The stats are in from the 2009 taxes that were filed. In 2009 51% of all households paid no income tax at all. What bugs me the most about that is that 31% of all households got more back than they paid in. That means that not only did they not pay any taxes, but the government actually paid them even more. What is scary about the stat is that in a democracy it would create a situation where those that receive can continue to vote to receive while those that pay the freight would be overruled. There has been a lot of discussion in the media that the top end of the spectrum should be paying more in taxes, but what about the giveaways on the bottom end? If I had my way I take some off both ends. I'd raise the taxes on the upper end, over $500,000 per year, and cut back on the giveaways on the bottom end.
Joe, I've been too quiet during the tax filing season, so it's time to make people think about their country and where it is going. I know there are some that will say, "You're a cold hearted SOB." for my tax ideas, but man oh man, if you saw the abuses that I see it would make you see red!
What do you think about a simplified flat tax (perhaps 10%-15%) on everyone with a low, low, bottom income limit to discourage free loaders? Additionally remove most deductions and loop holes....
On the surface a flat tax makes sense, but there two major problems with the flat tax that I see. One of which is that the vast majority, 75% to be specific, of all taxes are paid by the top 5% of earners. If we went to a flat tax the people in the middle would take a huge hit. Literally we would be giving a major tax decrease to the top earners and a major tax increase to the rest of the tax payers. The second problem with a flat tax is that the tax system has become so ingrained in our society, it would create some real hardships to lose a lot of those tax breaks. For example, how many of us would not own our own homes if it wasn't for the deduction we get for mortgage interest and real estate taxes? How do you think the loss of those deducitons would affect the housing industry. Same with medical expenses, contributions, employee business expenses and the like and the effects that would feel from the loss of those deductions. To a certain extent we have gone to a flat tax on the lower end by instituting a very high standard deduction.
Any idea how low the bottom was for those people that got back more than they paid? I'm just thinking .. how bad does your income have to be that the taxman.... a notoriously heartless organization........ will give back more money that someone earned.
Ian, it depends on your income and number of children. For example I had a single mother in this year with two kids and an income of $24,000. She got back $11,000. We also had a married couple with one child and an income of $36,000 who got an extra $1500 in federal giveaways. Generally you have to be under $40,000 with one of more kids under 17. Why 17? Who knows! Like many things in taxes, it just seems arbitrary. So much of what we see is just plain dumb. We give aid for kids to go to college because the cost of college education is skyrocketing out of sight. Yet the average, and I did say average, college president makes over $1,000,000 a year. No one looks at that and says we need to do something about the inequity. Do you think it may have anything to do with campaign donations paid by the college professors and administrators?
Okay, so I brought up the problem with the lower end of the spectrum, but now I've got one from the other end. For those of you that don't know there is a thing called capital gains. This is a special part of the tax code to encourage people to invest. The current maximum tax that can be levied on capital gains is 15%, which is roughly what a married couple making less than $70,000 a year is paying. Last year 13% of all the capital gains reported on all the personal tax returns that were filed in the US went to just the top 400 taxpayers in the US. Think about that. All the stock sales, land sales, and business sales that occured in the US and more than $1 of every $10 went to just 400 people. That one strikes me as being as wrong as the huge refunds that people get on the other end of the spectrum.
That is a crazy system, do you guys not have a Pay As You Earn system where inland revenue takes a % of your monthly take home pay, or is everyone responsible for filing their own taxes? Over here, we have a tax free allowance of around £8000, which means you don't pay tax on the initial 8k you earn, but after that, depending on how much you earn, the HMRC takes a % of your monthly take home pay. .. something like up to £45k you pay 20% income + 12% National Insurance, and it goes up to if you earn over £150k you pay 50% tax on that ... plus if you're eligible there are various credits available to you but the government is cutting a lot of these in order to reduce the fiscal deficit. Works pretty well in my opinion.
