[Cloud9...68]

I agree about the absurdity that 50% of the working public pays no taxes, but realistically, there's no way the Democrats would accept a tax increase on anybody but the "rich." This is supposed to be a negotiation process, and while the ideal would be for everybody to chip in their fair share, realistically, a combination of higher taxes on the well-to-do, combined with large budget cuts, would appear to be the best compromise.



And yes, we have exactly the government we deserve. This is evidenced by the fact that while some 94% of the respondents in a recent poll said NONE of the current sitting members of congress deserve another term, incumbents still get re-elected by huge margins, even in 2010.

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[flash]

while it will definitely hurt me, i think the rich need to pay more and the lower and middle classes need to pay less - as a perfect example, i only paid about 9% last year, after carefully following the tax laws, and actually being quite conservative on the deductions (we definitely could have done better had we decided to take anything questionable, but i want no risk of audit, so we really went conservative) - in the end i paid fewer dollars (not just percentage) in taxes than the teachers next door at less than half our income - but, that's the way the tax laws are set up, so we followed them



we need real tax reform, and something that sets a better balance

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[ds968]

Whether incumbents are reelected or everyone is removed and replaced with new members, the " game " played in DC will never change..and those who promise they will change the status quo are either flat out liars , or they are naive.

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[flash]

hence the need for a flat tax and a balanced budget ammendment

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[Cloud9...68]

You guys are all making so much sense.



Flash, when you say you advocate a flat tax, would you want it to apply to all wage-earners, or do you think it should kick in at some income level? Or should it be phased in up to that level (in which case it really wouldn't be "flat")? Your statement that you think lower-middle income folks should pay less seems to indicate the latter. In any event, I'd love to see ALL deductions, including the ones for mortgage interest and property and state income tax, eliminated.



As far as a balanced budget amendment, I'm all for it. However, it could get messy when the economy goes into a tailspin like it did in'08-09, causing revenues to plummet. But I'm sure that could get worked out. At least they're finally talking about it.

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[flash]

i would really need to look at the numbers, to make sure that the current lower income group's rate did not go up



also, maybe an exemption for those who only make a few thousand dollars AND are in college or a real job training school might not be a bad idea - that would take a big load off of students, who are going to be the taxpayers of the future

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[Cloud9...68]

[size="2"]I was curious, so I checked the current tax brackets (that's one of the things I love about this forum - it forces me to dust off my books, look up info online, etc.):[/size]



[color="white"][size="3"]Tax Bracket[/size][/color][color="white"][size="3"]Single[/size][/color][color="white"][size="3"]Married Filing Jointly[/size][/color][color="white"][size="3"]Head of Household[/size][/color][size="3"]10% Bracket[/size][size="3"]$0 – $8,500[/size][size="3"]$0 – $17,000[/size][size="3"]$0 – $12,150[/size][size="3"]15% Bracket[/size][size="3"]$8,500 – $34,500[/size][size="3"]$17,000 – $69,000[/size][size="3"]$12,150 – $46,250[/size][size="3"]25% Bracket[/size][size="3"]$34,500 – $83,600[/size][size="3"]$69,000 – $139,350[/size][size="3"]$46,250 – $119,400[/size][size="3"]28% Bracket[/size][size="3"]$83,600 – $174,400[/size][size="3"]$139,350 – $212,300[/size][size="3"]$119,400 – $193,350[/size][size="3"]33% Bracket[/size][size="3"]$174,400 – $379,150[/size][size="3"]$212,300 – $379,150[/size][size="3"]$193,350 – $379,150[/size][size="3"]35% Bracket[/size][size="3"]$379,150+[/size][size="3"]$379,150+[/size][size="3"]$379,150+



[/size]



Kind of brings into question the belief that 50% of all wage earners don't pay any taxes (which has been stated so many times that I had believed it). Based on the above, the most anybody can make before having to pay income taxes is $17,000. Given that the median household income is $63,093 (just looked that up, too), even with all the deductions a typical taxpayer is eligible for, I'm not seeing how the median taxable income can be whittled down below $17K for a family ($8500 for an individual). Somebody set me straight here, because from where I sit, the 50%-no-income-tax figure is looking like urban legend.



Edit: I see how the table lost its formatting in the process of coping it here. The bottom line is that for a couple or family filing jointly, taxes start to be owed for all earnings above $17K, at a rate of 10%. For an individual filer, the cut-off is $8500.

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[flash]

it's because a very large portion of that 50% of the wage earners are below the poverty level well below that $17k - remember that you have to factor in all of the part time employees, as well as the minimum wage earners



that's what the brackets would be IF there were no deductions - the problem lies in that those who make the most money, also have the most deductions, which dramatically lowers their actual percentage - we would have easily been in that top bracket, were it not for deductions

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[Cloud9...68]

I stand corrected; it appears that feasible that 50% of all wage earners aren't paying any federal income taxes under our current system.





