Today in conservative logic...

[Herbert Hoover]

What is a better way to help those who have been out of work for over 6 months? Extend their unemployment benefits? Or give some extra tax cuts to millionaires

Conservatives - you know the answer! :rofl:

http://thinkprogress.org/wp-content/uploads/2010/11/pence.jpg

HALPERIN: If your leaders came to you and said, "We have a deal with the White House. We're going to extend unemployment benefits, but the tax cuts for the people making over a million dollars a year will not be extended, but that helps to pay for it," would you take deal? Would you vote for that package?

PENCE: Look, I think the worst thing you could do for people that are struggling in this economy and looking for a job is raising taxes on any American. We don't wanna help with one hand and take away with another.

HALPERIN: Would you rather extend the tax cuts for every American, including those making over a million, or have the unemployment benefits extended if that's the choice?

PENCE: [Laughs] Yeah, good. This isn't a corner, but I feel the paint. You know? I'm good, nice move. I played chess with my son the other day and I lost, so, you know, I'm not good at this chess thing. [Laughs] Let me tell you, I think the minimum that we have to do right now for Americans that are struggling in unemployment in this economy is make sure that no American sees a tax increase.

[notreallyme]

HH's book on parenting suggests buying weed and alcohol for your kid if he is low on funds is the optimal way to help your children out.

[erosewater]

Without reading the OP, I can say that Mike Pence is dumb as a lamppost.

[Sub_Zero]

Those greedy millionaires will just bury the cash in jars in their back yards.

No way in hell would they invest the added funds in businesses. That might create some jobs to put some of those poor unemployed people to work while creating something of value in the process. And work sucks. So that would be evil.

[yankeetripper]

Those greedy millionaires will just bury the cash in jars in their back yards.

No way in hell would they invest the added funds in businesses. That might create some jobs to put some of those poor unemployed people to work while creating something of value in the process. And work sucks. So that would be evil.

How many jobs did the 2001 & 2003 tax cuts create?

[Gary Wright]

How many jobs did the 2001 & 2003 tax cuts create?

I have clients who are waiting on tax policy to decide whether or not they are going to hire. Right now, they're running over capacity.

I don't know how many jobs the tax policy would create, but I know of a few.

Small businesses who plow back their earnings into the business also expand faster with lower taxes. Expand faster means more jobs.

[ElDucky]

How many jobs did the 2001 & 2003 tax cuts create?

Double the amount that the stimulus package saved.

[Gary Wright]

What is a better way to help those who have been out of work for over 6 months? Extend their unemployment benefits? Or give some extra tax cuts to millionaires

Conservatives - you know the answer! :rofl:

http://thinkprogress.org/wp-content/uploads/2010/11/pence.jpg

Local restaurant can't hire anyone because nobody wants to work. They're on UC. They get several applicants a week who fill out an application and then tell them if the UC office calls to vouch they filled one out..

.. but they make it clear they don't want a job. The owners said they're having a much harder time finding daytime labor the last year than they ever did, but there is a steady stream of people filling out applications without any interest in actually working.

2 years is long enough. I'm tired of hearing boo-hoo stories about people who have been on UC for two years and who can "barely pay the mortgage" or "can't pay the bills because the UC doesn't match their prior wages".

Apartments, they're there. Jobs that will pay rent, and public assistance for low income, they're there too. Time for a reality check, berry.

[erosewater]

Can we stop calling them the 2001 and 2003 tax cuts? They were not cuts, they were deferrals. kthx

[yankeetripper]

I have clients who are waiting on tax policy to decide whether or not they are going to hire. Right now, they're running over capacity.

I don't know how many jobs the tax policy would create, but I know of a few.

Small businesses who plow back their earnings into the business also expand faster with lower taxes. Expand faster means more jobs.

Were jobs being created faster in the 90s or 00s?

Which decade had relatively higher tax rates?

[erosewater]

Local restaurant can't hire anyone because nobody wants to work. They're on UC. They get several applicants a week who fill out an application and then tell them if the UC office calls to vouch they filled one out..

.. but they make it clear they don't want a job. The owners said they're having a much harder time finding daytime labor the last year than they ever did, but there is a steady stream of people filling out applications without any interest in actually working.

2 years is long enough. I'm tired of hearing boo-hoo stories about people who have been on UC for two years and who can "barely pay the mortgage" or "can't pay the bills because the UC doesn't match their prior wages".

Apartments, they're there. Jobs that will pay rent, and public assistance for low income, they're there too. Time for a reality check, berry.

I agree that UE creates perverse incentives and distorts labor markets. And I agree that some people take advantage of it. But I don't it is at all accurate to portray our current unemployment problems as a result of just that. In many cases it's not really true that "jobs are out there".

[Gary Wright]

Were jobs being created faster in the 90s or 00s?

Which decade had relatively higher tax rates?

Are you contending that there are no other variables in other decades?

(like eased lending in the 90s, artificially high stock values and baloon equity that people learned to spend?).

I'm not sure there was ever any real economic expansion that wasn't created in the 90s by anything other than debt spending, explicit and implicit.

Same with the 80s. Well, and maybe the 70s, too. Where do we go back to, 1950s? There has been a real increase, maybe, due to population increases and labor productivity, but above and beyond that, it's probably all just assigned debt by now.

[Gary Wright]

I agree that UE creates perverse incentives and distorts labor markets. And I agree that some people take advantage of it. But I don't it is at all accurate to portray our current unemployment problems as a result of just that. In many cases it's not really true that "jobs are out there".

