 at 12:23 pm
Well at least Obama realizes that dire situations require dire methods, even if it requires turning his back on his old campaign promises. I’m sure his obsessive supporters won’t care either way since Messiah-Obama can do no wrong, but it looks like ole Obama won’t be repealing the Bush tax cuts anytime soon despite his former promises that he would do so. After all, promises aren’t important after you’ve actually won the Presidency right?
As people may know, the Bush tax cuts had heavily favored the rich. In what is pretty much an acknowledgment of the serious situation and realities, Obama is leaning towards letting the Bush tax cut for the wealthy expire on schedule in 2011 rather than repealing it sooner, which in essence is effectively delaying any tax increase for the rich while he gives his stimulus plan a chance to work. Great move for the Republicans…but disappointing for Dems who wanted marginal tax rate efforts to be shifted more to the rich sooner than later.
June 2nd, 2009 at 12:16 am
President Obama’s new tax brackets as proposed (according to the Wall Stree Journal) would create a new 36% rate and would apply to an adjusted gross income of $250,000 less the standard deduction and two personal exemptions. And yet, with all of the supposed hissy fit fuss about the catastrophically future high tax rates, the highest marginal tax bracket rate under the newly proposed Obama plan would only be 39.6%.
That’s not too bad. Besides, rich people deserve to pay their share. It’s time those who can afford it get fleeced for a change instead of us regular Joes and Janes getting hammered.
June 15th, 2009 at 2:27 am
In case some of you have been asking when the Obama income tax changes for higher income taxpayers will take place, they are slated to not take effect until 2011 – still quite a long ways off! So relax
The Pres has proposed raising the top two IRS tax brackets. The current 35% top marginal rate on ordinary income would rise to 39.6%, and the 33% rate would increase to 36%.
Obama has also proposed new limits on itemized deductions, and suggested that the top rate on long term capital gains and most dividends would rise to 20% from 15%. These plans are designed to affect upper income Americans only, described as families making more than $250,000. So ordinary people should be all right. Stay cool people
June 24th, 2009 at 2:16 pm
“..boosting the tax burdens of higher income earners to new heights.”
That’s malarkey. What Obama proposes is still a lower tax rate for the highest earners than 75% of the Progressive Tax Systems century of historical usage.
39% is also what Ronald Reagan averaged during his tenure. (He did inherit high and drop lower, but then put us deep in debt…like George did.)
Your not so veiled attempt to portray Obama as a socialist is even more criminal when you add the fact that you know these things as well as anyone.
A progressive tax system helps the middle class, who are the true engines of the economy. Otherwise you get Mexico.
June 26th, 2009 at 3:35 pm
I believe President Obama is CORRECT when he said that the income tax should be raised on anyone making over $250,000. It also should consist of two brackets and anyone making over $1,000,000 should be in the second bracket and it should be starting with the 2009 tax year and not 2010. Otherwise, the middle class will LOSE CONFIDENCE in President Obama. All I hear, up to now, is the sacrifices that the middle class are going to have to make. The people that one reads about in the Forbes 400 magazine are all billionaires and I read in BUSINESS WEEK that at UBS Bank in Switzerland, there are 52,000 accounts from Americans. It seems to me that Neil Barofsky does his job, he’s going to find out the problem is a lot worse than he ever dreamed of. They’re no reason why the TARP bailout should cost the taxpayers $3 trillion. The government seems to be dragging this out and the longer it goes on, the worse President Obama will look.
Yours truly, Disgusted Middleclass Taxpayer, Public Citizen and AARP Member, LaVern Isely
June 27th, 2009 at 12:31 pm
Complain about paying taxes all you want, but always keep this in mind: the only thing worse than paying taxes is not having any income on which to pay taxes.
Keep that in mind next time you have to file yours. Having to pay tax on your income is one of those “problems” that many people (especially lately) would gladly trade you for theirs.
June 27th, 2009 at 4:21 pm
Karl, I will glady pay taxes to provide for those who CAN’T work and for the Vets and the Seniors. BUT I am sick of paying for all the lazy a$$’s who won’t work and all they know how to do is lay on their backs and reproduce.
June 30th, 2009 at 5:05 pm
Can you advise the status of Obama’s campaign promise of no income tax for seniors earning less than $50,000?
July 5th, 2009 at 12:53 pm
I also support the concept of taxes. I have lived in numerous other counties and have seen what happens in socities without a tax base. Not for me. I am now sarting to believe that our taxes have not kept up with the explosion of incomes we have seen over the past 10 years. I no longer see America as a wealthy nation. I see America as a nation of some very wealthy people. Just look at our cities our roads etc. We as a nation are broke. I read last spring that if congress did not fix the ATM an additional 7 million tax returns would be have been caught by this tax. Thats 7 million more in just one year making 250k plus
Again a broke nation of wealthy people.
July 7th, 2009 at 4:23 pm
Do I enjoy paying my heating bill? NO
Do I enjoy paying my water bill? NO
Do I enjoy paying my internet bill? NO
Do I enjoy paying my phone bill? NO
Do I enjoy paying my grocery bill? NO
Do I enjoy paying my monthly mortage bill? NO
Do I enjoy paying my car finance bill? NO
Of course I don’t like to pay these bills . . . but I do, without fail.
If I chose not to pay them, they’ll shut off my gas, turn off the water, internet and phone service, take my house and car away and I’d go hungry.
I pay them because I’m responsible for them and I want to continue to live a decent lifestyle in this country.
I am a proud citizen of the great country.
It’s MY country and I truly believe I’m responsible for it.
Do I enjoy paying my TAXES? NO, but that’s how I help pay this countrys’ bills.
Cheers to all of you who had something to compare to by experiencing living in a foreign country.
July 8th, 2009 at 2:49 pm
I would consider myself conservative, and I would agree with the above about paying taxes…. we have an infrastructure and way of life that we want to preserve, protect, and keep clean…. and it costs money. The only problem I have with the tax system is that half the country pays for the other half…. Even people making $30,000 should pay something…even if it’s only $100 (0.33% of their income).
July 13th, 2009 at 3:37 pm
I stumbled across this conversation, definitely interesting. I think it represents a relatively quiet majority of Americans…not D’s or R’s. I agree that paying taxes is part of our duty. Where I begin to be challenged is the definition of “fair share” and the relative inefficiency of government. Let me explain;
I often hear folks talking about taxing people making over $250k as fine. The rich need to pay their fair share. How much is fair? Today, the top 5% in terms of income pay something like 80% of the taxes. When is it too much? Is it too much at 39% of your income? 50%? When does it no longer pay to work hard and earn as much as possible? That is a challenging question.
The other issue I have is around Government efficiency. Would you give to a charity where 50% of what you gave went to the charity’s overhead? Well, that is about what goes on when you “give” to the Government. There are some areas of necessity, like the military and roads, but other than that, there is not much the Government does well.
I guess I am not sure I see many examples of where the Federal Government actually does something well. Our politicians don’t even read the bills and only worry about how it impacts their next election. If I had my way, we would vote every incumbant out of office. We need to break free from the old guard power brokers.
July 20th, 2009 at 5:26 pm
What about the millions of people collecting unemployment that are going to be screwed because of insufficient withholding practices, not being able to have more than 10% withheld?
Since it’s taxed just like income, you are going to have a LOT of broke people owing a LOT of money next April – because the money just is not enough to pay taxes on top of other important financial obligations.
July 24th, 2009 at 1:25 am
Do you guys realize that when you raise taxes on the top earners that all they are going to do is hold onto their money even more or send them over seas? They will then stop investing in jobs because they cant afford to do it and maintain a profit. Most of these top wage earners are YOUR BOSSES! Think about it. They pay YOU. If they are taxed more, then you will earn less because they want to collect a profit as well. Think about it as if you are in their shoes. I have no problem with paying my fair share in taxes as long as my money isn’t going to crap. People who live in public housing, have expensive cars sitting in front of their house, living off of our hard earned money, then sticking their hand out for more after they have 6 more kids. Then a majority of THOSE kids see that they can sit on their ass and do nothing for money, it is just given to them. Bush spent us into oblivion during his terms and then Obama is going to triple that. None of the stimulus money is going to work, the cap and trade is going to cause this country even more heart ache, then the proposed universal healthcare will then bankrupt us. C’mon people, wake up! These people in our government, both Rs and Ds, are screwing this country up every day. We dont need anymore spending. They have already spent money WE DONT HAVE!!
July 28th, 2009 at 9:02 pm
Let me first of all clarify some semantics when one refers to “taxes” before I get into whether or not taxes are necessary. Taxes on gasoline pay for infrastructure like roads & bridges. Medi-Medi taxes pay government insurance companies & those under which, need care that they provide. Income tax is the majority of what we pay out of our pockets every year. Income tax is not paid to the treasury: it goes straight to the Federal Reserve. This would all be good if the Fed was transparent & there was as much apportionment as we are required under penalty of force (not statutes or regulations) to denote when handing over a percentage of our hard earned dollars each year.
The Fed has never been audited, it’s books are closed. No citizen can see where the income tax goes. The truth is that it goes directly to the Federal Reserve to pay off interest that we owe on bonds we effectively sell to the Fed to get the several billions in bailouts. The treasury will print these bonds (if not done electronically) & the Fed will buy them by printing (or adding ones & zeroes to their server) dollars to be put into the pool of circulating currency.
It is no surprise that when there is more of something then each component is worth less individually. If the Federal Reserve prints money out of thin air & adds to circulation, the dollar is debased & inflation occurs. The cost of living goes up as inflation sets in, but the last component of the economy to catch up to the new inflated standard is the wages.
It is against the Constitution to allow any other entity to coin currency other than the congress. The Federal Reserve is a private central bank that is not held by any accountability or oversight by any government entity. It is the Fed that sets the interest rate & creates inflation. It is also never defined in any clear way in the tax code or supporting regulations & statutes (laws & means to enforce them) that “taxable income” is domestic income earned by a US citizen. It is essentially voluntary, but may be punishable by imprisonment, fines & property seizure. There is NO law.
I have no problem paying taxes for police, healthcare, infrastructure, etc… But to pay blindly up to 35% of MY money to cover a never-ending cycle of debt that only aids the debasing of the worlds reserve currency to the point that it is near collapse is unacceptable.
I encourage, nay, I implore any that reads this to do your own research. You don’t have to go to cnn or fox, or even infowars. All that matters is that you realize it for yourself. Nothing convinces more than the truth. Even if you open your wallet or reach into your pocket & pull out a dollar, it says that “this note is legal tender for all debts..” It does not denote currency, it denotes debt. If all debts were paid, there would be no currency in circulation. The interest owed to the Fed can never be paid off. Debt = slavery.
August 2nd, 2009 at 9:59 pm
WOW…..I have been reading A LOT on the web lately. I have also been a non resident for the past 10 years. I watched, in awe, you all elect ?????? someone from ?????somewhere, that knows???? something about ?????? and immediately after you elected this ???? you all owe 1 added trillion dollars to what you already owed.
In the morning, after reading all what I have……I am changing my holdings to ANYTHING other than the dollar….The Mexican Peso will soon be worth more…
mark the words…the end is near…for sure.
August 4th, 2009 at 9:24 am
Wow… I love the comment where raising the top rate to 39.6% wasn’t “that much” and how it’s “only fair”. Sure doesn’t seem fair to me, and no, I’m nowhere near that bracket. You can’t just keep raising taxes on the rich to make up a shortfall. All we’ll do is cause a mass exodus of the wealthy, then we’ll really be screwed. You do realize that taking wealth from the rich and giving it to the poor is basially communism, right?
I have seen this unequal taxation from the inside and all it does is cost us, the middle class, in the end. I did all the accounting for a small business for years that had gross receipts of several million dollars. The owners were always trying to grow and expand their business. When income and business tax rates increased, it cost them around $75,000 a year. Did they cancel vacations, or sell a boat or car, or change their spending habits? No…. they downsized their expansion plans and let two employees go.
That’s the net effect when you raise taxes only on the wealthy and businesses. What doesn’t seem fair to me is that we have something like 60 million people in this country that pay no taxes AT ALL.
The REAL problem is that our tax money is used unwisely and unefficiently by our government almost to the point of criminality, and their solution to make up for it is always taking more.
August 4th, 2009 at 2:32 pm
President Obama’s proposed national health insurance for all, particularly for those who don’t even work and aren’t covered by health insurance will greatly jack up federal tax rates for all. Don’t believe the fantasy that the governmental national health insurance plan can be easily paid by a stiff tax increase for just the so-called wealthy types (those with incomes in excess of $250,000). If there’s a tax increase, the tax bracket rates will increase for middle class people as well. Sure, raising taxes on the middle class doesn’t make sense in this recession, but it’s the only way the federal government and Obama will be able to pay for his aggressive socialist agenda.
Governmental tax coffers and tax revenue have already dropped due to plunging American wealth so a tax increase across the board is the only way they’ll be able to pay for all of the projects. I’m sure Obama already regrets making the promise that middle tax rates won’t increase. Rest assured, he will be breaking this promise with the American people very soon. But then Obama, who is a typical trained lawyer is the ultimate spin meister and he has a loyal and diverse group of crazy Obama fanatics who believe he can do no wrong.
August 4th, 2009 at 3:11 pm
The current top marginal tax rates are nowhere near as high as they have been in the past. Taxes are not “always raised.”
At least 2/3 of the projected costs of the current health care proposal would be funded by savings elsewhere. The final version of any health care legislation is far from transparent at this point. What we have is a whole lot of people finally giving serious and spirited consideration to health care reform in this country. I classify this as a good thing.
Simply put, in America, we spend a minimum of twice as much on health care (measured as a percentage of gross domestic product) than any other industrialized nation. We pay the highest costs for most prescription drugs of any industrialized nation. Small businesses are being forced to reduce benefits and perform cost-shifting to place more of the burden for health insurance costs on employees. I know this to be a fact, as I am a small business owner employing 54 people at present.
If I maintain coverage for my employees at escalated costs, who really pays for that, ultimately? Surprise. It’s the people that utilize my company’s services. You.
That is the equivalent of a hidden tax hike on every consumer. You are already paying “increased taxes” hidden as a portion of the goods and services you buy every day.
Consider the continuing upward spiral of increased costs for health insurance and out-of-pocket health care costs in this country. Then consider that either way, you, as a consumer, are paying for those cost increases already….either in increased costs of goods and services, or as direct out-of-pocket expense.
The current trend is unsustainable.
