Someone explain taxes to me

[Bridgetjones]

It varies a bit by state in the US, and a bit by province in Canada. But Canadians really don't spend that much more in taxes than the US;
http://slumbuddy.wordpress.com/2012/...ates-for-2011/

Pay particular attention to the graphs they include. That's looking strictly at federal tax rates. The idea that Canadians are much more heavily taxed than Americans is basically a meme that doesn't hold up under scrutiny.

It's a meme that the right uses to scare Americans away from supporting social services and universal healthcare. Instead we build weapons we'll never use for hundreds of billions per year and then go fight wars with the cheapest weapons we have (soldiers).

[Daelak]

I'll just leave this here:

http://www.itep.org/whopays/

Anyone who says the rich pay more in TOTAL taxes can't add or read.

Edit: This doesn't refer to "federal income tax only," which is the isolated tax the right uses to fabricate poor little rich people. This map also does not refer to "total tax dollars collected," which is another isolated statistic the right likes to trot out to pretend the wealthy are overburdened. This map refers to holistic, real, effective tax rates on income. Without cherry-picking stats, the poor and middle class pay a higher percentage of income at the state level. Hopefully this explains why federal rates are much more progressive to act as a balance.

That report is a very sobering look at how much our system is rigged to completely fuck the poor. This country has literally been built on the backs of the poor for 200 years and we still have extremely unfair and regressive tax policies.

[Purlina]

Some states don't have an income tax at all. Like Florida, while NY has a state and city tax.

[Azaril]

I think there may be a three or four people in this discussion so far that have any clue in what most people would consider reality.

1) Higher taxes on the wealthy and better social programs for people in poverty DO CREATE MORE WEALTH OVERALL.
See Scandinavian countries and most recently, Brazil, in which the last president did something never done before. He taxed the banks and the money people had in the bank. The taxes he collected he used to rebuild the favelas in brazil (slums) and by doing so, lifting 28 million people out of extreme poverty and allowing 36 million to enter the middle class, in a country of 190.7 million. Not only did this create more wealth in the lower and middle class, the rich and the banks became more wealthy.

Higher taxes created more wealth. Proof and fact.

"“It [the Bolsa Familia] changes local economic dynamics as recipients spend benefit payments locally. You get more demand for goods and services and that means more jobs,” she [Chile’s former Social Democrat president, Michelle Bachelet] said."

http://riotimesonline.com/brazil-new...mic-equality/#
And they are continuing to promote such extreme social programs that boost the wealth of those in poverty so that they can better themselves.


2) Inflation is not bad. inflation is needed, inflation is good. Hyperinflation is bad (When inflation rises faster than the rate of interest earned on treasure notes). Inflation causes spending. When rich people have millions of dollars in the bank, it is not being spent on the economy. If the inflation rate is lower than the savings interest earned on the account, why would they have a reason to spend it? They can keep 1 dollar and in 10 years it will be worth more than 1 2013 dollar.

If inflation rises past the rate of interest (most likely interest rates would fall below inflation), keeping that 1 dollar in the bank lowers its value and intelligent investors would know that spending that dollar creates more wealth than not spending it.

if i have 10 million dollars and in 10 years, with rising inflation and lowering interest, that 10 million would only be worth 7 million. If i took that 10 million and invested it today in the economy with a return, such as real investments in start-up companies or even my own company, the increased efficency, production, new products, or even higher workers pay would result in more of my product being produced and purchased, and that 10 million could see a net return over 10 years of 20 million.


When people that don't know or listen to idiotic news sources as the Right (fox, infowars, red state, etc), they pretend examples such as the home budget apply and that the wealthy use all of their "hard earned" money to re-invest. None of that is close to the truth. In Macro Economics, where government roles such as taxing and spending have effect in, the history has proven time and time again that higher taxes on the wealthy cause the wealthy to invest more money into things that help the economy and that giving people in poverty assistance to get out, DO cause them to no longer be in poverty.

Just look at all the countries in the world that have done slashed tax and slashed spending austerity programs (spain, greece, ireland) and look where they are now? extremely high poverty rate, extreme wealth inequality, higher unemployment and a collapsed or collapsing economy and social structure.

[MustangMark83]

We punish success. Someone has to buy deli subs, mt dew and doritoes for those who refuse to work.

Damn it, this is a liberal forum! We care about the needy! How DARE you try and keep the money you earned! Go and be conservative somewhere else!

[Endus]

In Macro Economics, where government roles such as taxing and spending have effect in, the history has proven time and time again that higher taxes on the wealthy cause the wealthy to invest more money into things that help the economy and that giving people in poverty assistance to get out, DO cause them to no longer be in poverty.

There's two sides of this.

