Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Why American Workers Pay Twice as Much in Taxes as Wealthy Investors

bloomberg.com

Post reply on HN
Print view View original

201–210 of 323 posts

Re: Why American Workers Pay Twice as Much in Taxes as Wealthy Investors

#201

Post by vasilipupkin »

the_gastropod wrote: post #183
vasilipupkin wrote: post #105

Earlier quoted context omitted.

that's a different issue. To the extent that they have funds and do investing, their ability to save for retirement will be hurt by raising taxes on investment income.

Retirement accounts (401k, IRA, 403b, etc) are unaffected by taxes on investment income (capital gains, dividend payouts, etc.) Maxing out those retirement accounts (~$23.5k per person) is far more than most people save each year. So I don't think raising taxes on investment income would impact retirement much at all.

retirement accounts are exhibit A in why it's good to tax investment income at a lower rate. they are basically investment income taxed at zero.

Re: Why American Workers Pay Twice as Much in Taxes as Wealthy Investors

#202

Post by fulafel »

guelo wrote: post #194
fulafel wrote: post #115

Earlier quoted context omitted.

The Obama tax hikes were largely aimed at high capital incomes, though the accompanying high pay tax hikes was hardly "screwing the voters" either. See http://money.cnn.com/2015/01/30/pf/taxes/obama-taxes-rich/in...

Pretty sure the proposed taxes in the article you linked to did not pass. The only major tax change Obama was able to get through was the Obamacare related 3.8% Net Investment Income Tax.

I stand corrected. Still, "politicians" tried to DTRT.

Re: Why American Workers Pay Twice as Much in Taxes as Wealthy Investors

#203

Post by hippich »

ckinnan wrote: post #80
nsnick wrote: post #70

Earlier quoted context omitted.

Start by getting paid on a 1099 instead of a w2

Which means immediately higher taxes because you get to pay the employer side of payroll taxes, plus no pretax benefits like health care and no vacation or other untaxed benefits.

this applies to the certain degree.. if you make less than FICA threshold - yes, you are right. If you make more from multiple contracts/jobs - it is more efficient to be paid as contractor (assuming that client will pay you your employee taxes share, which would otherwise be paid by employer in case of W-2 employment)

Re: Why American Workers Pay Twice as Much in Taxes as Wealthy Investors

#204

Post by plandis »

vasilipupkin wrote: post #104
maxxxxx wrote: post #101

Earlier quoted context omitted.

I don't think that's accurate. As of now the wealthy are pulling away quickly. This will continue if the majority of of workers' income (salary) is taxed higher than the income of investors.

yes, but those workers will at some point retire and live off their investment income, no?

I grew up pretty poor and a lot of people I know are still working. My step mom is 80 and still has to work. A lot of poor people never retire.

Also, we have ways to encourage and provide benefits for people who are lucky enough to save for retirement. 401Ks, IRAs, etc... You don't need a lower capital gains tax, instead, provide more benefits for investments specifically set aside for retirement if you think not enough is being done.

Re: Why American Workers Pay Twice as Much in Taxes as Wealthy Investors

#205

Post by SilasX »

reboog711 wrote: post #109
dougk16 wrote: post #55

Earlier quoted context omitted.

Could you link to any "for dummies"-type resources that show how you can incorporate and use that corporation to reduce your taxes? Something that would hopefully be applicable to your typical middle-class homeowner in their 30s with young kids and a 9-5 making enough to get by but is looking for any edge they can find? Edit: (in the US)

No link, but the gist in the US is this: 1) Start Business 2) Get Real Clients to buy your stuff 3) Deduct Expenses 4) Pay 40%* of whatever is left over to the Government * The 40% number can go up and down depending on your income amount [and local tax commitments].

That doesn't reduce your taxes, that just has you personally take on the accounting for an enterprise.

It would only work if you could relabel personal expenses as a business expense, which is what I think the parent was looking for (and which is a time-honored practice with its own dangers, of course, but is hard for the IRS to stamp out entirely -- you "lose" a "business" pen and keep using it for personal stuff; how does the IRS know?).

