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

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

#231

Post by antisthenes »

rgbrenner wrote: post #175
gnicholas wrote: post #94

> You owe the IRS about $38,500 more, assuming each of us pays the maximum with no special deductions. This also assumes the investor has no interest income, which would be unlikely. For a younger person with a big nest egg, this wouldn't be a huge chunk of their assets. But as you age you'd want to shift into less-risky assets, like interest-bearing ones. Also, investors would probably be diversified into real estat…

But you only get to collect social security to the extent you paid into the system Medicare and social security payout more in benefits than you paid in: http://www.politifact.com/truth-o-meter/article/2013/feb/01/...

*If you live long enough, which isn't looking to be the case for the bottom quartile, considering the retirement age will be raised to 67 before our cohort will start retiring.

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

#232

Post by xapata »

jjeaff wrote: post #193
JamesBarney wrote: post #171

Earlier quoted context omitted.

This is called "piercing the corporate veil" and will not only get you in trouble with the IRS but will also mean if you're ever sued you won't get any of the normal protections to your personal assets that you would expect from doing business as a corporation.

Protecting yourself in a single owner corporation or LLC would require extraordinary discipline and bookkeeping. The protections offered by an LLC or corporation to a single owner are generally overstated. In other words, the corporate veil will be pierced either way.

It's not that bad. I keep a separate credit card, laptop, and office for company use.

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

#233

Post by api »

gnicholas wrote: post #82
theodorton wrote: post #35

Earlier quoted context omitted.

Salaries (and bonuses) are considered expenses for the company and will be tax deductible. I believe the example was that you may as a contractor (with your own company) receive a bonus to your corporation and be able to offset taxes for another 11 months compared to having the bonus paid out personally.

Working as a contractor for your wholly-owned company would never pass muster with the IRS. You might be able to avoid audit for a little while, but when this catches up to you it will be a huge mess. They would recast the transactions (they can do this) and you'd end up owing a ton of tax and penalties. Source: I'm a (former) tax lawyer.

This is yet another barrier to entry for the working class. If the poor try to use tax loopholes they get nailed. The rich can afford tax lawyers to make sure they're doing it right.

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

#234

Post by _m8fo »

vasilipupkin wrote: post #222
_m8fo wrote: post #167

One thing a middle class friend of mine does is the following: 1. Buy house 2. Rent out rooms 3. Deduct all expenses that you'd have to pay anyway, utilities, internet, etc. as "business expenses". 4. Depreciate house 5. Renovate the house and depreciate the new fixtures/additions/etc. 6. Reappraise the house after a certain time and refinance. 7. Take money out after refinancing and buy more property. Go back to (1)…

when you sell those properties, you still have to pay all the taxes. Depreciating doesn't save you from having to pay tax, it just defers the tax liability to the future.

You have to pay depreciation recapture tax whether or not you actually depreciate your house[1]. Not depreciating a rental property is just stupid.

[0] https://www.thebalance.com/depreciation-recapture-3192979 [1] Internal Revenue Code section 1250(b)(3)

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

#235

Post by autokad »

taeric wrote: post #136
autokad wrote: post #95

Earlier quoted context omitted.

No. No. No. It is really hard to take someones money and claim you can do better with it than they can, especially if that: #1 you do not share their views #2 you have no obligation to spend the money on what you stole it for #3 you have a proven track record for inefficiency Want to help me out? let me keep my damn money, let me decide what is right for me. you got an agenda? spend your own money toward it. its also…

Using rhetoric like "stole it for" doesn't help your cause. Pretty much period. I'm interested in debating some of these points. (Honestly more interested in seeing others debate it.) However, if you are going to get emotional on points, realize that you are betraying that you likely haven't researched the points. As an example, the claim that "almost all school funding" does not come from these taxes is not as true…

you are the one pushing rhetoric, and taking my money is not a point for debate.

I experienced this first hand with Philadelphia's soda tax (to fund universal preschool), which has been a spectacular yet tragic failure thus far.

at least with the tax, it was 'said' to have been appropriated for it, but capitals gains simply do not go for schooling children. those are funded mostly local, please play your 'ALL'/'NONE' lawyer ball somewhere else.

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

#236

Post by vasilipupkin »

_m8fo wrote: post #234
vasilipupkin wrote: post #222

Earlier quoted context omitted.

when you sell those properties, you still have to pay all the taxes. Depreciating doesn't save you from having to pay tax, it just defers the tax liability to the future.

You have to pay depreciation recapture tax whether or not you actually depreciate your house[1]. Not depreciating a rental property is just stupid. [0] https://www.thebalance.com/depreciation-recapture-3192979 [1] Internal Revenue Code section 1250(b)(3)

I agree, I am just saying, depreciation is not a free pass, since when you sell, you have to pay the tax.

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

#237

Post by HockeyPlayer »

gnicholas wrote: post #94

> You owe the IRS about $38,500 more, assuming each of us pays the maximum with no special deductions. This also assumes the investor has no interest income, which would be unlikely. For a younger person with a big nest egg, this wouldn't be a huge chunk of their assets. But as you age you'd want to shift into less-risky assets, like interest-bearing ones. Also, investors would probably be diversified into real estat…

> But as you age you'd want to shift into less-risky assets

Not if you are wealthy. If your money might not last you have to shift to conservative assets. But if you have 10x what you need for the rest of your life you can keep investing aggressively.

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

#238

Post by TheAdamAndChe »

ak217 wrote: post #63
TheAdamAndChe wrote: post #22

Earlier quoted context omitted.

I'm saying there are plenty of people making $200k post-tax. Also, 7% annual returns combined with an additional $150k/yr would lead to having $6.5 million like I said.

To make $200K post-tax, you need to make at least $260K pre-tax. In the US, that puts you almost exactly at the boundary of the 1%. I suppose this is a matter of your definition of "plenty of people".

1% of 300 million is still 3 million people. That's a lot of people making a lot of money.

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

#239

Post by vasilipupkin »

plandis wrote: post #204
vasilipupkin wrote: post #104

Earlier quoted context omitted.

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 eno…

poor people already pay very little to none income tax. lower capital gains tax is supposed to stimulate overall investment, which leads to more jobs, including for poor people. That's the idea behind it.

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

#240

Post by seanp2k2 »

danudey wrote: post #37
bryanlarsen wrote: post #20

Earlier quoted context omitted.

They're currently trying to close a couple of those loopholes here in Canada, and it's surprising how much traction the complaints against the reforms are getting. The opponents are claiming that the reforms are going to devastate family doctors and family farms. The complaints are mostly bogus, but people don't understand tax law so are vulnerable to an emotional plea.

As someone who works at a startup and has interacted with many others, there is some merit to the claims. I agree that these loopholes should be closed and the tax system reformed, but I think we should be careful to do it in such a way that doesn't negatively affect e.g. companies like the one I work for, which went from three people to 70 and millions in revenue in just a few years. Especially as Vancouver is tryin…

https://mobile.nytimes.com/2012/04/29/business/apples-tax-st... https://motherboard.vice.com/en_us/article/pga739/apple-avoi... should have the loopholes which allow them closed.
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