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Old 01-19-2012, 07:08 PM   #121
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So, what you are saying is that corporations get some value from the taxes [that are ultimately paid by individuals], correct?
Sure, with that correction (noting that the cost of those taxes are born by individuals), I agree that there's some marginal return on the money paid in.
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Old 01-19-2012, 07:13 PM   #122
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Sure, with that correction (noting that the cost of those taxes are born by individuals), I agree that there's some marginal return on the money paid in.
I'm going to make a digression here, but do you agree that there is no difference in taxing only corporations/business vs. taxing only individuals in that case?

I think you already know where I'm going with this, but in that case, I would advocate for corporations paying taxes instead of citizens. I would speculate that not a lot of people have the power or resources to fight the IRS - but corporations should have it in spades.

If we have to be taxed somewhere, tax what is most able to defend itself, not least able to defend itself.

Anyways, here's the other issue I have with corporate taxes. According to figures here, GE took in almost 5 billion in refunds - refunds! - on 10 billion reported income here. They "hid" their income in other countries to enable them to do this.

Even using your argument, when a company like GE games the system like that, would you agree that there are severe flaws in how we tax corporations?
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Old 01-19-2012, 07:23 PM   #123
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If we have to be taxed somewhere, tax what is most able to defend itself, not least able to defend itself.
That's your argument? Instead, what if we ditched a tax code so labyrinthine that there's an entire industry based on the inability of the average person to correctly file his or her own tax return?

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Even using your argument, when a company like GE games the system like that, would you agree that there are severe flaws in how we tax corporations?
If you think I'm defending the idiocy that is our current tax system, you're barking up the wrong tree. Nothing would make me happier than ditching the entire thing. It's a mess of loopholes, personal favors, incentives, disincentives to counter the incentives, unintended consequences, and whatever ad hoc nonsense is piled on year after year.

The issue I have with it is not, however, that it's not progressive enough in its structure (on the aggregate, it appears by most measures to be comparably progressive to the tax structures of most Western nations), nor that "corporations" don't pay enough taxes (when it's abundantly clear that corporations can't pay taxes without individuals bearing the burden).
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Old 01-19-2012, 07:28 PM   #124
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That's your argument? Instead, what if we ditched a tax code so labyrinthine that there's an entire industry based on the inability of the average person to correctly file his or her own tax return?
I never brought up that argument, and I'm in agreement as noted further below with your statement.

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If you think I'm defending the idiocy that is our current tax system, you're barking up the wrong tree. Nothing would make me happier than ditching the entire thing. It's a mess of loopholes, personal favors, incentives, disincentives to counter the incentives, unintended consequences, and whatever ad hoc nonsense is piled on year after year.

The issue I have with it is not, however, that it's not progressive enough in its structure (on the aggregate, it appears by most measures to be comparably progressive to the tax structures of most Western nations), nor that "corporations" don't pay enough taxes (when it's abundantly clear that corporations can't pay taxes without individuals bearing the burden).
Then you are agreeing in general with my perspective. Frankly, I agree with you about our tax system in general in this post.

However, there are two points in which we disagree. First off, I never said that "Corporations don't pay enough taxes". My comments specifically have been focused as to how corporations evade paying taxes.

Secondly, my argument is that corporations should be taxed based on your arguments, not citizens. Not because of "OMG, CORPORATIONS DON'T PAY ENOUGH TAXES!", but because there is no difference (according to you) in taxing corporations or citizens.

If you tax corporations, however, you are going to tax entities that are well able to defend themselves. You are taxing entities who are able to effectively lobby for tax cuts, and taxing entities that have more than enough power and resources to fight stupid actions taken by the IRS.

The average citizen does not have this. Or, to be more specific, my argument is not "MAKE CORPORATIONS PAY MORE ASDFLKASDFKLASDASLDKFASLDFKSADFLKASDFLKASFDLK!", but rather, "If we must be taxed, tax those most able to fight the taxes."

I would speculate there is a reason that the tax burden has shifted in the fashion it has. That is because it is easier for politicians to tax individuals than corporations, and individuals are less able to fight it than corporations.
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Old 01-19-2012, 07:39 PM   #125
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Warren buffet claims his low tax rate is because the bulk of his income is from long term capital gains taxed at 15%. He also has other deductions. 2008 he paid 11.08% on an adjusted gross income of just under 63 million.
My point is that, unless he is being taxed via carried interest rules, that in order for him to maintain a $63 million per year annual income via long-term capital gains (LTCG), he would have to sell enough property or securities to make $63 million in profit. (e.g. buy $252 million worth of stuff more than 12 months ago, make a 25% gain and then sell it for $315 million)

I would need to see a proper tax return to decipher those numbers. The linked story was missing pieces and muddling various terms (or getting them completely incorrect like stating dividends and LTCG are taxed the same).

