The Pawlenty Plan/My plan.

[The Don]

By your own account, you earn around $22k a year.

Applying standard deductions....

The first $5,700 (or $8,350 if you're head of household) is tax free, I'll use the lower deduction.

You'll pay 10% on the next $8,050 - $800
You'll pay 15% on the remaining $8,300 - $1200

So your effective tax rate is less than 10%.

You claim that you're going to double the tax take by:

• Increasing the deduction to $15k
• Reducing the marginal tax rates
• Reducing corporate taxes from 35% to 15%

Certainly in your case, the tax take would be down $2,000

In my, and my company's case, the tax take would be down by over $30,000

And yet somehow this is supposed to increase the tax take

 

[MinnesotaBrant]

Really you pay 35% off the top and live in America? No need to sharpen the guillotine for you then. Be sure to carry your 1040 with you at all times. You might need it. Thanks for not mentioning that I told you to kiss my ass. I was referring to your income level and not you as a person.

 

[The Don]

Really you pay 35% off the top and live in America? No need to sharpen the guillotine for you then. Be sure to carry your 1040 with you at all times. You might need it. Thanks for not mentioning that I told you to kiss my ass. I was referring to your income level and not you as a person.

I do not live in the United States as I clearly stated in my earlier posts in this thread. I was presenting what would happen to someone like myself under your tax scheme.

I also made it quite clear that my company would pay tax on its profits at 35% and that this would drop to 15% under your plan, not me as an individual. This would save approximately $30,000 in tax payments.

Please address the apparent contradictions in your claims about your tax plan

• You claim that it will double Federal Income Tax receipts
• You claim that it will transfer the burden of taxation to the very rich
• You claim that it will reduce payments for normal working stiffs

When I have attempted to clearly demonstrate that:

• Using widely divergent examples, receipts overall will fall
• Marginal tax rates are considerably lower, the rich will pay less of every extra $ they earn
• IF payments do increase then the people whose payments will increase most are those you are claiming to help (the lower-middle and middle classes)
• It relies on 100% collection rates
• It's an unfair sytem where earning a single extra dollar will result in paying neatly $7500 extra tax
• It relies on a mysterious set of criteria to define who will and will not ba liable to pay tax based on some combination of net worth (nearly impossible to calculate) and somehting to do with the fact that people who don't currently pay tax will not be paying tax in the future

Re-reading the thread from the start, it seems that your motivation for proposing this plan is a combination of anger that you have a substantial tax bill to pay and jealousy towards a cow-orker who apparently has a much better lifestyle than you do despite only earning a little bit more. Furthermore you believe that this person was in receipt of a significant tax rebate.

I'd like you consider the following:

• If you cannot pay your taxes in a lump sum, do what my FIL used to do, put aside tax money every month so that the final payment isn't so severe
• If you cannot do this because your outgoings exceed your incomings even if you don't account for the tax payments then you need to do somehting about one side of the equation, the other or both (spend less and/or earn more money)
• Worry less about other people. The way you descibe your cow-orker's lifestyle seems at odds with their income. $100,000 sounds like a lot of money but if you're raising 4 kids and (allegedly) spennding $100s a week on eating out and travelling first class etc.etc. then this is impossible unless your cow-orker has another source of income and/or is getting significant financial support from their partents
• Your cow-orker may be boasting about their lifestyle but they may be exaggerating a bit. Some people I work with like to boast about how much they spend and what a great lifestyle they lead and what luxuries they have. I'm not saying that they're lying but the 5* hotel they claim to stay at turns out to be a run of the mill 3*

I personally have not problem with the well off (including myself) paying more income tax but in my opinion the way to do this is to increase rather than decrease marginal tax rates.

 

[MinnesotaBrant]

I do not live in the United States as I clearly stated in my earlier posts in this thread. I was presenting what would happen to someone like myself under your tax scheme.

I also made it quite clear that my company would pay tax on its profits at 35% and that this would drop to 15% under your plan, not me as an individual. This would save approximately $30,000 in tax payments.