The same caliber of jobs definitely aren't out there. That's part of reality. if you could actually create a system that only provided the benefits to those who needed them in earnest and those who were really trying hard to get off of them, I'd be all for extension.

[yankeetripper]

Are you contending that there are no other variables in other decades?


No but just showing historical facts that show that higher taxes do not necessarily = fewer jobs and lower taxes do not always = more job.

[notreallyme]

No but just showing historical facts that show that higher taxes do not necessarily = fewer jobs and lower taxes do not always = more job.

I hope you are better at statistics than your last few posts indicate.

[yankeetripper]

I hope you are better at statistics than your last few posts indicate.

Is your position that job growth was faster from 2002 - 2010 than from 1992 - 2002?

[notreallyme]

Is your position that job growth was faster from 2002 - 2010 than from 1992 - 2002?

I hope your reading comprehension is better than what is shown by your last post.

I made no comment on the job growth during any period, that I have to mention that is a bit scary. To be honest I've never thought the reason for tax cuts is to create more jobs but to allow people to keep more of the money they earn.

I was simply commenting on your high school (non-college prep courses) thought process on statistics and what you think certain correlations seem to prove.

-- Is is your position that Gov't spending was lower from 2002 to 2010 than from 1992 to 2002?
Then it's Gov't spending that caused the decreases in jobs ... it's true cause I used facts!!

[the BS method]

Is your position that job growth was faster from 2002 - 2010 than from 1992 - 2002?

What are you getting at?

Is your policy to spend into oblivion then create a false dichotomy that we can either raise taxes or make people homeless?

[Extreme Extremist]

What is a better way to help those who have been out of work for over 6 months? Extend their unemployment benefits? Or give some extra tax cuts to millionaires

Conservatives - you know the answer! :rofl:

http://thinkprogress.org/wp-content/uploads/2010/11/pence.jpg

You are so right man. How dumb are they to think that someone would ever find another job. Six months is nowhere near enough time. Six years maybe, but six months is ridiculous.

And what is it with allowing hard-working and successful people to keep some of their money? All they are going to do is spend it or invest or give it charity. What a waste! Think about all the government bureaucrats who could be spending that money. We all know that would be a more efficient use of those resources than letting the actual earners of the money use it in the way they see fit.

I'm with you PP. How are we ever going to build an economic recovery by incentivizing those who actually produce the wealth while at the same time not providing hand-outs to the unemployed who wait stubbornly for their old jobs to come back or to government employees who do so much to advance our nation's economy (think about all the great wealth-producing work that those thousands of EPA, Dept of Education and Department of Agriculture folks do). Conservatives are dumb.

[Sub_Zero]

How many jobs did the 2001 & 2003 tax cuts create?

[obama admin]How many did they save?[/obama admin]

[FormLetter]

No but just showing historical facts that show that higher taxes do not necessarily = fewer jobs and lower taxes do not always = more job.

Are you going to claim that higher taxes = more jobs?

[yankeetripper]

Are you going to claim that higher taxes = more jobs?

I don't ever recall making that claim.

It would appear that the correlation to job creation and tax rates isn't that strong.

[yankeetripper]

I hope your reading comprehension is better than what is shown by your last post.

I made no comment on the job growth during any period, that I have to mention that is a bit scary. To be honest I've never thought the reason for tax cuts is to create more jobs but to allow people to keep more of the money they earn.

I was simply commenting on your high school (non-college prep courses) thought process on statistics and what you think certain correlations seem to prove.

-- Is is your position that Gov't spending was lower from 2002 to 2010 than from 1992 to 2002?
Then it's Gov't spending that caused the decreases in jobs ... it's true cause I used facts!!

Whatever, if you want to draw conclusions go ahead.

[Werewolf]

What is a better way to help those who have been out of work for over 6 months? Extend their unemployment benefits? Or give some extra tax cuts to millionaires


I'd definitely say giving tax cuts (by which you mean keeping the 2003-era tax rate). Unemployment benefits have a proven track record of not helping people get jobs. Give me the unemployment rates of 2004 any day!

Businesses that pay taxes under the individual income tax system are in desperate need of certainty. They need to know the level of taxes they're paying next year. They need to know the cost of employing people next year. Not surprisingly, these people are not willing to risk their livelihood by guessing wrong.

You'd think if Democrats were serious about avoiding giveaways to "the rich" while still seeking to help small businesses, they'd be proposing keeping the 2003 tax rates on income, and just raising the tax rates on dividends and capital gains. It's not income that makes you rich, after all.

[Gary Wright]

No but just showing historical facts that show that higher taxes do not necessarily = fewer jobs and lower taxes do not always = more job.

I don't know that you've done that. I couldn't prove it, either, not with as many other variables as there are.

I would bet lower taxes increase the number of jobs, all other things held the same, because there is more free capital. There are not any period where that's the only thing that changed.

There is certainly the case for unemployment being lower when taxes were higher, which is more of an "in spite of" thing.

[Gary Wright]

Are you going to claim that higher taxes = more jobs?

I woke up too late. Looks like you guys already had this well under control. :toast:

[the BS method]

I listened to some dem on c-span this morning talking about how the 'rich' making over 250k--in salary--were partying for the last decade and causing the deficits, while the poor were working hard.

Made want to stab my ears out. He also kept saying (on the radio) to "look at my charts!" when someone mentioned that spending causes deficits, not taxes.


It's funny (in a depressing kind of way) the situation we allow ourselves to get in. Well, the people really have no say after election day. Even the millionaire salary group had no say. Spending is at all time highs, and the dem's are going back to their typical "Bobby in Nebraska is going to die if we take away his unemployment benefits," "Jeany is gonna die too, cause you know, the rich partiers."

