Tax policy

[Vanquisher]

So much is made of republicans saying that they will vote for John McCain because their taxes will go down, and they don't want the government spending their money, but if you really, really look at it, that logic seems so incredibly flawed to me.

See this graphic from info collected by the Tax Policy Center (a nonpartisan group).



What am I looking at that's wrong here. Everything that we are hearing is that anyone making over 250K a year will have a 55% tax rate under Obama, but clearly, this doesn't look to be the case.

http://www.willobamacutmytaxes.com/

Then, there is this site saying that I will pay $6500 more under Barack Obama (for our new salary). I think I can live with that, that surely doesn't seem to be the tens of thousands of dollars that I am hearing from other. The differences in other tax brackets are even less, and only when you are in the bracket of making over a million dollars a year does the difference get to be significant. Well, boo hoo.

If you put our salary as residents, its a 200 dollar difference! It is a lot of money when you are a struggling family, but is it THAT much. Further, Obama has plans to help students and people with student loans. I am sure most of us can relate to that problem. You used to be able to get residency deferments for loans for 3 years, until George Bush signed the College Cost and Reduction Act. I have hopes that residents would be in a better position under Obama's plan.

What do you think?

[PrincessFiona]

Re: Tax policy

What I think is that under McCain, I would get back $7000k/yr. I know it sounds terrible...it's not tens of thousands of dollars...but it would be a great addition to my children's college funds. I am all for paying taxes...but I would argue that we should all pay the same flat rate. I don't care if you earn 50,000 or 5 million. If you come by your money honestly and through hard work, why should you pay a higher percentage of your income in taxes? Just because you earn more?

Ultimately,...and I know this sounds terrible...we sacrificed, scrimped, went into debt and have really struggled to get where we are financially. Why are we paying more for our hard work? I have a friend who is a teacher...and she is married to a teacher. Together each year, they pull in slightly over 100k. No, really...and they have their summers off, holidays off, didn't have to go to med school, do a residency or a fellowship....AND they use all of their tax stuff to get the money that they paid in during the year back.

It's just not fair...and that is the biggest problem that I have with the democrats right now...this angry idea that because someone earns more money, the government and people are almost entitled to their cut. What?

I guess attendinghood and paying taxes has changed me.

Kris

[Vanquisher]

Re: Tax policy

Right, Kris. I totally understand. It's not like I want to pay 7000 dollars more a year, either. I feel like I am entitled to that money as well. I think a flat tax is a better solution, but neither of these candidates is talking about a flat tax. I guess the other issues have me thinking that Obama is a better pick, though. Plus, medical school and residency were HARD, and I cannot imagine making them fiscally harder. The truth is that I will have more money in a few years and as greedy as I want to be and have my cake and eat it too (I deserve it!!!), can I really ask my parents to make that sacrifice for 7 thousand dollars?

My parents are teachers, and they aren't living the lap of luxury that you claim. They make nowhere near 100K. My mom has a Masters degree and nearly a Ph.D. that she had to pay for with school loans. My dad has nearly a masters degree. My mom has been teaching for 21 years. My dad taught for 30, but he was forced into early retirement because they were taking their health care benefits away. My dad has worked every summer since I was born selling used cars. They have both done odd jobs. My dad put in extra hours teaching driver's ed. It's not all that glorious. It sounds that way, though, doesn't it? It sounds all awesome to have summers off. Well, living off of food stamps and in a tiny little house while my mom was in college and my dad was trying to support us on his awesome teacher's salary with his summers off SUCKED. There is no way in hell I ever considered being a teacher. You know how I feel about medicine, and I would do it in a heartbeat over becoming a teacher. No respect and poor pay (considering their education level and the stresses of their jobs) and dealing with all of the external factors and subjective reviews of your performance as a teacher under the ludicrous NCLB act. The stress my mom is under is really incredible, and I wish with all my heart that I could win the lottery and give her enough money to retire.

So while an extra 7K sounds nice and all, I can't do it.

Sorry, the teacher things ruffles my feathers.

[PrincessFiona]

Re: Tax policy

Well, Heidi...I'm talking about a specific teacher here who I know well...but she has been a teacher now for 20 years and that explains her income partly.

Regarding the $7800/yr. I'll give it up...if...my children are equally entitled to the same grants and loans as people who earn less. You see...We pay more percentage-wise in taxes...and then what do we get for that money? Our children will not qualify for any kinds of govt. grants or loans for college because we earn too much.

It isn't even about that though. Ultimately, if I want to swim naked in my money, it should be mine to do that with.

Believe me when I say that I felt much differently a few years ago...but I know how much money we pay each year in taxes...and on top of that, we are hit with the AMT. Obama wants to raise the social security cap too. So...the reprieve that we get the last few months of summer will be on top of the $7800? Ultimately, that hurts America, because we use that money to pay for our vacation trips, buy furniture etc. To top it off...we don't even expect to GET social security....

I'm firmly opposed to handing over any more money to the government. They clearly can't manage it and the more that we give...the more that they take. If I saw clear benefits for my family: free college; quality, well-reimbursed healthcare for kids and the elderly; a well-designed national public transportation system....I'd think twice. But as it stands right now...this is my biggest issue with the democratic ticket.

