Tax Reality Check

[oden]

If there were no withholding or sales tax, and you had to pay all of your taxes in a lump sum at the end of the year, do you think politicians could get away with the tax burden they have placed on everyone? I think even those unfortunate enough to be living off of disability, pensions, welfare etc.. would be forced to realize they are still paying taxes!

[Rudyard K]

Politicians are extremely adept at devising taxes that "feel" like they are being imposed on someone else...but in reality are being imposed on all of us.

Sales tax simply raises the cost of good and services. We tend to exempt things that appear necessary (food, medical, etc). But that just shifts the burden to other items...and in theory higher income individuals under the assumtion that they by more of the non-exempt items.

Homestead and Over 65 property tax exemptions simply shift the burden of property tax away from residential and towards commercial enterprise. But such shift again just raises the cost of good and services. Theoretically that is also a shift to higher income individuals.

Hotel and motel taxes collect excessive tax revenues from visitors to a local, under the guise that such is not taxing its own citizens.

Corporate income tax has the feel of taxing some non person entity. But again, such taxes simply raise the costs of goods and services. I guess that also shifts the burden to higher income individuals.

Yep, if we all had to write a check at the end of the year for all the taxes we owe...it would be more dramatic.

[charlestudor2005]

Never happen. If we had a system like that, most people would likely wind up in debtor's prison w/in a couple of years for being unable to pay the tax. People in the US know how to spend on credit, but not save to stay out of jail.

As it stands now, we have a withholding system that doesn't work.

[Bebe Le Strange]

Originally Posted by oden

If there were no withholding or sales tax, and you had to pay all of your taxes in a lump sum at the end of the year, do you think politicians could get away with the tax burden they have placed on everyone? I think even those unfortunate enough to be living off of disability, pensions, welfare etc.. would be forced to realize they are still paying taxes!

People on disability or welfare that are at or below the poverty level for income are exempt from paying taxes, with the exception of sales / service tax on thing they buy. I don't know about the people living off pensions however.

In answer to your question no, I don't think they would get away with it, and the majority of people most likely would not save to pay for the taxes in a lump sum at the end of the year. I think you would see a real outcry from the public.

[I B Hankering]

Originally Posted by charlestudor2005

As it stands now, we have a withholding system that doesn't work.

It seems to me, the IRS is constantly putting a hurt on my party funds.

[charlestudor2005]

Originally Posted by Bebe Le Strange

People on disability or welfare that are at or below the poverty level for income are exempt from paying taxes, with the exception of sales / service tax on thing they buy. I don't know about the people living off pensions however.

IDK, but I don't think this is true. I think people can fall below the poverty level (which is a moving target) and still be required to file tax returns and pay taxes.

Someone on this board with more knowledge about taxes than me will be able to answer this definitively.

[gnadfly]

Don't forget gasoline tax, property tax and all those various taxes you pay on your utility bills. My guess is the avg middle class American pays 45-50% of their income in taxes.

[I B Hankering]

Originally Posted by gnadfly

Don't forget gasoline tax, property tax and all those various taxes you pay on your utility bills. My guess is the avg middle class American pays 45-50% of their income in taxes.

And the taxes and government fees on telephone service.

[atlcomedy]

As a small business owner I have the pleasure of writing checks to the governments on a quarterly basis In fact most of you providers out there should be doing the same I'm sure you all report all of that cash income

And yes, if most Americans had to do the same as opposed having their taxes withheld there would be an uproar that makes these tea party rallies look small.

[TexTushHog]

As a practical matter, it would never work because most people don't have the discipline to do that. I essentially do that since 70% of my income comes from a business and we don't know the profits until the last quarter. So I make a huge 1040-ES payment in December. But Joe Sixpack can't hold on to his money from one pay day to the next, much less until the end of the year.

[oden]

So I guess Joe sixpack would be motivated to ask why he had to pay and exactly where his taxes were going. My point exactly.

[TexTushHog]

No. He'd just be petrified of going to jail because he pissed away all the money he was supposed to bs saving to pay his taxes.

[WTF]

Originally Posted by gnadfly

Don't forget gasoline tax, property tax and all those various taxes you pay on your utility bills. My guess is the avg middle class American pays 45-50% of their income in taxes.

http://articles.moneycentral.msn.com/Taxes/Advice/YourRealTaxRate40.aspx


In a study for the National Bureau of Economic Research, Boston University economists Laurence J. Kotlikoff and David Rapson have found that our all-in marginal tax rate is 40%, give or take a bit. Yes, you read that right: 40%.

[Doove]

Originally Posted by WTF

In a study for the National Bureau of Economic Research, Boston University economists Laurence J. Kotlikoff and David Rapson have found that our all-in marginal tax rate is 40%, give or take a bit. Yes, you read that right: 40%.

That, combined with the fact that the top 20% share about 80-85% of the wealth in this country, while the bottom 80% split about 15-20%, all i can say is......

WHAT REDISTRIBUTION OF WEALTH ARE THESE PEOPLE TALKING ABOUT?

[TexTushHog]

40% sounds a lot more realistic to me.

Gas, utility taxes, etc. are basically meaningless to the wealthy because they are so small relative to income. You can basically look at your tax return(s), your pay roll taxes, and your property taxes and add $3 - 5k for the little shit and you're there. Add franchise tax if you own a business.