How Much Do We Really Pay in Taxes?

Off Topic Politics & World Issues
21

[quote]Headhunter wrote:
The worst tax of all is inflation, which many people don’t understand. A dollar earned in 1970 is worth far less today, for example. Inflation is a way of stealing wealth by government spending freshly printed money before the money works its way through the system and decreases the value of the pre-existing money. Most get robbed and don’t even know it.

Folks like Zap call it ‘entropy’ or some other bizarre concept. But its really a tax.

Of course, you’re supposed to invest to ‘beat inflation’. Few people do. Here’s why: suppose you earn 9% per year in investments, on average. These gains are taxed eventually so let’s say your ‘real’ gain is 6%. Now imagine the inflation rate is a paltry 5% (yeah, right). You gained a whopping one percent per year! You’ll double your wealth in…72 years.

Of course, the purpose in all this is to prevent the bulk of the people from becoming very well off. Wealthy and independent middle classes are harder to rule. But that’s another thread… :)[/quote]

That is an interesting point.

Though I doubt that anyone intends it, the active redistribution of wealth is destroying a class that took power away from the aristocrats and invented the constitutional republic in the modern sense.

These people were independently wealthy. They did not expect anything from the state nor did they need anything from it so they took no shit from it.

Redistribution destroys this class and makes it impossible for most people to get that rich trough hard work.

Whether a republic can survive when the people who founded it must come to regard it as an enemy, a means to their destruction, is questionable.

22

[quote]Zap Branigan wrote:
Headhunter wrote:
The worst tax of all is inflation, which many people don’t understand. A dollar earned in 1970 is worth far less today, for example. Inflation is a way of stealing wealth by government spending freshly printed money before the money works its way through the system and decreases the value of the pre-existing money. Most get robbed and don’t even know it.

Folks like Zap call it ‘entropy’ or some other bizarre concept. But its really a tax.

Of course, you’re supposed to invest to ‘beat inflation’. Few people do. Here’s why: suppose you earn 9% per year in investments, on average. These gains are taxed eventually so let’s say your ‘real’ gain is 6%. Now imagine the inflation rate is a paltry 5% (yeah, right). You gained a whopping one percent per year! You’ll double your wealth in…72 years.

Of course, the purpose in all this is to prevent the bulk of the people from becoming very well off. Wealthy and independent middle classes are harder to rule. But that’s another thread… :slight_smile:

You do realize it is impossible for everyone to be wealthy don’t you? This is not a grand conspiracy, it is reality.[/quote]

Perhaps a better choice of word would have been ‘prosperous’ instead of wealthy. My argument, however, doesn’t fall because of that word. Truly wealthy people can either compete and stay ahead of those in the middle class, or they can get governments to make it exceptionally hard for middle class people to become wealthy people. They (the wealthy) get government to pass regulation after regulation, and they get government to introduce income taxation, all to throttle competition.

I didn’t mean to hijack this thread. I’m trying to follow Thunderbolt’s rules for discussion. Please continue the discussion, it IS interesting.

23

[quote]ovalpline wrote:
As I understand it, gifts are not subject to tax as long as the donor receives nothing in exchange from the recipient.
[/quote]

Gifts of or with a value greater than $10,000 are subject to reporting and taxation. At least, that is what I have always read. An accountant could give a better answer.

24

[quote]Spry wrote:
I’m in the 30% tax bracket (in Australia). That is the middle tax bracket.

There is a 40 and 45% bracket above me and a 15% and zero tax bracket below me. We have a tiered bracket system.

Plus I have to repay a goverment loan for my university education at a rate of 8% of my gross income on top of my tax.

So I’m at 38% of my income with that.

Plus I pay 10% GST (same shit as VAT) on almost everything including food, petrol, clothes, etc. Plus, stamp duties on car registration. Plus, fees to use public roads, etc.

Easily half of my personally producded wealth is handed over to the government.

I do not see value for money. I HAVE TO PERSONALLY CONTRIBUTE EXTRA TO RECIEVE AND EDUCATION FOR FUCKS SAKE.

Oh shit, yeah there is also a compulsory 1% extra income tax for medicare.

Oh yeah I also have to pay an extra 1.5% income tax on top of that if I do not have personal health insurance.