[SuzySunshine]

Re: Tax policy

That's a really interesting chart Heidi and I have to agree with you. I look at the taxes for DH and I but I also look at the taxes for my parents and it does affect my decision. My dad is a state employee who loses benefits or pays more for them every year, my mom works at the same grocery store she has worked at since I was 10 b/c in the rinky dink town I grew up in she can't go anywhere else and make the money she makes which isn't much. I pray every day that she'll get to retire soon and she's only 54.

As for the teacher thing, MN teachers are paid VERY well compared to friends I have that teach in other states.

[Vanquisher]

Re: Tax policy

I think I would be ok with a flat rate of taxation if it taxed all income - interest, capital gains, yes even inheritance - as well as salary.

And I maintain that no candidate's tax proposal actually means anything at all (because of congress), but the comparison can be a fun exercise I suppose.

Right! Exactly! Checks and balances and all that.

Re: Tax policy

This is THE issue that divides me & DH in politics.

DH would echo almost everything Kris said - people shouldn't be punished for working hard and making more money.

I know this is idealistic talk, but people aren't given equal abilities or opportunities. Not everyone is able to become a doctor, intellectually, emotionally, even financially. I hear what DH is saying, and I feel bad for him b/c he's the one working so hard, but we're not going to go hungry because we have to pay a larger portion of the taxes. There are people who would, people who aren't buying meat for their kids because it's too expensive. Again, not everyone is able to make enough money to make ends meet, no matter how hard they work to overcome whatever difficulties they were handed.

DH just wants the government to stay out of his paycheck - and DH isn't a stingy person. He's super-generous and gives where he sees a need, both immediately around us and internationally. But I still think we can contribute a greater amount to the government so people who are "experienced" can devote their time to allocating it where there's the greatest need. And frankly, if people who are able don't do something to alleviate the problems, we'll all be affected eventually. I don't want a lot of poor, irritated, jaded people running around in my community. I'd rather pay more so they have better streets, less debt, and more time to be happy with their families.

One area where I could agree with Kris, though: If the govt isn't using the money appropriately, then yeah - what's the point?

[PrincessFiona]

Re: Tax policy

Deb....and I guess that is where I break off with myself too. I am a social liberal. I agree 100% that equal opportunities aren't there and that we need to have a good social net. I would support increased funding for schools, year-round school, universal healthcare etc.

The problem that I have is that there are a lot of people who can put meat on the table that pay less than we do in taxes percentage-wise...and there are big corporations who get out of paying millions and millions in taxes every year when they should be ponying up.

I just think things need to be set up in a more fair way. Everyone should pay an equal percentage of their income in taxes...but there should be some stipulations for people living in poverty, we should have better food programs, drug treatment, health insurance coverage for every man, woman and child....AND...this is the big problem that I have with the republican party. They scream that we can't afford it and that people should just pull themselves up by their own bootstraps...and yet at the same time, we are ok to fund costly unnecessary wars. I don't really hear the republicans wondering where they are going to get the money for that. :huh:

Maybe the answer lies more in finding ways to level the playing field as much as possible....school vouchers, school choice, higher qualifications for teachers, better pay, universal healthcare. If we give people a more fair start early in their lives then they might have a better chance to become more educated. At the same time, not everyone can or will become a doctor, lawyer, teacher etc....and people in other lesser paying jobs and professions should be treated with the same respect. I need my car repair guy as much as I need the guy to build my house, treat my dog or teach my kids. Even though salaries vary, every working person should be treated like a professional deserving of adequate health and dental insurance etc.

I don't know what the answer is.

Did I mention that I have no idea who I'll vote for.

Kris

[GrayMatterWife]

Re: Tax policy

The one thing to note about Obama's plan is that, as to lower-income earners who are filers but not tax payers, it does not really provide a "tax cut." It is a refund based on the representations made in the filer's return. A tax cut is usually understood to be a rate reduction, not a refund. However, Obama's plan calls for refunds (that is, redistribution) to tax filers who are not tax payers because they don't make enough to owe any federal income taxes at the end of the year (that is, folks who get their federal income taxes withheld back in the form of a refund). Currently, approximately 40% of the tax filers are not tax payers based on their lower income levels.

Under Obama's plan, higher earners (but under a certain threshold) may receive a real tax cut by receiving a variety of cuts and credits, that results owing less at the end of the year. They still owe taxes, but just owe less. However, lower-income tax filers/nonpayers also wil be receiving something: a check. They will be receiving cash money despite having contributed nothing in the form of tax payments. It is a form of wealth redistribution from the wealthier (those required under the Tax Code to pay taxes, based on their taxable income levels) to the less wealthy, through the government. Some might even call if a form of welfare. But, to any degree, it is not really a "tax cut," because you can't "cut" from zero.

This is also why the "tax cut" to lower income earners (read: nonpayering tax filers) under McCain's plan is so negligible. He does not endorse government-facilitated wealth redistribution as a matter of his broader policies, so people who don't pay taxes don't get anything.

