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Thread: ...why YOUR Taxes are going Up ~ ~ ~

  1. #1
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    Arrow ...why YOUR Taxes are going Up ~ ~ ~

    When President Obama and the new Congress begin to tackle important legislation and federal policy in January, one of the key issues will be how to reform America's byzantine tax code.Obama campaigned on a platform to raise taxes on the wealthiest Americans, declaring that millionaires and billionaires need to "pay their fair share." The president proposed the highly controversial "Buffett Rule," which would make sure those individuals earning more than $1 million a year would pay at least 30% of their income in federal taxes.

    Related : Do the Rich Have a Moral Obligation to Pay Higher Taxes? Gov. Jerry Brown Says 'Yes'

    The top individual tax rate is currently 35% but few U.S. households and individuals actually pay that much; various tax deductions and loopholes reduce one's tax burden.

    According to the Obama campaign, the richest 400 taxpayers in 2008 (who each made more than $110 million that year) paid an average income tax rate of just 18%. In 2009 over 20,000 U.S. households with more than $1 million in income paid a federal tax rate of less than 15%.Obama has vowed to raise the top income tax rate for individuals to 39.6% and let the Bush-era tax breaks end for the highest income earners. The majority of Americans — those who are lower to middle class — could also see a 2% tax increase if Congress allows the temporary payroll tax holiday to expire at the end of the year.

    Related : Here's Why Your Taxes Are Going Up 2% Next Year: Just Explain It

    Nearly half of voters support raising taxes on incomes over $250,000, according to Tuesday night's exit polls.Len Burman, a professor of public affairs at Syracuse University and a co-founder of the bipartisan Tax Policy Center, believes higher tax rates play just a small role in resolving the nation's budget woes."In the long term [Obama] is going to need to raise taxes on more than just the rich," Burman says in an interview with The Daily Ticker. "The budget problem isn't going to be solved without broader-based tax increases, preferably done in the context of tax reform and also serious entitlement reform. We're not going to be able to solve this on the tax side alone."Burman, who recently co-wrote the new book "Taxes in America: What Everyone Needs to Know," says tax rates do not need to be raised for any income group if Congress and the White House would agree on one simple change: raising the capital gains rate, i.e. the profits from the sale of an investment. Assets, such as stocks, art or real estate, that are held for at least a year are currently taxed at a special 15% rate; Obama wants to raise that to 20%."The problem with a low tax rate on capital gains is not that it allows Mitt Romney and Warren Buffett to pay very low taxes but that it creates this huge opportunity for tax sheltering," he notes. "There's a whole industry that's devoted to coming up with these schemes. [Raising capital gains rates] could make the tax system more progressive and allow for lower tax rates" and a reduction in the deficit Burman says.

    Obama's tax proposal also targets the Alternative Minimum Tax, the Estate Tax and as well as many personal tax credits and itemized deductions. Obama would make permanent the 2007 AMT patch and index it for inflation. He would raise the estate tax to 45% from 35% on estates worth more than $3.5 million. He would lower the corporate tax rate to 28% from 35% and provide a refundable $3,000 credit per added employee for companies that expand their workforce. He would tax carried interest as ordinary income.

    Related : Corporate Tax Loopholes=Corporate Socialism: Pulitzer Prize Winner David Cay Johnston

    A divided Congress refused to compromise with Obama during his first term and could very well dismiss the president's tax reforms for the next four years. Republicans are loathe to raise taxes by even a penny and Obama has said he would veto any budget bills that did not include tax increases. Neither party wants to raise taxes in a weak economy. But the options available for reducing the deficit and generating new revenue are few and far between.

    > http://finance.yahoo.com/blogs/daily...182808294.html

  2. #2
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    If that isn't depressing enough there's been many layoffs this week. The list is out there but it's growing so fast if I posted it, it would be obsolete by the time anyone here looked at it.


  3. #3
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    The idiot is doubling down on every single one of his failed policies.