Dem's wont cut any entitlements. And I can't believe extending the current tax brackets is still being called a cut, and making them go back to 2001 levels is not an increase.

If government is causing you to take less % of your pay home, that's ****ing tax increase. Healthcare is a tax increase on the middle class, & young men.

The last thing i heard that dude on the radio say was that he favored a 15-25 cent increase on gasoline. Which hurts the poor expo-expo-exponentially more than the rich.

/rant

[The Drunken Actuary]

You are so right man. How dumb are they to think that someone would ever find another job. Six months is nowhere near enough time. Six years maybe, but six months is ridiculous.

And what is it with allowing hard-working and successful people to keep some of their money? All they are going to do is spend it or invest or give it charity. What a waste! Think about all the government bureaucrats who could be spending that money. We all know that would be a more efficient use of those resources than letting the actual earners of the money use it in the way they see fit.

I'm with you PP. How are we ever going to build an economic recovery by incentivizing those who actually produce the wealth while at the same time not providing hand-outs to the unemployed who wait stubbornly for their old jobs to come back or to government employees who do so much to advance our nation's economy (think about all the great wealth-producing work that those thousands of EPA, Dept of Education and Department of Agriculture folks do). Conservatives are dumb.:meltdown:

[independent]

2 years is long enough. I'm tired of hearing boo-hoo stories about people who have been on UC for two years and who can "barely pay the mortgage" or "can't pay the bills because the UC doesn't match their prior wages".



I thought the current discussion was about extending unemployment benefits beyond 6 months, not beyond 2 years.

[Standtall]

I thought the current discussion was about extending unemployment benefits beyond 6 months, not beyond 2 years.

I think the first set of people have now hit the 99 week window and will be cut off. I don't think the 99 weeks has been shortened. Of course I am not on unemployment so I could be wrong.

[Incredible Hulctuary]

Businesses that pay taxes under the individual income tax system are in desperate need of certainty. They need to know the level of taxes they're paying next year. They need to know the cost of employing people next year. Not surprisingly, these people are not willing to risk their livelihood by guessing wrong.
They already have certainty. The money they spend on salaries isn't taxable. There isn't a single bloody small business owner who is deciding against hiring somebody due to the extra 4% they might have to pay on the gross profit above $200K or $250K which is left after paying employees, rent, and other costs of running the business. Unless they're dumbasses who can't do math and are believing the Republican mantra about how the extra few percent is going to kill small businesses.

[Guerilla poster]

How is the cost of employment impacted by the taxes?

[Blue Eyes White Dragon]

They already have certainty. The money they spend on salaries isn't taxable. There isn't a single bloody small business owner who is deciding against hiring somebody due to the extra 4% they might have to pay on the gross profit above $200K or $250K which is left after paying employees, rent, and other costs of running the business. Unless they're dumbasses who can't do math and are believing the Republican mantra about how the extra few percent is going to kill small businesses.

The money they make that they can reinvest in growing their company is affected by how much THEY have to pay in taxes.

Tax Cuts Expiring in 2010

1. Tax Rates. The top tax rate will go from 35% to 39.6%. In addition, if nothing is done, it will mean higher taxes across the board and a return of the marriage tax penalty. See the proposed 2011 tax rates for more information.
2. Capital Gains. The 0% long term capital gains rate will go away. Capital gains rates will go up to 10% for lower tax brackets and from 15% to 20% for higher tax brackets.
3. Dividends. Dividends will be taxed as ordinary income, with the new higher rates. Right now the dividend tax rates are 10% and 15%.
4. Child Tax Credit. The child tax credit will return to $500 from the current $1,000 per child. In addition, it may not be refundable for some taxpayers.
5. 529 Plans. 529 plan withdrawals will not be allowed tax free for computer or Internet access.
6. Business Taxes. In addition, various business taxes will change including the payroll tax credit and section 179 expense deduction.
7. Estate Taxes. Without any action, the estate tax (or death tax as some like to call it) exemption will go back to a $1 million exemption.
8. Other Tax Credits. The tuition credits will be limited, as will the earned income tax credit.
9. Mortgage Premiums. You will no longer be able to deduct mortgage insurance premiums after December 31, 2010.


A person making $500,000 per year could easily end up being taxed and extra $50k to $100K which would mean they would not have that to invest in their company to hire an employee or two.

[yankeetripper]

They already have certainty. The money they spend on salaries isn't taxable. There isn't a single bloody small business owner who is deciding against hiring somebody due to the extra 4% they might have to pay on the gross profit above $200K or $250K which is left after paying employees, rent, and other costs of running the business. Unless they're dumbasses who can't do math and are believing the Republican mantra about how the extra few percent is going to kill small businesses.

:clap:

[Herbert Hoover]

A person making $500,000 per year could easily end up being taxed and extra $50k to $100K which would mean they would not have that to invest in their company to hire an employee or two.

:rofl:

[Blue Eyes White Dragon]

:rofl:

You think it's funny that people will not be hiring and there will be no job creation don't you.

[Herbert Hoover]

You think it's funny that people will not be hiring and there will be no job creation don't you.

Everyone pays the same tax rate on the first $250K. After that the tax rate would be slightly higher by a couple of % points. For someone making $500K that sure as hell isn't going to add up to "an additional $100K in taxes."

What has the GOP done to foster job creation? Zilch!

In fact, unemployment would be much higher than it is now if the GOP had their way.

[erosewater]

A person making $500,000 per year could easily end up being taxed and extra $50k to $100K which would mean they would not have that to invest in their company to hire an employee or two.