August 6th, 2009 at 2:17 pm
As an Irish taxpayer having been exploited by the gross mismanagement of Irish finances since 1997 I have to say that the US tax regime is significantly more fair than the Irish one – the rates of tax paid and the bands across which the taxes are levied certainly seem to provide US taxpayers with more disposable income per Euro/Dollar earned, and the application of the taxes collected is (arguably) also more sensible than that employed by the Irish Public Representatives.
At least in the US, hard work is rewarded and people seem to contribute to the public purse in proportion to their income levels, unlike here in Ireland, where the combination of a minority of wealthy individuals and a broad range of people who defraud the system are supported financially by hard working middle-income earners who are taxed at exorbitant levels, to the detriment of their own families and living standards.
US citizens, be grateful for living where you do, and for the fairness of the system that is applied to you.
August 7th, 2009 at 10:05 am
I’m a bit worried about our taxes this year. I know that they changed the way they deduct federal income tax from paychecks. Due to the frequency of my paychecks from one job, and the smaller amounts my second job, and the low amounts my husband makes from his two jobs, we rarely see Federal income tax deductions on our paychecks.
My worry is that this is going to come back and bit us when we file our 2009 taxes in April of 2010. Are the federal tax rates going to be adjusted to reflect the change in paycheck deductions, or is all that money the government let us keep from our paychecks going to need to be paid back?
I’d like to get some concrete answers now, so that we can plan for tax day, and possibly change our exemptions for our paychecks so the Fed gets their cut before tax day and we don’t have a huge tax bill! I’m not concerned about getting a refund, but I don’t want to have to pay either!
August 15th, 2009 at 9:46 am
that was bush adminstration that gave money for the bailout you dummy.
August 15th, 2009 at 11:40 pm
Hey why dont you chill out and leave her alone.
August 26th, 2009 at 9:23 am
Steve, you are shortsighted and dangerous! Especially the part about taxes at the top aren’t nearly as high as they once were. Well, income tax itself used to be zero in this country if you want to go back far enough. Look it up with one of your fancy search engines. Start with something like: when did the income tax start in the USA. You might get something back like: In 1862, in order to support the Civil War effort, Congress enacted the nation’s first income tax law. Most people paid about 3%. Funny how you choose points in histroy that support your viewpoint and ignore hundreds of years of history where the tax rates were MUCH lower or even zero. Short-sighted and dangerous indeed.
August 26th, 2009 at 9:56 am
John, quite apparently you read one line from one of my posts and chose to label me based on that single line. I don’t play that sort of game.
In my opinion, it’s people like you who are “dangerous” because you have no interest in discussing anything to any degree of detail. You seize on a bullet point and proceed to use the anonymity of the internet to label and call names.
The fact is that tax rates at the top HAVE been much higher than they are now. That is a fact. That has nothing to do with the fact that at one time income taxes didn’t even exist. It’s a non sequitur.
I know the history of income taxes. I don’t need your pious history lesson.
August 27th, 2009 at 2:13 pm
Steve, you have way to much time on your hands. GET A LIFE!!!!
August 27th, 2009 at 2:25 pm
Actually, you have no idea how little time I really have. I run a company of 54 professionals and average around 55 hours per week in the office, Monday through Friday only of course.
The weekends are for “life”! :^)
August 30th, 2009 at 3:04 pm
I am completely broke and love life 24/7 and pay taxes with the wife. None of us has health insurance. We can barely make mortgage and pay bills. The one thing we do have is a little tiny biz that just gets us by. I am thrilled that we are allowed to work harder rather than be expendable. What a great country! Remember the country is the people. Shut out media and follow your instinct. You will all be fine. As f’ed as things are each us us can still face fear in our own way.
By the by we have no family to fall back on. No place to go. There is just US. Get it. Stop trying to beat the system be one! Life owes you nothing beyond what you make of it.
August 30th, 2009 at 3:06 pm
Darn I made a typo. “each us us” should read “each of us”
August 31st, 2009 at 11:58 am
Speaking of tax increases….
I’ve been researching whether it will be beneficial to cash out 401K and pay of my mortgage now…. and thought I’d share what I found….
It shocked me. I don’t think our generation knows how good we have it as far as taxes go. Some say history is a cycle. If that is true, we are in for a rude awakening when the cycle turns again. (SEE BELOW)
With the deficit and economy the way it is now….high taxation is inevitable for everyone.
I chose Married Filing Jointly and the $100, 000 – $150,000 tax bracket. That tax bracket range did fluctuate over the years, but this gives a general idea.
HISTORY OF FEDERAL INCOME TAX RATES
1927-1931 25%
1932-1935 56%
1936-1940 62%
1941 69%
1942-1943 85%
1944-1945 92%
1946-1953 90%
1954 89%
1955-1963 81%
1964 71%
1965-1978 66%
1979-1981 64%
1982-1986 50%
1987 39%
1988-1990 28%
1991-1992 31%
1993-1996 36%
1997-2000 31%
2001-2002 30%
2003-2009 28%
*The above is 82 years of US Income Tax History
*For 52 of those years, the tax rate was OVER 50%…and that is NOT the highest tax bracket
*For 21 of those years, the tax rate was OVER 81%…and that is NOT the highest tax bracket
*For 13 of those years, the tax rate was 28%, which is what it is today and has been since 401ks’ started in the 1980’s.
If history goes in cycles, as most agree that they do, our 401K/IRA’s may have future tax consequences beyond our wildest imagination. No wonder the government totes them so much.
10% penalty? Might be worth thinking about and having control over your future. We’ve already lost enough in the market and there is no guarantee for the future. However, I can bet that future taxes have a huge possibility of suffocating ANY future returns.
Here is the PDF to confirm the information
http://www.taxfoundation.org/files/federalindividualratehistory-200901021.pdf
September 15th, 2009 at 3:02 pm
Stef,
While I agree with conclusion, it is based on misleading info. Clearly, income not indexed to inflation. If you made 150k in the 40’s, you’d have the purchasing power of a multimillionaire today. Erock says it best, tax discussion is meaningless because of irresponsible spending. Tax rates will increase to service the higher debt costs once the credit quality of the US is seen for what is really is. It is laughable that some of these posters are taking the healthcare debate projections as fact….and the Iraq war was supposed to cost less than 100B not to mention the greatest ponzi schemes in history Social Security and Medicare are supposed to be self funding…Its like Bernie Madoff “investing” your dollars in a nice steak dinner. Ask yourself why there is no discussion about the econ 101 tenant of supply of “medicine” in this “false” debate? Any effort at price fixing of medical costs will destroy industry and reduce quality. Instead, break the monopoly of AMA and allow medical industry to grow according to the free market. Government has already price fixed and wounded the long term healthcare industry. Honestly, a better investment for the government to bend the “cost curve” would be to throw all that money into subsidizing tuition for prospective medical professionals, but that’s a whole other discussion about government distortion of any market..i.e. mortgages.
September 22nd, 2009 at 10:46 pm
Ron (Paul) from July 28th, 2009 at 9:02 pm is exactly right regarding Tax and the Federal Reserve. What a farse! Bail out corporations to the tune of trillions?? Granting bankruptcies like it’s giving out candy?? It took billions of dollars to fuel those air-craft carriers, tanks, jets, hummers, feed those troops all in Iraq. You can’t just loosen money for a war only, that’s impossible; you have to lossen it for everyone. So we got our ultra-expensive war and $300k+ home loans to people making $30K year!! Say what?? The Federal Reserve flooded the World Economy with it’s own printing press paper money and has clearly de-valued the U.S. dollar possibly beyond recovery. Gladly pay taxes to a bunch crooks and thieves hiding behind un-audited, no accountability doors. Do you people realize there was no central bank (federal reserve) in the U.S. prior to lets say 1905. The richest, wealthest men of the time created the idea of the central bank and convinced newly elected President to allow it. By the way check out “Audit the Federal Reserve” legislation H.R. 1207 and Ron Paul’s website at http://www.ronpaul.com/
September 22nd, 2009 at 10:56 pm
Hey Jerry,
The election is over. Ron Paul and McCain never had a chance. Time to stop looking into the past and start looking to the future. President Barack Obama is our head of state now and it’s time we throw our support behind the guy who has what it takes to fix our broken system and get the corruption out of Washington DC for good. Strict regulation of the financial system and more jobs for the people is what we need. We also desperately need universal health care for all as health care is a human right!
September 22nd, 2009 at 11:38 pm
This isn’t about elections. In fact I didn’t even realize Ron Paul ran for vice-president during the election. I just found out about him recently. Whether or not Obama is willing to help end the Federal Reserve I don’t know, but this isn’t about politics, it’s about ending a private organization’s (federal reserve) control over monetary policy in OUR country. Why should it be allowed that the central bank go un-audited? “Strict regulation of the financial system” is exactly what H.R. 1207 is. Obama suggests law, but relies on both the upper and lower house to make law reality. So lets see for the record if Obama will get behind “Strict regulation of the financial system”, because now he has the opportunity to do so. I definitely don’t see printing more cash as a viable solution and so far to my best recollection this is what we have seen from Obama.
September 23rd, 2009 at 9:57 am
Give it time. The world financial system was literally on the brink of collapse only a year ago. That is a fact, it’s not something I’m making up or even exaggerating. We were very, very close to a run on the banking system unlike anything seen since the Great Depression. And this time it could have been much worse. Money markets were collapsing like fish on hot rocks. Were the actions taken perfect in their timing or measure? Certainly not. No human endeavor is ever perfect. But here we sit, one year from the near total collapse, and most people think the financial system has stabilized to the point where fears of outright collapse are firmly in the rear view mirror. There are excesses yet to wring out, primarily in the commercial real estate arena, but that deleveraging has begun. Obama has said he will make reducing the deficit over the long haul a top priority of his administration. We will see if he can make that happen. In the meantime, let’s not forget his administration inherited an annual deficit of over $1-trillion for the previous fiscal year. This will be a long-term issue, and no one should expect miracles.
September 24th, 2009 at 9:33 am
2010 Tax brackets are now out and it was interesting to see what a turn around one year makes – thanks to 0 inflation. hardly any changes to the tax brackets, which means higher taxes in relative terms for everyone next year.
October 1st, 2009 at 3:42 pm
If I hear one more person try to tell me that the country will implode if the taxes of the wealthiest people in the country raise, I will throwup….the highest tax rate used to be around 60% or more that was used to penalize those people who took advantage of the system to gouge and horde large sums of money…the wealthiest state that people have no entitlements…but, state that they are entitled to all the money they can horde and should not be taxed…because for some reason they create jobs…well, let me make this clear, corporate executives do not use their personal incomes, bonuses, and perks to pay for employee salaries…and you should also know that with the cuts in employees, they do increase their salaries…the idea that the cuts are to make the corporate more profitable is BS….just look at the investment bankers….
October 8th, 2009 at 3:03 pm
I have had the opportunity to live in England until a few years ago where our VAT ( value added tax ) was 17.5% on everything we bought on the sticker , not once we got to the cashier. The health care was free but you did have to wait to be seen unless it was an emergency. Business owners / self employed were the ONLY people who had to file taxes annually. Savings on paper, etc HUGE – your employer had your taxes removed at EACH paycheck automatically. I understand that by overpaying each week / month allows the government here to use your money ( interest free ) until you fill in the proper paperwork on your annual tax returns to ask for it back…. BUT beware; fill in the wrong one, forget to check the right box…… HUGE fines etc etc will follow….
Now to my question; I was until recently a single parent working a full time job and then a couple of other jobs to make sure I met my financial commitments – I have NEVER received any child support so REALLY had a lot to make up. I am constantly hearing how companies who mismanaged their businesses have received millions in “bail-out” including banks. I also have heard that several homebuyers who bought mortgages beyond their financial ability to pay long term when the ’starter’ repayments wore off are being helped out. First time home buyers are being offered monies to buy homes – to encourage once again those who probably shouldn’t be otherwise buying one….? I simply don’t get it? Shouldn’t those who CAN be helped too? Did I take those additional jobs because I wanted to work until I dropped or to meet MY obligations, to MY children and to pay MY country taxes?
Looking back if I had only sat back and run into thousands of dollars of debt I could be receiving money for nothing too…… It really upsets me when I see those TV ads saying ” Do you owe the IRS thousands of dollars?” This is then followed by people claiming they owed $200,000 but only had to pay $ X.. how is THAT fair ? I owe whatever I have to pay that amount – no discount , not breaks…..
Is America really out to reward the bad business owners and people who cannot manage their money? In a normal world they would be fired, made bankrupt etc please help me explain this upside-down system to my children who are constantly telling me to give up teaching elementary school to run a McDonalds where I would make so much more money without the stress teaching today has.
Thank you in advance for any help / clarification.
Carol
October 8th, 2009 at 4:43 pm
If you are making $372,950 a year you are not struggling. End of story.
October 11th, 2009 at 4:01 am
Ah, but what if you’re making $372,949 a year? Don’t us poor slobs deserve a bailout?
I kid, of course.
I get a little annoyed at those people who go on about how they don’t care who’s in office, so long as they can keep their “hard-earned money”, then proceed to whine about “bail out” this and “deficit” that. If you don’t pay attention to who’s in office, if you don’t take the time to inform yourself about the facts–FACTS, not some politician’s opinions stated AS facts, mind–if you don’t do your job as an American citizen and participate in this government as an informed citizen and voter; then you have no right to complain when things don’t go your way.
That lack of basic citizenship skills, so prevalent in the Baby Boomers and their Age of Me First, is the root cause of our troubles today.
-It’s why we dismantled, law by law, the network of regulations which kept banks in check.
- It’s why we’ve lowered taxes over the last thirty years so far that we can’t even keep up interest payments on the loans, much less pay down our debt like honest people, and have to lie on our government’s balance sheet like a corporation circling the drain.
- It’s why we’ve closed our eyes to the fact that we have the worst health care this side of a third-world country, and console ourselves by saying that, at least if we pay through the nose, we can at least still find a few doctors who will work in this country, so long as each doctor has two lawyers to defend him from lawsuits and four secretaries to help him wade through the labyrinth of our “insurance provider network”.
- It’s why our nation’s children were raised on television and “participation awards” rather than achievement, and why so many of us are becoming disillusioned because we have grown up into a world where we will be forced, for the rest of our lives, to spend our hard-earned money paying down our parents’ excesses.
But that’s all behind us now. The Boomers are retiring, and though they’ll no doubt still be watching Fox News, and blithely voting their children into debt slavery in order to lower their taxes and keep up their Medicare benefits (you kids can pay for your OWN healthcare, though!), hopefully they’ll soon be too senile to make it to the real voting booth, and will instead content themselves by agreeing loudly with Rush Limbaugh that government should stay our of everyone’s lives, except to ensure that nobody ever aborts a child, or burns a flag, or utters a swear word on TV, ’cause that’s just un-American.