Please address the apparent contradictions in your claims about your tax plan

• You claim that it will double Federal Income Tax receipts
• You claim that it will transfer the burden of taxation to the very rich
• You claim that it will reduce payments for normal working stiffs

When I have attempted to clearly demonstrate that:

• Using widely divergent examples, receipts overall will fall
• Marginal tax rates are considerably lower, the rich will pay less of every extra $ they earn
• IF payments do increase then the people whose payments will increase most are those you are claiming to help (the lower-middle and middle classes)
• It relies on 100% collection rates
• It's an unfair sytem where earning a single extra dollar will result in paying neatly $7500 extra tax
• It relies on a mysterious set of criteria to define who will and will not ba liable to pay tax based on some combination of net worth (nearly impossible to calculate) and somehting to do with the fact that people who don't currently pay tax will not be paying tax in the future

Re-reading the thread from the start, it seems that your motivation for proposing this plan is a combination of anger that you have a substantial tax bill to pay and jealousy towards a cow-orker who apparently has a much better lifestyle than you do despite only earning a little bit more. Furthermore you believe that this person was in receipt of a significant tax rebate.

I'd like you consider the following:

• If you cannot pay your taxes in a lump sum, do what my FIL used to do, put aside tax money every month so that the final payment isn't so severe
• If you cannot do this because your outgoings exceed your incomings even if you don't account for the tax payments then you need to do somehting about one side of the equation, the other or both (spend less and/or earn more money)
• Worry less about other people. The way you descibe your cow-orker's lifestyle seems at odds with their income. $100,000 sounds like a lot of money but if you're raising 4 kids and (allegedly) spennding $100s a week on eating out and travelling first class etc.etc. then this is impossible unless your cow-orker has another source of income and/or is getting significant financial support from their partents
• Your cow-orker may be boasting about their lifestyle but they may be exaggerating a bit. Some people I work with like to boast about how much they spend and what a great lifestyle they lead and what luxuries they have. I'm not saying that they're lying but the 5* hotel they claim to stay at turns out to be a run of the mill 3*

I personally have not problem with the well off (including myself) paying more income tax but in my opinion the way to do this is to increase rather than decrease marginal tax rates.

It would increase tax rates. What you are not taking into account is that more than half the people in the US are either paying no tax, or getting more out then they put back in. I think what you are talking about in the US is called a C corp as they pay 30 something %. Most C corps are not paying this though as there are loopholes. Most corps in the US are S-corps or LLC's where you pay a graduated rate. all you really need to look at is the effective tax rate. The well off take a hit but I would assume could afford it. The next 4% would pay up to 5 percentage points more and and the top 1% would pay 1-2% more. It is way more agressive than what you think it is. Some people would make out like childless couples with little net worth making less than 66k a year.

The net worth thing can not be emphasized enough since a low income couple who does not have enough money to pay their tax will see their tax percentage increase greatly through penalties and fees. A person who has enough money to pay does not have to pay this extra tax. The IRS counts on this extra hidden tax to fuel the system. They do this through aggressive collection knowing that people without net worth will not have the resources to resist. I imagine it will take some mechanism of the state, such at the one used in France during their revolution, to correct this issue.

 

[The Don]

It would increase tax rates. What you are not taking into account is that more than half the people in the US are either paying no tax, or getting more out then they put back in. .

I think what you're confusing is marginal tax rates (which for most well-off people are well above 25%) and the amount of tax that is actually collected. 25% represents a significant cut in tax rates for the truly wealthy. The fact that the government fails to collect that tax revenue just highlights that at 25% the tax take will be even lower.

The net worth thing can not be emphasized enough since a low income couple who does not have enough money to pay their tax will see their tax percentage increase greatly through penalties and fees. A person who has enough money to pay does not have to pay this extra tax. The IRS counts on this extra hidden tax to fuel the system. They do this through aggressive collection knowing that people without net worth will not have the resources to resist. I imagine it will take some mechanism of the state, such at the one used in France during their revolution, to correct this issue.

Are you claiming that you don't owe the tax the IRS is claiming from you ?

Do you have any figures about how much the fees etc contribute ? In the UK it's a tiny fraction. I cannot believe it's much different in the US.

 

[MinnesotaBrant]

I think what you're confusing is marginal tax rates (which for most well-off people are well above 25%) and the amount of tax that is actually collected. 25% represents a significant cut in tax rates for the truly wealthy. The fact that the government fails to collect that tax revenue just highlights that at 25% the tax take will be even lower.