Show your work.

[Blue Eyes White Dragon]

Everyone pays the same tax rate on the first $250K. After that the tax rate would be slightly higher by a couple of % points. For someone making $500K that sure as hell isn't going to add up to "an additional $100K in taxes."

What has the GOP done to foster job creation? Zilch!

In fact, unemployment would be much higher than it is now if the GOP had their way.

Did you even read the post? You are only accounting for the marginal tax rate increase. There are LOTS of other increases. Capital gains up up up. Dividends up up up. AMT is going to crap all over some people.

You really have no clue. Someone making $500k could easily pay $100k more in taxes.

[Blue Eyes White Dragon]

Show your work.

What am I your accountant monkey?

[erosewater]

Did you even read the post? You are only accounting for the marginal tax rate increase. There are LOTS of other increases. Capital gains up up up. Dividends up up up. AMT is going to crap all over some people.

You really have no clue. Someone making $500k could easily pay $100k more in taxes.

If you're making 500K in taxable income, you're making it in salary, cap gains, dividends, or some combination of the 3. It's not as if the changes in tax rates on those things are additive and applied to all of your income. Show your work.

[Blue Eyes White Dragon]

A person making $500,000 per year could easily end up being taxed an extra $50k to $100K which would mean they would not have that to invest in their company to hire an employee or two.


For people who are mathematically challenged. Lets say I make $250K in wages. $200K in dividends and $50K in capital gains. $500K total.

For $50K in wages over $200k rate goes up 4.6%. I believe the rate on the first $200K goes up as well but I'm too lazy to look it up. That's $2300 more in taxes. For the $50K in cap gains tax goes from 10% to 20% that's $5,000. For dividends rate goes from 15% to 39.6% that's 24.6% times $200K that's $49,200. Add it all up, that's $56,500. And that's not even counting lost deductions and AMT which may hit way harder.

Happy now?

[doodle]

The money they make that they can reinvest in growing their company is affected by how much THEY have to pay in taxes.

Tax Cuts Expiring in 2010

1. Tax Rates. The top tax rate will go from 35% to 39.6%. In addition, if nothing is done, it will mean higher taxes across the board and a return of the marriage tax penalty. See the proposed 2011 tax rates for more information.
2. Capital Gains. The 0% long term capital gains rate will go away. Capital gains rates will go up to 10% for lower tax brackets and from 15% to 20% for higher tax brackets.
3. Dividends. Dividends will be taxed as ordinary income, with the new higher rates. Right now the dividend tax rates are 10% and 15%.
4. Child Tax Credit. The child tax credit will return to $500 from the current $1,000 per child. In addition, it may not be refundable for some taxpayers.
5. 529 Plans. 529 plan withdrawals will not be allowed tax free for computer or Internet access.
6. Business Taxes. In addition, various business taxes will change including the payroll tax credit and section 179 expense deduction.
7. Estate Taxes. Without any action, the estate tax (or death tax as some like to call it) exemption will go back to a $1 million exemption.
8. Other Tax Credits. The tuition credits will be limited, as will the earned income tax credit.
9. Mortgage Premiums. You will no longer be able to deduct mortgage insurance premiums after December 31, 2010.


A person making $500,000 per year could easily end up being taxed and extra $50k to $100K which would mean they would not have that to invest in their company to hire an employee or two.

If your employee will make you money, you will hire them. If not, you won't. Like you are just going to take your extra $50,000 and just give it to someone just because.

[Blue Eyes White Dragon]

If your employee will make you money, you will hire them. If not, you won't. Like you are just going to take your extra $50,000 and just give it to someone just because.

Not if you don't have the money to invest and your credit is tapped out or the credit market won't give you a loan. The extra $50,000 is an investment, new employees don't always generate income the first year even if they are profitable long term. Say you run a dry cleaner which is making money. You want to open a new location and hire some more employees. But in order to open the new location you have to build out the space you have to rent the place. Then it takes several months before you build enough clients at the new location to start turning a profit on your investment. If you don't have that extra $50 to $100K in profit that you paid in taxes to reinvest in growing your company, buying equipment,... then you don't have the money to expand and hire new people.

[Standtall]

They already have certainty. The money they spend on salaries isn't taxable. There isn't a single bloody small business owner who is deciding against hiring somebody due to the extra 4% they might have to pay on the gross profit above $200K or $250K which is left after paying employees, rent, and other costs of running the business. Unless they're dumbasses who can't do math and are believing the Republican mantra about how the extra few percent is going to kill small businesses.

Is there some percent where there is a single bloody small business owner who changes behavior based on taxes?

:popcorn:

[Standtall]

If your employee will make you money, you will hire them. If not, you won't. Like you are just going to take your extra $50,000 and just give it to someone just because.

Does there exist a single case where at a lower tax rate the employee is profitable and at a higher tax rate he is not?

Assume their is a range of value for the employee along the lines of:

He gets paid 50K

20% chance he makes 30K in After tax revenue
40% chance he makes 51K in After tax revenue
40% chance he makes 55K in After tax revenue

Something like this which is the sort of thing small business owners are trying to deduce all the time.

Expected after tax profit changes the equation if the taxes change.

Marginally higher tax rates will change the decisions of some owners.

If you don't think this is the case, expand your example to a 50% tax increase. Surely at some rate it becomes obvious. Just that to you, 4% seems like it affects nobody doesn't make that true.

[erosewater]

For people who are mathematically challenged. Lets say I make $250K in wages. $200K in dividends and $50K in capital gains. $500K total.

