Will Obama Default?

[jhende3]

I never thought ill agree with you Hankering but i too had to wear that beret I was in a airborne unit out of Bragg and i must say i hated the thing! We loved it when the uniform of the day included out BTU caps. But to be back to taxes i think mistake #1 was when GWB decided to give Americans refund checks since the govt had a surplus #2 was ever giving taxs breaks to people of any income level, not to say that it was all bad but its now a problem because people have come to like them and they weren't ever meant to be permanent. Business wont hire anyone because of them because it so much a part of there bottom line now. Every president has raised taxes but the strange part is that Obama doesn't want to raise them he wants to go back to what they were. Strange huh! Other president's just flat out raised them.

[I B Hankering]

Originally Posted by jhende3

I never thought ill agree with you Hankering but i too had to wear that beret I was in a airborne unit out of Bragg and i must say i hated the thing! We loved it when the uniform of the day included out BTU caps. But to be back to taxes i think mistake #1 was when GWB decided to give Americans refund checks since the govt had a surplus #2 was ever giving taxs breaks to people of any income level, not to say that it was all bad but its now a problem because people have come to like them and they weren't ever meant to be permanent. Business wont hire anyone because of them because it so much a part of there bottom line now. Every president has raised taxes but the strange part is that Obama doesn't want to raise them he wants to go back to what they were. Strange huh! Other president's just flat out raised them.

What about the AMT? Who is putting it back the way it was?

The AMT, as originally conceived in 1969, was to impact only the 155 richest American taxpayers. This year – 2011, an estimated 23 million Americans were subject to the AMT and liable for something like $3900 in increased taxes. 155 somehow now means 23,000,000?!?! Now that's fuzzy math!

IMO, it seems that every time the public allows Congress to take a swipe at the rich, it winds up hitting the middle class harder. Forgive me for not trusting Congress with my money—they are addicted to spending too much of our money.

http://www.cnsnews.com/news/article/...icans-may-soon

http://articles.moneycentral.msn.com...lyMeanTax.aspx

[Jdriller]

With a business, when you buy equipment, you can "write it off" But consider this. If you buy 100,000 of new equipment you can then deduct 100,000 from your gross profits. This means you can deduct about 35,000 (35% tax rate) from your income tax bill. But you still are out 65,000 from your personal income because that 65,000 would have been in your pocket to spend on a new car, bigger house, or whatever.

I believe all net income should be taxed the same way. Notice I am not saying at the same rate. It is Ok to have a lower tax rate for people with lower incomes like we currently have. But why should captital gains be taxes lower than normal income?
I think all net income should be taxed just like personal income. That would raise considerable funds to the government without raising personal income for the working people.

As far as real estate taxes, since I am not a realtor, and most of these properties are rental houses, I can deduct the taxes from gross rental income. If my real estate taxes, combined with depreciation, plus cost of maintanance and repairs exceed the income from those properties I have a passive income loss, which can not be deducted against "active" income from my practice or from my personal income. I can deduct real estate taxes on my personal home from my personal income. If my rental business loses money, that loss is not deductible from my personal income.

As far as the "extra" 6,000 in taxes on 200,000 goes. Its not the increase in tax that bothers me so much as what the government is going to do with it. The polititians are just going to spend it on wasteful programs, bail outs, and needless wars. If they were to cut spending on programs that don't work, wars we should not be in then I would not mind paying a little extra. I just think when your overbudget the first thing you do is figure out a way to cut spending. In business the biggest expense is payroll. It things get tight, the first and most effective place to cut expenses is by cutting payroll. That means laying off people unfortunately. The correlation with the government would be the first thing you do is cut programs.

[Munchmasterman]

Originally Posted by I B Hankering

True enough. But if the government takes it, you are guaranteeing the small businessman won't reinvest it. And the government certainly cannot be trusted to spend it more wisely.
That's true. The amount $6000, is on a taxable income of $450,000. Most small businesses make less than that. Several of my friends incorporated their business and get paid as employees. That helps avoid a lot of taxes but the taxes change about every year. My point is that spending cuts alone won't fix our problem. Letting the tax rate go back to where it was is a way of generating more revenue. It only affects people who make above $250,000. I don't want them hit with a 20% increase or anywhere near that amount. The 3% could be applied only towards the deficit or some such. I think most people in that bracket would pay the extra if they knew it wasn't being wasted on bullshit.
This is a tangential anecdote, but someone here, somewhere recently, did mention a $10,000 toilet seat purchased by DOD.