Are you claiming that you don't owe the tax the IRS is claiming from you ?

Do you have any figures about how much the fees etc contribute ? In the UK it's a tiny fraction. I cannot believe it's much different in the US.

This is all fantasy but you could charge a 25% tax on all the money that is offshored right now. That should bring in a trillion and change I am sure.

As far as i am setting up a payment plan now. looks like i owe 6600 dollars. i will be paying 150 a month in about a month and a half direct deposit with the bank. should be paid in a couple years. fees seem less then I remember. I had a really tough couple of years and fell behind. It would be nice if my wife saved some money instead of sending it all to her family. The nice thing about her doing that is that it increases the chances that her family will be more successful in the future though so I don't exactly disapprove. This is not something I could have done last year however. You actually have to have 150$ to pay 150$ and I didn't have it last year even though I was working 56 hours a week.

 

[The Don]

I agree that if somehow the government could collect the tax income that has been legally avoided then it would fundamentally change things.

A good example here in the UK is of Vodafone (a cellular operator) who had a multi-billion (£6bn) pound tax bill due as a result of their acquisition of Mannesman (another cellular operator) but tried to offshore it in Luxembourg.

They settled for paying £500m and didn't even have to pay interest (even though they had budgeted for it) - but that's another issue

Or retailer Phillip Green who pays next to no tax. Whatever the flat tax is set at, that gentleman would arrange his affairs so as not to pay it

 

[MinnesotaBrant]

I figured my taxes to be 2k at 37-39k a year as a couple. It surprised me that is was that high. I figure that our take home as a couple is roughly 550 a week. IRS takes approximately 40 dollars a week state 20$. so lets see what the real percentage we pay is. looks like pretty close to 10% for state and federal. If you include back taxes our tax rate is 20% Lets see what expenses are per week

rent 200
food 100
internet and electric 25
payment on back taxes 65.
misc 100.

so that leaves us with 60 dollars a week to think about buying a house taking a trip or whatever. Do you see a problem here? If the government taxes us 0% like they should we would have an extra 125$ a week to buy a house, purchase a big ticket item, or repair equipent that is broken. But the government, knowing it has a easy target, goes after the poor like piranna's after a capybera in the amazon river. I doubt this is going to change whether a republican or democrat gets in so why should I care?

 

[The Don]

I figured my taxes to be 2k at 37-39k a year as a couple. It surprised me that is was that high. I figure that our take home as a couple is roughly 550 a week. IRS takes approximately 40 dollars a week state 20$. so lets see what the real percentage we pay is. looks like pretty close to 10% for state and federal. If you include back taxes our tax rate is 20% Lets see what expenses are per week

rent 200
food 100
internet and electric 25
payment on back taxes 65.
misc 100.

so that leaves us with 60 dollars a week to think about buying a house taking a trip or whatever. Do you see a problem here? If the government taxes us 0% like they should we would have an extra 125$ a week to buy a house, purchase a big ticket item, or repair equipent that is broken. But the government, knowing it has a easy target, goes after the poor like piranna's after a capybera in the amazon river. I doubt this is going to change whether a republican or democrat gets in so why should I care?

So you're complaining that you've got a joint income of close to $40k a year (and I presume no kids because you've not mentioned them) - which puts you at 80% of median income - and you have to pay 10% tax ?

The reason why there are people with higher incomes who pay no taxes is because they have higher deductions. Try acquiring those deductions and see how that works out. Kids or significant medical expenses will do it but that'll up you expenditures considerably. Case in point is your Cow-orker with the 4 kids, their kid related costs are colossal (Current estimates are $226k) so your cow-orker is looking at over $1m in total.

Amazing as this may seem, you're comparatively well off (compared to the US population at large) which is why you're being asked to make a small contribution via federal income tax. In fact, because you're keeping your head above water, you're actually doing very well (comparatively).

What you're experiencing is not unusual however, the feeling that you're doing worse and/or having to pay more tax. One feature of most tax proposals is that they directly benefit the proposer and increase the contributions on "them".