Those who read this far probably think I’m a Democrat. Well, I’m not. I’m not a Republican either, nor a Libertarian, nor Socialist/Communist, nor any of those other parties on the ballot (though I gotta admit the Pirate Party’s got a great name). I’m an American. I believe in the power of the individual to shape his fate, through hard work and perseverance. I believe that government is nothing more or less than every individual in this country investing what they choose toward the good of the community, and because of this everyone who talks about how government is ruining this country really has noone but themselves to blame for not putting in the work to change it.
If you choose not to participate, then you have no right to complain when someone else makes your choice for you. Get out there and participate in the national debate! Vote! Convince your friends to vote! Find representatives who will work to get things done, like Barak Obama and Olympia Snowe, rather than mindless drones who say “No” to everything just to score political points while the house burns down on their heads!
And then, if you’ve done everything you can and we fail anyways? Yeah, then you can complain.
October 11th, 2009 at 4:47 pm
Eyeless1, hear hear!
And I AM a boomer myself.
October 14th, 2009 at 10:36 am
I’ve lived and worked in three western democracies, I and most people in the other two western democracies had no problem paying our fair share of taxes for the services that the state provided. The other two had universal healthcare so people didn’t have to pay taxes in the form of insurance premiums, deductibles, copays and were never denied coverage. But that’s another story.
Most people in America, although a smaller percentage than elsewhere, expect to pay for their services and the privilege of living in a western democracy too, What’s different here is that there is a very noisy and well-funded continuous campaign that aims to further enrich the already wealthy at the expense of the vast majority of working Americans. The Bush administration put this program on steroids and we all know what that led to. Economic meltdown for the many, vast wealth increases for the few.
October 20th, 2009 at 12:13 pm
It is obvious that President Obama lacks the practical life experiences that fuel common sense decisions. If you go in dept. you go backwards, If you invest in non product producing entities they return nothing. How about investing in Doctors, Scientists and Engineers for the future. How about Tort reform, the lawyers produce nothing except grief. Why aren’t the same laws applicable to Government employees and Politicians that we are expected to abide by. Our elders are turning in their graves. Support the people who produce like the rest of the industrialize countries, Help those who need help not those who want help
October 23rd, 2009 at 1:35 am
There are alot of people who are using the system out there to make their income tax smaller. I had an employee tell me once that she was going to “divorce” her husband to try to collect on food stamps/Medicaid for her 4 children etc. She was still going to live with him but not be married. He was an illegal so he was off the grid anyway working construction jobs. This is what the American taxpayer is working for….people who decide to take advantage of the system here for their benefit. They have children they can’t afford to have someone else pay for them (health benefits, food stamps, HeadStart etc). I told my employee that I would fire her if I knew she did this. Needless to say, she quit a month later. I know this is what she is doing.
The problem with this country is that we feel bad for everyone…the compassion is endless. Persons from other countries have children born here in order to receive benefits that they can’t get in their own countries. Do you blame them? Why would you become a citizen of this country and pay income taxes (or not)? You can still get healthcare via our emergency rooms, you can still send your kids to American schools and you don’t have to pay the IRS. NO AUDITS FOR YOU. ONLY FOLKS WITH SOCIAL SECURITY NUMBERS GET AUDITED.
October 28th, 2009 at 2:51 pm
I am enjoying the debate going on here. Far better than most drivel I read on blog posts and there seems to be a minimum of silly “haters” spouting nonsense. However, talking about federal income tax rates exclusively is a bit short-sited. I live in Ohio, I pay 25% to the feds, 5.75% to the state, 1% to my municipality, and .75% to my school district. Combined, that is a 32.50% tax rate on my income. However, this is deceiving too. Of course, I am leaving out social security and medicare. Once these two are added, nearly 50% of my income is taken by the government before I ever see a dime. Like most of society, I see the need for taxes. We live in a civilization that requires upkeep and that costs $$$$. But I am bit tired of our comparisons to third world countries (I have spent much time in 15 of these countries including Vietnam, Cambodia and Peru over the past 20 years) and how much better we have it here. The comparison is erronious–apples and oranges folks. We should be compared to other countries SIMILAR to ourselves, e.g., Germany, Japan, Canada, etc. What you find (excepting Japan) in these cases are similar rates of taxation, with variances of the method of taxation of course, but with far better services and standards of living than we have here. When a country like Sweden, for example, pays 50% of their income, they get superb roads, stellar schools, great medical care, efficient public transit, and a social welfare system that takes care of its indigent, mentally ill, and homeless. We (the US) get ill-advised and poorly planned wars, pot-holed roads, embarrassing public schools, no public health care unless you’re on medicaid or medicare, almost non-existent public transit, and a inefficient and ineffective welfare system that largely ignores the groups listed above. The issue is not taxation per se. The real issue is that we pay too much for too little.
October 30th, 2009 at 11:32 pm
Rich people pay more taxes cuz they beifit more from the exsistance of society. Also is your tax bracket 35%, yes, but do you really pay that? no, the rich have the means to hire professionals to give them all the tricks of the trade to pay less and hide some more… If the govenment lowerd the highest tax bracket from 35% to 20% would everyone all in a sudden say “wow thats so much more far, I will stop hiding money in my off shore tax haven”… no they wouldnt. They would do the same thing thier doing now and keep the difference. The whole write off, loopholes, exemptions need to be overhauled. Then you can start talking about a more fair bracket system.
October 31st, 2009 at 8:49 pm
Listen up… This country is headed for socialism. All the crybabies asking for handouts should get a life. This country is a capitalist country. Go out and better yourself and make plenty of money so you can pay high tax rates. Don’t expect my tax dollars to fund your life style because you are lazy and want to use foodstamps and sit on the bed watching oprah. Go betetr yourself, use opportinities and hard work to get ahead. Don’t blame the “rich” for your problems. Do you think all the rich became rich because of a silver spoon in their mouth? Go work 15 hour days, grind it out and make something of yourself
November 2nd, 2009 at 10:44 pm
Ok. So this is just based on my experience. I started my career making $300 a week, which today would be considered poverty level. This was not that long ago. I worked hard, put myself through school, spent 12-15 hrs 6 days a week getting better at what I do and I have been blessed with promotions that now allow me to make a substantial amount of money. Please don’t state that it is “fair” to keep raising the tax on rich people. I will NEVER be against paying taxes to help those who literally cannot work, however, it makes me irate to drive by and see the ‘porch sitters’ sitting around waiting for their government check to come in the mail so they can continue to sit. I came from nothing and made something. Someone’s background is not an excuse in my book. Also, I am not mad at the “sitters” themselves, however I am angry that our government has ALLOWED them to do this!! I LOVE AMERICA! Let me say that again, I LOVE AMERICA, however, our system is severely broken. I don’t care if the country is democratic or republican run, it needs to be fixed. And to all those sitters who could work if they chose, shame on you.
November 4th, 2009 at 2:08 am
NOBODY SEEMS TO UNDERSTAND TAX BRACKETS!!! YOU DO NOT PAY THE “MARGINAL” TAX RATE ON YOUR “LAST DOLLAR”!!! I WILL PLOT A SIMPLE % TAX VERSUS INCOME SO YOU CAN UNDERSTAND IF YOU REALLY WANT TO KNOW!!!!
November 4th, 2009 at 8:05 am
Phil,
You are sadly mistaken. You in fact DO pay your highest marginal tax rate on your last dollar earned. The graph you propose would indeed show a lower rate because you are talking about the average tax rate on total income, not on marginal income. If you’ve ever taken math before…there would be an asymptote at the highest marginal tax rate as your income goes to infinity.
November 5th, 2009 at 2:54 am
KEVIN —THE “LAST DOLLAR PARADOX” CAN BE EXPLAINED BY LOOKING AT THE IRS TAX TABLES. FOR EXAMPLE, WITH A TAXABLE INCOME OF $78,850,THE MAXIMUM INCOME IN THE SO~CALLED “25% BRACKET”, A SINGLE PAYER’S TAX IS $16,063/ 20.37%!!! YOUR “LAST DOLLAR” IS ONLY 20+% AT THIS INCOME LEVEL!!! MANY “EXPERTS” MAKE INCORRECT EXPLANATIONS OF THE “LAST DOLLAR” TAX DUE TO THE ODD METHOD USED TO DEFINE THE PROGRESSIVE TAXATION RATE/ A SIMPLE STEPPED,STRAIGHT~LINE GRAPH WOULD BE EASIER FOR MOST TAXPAYERS ( AND EXPERTS ) TO UNDERSTAND!!!
November 5th, 2009 at 9:21 am
Phil,
While I think we understand each other, let me carry your argument to an extreme to illustrate its failure and that there is no paradox. Lets say, you have a graduated tax system similar to the IRS, but tax rates of 15% on first 25k of income, 50% on next 25k, and 100% on any remainder of income. So, with your line of thinking, the person that earns exactly 50k in taxable income has a 16.25k tax liability for only a 32.5% average tax rate. Now, lets say an ingnorant person with no knowledge of the tax code, earns 60k in taxable income, his tax liability is now 42.5k for an average tax rate of 70.8%. Now, was this person’s last dollar taxed at 70.8% or 100%? This person has no incentive to earn any income beyond 50k because of the punitive marginal rate. THIS MUST BE UNDERSTOOD BY EVERYONE. EVENTUALLY GOVERNMENTS WILL TAX THE INCENTIVES OF PRIVATE SECTOR PRODUCTION OUT OF THE SYSTEM. A GOVERNMENT’S VERY LIFEBLOOD IS PRIVATE PRODUCTION. SIMILAR TO A CANCER THAT EVENTUALLY KILLS ITS HOST, TAXATION IS THE CANCER THAT KILLS THE HOST OF PRIVATE ENTERPRISE.(sorry about the CAPS) Those people clammoring for tax the rich at punitive rates don’t understand economics and what drives investment and job creation. I had to laugh at the reaction to the elections the other day as I heard over and over on the media that government “must do something about the jobs situation”. That people have connected governement policy to job creation truly shows how poor our education system is and how far we need to go as a country.
November 5th, 2009 at 10:43 am
What a great thread this has evolved into. Seriously!
Phil, there is no “paradox.” You are confusing the effects of a stepped bracket distributed across the total taxable income amount with a “sliding scale” system, basically. Every dollar beyond the set maximum bracket limits IS most assuredly being taxed directly at the next higher bracket rate. You are doing nothing more than averaging the final total tax bill across the entire total of taxable income. I could argue that every additional dollar taxed at the highest marginal tax rate applicable also increases the tax rate for the first dollar taxed. Because it does!
Semantics.
November 5th, 2009 at 3:20 pm
So Kevin, let me make sure I understand your last post.
On the one hand, you say punitive taxation by the government will stifle job creation. On the other hand, you ridicule those who say government policy can have any effect on job creation.
So….which is it?
November 5th, 2009 at 3:56 pm
Steve,
Good question, its both! I don’t belive they are mutually exclusive. I understand where I might have confused you and not been so clear, however, I believe they are congruent thoughts. Let me try to explain. Government policy most assuredly does have an effect on willingness/ability for the private sector to create jobs, but ask yourself, does it maximize job creation? And in that vein, punitive taxation only serves to further minimize job creation from an already non-maximum starting point. I argue that government policy only affects job creation to the extent that the private sector can overcome the hurdles placed in front of it by government. And actual government jobs are paid through taxation, and by definition, are sub-maximum to a free-market solution.
November 6th, 2009 at 12:44 am
KEVIN, YOU ARE INDEED CORRECT; EVERY TAXABLE DOLLAR IN A PARTICULAR “TAX BRACKET” IS TAXED AT THE BRACKET’S “MARGINAL RATE”!!! THE POINT I WAS TRYING TO MAKE IS THAT MOST TAXPAYERS BELIEVE THAT THEIR MARGINAL TAX RATE IS THEIR ACTUAL RATE OF TAXATION. IN REALITY,THEIR ACTUAL EFFECTIVE TAX RATE VARIES FROM A MINIMUM OF ABOUT 14% AT THE LOWER END OF THE “25% BRACKET” TO A LITTLE OVER 20% AT THE HIGH END FOR A SINGLE 2008 TAXPAYER. WIKIPEDIA’S “INCOME TAX IN THE U.S.” WEB SITE HAS A FAIRLY NICE GRAPH THAT SHOWS ACTUAL (EFFECTIVE) TAX RATES… (IT SHOULD BE NOTED THAT THE ACTUAL TAX RATES ARE VARIABLE & ARE ALWAYS LESS THAN THE “MARGINAL TAX RATES” !!!
November 6th, 2009 at 11:09 am
OK, Kevin. Here’s the deal. Your post in reply clears some things up, but in your original post you definitively stated “That people have connected government policy to job creation truly shows how poor our education system is and how far we need to go as a country.” You changed the argument in your reply when you said “Ask yourself, does it maximize job creation?”
Additionally, you railed on “punitive tax rates” killing private sector job creation. Obviously, tax rates are a direct function of government policy/law.
I perceive a few issues in both assertions.
I can easily connect government policy to job creation, in many, many ways, both positively and negatively (obviously, a negative influence on job creation implies stifling or even destruction of jobs). In fact, you yourself tried to do the latter with your statements about “punitive” tax rates.
First, please define what constitutes “punitive tax rates.” Is this a little bit like defining what is “obscene,” i.e., you may not be able to define it, but you know it when you see it? It’s easy to throw pejorative words around in the context of espousing your views, but it’s a little more difficult to be specific, no?
Second, as far as the influences of government policy on creation of jobs, how many examples do you want to see? Macro governmental policy has historically had HUGE impacts on job creation (or destruction). I won’t even address the New Deal…too obvious. But what about America’s decisions to enter (or start) any armed conflict, rightly or wrongly? Look at WWII, or Viet Nam, or Iraq for examples of the impacts on the GDP and hence the underlying industries that support the war efforts.
Government spending on infrastructure, from the local all the way up to the federal levels, has tremendous impacts on employment levels in associated industries. I know this to be fact, as I am an engineer engaged in the design of public infrastructure elements at virtually all levels. It may take awhile on the national level, but I can tell you without a doubt that aggressive local infrastructure investment by our local government and a major local state University have kept my company in business over the last couple of years, and has provided work for contractors throughout our area, while addressing significant public needs in the process.
Government can impact trends in employment through legislation addressing energy policy. If you have not seen what’s happening in the panhandle of Texas, down through the Sweetwater area into the northwestern fringes of the Hill Country, then you have not seen a very clear marker.
There are so many examples, it boggles the mind that anyone would not be able to connect government policy to potential job creation (and yes, even job destruction).
But to say the government has no effect is simply not factual in any sense.
