Tax Discrimination - It's that time again

[Joey D]

Yes it would. Someone 'just' getting by today in a system where a huge portion of their earnings is not taxed are no longer going to just get by when suddenly they are paying more tax. I think we forget or ignore just how poor some people are.

As I said in an earlier post - if we want the poorer members of society to pay more tax then we need to pay them more.

I mean the tax rate in the US for someone making under $9,525 a year is 10% so assuming they make the max, they're paying $952 per year. I'm proposing we implement a flat tax of 10% across the board for anyone with an income. So if they can afford the current system, they could afford a flat tax system.

 

[Daz555]

I mean the tax rate in the US for someone making under $9,525 a year is 10% so assuming they make the max, they're paying $952 per year. I'm proposing we implement a flat tax of 10% across the board for anyone with an income. So if they can afford the current system, they could afford a flat tax system.

If you set the flat rate of tax at the lowest rate (10% in your example) how you going to generate enough tax revenue? I can't see how you would.

Looking at the US tax position on wiki it looks like the bands run from 10% at the lowest ($9k) up to 40% for those making more than about $400k.

Any proposed flat rate needs to be significantly higher than the current lower rate in order to make up for the loss of the higher bands. So given that the flat rate will have to be higher than the current base rate - how are the lower paid going to afford to live on their current wages?

I could not find a calculation for the USA but the UK has the following tax bands:

Earnings up to £12,500 0%
£12,501 to £50,000 20%
£50,001 to £150,000 40%
£150,000+ 45%

The UK Institute for Fiscal Studies calculated that if this were replaced with a flat tax it would need to be set at around 24%

 

[Famine]

Taxation is, at its heart, a method of coercing the population not to perform certain tasks by fining them for it, allowing those who can afford it - or who are bloody minded - to continue doing it. It's essentially a monetary penalty for undesirable behaviours. We want people to smoke less, so we charge them more cigarette duty. We want them to drink less, so we charge them more alcohol duty. We want them to drive less, so we charge them more fuel duty.

So why is income even taxed in the first place? Why is "creating wealth for the economy" an undesirable behaviour that we need to fine people for?


There should be a flat income tax rate - of zero.

 

[Joey D]

If you set the flat rate of tax at the lowest rate (10% in your example) how you going to generate enough tax revenue? I can't see how you would.

Looking at the US tax position on wiki it looks like the bands run from 10% at the lowest ($9k) up to 40% for those making more than about $400k.

Any proposed flat rate needs to be significantly higher than the current lower rate in order to make up for the loss of the higher bands. So given that the flat rate will have to be higher than the current base rate - how are the lower paid going to afford to live on their current wages?

I could not find a calculation for the USA but the UK has the following tax bands:

Earnings up to £12,500 0%
£12,501 to £50,000 20%
£50,001 to £150,000 40%
£150,000+ 45%

The UK Institute for Fiscal Studies calculated that if this were replaced with a flat tax it would need to be set at around 24%

Well for starters, we could quit spending an asinine amount of money on things. The military budget could be slashed by about 75%, social security, Medicaid and Medicare should not exist, and there are plenty of other odds and ends that could be cut or scrapped. If spending was lower, then you wouldn't need as much tax revenue. This would allow people to keep the money they work for and spend it on whatever they wanted to.

There should be a flat income tax rate - of zero.

Agreed. Ideally, a flat tax rate of 0% on income is what we should strive for as that's the only truly fair way to do it. This is exactly why I wanted to move to New Hampshire, they have 0% income tax and 0% sales tax (however the property taxes are the highest in the nation I believe). But, then I remembered it was New Hampshire. At least Utah has a flat income tax rate of 4.95%

 

[Danoff]

Agreed. Ideally, a flat tax rate of 0% on income is what we should strive for as that's the only truly fair way to do it. This is exactly why I wanted to move to New Hampshire, they have 0% income tax and 0% sales tax (however the property taxes are the highest in the nation I believe). But, then I remembered it was New Hampshire. At least Utah has a flat income tax rate of 4.95%

Colorado also has a true flat income tax - though we attempted to break that in the last election. Of course I don't think that the federal income tax should even be allowed to be anything but flat. Equal protection under the law.

