Showing posts with label Taxes. Show all posts
Showing posts with label Taxes. Show all posts
Friday, September 17, 2004
The Simply Screwy Consumption Tax
The Bush "Consumption Tax" is the next great con trying to be pulled on the American people. All that it is is a national sales tax. That means, if you spend the majority of you income on food, clothing, furniture, electronics, etc. Your taxes will go up. If you have a lot of stocks that you buy and sell, your taxes go down. This means 98% of Americans will pay higher taxes (the middle and lower classes) while the top 2% will get a tax break. The only way this benefits you is if you pay more in capital gains and dividen income off of you investments than you would pay in sales taxes. This tax break on investment does not affect 401k and IRAs because they are already tax deferred accounts, so the consumption tax does not help. So, Yippee, I will not pay any tax on the $2.12 a month in interest I get off of my savings account. But I will now pay much more every time I buy something from the store. This is a regressive tax that only punishes the poor and middle class. Once again, I say, if you are middle or lower class and you are voting for Bush it is only because you have not really thought it through.
The Great Estate Tax Con
The republicans ran their campaign partly on the estate tax 4 years ago. This was one of the greatest cons I have ever seen pulled on the middle class (and the democrats were as much to blame for not educating the public).
First of all, the estate tax was ONLY paid by the rich. Unless you had an estate of over 1.3 million dollars (combination of husband and wife), you never paid a dime in estate tax. The first 1.3 million dollars were totally exempt. Very few Americans die with an estate larger than that. If, on the off chance you did, you did not have to worry about your spouse because the entire estate (100 %) passed to your spouse tax free. Only after the spouse's death were any taxes levied (and only amounts over the 1.3 million).
The second argument used by the republicans to con us was that you are paying taxes on the same money twice (double taxation). This is patently untrue. The majority of any estate over 1.3 million is in stocks, bonds, etc. If you buy a stock for $10 today and sell it next week for $30, you pay tax on the $20 gain (capital gains tax). With the former estate tax in place, if you buy a stock today for $10, and when you die, it is worth $30, you heirs pay tax on the $20 gain. This seems fair since it ensures that the tax is paid just as if you had sold it. But now, if you buy a stock for $10 today and hold on to it, and when you die, it is worth $30, it passes to you your heirs tax free. Therefore, tax is altogether avoided. For example - if Bill Gates were to sell his shares of Microsoft today, he would pay a tax of around 2 Billion dollars. But if he dies and there is no estate tax, that stock passes to his heirs and no tax is ever paid (even if it is sold by his heirs the day after they put him in the ground). Since the estate tax was only for estates over 1.3 million dollars, it is ONLY the rich who benefit from the end of the estate tax. They never have to pay taxes and can just live off of the dividends.
The third con pulled by the republicans was that getting rid of the estate tax protected family farms and family business from having to pay "huge" taxes or lose the farm/business. This was also a lie. There was a provision in the tax code excluding family farms and closely held family businesses from the estate tax. There is not one documented family farm ever being lost due to the estate tax.
Thanks to DeLay and Lott, the rich can stay rich forever and the middle class continue to be stuck flipping the bill.I would also like to point out that schools, police, firefighters, roads, and every publicly financed project still will have to be paid for somehow. So, instead of taxing the dead (who really can't spend the money) we now shift the burden onto the living. Thanks guys! I would have preferred to defer paying my taxes as long as possible.My advice is to reinstate the estate tax and use the proceeds to pay for college scholarships (we can increase the exemption from 1.3 million for inflation). If you expect to die with a larger estate than that... spend it while you are alive! Take a vacation! Live a little! The grand kids will survive without a 5 million dollar trust fund. But with a republican legislature and republican president, I don't foresee any change. Aren't you glad the children of the rich will never have to work in their lives. It just warms my heart.
First of all, the estate tax was ONLY paid by the rich. Unless you had an estate of over 1.3 million dollars (combination of husband and wife), you never paid a dime in estate tax. The first 1.3 million dollars were totally exempt. Very few Americans die with an estate larger than that. If, on the off chance you did, you did not have to worry about your spouse because the entire estate (100 %) passed to your spouse tax free. Only after the spouse's death were any taxes levied (and only amounts over the 1.3 million).
The second argument used by the republicans to con us was that you are paying taxes on the same money twice (double taxation). This is patently untrue. The majority of any estate over 1.3 million is in stocks, bonds, etc. If you buy a stock for $10 today and sell it next week for $30, you pay tax on the $20 gain (capital gains tax). With the former estate tax in place, if you buy a stock today for $10, and when you die, it is worth $30, you heirs pay tax on the $20 gain. This seems fair since it ensures that the tax is paid just as if you had sold it. But now, if you buy a stock for $10 today and hold on to it, and when you die, it is worth $30, it passes to you your heirs tax free. Therefore, tax is altogether avoided. For example - if Bill Gates were to sell his shares of Microsoft today, he would pay a tax of around 2 Billion dollars. But if he dies and there is no estate tax, that stock passes to his heirs and no tax is ever paid (even if it is sold by his heirs the day after they put him in the ground). Since the estate tax was only for estates over 1.3 million dollars, it is ONLY the rich who benefit from the end of the estate tax. They never have to pay taxes and can just live off of the dividends.
