Dockside Chat - Taxes?
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LI Sound Grunt
04-05-2008, 11:00 AM
Are we all inside on a beautiful day because we are doing our taxes?
Does it have to be this complicated? Is this an entire industry or what. What is wrong with a simple one low percentage tax for all income from all sources for everyone with no exceptions no deductions etc. Companies and individuals. Aren't all these loopholes jsut ginnies to special interest groups - and do we really need a child deduction to encourage more children? Isn't the country growing fast enough with the immigrants? ;?
Whatever............... back to the calculator and freegin forms
04-05-2008, 11:16 AM
A simple, easy to understand "Tax code" would eliminate too many jobs. We wouldn't want the tax pro's standing in the unemployment line, now would we? ;)
Theeasiest way to steal from the masses is to concoct forms and contracts so complicated that the "average man" has no hope of ever understanding them. Read an insurancepolicy lately(my favorite)?
04-05-2008, 11:51 AM
The problem with your question is the word "low" in your sentence. When Steve Forbes was running against GW in 1999 he proposed a "flat tax" of about 16% or 17% and it didn't take long for people who calculate tax revenue for a living to tel him the rate would have to be about 26% to 27% to generate the same amount of revenue as our current tax system raises and, surprises of surprises, we already have that "flat tax" in place, it's called Alternative Minimum Tax and is flat rate of either 26% or 28% depending on the level of your income. And, it gets there pretty easily, they basically take your adjusted gross income and add some preference items, give you some exemption that decreases as your income increases and then tax the resulting number at either of the two percentages noted above. That number is then compared to the "regular" income tax and the greater of the two is the one you pay.
The Internal Revenue Code is over 9,500 pages long and not one line has been passed by the Internal Revenue Service or the Department of the Treasury. The whole convoluted thing has been written and passed by the House and the Senate so, if you want to let somebody know how unfair you think this whole thing is, get hold of your Congressperson. One of the biggest reasons for the bloating of the Code is the social engineering that goes into the law, Child Care Credit, education credits, earned income credits, capital purchase incentives, etc.
I make my living doing taxes professinally and have never feared for my profession when somebody wants to "simplify" the Internal Revenue Code. In this day and age, it just can't be done because Congress doesn't have the political will to do the right thing and cut spending, just like "fixing" Social Security. There have been a couple of well thought out proposals for modify the system but political bullshi! keeps anything from happening so the "fix" will be to take away the cap on wages like they did with Medicare a number of years ago. If you will notice, that didn't "fix" Medicare then and hasn't now.
Congress has far too few members who do what is best for the country as a whole and instead do what is best for them to get re-elected. I never thought I would say this, but I think term limits is an idea whose time is way past due.
Have a great day!!!!!!!!!!!!!!
LI Sound Grunt
04-05-2008, 12:13 PM
Yes I see
This alternative minimum tax seems to be a back-door tax hike to me. It is what drove me to a tax professional - every time I did that worksheet I thought I was exempt, but the IRS thought otherwise so I had 3 years of corrected returns to do!!!!
Just wondering if you saw my post on tax consequences of ETFs vs. Mutual funds. (Basically do they both have to be reported as gains or lossess and dividends even if you don't sell?) I guess I don't have to worry as I have an accountant doing my returns - all I am doing is gathering the forms and data and even that is a pain in the butt. But for planning purposes I guess we all have to worry about tax consequences, before we invest.
Jeeze you must be busier than me! Hey at least you're making the big bucks doing it, right?
04-05-2008, 07:25 PM
I agree with you about the back-door tax hike. Back in 1969 when the first AMT was introduced, the house had a version that wasn't passed since the Senate felt it was too complex for the american taxpayer to understand. Congress got hungry for revenue and, lo and behold, they basically put into law the provisions that were previously thought to be too complex for the american public to understand. And, it is too complex for most of us, even in the business, to understand.
I don't know if I'm busier than you, but hopefully I will retire before you since I will be retiring on May 31 after 38 tax seasons. I planned on working about 60-7-0 hours a week this year as I eased into retirement, but it hasn't worked that way yet. I did read your comments on ETFs and Mutual Funds but have no comments on the ETFs, since I haven't had the opportunity to work with any and haven't invested either. Mutual funds do indeed tax you on their income whether they distribute it or not and, sometimes that seems unfair. Its especially perplexing to people who invest an amount, say $10,000, hold the fund for 15 years, reinvest the dividends and then sell for $20,000 and "think" they made $10,000. They totally forget about the reinvested income that they didn't get out until they sold. Oftentimes, they actually have a net loss on the deal, not counting the time value of money.
04-05-2008, 10:51 PM
The good news in all of this tax crap is that people that actually "know" are now projecting your current taxes are as low as taxes will ever be again in the United States of America. They are projecting incrementally higher taxes from here on in just to keep the US floating, based on the tanking dollar in the overall framework of the global economy.
LI Sound Grunt
04-06-2008, 07:41 AM
Thanks again to all
Esp Jalichty for taking out some time from his busy season. Good Luck on retirement!! I think you are doing the right thing - keeping a foot in the employment door and I am sure that with your knowledge of money matters you are well prepared financially. I was not as prepared as I should have been - relying too much on a pension that loses significant value ever year we have inflation over 2%. But I was able to get a part time job to make up the difference and some expenses were even less than I planned.
However, one thing to keep in mind after retirement, with all this time on your hands you may be tempted to travel, eat out more, take up new hobbies,and do other things that cost $$$. Good Luck and mostly enjoy it! 38 years of anything is enough!