U.S. Taxes

[CosmoKramer]

Okay, we all hate taxes and I understand that they are necessary to an extent but I find that we are taxed on EVERYTHING these days. I dont understand how governments, both state and federal, can have deficits when they tax us for nearly EVERYTHING we buy; they tax our income, interest made on that income, capital gains if you made smart investments, I pay a car tax (not for buying the car but just for having it), I pay a tax on my home (again, not for buying it but just for owning it) and when I die, they tax me again and they run the LOTTO. WTF!!!!!

That was not my point for opening this thread. I recently googled historic tax brackets in the US and I saw that for a very long period of time (1940's-70's) the highest tax bracket was 91%! I can't even imagine filling out my taxes and seeing that the government is taking 91% of what I earned...lol

Now from what I understand it was a marginal tax rate but still, 91%? Now keep in mind, Im not thinking about movie stars or Baseball players but rather the average mom and pop store or kid that worked his A$$ off and ended up making it fairly big would be taxed 91% for their success. To link this to our favorite act here at interference, Bono and the boys would have had to pay roughly 283 million in taxes last year (311 million from tour x 91%)...lol lol lol

 

[melon]

To link this to our favorite act here at interference, Bono and the boys would have had to pay roughly 283 million in taxes last year (311 million from tour x 91%)...lol lol lol

Here's the deal, though. That still leaves $28 million, which still leaves them in the top 1% of mankind and living quite well. And a century ago, that would have been seen as acceptable.

Interestingly enough, "money," at this stage of economic history, is ultimately a relative store of value; that is, Saudi Prince Al-Waleed bin Talal can spend half a billion dollars on his own personal "flying palace" (that is, an Airbus A380--the largest plane in the world--outfitted like a mansion), because, relative to the number and wealth amassed amongst other multbillionaires, that is what the wealthiest in the world will pay for a flying palace. But let's imagine that the wealthiest in the world were not "multibillionaires," but instead "multitrillionaires" at the time that Airbus decided to market flying palaces. Most certainly, these planes that were, once upon a time, valued at half a billion dollars would now be half a trillion for likely no difference in quality. And I'd say that that's a fairly good summary of inflation in non-politicized terms (that is, when politicians aren't changing the definition).

The trouble, I'd say, is that, while reinstituting a 91% upper tax bracket worldwide (because, remember, we've got a global economy, whether we like it or not) isn't going to end opulent lifestyles in the long run, it would represent a sharp enough contraction that it would trigger massive deflation, which is highly problematic unto itself. Then, of course, it's impossible enough to get coordination at a multinational level, so you run into the problem of wealth migrating abroad to the detriment of the national economy. And I'd say that this is the dilemma that we're dealing with now: how to fund a national society, it's people, and the necessary cost of maintaining infrastructure and needs in light of corporate and personal wealth concentration limiting such resources in a globally competitive marketplace.

But, to go back to the 91% tax bracket, when you've got a fairly closed national economy, which, a century ago, would have been due to the high cost of the global transportation necessary to enact global trade, you still had plenty of wealthy people living opulent lifestyles much for the same reason that multibillionaires live opulently in the absence of trillionaires, and why they will live less than they do now when trillionaires arrive, much like how millionaires are less well off now in the presence of billionaires.

At least, that's from my perspective. Kudos for bringing up a new topic in this place!

 

[U2387]

Okay, we all hate taxes and I understand that they are necessary to an extent but I find that we are taxed on EVERYTHING these days. I dont understand how governments, both state and federal, can have deficits when they tax us for nearly EVERYTHING we buy; they tax our income, interest made on that income, capital gains if you made smart investments, I pay a car tax (not for buying the car but just for having it), I pay a tax on my home (again, not for buying it but just for owning it) and when I die, they tax me again and they run the LOTTO. WTF!!!!!

That was not my point for opening this thread. I recently googled historic tax brackets in the US and I saw that for a very long period of time (1940's-70's) the highest tax bracket was 91%! I can't even imagine filling out my taxes and seeing that the government is taking 91% of what I earned...lol

Now from what I understand it was a marginal tax rate but still, 91%? Now keep in mind, Im not thinking about movie stars or Baseball players but rather the average mom and pop store or kid that worked his A$$ off and ended up making it fairly big would be taxed 91% for their success. To link this to our favorite act here at interference, Bono and the boys would have had to pay roughly 283 million in taxes last year (311 million from tour x 91%)...lol lol lol

No, no and no again!

No one ever paid anywhere near 91% of their income in federal income taxes. The pre 1986 tax code had about 30 brackets, 91 being the top until JFK in 1964, but the brackets were much narrower. You had to be literally at the extreme top of the scale to have just a small portion of your income taxed at 91%. Now we have 5 or 6 brackets each covering a large range of income. There were also many more deductions and credits back then to offset the higher rate. This all led to effective rates, the percentage of your income actually paid in taxes, of around 40% for the top 1%. That of course is alot higher than the low 20s now, but still, never anywhere 90.

The only reason it was really kept that high for so long was we actually paid for World War II and Korea. Sure, we went into record short term debt, but it did not leave behind a long run train wreck. The 3 years after WWII ended actually saw reductions in deficits and national debt!

Marginal vs Effective taxation is key. Your entire income is not taxed at the highest marginal rate you face, only the portion of it over the threshold for the corresponding bracket is.

