Cutting Taxes

[Dave Gray]

Democrats say:

Cut taxes for the middle class, but not those making $250K+ a year, as the govt. needs the money and tax cuts for the wealthy aren't stimulative.

Sounds reasonable to me.

Republicans say:

Cut taxes for everyone, because it's not the individuals over $250K that are the problem, it's the small businesses that make $250K that we don't want to stifle, as they create jobs and stimulate the economy.

Again -- Sounds reasonable to me.

So why aren't we hearing this compromise:

Cut taxes for individuals under 250K per year, and also cut taxes for any BUSINESS filing over 250K per year, but not individuals.

That seems to fit both sides.  Is there something I'm not understanding as to why this isn't being proposed?

[MyGodWearsAHoodie]

The problem with your solution is  most of those "businesses" in the $250k - $1 million range are "individuals." 

There is no such thing as a "business tax".

There is a tax on corporations (which this is not referring to) and taxes on individual income.  LLCs and partnerships are not taxed as entities but the income the owners make from them.

Let say you own a business that makes $275,00 per year  plus you make $25,000 from investments.  You are taxed at $300,000 as an individual.  There is no way separate your tax from say someone who makes $300k as a salary working for a corporation. 

[Dave Gray]

Is there no way to distinguish business filing as individuals and just rich individuals?

[MyGodWearsAHoodie]

Is there no way to distinguish business filing as individuals and just rich individuals?

There is always a way.  But you are talking about a radical upheaval of the tax code. 

One way would be to tax LLCs as an entity but make their distributions tax free and have different tax rates for LLCs and individuals.  I can think of several ways that would easily open things up to all sorts of fraud and tax evasion though. 

[badger6]

Democrats say:

Cut taxes for the middle class, but not those making $250K+ a year, as the govt. needs the money and tax cuts for the wealthy aren't stimulative.

Sounds reasonable to me.

Republicans say:

Cut taxes for everyone, because it's not the individuals over $250K that are the problem, it's the small businesses that make $250K that we don't want to stifle, as they create jobs and stimulate the economy.

Again -- Sounds reasonable to me.

So why aren't we hearing this compromise:

Cut taxes for individuals under 250K per year, and also cut taxes for any BUSINESS filing over 250K per year, but not individuals.

That seems to fit both sides.  Is there something I'm not understanding as to why this isn't being proposed?

Actually, forget about the business end of it. If an individual makes over 250K a year why should they pay more taxes ? All taxpayers should pay the same percentage after exemptions and deductions. Assuming a hypothetical 10% tax rate. Taxpayer A makes $35K after E&D and pays $3500 in taxes. Taxpayer B makes $350K after E&D should pay $35,000 in taxes. So in actuality taxpayer B pays substantially more in taxes but the total over all percentage is the same. There is no way in hell that someone should be penalized for making more money. Either that or just go to the Fair Tax sales tax thing they keep talking about. BTW, I am kinda poor, but I still don't think that Bill Gates should pay a higher percentage of taxes than I do, fair is fair. I do however think that there should be a maximum amount of money that a person should be allowed to have before donating it away to charity, friends, or family.

[bsfins]

Isn't the problem really,someone has to win,and be right?...I mean If they compromise,neither side wins...If it works,one side has to take the credit,if it flops,the other side has to use it against the other,and beat them to death with it in the next election. Sorry my two cents...

[Dave Gray]

Actually, forget about the business end of it. If an individual makes over 250K a year why should they pay more taxes ? All taxpayers should pay the same percentage after exemptions and deductions.

I think that wealthier people should pay a higher percentage.  ...however, that's not really an issue that's on the table.  We have (and have had) a progressive tax system for a long, long, long time.

[badger6]

I think that wealthier people should pay a higher percentage.  ...however, that's not really an issue that's on the table.  We have (and have had) a progressive tax system for a long, long, long time.

Actually that is the issue on the table. Although we have progressive tax brackets, not extending the tax cuts for higher earners effectively just widens the percentage gap. How is this any different than just coming straight out and raising taxes on the higher earners ? It's all an illusion with the end result the same.

If you don't mind me asking though Dave. Why do you feel that people that make more should pay a higher percentage ? In my example above, the higher earner makes 10x the money and pays 10x the taxes. Doesn't that seem fair ? I don't see why being successful should be penalized. Keep in mind that I am south of middle class.

[MyGodWearsAHoodie]

I support progressive tax, cause the wealthy can afford it more than the poor. 

An extra 5% of taxes for a guy who earns $20,000 a year might mean the difference between heating his house to a normal temp or keeping the thermostat at 40 degrees and shivering under 6 blankets at night.

An extra 5% of taxes for a guy who earns $20,000,000 a year might mean the difference between have 2 private Jets or only having one. 

[Dave Gray]

If you don't mind me asking though Dave. Why do you feel that people that make more should pay a higher percentage ? In my example above, the higher earner makes 10x the money and pays 10x the taxes. Doesn't that seem fair ? I don't see why being successful should be penalized. Keep in mind that I am south of middle class.

