Paying your fair share

Originally posted by tuwood

I just read this article and it got me to thinking about what really is a "fair share".

What Democrats Mean by ‘Paying Your Fair Share’

The one paragraph that kind of stuck out to me was this one:

There is nothing inevitable about either a higher or a lower amount of tax revenues, whether the tax rate is raised or lowered. The government can only set tax rates. How that will affect the tax revenues actually received depends on how people react, and you can know that only after the fact. Sophisticated projections have often been laughably wrong.

Typically when people talk about paying a fair share it's in the context of a progressive tax system where the more money you make the higher your tax rate should be and vis versa.  However, our tax code is so whacked that few of us have any confidence in people paying these rates due to so many deductions and loop holes.  So it seems like many are always wanting to tax the rich more and more.

I often see posts about the top tax rate in the 80's as being 90%, so we have lots of room to go up, but my understanding also was that the deduction and loophole climate was so much different back then that nobody ever actually paid that rate.

In my own personal life I've been in the top tax bracket for quite some time from a gross income standpoint, but my effective federal rate has been all over the board for various reasons.  Several years ago my wife stayed at home with the three kids (deduction/deduction), we owned a big house and an RV (deduction/deduction), we gave to the church and other charities (deduction/deduction), wife was in school part time (deduction), etc etc.  I went several years where I was making big bucks, but my effective tax rate was less than 3%.  I was essentially paying zero federal/state tax.
Fast forward several years later and my take home is essentially the same, but my tax rates are substantially higher due to not having the same deductions available to me. (sold the RV, wife working, lower interest rate on house).  Which one is fair?

Then on the other side of the equation you have people who are extremely poor who get tax credits, so not only do they pay zero taxes (which I feel is appropriate) they also get a tax refund in the form of a credit.  Certainly we can have programs that give people public assistance, but I don't feel it shouldn't be in the form of a tax return because negative tax isn't exactly a fair share either.

I'm genuinely curious what you guys think would be a good tax plan that was truly fair.  Personally I like the idea of a national consumption tax of 10% (or whatever) on everything but food, clothing, rent, and utilities.  This way the poor would still have very low (or zero) taxes and everyone else would be proportionally taxed based on the lifestyle they chose to live.  Obviously this would have some effects on lifestyle choices and I truly don't know if it would be good or devastating.

I think we can all probably agree that what we have in place today is jacked.  lol
What do you guys think would be fair and why?

Originally posted by dmiller5

The bolded isn't accurate.  They only get a tax credit back if they have paid taxes and it turns out to have been too much.

Originally posted by Hook'em

The bolded isn't accurate.  The EITC is actually a refundable tax credit - meaning people who pay no income tax are nonetheless eligible for tax refunds.

Originally posted by tuwood

I just read this article and it got me to thinking about what really is a "fair share".

What Democrats Mean by ‘Paying Your Fair Share’

The one paragraph that kind of stuck out to me was this one:

There is nothing inevitable about either a higher or a lower amount of tax revenues, whether the tax rate is raised or lowered. The government can only set tax rates. How that will affect the tax revenues actually received depends on how people react, and you can know that only after the fact. Sophisticated projections have often been laughably wrong.

Typically when people talk about paying a fair share it's in the context of a progressive tax system where the more money you make the higher your tax rate should be and vis versa.  However, our tax code is so whacked that few of us have any confidence in people paying these rates due to so many deductions and loop holes.  So it seems like many are always wanting to tax the rich more and more.

I often see posts about the top tax rate in the 80's as being 90%, so we have lots of room to go up, but my understanding also was that the deduction and loophole climate was so much different back then that nobody ever actually paid that rate.