In the short-term the only thing I can see that you can do is to try and decrease costs (40% of income going on rent is higher than average) or somehow increase your income (yes, I know, good luck in this economy). I hope things work out better for you

 

[MinnesotaBrant]

So you're complaining that you've got a joint income of close to $40k a year (and I presume no kids because you've not mentioned them) - which puts you at 80% of median income - and you have to pay 10% tax ?

The reason why there are people with higher incomes who pay no taxes is because they have higher deductions. Try acquiring those deductions and see how that works out. Kids or significant medical expenses will do it but that'll up you expenditures considerably. Case in point is your Cow-orker with the 4 kids, their kid related costs are colossal (Current estimates are $226k) so your cow-orker is looking at over $1m in total.

Amazing as this may seem, you're comparatively well off (compared to the US population at large) which is why you're being asked to make a small contribution via federal income tax. In fact, because you're keeping your head above water, you're actually doing very well (comparatively).

What you're experiencing is not unusual however, the feeling that you're doing worse and/or having to pay more tax. One feature of most tax proposals is that they directly benefit the proposer and increase the contributions on "them".

In the short-term the only thing I can see that you can do is to try and decrease costs (40% of income going on rent is higher than average) or somehow increase your income (yes, I know, good luck in this economy). I hope things work out better for you

Your wrong as usual. 40k for a couple is not better than the median which in america is something like 32k a year or so last I checked. Looking at this budget you should be crying no matter how understated I made it. Instead you are preaching. Lets say that my tax was 0 and I was able to have an extra 500 dollars a month in order to buy a house or purchase big ticket items. Can you imagine how damaged the economy would have to be in order for me to afford a house even with a 0 tax rate? It is shameful that the goverment is stealing the dreams of the poor in order to completely waste it, which is what they are doing now. You didn't question the numbers and in this case you should. My expenses are actually higher than what we make so in order to survive we have to cheat. Can you begin to see why I don't care about you having to pay 25%? They are making the poor pay 20% whilst the well of are paying under 20%. I think the fear is when the poor tell them to go to hell and they dont have prisons for all of them.

You are assuming that the kid expenses are paid by him and his wife and they are not. They live at their parents house and make 100k. The more you defend the wealthy the more you show your bias for the bourgeoisie. If we are starving and you tell us to eat cake better be sure that there will be civil war.

 

[The Don]

Your wrong as usual. 40k for a couple is not better than the median which in america is something like 32k a year or so last I checked. Looking at this budget you should be crying no matter how understated I made it. Instead you are preaching. Lets say that my tax was 0 and I was able to have an extra 500 dollars a month in order to buy a house or purchase big ticket items. Can you imagine how damaged the economy would have to be in order for me to afford a house even with a 0 tax rate? It is shameful that the goverment is stealing the dreams of the poor in order to completely waste it, which is what they are doing now. You didn't question the numbers and in this case you should. My expenses are actually higher than what we make so in order to survive we have to cheat. Can you begin to see why I don't care about you having to pay 25%? They are making the poor pay 20% whilst the well of are paying under 20%. I think the fear is when the poor tell them to go to hell and they dont have prisons for all of them.

You are assuming that the kid expenses are paid by him and his wife and they are not. They live at their parents house and make 100k. The more you defend the wealthy the more you show your bias for the bourgeoisie. If we are starving and you tell us to eat cake better be sure that there will be civil war.

I got my figures from here:

http://en.wikipedia.org/wiki/Household_income_in_the_United_States

In 2006, the "real" (adjusted for inflation) median annual household income rose 1.3% to $50,233.00 according to the Census Bureau

Your income is $40k so that's 80% of the median household income as I claimed.

I did expand on that by saying that, because you don't appear to have children or exceptional medical expenses then you're probably better off than, for example, a household with an income of $50,000 and two kids).

I'm not trying to defend the middle classes per se, just point out that you are effectively one of them. You have a reasonable income, lower than the median (but you're young and that's certainly a factor - certainly my income increased considerably between the ages of 20 and 35) but not critically so and you don't have kids or significant medical expenses.

You have got yourself into deep water with the IRS for failing to pay your taxes and claim that you shouldn't have to pay taxes - a lot of people feel that way.

You are also very jealous of a family whose income seems to rise with each post.

