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Old 04-17-2018, 02:55 PM   #11 (permalink)
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As always, I'm attempting to discuss the "why" of the topic rather than just the "how", and it seemed you had already covered the "how" of the thread.
Sales tax- every cashier in the country is a tax collector all year long, and you need to either deal with deductions at the grocery store every week until you max them out or just do it once a year when you file. Every store also needs to account for all these individual collections and forward them to Washington.

Income tax- Every company has someone who handles payroll already. This person handles deductions relatively seamlessly, and you can work on deductions once a year when you file.

Hopefully, most of us will have fewer jobs in the course of a year than we will have interactions with cashiers. That alone makes taxing income more efficient. Aside from the efficiency benefits of collecting tax payments in bulk once a week/month/what have you instead of every time someone in the country buys gum, income taxes have the advantage on not having to be so regressive.

The why is easy: government's got to get paid for some way.
The how is easy, too. Except everyone's got one deduction they like, and tax deductions are used to encourage or discourage certain things, so deductions aren't going away.

Pointing to current political discourse is simply a way of distracting from what you don't want to say out loud: people who are able to save a high portion of their income will see their tax rate reduced by a shift to sales tax at the expense of people who are not able to save a high portion of their income.

Warren Buffett points out that he pays a lower effective tax rate than his secretary, and also points out that that's a bad thing. Switching from income to sales tax would probably result in him paying an actual lower dollar amount in taxes than his secretary. That's even worse.

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Old 04-17-2018, 03:42 PM   #12 (permalink)
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I use the IRS Free Fillable Forms site. No problems with not using the tax software's operating system of choice, no wanting me to "upgrade" to commercial versions if I make too much money or have to fill out an uncommon form...
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Old 04-17-2018, 04:29 PM   #13 (permalink)
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Originally Posted by Fat Charlie View Post
Sales tax- every cashier in the country is a tax collector all year long, and you need to either deal with deductions at the grocery store every week until you max them out or just do it once a year when you file. Every store also needs to account for all these individual collections and forward them to Washington.

Income tax- Every company has someone who handles payroll already. This person handles deductions relatively seamlessly, and you can work on deductions once a year when you file.

Hopefully, most of us will have fewer jobs in the course of a year than we will have interactions with cashiers. That alone makes taxing income more efficient. Aside from the efficiency benefits of collecting tax payments in bulk once a week/month/what have you instead of every time someone in the country buys gum, income taxes have the advantage on not having to be so regressive...

Warren Buffett points out that he pays a lower effective tax rate than his secretary, and also points out that that's a bad thing. Switching from income to sales tax would probably result in him paying an actual lower dollar amount in taxes than his secretary.
Good point that generally speaking, needing to submit taxes continuously is less efficient than once annually. However, most people already pay a local sales tax, so collecting Federal tax in these areas would be a trivial matter. As an example, gas stations already collect sales tax, both local and federal, and these rates are subject to change independent of each other. The process for collecting sales tax has become (is becoming) trivial. Not only that, but cash sales are nearly gone, and collection of taxes becomes easy when transactions are done electronically. This process can be mostly automated.

As I pointed out, making a sales tax progressive is a simple matter, and finding tax loopholes for the wealthy becomes impossible. The wealthy would pay more in taxes both as a percentage of income, and in real terms. There would be no tax loopholes to exploit. Since wealthy people spend more money than poorer people, they would pay more tax.

As an example of a tax loophole, a friend of mine pays his children to do chores. That money is not taxed because it is a business expenditure (all perfectly legal, too). Since he is the custodian of his children's wealth, it is his discretion on where it ultimately goes.

If Buffett pays a lower effective tax rate (which I highly doubt), it's only due to his exploitation of legal means of avoiding and deferring tax payments to the government. Had his secretary been as prudent as he, they would be paying a lower effective tax due to their lower income.

Counting how many useful eyes or appendages we have and applying a deduction is absurd. Maybe everyone who grew up in a single parent family should get a deduction, since that's one of the biggest predictors of financial (and life) success.

The point is, those that spend more money will be taxed more, it will be fair, and it nearly eliminates corruption, special interests, and lobbying. Considering the vast majority of people get a tax refund, freeing up those overpayments by not charging them in the first place gives them more purchasing power throughout the year.
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Old 04-17-2018, 05:41 PM   #14 (permalink)
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Have a higher tax rate for Bentleys than for motorized lunch boxes?

Arizona Governor Doug Ducey fired 134 of the state's 332 audit and collections employees and the state lost $83 Million in taxes. That is especially bad because he reduced the work force by 40%, but audit collections dropped 47%. https://www.azcentral.com/story/news...es/1067745001/

As of 2015, the IRS had ‎79,890 employees and an annual budget of ‎$11.4 Billion.