So that 40.5% for an average guy earning an average wage.

Disgusting.

USA being a larger country you do get taxed less at an indivudal level than smaller countries I think.[/quote]

I would not classify HECS as a tax. I would view it more as a partial contribution to the cost of a purchase that you have made.

The actual cost of a degree in Australia is around four times what you pay through HECS. Taxpayers money is used to cover the majority of the cost.

If you want minimal taxation, you would have to accept the responsibility of funding your own education. Under these circumstances, a degree would cost around 100 grand. Also there would be no interest free government loans to help you pay this.

You are acting as if you have received nothing in return, when in reality you will probably have to work for decades before the amount of tax you have paid is equal to the amount that the government (other taxpayers) has spent on you.

25

[quote]Headhunter wrote:
Zap Branigan wrote:
Headhunter wrote:
They (the wealthy) get government to pass regulation after regulation, and they get government to introduce income taxation, all to throttle competition.

[/quote]

Then why exactly do they (the wealthy) pay the vast majority of income tax in the US?

Surely if “they” have as much influence on government policy as you are implying, then they would get the government to stop taking such a disproportionate amount of money from high income earners.

26

[quote]Regular Gonzalez wrote:
Headhunter wrote:
Zap Branigan wrote:
Headhunter wrote:
They (the wealthy) get government to pass regulation after regulation, and they get government to introduce income taxation, all to throttle competition.

Then why exactly do they (the wealthy) pay the vast majority of income tax in the US?

Surely if “they” have as much influence on government policy as you are implying, then they would get the government to stop taking such a disproportionate amount of money from high income earners.

[/quote]

The truly wealthy pay no income tax at all, because they do not work.

They also pay a relatively low amount of VAT because they already have everything so they consume relatively little compared to their earnings.

The real rich people only pay taxes on capital income, as far as they absolutely have to have income to cover their expenses.

What you are talking about is the upper middle class.

27

[quote]Headhunter wrote:
The worst tax of all is inflation, which many people don’t understand. A dollar earned in 1970 is worth far less today, for example. Inflation is a way of stealing wealth by government spending freshly printed money before the money works its way through the system and decreases the value of the pre-existing money. Most get robbed and don’t even know it.

Folks like Zap call it ‘entropy’ or some other bizarre concept. But its really a tax.

Of course, you’re supposed to invest to ‘beat inflation’. Few people do. Here’s why: suppose you earn 9% per year in investments, on average. These gains are taxed eventually so let’s say your ‘real’ gain is 6%. Now imagine the inflation rate is a paltry 5% (yeah, right). You gained a whopping one percent per year! You’ll double your wealth in…72 years.

Of course, the purpose in all this is to prevent the bulk of the people from becoming very well off. Wealthy and independent middle classes are harder to rule. But that’s another thread… :)[/quote]

Your math/estimates are a litte shakey.

First of all, long term capital gains tax is 15%, which would be paid when you declared the gains, not every year (correct me if I’m wrong). This means that you that you can continuely gain interest on the gains you’ve made until you declare them.

Second the inflation rate hasn’t been 5% in a while. It’s only been >5% one year since 1983. 3% is a more realistic estimate of inflation.

So if we assume you’re getting a 9% return every year, for 16 years, you would have 3.97 time your original investment (1.09)^16.
In that same time, inflation would devalue your money, but not nearly as quickly, assuming a 3% inflation rate, in that time your original investment would be worth 1/1.61 of what it was 16 years ago. 1/(1.03)^16.
This means that in real terms, your investment would be worth 3.97/1.61 = 2.47 times your original investment.

If your gains are taxed at a 15% percent rate, you’ll be left with 2.1 times your investment in real terms after 16 years, not quite the the 72 years you mentioned . . .

28

[quote]orion wrote:
Regular Gonzalez wrote:
Headhunter wrote:
Zap Branigan wrote:
Headhunter wrote:
They (the wealthy) get government to pass regulation after regulation, and they get government to introduce income taxation, all to throttle competition.

Then why exactly do they (the wealthy) pay the vast majority of income tax in the US?

Surely if “they” have as much influence on government policy as you are implying, then they would get the government to stop taking such a disproportionate amount of money from high income earners.

