U.S. Debt discussion

[yads]

Originally Posted by Azure

But, subsidizing the oil industry, or allowing GE to get away without paying ANY taxes at all while they have $10 billion dollar quarters is where you're losing your major source of revenue.

Ok, you keep citing this fact. I just had to step in and clarify. This happened in 2009, not last year. Over the last 4 years, including that billion dollar tax refund, they've paid just over $5 billion dollars in taxes. They've also paid out $35 billion in dividends over that time, which are also taxed. They still paid over that time a ridiculous 7% income tax rate, but let's not go overboard to claim that tax payers are subsidizing GE.

http://www.marketwatch.com/investing.../ge/financials

[Azure]

Its merely a 'fact'....considering it did happen, that is being used to point out how ridiculous the loopholes are, and how they're being used.

[VladtheImpaler]

The whole argument about "making the people that earn more than $250,000 pay their share" is crap. The people that make a $250,000 SALARY are the most taxed people in the country both in absolute and, I would bet, relative terms. They are taxed at the source, and there are no "loopholes" for salary-men.
I should say, I am not familiar with the US system of taxation, so please correct me...
Sure, you write off your RRSP equivalent (401K?), kids related expenses, medical expenses, etc, but these are not "loopholes" - these are based on policy decisions to encourage savings, education, reproduction. March Hare's argument about this not being fair is silly - if you can't afford these expenses (and corresponding write-offs), you are likely not being taxed much (or at all) in the first place.
The real write-offs, or loop-holes, if you wish, are available to the really wealthy, whose income is not derived from salary, but from investments, business, etc, plus farmers.

[afc wimbledon]

Every tax 'loophole' is for some laudable purpose, they are all there to encourage something or other, investment, savings, getting people to buy houses etc, they are all still loopholes though.

[MarchHare]

March Hare's argument about this not being fair is silly

Where did I say claiming tax credits for items like RRSP contributions, tuition, etc. wasn't "fair"?

[Tinordi]

http://t.co/KWhMksR

The Super Rich Hedge Fund Managers pay 15% tax.

[Tinordi]

One idea I love is progressive punitive fees.

So for example speeding tickets are valued based on your income not as a fixed charge. The effect is that for the wealth, speeding is relatively cheaper than for the poor and thus less of an incentive to drive the limit. Some of the Scandinavian countries have used this system where I believe Teemu Selanne got a $100,000 speeding ticket. That's a fantastic idea.

[MarchHare]

Originally Posted by afc wimbledon

Every tax 'loophole' is for some laudable purpose, they are all there to encourage something or other, investment, savings, getting people to buy houses etc, they are all still loopholes though.

This is exactly the point I was making. Tax credits and other deductions exist because the government wants to provide a financial incentive to encourage a particular behaviour from individuals and businesses. I'm sure if we looked at any of them in light of that purpose, we'd likely agree many are beneficial (although they can be abused by creative tax accountants beyond their original purpose, such as using farm equipment tax credits to buy Hummers as cited earlier).

Saying "we just need to close the tax loopholes and that will solve the deficit problem" is a naive statement at best. What you're really saying is that you want to eliminate government incentives to adopt certain practices. On this very forum, we've had many self-described conservative posters argue in favour of this type of taxation policy. For example, if reducing CO2 emissions is a desired societal goal, people have suggested that the government should provide a positive incentive in the form of a "clean energy" tax credit rather than enact a punitive measure like a carbon tax.

[Flamenspiel]

Ok, very interesting discussion. Where are the real experts? looking for a US tax accountant who can help with these loopholes.

[Flash Walken]

Originally Posted by Tinordi

One idea I love is progressive punitive fees.

So for example speeding tickets are valued based on your income not as a fixed charge. The effect is that for the wealth, speeding is relatively cheaper than for the poor and thus less of an incentive to drive the limit. Some of the Scandinavian countries have used this system where I believe Teemu Selanne got a $100,000 speeding ticket. That's a fantastic idea.

http://news.bbc.co.uk/2/hi/europe/1759791.stm

[afc wimbledon]

Originally Posted by MarchHare

This is exactly the point I was making. Tax credits and other deductions exist because the government wants to provide a financial incentive to encourage a particular behaviour from individuals and businesses. I'm sure if we looked at any of them in light of that purpose, we'd likely agree many are beneficial (although they can be abused by creative tax accountants beyond their original purpose, such as using farm equipment tax credits to buy Hummers as cited earlier).

Saying "we just need to close the tax loopholes and that will solve the deficit problem" is a naive statement at best. What you're really saying is that you want to eliminate government incentives to adopt certain practices. On this very forum, we've had many self-described conservative posters argue in favour of this type of taxation policy. For example, if reducing CO2 emissions is a desired societal goal, people have suggested that the government should provide a positive incentive in the form of a "clean energy" tax credit rather than enact a punitive measure like a carbon tax.

Personally I don't think loopholes work particularly well as an incentive and tend to have been put in the code as a result of lobbying rather than neutral decision making. Punative taxes are far more effective to be frank.

I think a general cull of loopholes would be a good thing regardless of its money raising effect ala the deficit, if there is one thing the US needs right now it is something to encourage them to think of themselves as in the crap together. If the poor and middle class feel they are bearing the brunt of fixing the US's problems while the rich continue to drink champers and buy german cars things will get very ugly down there.