Given the standard deduction of $11,400, plus an exemption of $3650 per child, a family of four can earn $43,200 without owing anything in federal taxes. Plus, with the tax credit of $1000 per child, given the lower tax bracket of 10%, this family could earn an additional $20K, for a total of $63,200, before owing any federal taxes. It's harder for an individual to avoid paying any taxes, though, because they wouldn't be eligible for the additional exemptions and credits, plus the threshold for individuals is lower, at $8500.



The figure I quoted in my recent post is the average US household income. According to another web site, the median income as of 10/5/2010 is $50,221, meaning that half of all households make below this amount. Given that a family of four can earn $13K above the median income without having to pay any taxes, and the likely skew in the distribution of lower-income people toward the low end (Flash's point), I can see how approximately 50% of all wage earners in the US pay little or no federal income taxes. Good to check these things out, I suppose. Either that, or I need to get out more... Or my parts need to come back so I can get back to re-assembling my 968. Kind of hard to get motivated to do that when it's 105 degrees or so, though...

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[tamathumper]

If you denominate all of your investments in dollars, you're going to be depressed for a long time...

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[Cloud9...68]

Are you sure about that? Certainly, relative to an independent standard such as gold, the dollar has lost a tremendous amount of its value. But the dollar is traditionally compared to the Euro, which, due to the problems with the PIIGS, is in even deeper doo-doo than the dollar. In fact, it appears that that's what set off all the selling in the market last week. It could be gory on Monday, now that our debt has been downgraded. Now, I wish I had heeded Rap's concerns and sold a bunch of my stocks and mutual funds prior to 8/2.

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[tamathumper]

I'm pretty sure.

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[Cloud9...68]

Not sure I follow. Even though the dollar has taken a beating, it's still up (at least recently) relative to the Euro, which is at least part of why oil prices have been dropping. Or do you mean the only smart investment at the moment is precious metals? Sure wish I had bought some gold awhile back, but alas...

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[jg968]

I saw a very good non-partisan video that explained the budget problem and what could be done to fix the problem. Seems like we have to educate the masses.



http://www.kpcb.com/usainc/



Jerry

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[Rap]

After yesterday I wondered whether Fridays decision to liquidate 50 percent shouldn't have been 100. No beating ones self here. I was watching some business show last nite thinking hmm some attractive prices there. Might be some good buys for quality, global, dividend paying companies. Then reality tempered with past experience set in to remind me that I am not a good stock picker! Besides, I don't think the fall is over.

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[tamathumper]

There is "up", and then there is "propped up". Our current money supply contains twice as many dollars as it did a few short years ago - the real definition of inflation. It takes a couple of years to work its way through the system and show up as higher prices for everything, but it will (and must) occur. Demand for the dollar is waning.

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[Rap]

Do you trade currency?

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[94SilverCab]

I heard comments Ben Bernake yesterday regarding his willingness to inject more cash into the economy to increase inflation and allow for our foreign debt to be paid with inflated (thus cheaper) dollars. The best position to be in right now is to have fixed debt (i.e. Mortgage) and no loans. I don't have a very good feeling about precious metals since there really is little intrisic value (if no one has any money, who's going to buy gold from you?).



At the moment the best pick is high quality, high dividend stocks, and be prepared to hold on for at least 5 years, or high quality bonds.



Jay

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[Cloud9...68]

"Demand for the dollar is waning."



I know very little about the currency markets, but I but I guess my question is, what is there is replace it? The Euro is in worse shape than the dollar, and I don't see the Yuan taking over as the world's reserve currency, especially with the Chinese's government's desire to keep it depressed to keep the prices of their exports low. In other words, yes, we suck real bad, but everybody else seems to suck even worse. At least that's how it looks to me...

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[ds968]

" In other words, yes, we suck real bad, but everybody else seems to suck even worse "



+ 1 !



Europe has its woes, but at least it's coming to grips with that (although a lot slower than they should )whereas China is about as close to falling off the cliff as it gets and has no clue what awaits it because it's too busy with their growth euphoria to shift focus to the fundamental problems they continue to face. By comparison, I think Japan's economic rise and fall will pale to China's bubble bursting, which I expect we may even see before the half of this decade turns over..



Not sure what the answer is, certainly not precious metals either ( regardless of historical stability ) but whether dumping stocks , buying blue chip only, shifting to bonds, treasuries, or whatever the strategy, I'm still sticking to mostly a US dollar based funds mechanism for the foreseeable future, in spite of how bad the dollar prognosis may be. Yes, it might degenerate to a point where it could hardly be worth the paper it's printed on, but much of the other currencies I fear will be one grade above toilet paper if things continue as they are now in the U.S, and on a global scale.

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