In my own personal life I've been in the top tax bracket for quite some time from a gross income standpoint, but my effective federal rate has been all over the board for various reasons.  Several years ago my wife stayed at home with the three kids (deduction/deduction), we owned a big house and an RV (deduction/deduction), we gave to the church and other charities (deduction/deduction), wife was in school part time (deduction), etc etc.  I went several years where I was making big bucks, but my effective tax rate was less than 3%.  I was essentially paying zero federal/state tax.
Fast forward several years later and my take home is essentially the same, but my tax rates are substantially higher due to not having the same deductions available to me. (sold the RV, wife working, lower interest rate on house).  Which one is fair?

Then on the other side of the equation you have people who are extremely poor who get tax credits, so not only do they pay zero taxes (which I feel is appropriate) they also get a tax refund in the form of a credit.  Certainly we can have programs that give people public assistance, but I don't feel it shouldn't be in the form of a tax return because negative tax isn't exactly a fair share either.

I'm genuinely curious what you guys think would be a good tax plan that was truly fair.  Personally I like the idea of a national consumption tax of 10% (or whatever) on everything but food, clothing, rent, and utilities.  This way the poor would still have very low (or zero) taxes and everyone else would be proportionally taxed based on the lifestyle they chose to live.  Obviously this would have some effects on lifestyle choices and I truly don't know if it would be good or devastating.

I think we can all probably agree that what we have in place today is jacked.  lol
What do you guys think would be fair and why?

Originally posted by mrbbrad

To me the only "fair share" is when everyone pays an equal percentage on their income; no deductions, no loopholes, no different rates for different type of income, it's all taxed at a flat rate and we all pay into the system. That way people who earn more will pay more, but people who pay no taxes today will have to pay their fair share. I'd hazard a guess to say that beyond common federal/state services, and corner case specialty programs, the majority of people (not companies) who benefit from government funded programs have paid the least in taxes; the old 80/20 rule. They should at least pay their fair share, right? But of course, life isn't fair.

Originally posted by tuwood

Another whole sidetrack on this topic is what the money actually goes to effecting ones attitude as well.  If our government was truly efficient and provided a good service for the money we gave them I would feel a lot different than I do seeing the complete and utter waste and abuse.  Just makes me sick to know that probably 90% of my tax dollars go to interest and stupid studies like the migratory mating patterns of the horn spotted weasel squirrel on cloudy days.

Originally posted by Hook'em

African or European?

Originally posted by tuwood

Another whole sidetrack on this topic is what the money actually goes to effecting ones attitude as well.  If our government was truly efficient and provided a good service for the money we gave them I would feel a lot different than I do seeing the complete and utter waste and abuse.  Just makes me sick to know that probably 90% of my tax dollars go to interest and stupid studies like the migratory mating patterns of the horn spotted weasel squirrel on cloudy days.

Originally posted by Jackemy1 I always wondered how people's perceptions would change if they had to write and sign a separate check for their 11.5% of employment tax and withholdings instead of it being netted from the paycheck.

Originally posted by tuwood

Another whole sidetrack on this topic is what the money actually goes to effecting ones attitude as well.  If our government was truly efficient and provided a good service for the money we gave them I would feel a lot different than I do seeing the complete and utter waste and abuse.  Just makes me sick to know that probably 90% of my tax dollars go to interest and stupid studies like the migratory mating patterns of the horn spotted weasel squirrel on cloudy days.

Originally posted by tuwood

I don't know...  arrrrrgggghhhh

Originally posted by tuwood

Yeah, that would be very impactful. Simply eliminate employer withholdings altogether so that every employee is responsible for paying their tax bill.  ouch

Originally posted by mdg2003 I can't see that working. If employers didn't withhold, people would just spend all the money in their check and worry about it when the bill was due on 15Apr. Now if the employer were to withhold the exact amount owed, based on a flat rate; I would imagine everyone would be OK with that. Beats the heck out of them withholding too much and getting interest free use of my money. I always cringe when a co-worker brags about getting an $8000 refund from the IRS. Dumbazz.

Originally posted by dmiller5

you might call them a dumbazz....but I think for many having that little self made bonus at the end of the year, that they can't blow, and that is there in case they eff up, is probably a good thing.  Really...how much interest do you think you're getting on a couple grand anyhow. It isn't significant.