Re: Why American Workers Pay Twice as Much in Taxes as Wealthy Investors

#206

Post by JamesBarney »

31reasons wrote: post #177

Can't we just have Sales tax only. People who buy more will pay more taxes. You can exempt certain items like food, education, healthcare. Why do we need complicated income tax model? In the Sales Tax Only model, wealthy investors can invest as much money as they like but they will only be taxed if they liquidate their stocks and buy a fancy car or a yacht. I am trying to understand why we need Income tax at all?

I'm not sure what's makes an income tax less complicated than a sales tax.

Re: Why American Workers Pay Twice as Much in Taxes as Wealthy Investors

#207

Post by arca_vorago »

danudey wrote: post #72
sharemywin wrote: post #41

Earlier quoted context omitted.

The problem is a strong multiparty system can get fringe elements in power. We also, need to rank candidates: https://www.scientificamerican.com/article/ranking-candidate...

> The problem is a strong multiparty system can get fringe elements in power. But as demonstrated, a two-party system can (will?) eventually lead to polarization, causing one of the only two options in the system to become a fringe element, and unfortunately the only option the people have now are the democrats or a party of right-wing extremists who are anti-woman, anti-poor, anti-education, anti-science, and white…

I don't have time to go into the length I want, but this comment is a perfect example of the myopia that polarizes peoples opinions. Both parties are equally part of the problem, and the people on both sides who fail to see that are also, including comments like yours.

Please, don't try and turn this into a whataboutism and argue how much worse one party is, that's the trite and cliche response we always here that never addresses root causal issues.

Rant about your comment aside, after long deliberation this is why I support the unparty movement, the people could get enough third party people in to take away the majority from both parties. Congress (and the rest of gov) needs to be reminded they work for the people. Right now, both parties work for themselves and those that corrupt/black mail/threaten them.

Re: Why American Workers Pay Twice as Much in Taxes as Wealthy Investors

#208

Post by jjeaff »

brianwawok wrote: post #165
jermaustin1 wrote: post #128

Earlier quoted context omitted.

People often forget about S-Corps. As the owner you W-2 yourself, then what is "left over" is a dividend. Since an S-Corp is a pass-through entity, you don't pay corporate taxes, and aren't getring the C-Corp double tax on your dividends. On the dividend, you don't end up paying toward FICA. Effectively saving you up to 15.3%. IRS rules stipulate you have to be paid a "reasonable" compensation, which most accountants…

So the average programmer US wise makes something like 90k I believe (haven't checked in a few years). You are saying if you ran a 1 man SAAS app and made 200k in a year, you would w2 yourself for 30k and take a 170k dividend? I am not sure my accountant would like this plan. Taking say that 90k or 100k might be plausible, but 30% of the average wage? (And at the 90k point.. FICA goes away past 110k anyway, so the sa…

More like $60k. But no, your accountant will not go for anything even remotely risky. Accountants are notoriously conservative. No accountant is going to stick their neck out for their average customer.

You have to pay the big bucks for the guys willing to push the envelope. And that's not be ause they are better, it's because they have to make more money to offset the risk to their career.

Re: Why American Workers Pay Twice as Much in Taxes as Wealthy Investors

#209

Post by Shivetya »

I would love a simple tax system but no politician in Washington wants, especially those on the left side of the aisle. the tax system is the largest source of political power that exists in the United States and likely everywhere in the world.

Politicians refuse to let you disarm them. Worse they are adept at convincing you they need more taxing power by playing you off each other, by preying on your jealously or creating it.

What is ignored about investment income taxing is that original income used to create the investment was taxed. Hence we are taxing it more than once and doing so forever. the alternative is they pull their investments/risks and put them into vehicles like bonds that government officials really want them in. don't think these articles come out of thin air, they are politically motivated to get you angry so you willingly give more power to the political class; they are the true one percent

Re: Why American Workers Pay Twice as Much in Taxes as Wealthy Investors

#210

Post by plandis »

paulpauper wrote: post #39

One of the arguments for low long term capital gains taxes is that investments carry higher risk and volatility than wages. Accumulated wages grow monotonically but investments are inherently volatile and there is always the risk of losing everything

I can diversify my investments, I cannot diversify the company I work for. For an individual being employed is pretty risky. I'm fairly confident that I have enough money to survive a recession without needing to take a hit on my investments (and I'm assuming the uber-wealthy are definitely in this situation). I'm not confident that I won't entirely lose my main source of new income.
Post reply on HN