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Pass-Thru Income Deduction

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Re: Pass-Thru Income Deduction

#81

Post by joelrunyon »

munk-a wrote: post #52
joelrunyon wrote: post #6

Earlier quoted context omitted.

This. I think I would be willing to pay a higher total flat tax if it was just simpler. Right now, I spend a few thousand/year and an annoying amount of time to make sure I'm doing it right.

I think everyone* wants this, and this is how it works in Sweden where most people get mailed a pre-filled tax form and just have to vet the information and direct the refund/pay the bill. In the US there is a not small industry of tax preparers that exists solely due to the complexity of our tax code. The complexity is there to keep H&R Block, TurboTax etc... in business by encouraging middle/low income people to ke…

I'm not sure people will feel "fleeced" since most people (~80%) are getting a tax cut - https://www.washingtonpost.com/graphics/2017/business/tax-bi...

Re: Pass-Thru Income Deduction

#82

Post by tunesmith »

the_cat_kittles wrote: post #33

if you are happy that you can save some money this way, i think you are super lame. i am sad that over paid people like me and most of yall are now even less responsible for helping poor people (among other things, i know... )

Most people reading this (outside of VC kajillionaires) are not your enemy. But it does go to show how messed up things are. We recently saw a financial planner. Compared to most people we know personally (in a variety of non-tech industries), we are doing really well with tech salary. But compared to retirement projections, we are actually only treading water. We might be able to retire a little early, but only if things don't take a major downturn.

It underscored just how whacked things are. The next twenty years will change society. What now seems like a personal responsibility (for everyone to save for retirement) will fail so thoroughly that it will become a massive societal problem. I know so many people who pat themselves on the back for "being responsible" by putting a few hundred bucks into their Roth during tax season. It's dumbfounding how insufficient that is.

Students and people with service income think that tech people have it made. In reality we're probably more like the middle managers of the early 80's, earning one notch above the blue collar union folks. We don't really know if we'll make it to retirement before ageism or a crashing market will make our savings irrelevant.

Re: Pass-Thru Income Deduction

#83

Post by jfaucett »

emodendroket wrote: post #78
jfaucett wrote: post #74

Earlier quoted context omitted.

> We don't need to run an "experiment" to know this would be bad. That's the kind of armchair philosophizing that leads to all kinds of problems, we need more scientific method and less philosophy if we want to get anywhere in a productive manner. There's plenty of counter points to be made about the sales tax. Here's two. 1. Its the most efficient tax. 2. It has the lowest economic damage. For point #2, the idea is…

Let's not kid ourselves. No experimentation is needed to understand that such a policy would shift more of the tax burden onto the shoulders of the poor and away from the wealthy. If you want to advocate for that, knock yourself out, but it seems to me like it's manifestly unjust and it's unconscionable to conduct such an "experiment." The framing of science seems dishonest, especially when anyone can view your profi…

> I somehow doubt you'd be equally in the spirit of discovery of the "experiment" were a commune or large-scale nationalization of industries.

No I absolutely would be, so long as it is formed in a traditional experimental design. I wouldn't want anything I was proposing above or you are here to just be globally implemented, since we don't actually know how it would work out. So, I freely admit my bias. But the only way to counter bias and make progress is with data and a process for checking yourself. For me, that is the scientific process, anything else is really just us following our emotions which doesn't lead anywhere fruitful, that's my point.

Re: Pass-Thru Income Deduction

#84

Post by techsupporter »

snotrockets wrote: post #79
techsupporter wrote: post #41

Earlier quoted context omitted.

> I've often wished a test city/state would be allowed to just do a flat tax I don't want a flat tax (as in "all income taxed at 15%," let's say) because a flat tax has an unfair impact on people at lower income levels. But, otherwise, I agree with your entire post. Here's my ideal law, with the caveat that I have zero legal training beyond six seasons of Law and Order and four seasons of Suits: (1) The following mar…

There's a problem here: one of the goals of taxation is to encourage certain behaviors (like creating new employing in a low-employment region, or saving for retirement) and discourage others (like smoking). You remove this important policy tool, offering no other tool to replace it.