November 6th, 2009 at 9:58 pm
Steve,
Obviously, a very complex issue and I accept your points and beg your pardon for not being more specific and careful about my statements. I am thinking of the question in terms of government policy relative to a free market policy. I want someone to prove to me that government investment is equal to or better than what a free market delivers.
Lets say a government opens a new park. Everybody says what a great thing to do! Now, the park has been open 5 years and been lightly attended and has been running at an operating loss every year. A politician will come to his/her constituency and say what a great thing we have here, we need to raise taxes to cover this loss i.e. government is largely, not totally, impervious to market signals. Now, contrast that with a free-marketeer who opens a shop and is suffering losses. The market is sending a message to that owner that his wares are undesirable. He cannot go and raise taxes, instead he must make changes or be out of business which would free up the space for a more productive venture. I believe truly free markets, not the quasi-free markets we have today, will maximize employment and income relative to a government deciding where to invest capital.
Please think of taxation as a redistribution of wealth, because that is exactly what it is. So, in a sense, any tax is a “punitive” tax that forces private investors to seek a higher rate of return than they otherwise would. Since governments don’t earn their revenue, they cannot possibly “invest” this money better than the private sector (I already know you will try to debunk that statement). Governments can and will distort markets beyond any semblance of a free market, just look at our most recent sub prime debacle and the tax-advantaged status real estate has held for many decades. Just a warning to beware of politicians saying “look what the free market has done”, when in fact the government policies of Fannie Mae and Freddie Mac are largely to blame for the distortions in that market. Lots of other blame to go around there too as I’m sure you are aware.
I ask you to relate the AIG bonus /Exxon windfall profits situations to your company, where the government wanted to confiscate bonuses/earnings because they deemed them too high. What’s to keep the government from saying to you “hey, I’ve helped you stay in business and I think your profits are too high given you are doing a public service”. Sounds far fetched, but it is a thin line from AIG/Exxon to the small businessman. Governments do crazy things in a crisis, all in the name of the “public good” of course.
November 8th, 2009 at 2:55 pm
You know, this really ticks me off. The author’s liberal, elitist attitude in all his praise for Obama (and condescension for anyone with a different opinion) disgusts me. The bottom line? I am taking home LESS in my paycheck and I am not in either of the top two brackets. We’ve been had by the likes of this author and Obama’s empty promises.
November 8th, 2009 at 5:41 pm
Err… Shannon how am I elitist or condescending? Please elaborate as I’m curious as to the precise words I used to suggest that.
I actually voted for John McCain in the last election due to my opposition of Barack Obama’s pro-tax agenda. However, I respect the man for his stubbornness in supporting unfavorable tax policies to bolster his promotion of social programs that he honestly believes is in the best interest of the American people. Respect doesn’t necessarily mean I agree or support.
November 9th, 2009 at 7:46 pm
I’m a tax dummy still trying to understand the brackets, and maybe somebody here can help.
My adjusted Gross Income for 2009 is going to be about $70,000 (couple filing jointly). As I understand it, that would put me in the 25% tax bracket (I think the cutoff is $67,900). Does that mean I pay 25% of $70,000 (which computes to $17,500) or does it mean I’ll pay 15% on the first 67,900 and then 25% on the next $2,100? (which computes to $3395 + 525 = 3,920)?
November 10th, 2009 at 2:38 pm
Albert,
The latter scenario is correct, i.e. 15% on first segment of income. That’s why maximizing your deductions is so important because it reduces the amount that’s taxed at the highest marginal rate. Tax credits, if they are available, are even better as they are a direct reduction of tax on a one for one basis.
November 11th, 2009 at 4:00 am
ALBERT: I AM GLAD THAT THE FORUM IS BACK TO THE SUBJECT OF TAX BRACKETS/WE ALL HAVE A LOT TO LEARN!!! YOUR ASSUMPTION THAT THE FIRST $67,900 IS TAXED AT 15% IS NOT CORRECT SINCE THE FIRST $16,700 IS TAXED AT 10% WHICH EQUALS $1,670 AND THE REST ($67,900-16,700=51,200) AT 15%,WHICH EQUALS 7,680, FOR A TOTAL OF $9,350.THE TOTAL TAX ON $70,000 IS THEN $9,350 PLUS YOUR CORRECT 25% TAX OF $525, WHICH RESULTS IN A TAX OF $9,875 !!! THE EFFECTIVE TAX RATE IS ONLY 14.1% / NOT THE 25% “MARGINAL” RATE!!! (YOUR ARITHMETIC IS WAY OFF AS YOU MAY KNOW/ IT LOOKS LIKE YOU MULTIPLIED $67,900 BY 5% INSTEAD OF 15%…)
November 11th, 2009 at 9:28 am
Albert,
Sorry, didn’t check your numbers, as I was just commenting on methodology.
November 14th, 2009 at 2:00 am
Here is what I hate and disagree with about taxes. For one, I am put in a higher tax bracket because of my income, just because I make a little more. That is not the kicker, not only do I pay more taxes, but a lot of that money is going to people for welfare and food stamps. I do not mind it at all to people that deserve it because they are in need, such as single parents, people that are disable, etc. However, some of that money also goes to indiviuals who do not deserve it, such as people who have been out of prison buying drugs and people who do not want to work. So, I get hammered for the money that I have earned to give out to those people who do not deserve it?! I mean think about it, look at your local grocery store at some of the people that are on foodstamps, do you think they really deserve it? Maybe they should stop having 18 kids and get a job. I also think that if your are on welfare or foodstamps, you should be required by law to take regular drug tests and job tests.
November 23rd, 2009 at 3:56 pm
A minute’s success pays the failure of years.
November 23rd, 2009 at 5:22 pm
Wow…..is Steve a Liberal Talking Head…appointed to host this forum and keep us all brainwashed into believing this is all Bush’s fault? Please, bring something new to the table….like some straight facts about how the deficit has grown since Obama taken office…and how much more it will grow with “Health Care Reform”.
November 23rd, 2009 at 5:45 pm
GK:
Of course it’s grown since Obama has taken office. What’s your point? Most of the spending was already in place from prior budgets and actions taken to stem financial crisis. TARP was instituted well before the November elections. The primary thing that was not already in place when Obama took office was the stimulus package.
Where did I say anything remotely about everything being Bush’s fault, anyway? I believe I referenced the fact the Republicans were in complete control of both houses of Congress AS WELL AS the White House during the periond of time the national debt increased from around $4-trillion to around $11-trillion, thereabouts. Plenty of culpability to spread around. But those numbers are undeniable and they represent RECORD growth in the national debt.
So, GK….”Wow”…are you the Limbaugh/Beck dittohead rightwinger self-appointed to rewrite history for us?
How does it feel to be labeled, GK?
For the record, I am a member of the Concord Coaltion. If you knew anything about them at all, you would know the single issue they focus on is trying to restore control over spending and growth in the annual deficits and especially in the national debt, in generationally fair ways.
So please do not use your own slanted viewpoints to try and paint me as something I am not.
November 27th, 2009 at 1:48 am
I have been unemployed since Nov 2008, but that’s not what scaring me the most.
When January 1 comes around, I will owe income tax on my 2009 unemployment income. I don’t have it. Paying “income tax” on unemployment “benefits” was one of Ronald Reagan’s pet projects. The concept wasn’t logical then, and it isn’t logical now. It was only another way to shift the tax burden away from the wealthy to those with the least power. Until now, we haven’t had an opportunity to see what it means to our population on a large scale. People will go hungry, will be cold, will loose their homes and suffer ruined credit because of their 2009 IRS bill. Having “universal health care” which is such a misnomer – it’s just another tax bill with or without the public option, will be a joke.
This is an economic tsunami on our horizon that’s going to impact everyone, whether they are employed or not.
November 29th, 2009 at 3:21 pm
It is interesting how right-wingers are so quick to jump on Obama to blame him for paying their individual income taxes on stimulus and everything else while they never said a word when Bush and Cheney went on spending Billions and Billions of dollars in Afghanistan and Iraq, then Billions more building Infrastructure in Iraq, which would be bombed the following day!!! And do NOT forget that it was Bush who authorized Billions of Dollars to BAIL OUT AIG and bunch of other greedy companies that drained themselves down. It was Bush who approved another multi-billion stimulus package that sent out Useless checks to families who just spent it right away shopping. You guys are whining and complaining about Health Care reforms, but the war in Iraq and Afghanistan cost us way more than the Health care system would ever cost!!! All that money went down the drain and where is your patriotic “Win the war in Afghanistan” chanting when now most right-wing republicans are criticizing Obama for increasing the troops in Afghanistan when so many of our soldiers are getting killed left and right. I can bet you if Obama said he was pulling the troops out, the republican would have chanted that he’s weak and not finishing the war the Bush administration started, etc.!! Neither Obama nor Bush had much to do w/ writing the Tax Code, so please research your subject before you make fool of yourself and post something like this.
December 6th, 2009 at 7:14 pm
It is interesting that Republicans have such a short term memory. It seams to be true
that if the Republicans are against it, it must be good for America. So we are on the right path, just give it some time. This was a MESS a year ago, and it has improved.
December 11th, 2009 at 3:06 pm
This issue about taxes is very interesting. I am a fiscal conservative and a social moderate. Government under both the last administrations has exploded to such large proportions that we may not be able to recover. The left is always concerned that the rich are not paying their fair share; however, as previously mentioned, the upper 5% pay somewhere in the neighborhood of 80% of the taxes. The left vilifies the rich and makes anyone who produces to seem evil and greedy and earning their ill-gotten riches on the backs of the poor. This is easy to sell to the masses as they are generally not rich and see no impact on raising taxes on the producers.
The right is no better. They claim to believe in a smaller role for government yet vote in more spending and add to the overall burden of BIG government. Rich fat cats who take 8 and 9 digit salaries becuase they claim that they deserve it because “they” earn so much for their companies are simply overstating the direct impact “they” have and are actually rewarding themselves for taking uncalled for risks and getting it right some of the time. Even worse is the fact that they expect the same ridiculous pay when they don’t hit their performance numbers.
It’s all very frustrating. Government should not be the solution for everything. It should be forced to live on a percentage of the GDP. A portion of the total take should go into fund that would help us through periods of cyclical downturns and the rest should be used to run the government functions. All programs should be forced to live within that “budget” and if new government “mandates” are called for then antiquated government “mandates” should be dropped or revamped.
I wish we had a tax program that was simple and easy to understand and that could not be changed without a constitutional ammendment. Don’t hold me to these percentages and brackets but something as follows would be a much cleaner system:
0% wages & bonuses tax on 1st $50,000
10% on wages & bonuses from $50,001 up to $125,000
25% on wages & bonuses from $125,001 up to $500,000
35% on wages & bonuses from $500,001 up to $2,000,000
50% on wages & bonuses from $2,000,001 to $5,000,000
80% on wages & bonuses in excess of $5,000,000
Non wage and Business income taxed in a similar table
0% 1st $50,000,
10% on next $500,000
20% on next $10,000,000
25% on all above $10,000,000
NO tax deductions except for charitable giving
Politics will should remain a part of how we spend the people’s money. But how much we take as a percentage of GDP should be taken out of the ploitical spectrum.
December 12th, 2009 at 3:14 pm
Steve D, you make many good points and I have enjoyed reading your many posts. I’d like to add a few things I’ve come to believe about our “system” and our world in general. I’m 62 years old and have seen a lot in my time on this planet.
1. Capitalism ‘without parameters’ is a ruthless monster that has the potential to destroy our country.
2. Creating a country with a vastly shrunken middle class is dangerous as it will lead to either revolution or a police state.
3. There should be term limits for all government positions and there should be no allowance of lobbyist money. Those running for office should be required to debate the issues.
4. Our tax system needs to be changed to be more progressive with no deductions, or, as you pointed out, maybe just for charities. However, charities wouldn’t even be needed in a just society. Our system would care sufficiently for the TRULY needy.
5. Americans need to be more cognizant of what it takes to fund a modern country. We all want better roads, better schools, better health care, etc. but we don’t to pay the taxes to fund them.
If Washington, Jefferson, Madison, etc. were to view our country today they would be in shock. We have become a consumption driven monolithic society. Does anyone in their right mind think the earth can continue to sustain this type of lifestyle? What happens when every third-world country reaches our level of consumption? Well, most likely more wars will break out in fighting over resources. What the world needs is more cooperation and population control to be able to maintain a life for all that is comfortable and relatively stable.
December 17th, 2009 at 6:02 pm
The IRS are blood sucking scum. If you think that we pay taxes to live in such a great country than you are stupid. Both because this is NOT such a great country, and because that money is to fund things that will NEVER help you or me, or anybody. Abolish the income tax. You are wasting our money you scumbags.
December 18th, 2009 at 8:31 pm
It always amazes me how people can rail against income taxes. You CANNOT run a modern country without them. Try to get rational and think about what would happen without income taxes. For one thing, you would have to park your car and walk everywhere. There would be no roads that you could drive on. There are so many examples a logical thinking person could list. It’s laughable that anyone in their right mind could imagine a modern society without income taxes to pay for all the things the citizens demand. How long do you think the US would remain a free country without a military? How do you think the military is funded? Or, what about education? We sure didn’t get our money’s worth with yours. You don’t even know the difference between “than” and “then”. You need to get real. If you don’t like the country the way it is, run for office and make a case for your changes. It’s sooooo easy to sit behind a computer and remain invisible spouting nonsense. We all know things are not perfect in American. Can you name one place where everything is perfect and you’d like to live? Would you be happier with a consumption tax or some other type of tax? Or, do you honestly think the US, or any state, can operate without any tax system? The states in the US without an income tax have other taxes to take its place. Lay out your case for no taxation. I’ll be waiting for your intelligent response.
December 25th, 2009 at 10:32 pm
Look, I am sick of all those undercover socialists out there who claim our tax dollars actually make America a better place to live. They DON’T! They are simply a means of the economically viable subsidizing those who contribute nothing to the country. Taxes have been an impediment to American progress, not a proponent of it. Luckily, private enterprise has been sufficient to more than compensate for this economic inefficiency and has made the US the greatest country in the world. However, we are trending to a point that this may no longer be the case, given increased global competition (which is a good thing) and the increasing need to be efficient. The Obama administration will likely raise taxes to a point that both hinders global markets and weakens America’s relative economic advantage.