I know a little about the proverbial $10,000 toilet as my father worked for DCAS (Defense Contracts Administration Services). 10 to 20% of our defense spending is wasted. There are a lot of different ways and reasons for that and it is difficult to trim it. The vast majority is done by the large companies such as (used for examples only, not claiming they over charge) Raytheon, Boeing or Unisys.
As an aside, we used to wear maroon berets at Bragg. They do lack the visor but the only other berets we saw were green. Like wearing bloused boots with your dress uniform, it was something that looked cool and let you stand out from normal uniform.
I’ll admit one thing that really perturbed me in 2001 was when General Shinseki decided to make the black beret standard Army headgear in lieu of a perfectly functional patrol cap. Most of the guys I served with, btw we were not Special Forces, hated the beret. The beret was hot and uncomfortable to wear while one performed fatigue duties. Plus, it didn't shield the sun from your eyes or your face from the rain. All in all, it was a high maintenance ornament for your head. The real kicker is DOL bought 618,000 berets from Communist China. Each Chinese made beret cost 3¢ more than an American made beret. Overall it was a big and unnecessary expense. Shinseki’s decision cost the Army $30 million. We needed better body armor, not a head ornament. One benefit we did garner from going to Afghanistan. We did not have to wear that damn beret while we were there. Also of note, the beret is now out as of a couple of weeks ago, and a new patrol cap has been adopted for field and fatigue wear.

Bottom line is we need both cuts and hikes. Neither by itself will do the trick.

[Jdriller]

What would happen if as part of the agreement to let the Bush tax reduction expire and go back to the tax rate prior to his tax reduction the agreement was also to go back to the government spending level that was then in place?

[Munchmasterman]

Originally Posted by jhende3

I never thought ill agree with you Hankering but i too had to wear that beret I was in a airborne unit out of Bragg and i must say i hated the thing! We loved it when the uniform of the day included out BTU caps. But to be back to taxes i think mistake #1 was when GWB decided to give Americans refund checks since the govt had a surplus #2 was ever giving taxs breaks to people of any income level, not to say that it was all bad but its now a problem because people have come to like them and they weren't ever meant to be permanent. Business wont hire anyone because of them because it so much a part of there bottom line now. Every president has raised taxes but the strange part is that Obama doesn't want to raise them he wants to go back to what they were. Strange huh! Other president's just flat out raised them.

One other reason for a lack of hiring is that American worker productivity continues to increase.

Originally Posted by I B Hankering

What about the AMT? Who is putting it back the way it was?

The AMT, as originally conceived in 1969, was to impact only the 155 richest American taxpayers. This year – 2011, an estimated 23 million Americans were subject to the AMT and liable for something like $3900 in increased taxes. 155 somehow now means 23,000,000?!?! Now that's fuzzy math!

IMO, it seems that every time the public allows Congress to take a swipe at the rich, it winds up hitting the middle class harder. Forgive me for not trusting Congress with my money—they are addicted to spending too much of our money.

http://www.cnsnews.com/news/article/...icans-may-soon

http://articles.moneycentral.msn.com...lyMeanTax.aspx

Anything aimed at just 155 people can't work in the long run. They will all try to jump off that bus. The laws widen the parameters to re-include them, something else changes, etc. They wind up with a bunch of dolphins (middle class people) mixed in with the "rich" fish they have caught in their nets.

[TexTushHog]

Originally Posted by WTF

Evidently jdriller and I. B. do.

No damn wonder they hate taxes!

I'd hate'em too if I paid income tax on all my revenue!

I am starting to understand these guys rage.....they been overpaying their taxes by a shitload!

That really isn't Obama's fault guys. Pull your head outcha ya ass and pay someone to explain the tax code to ya!

If I paid taxes on my gross, I'd be pissed off, too.

But if you're really paying income tax on your gross, I'll take your malpractice case against your accountant!!! Somehow, my guess is your tax return doesn't bear out your story.

