It's so hard to save money when....

[MonkeyMama]

m3racer - I certainly sympathize with you.

As a tax professional I know this:

1 - The poor don't pay INCOME taxes, but they are too uneducated to realize (most people are - who can figure out the tax code).
2 - The truly rich (thinking $1 mil+ annual income) can buy all the tax loopholes they want
3 - The middle class is squeezed the most tax wise. This is particularly true in more expensive areas where you can make $200k and be living like a college student due to extremely high cost of living.

The avergae joe bloe thinks Mr. Middle Class is exaggerating. What I see in my field is a LOT of people in the $100k-$500k range (more on the lower end) coming to us and looking for help cutting their taxes. We always have to break the news that they aren't making enough money to buy tax breaks. In fact, they are losing most of them and getting slammed with AMT. These are people squarely in the middle class. A LOT of them aren't even upper middle. This is California.

In the meantime the poor are whining that the "rich" (who in their eye is anyone who makes six figures) aren't paying their fair share. Or maybe rich is just defined as "anyone who makes more." Um, plenty of people who make $100k pay way more than their fair share of taxes!

I've seen a few too many paychecks come through here where net pay is only about 50% of gross. I have personally lost any incentive to aim for a high paying, high stress job. Why bother? Why would I aim for a $200k per year job when I can make half that and KEEP most of it. Literally at $80k income we are in the 15% tax bracket with a pile of deductions. IF we made another $30k income, we would be slammed by AMT (which is s'posed to be a tax on the super rich). So $80k - lowest tax bracket? $110k - richest of the rich? YEah, the tax code has ISSUES.

ETA: I think what it comes down due is the lower middle class simply does NOT understand why people who pay six figures for their education and work a million hours a week for a top job don't want to settle for a lower middle class lifestyle. They expect more. Is it really that wrong to expect more? What is the incentive to aim high any more? THis is a serious issue for the middle class.

[DebbieL]

Wow, if you think it's bad there, try coming to Canada. Our rates are much higher (and we don't get the tax breaks that you do). There is a day in July I believe when they say the money we earn after that point is ours (everything up until that point goes to taxes in some form - either income taxes, purchase taxes, etc). Only the really poor here get away with paying next to nothing in taxes. We pay close to 40% income taxes after $80K, and close to 44% over $125K. There is no deduction for having kids (dependents) unless your income is very low (think family incomes at poverty levels). Even with low incomes, the deductions don't come close to what you guys get. If you are an average income couple, you will never get any tax break from having dependents. We can't deduct mortgage interest either.

[Joan.of.the.Arch]

Problem? Majority don't pay taxes. If you have two kids and make something like under $75k, it's likely you aren't paying any taxes. I think something over $150k even with 2 kids and you are about to get hit by AMT.

This did not ring true to me, so I just ran it through the first effective rate calculator I found. Using the info married, filing jointly, 2 dependents, $70,000, the calculator says the ETR is 6.21%. Add to that, the ~7% FICA tax, 15.3% in FICA if self employed. I am wrong to add in FICA on that, or does EFR include it already?

View Effective Tax Rate Calculator

In addition, that family in an area like mine also pays many other taxes beside the federal ones, not the least of which is a total of 8.3% sales tax. I'm pretty sure LAL wasn't meaning to account for those taxes, but the original poster was talking about more than just federal income tax, so I'll talk about it with respect to this family, too.

[LivingAlmostLarge]

Joan, I was trying to point out federal taxes only. State depends on where you live and FICA is capped at ~$100k.

Love the ETR. And the $70k family pays $4k in taxes or 6.21%.

I don't count sales taxes because you don't pay 8.3% of your income on stuff. I would count state income taxes which in MA is a flat 5.3%.

So the family of $70k pays 6.2% federal taxes (very low!) and 5.3% state income taxes nearly the same!

How is that at all fair? In places like Texas, WA, NH, they pay 0% state income taxes.

I don't think I pay that much. Like 15% federal, then 5.3% state. And yes I realize SS is a tax but personally I don't consider it in my "taxes".

I think it should be segregated out.

[m3racer]

A flat tax is an interesting point but where should that % fall. We would see people in arms if we taxed every American at 40%.

I find it interesting that people like asmom are quick to make liberal criticisms of others that pay more than they do in taxes. I wonder if they would have such a sharp tongue if they paid an exorbitant amount in taxes. I seriously doubt it. I don't understand how people like her can criticize others that pay more taxes....It's disgusting IMO. In fact, I'm still waiting to hear from her and others like her to make a constructive comment on fair taxation.

[m3racer]

Sorry M3racer, I think the people less well off do need a "Tax cut". .

Only if they are already paying taxes. How can you give a "tax cut" to those that don't even pay a penny. I do have a problem with wealth distribution. It's not American IMO. Our country was based of the premise that ANYONE can become successful with a little hard work and ingenuity. The current tax system discourages the entrepreneurial spirit that has made this country great.

[m3racer]

m3racer - I certainly sympathize with you.

As a tax professional I know this:

1 - The poor don't pay INCOME taxes, but they are too uneducated to realize (most people are - who can figure out the tax code).
2 - The truly rich (thinking $1 mil+ annual income) can buy all the tax loopholes they want
3 - The middle class is squeezed the most tax wise. This is particularly true in more expensive areas where you can make $200k and be living like a college student due to extremely high cost of living.