For $50K in wages over $200k rate goes up 4.6%. I believe the rate on the first $200K goes up as well but I'm too lazy to look it up. That's $2300 more in taxes. For the $50K in cap gains tax goes from 10% to 20% that's $5,000. For dividends rate goes from 15% to 39.6% that's 24.6% times $200K that's $49,200. Add it all up, that's $56,500. And that's not even counting lost deductions and AMT which may hit way harder.

Happy now?

So the best you could do was 56K. Not "50-100K".

[Standtall]

So the best you could do was 56K. Not "50-100K".

56 is 50 to 100.

:judge:

[remilard]

If your employee will make you money, you will hire them. If not, you won't. Like you are just going to take your extra $50,000 and just give it to someone just because.

I believe that the stock market will increase between now and when I retire. I have some thousands of dollars invested based on that belief.

Why don't I invest 15 trillion dollars? I would make much more money.

[erosewater]

56 is 50 to 100.

:judge:

If we don't extend these tax cuts someone making 500K could pay 50K to 1 trillion in new taxes!

[Standtall]

If the dividend tax does go up from 15 to 39ish, won't this mean a strong one time hit to stock prices? If not, why not?

[erosewater]

Income is income. Tax it all the same.

[Standtall]

If we don't extend these tax cuts someone making 500K could pay 50K to 1 trillion in new taxes!

I know! Scary right?

The good news is, if this person does pay 1 trillion, we can almost wipe out the deficit!

[Guerilla poster]

200 k in dividends is nice.

[Standtall]

Income is income. Tax it all the same.

It's an interesting concept but strange in practice.

What about things like gifting? Gambling?

Say you and 5 coworkers get your paychecks (income) and decide to roll a dice for a $1k each. The winner gets 6K. Does the 6K constitute income too?

What if you roll the dice 6 times over the course of a year and you each win once? Does the government get taxes for each win?

[Guerilla poster]

It's an interesting concept but strange in practice.

What about things like gifting? Gambling?

Say you and 5 coworkers get your paychecks (income) and decide to roll a dice for a $1k each. The winner gets 6K. Does the 6K constitute income too?

What if you roll the dice 6 times over the course of a year and you each win once? Does the government get taxes for each win?

How is it different than if I spend 1k buying sugarcane and the sugarcane guys gets profit. Income is income. On the last example, you should be able to net the losing ones as an expense in theory.

Obviously, the right tax system is not based on income but then under a sales tax the government would collect on all six transactions not the net income.

[Standtall]

How is it different than if I spend 1k buying sugarcane and the sugarcane guys gets profit. Income is income.

Obviously, the right tax is not based on income.

I am pointing out that income = income is simple, and doesn't seem quite right.

[erosewater]

It's an interesting concept but strange in practice.

What about things like gifting? Gambling?

Say you and 5 coworkers get your paychecks (income) and decide to roll a dice for a $1k each. The winner gets 6K. Does the 6K constitute income too?

What if you roll the dice 6 times over the course of a year and you each win once? Does the government get taxes for each win?

Than everyone's income is still 1K, and the taxes are unchanged.

[Guerilla poster]

I am pointing out that income = income is simple, and doesn't seem quite right.


why not?

[Standtall]

Than everyone's income is still 1K, and the taxes are unchanged.

What if you only play one time and lose?

Does the income of the winner go up 5K or is it 6K? And what happens to the losers? Does their income go down 1K each for taxation purposes?

[Standtall]

why not?

Something about rolling dice.

[Guerilla poster]

What if you only play one time and lose?

Does the income of the winner go up 5K or is it 6K? And what happens to the losers? Does their income go down 1K each for taxation purposes?


in theory they should be able to write of 1k as expense each, while one reports 5k in additional income.

I don't know if current law allows this but under income is income rules it should.

[Guerilla poster]

Something about rolling dice.

How is a gambling circle different than any other business transaction?

[notreallyme]

What if you only play one time and lose?

Does the income of the winner go up 5K or is it 6K? And what happens to the losers? Does their income go down 1K each for taxation purposes?

Really you didn't get his answer? I thought it was pretty simple and to the point.

[Standtall]

in theory they should be able to write of 1k as expense each, while one reports 5k in additional income.

I don't know if current law allows this but under income is income rules it should.

Current law most definetly does not allow this.

If it "should" doesn't this mean that "gambling" in the stock market should be different than "regular income"?

[Standtall]

Really you didn't get his answer? I thought it was pretty simple and to the point.

In the simple case where nobody ends up winning, the answer is simple, the tax laws are not.

[Standtall]

How is a gambling circle different than any other business transaction?

No expectation of net profit?

[notreallyme]

How is a gambling circle different than any other business transaction?

You could have a long conversation on that, but suffice it to say we are about the only country that believes it is unless done as a business.

i.e. Play the lottery in Europe, pay taxes on front end (not dependent on if you win).

[Guerilla poster]

Current law most definetly does not allow this.

If it "should" doesn't this mean that "gambling" in the stock market should be different than "regular income"?

?

[Standtall]

?

If I make 100K at work and lose 5K in the stock market, what is my net income for taxation purposes for the year?

[Guerilla poster]

You could have a long conversation on that, but suffice it to say we are about the only country that believes it is unless done as a business.

i.e. Play the lottery in Europe, pay taxes on front end (not dependent on if you win).

The US way just fraudently increases the amount of the winnings,imo.

[notreallyme]

In the simple case where nobody ends up winning, the answer is simple, the tax laws are not.

His was ... everyone made $1,000 (their original salary - the gambling is taxed as though it never occurred that is it's not taxed)

Most countries do it this way.