[Fire]

Tax loopholes = Social Engineering

All loopholes should be removed and people should be responsible for themselves. With all the loop holes gone they could also reduce the base rate as well. Let the people decide what to do with their own money.

[VladtheImpaler]

Originally Posted by MarchHare

Where did I say claiming tax credits for items like RRSP contributions, tuition, etc. wasn't "fair"?

You said these were loopholes only available to the rich because they are the only ones who can afford to take advantage of them.

[chemgear]

Originally Posted by Tinordi

One idea I love is progressive punitive fees.

So for example speeding tickets are valued based on your income not as a fixed charge. The effect is that for the wealth, speeding is relatively cheaper than for the poor and thus less of an incentive to drive the limit. Some of the Scandinavian countries have used this system where I believe Teemu Selanne got a $100,000 speeding ticket. That's a fantastic idea.

Not to sidebar this particular item but, I sorta understand the . . . visceral enjoyment/positives of this argument. But I'm not sure about it though; especially when you extrapolate the principle.

I guess you could toss younger people in jail longer for equivalent crimes because they have more "time" than some old geezer. Not sure why I'm thinking about it like that but perhaps I'm just tired today!

[Cowboy89]

Originally Posted by Fire

Tax loopholes = Social Engineering

All loopholes should be removed and people should be responsible for themselves. With all the loop holes gone they could also reduce the base rate as well. Let the people decide what to do with their own money.

Be careful what you wish for. Some people are so stupid as to make the arguement that 'XYZ Large Corporation paid no tax in 2009 and 2010 so therefore there must be loopholes that must be closed' In reality a lot of companies lost money in 2009 due to the recession and carried forward their losses and used them againt their 2010 earnings to effectively not owe tax. This isn't a loophole, but rather the basis of a fair taxation system of only taxing companies when they actually make money rather than simply exist. In this example if all losses have been exhausted by 2011 then profits may be taxable again.

That said there also are in many instances convoluted rules that allow companies to create structures to avoid taxes and maybe there can be some work done to make it harder for companies to avoid it, but arguements like the above are far too simpleton to have merit.

[MarchHare]

Originally Posted by VladtheImpaler

You said these were loopholes only available to the rich because they are the only ones who can afford to take advantage of them.

No, that's not what I said.

I stated that wealthy people are more likely to take advantage of the specific tax incentives I mentioned (tuition credits, RRSP deductions, home renovation tax credit) because after their basic needs are met, they have a greater amount of remaining funds to spend on education, retirement savings, and home remodelling compared to lower income people. They're also more likely to employ personal accountants who know how to take advantage of other programs to reduce their tax bill.

Do you dispute this?

[Edit]
The exact text of my earlier post, for reference:

It goes without saying that someone who is already wealthy is in a better position to send their kids to university, maximize their RRSP contributions, and renovate their home compared to someone living paycheque-to-paycheque who struggles to pay their rent and feed their family. So in effect, while the government has provided economic incentives that I'm sure most people agree are valuable (higher education, retirement savings, economic stimulus, etc.), they amount to tax "loopholes" that primarily benefit the wealthy.

[VladtheImpaler]

Originally Posted by MarchHare

No, that's not what I said.

I stated that wealthy people are more likely to take advantage of the specific tax incentives I mentioned (tuition credits, RRSP deductions, home renovation tax credit) because after their basic needs are met, they have a greater amount of remaining funds to spend on education, retirement savings, and home remodelling compared to lower income people. They're also more likely to employ personal accountants who know how to take advantage of other programs to reduce their tax bill.

Do you dispute this?

[Edit]
The exact text of my earlier post, for reference:

Ok, so that is what you said, but not as absolutely as I stated. And you used this as part of your argument that these people should be taxed more. Which led to my argument that this is ridiculous, as these are already the most taxed people in absolute and relative terms.

[Knut]

Originally Posted by Tinordi

One idea I love is progressive punitive fees.

So for example speeding tickets are valued based on your income not as a fixed charge. The effect is that for the wealth, speeding is relatively cheaper than for the poor and thus less of an incentive to drive the limit. Some of the Scandinavian countries have used this system where I believe Teemu Selanne got a $100,000 speeding ticket. That's a fantastic idea.

Really ??

Why should one person receive a stiffer punishment than the next for the same offence ?

Is there data out there detailing that rich dudes in Beamers get more speeding tickets ?

[Flash Walken]

Originally Posted by Hesla

Really ??

Why should one person receive a stiffer punishment than the next for the same offence ?

Is there data out there detailing that rich dudes in Beamers get more speeding tickets ?

I would assume that there are more speeding tickets leveled against porches than prius'.

[Daradon]

Originally Posted by Hesla

Really ??

Why should one person receive a stiffer punishment than the next for the same offence ?

Is there data out there detailing that rich dudes in Beamers get more speeding tickets ?

I wouldn't argue for this system, but I'm not sure I agree with your assesment of the situation.

When it comes to a monetary penalty, a percentage of income is probably a more fair punishment than a flat fee.

To use your terminology, 200 is going to be a much stiffer fine to the guy making 45,000 a year than the guy making 4,500,000 a year.

Now, of course anything including criminal charges, or jail time would be different, and have to be equal in absolutes.