Originally:

My coworker made 14 dollars an hour for the same job. He did not pay taxes and got 3,500 back from the govt. I barely made my rent while he ate nightly dinners for 100-200 dollars etc. I do admit that he lived with his rich parents with his 4 kids but there was more than that.

Then...

They made 100k a year as a couple. Lived in their parents house with 4 kids. He was going to school to be a police cadet and it appears that he had been going to school for the last 10 years.

So she must be pulling in $70k plus which changes things considerably. $14 an hour is not the same as $100k a year


I get it. You're jealous of this guy, his lifestyle, his rich parents etc Their joint income is 2.5 times yours (and then there's his lower costs) so its understandable that they have more money to throw around. You're also jealous of his $3500 tax rebate but please consider:

• He may have been lying or exaggerating just to pull your chain. Their claims about their lifestyle means that this wouln't be out of the question
• The rebate could have been from previous years. If he had been studying as you claim then prior year taxes could have been refunded
• It could have been a rebate for an overpayment. In the past I have received these - I go too much tax deducted from my wages through the year and got it sorted out at the end. This still meant that I paid taxes that year

 

[The Don]

snip.... They are making the poor pay 20% whilst the well of are paying under 20%....snip.

...except by your own figures from earlier in the thread, the bottom 50% have an effective tax rate of 2.59%. Yours is higher because

- You have standard deductions
- You're paying tax that you failed to pay in previous years

 

[MinnesotaBrant]

...except by your own figures from earlier in the thread, the bottom 50% have an effective tax rate of 2.59%. Yours is higher because

- You have standard deductions
- You're paying tax that you failed to pay in previous years

Actually I have some mowing income too. I figured out today that by declaring every penny of that income, I could greatly decrease my taxes since it probably would only increase my taxes by 500 at most whilst I could decrease my taxes considerably with an offer in compromise. So while it at first appeared that I may never get caught up, actually now it seems I will.

 

[The Don]

Actually I have some mowing income too. I figured out today that by declaring every penny of that income, I could greatly decrease my taxes since it probably would only increase my taxes by 500 at most whilst I could decrease my taxes considerably with an offer in compromise. So while it at first appeared that I may never get caught up, actually now it seems I will.

So by failing to pay your taxes and making an offer of compromise (it it's effective) you've ended up paying less tax than you should.

Congratulations, you've just stiffed every low income worker who actually pays the taxes they owe. Yet another example of the comparatively well off indulging in tax avoidance at the expense of those who are less fortunate

 

[MinnesotaBrant]

Ah no, I am not well off. Also I cannot pay my taxes. Since god basically told me that this is the right thing to do. (doesn't this scare you a tiny bit?). I guess I better go at it. (not that I have to.).

Guess, I will declare bankcruptcy. Then, after that, do an offer in compromise. I am not really good at doing what god wants me to do. I don't know how declaring your income is cheating though.

 

[MinnesotaBrant]

Geeze, someone sent me a garnishment summons and the government is shut down. What should I do? They seem to think I still have a full time job and can be garnished? Its true that I do make extra income but walking around doing odd jobs nets me at most 3-4 20$ checks a week. How are they going to make money off of that? Guess they can read all about it when I file bankruptcy.

 

[The Don]

Guess they can read all about it when I file bankruptcy.

Think very carefully before you do that. Here in the UK there are significant consequences of declaring bankruptcy - not least that borrowing money in the future will be incredibly difficult and expensive.

 

[The Don]

Ah no, I am not well off.

Well by your own account you are comparatively well off. Your income is 80% of
national average household income and you have no children or exceptional medical expenses you have declared. The fact that you come close to balancing your household budget each month also puts you in the "comparatively well off" class

Also I cannot pay my taxes.

Well, you have chosen not to pay your taxes for quite some time and as a consequence are having a hard time paying your back taxes. Other people on comparable incomes manage to pay their taxes.

Since god basically told me that this is the right thing to do. (doesn't this scare you a tiny bit?). I guess I better go at it. (not that I have to.).

Really ? God told you to pay your taxes ?

You kinda have to pay your taxes (or as you mention, come to a compromise agreement). The IRS tend not to give up.

Very few people enjoy paying taxes and very few people feel that they are well off. You're not alone in feeling hard done by.