[Guerilla poster]

If I make 100K at work and lose 5K in the stock market, what is my net income for taxation purposes for the year?

95k in my theoretical world.

[erosewater]

Current law most definetly does not allow this.

If it "should" doesn't this mean that "gambling" in the stock market should be different than "regular income"?

If you're "gambling" in the stock market, you pay taxes on your net gain, not the total amount of money you get when you sell the shares.

[oirg]

in theory they should be able to write of 1k as expense each, while one reports 5k in additional income.

I don't know if current law allows this but under income is income rules it should.

I would go to a race track, and pick up $5,000+ worth of losing beting slips to offset the $5,000 gambling win.

[Standtall]

The US way just fraudently increases the amount of the winnings,imo.

For lottery yes. For other forms of gambling, they tax you where other countries do not.

If you have a casino full of people and 99 lose and one wins big, the winner pays tax, the losers do not get to write off their losses.

[Guerilla poster]

His was ... everyone made $1,000 (their original salary - the gambling is taxed as though it never occurred that is it's not taxed)

Most countries do it this way.

Then, you are making decisions on what counts as income and not being pure about it.

[erosewater]

If I make 100K at work and lose 5K in the stock market, what is my net income for taxation purposes for the year?

95K, because you can deduct capital losses just like you have to pay taxes on capital gains.

[Standtall]

His was ... everyone made $1,000 (their original salary - the gambling is taxed as though it never occurred that is it's not taxed)

Most countries do it this way.

The US does not, correct?

[notreallyme]

Current law most definetly does not allow this.

If it "should" doesn't this mean that "gambling" in the stock market should be different than "regular income"?

You are doing some serious Jumping of the Shark here.

If you own a stock you own a business, if the value of that business goes up or you get some $'s from owning it you pay tax. Pretty simple if you don't try to make it not.

Options could be looked at differently I suppose, but then some of those are bought as insurance, so more complications. Easier just to tax and allow write offs.

[Standtall]

I would go to a race track, and pick up $5,000+ worth of losing beting slips to offset the $5,000 gambling win.

So the answer is tax fraud?

[Guerilla poster]

I would go to a race track, and pick up $5,000+ worth of losing beting slips to offset the $5,000 gambling win.


tax fraud is always an option

[Standtall]

95K, because you can deduct capital losses just like you have to pay taxes on capital gains.

You can deduct capital losses from regular income?

[Standtall]

Then, you are making decisions on what counts as income and not being pure about it.

I sometimes forget if I am disagreeing with you or not.

[erosewater]

You can deduct capital losses from regular income?

Yes, up to $3000/year, with the excess carrying over to future years.

[notreallyme]

The US does not, correct?

Correct. Though in practice it does unless you make over a certain amount at once or such a large amount it really effects your situation.

I've never heard of anyone claiming a $100 pull tab win and I bet the tax folks would laugh if someone did, yet legally you are obligated to.

-- Tangent. I believe the US does it as another way to fight the 'War on Drugs'. To easy to claim you won large amounts gambling if asked where your funds came from.

[oirg]

If you have a casino full of people and 99 lose and one wins big, the winner pays tax, the losers do not get to write off their losses.

The winner can offset his winnings with documented gambling losses.

The losers, however, can't use their gambling losses to offset their non-gambling earnings.

[independent]

I think the first set of people have now hit the 99 week window and will be cut off. I don't think the 99 weeks has been shortened. Of course I am not on unemployment so I could be wrong.

I did some research. Everything I find says that anybody currently getting benefits has been getting them for less than 99 weeks. Benefits beyond 26 weeks have been paid under the Federal Emergency Unemployment and Extended Benefit programs.

The NY chart below shows what happens if these federal benefits aren't extended ("current law"). Notice that people who originally filed after May 31 of this year will just the basic 26 weeks. Those who filed earlier will get more, but nobody currently getting benefits will get 99 weeks.

[Guerilla poster]

I sometimes forget if I am disagreeing with you or not.


:tup:You are thinking about the real world and how taxes currently work and I am thinking about a pure world where income is income. I agree, it is not straight forward. Let us say we had sales tax instead of income tax and many desire, does your hypothetical count as a sales transaction?

[Standtall]

Yes, up to $3000/year, with the excess carrying over to future years.

Did not know that, thanks.

Why do you think the limit is so low?

[notreallyme]

Then, you are making decisions on what counts as income and not being pure about it.

Huh?

Income has to have a defintion if you are going to tax it right?

The defintion I would use would not include gamblig :shrug: (or money made from a 'hobby').

[Guerilla poster]

Huh?

Income has to have a defintion if you are going to tax it right?

The defintion I would use would not include gamblig :shrug: (or money made from a 'hobby').


Obviously, the prostitution ring you are running is a hobby right?

[notreallyme]

The winner can offset his winnings with documented gambling losses.


Not entirely true.

You still lose some deductions and some states (MN cough cough) will rape you. (Taxes winnings, no write off for losses)

[notreallyme]

Obviously, the prostitution ring you are running is a hobby right?

Until I get more girls it is ;)

[Standtall]

:tup:You are thinking about the real world and how taxes currently work and I am thinking about a pure world where income is income. I agree, it is not straight forward. Let us say we had sales tax instead of income tax and many desire, does your hypothetical count as a sales transaction?

I would not want to count it as a sales transaction.

[oirg]

Not entirely true.

You still lose some deductions and some states (MN cough cough) will rape you. (Taxes winning no write off for losses)

Did not know that - it's BS.

[Standtall]

I did some research. Everything I find says that anybody currently getting benefits has been getting them for less than 99 weeks. Benefits beyond 26 weeks have been paid under the Federal Emergency Unemployment and Extended Benefit programs.