The third con pulled by the republicans was that getting rid of the estate tax protected family farms and family business from having to pay "huge" taxes or lose the farm/business. This was also a lie. There was a provision in the tax code excluding family farms and closely held family businesses from the estate tax. There is not one documented family farm ever being lost due to the estate tax.
Thanks to DeLay and Lott, the rich can stay rich forever and the middle class continue to be stuck flipping the bill.I would also like to point out that schools, police, firefighters, roads, and every publicly financed project still will have to be paid for somehow. So, instead of taxing the dead (who really can't spend the money) we now shift the burden onto the living. Thanks guys! I would have preferred to defer paying my taxes as long as possible.My advice is to reinstate the estate tax and use the proceeds to pay for college scholarships (we can increase the exemption from 1.3 million for inflation). If you expect to die with a larger estate than that... spend it while you are alive! Take a vacation! Live a little! The grand kids will survive without a 5 million dollar trust fund. But with a republican legislature and republican president, I don't foresee any change. Aren't you glad the children of the rich will never have to work in their lives. It just warms my heart.
Thursday, August 26, 2004
The Bush Illogical Tax Policy
I am pretty sure that President Bush will say anything to get re-elected, even if it makes no logical sense. Bush keeps reiterating the below logic in his stump speeches all across the Midwest:
St Paul, Mn, August 18th, 2004 "We have a difference in opinion on this campaign about taxes. My opponent said that he's going to -- he promised about over $2 trillion of new programs. And so we said, well, how are you going to pay for it? He said, well, I'll pay for it by taxing the rich. You've heard that before, haven't you? You've heard that line. That's why people hire accountants and lawyers, so you won't be able to tax them. You can't raise enough money to pay for all his spending by so-called taxing the rich. He's going to try to stick you with the tax bill."
I am not sure why there has not been more discussion regarding Bush's recent rational as why not to raise taxes on the rich - Because rich people cheat their way out of paying their fair share of taxes. While this may be a true statement... the rich do use tax loopholes to get out of paying their taxes. This is something that only Ed Gillespie and Rush Limbaugh will argue otherwise. But, how can this be used as a reason to keep a tax cuts for the wealthiest 1% of the population during a war and a record budget deficit. I have several questions I would like answered:
1) If the rich were using accountants and lawyers to get out of paying taxes before, why did Bush need to give them a tax cut? Weren't they already NOT paying their taxes since taxes were (in his opinion) high?
2) Is Bush claiming that, at current tax rates, rich people do not use accountants/lawyers to get out of paying their taxes? (we know that is not true)
3) Is Bush claiming that he is not strong enough a leader to get congress to close the tax loopholes used by the rich to not pay their taxes?
4) Has Bush ever used accountants/lawyers to get out of paying his fair share of taxes? (my guess is - yes)
5) Is Bush saying that we should play a dirty trick on the rich and not tax them at all so they can't use loopholes (absurd extrapolation, I know, but not something I would put entirely past his train of thought).
Here is my suggestion... instead of increasing our national debt exponentially by allowing the rich to use tax loopholes, CLOSE THE LOOPHOLES!!!. If you are middle or lower class and you are voting for Bush, it is only because you have not really thought it through.
St Paul, Mn, August 18th, 2004 "We have a difference in opinion on this campaign about taxes. My opponent said that he's going to -- he promised about over $2 trillion of new programs. And so we said, well, how are you going to pay for it? He said, well, I'll pay for it by taxing the rich. You've heard that before, haven't you? You've heard that line. That's why people hire accountants and lawyers, so you won't be able to tax them. You can't raise enough money to pay for all his spending by so-called taxing the rich. He's going to try to stick you with the tax bill."
I am not sure why there has not been more discussion regarding Bush's recent rational as why not to raise taxes on the rich - Because rich people cheat their way out of paying their fair share of taxes. While this may be a true statement... the rich do use tax loopholes to get out of paying their taxes. This is something that only Ed Gillespie and Rush Limbaugh will argue otherwise. But, how can this be used as a reason to keep a tax cuts for the wealthiest 1% of the population during a war and a record budget deficit. I have several questions I would like answered:
1) If the rich were using accountants and lawyers to get out of paying taxes before, why did Bush need to give them a tax cut? Weren't they already NOT paying their taxes since taxes were (in his opinion) high?
2) Is Bush claiming that, at current tax rates, rich people do not use accountants/lawyers to get out of paying their taxes? (we know that is not true)
3) Is Bush claiming that he is not strong enough a leader to get congress to close the tax loopholes used by the rich to not pay their taxes?
4) Has Bush ever used accountants/lawyers to get out of paying his fair share of taxes? (my guess is - yes)
5) Is Bush saying that we should play a dirty trick on the rich and not tax them at all so they can't use loopholes (absurd extrapolation, I know, but not something I would put entirely past his train of thought).
Here is my suggestion... instead of increasing our national debt exponentially by allowing the rich to use tax loopholes, CLOSE THE LOOPHOLES!!!. If you are middle or lower class and you are voting for Bush, it is only because you have not really thought it through.
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