First, if you "punish" high incomes (by which I mean a $250k+), you "encourage" those making such salaries to reduce their taxable income. Re-investing in your company, for instance, allowing it to produce more or conduct greater R&D, and investing in your long-term profit potential rather than this year's salary. Or donating more to charity. Etc. Capital gains should be taxed at a rate similar to income, too, not significantly less as in the US, otherwise you get the current situation in the US where CEOs take a small (relative) salary and a much higher relative proportion of their compensation in company stock, allowing them to basically legally evade taxation on income in a way that simply is not available to people making less than CEO-level salaries because they need to do things like pay their mortgage and buy food, and can't if 80% of their compensation is in stock.

Once you "encourage" the wealthy to divest themselves of income, that money has to go somewhere. It typically ends up encouraging greater employment and growth. This creates more employed middle-class types, and the middle class drive the entire economy. Capitalism is a consumer-based model. Companies produce, consumers consume. And to consume, they need the money to spend on that consumption. Increasing the amount of money the lower and middle class have to spend means they buy more products which means companies make more profits meaning they can afford to pay higher salaries/hire more people meaning they can consume more and so on. The difficulty is that's how it works at a macro scale, and CEOs and shareholders (the ones with money to pay lobbyists on their behalf) are more interested in improving their performance on a micro scale, which throws a wrench into the entire system.

Money isn't consumed. It's exchanged. The worst thing you can do for the economy is collect it in pools and keep it from working. It's fuel for the economy. It needs to be changing hands as often as possible. For instance, say I earn $50. I use that $50 the next day to pay for dinner for me and my girlfriend. The restauranteur uses that $50 the day after as part of his food budget, buying groceries. The grocer uses that $50 the next day (day 4) to buy a few books at a book store. The book store owner (day 5) buys some new clothes. And so on. In those 5 days, that $50 was used for $250 worth of transactions. If you instead lock it up in a certificate of deposit or the like, it isn't churning through the economy any longer, it's not being efficiently used. Wealth disparity leads to economic stagnation, every time. You need SOME variation, to encourage ambition and reward success; I'm not arguing for communism here or something, but the fact that the US is suffering economically today is directly tied to the distribution of wealth.

Check the first graph here; http://en.wikipedia.org/wiki/Wealth_..._United_States

You'll note that it's observing the percentage of income in the top 1% of earners. You'll also note that the last time it spiked as high as it is currently was just before the Great Depression.

Wealth inequality kills economies at the macro level, so that the few at the top can improve their own micro performance.

[Saphyron]

I am asking about taxes taken from paychecks.

(These numbers are slight estimates and not exact)

So I get paid weekly. In a 30 hour week, making 10.50 an hour, I only get $275 from the $315 I was supposed to make. Around 12% taken out.

My boyfriend who gets paid every two weeks, clocked in 88 hours, 8 of them being overtime, making 10.50 an hour, only gets around $750 of the $950ish he earned. Over 20% is taken out.

Why the huge difference?

O_O only 20% and 12%. you americans have it easy in that area we pay 50% here. and if you have a really good paying job you pay 60%

In any case as many others have pointed out he earns more so he has to pay more.

[Reeve]

There's two sides of this.

First, if you "punish" high incomes (by which I mean a $250k+), you "encourage" those making such salaries to reduce their taxable income. Re-investing in your company, for instance, allowing it to produce more or conduct greater R&D, and investing in your long-term profit potential rather than this year's salary. Or donating more to charity. Etc. Capital gains should be taxed at a rate similar to income, too, not significantly less as in the US, otherwise you get the current situation in the US where CEOs take a small (relative) salary and a much higher relative proportion of their compensation in company stock, allowing them to basically legally evade taxation on income in a way that simply is not available to people making less than CEO-level salaries because they need to do things like pay their mortgage and buy food, and can't if 80% of their compensation is in stock.

Once you "encourage" the wealthy to divest themselves of income, that money has to go somewhere. It typically ends up encouraging greater employment and growth. This creates more employed middle-class types, and the middle class drive the entire economy. Capitalism is a consumer-based model. Companies produce, consumers consume. And to consume, they need the money to spend on that consumption. Increasing the amount of money the lower and middle class have to spend means they buy more products which means companies make more profits meaning they can afford to pay higher salaries/hire more people meaning they can consume more and so on. The difficulty is that's how it works at a macro scale, and CEOs and shareholders (the ones with money to pay lobbyists on their behalf) are more interested in improving their performance on a micro scale, which throws a wrench into the entire system.