And jdriller, while you correctly point out that your passive losses can't be deducted against active income, you fail to mention that you can offset it against the passive income you get from other rent houses. More half truths.

[Jdriller]

I never claimed to pay taxes on gross income. I said on 1.5 million in gross income I net about 250,000 in net income after deducting overhead costs. After taxes, including self employment taxes my take home is only about 150,000. My complaint is that I have to personally produce nearly 10.00 for every 1.00 I get to keep and spend after I pay taxes and overhead expenses. This is due to the nature of my business. I am the sole producer of income in this business. So if I have to pay $3000.00 more in taxes I have to produce $27,000 more in gross income to pay the $3,000 additional taxes to maintain the same net income after taxes for personal spending. 250,000 x 33% = 82,500.00 plus 15.3% (self employment tax) on 106,000 = 16,218.00 82,500 + 16,218.00 = 98,718.00 which is close enough to say 100,000 in taxes netting 150,000 in after tax money. The rental business does not produce much in income each year by the time you deduct mortgage payments, insurance and repairs and taxes. The passive losses are carried over and are used as a deduction when I have a positive rental income. But so far losses have exceeded income over the long haul. The real profit will come when I eventually sale the houses as I bought most of them in the late 80's as repos' and they have nearly tripled in value since I bought them. Prior to about 1987 if you had losses in real estate the loss was deductible from personal income but, then Congress changed the rules. I have had some years where these losses exceeded 20,000 in an individual year and would have liked to have deducted that from my personal income but could not (because Congress changed the rules after I bought the houses) A question I have not asked my CPA is that when I sale the houses (I think that profit will be Captial Gains) if I have carried over passive losses, will thoses losses be a deduction off of the Captial Gains income since this will be a completely different kind of income. I suspect any passive losses not used against passive income will be lost completely and never qualify as a deduction from personal income or Captial Gains income.

[I B Hankering]

Originally Posted by Munchmasterman

Bottom line is we need both cuts and hikes. Neither by itself will do the trick.

Agreed. But I don't trust Congress, it's always been "bait and switch."

Originally Posted by Munchmasterman

As an aside, we used to wear maroon berets at Bragg. They do lack the visor but the only other berets we saw were green. Like wearing bloused boots with your dress uniform, it was something that looked cool and let you stand out from normal uniform.

I quite understand that it was a point of pride for many units; especially, when worn with Class A's. I am not criticizing that. Plus, as a matter of perception, the beret w/o bloused boots looks pretty queer. The visored cap is just so much more practical for fatigue details or while moving anywhere outdoors in inclement weather. And while the Class A "c@@t cap" was none too cool, at least it slid under your belt, under your dress coat, for carry indoors.

[WTF]

Originally Posted by Jdriller

. My complaint is that I have to personally produce nearly 10.00 for every 1.00 I get to keep and spend after I pay taxes and overhead expenses. .

Well it sounds like you have an issue with your job not the tax man.

[Munchmasterman]

Originally Posted by Jdriller

I never claimed to pay taxes on gross income. I said on 1.5 million in gross income I net about 250,000 in net income after deducting overhead costs. After taxes, including self employment taxes my take home is only about 150,000. My complaint is that I have to personally produce nearly 10.00 for every 1.00 I get to keep and spend after I pay taxes and overhead expenses. This is due to the nature of my business. I am the sole producer of income in this business. So if I have to pay $3000.00 more in taxes I have to produce $27,000 more in gross income to pay the $3,000 additional taxes to maintain the same net income after taxes for personal spending. 250,000 x 33% = 82,500.00 plus 15.3% (self employment tax) on 106,000 = 16,218.00 82,500 + 16,218.00 = 98,718.00 which is close enough to say 100,000 in taxes netting 150,000 in after tax money. The rental business does not produce much in income each year by the time you deduct mortgage payments, insurance and repairs and taxes. The passive losses are carried over and are used as a deduction when I have a positive rental income. But so far losses have exceeded income over the long haul. The real profit will come when I eventually sale the houses as I bought most of them in the late 80's as repos' and they have nearly tripled in value since I bought them. Prior to about 1987 if you had losses in real estate the loss was deductible from personal income but, then Congress changed the rules. I have had some years where these losses exceeded 20,000 in an individual year and would have liked to have deducted that from my personal income but could not (because Congress changed the rules after I bought the houses) A question I have not asked my CPA is that when I sale the houses (I think that profit will be Captial Gains) if I have carried over passive losses, will thoses losses be a deduction off of the Captial Gains income since this will be a completely different kind of income. I suspect any passive losses not used against passive income will be lost completely and never qualify as a deduction from personal income or Captial Gains income.

