Who REALLY pays income taxes?

First of all, not everyone who uses said "loopholes" is doing so to the tune of hundreds of thousands nor is there anything to suggest that those who do are still owing hundreds of thousands. For all we know many of them could be reducing their tax responsibility to a mere single digit percentage.
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Ok, first my experience is talking through that example of the hundreds of thousands, but I agree that it is only one in a million cases and each is different.

However, the second thing to consider is they are not these so-called loopholes, they are legit ways to pay lower tax. For example, some investments generate losses, those losses allow the individual, company, etc. to offset their income to the amount of their losses for the year. They really did loose money during the year, it just happens that they get a tax break for that on their return. Meaning, if they make X, the IRS allows them to deduct Y as a loss, because they actually lose Y during the year. Are there more agressive ways, sure, most result in higher risk for audit, higher chance of paying penalties and interest on the amount that should have been paid.

Thirdly,

In many cases the wealth is not from hard work but from luck and investments meaning that their wealth is reliant on a stable, secure society and thus should be responsible for a greater share of making sure the government is around to protect that.
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we are now basing the higher tax on higher income individuals because they should pay for the government to be around and protect them? Huh?

You miss the important part of your post, from investments, they actually INVESTED that money, they are on the hook for that, they are risking it to some extent.
 
someone on $80,000 or $100,000 a year can probably spare a little.
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Why can they spare it? Did they not earn that money (assuming legally) and do they not therefore have to right to enjoy it by increasing their house size, buying a new car, buying a gun, etc. What says they should have to spare a little because people are not as fortunate as them?

If the rich don't 'need' it then shouldn't they not gladly do their bit to help the rest of society by paying their taxes?
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No, they should do it through charitable contributions, voluntary donations to individuals, not by paying more to the federal government.

Hopefully, this transfer of income never becomes acceptable in the United States. NEVER!!!
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Agreed.
 
Sure...

AGI is "the line"

There are above the line deductions, tuition and fees, retirement contributions, etc. and below the line deductions, itemized deductions, exemptions based on sigle, married filing seperately, jointly, numbers of dependents (kids, grandparents, etc)

When you take all your income, subtract the deductions allowed you get your TAXABLE INCOME, this is what the amount of tax your income generates is based on. Then, based on credits, amounts paid in, foreign tax credits, energy credits and a variety of other things, you then calculate your tax owed as of when you are filing.
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Ok, so let's use that. True or not that the top 1% is more likely to have more "above the line" deductions? (rental homes, 1/2 of self employment taxes, IRA contributions, alimony (the large Paul McCartney sort), health savings accounts, etc.

Because of this, maybe AGI isn't the best denominator to compare income when talking about (in everyday terms) what percentage we pay of income tax.
 
I have been blessed in many ways... none of which include tons of dough laying around! I have worked in both pest control and lawn maintenance to the tune of 15 or more years. At 18 I was mowing lawns of 4 million dollar homes owned by some rather affluent folks. They paid us 6-7 hundred a month. I started out at 5 bucks an hour and "topped" out as an employee at 2,000 per month salary. We were a very high quality pair of guys. We started out the day with sharp blades on the mowers and switched them while we ate our lunch. You could rarely get us to give you an estimate because we rarely lost a customer and when we did it was usually money related. Those leaving 'cuz we were nearly twice as much per month were forewarned that the slot would be filled in under a week. Sure enough we were back to full and they were out of luck.
I realized at 18 that at the end of 11 out of twelve months we all end up with the same bottom dollar... Nearly nothing! Except for April... than I was the one with more at the end of the month. You reap what you sow and no one should have to pay a higher percentage in taxes than the next guy... I am finding it hard to believe that I am one of the below poverty level (by a ways) and I am in the boat of the super rich in regards to taxation.
Heck... Why do I DESERVE FOUR THOUSAND DOLLARS over my pay in? That is $4,000 of someones hard earned money! They call it EARNED INCOME CREDIT? Who earned it? NOT ME! How much total per year is sent out as EIC? could it be used by the gubmint to pay gubmint bills?
No one I know goes out handing out extra money to even family in need "JIST CUZ"....
Brent
 
Hopefully, this transfer of income never becomes acceptable in the United States. NEVER!!!
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Not only is it acceptable but it has been practiced here for a long, long time. That's what progressive income taxation does; transfers wealth from those who earn it to those who don't.:barf:
 
I have no problem helping those who can't help themselves. But, anybody who thinks all of the underclass whining about this or that has put the effort and dedication in to work that I did is simply an idiot.
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I"m certain you worked hard for your income however many do, there are those who work very hard and never gain and it's all part of life but to believe your any better or worked more in life then other with less money is somewhat naive.