Money isn't consumed. It's exchanged. The worst thing you can do for the economy is collect it in pools and keep it from working. It's fuel for the economy. It needs to be changing hands as often as possible. For instance, say I earn $50. I use that $50 the next day to pay for dinner for me and my girlfriend. The restauranteur uses that $50 the day after as part of his food budget, buying groceries. The grocer uses that $50 the next day (day 4) to buy a few books at a book store. The book store owner (day 5) buys some new clothes. And so on. In those 5 days, that $50 was used for $250 worth of transactions. If you instead lock it up in a certificate of deposit or the like, it isn't churning through the economy any longer, it's not being efficiently used. Wealth disparity leads to economic stagnation, every time. You need SOME variation, to encourage ambition and reward success; I'm not arguing for communism here or something, but the fact that the US is suffering economically today is directly tied to the distribution of wealth.

Check the first graph here; http://en.wikipedia.org/wiki/Wealth_..._United_States

You'll note that it's observing the percentage of income in the top 1% of earners. You'll also note that the last time it spiked as high as it is currently was just before the Great Depression.

Wealth inequality kills economies at the macro level, so that the few at the top can improve their own micro performance.

While I generally agree with you, and don't think the CD is the most economically useful investment right now, the money in the CD isn't really "locked up." It's still being used for investments, which then turn around and spend the money on things like capital equipment, wages, etc. The issue is that we don't have any issue right now with access to capital. The bigger issue is not having enough demand, for which the solution is having more money available in the lower class and middle class.

[GreatSageCorban]

"Hello guys, I has a question about tax brackets"
/13 pages of bickering.

[Twotonsteak]

I am asking about taxes taken from paychecks.

(These numbers are slight estimates and not exact)

So I get paid weekly. In a 30 hour week, making 10.50 an hour, I only get $275 from the $315 I was supposed to make. Around 12% taken out.

My boyfriend who gets paid every two weeks, clocked in 88 hours, 8 of them being overtime, making 10.50 an hour, only gets around $750 of the $950ish he earned. Over 20% is taken out.

Why the huge difference?

The technically accurate reasoning is that your tax-rate is affected by exemptions, deductions, hours worked, state worked in, and state lived in among others. For instance Texas is considered a very friendly state with relatively low taxes. By contrast I pay around 18% in taxes for thirty hours of work, but I live in PA and state taxes are much higher.

The more accurate reasoning is that the Federal Government (especially Democrats), as a rule, punishes success. The harder you work, the more you make. The more you make, the more you pay in taxes. This is why lower-income families have a higher "tax rate," but pay virtually no federal taxes. Mean-while the Middle Class and Wealthy have a lower "tax-rate," but pay more in taxes.

In short the entire system is fubar.

[Reeve]

The more accurate reasoning is that the Federal Government (especially Democrats), as a rule, punishes success. The harder you work, the more you make. The more you make, the more you pay in taxes. This is why lower-income families have a higher "tax rate," but pay virtually no federal taxes. Mean-while the Middle Class and Wealthy have a lower "tax-rate," but pay more in taxes.

In short the entire system is fubar.

What? No. First of all, the government doesn't "punish success." If you are successful, you still make tons more money than someone who is not. You pay a higher rate than someone who is unsuccessful in order to support the system that allowed you your success.

Secondly, lower income families do NOT have a "higher tax rate," nor do higher income families have a "lower tax rate," except inasmuch as the top end families might derive a lot of their income from capital gains, which is inexplicably taxed at 15% instead of normal earned income rates.

[Daelak]

The technically accurate reasoning is that your tax-rate is affected by exemptions, deductions, hours worked, state worked in, and state lived in among others. For instance Texas is considered a very friendly state with relatively low taxes. By contrast I pay around 18% in taxes for thirty hours of work, but I live in PA and state taxes are much higher.

The more accurate reasoning is that the Federal Government (especially Democrats), as a rule, punishes success. The harder you work, the more you make. The more you make, the more you pay in taxes. This is why lower-income families have a higher "tax rate," but pay virtually no federal taxes. Mean-while the Middle Class and Wealthy have a lower "tax-rate," but pay more in taxes.

In short the entire system is fubar.

Fact: Poorer income earners pay a larger portion of their INCOME to state and federal taxes.

Fact: The wealthiest among us in the US, pay a smaller portion of their INCOME to state and federal taxes.

Fact: Giving tax breaks to the wealthiest among us has no affect on employment, larger GDP growth, or higher federal tax receipts.

Fact: Progressive taxation is the best way to create a healthy economy so that the 99% of wage earners have more money to spend on consumer goods. The wealthiest 1% do not have the consumer buying power as the vast majority does when acting in concert. Sales and excise taxes historically produce less revenue for states, and take large chunks out of the vast majority of wage-earners pockets, i.e. less to spend on consumer goods aka DEMAND. Regressive taxation policies, like the ones in the report posted above are inherently unstable and cause massive deficits and more reliance on funding from the federal government.