The NY chart below shows what happens if these federal benefits aren't extended ("current law"). Notice that people who originally filed after May 31 of this year will just the basic 26 weeks. Those who filed earlier will get more, but nobody currently getting benefits will get 99 weeks.

Thats pretty interesting when you think about it.

Is there actually an expectation that people made choices about taking a job or not based on thinking they could get 99 weeks of benefits? I think some people made that choice and feel like the government reneged on their deal. Interesting if we should care about people that selected the unemployment over a job opportunity or search that was not in their optimal field/pay range etc...

[erosewater]

Did not know that, thanks.

Why do you think the limit is so low?

I don't know. I would guess for the same reason tax accounting gives bigger profits than stat, the gov't wants their money now.

[independent]

For people who are mathematically challenged. Lets say I make $250K in wages. $200K in dividends and $50K in capital gains. $500K total.

For $50K in wages over $200k rate goes up 4.6%. I believe the rate on the first $200K goes up as well but I'm too lazy to look it up. That's $2300 more in taxes. For the $50K in cap gains tax goes from 10% to 20% that's $5,000. For dividends rate goes from 15% to 39.6% that's 24.6% times $200K that's $49,200. Add it all up, that's $56,500. And that's not even counting lost deductions and AMT which may hit way harder.

Happy now?

I've never done taxes for a small business. I'm trying to figure out where this person gets "dividend" income of $200k. I can't envision "dividends" from a sole proprietorship, but maybe they exist. An S-corp would do pass-thru taxes and wouldn't have separate taxes on dividends. Partnerships are the same. Are you assuming the small business is incorporated as a C-corp and paying taxes at both the corporate and individual levels? I'm not sure why people would do that, but there may be good reasons.

The dividends can't come from publicly traded stocks because that would mean $5 million or more of market value, and you say this owner's borrowing power is tapped out.

[yankeetripper]

Did not know that, thanks.

Why do you think the limit is so low?

The $3K limit? No idea why it is so low but I think it's been $3,000 for a loooong time with no indexing. But you can always deduct 100% of your losses against gains. :shrug:

It could also have something to do with CGs taxed at lower rates than than OI and they are trying to avoid people "gaming the system" by generating large losses in one year to off large ordinary income then taking large gains the next year at preferential tax rates. Again just a guess.

[independent]

Thats pretty interesting when you think about it.

Is there actually an expectation that people made choices about taking a job or not based on thinking they could get 99 weeks of benefits? I think some people made that choice and feel like the government reneged on their deal. Interesting if we should care about people that selected the unemployment over a job opportunity or search that was not in their optimal field/pay range etc...

You've got interesting wording. Who has this expectation? You, me, congresscritters?

I'd say that with nearly 10 million people collecting unemployment benefits, somewhere there is at least one person who turned down a job because he figured he could relax for the remainder of his 99 weeks or because he figured the longer period gave him the time to find a better job.

I don't think that there are enough people like that to significantly impact the unemployment rate. We've go 4 million unemployed who aren't getting benefits and 4 million more who are working part time but want full time jobs. It seems to me that they would find most of the available full time jobs so the slackers/lookers aren't impacting the total much.

[Atropellador]

i.e. Play the lottery in Europe, pay taxes on front end (not dependent on if you win).In almost any lottery, the expected return (expected winnings minus cost of ticket) is negative. If this amount is taxed, then the tax ought to be negative. Or are you saying the tax is based on the cost of the ticket, with no regard for expected winnings?

[Guerilla poster]

In almost any lottery, the expected return (expected winnings minus cost of ticket) is negative. If this amount is taxed, then the tax ought to be negative. Or are you saying the tax is based on the cost of the ticket, with no regard for expected winnings?

Sort of like the New GM stock.

[notreallyme]

In almost any lottery, the expected return (expected winnings minus cost of ticket) is negative. If this amount is taxed, then the tax ought to be negative. Or are you saying the tax is based on the cost of the ticket, with no regard for expected winnings?

The tax is on the ticket with no regard for expected winnings.

I have a feeling it's really a tax on the bookie more to the effect of for each dollar gambled:
90% paid out in winnings
1% in gambling tax
9% in profit

Obviously my numbers are made up. And who knows if it is a separate tax and then the profit is taxed as well or not.

[Blue Eyes White Dragon]

I've never done taxes for a small business. I'm trying to figure out where this person gets "dividend" income of $200k. I can't envision "dividends" from a sole proprietorship, but maybe they exist. An S-corp would do pass-thru taxes and wouldn't have separate taxes on dividends. Partnerships are the same. Are you assuming the small business is incorporated as a C-corp and paying taxes at both the corporate and individual levels? I'm not sure why people would do that, but there may be good reasons.

The dividends can't come from publicly traded stocks because that would mean $5 million or more of market value, and you say this owner's borrowing power is tapped out.

He could have $2.5M in CQP which pays 8.5% dividend. He's already used his stock as collateral on other loans and is thus tapped out. Or maybe he inherited the stock which is in a trust and he only has access to the dividends. There are at least a million explanations. I'm getting tired of all the nit pickin going on.

And to the other poster, 56K is indeed in the range of 50-100K. Exercise completed. And as pointed out there are additional factors such as loss of deductions and increased taxes on income that would also increase taxes but were not needed to get into the desired range.

[erosewater]

I never questioned whether you could in fact devise a scenario in which it were true. I wanted to see just how extreme your assumptions would need to be. And just as I suspected, they're pretty far out there.