One of the great problems America families face today is self worth being placed on how much you earn, me I will take friendship, family and a quite quality life anytime but that is me.
 
They call it social engineering! Income taxes are for the rich. They provide me with a $2,000 boot up every year! It is recouped via other taxes!

The balance goes to the war machine, Social Programs to place the masses under the thumb!

There are so many hidden taxes people don't ever think about!

There is a tax on your telephone that dates back to WWll. Emergency War action, Why is that still there?

Sales tax

Property tax
Transfer tax
Vehicle tax
Alcohol tax
Tobacco tax

Gas tax
Road tax
Gross receipts tax
Water tax
School tax
Social Security tax
Medicaid tax
State tax
County sales tax

Telephone Alone!

Federal Access tax
Federal Excise
State 911 access line tax
Universal service tax
New Mexico Access tax
Inter provider tax ( Cell TO Cell )
Electrical Energy Efficiency Fee

School bonds

General bonds

If I had more time I'm sure I could find a pile more!

Federal Income Tax is only the Tip of the Berg!:barf:

Thank you people for paying more taxes then you should have! With out you doing so, I would have drowned Years Ago!
Thank you Rich People that help me keep my head Above the Tax water!
 
Here I'll make it easy to understand how our taxes work.
(copied from another site)

kenny b


Suppose that every day, ten men go out for beer and the bill for all ten
comes to $100. If they paid their bill the way we pay our taxes, it
would go something like this:

The first four men (the poorest) would pay nothing.

The fifth would pay $1.

The sixth would pay $3.

The seventh would pay $7.

The eighth would pay $12.

The ninth would pay $18.

The tenth man (the richest) would pay $59.

So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the
arrangement, until on day, the owner threw them a curve. "Since you are
all such good customers," he said, "I'm going to reduce the cost of your
daily beer by $20."Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the
first four men were unaffected. They would still drink for free. But
what about the other six men - the paying customers? How could they
divide the $20 windfall so that everyone would get his 'fair share?'
They realized that $20 divided by six is $3.33. But if they subtracted
that from everybody's share, then the fifth man and the sixth man would
each end up being paid to drink his beer. So, the bar owner suggested
that it would be fair to reduce each man's bill by roughly the same
amount, and he proceeded to work out the amounts each should pay.

And so:

The fifth man, like the first four, now paid nothing (100% savings).

The sixth now paid $2 instead of $3 (33%savings).

The seventh now pay $5 instead of $7 (28%savings).

The eighth now paid $9 instead of $12 (25% savings).

The ninth now paid $14 instead of $18 (22% savings).

The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued
to drink for free. But once outside the restaurant, the men began to
compare their savings.

"I only got a dollar out of the $20,"declared the sixth man. He pointed
to the tenth man," but he got $10!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar,
too. It's unfair that he got ten times more than I!"

"That's true!!" shouted the seventh man. "Why should he get $10 back
when I got only two? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison. "We didn't get
anything at all. The system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat
down and had beers without him. But when it came time to pay the bill,
they discovered something important. They didn't have enough money
between all of them for even half of the bill!

And that, boys and girls, is how our tax system works. The people who
pay the highest taxes get the most benefit from a tax reduction. Tax
them too much, attack them for being wealthy, and they just may not show
up anymore. In fact, they might start drinking overseas where the
atmosphere is somewhat friendlier.



For those who understand, no explanation is needed. For those who do not
understand, no explanation is possible.
 
ISn't it strange....

That this country operated for more than 100 years without a Federal (or any for that matter) Income Tax.

Take heart that you are in the USA, as in some other countries the tax rates go to 60% and possibly higher.

It has been said that democracies can only exist until the people learn that they can vote thtemselves money from the public trough. And ever increasing types and amounts of taxes are what puts the money in the "trough", for us (through our representitves) to spend.

The idea of a flat rate tax is appealing, but given human nature, I wonder how long it could exist before being "loopholed" into ineffectiveness. And after all, think of all the CPAs and Tax attorneys it would put out of business!

Every year at this time, as people again begin their yearly ritual of complying with the current tax codes, only then do we remember and curse how complicated it has gotten. Even if we do not strive to pay the minimum possible tax, it is complicated.

We abolished physical slavery, and eventually replaced it with tax slavery. Not all at once, but bit by bit over time. From the beginning, and for many years, our nation's government operated mainly off taxes/tariffs levied on goods in commerce. Import/export duties. This did sometimes cause cash flow difficulties for our Federal government, but then there weren't anywhere near the calls on it's resources as we face today. The cash cow that is the "working class" and the "wealthy class" has given our govt the resources to become the world superpower, inspite of the waste, fraud, greed, and corruption endemic to all bureaucracies not completely staffed by idiological zealots. We probably shouldn't complain, after all, it was our ancestors who gave this power to the govt, and our lack of collective will allows them to keep it.
 