[Edit1: Technically qualified dividends of domestic corporations could be taxed at 15%. I'll have to double check whether enough can bump your marginal bracket or not. Edit2: Note that neither A nor B shares of Berkshire Hathaway pay a dividend.]

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I think I calculated my tax burden at 28% in 2008. 28 to 30% Seems to be about what it runs. Dual income no kids around the FICA cutoff.
I would be willing to place a wager that your effective Federal income tax rate as a percentage of AGI (i.e. to compare to Buffet's 11.08% quoted above) was not 28%.

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My Capital gains income doesn’t qualify for the special rate because it is from company stock pre tax investments in 401k.
That's because you are "taking advantage of tax loopholes!" You don't pay ANY capital gains tax on the company stock (or other investments) inside the 401k. Nor do you pay ANY taxes on dividends or interest paid by those investments.

In fact, the money you put in to the 401k reduces your taxable income. The trade-off is that you will pay taxes when you make withdrawals, but quite possibly at a lower marginal rate than you are paying today.


If you are close to the FICA cutoff, you are probably in the top quartile of income earners. Therefore, you should stop taking advantage of tax loopholes (like Romney) and save exclusively in taxable retail investment accounts. While you are at it, sell anything with a profit in less than 365 days, do not invest in municipal bonds and make sure not to claim any tax deductions (like charitable deductions). Oh, and only own domestic equities via mutual funds/UITs/ETFs/etc so any dividends are taxed at your marginal rate.

That's only fair.

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Originally Posted by rleete View Post
But, here's the kicker. Stocks bought outside the plan had to be sold, and the money was then capital gains. So, I have a one time only windfall, that was actually more than a single year's gross salary. Now those pols are talking about changing the rules, because all those evil capitalists are making big bucks and not paying their fair share.
This is exactly the kind of scenario I keep harping on when I talk about the "top income earners." They are often one-time "windfall" events.

Last edited by Scrappy Jack; 01-19-2012 at 08:12 PM. Reason: Remembered about qualified domestic corp dividends
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Old 01-19-2012, 08:09 PM   #126
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What is the alternative, Jared? The Republicans have demonstrated they'd rather shut down the country rather than compromise and work with other people.
im confused as to why you are asking me for an alternative
you know i support Ron Paul
could you elaborate?
or perhaps i have said something you would like me to elaborate on
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Old 01-19-2012, 08:23 PM   #127
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im confused as to why you are asking me for an alternative
you know i support Ron Paul
could you elaborate?
or perhaps i have said something you would like me to elaborate on
Okay.

You say that Ron Paul isn't going to back out on his word or compromise. I don't doubt it.

But what is the alternative if the House or the Senate aren't willing to compromise?

Remember, the Republicans were willing to shut down the entire government if they didn't get their way on the budget.
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Old 01-19-2012, 08:35 PM   #128
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Remember, the Republicans were willing to shut down the entire government if they didn't get their way on the budget.

You say that like it's a bad thing? and yes, most of Paul's "ideas" if you will, will not pass through congress...
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Old 01-19-2012, 08:48 PM   #129
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You say that like it's a bad thing? and yes, most of Paul's "ideas" if you will, will not pass through congress...
These are the same Republicans that turned down 4trillion in "cuts in future spending" because it wasn't the "cuts in future spending" they wanted.
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Old 01-19-2012, 10:15 PM   #130
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Originally Posted by Scrappy Jack View Post

I would be willing to place a wager that your effective Federal income tax rate as a percentage of AGI (i.e. to compare to Buffet's 11.08% quoted above) was not 28%.
You might loos that wager. Household income in the 95 to 98th percentile. By mgeffriau numbers average is ~25% but his numbers are low by employer paid potion of payroll plus I don’t have much in deductions. No kid, paid down mortgage a bit refinanced at low intrest, etc compared to the average.

What’s odd is I feel poor as hell. I drive cheap cars over 20 years old and I find it hard to find money to do the things I want to do and keep expenses below what I can pay off on the credit card every month and I certainly don’t appear wealthy.

Bob


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That's because you are "taking advantage of tax loopholes!" You don't pay ANY capital gains tax on the company stock (or other investments) inside the 401k. Nor do you pay ANY taxes on dividends or interest paid by those investments.

In fact, the money you put in to the 401k reduces your taxable income. The trade-off is that you will pay taxes when you make withdrawals, but quite possibly at a lower marginal rate than you are paying today.