 

[Daz555]

Land and income taxes were invented in England in order to pay for war.

Well for starters, we could quit spending an asinine amount of money on things. The military budget could be slashed by about 75%, social security, Medicaid and Medicare should not exist, and there are plenty of other odds and ends that could be cut or scrapped. If spending was lower, then you wouldn't need as much tax revenue. This would allow people to keep the money they work for and spend it on whatever they wanted to.

What about those unable to work due to illness or disability? What about children? Some form of social security will always be needed. It does not necessarily have to come from central government or the state but a safety net is required for those unable to provide for themselves. That safety net will always need funding.

 

[Danoff]

What about those unable to work due to illness or disability?

Charity. Also is that what we're limiting the discussion to? People who are literally unable to work? Because I thought we were talking about poor people.

What about children?

Required by law to be cared for by their parents. If their parents do not care for them, and do not give them up for adoption, those parents are found to be abusive and can be criminally prosecuted. The child will be under the custody of a parent who is willing to care for them.

Some form of social security will always be needed.

Charity, not at the point of a gun.

 

[PocketZeven]

Charity. Also is that what we're limiting the discussion to? People who are literally unable to work? Because I thought we were talking about poor people.



Required by law to be cared for by their parents. If their parents do not care for them, and do not give them up for adoption, those parents are found to be abusive and can be criminally prosecuted. The child will be under the custody of a parent who is willing to care for them.



Charity, not at the point of a gun.

Charity does not structurally help people in need. Only incidental. I presume you donate often. I however havent donated a penny in years.

 

[Danoff]

Charity does not structurally help people in need. Only incidental.

Do explain.

I presume you donate often. I however havent donated a penny in years.

Yes I do.

 

[Liquid]

So why is income even taxed in the first place? Why is "creating wealth for the economy" an undesirable behaviour that we need to fine people for?

It was originally used to raise additional funds to pay for other government projects, not stimulate the private sector. At least, hypothetically; income tax was levied in Great Britain on an ad hoc, non-permanent basis during the 1700s and early 1800s whenever a war was being fought and funds were needed to raise an army. It was last levied in 1842 and simply never repealed. By the time of the Crimean War ten years later, it just became an accepted fact of life.

And get this, when the English government considered levying an income tax earlier in the 1600s, there was uproar at the very idea that the government should know what people's personal income and finances were; it was considered a gross invasion of privacy. Fancy that...

 

[Joey D]

Land and income taxes were invented in England in order to pay for war.

What about those unable to work due to illness or disability? What about children? Some form of social security will always be needed. It does not necessarily have to come from central government or the state but a safety net is required for those unable to provide for themselves. That safety net will always need funding.

As @Danoff mentioned, charity goes a long way, even more so than government assistance. There are plenty of foundations out there that can take care of those who can't take care of themselves. And as far as healthcare goes, virtually every nonprofit and not-for-profit hospital in the US offers up charity care for those who are sick or disabled.

 

[PocketZeven]

Do explain.



Yes I do.

I think voluntary donation is based on emotion. If you dont feel connected to the cause you are not likely to donate. Also I dont believe people are enclined enough to donate sufficiently to actually help a large number of people.

What I mean with incidental is that individual causes that receive (media) exposure are more likely to receive donations then causes that have structural problems that go under the radar that also are in need of funds.

What causes do you donate to?

I personally dont donate, because a lot of charity organisations "bleed" a lot of moeny before even reaching the cause.

 

[Danoff]

I think voluntary donation is based on emotion. If you dont feel connected to the cause you are not likely to donate. Also I dont believe people are enclined enough to donate sufficiently to actually help a large number of people.

What I mean with incidental is that individual causes that receive (media) exposure are more likely to receive donations then causes that have structural problems that go under the radar that also are in need of funds.

What causes do you donate to?

I personally dont donate, because a lot of charity organisations "bleed" a lot of moeny before even reaching the cause.