Ron Paul: You can down size the Federal Government to the employment level of 1997 and it could exist without the IRS.
Government is so worried about fraud they set up large hierarchies to "administer" the money honestly.

Tax cuts are great ways to stimulate the economy. But Gov't never seems to curb the spending.

Also, It was interesting to hear OPEC tell us that there was nothing wrong with the price of oil, it's our WEAK dollar that's the problem. Strengthen your dollar.
 
IMO, If you do not pay income taxes (for whatever reason) you should not benefit from any assistance that is funded from the income tax. Taxing people that are "rich" more than others is just wrong. Should someone be punished just because they worked hard and built up their life. NO. A tax rate should be the same for EVERYONE. All this talk about "their rich and they dont need all that money so it should be taxed higher" is BS. Once you start talking about NEED, you end up with income redistribution according to NEED. I bet some of you would balk like a mule if some one told you that you did not NEED more than 1 gun.
 
Can you please confirm this statement as the rest of your argument stems from it. AGI is what you get AFTER deductions and exemptions, you don't take deductuctions from AGI.
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Ever completed a 1040? The adjusted gross income is the last line on page 1. All deductions and exemptions are subtracted from AGI on page 2.
 
Ever completed a 1040? The adjusted gross income is the last line on page 1. All deductions and exemptions are subtracted from AGI on page 2.
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Not exactly.
Lines 23 to 31a, and 32 through 35 get deducted from income.
They include qualified education expenses, certain business expenses, health savings accounts, moving expenses, half of self employment tax, some slef employment pension plans, slef employment health insurance, withdrawal penalties, alimony, IRAs, some student loan interest, some tuition and fees, and domestic production activities.


The personal and itemized deductions are on page 2 and do NOT affect AGI.
 
Because of this, maybe AGI isn't the best denominator to compare income when talking about (in everyday terms) what percentage we pay of income tax.
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I would agree. That's why each day I am more in favor of a new tax system, national sales tax (consumption tax) or a flat tax. Each of these have their own problems to be ironed out, but they are better than the current tax structure.

Ok, so let's use that. True or not that the top 1% is more likely to have more "above the line" deductions? (rental homes, 1/2 of self employment taxes, IRA contributions, alimony (the large Paul McCartney sort), health savings accounts, etc.
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That is a pretty fair assumption, but also remember, those poor, less fortunate folks who file income taxes still pay no tax. Regardless of how they got their taxable income to zero (Child Care Credits, Exemptions, Dependents, etc.) they still have been able to maintain a zero taxable income.

Where the unfair part in that is some of these deductions below the line get phased out for the wealthy when their income reaches a certain limit (and the limit is not something we would consider EXTREMELY wealthy, sometimes the limit starts at $105,000, something more dual spouses are able to pull in during the year). Add to that the AMT disaster this country has and noone gets taxed fairly, rich or poor.
 
However, the second thing to consider is they are not these so-called loopholes, they are legit ways to pay lower tax.
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Oh I agree they're perfectly legit (at least until someone moves their money offshore), I'm just saying that there are plenty of cases in which wealthy people are paying less of a percentage than those in the middle class and that the wealthy have access to these legit ways of paying lower taxes that the middle class often doesn't.

we are now basing the higher tax on higher income individuals because they should pay for the government to be around and protect them? Huh?
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That's the whole reason we pay taxes in the first place. To fund the government. Even the most basic services listed in the Constitution is one that benefits the wealthy far more than the lower classes without as much to lose.
You miss the important part of your post, from investments, they actually INVESTED that money, they are on the hook for that, they are risking it to some extent.
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Yes but it's a lot easier to invest ten grand when you make six figures a year than when you make thirty thousand. The point is that the wealthy don't necessarily work harder than anyone else; often their money is inherited, often their family's social class gave them opportunities not available to others.

I'm not saying there's anything wrong with that but this idea that rich people are rich because they work harder is pretty ridiculous. If it were true then all the "hard workers" on this forum would be millionaires.
 
That this country operated for more than 100 years without a Federal (or any for that matter) Income Tax.
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Imagine trying to put a man on the moon without the federal government using income tax to pay for it.

Imagine subsidizing the telecom industry that created the foundation for the network on which you read this post without the federal government using everyone's money to pay for it.

Like it or not many of the luxuries we enjoy in this country are due to federal government spending.
 
Granted we got tang, wd-40 and a few products from it and it sped up the technology age... but what did the government return to us financially with the man on the moon stuff? Wasn't really a big thing. but it cost a ton...
Brent
 
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