If you are close to the FICA cutoff, you are probably in the top quartile of income earners. Therefore, you should stop taking advantage of tax loopholes (like Romney) and save exclusively in taxable retail investment accounts. While you are at it, sell anything with a profit in less than 365 days, do not invest in municipal bonds and make sure not to claim any tax deductions (like charitable deductions). Oh, and only own domestic equities via mutual funds/UITs/ETFs/etc so any dividends are taxed at your marginal rate.

That's only fair.
Yep take advantage of loopholes when I can.

Max out my 401k contribution pre tax. Get the company stock dividends out as periodic payments when dividends are paid, pay regular income tax on that income but avoid paying payroll tax on that income.

Bob
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Old 01-20-2012, 09:57 AM   #131
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These are the same Republicans that turned down 4trillion in "cuts in future spending" because it wasn't the "cuts in future spending" they wanted.
IIRC, it had more to do with the tax changes that went along with Obama's 4trillion in 12 years proposal.
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Old 01-20-2012, 12:24 PM   #132
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You might loos that wager. Household income in the 95 to 98th percentile. By mgeffriau numbers average is ~25% but his numbers are low by employer paid potion of payroll plus I donít have much in deductions. No kid, paid down mortgage a bit refinanced at low intrest, etc compared to the average.
I think there is some confusion here.

Pull up your 2010 tax return. On the 1040, look at line 60. This is your total tax obligation for the year. Take that number and divide it by line 37 (your adjusted gross income or AGI). That number is what would be comparable to the ~11 - 15% that Buffet discusses in the quote you listed above.

I would be really surprised if that number is greater than 20%.
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Old 01-20-2012, 12:42 PM   #133
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IIRC, it had more to do with the tax changes that went along with Obama's 4trillion in 12 years proposal.
They put their foot down over bush tax cuts for billionaires. And also somehow Norquists anti tax pledge suddenly came to mean eliminating tax loopholes and subsidies for giant corporations was equivalent to a tax increase they werenít for that ether. But that didnít play too well in the media so it wasnít talked about. Tying Obama to GE who got a huge tax refund on absurd profits seemed to be a better message for them even though it was Obama trying to eliminate the tax loopholes.

Bob
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Old 01-20-2012, 12:51 PM   #134
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Originally Posted by Scrappy Jack View Post
I think there is some confusion here.

Pull up your 2010 tax return. On the 1040, look at line 60. This is your total tax obligation for the year. Take that number and divide it by line 37 (your adjusted gross income or AGI). That number is what would be comparable to the ~11 - 15% that Buffet discusses in the quote you listed above.

I would be really surprised if that number is greater than 20%.
I can go back and look but that wouldn't be comparing apples to apples. have to take the FICA number and double it first in my case to show total amount of my income that went to the federal government. 2010-2011 wasnt a good year for me wife was under employed. 2008 was pretty good however and now she is back again with a good job started in November.

Bob

Last edited by bbundy; 01-20-2012 at 01:56 PM.
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Old 01-20-2012, 01:57 PM   #135
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I can go back and look but that wouldn't be comparing apples to apples. have to take the FICA number and double it first in my case to show total amount of my income that went to the federal government. 2010-2011 wasnt a good year for me wife was under employed. 2008 was pretty good however and now she is back again with a good job.

Bob
That's the disconnect. From the Forbe's article:

Quote:
Originally Posted by Forbes article
According to a letter Buffett sent to Rep. Tim Huelskamp (R-Kansas) that the Congressman posted here, the billionaire had adjusted gross income in 2010 of $62,855,038, taxable income of $39,814,784, and a federal income tax bill of $6,923,494. That makes his effective tax rate, as a percentage of AGI, just 11.06%, compared to an average effective rate in 2008 (the most recent year available) of 18.1% of AGI for the 400 taxpayers with the largest incomes, according to figures reported by the Internal Revenue Service.
They are saying Buffet's line 60 was $6,923,494, his line 43 was $39,814,784 and his line 37 was $62,855,038.

$6,923,494 / $62,855,038 = 11.02%

This is an example of a few things:
  • The complexity of our tax code makes it difficult for lay people to discuss accurately
  • I think some level of intentional misdirection on Buffett's part (using effective tax as a percentage of AGI when most people think and speak in terms of marginal brackets)
  • Ignorance or duplicity (I think more of the former) with reporters who also do not understand the tax structure that they are reporting on

I don't care what year you use; I would be surprised if your effective tax rate as a percentage of AGI was over 25%. In fact, I would be surprised (but not shocked) if it was over 20%.