I donate to a fair number of places. One of the bigger ones is my daughter's orphanage in China. But also up there is Opportunity Village in Las Vegas.

 

[Daz555]

And as far as healthcare goes, virtually every nonprofit and not-for-profit hospital in the US offers up charity care for those who are sick or disabled.

And this care is comparable to those will full health insurance?

 

[Danoff]

And this care is comparable to those will full health insurance?

I'd guess that your answer would be yes... because doctors don't generally dial up or down the care... but why on Earth is this the standard? The standard of charity is to make it so that you can't tell the difference between buying it and having it charitably provided by others? That's nonsense.

 

[Daz555]

I'd guess that your answer would be yes... because doctors don't generally dial up or down the care... but why on Earth is this the standard? The standard of charity is to make it so that you can't tell the difference between buying it and having it charitably provided by others? That's nonsense.

Care will be dialled up or down because doctors don't have access to funds to pay for medication for example and local foundations setup to help those without insurance do not always have the funds needed to help all the cases that come to them. Who on earth wants to live in a society where the sick and disabled get worse medical care than others?

I don't. I'd also argue that the care of the most vulnerable members of our society should be baked into the very core of that society, not regarded as "charity".

Thankfully my country has health care that is largely free at the point of consumption. You can choose to have private health insurance as well if you want of course and some do - about 10%.

 

[Daz555]

As @Danoff mentioned, charity goes a long way, even more so than government assistance.

Interestingly the poorer in society give a higher portion of their income to charity than the rich. This is not surprising as evidence shows that in general the rich are more inclined to prioritise their own self interest, whereas the poorer members of society are on average more altruistic.

 

[BobK]

Interestingly the poorer in society give a higher portion of their income to charity than the rich. This is not surprising as evidence shows that in general the rich are more inclined to prioritise their own self interest, whereas the poorer members of society are on average more altruistic.

Source?

 

[Joey D]

And this care is comparable to those will full health insurance?

Yes, by law a physician has to help a patient in an emergency situation due to the act called EMTALA. Otherwise, in all other situations, a physician is obligated to do so by the American Medical Association's Principal of Ethics. While some physicians are in it solely for the money, most are in the profession because they want to help people.

However, for the most part, non-profit and not-for-profit hospitals typically work with you if you can't afford care. They also offer free clinics to underserved populations as well, especially in larger cities. I'm coming up on 10 years in healthcare now, and I've worked in something like 25 different hospitals and clinics, some in very poor areas, and never once seen a patient turned away because of money.

Interestingly the poorer in society give a higher portion of their income to charity than the rich. This is not surprising as evidence shows that in general the rich are more inclined to prioritise their own self interest, whereas the poorer members of society are on average more altruistic.

While I'm not sure how true that is, it does make sense. If Bill Gates gives $1 million and I give $100 to the same organization, due to his fortune he's given a smaller percentage of this income than me.

 

[Danoff]

Care will be dialled up or down because doctors don't have access to funds to pay for medication for example and local foundations setup to help those without insurance do not always have the funds needed to help all the cases that come to them. Who on earth wants to live in a society where the sick and disabled get worse medical care than others?

What do you mean the sick and disabled get worse care? The sick and disabled are the people who are getting medical care. That's all of them. Who is getting medical care that's not sick and disabled? You mean people who are healthy and getting routine screenings are getting better care? That doesn't make sense, they're not getting care.

I think... if I'm reading between the lines here, that you're implying the sick and disabled people are poor, and the poor are getting worse medical care. And that's of course total nonsense. The sick and disabled are not necessarily poor. I've been sick, my daughter is "disabled" in some respects. I don't think very many people would consider me poor (and her by extension). Also, that's quite a terrible view you have of poor people, to assume that they're sick and disabled. I'm watching a poor individual mow a lawn right outside my window, he doesn't seem sick or disabled. But he probably doesn't have the means to pay for the best healthcare available either.

And that's good, we need people to be able to buy healthcare.

I don't. I'd also argue that the care of the most vulnerable members of our society should be baked into the very core of that society, not regarded as "charity".