There are a few reasons.  I don't really think that taxes are about fairness.  Taxing everyone equally would be the fairest, I agree.  However, I don't think it's what's best for the country.  I think that we're stronger as a nation when there isn't a large gap between the poor - middle - upper classes.  I think it's best for everyone, even the rich.  Even though the wealthiest people would pay more, they won't have a neighbor sleeping in the street.  It's a better scenario for both, I feel, even if it is forced charity.  I think that it's kinda like the old adage about a chain being only as strong as its weakest link.

The 2nd reason is that I think it's good for the economy, as a whole.  Spending habits of the very wealthy don't change based on tax structure.  They are rich, regardless.  But spending habits of the poor do, greatly, since every bit of the money will be used to buy goods and services. 

The 3rd reason is that I feel that the wealthy utilize the structure of our country to gather their wealth more-so than the poor do.  Not counting stuff like food stamps and welfare (which is definitely worth arguing, I just think it's a separate thing), I think that upper earners utilize systems more.  I'll give you one example, but I'm sure there are many:  Those with money travel a lot.  They use airports way more than broke people do.  But, we are all paying for the FAA.

I think that I'm not really getting my 3rd point across very well.  I'll try it another way:  We have a system in the US, set up by tax dollars.  It includes commerce, roads, the internet, cable, telephones, trade agreements, and a slew of other stuff.  The wealthy are taking more advantage of that system to earn more money.  Therefore, I think it's reasonable to put them on the hook for more of it.

Lastly, I think it's just a matter that we need to control the deficit.  It needs to come from a reduction in spending AND an increase in taxes.  I don't think that the middle or lower class can bear that tax burden equally with the upper class.  The result would be too damaging.  Therefore, I support a progressive tax system.

[Spider-Dan]

If an individual makes over 250K a year why should they pay more taxes ? All taxpayers should pay the same percentage after exemptions and deductions.

Why the same percentage?  Why not just the same dollar amount?

No, seriously... why is it presumed that paying the same percentage is somehow "more fair" than the progressive system we have now?  At the end of the day, richer people are still paying more real dollars in taxes.  So if we can argue that it's unfair for Bill Gates to pay a higher percentage than a janitor at Best Buy, why can't we argue that it's unfair for him to pay more money, period?

The concept is very simple:  you make more money, you pay more money in taxes.  Argue against that, or don't, but don't try to sell me the story that if they are only paying the same percentage (where said percentage is defined in an extremely nebulous and malleable fashion), now it's actually "fair."  Because it's still not, and it'll just result in moving the goalposts further to the right.

P.S. Why include deductions and exemptions at all?  Doesn't that make it less fair?  Why should I pay more real dollars in taxes, as a single non-parent adult, compared to another adult with the same job and salary as me, but with a wife and 3 kids?

[bsmooth]

Actually that is the issue on the table. Although we have progressive tax brackets, not extending the tax cuts for higher earners effectively just widens the percentage gap. How is this any different than just coming straight out and raising taxes on the higher earners ? It's all an illusion with the end result the same.

If you don't mind me asking though Dave. Why do you feel that people that make more should pay a higher percentage ? In my example above, the higher earner makes 10x the money and pays 10x the taxes. Doesn't that seem fair ? I don't see why being successful should be penalized. Keep in mind that I am south of middle class.

We can establish a just and fair system, as long as your remove all the special loopholes the rich people's lawyers always seem to find, and every special deduction os removed. Also there needs to be 100% transparency so that the rich can no longer hide money offshore or in Switzerland.

[EDGECRUSHER]

I don't think the question is whether or not the wealthy can afford the taxes, but moreso why are they being asked to carry more of the burden? They worked for their money just like everyone else(except Paris Hilton), so why punish them when a standard tax rate would have them paying more in taxes anyway?

I just find it to be un-American.

[Spider-Dan]

I don't think the question is whether or not the wealthy can afford the taxes, but moreso why are they being asked to carry more of the burden?

Because they have more disposable income.

This nation has to pay for a lot of things like infrastructure, military, and, yes, social programs.  In order to be able to afford to pay for them, there needs to be a certain level of revenue.  Right now, the revenue isn't high enough, so that leaves us with one of three non-exclusive choices:

1) cut spending
2) tax the lower income earners more
3) tax the upper income earners more

You find me a politician that wants to make significant cuts to any of the top three government line-items (Medicare, Social Security, defense) and I'll show you a politician that's out of a job.  So already, we've eliminated 82% of the budget from scrutinization.

If you care about running a balanced budget, you need to increase taxes.  And sorry, but if you're going to tell me that a low-income family being unable to afford to send their kid to college so that a person making $10M can keep 2% more of his income is "more fair," you and I have drastically different definitions of what the word fair means.

I do not see a nation in which we have a tiny, super-rich aristocracy and a sprawling majority of poor serfs as "the American dream."

[Fau Teixeira]

and by the way .. this is a tax on income .. not on wealth .. if rich people don't want to pay higher taxes on their income over 250k .. then the solution is very simple .. don't make more than 250k in income after deductions.

seems to me like no-one is forcing the rich to get richer here .. yay for fairness