[Edit: I have a stack of 1040s for people in a wide variety of situations for reference [I am not a tax preparation professional and nothing I say should be taken as professional advice] and none of them have effective tax rates over 25%. Whatever theoretical wager we placed on bbundy's effective rate being less than 25% - I would be willing to double it when I say at least one of those returns is for someone who makes a LOT more than he does. Their rate is between 20.01 and 24.99%.]
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Old 01-20-2012, 02:15 PM   #136
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They put their foot down over bush tax cuts for billionaires.
You seem otherwise too intelligent to talk like this.

There are a lot of lower and middle income senior citizens and retirees that benefit more on a percentage basis from the "Bush tax cuts for billionaires" than any of the .01%.

Guess what the tax rate for long term capital gains and qualified dividends is for a married couple with taxable income (different from adjusted gross income or AGI) less than $69k in 2011 was? 15% less than it was for Warren Buffett. 15% - 15% = 0%


In addition, the Bush tax cuts introduced the 10% marginal bracket which likely reduced the total tax expenditure for EVERYONE.
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Old 01-20-2012, 03:08 PM   #137
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Originally Posted by Scrappy Jack View Post
That's the disconnect. From the Forbe's article:



They are saying Buffet's line 60 was $6,923,494, his line 43 was $39,814,784 and his line 37 was $62,855,038.

$6,923,494 / $62,855,038 = 11.02%

This is an example of a few things:
  • The complexity of our tax code makes it difficult for lay people to discuss accurately
  • I think some level of intentional misdirection on Buffett's part (using effective tax as a percentage of AGI when most people think and speak in terms of marginal brackets)
  • Ignorance or duplicity (I think more of the former) with reporters who also do not understand the tax structure that they are reporting on

I don't care what year you use; I would be surprised if your effective tax rate as a percentage of AGI was over 25%. In fact, I would be surprised (but not shocked) if it was over 20%.


[Edit: I have a stack of 1040s for people in a wide variety of situations for reference [I am not a tax preparation professional and nothing I say should be taken as professional advice] and none of them have effective tax rates over 25%. Whatever theoretical wager we placed on bbundy's effective rate being less than 25% - I would be willing to double it when I say at least one of those returns is for someone who makes a LOT more than he does. Their rate is between 20.01 and 24.99%.]
Compared to his income for Buffet the employer paid portion of payroll tax that dosnt show up on a tax return was essentially 0%. for me it is far from 0% closer to 7% and it dosn't even appear on my tax return.
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Old 01-20-2012, 03:10 PM   #138
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IIRC, it had more to do with the tax changes that went along with Obama's 4trillion in 12 years proposal.
Yes, over closing ridiculous loopholes such as how long you could write off a private jet for. I wish I was shitting you.
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Old 01-20-2012, 04:58 PM   #139
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I work for a company that, up until a few months ago, was employee owned. We had a stock ownership plan, where they gave us anywhere from 2-6% of our base pay in stock every year, called "safe harbor". I was also allowed to buy shares, up to a maximum of 10% of base pay. Once I became eligible, I bought the max every year.

Last September, the company was sold to a private firm.
...

But, here's the kicker. ... So, I have a one time only windfall, that was actually more than a single year's gross salary. Now those pols are talking about changing the rules, because all those evil capitalists are making big bucks and not paying their fair share.

Am I to be penalized for making a sound financial decision?
All legislation to "tax the rich" are really designed to tax high wage earners and not the truly rich.

The aftermath of the Enron debacle and the new accounting standards that followed, included making it more expensive for companies to give out stock options. "Tax the rich executives that get stock options", remember? Well, the real result was that a lot of companies quit giving stock options to employees, and left it for the execs. The real effect was the oppposite of intended.

Here's a great video explaining how gov't intervention actually *resulted* in greater incomes for company execs over the last 30 years, from like 20x of rank and file workers, to 500x:

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Old 01-20-2012, 05:01 PM   #140
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You seem otherwise too intelligent to talk like this.

There are a lot of lower and middle income senior citizens and retirees that benefit more on a percentage basis from the "Bush tax cuts for billionaires" than any of the .01%.

Guess what the tax rate for long term capital gains and qualified dividends is for a married couple with taxable income (different from adjusted gross income or AGI) less than $69k in 2011 was? 15% less than it was for Warren Buffett. 15% - 15% = 0%


In addition, the Bush tax cuts introduced the 10% marginal bracket which likely reduced the total tax expenditure for EVERYONE.
The only tax cut I ever noticed making a difference in my 31 years in the work force was a 2% payroll tax cut and that did not come from any Republican. Biggest tax increases for me were in the Reagan years before I could even vote. Between Reagan and Bush 1 payroll tax went from 12.26 to the current 15.3%. Plus the tax brackets I was in kept getting higher rates and less deductions. For some reason I still considered myself Republican up through Bush 1.

Bob
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