    The Stage Has Been Set For Another Credit Crisis

    --------------------------------------------------------------------------------

    By Shah Gilani, Capital Wave Strategist, Money Morning

    If you think yesterday's market action was something to worry about, you ain't seen nothing yet.

    President Barack Obama getting re-elected sets the stage for another credit crisis.

    When the president came into office in 2008 he had a mandate to fix the banking system, which consisted of too-big-to-fail banks holding America and its economy hostage to their greedy schemes.

    He swept that mandate under the door of Congress and the Federal Reserve.

    The president has no position on the big banks, and it seems he likes it that way.

    By lightening up on his already watered-down rhetoric about making banks toe the line, he got campaign money from them. So did Congressmen. That money came from the Federal Reserve.

    Now that the president has won a second term, he's not about to fight Congress over their pandering to the big banks, since he's got other things to fight with them over; rather, he's going to advocate a lite-touch going forward to allow banks to continue to strengthen their balance sheets so they can fuel an American recovery.

    It seems to be all happening under the cover of darkness. And, it's not going to work.

    No matter how much money the Federal Reserve feeds banks via QE4-ever, enough so they could pay off their bailout loans, pay themselves big bonuses again, pay trumped-up dividends to entice equity investors, and continue buying Treasuries with no-interest financing, their balance sheets are still laden with derivatives, stale mortgages and sickeningly more government debt that's about to get downgraded.

    This president blew his first mandate and the result is that it's like déjà vu all over again.

    The too-big-to-fail banks are all a lot bigger now than they were in 2008, and none of them are any more stable or less prone to the massive correlation of similar asset mixes and counterparty exposure (namely themselves) that if pierced will trigger another crisis.

    With a presumed second mandate that probably encompasses all the agenda items he didn't finish, or start in his first term, the president isn't about to take the lead on addressing what's really wrong with America's economy.

    And what is that? It's the public's total lack of confidence in the capital markets and their ability to finance growth where it most needs to be nurtured, close to home.

    But, before we all liquidate our portfolios, maybe we should give freshly elected Elizabeth Warren a shot at leading the Senate to the high ground on the future of banking in America.

    If Warren champions smaller, better capitalized banks that aren't too big to destroy us all again, maybe the president's socialist tendencies, especially when it comes to big banks and the Federal Reserve, will be checked and free markets somehow restored.

    In the meantime, someone hand me some sell tickets.

    http://moneymorning.com/2012/11/08/t...credit-crisis/

    Put some cash in a safe haven ASAP:

    https://www.everbank.com/personal/fo...urrencies.aspx

  4. #4
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    The government already taxes dividends twice. The income tax rate on dividends shouldn't be 20% or 15%, it should be 0%!

    What if you paid income tax on what you earn (paycheck) then when you go to give your kids an allowance each week the government made you pay 20% of whatever you were giving little Susie? Fair? Not in my opinion.

    The two taxes that dividends are hit with are corporate income taxes and individual income taxes.

    Corporate income taxes are paid on any profits the company has before it pays dividends. According to the Motley Fool, corporate taxes can exceed 35 percent in the United States.

    When the company pays dividends, the individual investors must report those dividends on their income taxes.

    The double taxation greatly decreases the amount of profit that reaches and stays in the hands of the investor. According to the Tax Policy Center, if the corporate income tax is 34 percent and the personal income tax rate equals 33 percent, for each dollar of profit to be paid out in dividends, only 44 cents remains with the investor after taxes.
    Read more: Why Are Dividends Taxed Twice? | eHow.com http://www.ehow.com/facts_6159745_di...#ixzz2BpezDMOf

  5. #5
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    Bumpity bump. Maybe the thread title (and OP) are keeping this from being heavily viewed....or people have little interest in the dividend tax?

  6. #6
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    the first say..... $25000 or $50000 of dividends should be tax free or taxed at a LOW rate.

    But IMO a wealthy taxpayer, with dividends of say 50K has a portfolio of 2 million. they can pay full rate on all dividends over say 50k.