This trend actually began with FDR, with his New Deal plan. As a direct result of this program, the US created Social Security and then, through LBJs continued New Deal-like initiatives, the Medicare tax came into effect. These combined taxes total roughly 8% of gross income. The major cause behind this recession was that credit spreads widened drastically, making it too expensive for companies and individuals to borrow. Imagine is our private loanable funds increased by another 8% roughly (through the transfer of FICA taxes to private investment). Obviously, this wouldn’t likely be the full 8% because some of this would be spent, but I think you get the idea. In essence, we would have had more private loanable funds which would have decreased yields and mitigated the effect of widening credit spreads. Another problem with a regressive tax system, those who are more likely to save and, thus, increase loanable funds (and, therefore, lower the deficit), the top-earners, are taxed the highest percent. No wonder why our deficit has reached unacceptable levels and continues to trend unfavorably! Bottom line: THE GOVERNMENT NEEDS TO SPEND LESS MONEY, CUT PROGRAMS, AND LET THE FREE MARKET WORK! LOWER TAXES AND CUT SPENDING! ITS F*CKING COMMON SENSE!!!
December 26th, 2009 at 11:39 am
Obviously, you’re someone caught up in a political mindset unable to look at things realistically or even humanely. First, the current recession and near collapse of our financial system was caused by a lack of regulation, lack of oversight, and pure greed. In other words, capitalism without parameters. Without parameters, capitalism turns totally Darwinian and it becomes survival of the fittest. There’s absolutely no room for the brotherhood of mankind. This might be fine in professional sports, but when you’re dealing with the lives of every day human beings, it becomes ruthless and uncaring. Is that your idea of a perfect world?
Apparently, you have no problem with the fact that your beloved private enterprise decided to bet the house on speculative investments and lost and then decided they could dump the problem on the average guy and walk away. Sadly, they succeeded spectacularly.
You also seem unaware that federal income taxes are at a historical low point. However, all those tax cuts during the Bush years did nothing to help the average guy working his/her 40 hour week because behind the scenes all those wizards in charge of the financial structure of America were busy creating a huge self-serving bubble that burst leaving the mess to be cleaned up using the average Joe’s bank account.
You appear to think there’s nothing more important in this world than money and material possessions. You hint at your opposition to Social Security and Medicare. Apparently, in your mind, anyone not rich is undeserving of having at least the basic necessities to sustain them in their old age.
We Americans seem to be having a rough time coming to terms with the fact that other countries are moving up and we no longer have total control of the world economy. We did for a long time and it spoiled us to a point where we are blind to reality. It’s a different world today.
December 28th, 2009 at 7:19 pm
Is the $250. sent to seniors taxable? And is the decreased withholding of those with paychecks merely a withholding decrease or a tax decrease?
January 1st, 2010 at 1:02 pm
The $250 sent to SS recipients is NOT counted as taxable income. The reduction in withholding amounts is related to EARNED INCOME and will only apply to those under certain income thresholds. So, unless you have earned income, nothing changes as far as your taxes owed is concerned. That is my impression of things. Check with a professional to be sure.
January 5th, 2010 at 3:15 am
Hey folks,
I have to give huge kudos for most of you who’ve posted on this site for making it a really enjoyable thread to read…especially for keeping the name-calling out of the mix (which seems to be so prevalent on other blogs).
I also know that I am joining this conversation waaaayyy late, but I wanted to clarify something Steve said in his post from Nov. 5, in the example he provided regarding marginal tax rates.
I have been left slightly confused.
In the example you give explaining a graduated tax rate, you provide the case of a 15% tax rate on the first 25k, a 50% tax rate on the next 25k, and 100% tax on any remainder of income.
Your numbers for someone earning 50k are correct (16.25k tax liability for a 32.5% average tax rate).
For someone earning 60k, you state that their tax liabilty would be 42.5k with an average tax rate of 70.8%. You use these numbers to illustrate your point about someone being less inclined to earn more due to higher taxes.
Shouldn’t the numbers be: 15% for first 25k earned = 25,000 x .15 = $3750
50% for next 25k earned = 25,000 x .50 = $12,500
100% for remainder earned = $10,000
Which gives us a total of: 3,750 + 12,500 + 10,000 = $26,250 (not 42.5k that you state). This leaves us with an average tax rate of 43.8% (26,250/60,000).
Perhaps, in this example, since the person was taxed at a 43.8% rate, not the 70.8% rate you suggest…they would be more inclined to invest in the market, thus stimulating the capitalist system.
All said, all you all have provided a very intelligent and enlightening conversation, and I look forward to more!
Sincerely, Doug
January 6th, 2010 at 8:25 pm
Dear Doug,
Your math appears to be correct. Kevin’s post on Nov 5 is incorrect & somewhat misleading.
There is obviously a need for clear explanations of the current IRS tax code!
January 7th, 2010 at 12:06 pm
I just quickly did my 2009 taxes and I am going to owe more taxes this year than ever. I always had at least 10% held out on federal taxes plus extra.since the stimulus I am way short now , why didn’t they tell us we would have to pay it back in 2010.I would have increased my federal taxes to compensate for it .would welcome reply
January 7th, 2010 at 7:51 pm
My 17 year old lived with my retired parents this last year and was home schooled and then got her GED. Will they be able to claim her on their taxes?
January 8th, 2010 at 4:52 pm
Phil,
While I agree my math was wrong (must’ve been lack of sleep), the point of marginal taxation (higher rates) vs average taxation is not misleading in any way. I simply stated a hypothetical that gives no incentive to work beyond a certain point that is clearly driven by the marginal rate and has no relation to what your average tax rate might be at that income inflection point.
Steve, I’m sorry that you owe more than you thought…that is going to happen to alot of people this year….what I find fascinating is this “great deal” the irs is giving for roth ira conversion allowing people to convert and pay 50% in 2011 and 50% in 2012, conveninently delaying taxation until the Bush tax cuts expire in 2011 thereby maximizing revenue. When government is concerned a “gift” is not always a gift.
January 9th, 2010 at 3:53 am
Kevin,
Your hypothetical example was misleading because you used a 100% marginal tax bracket
which screws up the results (and is obviously unrealistic ).
There is an incentive to increasing your income past the tax bracket change points since
the effective tax does not jump up, it just continues on at a slightly higher rate of change!
The IRS tax bracket system is clever but confusing way to provide a progressive [increasing]
effective tax rate….
January 12th, 2010 at 12:43 am
First of all, Rick, it seems like you may need a little history lesson. Federal income taxes were not allowed until the passing of the 16th Amendment, so we are not at historic lows. Contrary to what the media would like you to believe, America actually existed pre-New Deal. Also, your assertion that a “lack of regulation” and “pure greed” were the causes behind the recession and “near collapse of our financial system” is simple evidence that you watch too much CNN and a healthy dose of Jon Stewart. It also highlights that you, like most individuals, have no insight into the world of finance or markets. If you own a home, you have no one to thank but banks and securitized lending, which has kept rates affordable. If not for securitization, mortgages would be unaffordable except to the very few because of their illiquidity. So, before you bash “greed” and the evil bankers, keep that in mind. If you don’t believe me, just look at home ownership rates in countries with illiquid debt markets. Furthermore, it is the wrong kind of regulation that got us into this mess. Through such vehicles as the Community Reinvestment Act, the government has consistently pressured banks to lend to individuals which simply couldn’t pay back the loans. And (what do you know) when banks are forced to make loans with zero down to individuals with no net worth and insufficient current income, default rates are going to rise. Make no mistake, it’s not the free market that’s failed here, it’s the wrong kind of regulation and careless government spending. In closing, notice how your attempted rebuttal of my post includes emotional language rather than quantitative data, a sign of a weak, yet, sadly, increasing popular method of persuasion (i.e. hope and change).
January 12th, 2010 at 7:21 am
Andrew, right on! The Community Reinvestment Act forced banks to provide loans to individuals with no proof of income and no down payments and, of course, in some cases, no principal payments . . . merely using appreciation as collateral for interest-only payments. When ARM loans re-set, people began losing their homes and the giant domino effect began. Similarly, dealers were making automobile loans for longer and longer periods of time, thus prostituting vehicles . . . sell now, don’t worry about tomorrow’s sales.
My son just got a new job as a dealership GM after a year of searching for work and he was good. More than 100 qualified people are applying for every dealership GM job.
I was laid off from the hospitality industry and fortunately can go on Social Security. But I’m now worried about how I’m going to pay my 15% tax since I’ve not been deducting anything.
A sad state of affairs.
January 12th, 2010 at 10:04 am
Andrew,
If you refuse to see how unregulated business can damage a society then I guess we have no where to go from that point. You, obviously, believe in completely free capitalism. The darwinian type I mentioned previously. That, of course, leaves absolutely no room for any “emotion” and is based on survival of the fitest in the most extreme form. If you look back to the Eisenhower years and move forward to today, you will see tax rates MUCH higher than now. You can’t argue with that. You seem totally unable to see how greed got us into a big mess. Don’t get me wrong, there is plenty of blame to go around. People who should not have been given mortgages got them. The average Joe got greedy, too. However, in my mind, those granting the mortgages should have had the final say as to whether someone could handle it or not. You try to pass the blame off on others who forced lending institutions to give loans to those who should not have received them. That’s kind of a simple way out. Banks don’t have to lend money to those they feel are not credit worthy despite any pressure there might be. It was the giant lending institutions that came up with the grand scheme to package loans and turn them into investment vehicles to dump them off because they knew they were shaky. By the way, I watch all news outlets, not just CNN. I find CNN about in the middle, MSNBC way to the left and FOX way to the right. Actually, I’ve not been watching too much TV of any kind because it’s all BS right now. Everything is solid partisan politics to a degree that makes me want to puke. They’re all hammering at peripheral issues while the important stuff gets pushed off to a future date. It’s really sad what things have come to in American politics.
January 14th, 2010 at 12:03 pm
Just letting folks know, that if YOU are retired military and/or know someone that is retired military..better tell them that any tax breaks, credits, etc they got last year or so..uncle sam wants it back..WHICH is why all retired military checks have less take home pay coming in because the federal withholding tax was increased ..(in our case, by 16.50 a month). On hubbys W2.,..he always claims “0″ (zero) dependants so they take the max out anyway..BUT..the way this new government has done this take back the break (s) theyve given the lil people of this country..just burns my backside..
I wonder if the rich, wealthy and the politicians have paid their fair share before coming after us retired military/lil people of the country.
January 16th, 2010 at 2:06 pm
I am very saddened by this most recent turn of events in the history of US tax policy in that the government wants to tax the banks .15% on liabilities net of fdic insured deposits for the next 10 years. While I agree that this is not the end of the world for banks, the arguments coming out of Washington are so baseless as to be laughable i.e. “they can afford it, so let them pay” as governement becomes the final arbiter of justice. This plan is going to affect some institutions that did not even participate in the bailout, the FORCED bailout I might add. So, by keeping the failed institutions alive, the governement is in effect telling the healthy institutions, the very ones that already payed back their contractual obligations, to pay for this mess, even going so far as to specifically exempt fannie, freddie, and chrysler from this tax. However, a free market is designed so that instead healthy well-run institutions should be picking up market share from those failed institutions. And does anyone see parallels with healthcare here, in that the government has agreed to exempt unions until 2018 if they are deemed to have cadillac health plans. This government is playing a dangerous game of populist class warfare. And what scares me most is that the average citizen no longer even blinks an eye as to the question of whether these measures are even constitutional. Some day, our Congress may declare YOU can afford it in their quest for ever increasing revenues as they mete out their justice.
January 18th, 2010 at 1:32 pm
So, now I see that my Federal tax witheld from my first 2010 pay check is greater than in 2009. It will be significant over the course of a year, and I make WAAAY under $250,000. So much for that promise.
January 18th, 2010 at 8:53 pm
Bill,
Withholding amounts don’t necessarily correlate to taxes owed at the end of the year. Withholding is based upon your income AND the number of dependents you claim. To determine your tax bill you need to know your income/deductions and compare the figure to the marginal tax brackets. Since taxes have not been increased for 2010, you’re getting ahead of yourself.
January 18th, 2010 at 11:12 pm
i dont mind paying taxes as long as its fair. eliminate the food stamp program and let them work. i’m tired of payng taxes just for this lazy people. i cannot even afford to fill up a shopping cart nowdays but this people are like spending like they are paying taxes, and guess what they will even load it in a cadillac or mercedes. i cannot even qualify for the basic services or the government just because i am working and i am paying taxes. is this fair ?
January 21st, 2010 at 12:23 am
Edward,
I worked in Human Services for 30 years. I can tell you that the VAST VAST majority of people using Food Stamps need them very much. Many are older people living on fixed incomes or working mothers not making enough to feed their kids. Too many people label all Food Stamp recipients as unworthy leaches. That is just stereotyping people. For every welfare recipient driving a big fancy car, there will be thousands driving cars barely staying in one piece. There will always be a few scammers who get through the system making legitimately needy people pay the price of being labeled scammers, too. Don’t speak from fact-lacking emotion, get the true information.
January 21st, 2010 at 6:41 am
In response to Andrew’s point above.
I think there was plenty of greed that drove us to where we are. Different regulation could have stopped it and both D’s and R’s are responsible for gutting a lot of regulation that could have.
The problem lies in the fact that greed and “the evil bankers” were making short term decisions for large short term gains when the people they represented directly and indirectly hired them to make sound long term decisions.
I don’t think the government said, “hey banks, we need to build our neighborhoods. Go out and give stated income loans to people with no job and a heart beat.” and then the economy came crashing down.
I believe it went like this.
Collectively bankers and fund managers manage a giant pool of money for pension funds, retirement funds etc. The idea is that they can invest this money and get a safe return for grandma and grandpa to live on after working hard for their whole lives.
In the last century, mortgages were inherently safe because if you had been granted a mortgage, you had went to the local bank and proved you had a steady job, a high net worth, and then you put down a significant down payment (20% or more). In return they got a steady stream of money for 30 years with a bit of return on their investment. Then you just went to work and paid your principle and interest payment each month and planted a few trees and flowers here and there until you owned the house.
The bankers and fund managers decided that mortgages would be a great model in which to invest some of their giant pool of money but they couldn’t deal directly with every tom dick and harry that wanted to buy a house so they decided it would be easier to start buying up mortgages from local banks and bundling them together to make stocks and bonds that could be sold and traded on the market. Mortgage Backed Securities (MBS) are born.
Investors in the giant pool of money go to their Credit Default Swap dealer who assures them that if the giant pool of money pays them a monthly fee they’ll pay out $x,xxx,xxx amount to offset a loss they might take on the MBS. kind of like an insurance policy but there is really nothing to insure, just money changing hands.
The CDS dealer writes a new deal and gets nice big commission check.
The Mortgage Backed Securities are AAA rated because theoretically each person in each little house the security was built on has proved their income and has steady job.
And to make sure they were AAA rated the fund managers would heavily subsidize the rating agencies that grant the AAA rating.