The truly wealthy pay no income tax at all, because they do not work.

They also pay a relatively low amount of VAT because they already have everything so they consume relatively little compared to their earnings.

The real rich people only pay taxes on capital income, as far as they absolutely have to have income to cover their expenses.

What you are talking about is the upper middle class.

[/quote]

HH used the word wealthy, so I assumed that he wasn’t only referring to the ultra rich. Now that I think about it though, that probably is who he was referring to.

Do you agree with HH’s theory?

29

"Speaking at a $4,600-a-seat fundraiser in New York for Senator Hillary Clinton, Mr Buffett, who is worth an estimated $52 billion (£26 billion), said: �??The 400 of us [here] pay a lower part of our income in taxes than our receptionists do, or our cleaning ladies, for that matter. If you�??re in the luckiest 1 per cent of humanity, you owe it to the rest of humanity to think about the other 99 per cent.�??

Mr Buffett said that he was taxed at 17.7 per cent on the $46 million he made last year, without trying to avoid paying higher taxes, while his secretary, who earned $60,000, was taxed at 30 per cent. Mr Buffett told his audience, which included John Mack, the chairman of Morgan Stanley, and Alan Patricof, the founder of the US branch of Apax Partners, that US government policy had accentuated a disparity of wealth that hurt the economy by stifling opportunity and motivation."

Mr. Buffett is good at what he does and doesn’t mind competition. Most very wealthy people though, are like Paris Hilton: Rich as can be and hell bent on staying that way by any means possible…maybe even government intervention? They can’t compete in a capitalist system but they can influence lawmakers.

30

[quote]dk44 wrote:
Headhunter wrote:
The worst tax of all is inflation, which many people don’t understand. A dollar earned in 1970 is worth far less today, for example. Inflation is a way of stealing wealth by government spending freshly printed money before the money works its way through the system and decreases the value of the pre-existing money. Most get robbed and don’t even know it.

Folks like Zap call it ‘entropy’ or some other bizarre concept. But its really a tax.

Of course, you’re supposed to invest to ‘beat inflation’. Few people do. Here’s why: suppose you earn 9% per year in investments, on average. These gains are taxed eventually so let’s say your ‘real’ gain is 6%. Now imagine the inflation rate is a paltry 5% (yeah, right). You gained a whopping one percent per year! You’ll double your wealth in…72 years.

Of course, the purpose in all this is to prevent the bulk of the people from becoming very well off. Wealthy and independent middle classes are harder to rule. But that’s another thread… :slight_smile:

HH you scare me. I’m just starting out in the world and you make me feel hopeless. Thanks a million asshole. [/quote]

LOL! But in a way, I’m saddened. You’re a great guy and what you’re facing is much more and much worse than a haphazard plan to confiscate your wealth. And no, I’m not talking about some Great Conspiracy or anything like that. Its so awful that you’ll have to figure it out and see it for yourself. It really is that bad.

31

[quote]stokedporcupine wrote:
you come off as if your suggesting that we could do away with taxes completely, and that taxation is evil. [/quote]

We could, and it is.

If it is wrong for me to take something to give to someone else it is wrong for an armed, mob rule – called the State – to do it.

32

Mr Buffett, who runs the investment group Berkshire Hathaway and is widely regarded as the world�??s most successful investor, said that he was a Democrat because Republicans are more likely to think: �??I�??m making $80 million a year �?? God must have intended me to have a lower tax rate.�??

Mr Buffett said that a Republican proposal to eliminate elements of inheritance tax, which raises about $30 billion a year from the assets of about 12,000 rich families, would broaden the disparity between rich and poor. He added that the Republicans would seek to recover lost revenue by increasing taxes for the less prosperous.

He said: �??You could take that $30 billion and give $1,000 to 30 million poor families. Or should you favour the 12,000 estates and make 30 million families pay an extra $1,000?�??

From HH’s link.Just a gentle rebuttal to all of those who disparage the people of more ‘liberal’ bent as being somehow deluded…

33

[quote]Headhunter wrote:
Zap Branigan wrote:
Headhunter wrote:
The worst tax of all is inflation, which many people don’t understand. A dollar earned in 1970 is worth far less today, for example. Inflation is a way of stealing wealth by government spending freshly printed money before the money works its way through the system and decreases the value of the pre-existing money. Most get robbed and don’t even know it.