Charity is better than force. You're calling the poor the "most vulnerable", and I'm not sure that's a fair characterization. But a lot depends on in what respect you consider them vulnerable. Regardless, charity is a good thing. The fact that people want to take what they have produced for themselves and give it to others to help them is the very best of society. Pointing a gun at those people and forcing them to give is some of the worst of society.

I find it incredibly ironic and somewhat distasteful that you should prefer people be coerced by force into helping others over simply helping them because that's what they want to do.

Thankfully my country has health care that is largely free at the point of consumption.

That's not necessarily a good thing. And it's not free, it's just not paid for at that time.

You can choose to have private health insurance as well if you want of course and some do - about 10%.

Well that's good. Some countries don't allow that, because they don't want the poor (that's sick and disabled to you) to get worse healthcare than the rich. But of course doing so not only violates the rights of the people, it also ruins all kinds of important economic signals in healthcare.

Interestingly the poorer in society give a higher portion of their income to charity than the rich. This is not surprising as evidence shows that in general the rich are more inclined to prioritise their own self interest, whereas the poorer members of society are on average more altruistic.

I'm not sure that giving a higher portion of your income makes you more altruistic. It can become quite difficult to give a lot of money. You can click "donate $1" at the checkout and donate a substantial portion of your net worth if your net worth is $100. But for Bill Gates to donate a billion dollars, that takes real effort. Bill Gates has to work a lot more to donate that money, and he's way more involved in the cause, more personally invested in the charity.

If you think someone who's net worth is $100 clicking "donate $1" at the checkout is more altruistic than Bill Gates working for weeks with advisers and sitting with presentations and giving directives for the donation of $1B, then you're wildly out of touch with the concept of altruism.

 

[mustafur]

@Danoff Charity is better then force but living is better then dying.

That's what it comes down to, in America you literally having people commiting suicide to not bankrupt their family in medical bills to keep them alive from health issues, sure you can say for every case there is a reason X is Y, but must we think like this?

Not everyone is a Robot thinking of consequences for everything ever, it's not exactly the Wild West anymore, life and death isn't every decision in life and the butterfly effect of doing such actions, things can happen outside of your control.

 

[Danoff]

@Danoff Charity is better then force but living is better then dying.

That's what it comes down to, in America you literally having people commiting suicide to not bankrupt their family in medical bills to keep them alive from health issues, sure you can say for every case there is a reason X is Y, but must we think like this?

Not everyone is a Robot thinking of consequences for everything ever, it's not exactly the Wild West anymore, life and death isn't every decision in life and the butterfly effect of doing such actions, things can happen outside of your control.

Committing suicide instead of bankrupting your family with medical bills is something I want to be considered.

Alright, on the face of it I get that that statement looks bad. But consider for a moment that suicide is the humane way to go in so many circumstances. We recognize that euthanasia is humane for dogs, but for some reason we can't see it with people. I get that it's a controversial topic, but ultimately your life is yours is it not? How can we tell someone they're not allowed to stop living. That seems like the ultimate personal decision. Especially for someone living with a lot of pain, and with an expectancy of living with a lot more pain.

So I've established, and as controversial as it is, I kinda of expect agreement, that suicide is a viable alternative to fighting a disease. Now what about bills?

The outlook is not black and white, for anyone. It's a reality that people face difficult decisions when it comes to whether to pursue treatment. My grandfather, for example, pursued late-stage cancer treatment and died probably faster and in more pain than he would have if he had not treated it. Certainly if he had been able to accept, without stigma or legal consequences, that he could choose when to end it when going without treatment, it would have been potentially the right call to forgo treatment. The price tag will affect that decision. If my grandfather is facing this already difficult decision, and you tell him that that price tag is $10,000 for treatment, or $100,000, or $1,000,000, or $10,000,000 or $100,000,000, well I'd expect that to affect his decision making. And well it should. If you're already on the fence, how would it not tip your estimation when considering a vast amount of resources that will be spent on your treatment. That has to be value created, or else it's a drag and a destructive force on the economy.