Fund manager sells MBS makes nice commission.
Rating agency makes nice commission.
Things are great, the giant pool of money has somewhere to go that is safe and secure with a little bit of return.
Tom Dick and Harry have houses now that are essentially owned by the giant pool of money.
Then other foreign and domestic investors want to park some of their money in some of these great new safe and secure Mortgage Backed Securities but there are not enough mortgages to be bought and bundled into more MBS’s.
So, the fund manager tell the local banks to lower their standards a bit to cast a wider net and get some more mortgages that they can bundle.
It is no sweat off the bank’s back if its a shady borrower because the giant pool of money is going to buy the mortgage before the ink dries on the purchase agreement. Local banker makes a commission.
Tom Dick and Harry can now buy a house with no money down but they have to have a job.
Though the mortgages backing the MBS aren’t quite as solid as the earlier ones, fund managers have more AAA rated MBS to sell.
Hooray! Commissions all the way around.
These MBS are a hit and investors are getting even a higher rate than they planned. More investors want in and the giant pool of money grows.
Fund managers have buyers for MBS and thus more commissions to be made but there are no more mortgages buy and bundle.
Better lower the standards a bit more.
Now Tom Dick and Harry can buy a house with no money down and the payment will be low for the first five years but they have to be able to prove their income and have a job
Around and around we go.
Every time there were investors with money ready to go and commissions to be made the fund managers pressured the local banks to lower the standards and they promised to buy the sketchy mortgages.
More bankers and fund managers got more commissions.
Tom Dick and Harry can now buy a house with no money down with a low payment for the first five years and they have to have a job but they can just make up their income level.
Commissions all the way around. The giant pool of money just can’t get enough MBS!
But wait, there is vast MBS potential from Toms Dicks and Harrys out there that don’t even know what a mortgage is.
So the fund managers and banks started advertising directly to Tom Dick and Harry. Even during the superbowl.
Tom Dick and Harry can now get a house with no job and a made up income.
Commissions all the way around. Bankers and fund managers rejoice!
This securitized lending thing is great!
5 years later. . . Tom Dick and Harry open up their mortgage statement and it sais from now on their monthly payment will be twice as much.
Tom Dick and Harry can’t afford twice as much.
Tom Dick and Harry call their local bank to see what’s up
The local bank sais they can’t help because they sold the loan to the fund manager
The fund manager sais he can’t help because their loan has long been tied up with a thousand others which was bought by the giant pool of money.
You can’t call the giant pool of money.
Tom Dick and Harry can’t make the payments and go into foreclosure.
This starts happening alot.
Meanwhile:
Investors in the giant pool of money go to their Credit Default Swap dealers and start cashing in on their agreements.
More money changes hands.
Big bonuses are paid.
More Toms Dicks and Harry’s foreclose on their mortgages
More MBS’s dive in value
Grandma and Grandpa open up their monthly pension statement and find out the MBS their pension was invested in has failed and their retirement money is gone.
Unregulated marketeers sees an opportunity for massive profits and start buying up these credit default swaps with the hope the corresponding MBS will fail
The giant pool of money is happy to cut its losses.
More money changes hands. More commissions are paid on each deal.
More Toms Dicks and Harry’s get the double payment notice and foreclose on their mortgages
More MBS’s dive in value
Grandma and Grandpa open up their monthly pension statement and find out the MBS their pension was invested in has failed and their retirement money is gone.
The unregulated marketeer cashes in the credit default swap and makes a massive profit.
More Toms Dicks and Harrys go into foreclosure.
More MBSs dive in value.
Banks and fund managers in the giant pool of money start to loose money.
They are not able to lend and invest on other projects because they don’t have enough cash reserves.
They make claims with their insurance large insurance companies as assets and investments loose value.
The insurance companies don’t have enough money to cover the policies they have written and collected premiums on.
Tom Dick and Harry don’t know who own’s there mortgage
Tom Dick and Harry loose their job because their employer can’t get credit to run their business day to day and make payroll.
The banker, the fund manager, the free marketeer, and the insurance agent already deposited their commission and bonus checks that they got for good performance.
There are fewer and smaller commissions in this story at least for now. . . . until the next big unregulated financial idea comes along. Don’t worry bankers and fund managers there is always hope for a loophole. And we the people will be down at the bottom actually producing and providing goods and services ready to be ignored and exploited when that comes along.
January 21st, 2010 at 5:18 pm
Pete,
Not a bad way to put it. As I’ve said previously, unregulated capitalism can turn into a monster because it basically becomes Darwinian. The biggest and strongest become a hulking mass of greed and chop up everyone else. Is this how we want our American society to evolve? Should all parameters of behavior in the business world be tossed out? Should we just have a free-for-all right up to the bitter end?
January 26th, 2010 at 7:40 pm
I have a good job and work hard all year. I wouldn’t mind paying my share of taxes except I know so many, like a relative of mine who is in his late 40s, who live off the taxes I pay while he is perfectly able to work a full time job. While he buffaloes his doctor and could win an Oscar with his acting, he has every day off to go do whatever he pleases with his disability check and the money his dumb as a box of rocks mother doles out to him. More follow-up should be done on people getting disability and welfare. We could probably make a big dent in this country’s debt if these slackers got off their lazy behinds and got a job instead of sucking money off the government and their relatives!
January 30th, 2010 at 3:00 pm
Cristy,
Great point you made above. A large portion of the deficit is attributable to programs that don’t yield a thing for our society, such as welfare programs and unemployment benefits. If we must have these programs as “economic stabilizers”, then make those people work for their money rather than simply pick up a check. There are plenty of roads that need cleaning, public facilities that need to be maintained, etc., and there’s no need to hire an additional employee to perform these tasks when welfare-dependant individuals, who are perfectly capable of doing this, sit on their ass all day long and get paid to do it. Reagan tried to implement a program like this but was ridiculed for being too “cold” and “uncompassionate” for making these people work for their “compensation.” It is truly a sad state of affairs when hard working individuals must subsidize those who truly are a burden to everyone else. Rick, I have to say, I agree with you, if our founding fathers could see this, they would be sick to their stomachs.
February 2nd, 2010 at 4:33 pm
Hello all,
I am wondering if someone can help me with my question.Im 19 and I am always claimed as a dependent.In 2007 I made about $9,000 and 2009 I made just under $8000.But this year I am only getting back $57.00 and with the 2007 return I got over $400.Both years done the same exact way.Some one I know made around $3000 in 2009,was claimed as a dependent but got over 400 back still.Why am I getting next to nothing back this year?If any one has an idea why this could have happened or can point me in the right direction on how to find out that would be great.(I did not make enough to file in 2008 also)
Thank you.
February 4th, 2010 at 2:15 pm
Blessed to live in this great country? That is simply an excuse that this country has the luxury to afford its citizens. Other countries tax their people MORE and they get less in return and they don’t even get the feel good excuses. Income taxes are unconstitutional and sinister in design. The land of the free is losing its freedom.
February 5th, 2010 at 2:02 pm
Matt,
Just what other countries have you lived in that you can state wtih such assurance that they get less? Would you not think if citizens of a democratic nation were all that unhappy with their system of taxation compared to their benefits, they would eventually vote to change things? I think one also has to decide just what is a “benefit”. Some might consider peace of mind a benefit. Americans seem to think completely in terms of money and material things. Also, how would you propose to fund necessary things like the military? There are numerous other examples of things that need to be funded to make citizens safe, healthy, and prosperous. One way or another things have to be funded on the Federal, State, or local level. A modern society cannot function without taxes.
February 6th, 2010 at 10:25 am
Rick,
While I agree some level of taxation is necessary primarily to meet national defense, I would argue that at the federal level we have gone way, way too far as to the definition of “necessary”. Let me try to explain…For instance, lets take a closer look at the Social Security program. With this program, the government has hoodwinked the general populace. Government takes money in through these taxes and uses it to meet current expenses. This scheme has worked fantastic since its inception earlier in 20th century, as the influx of money has far outpaced the expenditures in benefits. How many times have you heard members of Congress say “the social security trust fund”, i.e. leading you to believe the money has been tucked away and compounded like our 401k, or other investment accounts. There is no such thing as a trust fund, it is an accounting fiction, one reason our government refuses to present its financial situation on an accrual basis with actuarial based cash flows. Just wait, as the expenditures in social security have recently started outpacing the intake of ssi taxes, you will see a growing chorus of those in Congress saying we have to raise taxes, or cut benefits. And while I agree our lifespans have increased, the real crime is in how the government has spent this zero cost influx of funds. Now face to face with decades of irresponsible, “necessary”, spending, politicians are reeping what they have sown. There is no way around the irresponsibility of past administrations. The joke will be on us as taxpayers. People like myself and Matt see these consolidations of power at the federal level as impinging on our personal liberties. People like Rick won’t see it until its too late. Programs like the military, I can rationalize (only barely), but stuff like social security, education dept (no child left behind), and countless other well intentioned federal programs need to be dismantled. Choices better made on an individual basis, should never be made at a federal level. It really is as simple as whether you believe people can think/plan for themselves or whether you believe the paternalistic government has to protect you from yourself.
February 7th, 2010 at 12:42 pm
b…Guess what? I totally agree that the Federal government has lied to the populous about SS. The money IS NOT THERE. It will have to come from somewhere. I guess what I was trying to say is that no matter where the money is going to come from (federal, state, county, local) it is going to have to come from somewhere to pay for things people WANT. So taxes will go up eventually. I do believe, however, that many education and social programs, while maybe not necessary, are really the right thing to do. Especially education related programs. Additionally, there is no guarantee that state and local entities would handle these things any better than the federal government. I guess maybe taking your poison locally might make some feel better. Corruption is rampant. Always keep in mind that if you create a large underclass, you sow the seeds of change, perhaps violent change. I’m not saying those who would foment change would be “right”. But, keep in mind that revolutions sometimes begin with a feeling of being left out, behind, or abused. Think 1776. There are no easy answers in today’s fast-paced, techically-connected world. Sometimes frustration prevents us from thinking rationally. What’s best may not be what we like or want.
February 7th, 2010 at 6:08 pm
B,
Great point about Social Security, really spot on! And Rick, thank you! Thank you for allowing all of us to see how inconsistent and illogical individuals with YOUR political mindset are. Earlier in this blog, you stated that striving for “brotherhood of mankind” is right and that tax cuts and individual economic freedom is “ruthless and uncaring.” As more and more people made additional rational arguments supporting low taxes and small government, your tune has changed. Apparently we should now pay high taxes and support worthless programs because if we don’t, a violent underclass revolution will develop. How typical. And when you really get backed into a corner, you pull out the old “there are no easy answers” card. You know, Rick, I think you just may have a future in politics. Guess what, ITS NOT THAT COMPLICATED, as B pointed out. Let me give you a little econ 101 lesson using TARP as our case study. The total value of TARP, in the end, was roughly $2.5 trillion (the $700 billion plus additional commitments of about $1.8 trillion). This amounts to over $18,000 per taxpayer on average. Just imagine if the average US consumer had an additional $18,000 to spend through tax cuts and previous years’ taxes paid recapture. A large problem with the current economic situation is that businesses have excessive levels of inventory since consumers don’t have the necessary disposable income to spend. Through a tax cut like the one mentioned above, businesses would begin to sell their inventory, expand, and hire more employees as sales increase. And, guess what, since taxpayers won’t spend all of their tax cut (some will be saved), the supply of private loanable funds will increase and borrowing costs will be reduced (credit spreads were arguably the largest cause behind the crises and what TARP was trying to target). Thus, through the tax cut, consumption (which accounts for over two thirds of GDP) would increase, along with employment, while borrowing costs would decrease, leading to economic stabilization and rapid growth. But, of course, TARP was chosen instead. To my point, this concept is not that complex and certainly feasible. Even my friend’s 6 year old son can understand the logic behind this plan. In Washington, they (on both sides of the isle) JUST DON’T UNDERSTAND THIS and don’t care to. After all, when they have lobbyists and certain voting constituencies to satisfy, why would they? And in your next post, Rick, I’m sure you’re going to say that you are an ardent opponent of TARP. Maybe you don’t mind having money out of your paycheck being transferred to other people, and that’s fine, donate to a charity. But, don’t say that it’s alright that all of us are forced to do so. Rick, to be quite frank, it’s precisely people like you that have ruined America and it disgusts me.
February 8th, 2010 at 12:10 am
Andrew,
I’m sorry that you’re such an angry unhappy person. What I said was that taxation should be progressive. The more you make, the greater the percentage of your income you should pay in taxes. That’s my OPINION. In your ideal world should I not have an opinion? I also did not say that individual economic freedom is ruthless and uncaring. What I said is that capitalism without parameters (regulations and oversight) would become totally Darwinian. Are you for capitalism without any parameters? No oversight? No regulations? Just wondering how that would work in the real life. Would you like to go through the derivatives debacle again any time soon? I’m also all for tax cuts for people making under about $200,000/yr. Yes, the money they would spend would help things move in a positive direction. The rich don’t need any more tax cuts. They got theirs under the Bush Administration. I was not in favor of the bailout for big banks or any big business. They should have been allowed to suffer their fate as determined by their risky business practices. But, high powered capitalists have friends in high places. How long do you think all the countries of the world can keep growing through consumption? How long do you think earth’s resources are going to last? At the rate humans are consuming natures bounty, I would say things are going to be rather depleteted within a matter of several centuries unless humans wise up and start cooperating and planning. I’m guessing you’re a youngster less than 35 yrs. old with a very selfish view of things. If you think revolution is not a possibility in America, you better wise up and read some world history. Also, your crack about some 6 yr. old understanding economics better than myself is delusional. I’m making no political statements on here. I am not registered with any party. I’m an Independent voter. I don’t trust any politicians. They are tools of the monied influencial and are basically out to get re-elected to their cushy jobs. Our system of governance has become hopelessly corrupted. I don’t have all the answers and don’t claim to. I only have opinions which you may not agree with. Take a chill pill, dude.
February 9th, 2010 at 12:30 pm
I am 72 yrs old and I am living in an assited living facility. I am on Medicaid. I get my pension from the govt. I am a retired govt. employee. They are taking Fed. taxes out of my pension. Do I still have to pay Fed Taxes ?
February 9th, 2010 at 1:17 pm
if the tax bracket threshholds have risen then why is my january check reduced by an additional $10.00 of Federal withholding when i have had no pay increases???