[McPants]

Re: Tax policy

Speaking as a foreigner (once again, note that I haven't lived a day as an American, culturally and financially speaking) I find it extremely difficult to understand how anyone who has any interest in healing or helping others could ever support a tax policy that is based on a flat rate for all citizens. People are simply not all clones of each other. Some people are cut out to be for instance physicians (D-gf), academics (myself) and others are cut out to perform jobs that are less demanding with regards to responsibility, personal achievement and hours spent getting to the point that you get to perform it.

I have all the respect in the world for your husbands who work unreasonably many hours per day and want to feel that it is worth it when they read their paycheck at the end of the month, however do they not end up making a good living? Do they prefer people starving to death because they have no money to pay the flat tax rate that is the same for the billionaire, millionaire, and the reasonably wealthy person that I think most of us recognize ourselves as. As much as I like the prospect of having lots and lots of money, I would be ashamed of supporing such a system and I'm not even the person who's taken a hippocratic oath. Me and D-girlfriend will make enough money to make our lives comfortable even if we happen to pay a bit more per capita than the average person.

I do apologize for this rant, however it somehow strikes a very unpleasant chord with me when people who ostensibly claim to want to help others show political opinions that at least to me appear to be a polar opposite of that view. Also, don't forget, I'm European.

EDIT: When making this statement I mistook flat tax rate to mean.. Oh, just read Poky's comment below, okay?

[poky]

Re: Tax policy

McPants, just to clarify:

I'm 99% sure that what is meant by "flat tax" in this conversation is a flat *percentage*, not a flat *absolute amount*. And that there would be provision for people under a certain income to not have to pay at all.

Personally, I'm not convinced flat percentage is the way to go, but I'm all for simplification, because it would save a *lot* of money. Of course, it would also put a lot of CPAs out of work. :huh:

[McPants]

Re: Tax policy

McPants, just to clarify:

I'm 99% sure that what is meant by "flat tax" in this conversation is a flat *percentage*, not a flat *absolute amount*. And that there would be provision for people under a certain income to not have to pay at all.

Personally, I'm not convinced flat percentage is the way to go, but I'm all for simplification, because it would save a *lot* of money. Of course, it would also put a lot of CPAs out of work. :huh:

Agreed, after a quick wikipedia excursion, I realize you're entirely correct and the view instantly becomes much less offensive to me. What I was thinking of was the so called "poll tax" that Margaret Thatcher put into practice in the UK in the early 80's (see how my being European complicates things for me!). I still support a progressive tax rate, however I hold no negative opinions towards anyone who were to support a flat tax percentage.

[PrincessFiona]

Re: Tax policy

McPants, I have no problem at all with paying taxes...even the 40% that we pay when all is said and done...but I feel like we get nothing for that money I guess. Having lived in Europe for years (and being married to a European) I can't understand why we don't have some form of universal health care in this country, why a college education is so expensive and even out of reach for many people...and why we haven't invested in better public transportation (buses and trains) nationally.

I also believe that we all come from different backgrounds and have different abilities. No one should be starving, without healthcare and the basic necessities...no one...I truly believe that. I don't feel like people should just pull themselves up by their bootstraps. I do, however, feel like the tax system should be more fair. Some people end up being able to deduct so many things that they end up getting back every dime that they paid in taxes at the end of the year...even though they make a decent living and don't go without. That seems unfair to me. I'm paying...I'm contributing...I just think maybe we should all contribute a little bit.

:soapbox:

Kris

[McPants]

Re: Tax policy

McPants, I have no problem at all with paying taxes...even the 40% that we pay when all is said and done...but I feel like we get nothing for that money I guess. Having lived in Europe for years (and being married to a European) I can't understand why we don't have some form of universal health care in this country, why a college education is so expensive and even out of reach for many people...and why we haven't invested in better public transportation (buses and trains) nationally.

I also believe that we all come from different backgrounds and have different abilities. No one should be starving, without healthcare and the basic necessities...no one...I truly believe that. I don't feel like people should just pull themselves up by their bootstraps. I do, however, feel like the tax system should be more fair. Some people end up being able to deduct so many things that they end up getting back every dime that they paid in taxes at the end of the year...even though they make a decent living and don't go without. That seems unfair to me. I'm paying...I'm contributing...I just think maybe we should all contribute a little bit.

:soapbox:

Kris

Kris, I can definitely understand your frustration with the tax policies (note that my ever so slightly misguided rant was against people who support a flat tax amount paid by all citizens). Given that health care isn't universal in your country, taxes obviously have to be low enough for people to be able to afford health insurance. The same goes for higher education. Paying taxes without feeling like you get anything back is very demoralizing. Having grown up in the country that used to have the highest tax level in the free world, I certainly know what that's like.

I can't really comment on the issue that certain people get to deduct unfair amounts and others don't, however. It sucks if that is the case, though in my experience most systems of taxation have their loopholes and all too often these loopholes are used by people with enough resources/lack of scruples to search them out. Perhaps the U.S. system of taxation has more of those than other countries. If so, a revision of the tax policies would seem to be in order.

Re: Tax policy

If so, a revision of the tax policies would seem to be in order.

Holy Understatement Batman! I think that's one sentiment that ALL Americans can agree on.