    Just an opinion..... The very wealthy in this country who have no earnings other than investment income pay an unfair low rate.

  7. #7
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    Quote Originally Posted by southparkcpa View Post
    the first say..... $25000 or $50000 of dividends should be tax free or taxed at a LOW rate.

    But IMO a wealthy taxpayer, with dividends of say 50K has a portfolio of 2 million. they can pay full rate on all dividends over say 50k.

    Just an opinion..... The very wealthy in this country who have no earnings other than investment income pay an unfair low rate.
    You are the CPA so correct me if I am wrong but as a shareholder aren't you "sharing" earnings that have already been taxed at the corporate rate so you are therefore already being taxed twice which is why the rate is lower in the first place?

  8. #8
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    Quote Originally Posted by Trades View Post
    You are the CPA so correct me if I am wrong but as a shareholder aren't you "sharing" earnings that have already been taxed at the corporate rate so you are therefore already being taxed twice which is why the rate is lower in the first place?
    Of course...but the lower rate is part of the BUSH plan. It hasn't always been that way so NO that is NOT why they are low. They are low as part of the BUSH tax cuts.

    the reduced rates, while nice for investors, have never been this low historically.

    And yes...they have been taxed at the corporate level.

  9. #9
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    Quote Originally Posted by jetstream23 View Post
    The government already taxes dividends twice. The income tax rate on dividends shouldn't be 20% or 15%, it should be 0%!

    What if you paid income tax on what you earn (paycheck) then when you go to give your kids an allowance each week the government made you pay 20% of whatever you were giving little Susie? Fair? Not in my opinion.



    Read more: Why Are Dividends Taxed Twice? | eHow.com http://www.ehow.com/facts_6159745_di...#ixzz2BpezDMOf
    False argument.

    When a Business earns income, it's the businesses income, not the shareholders. You have no claim on that income, only the value of your shares. At no time is that business requires to give you a penny of that income, it isn't yours. Only upon dissolvement would you have a claim, less the companies outstanding liabillities (almost always more, i.e. you get nothing).

    When the business pays you a dividend, then and only then does it become income for you.

    We have a system where businesses and individual pay tax. As such, income (at the business level) is taxed, and income (at the personal level) is taxed.

    You mention your paycheck being double taxed......well, it is. Your employer IS taxed on their business income. Then your paycheck is taxed as personal income. The difference is a paycheck (i.e. working) is taxed higher than non-working (investment/stock dividend) income.

    It's a weak argument, designed to protect the income of investors over the income of workers. On this I support the left, flat tax, flat tax, flat tax. The source of income (investment vs. work) is irrelevant, the tax RATE should be the same.

  10. #10
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    Quote Originally Posted by Warfish View Post
    False argument.

    When a Business earns income, it's the businesses income, not the shareholders. You have no claim on that income, only the value of your shares. At no time is that business requires to give you a penny of that income, it isn't yours. Only upon dissolvement would you have a claim, less the companies outstanding liabillities (almost always more, i.e. you get nothing).

    When the business pays you a dividend, then and only then does it become income for you.

    We have a system where businesses and individual pay tax. As such, income (at the business level) is taxed, and income (at the personal level) is taxed.

    You mention your paycheck being double taxed......well, it is. Your employer IS taxed on their business income. Then your paycheck is taxed as personal income. The difference is a paycheck (i.e. working) is taxed higher than non-working (investment/stock dividend) income.

    It's a weak argument, designed to protect the income of investors over the income of workers. On this I support the left, flat tax, flat tax, flat tax. The source of income (investment vs. work) is irrelevant, the tax RATE should be the same.
    when he's right...well...he's right. Very articulate, seriously.

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    Is taxing the interest paid on stocks why are the wealthy dumping stocks right now. They are avoiding the higher taxes next year. Before higher taxe cut entitlements and the fat from the military budget and since the congress is only in session for 6 months of a year pay them for 6 months.