February 9th, 2010 at 3:04 pm
The level of intelligence of the average American voter is astonishing. “Bailout,” is a bumper-sticker word freighted with meaning for those with diminished I/Q.’s . Every major economist, conservative and liberal, men who hold the nobel prize in economics, tell us that if it were not for the loans to the banks, all of which, incidentally, will be paid back with interest, our country would have descended into a 1930’s depression. I am old enough to remember, buster, and you don’t know what poverty is. Try reading a history book from time to time rather than watching cable television……if nothing else invest in a subscription to “The Economist” magazine. Finally, the investments made by the banks were wrong, but that is quite beside the point–they were made, and this was largely a result of incompetance by both Republican and Democratic administrations, as well as lobyists, the same guys thqt are spending millions of dollars to thwart the Obama administration quest to impose needed regulations on the banking industry. Regulation of any industry is not socialism. If we had a security and exchange commission before the Great Depresssion, the depression could have been avoided. It’s time now to fix the broken regs…….so that this sort of thing cannot happen again.
February 10th, 2010 at 11:28 am
Carrie, above, asked a question and I have a similar one:
I make less that $20,000 per year, yet this year my income tax is over $500 more than it was last year!
How can this be?
2008, my income was <$19,000 and my income tax was $1200.
2009, my income was <$20,000 and my income tax is over $1700.
I don't itemize deductions.
Was there a tax increase for my income bracket?
February 10th, 2010 at 4:47 pm
Debi…I believe the cost of your assisted living is deductible as a medical expense. If you’re on Medicaid, I would think you will pay no income taxes but will probably owe any money you have coming in, over and above a small monthly allowance, to the assisted living facility. It will be a wash for you. Consult with a professional tax adviser,however.
February 10th, 2010 at 4:55 pm
william klein…I guess you’re saying, as I do, that capitalism without parameters is not such a great thing. I, too, am getting weary of everyone calling President Obama a socialist for wanting business to be accountable to some regulation.
February 10th, 2010 at 4:59 pm
donna,
The tax brackets have not changed but the amount of income subject to each bracket has changed. If you believe too much is being withheld, just ask them to withhold less. It really doesn’t matter much unless you really need that $10 every month because it will all come out the same at the end of the year when you do your taxes assuming someone does them that knows what their doing. You will probably get a refund.
February 10th, 2010 at 5:05 pm
Catherine
There has to be more to your story than what you state. I just can’t see how it would be possible for you to be paying $500 more this year with exactly the same set of circumstances. You better check with someone who knows about tax preparation. There has to be a reason why you owe so much more this year. Are you by any chance confusing “withholding” with what your eventual tax will be?
February 12th, 2010 at 8:57 am
Obama and Co. changed the rules on Fed tax deducted from our pay checks last year and the result for us was that we have to pay close to $700.00 in addition to what was withheld over 2009.
They taxed our Social Security Income at a much higher percentage than in 2009 also, and I’m watching John Stossel riding on a new red electric golf cart that cost $8,000.00 that he got for FREE due to this “fair” tax code?
$700.00 is more than two (2) car payments on our used 4 year old Chevrolet Impala that we had to buy last summer. We paid over $1000.00 just to get license plates for it.
I feel like the only hen in a fenced area with 12 roosters that find any oriface on my body, and ” please their pleasures” at my expense. Reason being is that the farmer that owns me can’t find it in his heart to kill the roosters, or killed all the hens not knowing the difference, or maybe just a sadistical “progressive” that thinks as long as I lay eggs, what the hell. I’m just trying to avoid him as his wife isn’t giving him any lately, and he has already tried to put a smile on the sheep!
February 12th, 2010 at 5:20 pm
Rick,
Thank you…that’s what I thought. I rechecked everything and found that I had made a mistake. Thanks again!
February 12th, 2010 at 5:52 pm
I don’t know where you people get your tax information. The fact is, taxes have not been raised. Yes, they can fiddle with withholding amounts but at the end of the year it all comes out in the wash and you pay no more than you did the year before assuming your income has not increased too much whereby you’d be in a higher tax bracket. By the way, the amount of income subject to each tax bracket has been raised for 2010 so if your income has not gone up, your taxes won’t go up, either, unless you’ve lost some big deductions. Too many of you confuse withholding with taxes owed. There’s a big difference. If you’re unhappy with your withholding amounts, tell your employer to change it. Any intelligent person with an uncomplicated tax situation ought to be able to figure out almost to the penny how much wiil be owed to Uncle Sam and match his withholding to that number. I do this every year and I have to send in estimated taxes. It’s not rocket science. By the way, taxes on Social Security have not been raised either. It your income is above a certain level, you pay tax on 85% of it instead of the lower rate. That hasn’t changed.
February 13th, 2010 at 6:57 pm
Rick,
Once again, your arguments lack consistency. You are arguing for a progressive tax rate AND a less consumption-dependant economy. These two are inherently at odds. As one’s income increases, his/her marginal propensity to consume decreases (or, alternatively, marginal propensity to save increases). This is common sense, if you are in a low income tax bracket, you simply cannot afford to save as all income is spend on necessity items. The reverse is true for those in higher income tax brackets, as these individuals can afford to invest their surplus income. Thus, if what you want is a more investment-dependant economy (fueled by savings) the logical tax incentive would come through a regressive tax system. You tax those in lower brackets more, so consumption decreases, and as those who make more money are taxed less, the gross amount invested in savings rises, fueling investment and lowering consumption’s proportional share of GDP. I’m not advocating for this (I am an advocate of a flat tax), but if you are hinting that consumption is not the way to grow, than this is exactly what would be suggested from a tax standpoint. So, buddy, which is it, are you an advocate of a progressive tax system or a less consumption-dependant economy, because you can’t have it both ways? Also, your assertion that you aren’t making political statements is blatantly false. In one of your recent posts you state, “I, too, am getting weary of everyone calling President Obama a socialist for wanting business to be accountable to some regulation.” Sounds pretty political to me. Also, when you state that the earth’s resources will be used up in a “matter of several centuries,” are you basing that on any sound scientific research, or just pulling it out of you’re a**? I guess you don’t believe in technological advancement or innovation either, although real GDP per capita has increased rapidly over the last 50 years (driven by innovation)? As for William Klein, some very prominent economists argue that TARP didn’t help much of anything, and all of the recipients have not paid back the amount of funds. When you examine TARP funds received as a proportion of a firm’s total assets, none of the amounts received by the individual firms, obviously, would have made the difference between solvency and insolvency. Just for your information, since you seem to be somewhat financially illiterate, total assets can be found on the balance sheet, along with a firm’s equity (or alternatively, degree of solvency). You only head about the most financially stable firms, such as Goldman and JP Morgan, which have paid back the funds. Hundreds of billions have not been (and won’t be) paid back. Also, I do read the economist, but evidently you don’t judging from your incoherent rant. Face it BUSTER, Keynesian economics doesn’t work! I would tell you to check into your facts, but judging from your outdated views, it appears the only thing you should be checking into is a retirement communi
February 15th, 2010 at 3:22 pm
Let me preface this post by saying I have very little knowledge of the IRS, A LOT OF FEELINGS REGARDING THE IRS, but not as much knowledge. I think my question is fairly straight forward but I’ve been unable to get a very succinct answer.
My husband and I have been getting our taxes prepared by the same preparer for the past six to seven years now. We have never had to pay in in that time frame. Well, he just called me with the GREAT news that we’ll be owing about 950.00 this year. Nothing has changed, we’re still in the same tax bracket, so I’m trying to find out what’s up!
I know that Barry has said that he’s given tax relief to about 95% of people making under $250,000 per year. At least that’s what I’ve heard this week. Don’t remember ever seeing a check in the mail from the IRS so I’m assuming this break is coming by taking less taxes from each paycheck, trying to cause some sort of stimulative effect on the economy???, right!
We have a combined income of less than $100,000 and as mentioned earlier nothing has changed financially. So why would we OWE $900.00 this year and RECEIVED between $1,000-$1,300 yearly in the prior six to seven years.
Also to try to be “even” with the government at the end of the year what is the best way to file.
I believe both of us are now filing married 0, no dependents, and yet they still WANT MORE!!!
I believe it’s possible to claim married, but withhold at single rate. Any help would be greatly appreciated.
February 18th, 2010 at 12:54 am
Jen,
It is quite simple. Taxes have not been increased. What does happens is that sometimes employers adjust withholding. If NOTHING has changed with respect to income/deductions/credits, I can only assume your withholding was adjusted to take less out during the year. Why don’t you just take a look at your 1040’s and compare last year to this year. It should be fairly simple to see where the adjustment came into play. Also, if you don’t believe tax bracket percentages have remained the same, just Google “2008 & 2009 income tax brackets” to verify that they are the same as last year. You may have owed more at the end of the tax year this time but the figure you need to take a look at is 1040 line 61 from last year and compare to line 60 for 2009. Those lines tell you what your tax liability is BEFORE any withholding is taken into consideration. If those lines are very different you must have had some changes you’re not aware of. What I’m learning from reading posts is that more people need to become more involved with their own tax preparation. If your tax situation is fairly straight forward it makes no sense in my opinion to hire someone to prepare your forms. Just buy a tax package like TurboTax and do them yourself. Nothing to it. I use it and I have rental property, trade stocks and options, bonds, and other things a lot of people don’t run into.
February 18th, 2010 at 10:51 am
For everyone (well, almost everyone): Don’t forget to file Schedule M “Making Work Pay” this year. Most single filers with AGI less than $75,000 get a $400 credit, and most married filing jointly filers with AGI less than $150,000 get a $800 credit.
February 18th, 2010 at 12:45 pm
Steve (The Original),
Good point. That’s another example of why using a tax program like TurboTax is a good thing. It automatically takes your data and searches for anything you might be eligible for.
February 19th, 2010 at 2:06 pm
Is the above picture a picture of the tax tables moving? lol But, they didn’t move? That’s not a tax increase?
For all of you you Bill Gates, Warren Buffet types who say they don’t mind paying more taxes; you are perfectly ABLE to do so right now. At any time you feel froggy to send a check to the IRS for ANY amount you feel you want to give them. Anytime, anyplace, any amount. There’s no law against it.
Yup…. that’s what I thought. You either are ignorant, or well, you really don’t mean what you say.
February 19th, 2010 at 2:07 pm
Jen, I can vouch for what you said. Same happened to us
February 19th, 2010 at 6:54 pm
Just saw where in 2007 the 400 richest Americans made a million dollars about every 26 hours. If you check the Tax Schedule, a layman would probably think “Ahh a graduated income tax system, they’ll pay 35%!” Nope… They paid an average of 16.6%… Now, some of you may think this is fair. I remember B.R., you know, Before Reagan, when the tax rate on the richest Americans was +/- 74% but they only paid about half that too… So, it was dropped to help them out. Now the rate is 35% and they are paying half of this one… At some point, America should realize how the average guy on the street is not being served by our govt. But, the rich are being served really well and, based on their retirement and perks, the congress doesn’t do a bad job serving themselves either.
February 20th, 2010 at 6:03 am
hey rick no answer? I know that I’m a brighta guy but challenge me a little on st besides emotion. It’s too easy, give me a harder debate to win!
February 20th, 2010 at 4:15 pm
Andrew…you’ve shown yourself to be rude, arrogant, and supremely immature. Your last post speaks quite clearly to that assessment. Do you propose to go through life behaving childishly whenever someone disagrees with you? Are you going to jump up and down and stomp your feet when you hear a dissenting opinion? There are always numerous ways things can be viewed and problems solved. I learned that quickly managing 65 employees in my former position.
I disagree with your assessment/solutions to our economic problems. For me to further elucidate my position on these issues would be a waste of time as there is no room in your consciousness for rational discussion. Your modus operandi is to bully, incite,and name call. NOTHING in your posts has any more validity than anything I wrote. They were YOUR opinions shaded with YOUR emotions whether you realize it or not. Opinions are just that, OPINIONS, whether they are yours or someone else’s that you have latched onto. Even the brightest economic minds have opinions lined up against those opinions. No one is the repository of incontrovertible truth. I sure hope you learn that in life.
For your information, I know quite a bit about business and finance. I built a successful business over a period of 10 years and sold it for a very nice profit before retiring. I did that while working a full-time job for another employer. I really don’t need a lecture on finance and business from some young know-it-all who lacks respectful communication skills.
This will be my last post to you as the board does not need to be burdened with this dialogue any further.
February 20th, 2010 at 4:28 pm
Jim,
You are very correct. The tax tables do not tell the whole story. The rich can avail themselves of many outs. The same applies for American businesses. I always hear about the supposed high tax rate on American companies but when you dig deeper, you find that very few ever pay taxes at a high rate. The tax code allows for them to find ways to avoid paying taxes. Again, this is supposed to be good in that benefits will eventually trickle down to the average guy. Not much trickling over the past couple of decades as the working and middle classes have slowly been squeezed. More squeezing is on the way in the not too distant future as the crap is about to hit the fan. We cannot keep running up the deficit and support all of the programs we now have. There will need to be more scrutiny of, and compromise in, programs and more revenue coming into the treasury for American to get back on its feet. It will be painful and take a long time. Right now the monied interests still have a strong grip on the levers of power but eventually that will give way to the masses who will become more vocal about the future of the country.
February 21st, 2010 at 2:29 am
I have read these comments and understand the frustration. I own a small business in Massachusetts and the way the economy is it’s making it hard to keep my employee’s busy. During the booming 04,05,06 years when people had an unlimited piggy bank I.E thier mortgage. I saw my friends unloading tons of equity from thier houses and say don’t worry my house is worth tons. I remember telling these guys be careful it’s not going to last. Now about 60% of those friends are renting and thier neverending nest egg growth is worth nothing and all the fun they had with boats,cars,atv’s,snowmobiles,vacations,rv’s,huge nieghborhood parties, ect. Now they can barely put food on the table shop at wal-mart go to the salvation army store for school shopping it’s sad BUT they put themselves in this position. I did not fall into this trap and my house is secure FOR NOW. I have seen a little upswing in the purchasing of product that I produce thank god. Taxes are a needed thing but if we add up all the things we pay taxes on it ads up to alot more than we think. I am no brianiac and do not have a MBA or for that matter I dropped out of 9th grade. Everyone is talking about people getting help here welfare there. I hate welfare I think that people should work for anything they get. I would’nt hate it as much if I saw the people picking up the trash on the side of the road or painting the bridges or cleaning up the grafitti on the walls of the highway. What ever happened to the WPA I remember my grandfather talking about this if I used the right abrieviation. They used to get a check to help in the thirties for the work they did. It was’nt a handout it was more of a paycheck. Some call this communist I don’t see it that way. If your going to get Gov. money then get your benifits in the way of a check and get taxed for it. Illegal immergrant’s are in this country we know it and the Gov know’s it. I think I read it’s about 12,000,000 that’s alot of untaxed people go into the high known immergrant communities and start looking through the books of companies and see how many employee’s they have on the books then look around the shop I bet they count more people working there than they are reporting. Bust them and make the illegal pop. start to pay taxes you will see a drop in the illegal pop. because we will shut down your company if you don’t take taxes out. Illegal people in America do not have rights. THEY ARE NOT AMERICANS. go to court any given day you will see that they are using the system more than we are they get court appionted attorney’s language specialist’s and services that should only be avail. to AMERICANS. I got a thread in my e-mail the other day I will post it here
WOULDN’T IT BE GREAT TO TURN ON THE TV AND HEAR ANY U.S. PRESIDENT, DEMOCRAT OR REPUBLICAN GIVE THE FOLLOWING SPEECH?
