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Thread: [NEWS] Trump suggests that protesting should be illegal

  1. #61

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    Quote Originally Posted by AnalogRTO View Post
    There are also a host of programs that, while people would scream if they got cut, absolutely should get cut. The closest thing to immortality on this planet is a government program. We have programs that were meant to cover some gap that occurred at one point in time but we cannot cut now because they provide some people jobs. Other programs fail to do what they were intended to do and, instead of being cut or re-structured, a new program is added. Government waste is real.
    The federal budget for the current fiscal year is around $4.1 trillion dollars. If you're so certain that there's a meaningful amount of waste, here's a challenge. Please identify the programs you want to cut to save 5%, or around $200b. I'm curious. Please provide some citations for your sources - the federal budget appropriations are public.



    The average tax rate for the bottom 75% of wager earners is below 10%. It's only as you're approaching the top 10% of income before you get a tax rate above 10%.
    You're only considering federal income tax. The 75th percentile of household income in the US is around $100,000. At that point, you're just into the 22% bracket, plus around 6% for state taxes and around 9% for FICA (SS/Medicare). That assuming, of course, it's wage income. If you're getting $100k a year from dividends or capital gains, once you take the standard deduction you're looking at a federal tax rate of ZERO, no income tax and no FICA. Suckers!



    If you look at the IRAs, 401(k)s, HSAs, etc., those are all capped at a dollar amount and only provide a small amount of change to tax rates for highest earners (even though they max out the contributions to those). Capital gains is the big thing.
    They're capped but the benefits grow pretty impressively, and the reality is that you're not able to meaningfully contribute to them at low levels of income. I max out a 401k, two Roths and an HSA. That's $18,5000, $11,000 and $6,900 a year just in savings and that's not easy to do unless you're making a good chunk of change (plus my employer contributes another $15k to my 401k). If I was an executive, I could get access to a 409a plan which has no income limits and lets me defer a great deal more money into years when my tax rate is lower. Most deferred income plans disproportionately benefit the top quintile of income earners.

    There's a poster here who is about to cash out a 401K early - this is common for most lower income earners and incurs a 10% penalty plus marginal tax rates. In almost all cases an early withdrawal means you were worse off than never contributing in the first place!!



    Say you have $5 million in investments and get 10% return on that per year (long-term). You only get an actual $100,000 per year in 'normal' income, but get $500,000 per year in capital gains. You get taxed at 25% on your $100k and 15% on your $500k, a net tax bill of $100k. If you had made $600k of 'normal' income, you would be taxed at 39.6% on that, a nearly $240k bill.
    It's even better. You only get taxed on the capital gains when you sell. If your investments go up by $500,000 and you sell $100,000 of them, you pay capital gains rates on 10% of that $100k, not the whole $500k gain.



    We just need to reform a lot of the way things are done in this country. Tort rulings get ridiculous in a lot of places and are a lot of the reason insurance costs are so high (especially medical malpractice).
    I don't consider tort rulings unduly onerous, especially when one considers how hard it is to sue a doctor in the first place. If you make $100k a year and a doctor's error causes you to be unable to work, that's a loss of around $2.5m to your family.



    Those receiving government aid have an incentive to not find work as it reduces their monthly income further than if they just stay jobless. I have no issue with paying for a lot of things through my taxes, but our country has really screwed a lot of things up here.
    That argues for making benefits more generous (at least in terms of cutoffs), not less. I'll also point out that anyone who thinks social benefits are generous has never tried to live on them. What would AFDC and food stamps get you in your part of the country - would you want to live on that?

  2. #62

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    Quote Originally Posted by AnalogRTO View Post
    I have no issue with paying for a lot of things through my taxes, but our country has really screwed a lot of things up here.
    A lot of people would agree with that! They just wouldn't agree on exactly what was screwed up. Should we spend more money on killing people in other countries? Or should we spend more money on doling out handouts at home?