Fact:

[GreatSageCorban]

Personally, I wouldn't mind paying taxes, if the government lived within it's means, and stayed within the core roles of what a government is supposed to do. I balance my budget every month. They need to do the same. Cut the waste, if your still over speeding, cut more waste.

If after 'literally' all waste has been cut, and your still over budget, then we'll 'talk' about tax increases.

[NatePsy]

The wealthy must get taxed a shitload of money and if that is not the case, why aren't they falling in line with the rest? Can't exactly be bracketed if they aren't applying it to the wealthy.

[Kujako]

Personally, I wouldn't mind paying taxes, if the government lived within it's means, and stayed within the core roles of what a government is supposed to do. I balance my budget every month. They need to do the same. Cut the waste, if your still over speeding, cut more waste.

If after 'literally' all waste has been cut, and your still over budget, then we'll 'talk' about tax increases.

I agree, however there is difficulty getting enough people to agree on what the "waste" is. Especially when those benefiting from it are also the ones who can afford to send lobbyists. So even if you assume that all politicians are incorruptible, they are still only exposed to one sides opinion. There is no anti-defense spending or anti-farm bill lobbyists.

[Reeve]

Personally, I wouldn't mind paying taxes, if the government lived within it's means, and stayed within the core roles of what a government is supposed to do. I balance my budget every month. They need to do the same. Cut the waste, if your still over speeding, cut more waste.

If after 'literally' all waste has been cut, and your still over budget, then we'll 'talk' about tax increases.

Government budgets and personal budgets aren't comparable. For example, you don't have the ability to borrow billions of dollars at 1% interest. If you could, it would undoubtedly be a good investment opportunity for you.

Second, how do you define waste? What percentage of the budget is currently consisting of waste?

[Daelak]

Personally, I wouldn't mind paying taxes, if the government lived within it's means, and stayed within the core roles of what a government is supposed to do. I balance my budget every month. They need to do the same. Cut the waste, if your still over speeding, cut more waste.

If after 'literally' all waste has been cut, and your still over budget, then we'll 'talk' about tax increases.

Equating your household budget with that of the largest first world country is laughable, if not downright irrelevant. All first world countries, like the US, are all welfare states, because that is the definition of a first world country.

Before WWII, the GI Bill, SS, and medicare, there were literally people dying in the streets and starving. There was no recourse for people who were sick, had no access to medical attention, and therefore life expectancy and infant mortality were daily horrors of living. Those social programs that were implemented were some of the direct reasons why we have such a large middle class now.

Again, remember why first world nations are called first world nations, it is not because they follow a libertarian or conservative government philosophy, it is because they have robust welfare programs, the most progressive taxation policies, and the most freedom. Unless you can show me where all the third world millionaires and billionaires are hiding out, they have no other choice, and it would make them a lot more wealthy if they lobbied for more income taxation.

[Purlina]

If your really wealthy you should be making most of your money from long term capital gains anyway....

[Porcell]

What? No. First of all, the government doesn't "punish success." If you are successful, you still make tons more money than someone who is not. You pay a higher rate than someone who is unsuccessful in order to support the system that allowed you your success.

Exactly.

http://taxfoundation.org/article/sum...ome-tax-data-0

The top 1% (1.4 million people, total AGI of group ~1.3 Trillion) had an average AGI (Adjusted Gross Income) of $960,000 and paid an average rate of 24%, contributing a total of $318,043,000,000 in income tax, which was 36.7% of the total income tax collected.

The 25%-50% group (35 million people, total AGI of group ~$1.6 Trillion) had an average AGI of $47,000 (upper end was $66,000 and lower end was $32,000) and paid an average rate of 5.58% and contributed a total of $90,449,000,000, or 11% of the total income tax collected.

So you can clearly see that the rich do in fact pay more in income tax. The top 1%, 1.4 million people making $1.3 trillion, compared to the second quartile (25%-50%) which combined made about the same amount ($1.6 trillion), but paid 11% of the total collected amount, compared to 37% contributed by the 1%.

By the way, I'm not saying it's unfair or needs to change at all. You'll never hear a rich person say "They tax me way too much, I wish I made less money." I think it's fine the way it is. You don't need to try and bleed the stone dry, but you don't need to give them any breaks either.

[Reeve]

Equating your household budget with that of the largest first world country is laughable, if not downright irrelevant. All first world countries, like the US, are all welfare states, because that is the definition of a first world country.

The definition of a first world country is the US and its allies during the cold war, just to be accurate. 2nd world is Russia and its allies, and 3rd world is everyone else. People have just grown accustomed to thinking of those terms in economic terms because there was a high correlation between wealth and first world vs. third world status. China, for example, is a second world country, as is Russia, the Ukraine, Estonia, etc.