“My Fellow Americans: As you all know, the defeat of the Iraq regime has been completed.
Since congress does not want to spend any more money on this war, our mission in Iraq is complete.
This morning I gave the order for a complete removal of all American forces from Iraq This action will be complete within 30 days. It is now time to begin the reckoning.
Before me, I have two lists. One list contains the names of countries which have stood by our side during the Iraq conflict. This list is short . The United Kingdom , Spain , Bulgaria , Australia , and Poland are some of the countries listed there.
The other list contains every one not on the first list. Most of the world’s nations are on that list.. My press secretary will be distributing copies of both lists later this evening.
Let me start by saying that effective immediately, foreign aid to those nations on List 2 ceases immediately and indefinitely. The money saved during the first year alone will pretty much pay for the costs of the Iraqi war. THEN EVERY YEAR THERE AFTER IT’ll GO TO OUR SOCIAL SECURITY SYSTEM SO IT WONT GO BROKE IN 20 YEARS.
The American people are no longer going to pour money into third world Hell holes and watch those government leaders grow fat on corruption.
Need help with a famine ? Wrestling with an epidemic? Call France .
In the future, together with Congress, I will work to redirect this money toward solving the vexing social problems we still have at home . On that note, a word to terrorist organizations. Screw with us and we will hunt you down and eliminate you and all your friends from the face of the earth..
Thirsting for a gutsy country to terrorize? Try France or maybe China .
I am ordering the immediate severing of diplomatic relations with France ,
Germany , and Russia .. Thanks for all your help, comrades. We are retiring from NATO as well. Bonnechance, mes amis.
I have instructed the Mayor of New York City to begin towing the many UN diplomatic vehicles located in Manhattan with more than two unpaid parking tickets to sites where those vehicles will be stripped, shredded and crushed. I don’t care about whatever treaty pertains to this. You creeps have tens of thousands of unpaid tickets. Pay those tickets tomorrow or watch your precious Benzes, Beamers and limos be turned over to some of the finest chop shops in the world. I love New York
A special note to our neighbors. Canada is on List 2. Since we are likely to be seeing a lot more of each other, you folks might want to try not pissing us off for a change.
Mexico is also on List 2 its president and his entire corrupt government really need an attitude adjustment. I will have a couple extra thousand tanks and infantry divisions sitting around. Guess where I am going to put ‘em? Yep, border security.
Oh, by the way, the United States is abrogating the NAFTA treaty – starting now.
We are tired of the one-way highway. Immediately, we’ll be drilling for oil in Alaska- which will take care of this country’s oil needs for decades to come. If you’re an environmentalist who opposes this decision, I refer you to List 2 above: pick a country and move there.
It is time for America to focus on its own welfare and its own citizens. Some will accuse us of isolationism. I answer them by saying, ‘darn tootin.’
Nearly a century of trying to help folks live a decent life around the world has only earned us the undying enmity of just about everyone on the planet. It is time to eliminate hunger in America It is time to eliminate homelessness in America . To the nations on List 1, a final thought. Thank you guys. We owe you and we won’t forget.
To the nations on List 2, a final thought: You might want to learn to speak Arabic.
God bless America .. Thank you and good night.”
That’s my rant thanks sorry for so long have alot on my mind.
February 21st, 2010 at 6:36 am
Rick it’s funny that you claim that my assertions are based in emotions when I have mentioned nothing but factual data. You’re claims are evidence that individuals of your mindset are incapable of having a rational discussion, and when people call you out, you act like a spoiled brat. Deal with it, you lost the debate, have not put forth any factual support. Why don’t you put forth facts, stop making emotion-based claims and inconsistent arguments, and start thinking like a rational human being. I apologize that my logic and sound factual support threatens you. And, let’s remember, you criticized me first after my initial post buddy, so don’t pull the poor bleeding heart liberal card on me!
February 21st, 2010 at 11:18 am
Joel,
Yes, everyone is getting really frustrated. I agree with many of the things you said but the reality is some things are not so easy to fix. At least not as easy as you might think. There’s plenty of blame to go around. You were wise to warn your employees and friends not to mortgage their homes to the max. They learned a good but expensive lesson. Individuals on both sides of the mortgages were to blame in most cases. The lenders were greedy as were the borrowers.
With respect to taxes, let me say, it’s easier to give people things than to take them away. We’ve been giving people things (benefits, entitlements, etc.) since after WWII. Neither party wants to be seen as taking away these things because they will lose power. They are going to wait until the very last second to take action. As an example, everyone knows Americans can’t go on buying medical insurance with premiums rising way faster than wages. It just can’t go on. Of course, those with good company paid insurance or Medicare don’t want to make any sacrifice for those who don’t. So until more people become hurt by this situation than those not hurt, things can’t change.
I mentioned before that the biggest part of any welfare budget is NOT cash assistance but medical assistance. BY FAR. You can’t make sick or old people in nursing homes go to work. Many working poor also receive medical assistance because their employers don’t offer insurance or they can’t afford the premiums. Yes, able bodied people should work, and many do since Clinton passed legislation forcing them to, for any assistance received but that won’t even put a small dent in welfare. Believe me, I worked in that business for 30 years. IT’S ALL MEDICAL ALL OF THE TIME. Welfare makes great TV theater, however. It’s an emotional issue that garners votes.
The problem of illegal immigration is a tough one created over many decades by lax rules and lax enforcement. Businesses love the cheap labor and American consumers love cheap prices. As an example, you’d be hard pressed to find a home built here in Arizona that wasn’t largely built by Hispanics. Many, I’m sure, were illegal. It’s a tricky problem now because so many Hispanics have become LEGAL citizens over the past 60 years that they represent a huge voting bloc that both parties are afraid of. Rightly so.
With respect to the ideas and solutions put forth in the thread you posted, I can only say it’s really too simplistic in today’s world. I absolutely hated the idea of war in Iraq and Afghanistan. However, what do you think would have happened if we did not go in? My guess is Al Qaeda would be much stronger right now. It would slowly topple other weak or corrupt governments and that would eventually threaten the U.S. Yes, many of our so called allies are selfish wimps. However, many of the countries that would be included on list number 2 are poor countries with little or no expertise at fighting wars. There are, however, many who should be helping. The biggest being Russia and China who have potential problems with insurgent movements in their own countries. But, they know the U.S. has little choice but to fight against the extremists.
I found some of the things in the thread amusing. The deal about the parking tickets was funny and the issue about drilling in Alaska was, too. The oil in Alaska will not provide American with its energy needs for decades. It would satisfy one small piece of our need at the risk of who knows what damage in a pristine environment. Alaska is a national treasure bought on the cheap. I am, however, open to looking at that situation more closely. By the way, we are hunting down terrorists every day. But, it’s not easy.
Problems in today’s world are very complex and frustrating. People want simple solutions and they want them now. It is not going to happen like that. It’s always a painful ugly process. Most of the problems in today’s world can be boiled down to (in my opinion) greed (business and personal), ignorance, rabid nationalism/tribalism, and religion. It won’t be easy changing of any of those things.
February 21st, 2010 at 7:36 pm
Rick B,
I understand the problem would be harder than I posted I was mearly unloading a few things in my head. I found the thread that I posted slightly amusing as well. I do think however we should reserch the oil in the shale in Colorado. Canada does have a good supply in the sand up there that China is trying to buy now. I would never expect the elderly to work for health benefits but i do expect the able bodies claiming fiber mialga or carpul tunnel or my dick’s broke to work for the benifits. My spelling is horrible. The world we live in now is so screwed up hell I think that we forgot how to produce anything anymore. Our fruit comes from chili our cars come from overseas our clothes come from everywhere but here and we act like drones. I buy USA Jeans cotton made here and made with American labor. $38.00 per pair and they last. We have a debt to china for 800,000,000,000 that’s what we baled out the banks with. We pour money into Haiti who buy the way hate us until crap like this happens. And our taxes go up go figure. Hell they used to eat jamacans. In any way I can’t stand the thought of taxpayer’s paying for Illegal imergrants to have any rights here. They don’t deserve any there not Americans those are our rights that millions of us have spilt blood for. I served in the army I cannot remember saying that I will defend the constitution for the illegal’s to have all the right’s as I or my fellow Americans have. That bother’s me. I here people say to me don’t you have a heart my answer is always yes I care about every American in this country and this country only. We are trying to fix the world and we are loosing sight of ourselves in the process. I think that term limit’s should be put in place in the senate and congress no more than 8 years they get to cozy. i also think that we should question everything that we have knowledge about and don’t agree with. I think that big decisions like health care should be left to the voter’s we have to pay for it. Our National defense is weak because we are spread to thin around the world saving everyones economy. Before my cousin was killed in 2004 in Iraq the troops were wiping thier ass with the Iraq money because it was not worth anything until the USA decided to back thier dollar. Screw them they have major oil that they don’t contribute to the effort to liberate them the military should’nt have to pay crap for thier fuel. I have so much on my mind I get on a rant very easily sorry people Frustration is getting the best of me.
February 23rd, 2010 at 12:18 pm
Joel,
I think we’re all frustrated right now. So many things have become so large that no one seems to know what the correct answers are. Unfortunately, our political leaders are so polarized they can only think in immediate terms related to getting reelected. Try to stay calm as things have a way of working out in time.
First, I’m very sorry to hear about your cousin being killed in Iraq. Let’s hope that in the long run he died for a good cause. We won’t really know for many years down the road. And, thank you for serving in our military.
Yes, there is a lot of oil shale in the mountains out in Colorado. However, it is very expensive to turn into usable oil. Also, I don’t think the people of Colorado want that kind of mining in their state. Their is still too much oil in the world for companies to deal with oil shale at this time. Eventually, some alternative forms of power will have to be used.
Jobs were shipped over seas to countries like China, Viet Nam, etc., because big companies pushed for gobalization. That let them produce goods with cheap labor. Unfortunately, that meant job losses for Americans who were used to nice wages. It’s probably not going back to the way it was. Global competition won’t allow American companies to be profitable with expensive labor. America needs to invest heavily in areas where we can compete. High tech is one area. Again, unfortunately, education does not seem to be a priority of most Americans. We seem to be too self centered and concerned about our own individual welfare to think in terms of what’s good for the country and future generations.
I know the immigration issue really really irritates people. It’s just something that has to be dealt with with great care. As mentioned previously, there is a huge (and growing) Hispanic voting bloc in America. That’s not going to change. So, some sort of compromise has to be worked out to deal with the issue. That’s just the way it has to be whether we like it or not.
I agree with the idea of term limits. I also think there should be NO lobbying of any sort. Businesses should not be allowed to contribute to campaigns. There has to be a better way of electing people to make important decisions.
February 24th, 2010 at 2:23 am
FLAT TAX………………..dam people when u going to learn…………………….
February 24th, 2010 at 1:31 pm
A flat tax will never fly because it’s too regressive. When working and middle-class people see how much of their income would go for taxes with no exemptions, credits, or deductions they would freak out, especially when they see how little tax (percentage wise) the rich would pay in relation to their large incomes. Can you imagine the titanic battles that would occur when special interests try to carve out exceptions for themselves? Won’t happen in your lifetime. Taxes will be going up in the future and they will be progressive. There’s no way out of the box we now have ourselves in due to greed, waste, out-of-control spending, financial favortism, and poor planning.
February 24th, 2010 at 3:10 pm
Here’s a prime example of why the rich and other special interests will never allow a flat tax without loopholes to fly:
Divorce Filing Reveals How the Rich Stay RichUpdated: 2 hours 23 minutes ago
Print Text Size E-mail MoreScott Martelle
AOL News LOS ANGELES (Feb. 24) — As F. Scott Fitzgerald once wrote, “The rich are different from you and me” — and apparently never more so than at tax time.
Legal papers filed in connection with the high-profile divorce here of Jamie and Frank McCourt, whose portfolio includes the Los Angeles Dodgers baseball team, show that the couple took in $108 million from 2004 to 2009 and didn’t pay a penny in income tax, according a Los Angeles Times report.
Vince Bucci, Getty Images
Frank and Jamie McCourt, here in 2008, are locked in a high-profile divorce battle.
The McCourts made their money in real estate, primarily in Boston, before buying the team in 2004. So rancorous is the divorce that even the team’s ownership is in contention. Frank McCourt claims he owns the team individually; Jamie McCourt claims she owns half.
The McCourts apparently used legal tax mechanisms, including depreciating property, to offset the income. But that isn’t likely to make the news any more palatable for people affected by high unemployment, record home foreclosures and tanked retirement accounts.
Or, for that matter, for Dodgers fans. The team announced this week it is raising ticket prices for the coming season.
Filed under: Nation, Money, Sports
February 27th, 2010 at 10:13 pm
The IRS 1040 tax tables can be used to help understand the somewhat confusing Federal income tax system. These tables show the tax to be paid at every income level up to $100,000. The effective tax rate is then,in per cent,the tax divided by the income at that income level. The tables show that the tax rate for a single-filing payer is 10% on incomes up to $8,350. Above $8,350 the effective tax rate gradually increases from 10% to 13.76 % at the$33,950 income level, the top of the “marginal” 15% tax bracket,where the tax is $4,671. In the next bracket,which has a marginal rate of 25%, the effective tax rate starts at 13.76% at the $33,950 level and ends at 20.36% at $82,250, the end of the bracket. Similar results occur with higher income brackets & married payer rates are somewhat lower…
It should then be obvious that (1)There are no steps in the tax rate as you go from from one tax bracket to the next, (2)The effective tax rates are always less than the marginal rates, and (3)Each “additional dollar” is taxed at the effective tax rate at that income level,
not at the marginal rate as many believe!
March 9th, 2010 at 8:15 am
Hi All,
I require a Late Filing Interest and Penalty rate table for all the States for tax year 2010 to make it simpler for me to calculate it. Can anyone get it for me. I have tried the Tax Almanac website but they give out only Underpayment rates.
Thanks,
Nick