Make no mistake, publicly funded healthcare still has to make this decision. There is no escaping putting a price tag on these scenarios. The question is just who is putting the price tag on it. If it's the public, then the price tag is calculated based on budget by a board of (hopefully) elected individuals completely removed from the case and the particulars, making a decision at a desk on in a conference room while reviewing documents. If it's private, then it's someone like my grandfather, weighing the options for himself.

And that's how I want all of this, for individuals to weigh the options for themselves. What is this treatment worth? Is it really better to pursue? This is something people entrust to doctors, but your doctor's job is to keep you alive, not to help you decide when to stop. So few of them are willing to take that role.

 

[Danoff]

Apparently some states allowed local government to establish charities for folks to contribute to, and would offset local property tax if you contributed to the local charity. Why? So that you could take the full federal deduction (on the charitable contribution) without hitting the SALT cap. In effect, the states are trying to create a loophole workaround for the SALT cap.

Nobody thinks this stuff is going to be abused, or create unintended consequences until it does. I'm sure that nobody that supported the deduction of charitable contributions from federal taxes ever dreamed that states would try to use it as a shelter to enable you to pay local tax through it.

 

[Joey D]

So hey, today is tax day in the US and I'm, once again, blessed with paying more than was taken from my paychecks. It's ridiculous. Both my wife and I claim 0 and I have $100 extra taken out of each check, plus we have a kid, donate to charity, have student loan debt, and contribute to retirement accounts. However, even with all of that we still owe $2,700 to the federal government and $750 to the state. I need to hurry up and buy a house.

 

[Keef]

I filed late and owe some taxes from last year which I'd gladly pay - I took out a debt consolidation loan for this purpose and others - but apparently the IRS doesn't know how much I owe which makes no ****ing sense because Turbo Tax knew how much I owed immediately. So since February I've been getting on the IRS's website occasionally to see if they've actually updated how much I owe so I can actually pay it. Nothing yet.

 

[Danoff]

So hey, today is tax day in the US and I'm, once again, blessed with paying more than was taken from my paychecks. It's ridiculous. Both my wife and I claim 0 and I have $100 extra taken out of each check, plus we have a kid, donate to charity, have student loan debt, and contribute to retirement accounts. However, even with all of that we still owe $2,700 to the federal government and $750 to the state. I need to hurry up and buy a house.

Withholding gets weird. But I'm kinda surprised given that you have a kid.

 

[ROAD_DOGG33J]

If I were to guess, I would put my money on investments being the main cause.

 

[Joey D]

Withholding gets weird. But I'm kinda surprised given that you have a kid.

The child tax credit thing that we got goofed that up it seemed. I'm not sure why the government decided to send that to me early and in small checks when they could've just given it to me now. But I think the biggest issue is that jointly my wife and I make too much money without owning anything. My wife's income has increased substantially, which was sort of surprising to me since I didn't think barbers made that much money when they didn't have their own business, but apparently, they do. We both made some money in the stock market this year, but we paid the short-term capital gains on that already. I really should learn more about taxes, but it's really confusing and it's just easier to pay someone to do it all for me to make sure I don't completely botch it.

 

[TB]

I filed late and owe some taxes from last year which I'd gladly pay - I took out a debt consolidation loan for this purpose and others - but apparently the IRS doesn't know how much I owe which makes no ****ing sense because Turbo Tax knew how much I owed immediately. So since February I've been getting on the IRS's website occasionally to see if they've actually updated how much I owe so I can actually pay it. Nothing yet.

 

[Danoff]

The child tax credit thing that we got goofed that up it seemed. I'm not sure why the government decided to send that to me early and in small checks when they could've just given it to me now. But I think the biggest issue is that jointly my wife and I make too much money without owning anything. My wife's income has increased substantially, which was sort of surprising to me since I didn't think barbers made that much money when they didn't have their own business, but apparently, they do. We both made some money in the stock market this year, but we paid the short-term capital gains on that already. I really should learn more about taxes, but it's really confusing and it's just easier to pay someone to do it all for me to make sure I don't completely botch it.

If the government told you how much you owe, how would they collect the billions in overpaid tax?