Folks like Zap call it ‘entropy’ or some other bizarre concept. But its really a tax.

Of course, you’re supposed to invest to ‘beat inflation’. Few people do. Here’s why: suppose you earn 9% per year in investments, on average. These gains are taxed eventually so let’s say your ‘real’ gain is 6%. Now imagine the inflation rate is a paltry 5% (yeah, right). You gained a whopping one percent per year! You’ll double your wealth in…72 years.

Of course, the purpose in all this is to prevent the bulk of the people from becoming very well off. Wealthy and independent middle classes are harder to rule. But that’s another thread… :slight_smile:

You do realize it is impossible for everyone to be wealthy don’t you? This is not a grand conspiracy, it is reality.

Perhaps a better choice of word would have been ‘prosperous’ instead of wealthy. My argument, however, doesn’t fall because of that word. Truly wealthy people can either compete and stay ahead of those in the middle class, or they can get governments to make it exceptionally hard for middle class people to become wealthy people. They (the wealthy) get government to pass regulation after regulation, and they get government to introduce income taxation, all to throttle competition.

I didn’t mean to hijack this thread. I’m trying to follow Thunderbolt’s rules for discussion. Please continue the discussion, it IS interesting.

[/quote]

I look at how prosperous people are today compared to 30 years ago and I see us moving forward. Just because there are people that have even more wealth does not mean that others are worse off.

34

[quote]Neuromancer wrote:
Mr Buffett said that a Republican proposal to eliminate elements of inheritance tax, which raises about $30 billion a year from the assets of about 12,000 rich families, would broaden the disparity between rich and poor. He added that the Republicans would seek to recover lost revenue by increasing taxes for the less prosperous.

He said: �??You could take that $30 billion and give $1,000 to 30 million poor families. Or should you favour the 12,000 estates and make 30 million families pay an extra $1,000?�??
[/quote]

The disparity between rich and poor is not the issue. The issue is that government thinks somehow it is it’s duty to create equality through intervention. There will always be rich people and poor people. Who is to say what the correct variance is supposed to be?

If government just got out of the way poor people would be better off. The only reason poor people have it that good in this country is that property is still somewhat respected by government.

Also to think that government has a right to tax your property after your death is wrong!

35

If Mr. Buffett is such a big fan of the inheritance tax why then did he structure his estate such that he will avoid paying any?

36

[quote]LIFTICVSMAXIMVS wrote:
Neuromancer wrote:
Mr Buffett said that a Republican proposal to eliminate elements of inheritance tax, which raises about $30 billion a year from the assets of about 12,000 rich families, would broaden the disparity between rich and poor. He added that the Republicans would seek to recover lost revenue by increasing taxes for the less prosperous.

He said: �??You could take that $30 billion and give $1,000 to 30 million poor families. Or should you favour the 12,000 estates and make 30 million families pay an extra $1,000?�??

The disparity between rich and poor is not the issue. The issue is that government thinks somehow it is it’s duty to create equality through intervention. There will always be rich people and poor people. Who is to say what the correct variance is supposed to be? If government just got out of the way poor people would be better off. The only reason poor people have it that good in this country is that property is still somewhat respected by government.

Also to think that government has a right to tax your property after your death is wrong![/quote]

The statement that poor people would be better off is pure conjecture and opinion.While of course you’re entitled to yours,we all live in the reality of the now,and I for one,have no doubt in my mind that the mythical “free market” would be a disaster for the majority if left unchecked by a controlling force,ie,Government.

Extremism towards one side or the other is a recipe for disaster.

All in all,the balances in place in Europe and North America is the way forward.In my view,of course.

While of course a continual process of ongoing debate and course corrections is always needed,the basics appear to me to have worked themselves out over a period of hundreds of years.

There will never be a Communist paradise,and likewise,there will never be
a Capitalist utopia.

The reality of what is,lies somewhere in the middle.

As in all things,balance is the key.

