Is this where all the MATHLETES hang?
I’m following, or trying to follow. I’ve said I wanted to understand monetary, fiscal policy and economics a little better this year. Jumping in the deep end!!
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I’m not sure what to think about this.
Can you please tell me what race Omar Jones and his wife Detri are?
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Truthfully, I like it a lot but I’m attracted to most tax revision plans that are cohesive rather than our current hodge-podge.
I would be in favor of a consumption tax as an alternative. I understand Beans’s objections but believe consumers will quickly adapt.
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This is basically how I feel about this. You make a lot of good points @countingbeans. I think most politicians use income tax (among many, many other topics) as a prop to argue over and get votes. Not sure how I feel about a tax on consumption in general, I just very much doubt we will ever see such a significant overhaul in the tax code.
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I refer to it as “unconstitutional bullshit tax.” 16th amendment can shove it.
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What’s so bad about a separate capital gains tax?
The capital gains tax should be separate under the current system and it should be lower than most if not all of the ordinary rates.
In my proposed system, it would be eliminated simply because of how taxes are collected making it unnecessary. You might see a drop in investment dollars and it’ll effect WACC caluculations, but I think any change would be negligible. If you can average a 10% ROI investing in a Vanguard fund over a .5% ROI in your savings account you’re still going to invest regardless of the tax implications.
nothing inherently. It’s just cheap political fodder for the uninitiated so it gets annoying.
Thanks, and to your larger point, I agree, but I don’t think it’s going to happen. Too much social engineering to do.
Thanks, and yes I agree.
If I get the time I’ll revise the original post with my current batch of updates, and copy paste the original down thread. Should clear up the previously mentioned “cliff @ 100k” issue I wrote in there (unintentionally).
Original Post 1.0
What is the purpose of this proposal?
Maybe I missed it.
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2.0 is up in the original post, but I think I’m going ot have to change some things, as it dropped the taxes paid below where I’d like it in the example, I think a 2.1 is coming.
mental masturbation?
Ehh, if it helps a couple people understand how our tax system works, how it’s used by politicos as propaganda for votes and helps them see why it isn’t easy to just “simplify” the tax code, it’s worth my efforts.
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It’s fascinating regardless.
I think a cohesive plan is in dire need, this gradual patch work is a nightmare
So, I’ve been thinking about this thread a lot and Treco’s comment really hit the nail on the head.
What are you trying to accomplish? If you’re trying to redistribute income you’ve failed miserably. If you’re trying to simplify the tax code you’ve done well.
You can’t debate policy removed from politics otherwise you’re just a wonk (which is ok, because those conversations can be interesting sometimes, too).
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When I think about taxes, I think about
- covering necessary government costs
- addressing poverty.
Those two things don’t touch deficits and the debt we already have, or the complexities of the fed or interest rates, etc… Then there’s such a disagreement across the spectrum of what necessary government looks like.
As for addressing poverty, we could talk about things like wages and increasing tax credits, or even just doing a minimum income for those people. About half the people of working age who are living in poverty have zero wage earners in the household, so things like raising minimum wages, or making the Earned Income Tax Credit (EITC) more generous won’t help them.
Tell me what else I’m missing, please.
I would submit that the entire tax code has moved from an original purpose of: the government has financial obligations that need to be funded collectively for the safety and welfare of the governed; to one that is doing the original purpose (now with less efficiency due to complexity) combined with millions of lines of 100% politically motivated code.
For Joe Blow using A or EZ form, still simple. Pay nothing or very little.
For Jane Dow using 1040, many more options of how to live are influenced by tax code. Should I give more to charity? Should I have another child? Should I buy or pay off house? Depending on era lived, should I buy kid a house or leave in will? Should I save for my own retirement and if so - pay tax now or later? Even to small business ownership - Should I transfer already taxed 100K out of personal bank and then pay taxes on widgets bought because they are now inventory? Can I buy that land in anticipation building on it in the future. Oh yeah, buildings are taxable too…
All of these and countless other items, due to taxation complexity, must be weighed before commitments are made. I’ll pick one - why muddy the water on a person wanting to save money for their own retirement, when it is ultimately better for our society that we remain self sufficient to the end?
I haven’t touched on corporate, but feel it is strictly political in nature. Should I build in one community, state, or even country? Can I get an accelerated write off so I can modernize my equipment? Should I dole out profits to avoid taxes, when I really need to save it since I operate in a cyclical industry.
These should be business questions on their own. Questions that neither hindered by tax burden nor unfairly slanted to the GEs of the world who write their own code to be passed into the tax code via their bought off Congressional recipient.
There is plenty of work accountants could be doing into this planning, along with the oversight of the bookkeeping function, auditing, and such. Simple taxes are necessary. Complex taxes bleh.
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Excellent post @treco … for me and my fellow accountants, the individuals that can answer those questions for his or her clients and their various entities are the ones that go far, make partner, and earn a lot of money.
Certainly not lol, and happy to fail in that regard.
The hardest issue is not so much getting it more simple, as it is, not having it LOOK like a windfall for the rich (ie: the people that pay all the taxes.)
End of the day, I could make the regular Joe’s 1040 really, really simple. However the person making 35m in a year wouldn’t have a simple return, for various reasons… Which would lead to more and more misinformed calls of “muh loopholes”…
Yeah, this is certainly more wonk than anything.
I don’t necessarily agree with this. There are SOME instances of political rules, but fewer than I think you’re giving credit to.
Unless you can provide their Tax Returns, and point out the rules you’re alluding to, this is 100% opinion, and no basis in fact what-so-ever.
(This isn’t a hit against you)
Anyone taking tax implications into account for either of these choices are dumb. Charitable gifts are awful cash management vehicles, as in horrid. You give because you want to. Having children out costs any tax savings on the planet… Again stupid to even consider tax implications when family planning.
Later… Almost always later.
You’d only be paying tax on profits, not capital, not inventory.
No they aren’t. The profits from revenue generated by them are.
Because you aren’t looking at the situation for what it is completely. The government a wants you to save for retirement, and therefore gives an incentive to do so with a 401k, to defer the taxes on those wages. Now to prevent “rich” people from putting all their OI (top tax rate income) into deferred vehicles, deferring OI income into retirement where the total OI would be lower than today, they put caps on it.
So you have IRA’s you can put after tax money into, and after that it’s just savings in brokerage and paper accounts.
The retirement plan rules all favor lower wage earners, and entrepreneurs. It isn’t watered down, in fact it’s very robust, with checks written into the code to prevent “rich” people from deferring vast sums of tax 30-60 years.
Your feelings are wrong.
Yes, if you’re a small-ish business, almost assuredly you can.
By “dole out” do you mean accelerate expenses? What are you trying to say here?
You a sports fan?
How many professional sports have simple rule books that could be learned in a couple of hours? Same reason the rules in sports are complex is the same reason the tax code is complex.
You could blow it up tomorrow, and start fresh, but this time 2018, we’d be right back here again.
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This is such a hard concept for people to understand.
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Most of my examples were only to illustrate that there is complexity to an extent that tax consequences must be weighed as an integral part of business decisions. And I may have combined property taxes incorrectly into my statement (taxation of widgets and buildings - which is a 3% of net value in dear non state income tax Texas).
Since our last huge conversations on corporate income taxation (prior to 2012 prez elections - ha), I have questioned the point of a corporate taxation (a la @anon50325502 I think) or only having a low rate. I know it would take some serious juggling to make up the revenue shortfall.