A few questions about the house rental business.
Mortgage payments are income aren’t they? Since you don’t own the house now but you will later? Does the building depreciate but the land doesn’t? What happens when you sell? Doesn’t your net worth/assets increase each year?
Not trying to dump on you but you are a good example of someone who doesn’t create jobs in your business regardless of the tax rate. If taxes are lower, you make more money. If they are higher, you make less. But the tax rate doesn’t play a role in job creation with you.

[Guest050715-1]

Originally Posted by Munchmasterman

A few questions about the house rental business.
Mortgage payments are income aren’t they? Since you don’t own the house now but you will later? Does the building depreciate but the land doesn’t? What happens when you sell? Doesn’t your net worth/assets increase each year?
Not trying to dump on you but you are a good example of someone who doesn’t create jobs in your business regardless of the tax rate. If taxes are lower, you make more money. If they are higher, you make less. But the tax rate doesn’t play a role in job creation with you.

All rent received is reported as income. Taxes, insurance and any other expenses such as maintenance are expensed off. There is no allowance for principle. Makes sense since you are paying yourself to for an asset. The structure, not the land, is depreciated.

If the property value goes up and as you pay down the principle, then of course your financial statement will change to reflect the new conditions. I’ve never sold a rent house, but I assume it would be a short or long term capital gain.

Of course it employs people. What about all the people at the title and mortgage company that close the loan? What about the maintenance people and the owner? What about all the people that administer the insurance and property taxing body? What about he people at the stores where I buy all the maintenance stuff? What about my CPA and attorney? If I were a big apartment building owner, I would have a staff to manage the different properties. It’s not wealth creating industry like manufacturing, construction, mining and, I could add, the medical field, but it does employ people.

Taking risks means better rewards. That’s why owning your own company, leveraging yourself to buy income producing assets, wildcatting off the coast of Venezuela, etc. pays more than a regular 9 – 5, W2 job. People creating jobs and conducing commerce should be incentivized to do so. The tax codes are written to favor those with money. It’s the golden rule; those with the gold make the rules. It’s just that simple. Maybe it isn’t right, but it is that simple.

[Whirlaway]

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[Whirlaway]

Amazing question and conclusion. I assume like minded people are advising Obama as well. Hence his mantra to "tax the rich". After all, tax rates have no relationship to individual's saving habits, spending patterns, investment decisions..you make alittle more, or you make alittle less; no importance....simply astounding ignorance.

Originally Posted by Munchmasterman

A few questions about the house rental business.
Mortgage payments are income aren’t they? Since you don’t own the house now but you will later? Does the building depreciate but the land doesn’t? What happens when you sell? Doesn’t your net worth/assets increase each year?
Not trying to dump on you but you are a good example of someone who doesn’t create jobs in your business regardless of the tax rate. If taxes are lower, you make more money. If they are higher, you make less. But the tax rate doesn’t play a role in job creation with you.

[Whirlaway]

And the comparison is worse.....the teacher actually works closer to 8 months than 10 and if you anualize the salary (to compare apples to apples) the adjusted teacher income is $32,800 per year compared to $19,700 for the E-4. And the teachers total package (benefits included) widens the margin even more.

Originally Posted by I B Hankering

Prepared by the Texas Education Agency for the 2010-2011 School Year. Monthly Salary Based on the Standard 10-Month Contract.


Years of Experience --------Monthly Salary--------Annual Salary
-----Credited----------------------------------- (10 month contract)

--------0 ----------------------$2,732 --------------- $27,320

http://www.tea.state.tx.us/index2.aspx?id=2147485382


An E-4 in the service with less than 2 years active duty. Basic pay $1,6449 per month: $19,738.80 per year Everybody below that grade makes less.

http://www.militaryfactory.com/military_pay_scale.asp