The avergae joe bloe thinks Mr. Middle Class is exaggerating. What I see in my field is a LOT of people in the $100k-$500k range (more on the lower end) coming to us and looking for help cutting their taxes. We always have to break the news that they aren't making enough money to buy tax breaks. In fact, they are losing most of them and getting slammed with AMT. These are people squarely in the middle class. A LOT of them aren't even upper middle. This is California.

In the meantime the poor are whining that the "rich" (who in their eye is anyone who makes six figures) aren't paying their fair share. Or maybe rich is just defined as "anyone who makes more." Um, plenty of people who make $100k pay way more than their fair share of taxes!

I've seen a few too many paychecks come through here where net pay is only about 50% of gross. I have personally lost any incentive to aim for a high paying, high stress job. Why bother? Why would I aim for a $200k per year job when I can make half that and KEEP most of it. Literally at $80k income we are in the 15% tax bracket with a pile of deductions. IF we made another $30k income, we would be slammed by AMT (which is s'posed to be a tax on the super rich). So $80k - lowest tax bracket? $110k - richest of the rich? YEah, the tax code has ISSUES.

ETA: I think what it comes down due is the lower middle class simply does NOT understand why people who pay six figures for their education and work a million hours a week for a top job don't want to settle for a lower middle class lifestyle. They expect more. Is it really that wrong to expect more? What is the incentive to aim high any more? THis is a serious issue for the middle class.

I couldn't have said it any better.

[m3racer]

Another fundamental problem is that government spending is way out of control. Yes entitlement programs are noble but are financially impractical. I don't even want to get into the other spending projects the govt funds. Just look at CA. Why can't the government make a budget and live within its means? It should be like every US family that lives and adheres to a budget. If this happened than all Americans would get to keep more $$$ that they earned.

[GREENBACK]

I think every american that makes any amount of money at all should pay a % of tax. I don't know where a flat tax should be set but everyone should contribute to the priviledge of living in america because you certainly reap the benefits. Having more possesions than you can afford or more children than you can afford should be considerations you make with your tax burden in mind.

I think we could start by looking at around 25%; That's about middle ground. They're should be no more bickering about the rich not paying their fair share because we all get to contribute the same % and the amount is simply based on income. I know this is somewhat simplified but if we want to examine fairness it's a good start...IMO

[Angio333]

Everyone is fighting about whats taken out of our paychecks, but what about all of the other taxes we have to pay? For example, property tax.

We can't forget about estate tax. We are taxed in some way for pretty much everything we do. If we spend money, we often have to pay sales tax. If we save it, we get taxed on the interest. If you leave it to a loved one when you die, you often have to pay estate tax.

We are way over taxed.

[GREENBACK]

Everyone is fighting about whats taken out of our paychecks, but what about all of the other taxes we have to pay? For example, property tax.

We can't forget about estate tax. We are taxed in some way for pretty much everything we do. If we spend money, we often have to pay sales tax. If we save it, we get taxed on the interest. If you leave it to a loved one when you die, you often have to pay estate tax.

We are way over taxed.

You're right and we are entering a new phase that will make these times look like a bargain. I'm confident that everything you mentioned and much more will be raised exponentially to address current and future issues that were created by those who will raise these taxes.

[m3racer]

So here's a list of ideas that have been posted by forum members:

1) Flat tax (?% unknown but it sure as hell isn't 40%) on any earned income
2) Taxes on purchased items only and not on income (I'm not sure how feasible that is but it's an interesting point)
3) No tax refunds to those that don't pay any taxes
4) .....

[LivingAlmostLarge]

If we did away with deductions and just charged a flat tax of 10% that would be fine by me.

Consider, Warren Buffet made a bet in 2007 that he paid less taxes % wise than his middle managers. Yes 15% of his income is more than all of us together at saving advice pay combined! BUT it's still only 15%.

So thus why people whine.

I think tax relief needs to come to people in the middle. Those who are supposedly "rich" but not really rich like MonkeyMama said to buy tax breaks.

Most of my friends are in the $200k category getting hit by AMT. I am not because I have no kids fortunately.

[asmom]

I find it interesting that people like asmom are quick to make liberal criticisms of others that pay more than they do in taxes. I wonder if they would have such a sharp tongue if they paid an exorbitant amount in taxes. I seriously doubt it. I don't understand how people like her can criticize others that pay more taxes....It's disgusting IMO. In fact, I'm still waiting to hear from her and others like her to make a constructive comment on fair taxation.

Why don't you grow up? I never criticized anyone who pays more than me in taxes. Not even close. I did however criticize you. I don't dispute that.

Last night you wrote that the discussion had gone off-topic and you wanted to discuss fair taxation. I don't want to discuss fair taxation so I respected your wish and bowed out. You seem to have a pretty good discussion going, so enjoy.

[m3racer]

Why don't you grow up? I never criticized anyone who pays more than me in taxes. Not even close. I did however criticize you. I don't dispute that.

So I guess you criticized me because I have a problem with unfair taxation? Not really. Instead you criticized a person who DOES pay more taxes than the average American for personal reasons? I won't speculate what your problem is...maybe it's a sense of entitlement....who knows...who cares.

The fact is many Americans feel like they pay too much in taxes. You somehow took it personal and made it your personal crusade to defend government programs and to bash me in the process. No one here is disputing that there is an important place for RESPONSIBLY RUN government programs. You than made fabricated comments that I believe the majority of people in these programs are unworthy. Of course I never said such a thing. Finally, you tried to illustrate your point by concocting some fictional % that goes to social services.

LOL....Well I'm glad you can take what you dish out. Nothing personal but thanks for leaving this thread if you have nothing constructive to contribute.