I don't see that as a problem. It's the old "it's a feature, not a bug." Using the tax code as a cudgel for social change has, in my view, more downsides than upsides. On the one hand, exempting retirement savings is probably a good thing (making it easier for people to provide for themselves in their later years). But, on the other, exempting the cost of owning housing is probably not a good thing (encouraging sprawl and crazy lending standards).

The tax code should, in my current view which I'm willing to entertain rebuttals against, be used to raise revenue for the operation of the government. If you want to use the government to encourage other behaviors, do it in another way, like direct payments or some other incentives I can't think of right now, but keep the tax code simple lest we wind up with, frankly, the mess we have now.

Re: Pass-Thru Income Deduction

#85

Post by emodendroket »

jfaucett wrote: post #83
emodendroket wrote: post #78

Earlier quoted context omitted.

Let's not kid ourselves. No experimentation is needed to understand that such a policy would shift more of the tax burden onto the shoulders of the poor and away from the wealthy. If you want to advocate for that, knock yourself out, but it seems to me like it's manifestly unjust and it's unconscionable to conduct such an "experiment." The framing of science seems dishonest, especially when anyone can view your profi…

> I somehow doubt you'd be equally in the spirit of discovery of the "experiment" were a commune or large-scale nationalization of industries. No I absolutely would be, so long as it is formed in a traditional experimental design. I wouldn't want anything I was proposing above or you are here to just be globally implemented, since we don't actually know how it would work out. So, I freely admit my bias. But the only…

This kind of extreme "scientism," if you will, ignores the fact that 1) we can anticipate the likely effects of a policy using our powers of reason and a large body of evidence from the various forms of government in action all over the entire world 2) it is unethical to conduct experiments on human subjects whose likely result is harm.

Re: Pass-Thru Income Deduction

#86

Post by curun1r »

joelrunyon wrote: post #81
munk-a wrote: post #52

Earlier quoted context omitted.

I think everyone* wants this, and this is how it works in Sweden where most people get mailed a pre-filled tax form and just have to vet the information and direct the refund/pay the bill. In the US there is a not small industry of tax preparers that exists solely due to the complexity of our tax code. The complexity is there to keep H&R Block, TurboTax etc... in business by encouraging middle/low income people to ke…

I'm not sure people will feel "fleeced" since most people (~80%) are getting a tax cut - https://www.washingtonpost.com/graphics/2017/business/tax-bi...

They'll only feel fleeced when the follow-up cuts to Social Security and Medicare get felt. Republicans have been very careful to say that only the benefits of current recipients of those programs won't see cuts. The rest of us who aren't yet retired will take a pretty huge hit in retirement. That's where we're being fleeced.

Perhaps the people who look at a tax return as free money from the government won't feel fleeced, but anyone who understands the concept of saving for retirement should be able to put together that we're having our tax burden lessened by $1k-$2k per year and, in exchange, needing to almost entirely fend for ourselves in retirement.

Re: Pass-Thru Income Deduction

#87

Post by pascalxus »

danjoc wrote: post #63
pascalxus wrote: post #56

Earlier quoted context omitted.

First of all, this bill mainly helps those earning less than 315K per family If you're making a big salary working for tech, your not as well off as you think. You may be earning x10 more than a the average "poor" person, but after income taxes, sales tax, property tax, etc, it's barely x5 to x6. And if google forces you to live on the penninsula, then your living costs are x5 to x10. I'm sure there are plenty of hig…

>You may be earning x10 more than a the average "poor" person, but after income taxes, sales tax, property tax, etc, it's barely x5 to x6. lol, you made me laugh. "Look, I know it looks like I make more than you Mr Grocery Bagger, but I have a lot of property taxes on my mansion and Ferrari. So you see, I barely make 5 times more than you!"