Originally posted by mdg2003


You're right about it serving as a bit of a bonus that won't be blown during the year. Except most people that mismanage their money like that will just blow the $$ as soon as the check clears. Interest on a couple grand however, is significant. Not in the short term, but interest over time is where the magic happens.

Originally posted by Jackemy1



I certainly get that it s not wise for the government to extend credit to every American tax payer and it is better to make the employer the tax collector. My point is many people have no idea how much they pay in taxes. They just know how much of a refund they got. If they really added up and had to cut a check out of their bank account quarterly, like business owners and the self employed do, they might be a little more concerned about what government does with the money.

I was in Italy a month ago, the VAT is 22% on most goods yet nobody sees the tax as it is in the price of the goods. I'd imagine if the Italian consumer saw the 22% tax on every receipt they would be a little less complacent about the tax..

Originally posted by mdg2003 You are right that most don't really know how much they pay. Every paycheck has the with holding deduction that we can see on our paycheck stub. However, I believe, as you probably do, that this is a 'fuzzy' number. This is due to the phenomenon that most everyone is fixated on that refund check that is guaranteed to arrive up a few weeks after filing taxes. The impact of having x amount taken from each paycheck seems lessened when you count on that 'bonus' at years end when a lot of that deduction comes back. Take a fixed tax rate, 11.5% as someone previously suggested, and that was removed from our paycheck each week. I think most Americans would look at taxes differently if they knew those deductions were never coming back. We would all be better off being able to use our money as we earned it. We could invest it differently and more effectively. I don't see a flat tax rate being agreed upon by either party in our govt. Both sides are able to use the tax system as a means to control and coerce voters. The democrats coerce voters with the make the rich pay their fair sure argument. The republicans coerce voters by saying the democrats are trying to shove the middle class into higher tax brackets. Blah blah blah. Point is they can both control a lot of voters by merely suggesting how they plan to either increase or decrease the taxes on a certain class or segment of our society. We all lose, they win.

Originally posted by mdg2003

You're right about it serving as a bit of a bonus that won't be blown during the year. Except most people that mismanage their money like that will just blow the $$ as soon as the check clears. Interest on a couple grand however, is significant. Not in the short term, but interest over time is where the magic happens.

Originally posted by chirunner134



2400 at 5% return would be $66 a year.( depositing $200 a month with monthly compounded interest). Now if you saved that $2466 a year for 40 years you get some serious change. If you only save $66 a year you would have about $2500 over 40 years. Chances are if you need the money for whatever reason every year you will not be able to save it to really get the benefit.

having 2400 a yearly bonus you can not touch and forces you to save might be more useful to many people.

Now makes me wonder what the median return is.

Originally posted by mdg2003


You are right that most don't really know how much they pay. Every paycheck has the with holding deduction that we can see on our paycheck stub. However, I believe, as you probably do, that this is a 'fuzzy' number. This is due to the phenomenon that most everyone is fixated on that refund check that is guaranteed to arrive up a few weeks after filing taxes. The impact of having x amount taken from each paycheck seems lessened when you count on that 'bonus' at years end when a lot of that deduction comes back.

Take a fixed tax rate, 11.5% as someone previously suggested, and that was removed from our paycheck each week. I think most Americans would look at taxes differently if they knew those deductions were never coming back. We would all be better off being able to use our money as we earned it. We could invest it differently and more effectively.

I don't see a flat tax rate being agreed upon by either party in our govt. Both sides are able to use the tax system as a means to control and coerce voters. The democrats coerce voters with the make the rich pay their fair sure argument. The republicans coerce voters by saying the democrats are trying to shove the middle class into higher tax brackets. Blah blah blah. Point is they can both control a lot of voters by merely suggesting how they plan to either increase or decrease the taxes on a certain class or segment of our society. We all lose, they win.