 

[MinnesotaBrant]

Well by your own account you are comparatively well off. Your income is 80% of
national average household income and you have no children or exceptional medical expenses you have declared. The fact that you come close to balancing your household budget each month also puts you in the "comparatively well off" class



Well, you have chosen not to pay your taxes for quite some time and as a consequence are having a hard time paying your back taxes. Other people on comparable incomes manage to pay their taxes.



Really ? God told you to pay your taxes ?

You kinda have to pay your taxes (or as you mention, come to a compromise agreement). The IRS tend not to give up.

Very few people enjoy paying taxes and very few people feel that they are well off. You're not alone in feeling hard done by.

You know I am kinda warming up to this idea. Thanks. Here in MN the govt is shut down. Also, I got a garnishment letter that I cannot respond to because of the shut down.

Your numbers are probably off let me look at the average household income for a couple 68k. I am 30k off from that. What you fail to factor in is costs, which are rising. Right now my declared disposable income is 2.4k for a year. a couple making 68k would have 32.4k disposable income. Using my expense chart for you. At 100k you would have 72.2k disposable income. So from your perspective, everything is fine. From my perspective it sucks, and I hate you. (from a philosophical standpoint) My understanding is that expenses are going to go up. Lets say that expenses go up 10%. My disposable income would be 520 dollars. Not even enough to buy 1 medium car repair. Your disposable income would be somewhere around 70k. Everything else being equal. Look why don't you save everyone the trouble, stop arguing and just pay my taxes. It will be alot easier that trying to win this arguement, and I would even let you win.

I had aproximately 8k in medical bills I didn't pay last year. In America, if you don't pay the bill, you can't deduct it. It has to be over 10k before it starts to matter anyway. Its not like this is a socialized country here or anything

 

[The Don]

Your numbers are probably off let me look at the average household income for a couple 68k. I am 30k off from that.

Where is your source for this ?

You haven't just taken the average personal income and doubled it have you ? If you have then you're not doing it right.

According to the best figures I can find, average household income in the United States is around $50,000 Source

What you fail to factor in is costs, which are rising. Right now my declared disposable income is 2.4k for a year.

Okay, so you have disposable income of $200 a month. I'm pretty sure there are plenty of families out there where it is zero (or negative). Also, it's in your interest to minimise your stated disposable income in your dealings with the IRS.

a couple making 68k would have 32.4k disposable income.

Firstly, the figure of $68,000 is too high, an average household has an income of around $50,000

Secondly, most of those families have expenses you don't have like:

- Kids - a child currently costs around $250,000 (over $2,000 a month) to raise
- Student loan repayments
- Exceptional medical expenses

Using my expense chart for you. At 100k you would have 72.2k disposable income. So from your perspective, everything is fine.

You're assuming (incorrectly) that everyone has the same level of expenses as you. Some people's expenses are much high, some are considerably lower.

From my perspective it sucks, and I hate you. (from a philosophical standpoint) My understanding is that expenses are going to go up. Lets say that expenses go up 10%. My disposable income would be 520 dollars. Not even enough to buy 1 medium car repair. Your disposable income would be somewhere around 70k. Everything else being equal. Look why don't you save everyone the trouble, stop arguing and just pay my taxes. It will be alot easier that trying to win this arguement, and I would even let you win.

Your performance in other threads shows that there's no point attempting to get you to concede that you may be mistake. This thread is a perfect example. You've moved the discussion on from your tax plan without acknowledging that there are gaping flaws in that plan onto an exchange best described as "I would like more money and/or not to have to pay taxes".

Why the heck should I (or anyone else) pay your taxes when the solution is clear. If you want more money, go out and get a better maying job, or better yet start your own business and get yourself - and a bunch of other people - better paying jobs.

I had aproximately 8k in medical bills I didn't pay last year. In America, if you don't pay the bill, you can't deduct it. It has to be over 10k before it starts to matter anyway. Its not like this is a socialized country here or anything

Well you can hardly deduct things you didn't pay...

So in addition to not paying your taxes you don't pay your medical bills.

Of course if you had what you term socialised medicine, you wouldn't have personally borne these costs but it would have relied upon you paying your taxes - something you appear reluctant to do.



Long story short, get a better paying job