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    Quote Originally Posted by MnJetFan View Post
    Is taxing the interest paid on stocks why are the wealthy dumping stocks right now. They are avoiding the higher taxes next year. Before higher taxe cut entitlements and the fat from the military budget and since the congress is only in session for 6 months of a year pay them for 6 months.
    1- Interest on stocks???
    2- Downturn in market? try 4th qtr 2011, 2008, etc... this is all a cycle. Historically, markets do better under democratic presidents.

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    What's missed by a lot of people is that the 250k is AGI not Gross. You're probably closer to 400k to 500k as an individual employee to even be affected since that income level tends to have 401k, mortages, and other tax credits that bring that AGI down.

    The second thing is that you're only paying the higher rate on the amount over 250k AGI. So... if your household makes 300k AGI, you're really paying the extra 2% on the 50k or your taxes go up 1k.

    The third thing that I hear and people seem not to understand is that businesses pay taxes on profit not gross income. If you're an S corp for instance, you have to clear over 250k in profit to even start to be affected. If your business grosses 1 million dollars but your profit from it's 300k, then you're going to pay the extra 2% on the extra 50 k as the example above.


    My point isn't to say it's good/right or even to say it's fair. My point is that people throw around that 250k number without understanding that it's AGI.

    Should it be 500k AGI, 10 Million, or a flat tax, people need to understand what is being presented because I hear a lot of people who keep saying they make 250k with their spouse's income and if that's gross, you aren't going to be affected at all because 1) Your AGI will be lower 2) You just hit the floor of the increase so it's anything above that that will be taxes at a higher rate.

  14. #14
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    Quote Originally Posted by CleatMarks View Post
    What's missed by a lot of people is that the 250k is AGI not Gross. You're probably closer to 400k to 500k as an individual employee to even be affected since that income level tends to have 401k, mortages, and other tax credits that bring that AGI down.

    The second thing is that you're only paying the higher rate on the amount over 250k AGI. So... if your household makes 300k AGI, you're really paying the extra 2% on the 50k or your taxes go up 1k.

    The third thing that I hear and people seem not to understand is that businesses pay taxes on profit not gross income. If you're an S corp for instance, you have to clear over 250k in profit to even start to be affected. If your business grosses 1 million dollars but your profit from it's 300k, then you're going to pay the extra 2% on the extra 50 k as the example above.


    My point isn't to say it's good/right or even to say it's fair. My point is that people throw around that 250k number without understanding that it's AGI.

    Should it be 500k AGI, 10 Million, or a flat tax, people need to understand what is being presented because I hear a lot of people who keep saying they make 250k with their spouse's income and if that's gross, you aren't going to be affected at all because 1) Your AGI will be lower 2) You just hit the floor of the increase so it's anything above that that will be taxes at a higher rate.


    WRONG...... AGI is the final number on page 1 of your tax return and is before deductions like mortgage , taxes etc... but is after any 401K.


    Extra 2 percent??? The rate is set to go from 35 to 39. AND for many, there is a 3.8 medicare surtax.


    I see your point..but your terminology is wrong.

    Realistically...a family of 4 or 5, in NY/NJ/VA etc..250K is NOT a lot of money.

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    Quote Originally Posted by southparkcpa View Post
    WRONG...... AGI is the final number on page 1 of your tax return and is before deductions like mortgage , taxes etc... but is after any 401K.


    Extra 2 percent??? The rate is set to go from 35 to 39. AND for many, there is a 3.8 medicare surtax.


    I see your point..but your terminology is wrong.

    Realistically...a family of 4 or 5, in NY/NJ/VA etc..250K is NOT a lot of money.

    Thanks for the corrections. I also agree that 250k is not a huge amount of money but again, it's the money over that amount you're going to pay on. Lots of people are acting like they're going to pay on that first 250k. Again, not saying it's right or wrong, just saying... we need to agree on what's being proposed.

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