  3. #63

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    Quote Originally Posted by PCPilot View Post
    The federal budget for the current fiscal year is around $4.1 trillion dollars. If you're so certain that there's a meaningful amount of waste, here's a challenge. Please identify the programs you want to cut to save 5%, or around $200b. I'm curious. Please provide some citations for your sources - the federal budget appropriations are public.
    Do you work public sector? Have you ever discussed fiscal policy with public sector workers? Have you ever heard someone say, "we need to spend a bunch of money by the end of the fiscal year so our budget doesn't get cut"? The problem isn't that Congress is making poor choices with spending, it's that poor choices with spending at the lower levels are rewarded by giving them more money to play with the following year.




    You're only considering federal income tax. The 75th percentile of household income in the US is around $100,000. At that point, you're just into the 22% bracket, plus around 6% for state taxes and around 9% for FICA (SS/Medicare). That assuming, of course, it's wage income. If you're getting $100k a year from dividends or capital gains, once you take the standard deduction you're looking at a federal tax rate of ZERO, no income tax and no FICA. Suckers!
    Correct. You pointed out, it is income tax. You said that the low-wage earners on the totem pole are getting screwed, but the average tax rate for the bottom 50% of tax returns filed is roughly 3%. I don't argue that low-wage earners should pay more, but them getting screwed is not the truth either. In reality, it's those in the middle who usually take the biggest hit.




    They're capped but the benefits grow pretty impressively, and the reality is that you're not able to meaningfully contribute to them at low levels of income. I max out a 401k, two Roths and an HSA. That's $18,5000, $11,000 and $6,900 a year just in savings and that's not easy to do unless you're making a good chunk of change (plus my employer contributes another $15k to my 401k). If I was an executive, I could get access to a 409a plan which has no income limits and lets me defer a great deal more money into years when my tax rate is lower. Most deferred income plans disproportionately benefit the top quintile of income earners.

    There's a poster here who is about to cash out a 401K early - this is common for most lower income earners and incurs a 10% penalty plus marginal tax rates. In almost all cases an early withdrawal means you were worse off than never contributing in the first place!!
    I didn't argue that those plans help out as deferred income to the top earners, I take advantage of them as well. You aren't getting all of your money as savings--you are deferring or removing the taxation of it. So, you drop $36,400 off your income, which if you're in the 22% bracket only means you net just over $8k off your tax bill.

    Of course, if you make enough, that $11,000 for Roths goes away, so now you're talking $25,400 at 33% tax rate, net savings on tax rate of $8,382, and you don't get the deferred income.



    It's even better. You only get taxed on the capital gains when you sell. If your investments go up by $500,000 and you sell $100,000 of them, you pay capital gains rates on 10% of that $100k, not the whole $500k gain.
    If I buy a house and it goes up $100k in value, I can't see that gain until I sell. That $100k does me no good until I liquidate my investment, in the meantime, it still costs the same to me. Hence, capital gains only kick in after the sale. If you want to tax capital gains every year that the value goes up, you need to increase the capital losses amount to cover more than just $3,000.



    I don't consider tort rulings unduly onerous, especially when one considers how hard it is to sue a doctor in the first place. If you make $100k a year and a doctor's error causes you to be unable to work, that's a loss of around $2.5m to your family.
    You're assuming roughly 20 years of future work, so somebody fairly young. What if the person is in their 60's? How about a retiree? What if it doesn't cause you to lose your job? How do you calculate each loss?

    Talk to a doctor and find out how much their medical malpractice insurance is per year. Then look at where the problems come from--5% of all doctors are behind over 50% of all malpractice claims. The problem with healthcare costs isn't because of malpractice claims, it's because doctors are scared silly of being sued for malpractice or even threatened with it. They'll order unnecessary tests and make unnecessary referrals just to avoid it.



    That argues for making benefits more generous (at least in terms of cutoffs), not less. I'll also point out that anyone who thinks social benefits are generous has never tried to live on them. What would AFDC and food stamps get you in your part of the country - would you want to live on that?
    I didn't say to make benefits less. What I suggested is that those people who actively try to help provide for themselves not be penalized severely by losing more benefit than they gain from their own effort. If you were to get $5,000 per month when you are not working, then you go get a job that pays $2,000 per month, would it make sense to you to be working when your benefit drops to $2,000 per month? It's a net loss of $1,000 per month for making an effort.

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