Also, for the entire time the top bracket was 91%, capital gains were taxed at 25% tops, so alot of the wealthier people just reinvested their income before it was taxed to get the lower rate.

As for all the sales taxes, you pay them and then alot more in most European countries. There are national value added taxes, much higher gas taxes, etc. Americans have an average combined tax burden(state, feds, local) of around 23-25%.

Overall, the US is very close to or at the bottom of industrialized countries in terms of tax burden.

Also, there is no tax that applies at death. There is an estate tax, which does not hit you, but hits an heir should you have more than $3.5 million to leave them, or if you are married, more than $7 million to leave them. The rules are even more generous for farms and small businesses.

The government does not tax every death certificate, just people inheriting great amounts of money. There has been a coordinated campaign by some to make you believe there is a death tax, but it is a complete myth. Less than 1% of people who die have an estate tax return filed by an heir. And with the super high exemptions and special rules for small businesses and farmers, it pretty much ensures that only the very rich pay this tax.

I wouldn't go looking for a lower taxed industrialized country than the US, because you probably will not find many.

 

[U2Fan101]

Reasons why we are in deficit:

1) Government, both state and federal, keeps spending money it doesn't have. I would know. I'm HR for the State of Missouri and for a while we kept hiring people when there was no budget!
2) Big business get tax breaks with state and federal government, thus thats a HUGE chunk of money the government isn't getting.
3) Social Security Cap/Social Security Borrowing - First of all, the government has a cap on Social Security, which is mistake number one. Everyone gets taxed the same percentage on their income for security no matter how much you make. No cap. Period. Also, the government borrows money out of social security to pay for things because of number 1.
4) The government keeps spending money it doesn't have by creating programs. IE: Healthcare bill.

Those are just 4 I can think of out of many more.

 

[deep]

very objective list you have got there

where are the huge amounts spent in Iraq and Afghanistan?

 

[U2Fan101]

very objective list you have got there

where are the huge amounts spent in Iraq and Afghanistan?

That one works too.

 

[kramwest1]

3) Social Security Cap/Social Security Borrowing - First of all, the government has a cap on Social Security, which is mistake number one. Everyone gets taxed the same percentage on their income for security no matter how much you make. No cap. Period. Also, the government borrows money out of social security to pay for things because of number 1.

This is one of the easiest fixes out there. Since this is the first year that SS will pay out more than it takes in, it should be on the tip of everyone's tongue. Yes, high unemployment and the subsequent lack of payroll tax that follows helped this day arrive faster, but it needs to be dealt with.

I believe the FICA cap is currently around $108,000, meaning the income you earn above that amount does not have a portion taken out for Social Security/Medicare. This cap should be removed.

It would be tough to cut payouts right now, but they should be capped. As I said in another thread, Social Security was meant so that Grandma and Grandpa didn't eat dog food. It was not meant as an additional retirement vehicle. Honestly, most seniors I know (and I am speaking from a very middle-class standpoint) use their SS checks as bonus money to go to the casino or to travel. Yes, that stimulates the economy, but it's really not the original intent of SS.

 

[the iron horse]

Taxes that go way beyond the U.S. Constitution.

It is thievery.

One of the reasons I have voted Libertarian since the early 1990s.

 

[BVS]

Taxes that go way beyond the U.S. Constitution.

Have you ever noticed there aren't that many consititutional experts on the libertarian side? Because most that have studied law and the constitution know that that statement just isn't true.

The brilliance of the Constitution is also the part that makes it frustrating for some, which is the fact that it's not carved in stone, it's living and breathing and knows it's not perfect.

So to make such absolutes would be wrong.

 

[deep]

there is nothing in the constitution about the public air waves,

perhaps everyone should be able to broadcast on any wave length or mega hertz they want?

 

[the iron horse]

Have you ever noticed there aren't that many consititutional experts on the libertarian side? Because most that have studied law and the constitution know that that statement just isn't true.

The brilliance of the Constitution is also the part that makes it frustrating for some, which is the fact that it's not carved in stone, it's living and breathing and knows it's not perfect.

So to make such absolutes would be wrong.

What statement isn't true?

 

[BVS]

The one I quoted.

Take deep's post for example. The airwaves weren't even a thought in the forefather's head when the Constitution was written, so where does it fit into the Constitution? Is it "beyond" the Constitution?

Give me an example of a tax that is "beyond" the Constitution. Please?

 

[KhanadaRhodes]

just my opinion, but i think the constitution and the bible are the same kind of thing. they're both documents written ages ago and are open to much interpretation. i'm sure this is a no shit kind of thing, but just felt like throwing that out there. you show me one part of the constitution you think says this, there's another part that can be interpreted to say the exact opposite.

i'm definitely not anti-tax, but i think they're a necessary evil. yet i also think we're not taxed highly enough. yeah it'd be nice if we could keep every dime we make at our jobs, but i like having a safe neighbourhood to live in, no potholes in the road, etc.

 

[deep]

just my opinion, but i think the constitution and the bible are the same kind of thing.
.

that is more correct than most people realize

I have often said 'The Constitution is not The Bible and for that matter The Bible is not The Bible"

both are man made writings, the main purpose is to create a structure for people to live together, cooperate, and a document to give others authority over the masses.

Both have been used to set up Governments.