If you earn that much, you'll most likely have to be in the bay area, probably the peninsula.

Most of the spending goes to housing and groceries. When you spend 3 million+ on a extra crappy house with a leaky rough and 1500 sq ft in palo alto, do you see what i mean?

Penninsula house prices are roughly 1-2.5 million now, and the lower range ones are pretty crappy, often in a bad neighborhood.

Re: Pass-Thru Income Deduction

#88

Post by curun1r »

chii wrote: post #60
wbl wrote: post #45

Earlier quoted context omitted.

Define earned.

Any money, cash, or equivalent, that you are in posession of at time T, that you did not have possession of at time T-1.

What does equivalent mean? Is BitCoin an equivalent? Stocks? Real Estate? Food? An Education? Do like-kind exchanges count as income? What about non-like-kind exchanges? (i.e. what if you sell real estate and buy stocks?)

What about barter? If I trade my property or time for someone else's property or time without it ever being denominated in "money, cash or equivalent," is that taxable? From the recent controversy, does a graduate school education have a taxable value when it's offset by work the graduate student does for the University?

What about inherited wealth? Does an inheritance count as income? From one perspective, at T-1, you didn't have it and at T you did. But from the family unit perspective, nothing changed. If someone's spouse dies, since their 50% ownership of communal property just increased to 100%, is that taxable? If not, how is that really different than leaving wealth to children or extended family?

What about expatriates? If someone lives in France, earns money in France and pays French taxes, do they pay US taxes too? What if they work part time in France and part time in the US...does that earn them the lower marginal rate in both countries despite earning a much more comfortable living?

These kinds of overly-simplistic tax plans always seem to breakdown in accounting for situations that happen in the real world. And once all the necessary questions have been asked and the answers incorporated into the tax code, it's not that much simpler than what we currently have. Yes...the tax code is an overly-complex maze of crap that tends to benefit those with the best team of CPAs. But we're better off fixing that without throwing out the entire thing and starting from scratch.

Re: Pass-Thru Income Deduction

#89

Post by tunesmith »

jfaucett wrote: post #15
cornellwright wrote: post #2

One of the worst things about the current tax code (and soon-to-be new tax law) is the cost of compliance. You can argue about high tax or low tax and who should pay more than whom, but cost and time to comply does not create any value and is an artificial way that we make our country less competitive. This article is a clear example of that, laying out 10 different things you need to know with complicated formulas f…

completely agree with this sentiment. I've often wished a test city/state would be allowed to just do a flat tax and completely remove all tax code and see what happens. Obviously the convolutedness is a barrier to entry to small startups and a unfair advantage for established market entities. Also I'd love to see an experiment on a zero tax law that basically amounted to no taxes unless the business/person earned a…

Or you could pick a "flat logarithmic" tax since the value of money is roughly logarithmic as it increases. Replace tax brackets with a simpler continuous formula that is the same for everyone.

Re: Pass-Thru Income Deduction

#90

Post by closeparen »

snotrockets wrote: post #79
techsupporter wrote: post #41

Earlier quoted context omitted.

> I've often wished a test city/state would be allowed to just do a flat tax I don't want a flat tax (as in "all income taxed at 15%," let's say) because a flat tax has an unfair impact on people at lower income levels. But, otherwise, I agree with your entire post. Here's my ideal law, with the caveat that I have zero legal training beyond six seasons of Law and Order and four seasons of Suits: (1) The following mar…

There's a problem here: one of the goals of taxation is to encourage certain behaviors (like creating new employing in a low-employment region, or saving for retirement) and discourage others (like smoking). You remove this important policy tool, offering no other tool to replace it.

You can take the mortgage interest deduction for a high-rise condo. It’s not responsible for sprawl. That would be FHA underwriting standards, but mostly local zoning, which is mostly voter preference.
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