People buy toys like devices and cars whether or not they are fiscally responsible. Let's say you have one rate for devices that cost a thousand dollars or less and personal vehicles that cost thirty thousand or less, but a $60,000 vehicle has four times the taxes of a $30,000 one, and so forth. Houses are expensive, too, but while I am sure you can still find a nice place somewhere for $100,000, while the cheapest patch of dirty I found in San Francisco was $200,000 for 1473 square feet of a steep hill without street access.

I liked the idea of simplifying taxes before I started paying them. Perhaps those 80,000 tax wo\men enjoy their jobs, but how much of that $11 - 12 Billion could go towards... what is in vogue nowadays? Crosseyed kittens?
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Old 04-17-2018, 06:07 PM   #15 (permalink)
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Arizona Governor Doug Ducey fired 134 of the state's 332 audit and collections employees and the state lost $83 Million in taxes...

As of 2015, the IRS had ‎79,890 employees and an annual budget of ‎$11.4 Billion.

Let's say you have one rate for devices that cost a thousand dollars or less and personal vehicles that cost thirty thousand or less, but a $60,000 vehicle has four times the taxes of a $30,000 one, and so forth. Houses are expensive, too, but while I am sure you can still find a nice place somewhere for $100,000, while the cheapest patch of dirty I found in San Francisco was $200,000 for 1473 square feet of a steep hill without street access.

I liked the idea of simplifying taxes before I started paying them. Perhaps those 80,000 tax wo\men enjoy their jobs, but how much of that $11 - 12 Billion could go towards...
Auditors are hardly necessary when tax loopholes are closed. The problem with deductions is twofold; not only do they artificially manipulate the market to benefit special interests at the detriment of everyone else, but those loopholes are difficult to regulate. Who is going to audit if you have 1 eyeball or 3, for instance? The tax code almost entirely relies upon the goodwill of citizens to be honest, and exploits those who aren't sophisticated enough to claim deductions which they are entitled. Can you imagine if businesses were run this way? You're expected to calculate your own bill using thousands of pages of law as a "guide", and if you make a mistake and are caught, must pay a penalty and possibly face criminal charges.

You're already inventing ways to make something that should be simple very complex, while introducing unfairness by penalizing expensive things.

...and poor people shouldn't expect to live independently in high rent places. I'm far from poor and have no delusions about affording a mortgage in SF. Fortunately the world offers other opportunities, including splitting a dwelling among several people (common in Portland).
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Old 04-17-2018, 06:12 PM   #16 (permalink)
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You know, if tax day were every day, I could probably build a house inside of a couple months. All the house projects are getting done today, and I haven't submitted taxes yet. It's like polishing a turd to me; pointless.

EDIT: It's 11:57pm, and I have finally submitted my tax return. I think by procrastinating, I'm holding out hope I might die before having to actually do it. T-minus 364 days until the next planned torture event.
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Old 04-18-2018, 08:25 AM   #17 (permalink)
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If Buffett pays a lower effective tax rate (which I highly doubt), it's only due to his exploitation of legal means of avoiding and deferring tax payments to the government. Had his secretary been as prudent as he, they would be paying a lower effective tax due to their lower income.
Investment income has long been taxed at a lower rate than actual work. The way tax policy is supposed to work, it means our lawmakers are trying to punish those of us who have to work for a living, encouraging us to live off of investment income instead. Or you could say that the rich have bought Congress.

Social Security and Medicare, reagrdless of how you dress them up, are taxes. Taxes not on income as such, but on payroll income. And they're capped so someone making $1m a year may pay more in SS than I do, but it's a much lower percentage of their income. If they're reasonably smart, they've got things structured so that most of their money isn't in regular payroll anyway.

We can't all be classified as owners and get our pay labeled as investment profits: most of your regular secretary's income will be payroll, taxed at a higher rate than Buffett's money as well as being subject to SS & Medicare deductions.
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Old 04-18-2018, 01:19 PM   #18 (permalink)
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The way tax policy is supposed to work, it means our lawmakers are trying to punish those of us who have to work for a living, encouraging us to live off of investment income instead. Or you could say that the rich have bought Congress.
Most of the people who live off investment income aren't rich - or at least not in the rich enough to buy Congress category. They're people who've worked (seeing their income taxed once already), saved a bit instead of (over)spending, and are now retired.

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... T-minus 364 days until the next planned torture event.
Why do you consider it torture? Unless your return is a lot more complicated than mine (which includes Schedule C, D, SSE, and several pages of numbered forms), it's not all that difficult.

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Old 04-18-2018, 02:27 PM   #19 (permalink)
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I'm not saying Mustachians are evil people who buy congresscritters, I'm saying that evil people who buy congresscritters have most of their income structured as coming from investments.
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Old 04-20-2018, 01:24 PM   #20 (permalink)
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I'm not saying Mustachians are evil people who buy congresscritters, I'm saying that evil people who buy congresscritters have most of their income structured as coming from investments.
Why do you think it's "evil" to support a policy that helps out retired people and benefits the overall economy? FTM, why is it evil to buy a Congresscritter or two?

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