37

[quote]BackForMore wrote:
If Mr. Buffett is such a big fan of the inheritance tax why then did he structure his estate such that he will avoid paying any?[/quote]

Please let me know where I could go see and confirm that he has done this.To my knowledge most of his wealth will be donated to charity when he dies.

Edited to include the link to an interview with him that I found.

38

[quote]Regular Gonzalez wrote:
orion wrote:
Regular Gonzalez wrote:
Headhunter wrote:
Zap Branigan wrote:
Headhunter wrote:
They (the wealthy) get government to pass regulation after regulation, and they get government to introduce income taxation, all to throttle competition.

Then why exactly do they (the wealthy) pay the vast majority of income tax in the US?

Surely if “they” have as much influence on government policy as you are implying, then they would get the government to stop taking such a disproportionate amount of money from high income earners.

The truly wealthy pay no income tax at all, because they do not work.

They also pay a relatively low amount of VAT because they already have everything so they consume relatively little compared to their earnings.

The real rich people only pay taxes on capital income, as far as they absolutely have to have income to cover their expenses.

What you are talking about is the upper middle class.

HH used the word wealthy, so I assumed that he wasn’t only referring to the ultra rich. Now that I think about it though, that probably is who he was referring to.

Do you agree with HH’s theory?
[/quote]

That inflation the biggest tax there is and that it prevents the formation of wealth?

Yes I do.

Though I do not think that it is intended I think the consequences are as far reaching as he thinks.

39

[quote]Neuromancer wrote:
Mr Buffett, who runs the investment group Berkshire Hathaway and is widely regarded as the world�??s most successful investor, said that he was a Democrat because Republicans are more likely to think: �??I�??m making $80 million a year �?? God must have intended me to have a lower tax rate.�??

Mr Buffett said that a Republican proposal to eliminate elements of inheritance tax, which raises about $30 billion a year from the assets of about 12,000 rich families, would broaden the disparity between rich and poor. He added that the Republicans would seek to recover lost revenue by increasing taxes for the less prosperous.

He said: �??You could take that $30 billion and give $1,000 to 30 million poor families. Or should you favour the 12,000 estates and make 30 million families pay an extra $1,000?�??

From HH’s link.Just a gentle rebuttal to all of those who disparage the people of more ‘liberal’ bent as being somehow deluded…[/quote]

Who says that he is not deluded?

He is a genius investor and a piss poor economist.

40

[quote]Zap Branigan wrote:
Headhunter wrote:
Zap Branigan wrote:
Headhunter wrote:
The worst tax of all is inflation, which many people don’t understand. A dollar earned in 1970 is worth far less today, for example. Inflation is a way of stealing wealth by government spending freshly printed money before the money works its way through the system and decreases the value of the pre-existing money. Most get robbed and don’t even know it.

Folks like Zap call it ‘entropy’ or some other bizarre concept. But its really a tax.

Of course, you’re supposed to invest to ‘beat inflation’. Few people do. Here’s why: suppose you earn 9% per year in investments, on average. These gains are taxed eventually so let’s say your ‘real’ gain is 6%. Now imagine the inflation rate is a paltry 5% (yeah, right). You gained a whopping one percent per year! You’ll double your wealth in…72 years.

Of course, the purpose in all this is to prevent the bulk of the people from becoming very well off. Wealthy and independent middle classes are harder to rule. But that’s another thread… :slight_smile:

You do realize it is impossible for everyone to be wealthy don’t you? This is not a grand conspiracy, it is reality.

Perhaps a better choice of word would have been ‘prosperous’ instead of wealthy. My argument, however, doesn’t fall because of that word. Truly wealthy people can either compete and stay ahead of those in the middle class, or they can get governments to make it exceptionally hard for middle class people to become wealthy people. They (the wealthy) get government to pass regulation after regulation, and they get government to introduce income taxation, all to throttle competition.

I didn’t mean to hijack this thread. I’m trying to follow Thunderbolt’s rules for discussion. Please continue the discussion, it IS interesting.

I look at how prosperous people are today compared to 30 years ago and I see us moving forward. Just because there are people that have even more wealth does not mean that others are worse off.[/quote]

That is the age old problem of economics that people only react to what they see and not to what they not see.

What you do not see is how much better people could be off without state intervention and the coming catatstrophe when people will want their money back.