[Blue Eyes White Dragon]

I never questioned whether you could in fact devise a scenario in which it were true. I wanted to see just how extreme your assumptions would need to be. And just as I suspected, they're pretty far out there.

Liar.

A) you doubted me
B) it is not that extreme

[Blue Eyes White Dragon]

And if you own a small business, it makes sense to make it an LLC so you protect your assets from the litigious society.

And when you take money out of your LLC the IRS treats it as dividends:

One more note: Be careful about paying yourself a very high salary and attempting to deduct it as a payroll expense. The IRS tends to view such salaries as dividends, which could mean you can't deduct your compensation as a business expense. Plus, you'd have to pay corporate taxes on the dividend.

http://www.entrepreneur.com/money/moneymanagement/article66020.html

[erosewater]

Liar.

A) you doubted me
B) it is not that extreme

A) No, I doubted that anything other than extreme assumptions could get you there, and I was right
B) Bull. What percentage of the population do you think has dividend income of 200K+? What percentage of people making around 500K/year have 200K in dividend income? The only way you get there is with dividends, because the other rates are only changing by roughly 5%.

[Blue Eyes White Dragon]

A) No, I doubted that anything other than extreme assumptions could get you there, and I was right
B) Bull. What percentage of the population do you think has dividend income of 200K+? What percentage of people making around 500K/year have 200K in dividend income? The only way you get there is with dividends, because the other rates are only changing by roughly 5%.

You are forgetting the loss of deductions and AMT. AGAIN.

Also, assuming you have money, it makes sense to have a proper tax strategy. The only way you generate cap gains is by sales so why would you want to be churning your assets to generate cap gains taxes. Answer, you wouldn't. And stocks and bonds that pay dividends are safer investments than stocks that don't pay dividends. Dividends are taxed less than income so it really makes sense as a small business owner to pay yourself dividends instead of a high salary which has payroll taxes and other things as well.

"Absolute tax savings can be realized by having income taxed inside the corporation at the small-business tax rate and then paid out as a dividend, rather than having the corporation pay a tax-deductible salary to be taxed in the hands of the individual," says Golombek.

And AS I SAID there are many other factors that you can look up yourself that I didn't care to go into that make the taxes go up a lot too:


Other Expirations
Another legacy of the two tax cuts was the elimination of the phase out of the personal exemption, which was gradually eliminated over time. If no extension is passed, then the phase out will resume at incomes above $122,500.

The phase out for itemized deductions were also eliminated by the Bush tax cuts, and these will also kick back in. Some taxpayers may lose as much as 80% of their itemized deductions if their income is too high.

Losing your deductions and AMT could cost you $50K all on its own. But whatever, I'm tired of trying to educate you.

[Incredible Hulctuary]

Income is income. Tax it all the same.
I agree that the tax rates for capital gains should = regular income = dividends. But if that is done they should eliminate the corporate tax (which now accounts for less than 10% of Federal revenue) and adjust the regular income tax rates downward to compensate for the large increase in tax rates for capital gains and dividends.

[Incredible Hulctuary]

I've never done taxes for a small business. I'm trying to figure out where this person gets "dividend" income of $200k. I can't envision "dividends" from a sole proprietorship, but maybe they exist. An S-corp would do pass-thru taxes and wouldn't have separate taxes on dividends. Partnerships are the same. Are you assuming the small business is incorporated as a C-corp and paying taxes at both the corporate and individual levels? I'm not sure why people would do that, but there may be good reasons.
Under current law, many owners of C-corps pay themselves a lowish salary (to the extent that the IRS allows) and the rest in dividends, due to the lower tax on dividends. So for them, letting the tax cuts expire could result in a big increase in their tax bill.

However, that doesn't really hurt their ability to reinvest in the business. Money paid out as dividends is money the business decided not to reinvest in itself. If anything, the higher dividend tax could push the owner to take less in dividends and let the business retain more of its profits, in order to avoid the higher dividend tax.

[Incredible Hulctuary]

The money they make that they can reinvest in growing their company is affected by how much THEY have to pay in taxes.

Tax Cuts Expiring in 2010

1. Tax Rates. The top tax rate will go from 35% to 39.6%. In addition, if nothing is done, it will mean higher taxes across the board and a return of the marriage tax penalty. See the proposed 2011 tax rates for more information.
2. Capital Gains. The 0% long term capital gains rate will go away. Capital gains rates will go up to 10% for lower tax brackets and from 15% to 20% for higher tax brackets.
3. Dividends. Dividends will be taxed as ordinary income, with the new higher rates. Right now the dividend tax rates are 10% and 15%.
4. Child Tax Credit. The child tax credit will return to $500 from the current $1,000 per child. In addition, it may not be refundable for some taxpayers.
5. 529 Plans. 529 plan withdrawals will not be allowed tax free for computer or Internet access.
6. Business Taxes. In addition, various business taxes will change including the payroll tax credit and section 179 expense deduction.
7. Estate Taxes. Without any action, the estate tax (or death tax as some like to call it) exemption will go back to a $1 million exemption.
8. Other Tax Credits. The tuition credits will be limited, as will the earned income tax credit.
9. Mortgage Premiums. You will no longer be able to deduct mortgage insurance premiums after December 31, 2010.


A person making $500,000 per year could easily end up being taxed and extra $50k to $100K which would mean they would not have that to invest in their company to hire an employee or two.

While I agree that letting ALL the tax cut provisions expire could result in a much larger tax bill for some individuals at that income level, it is a rare scenario due to how businesses are taxed (as pointed out in independent's post). And we're not talking about letting all cuts expire; the Dems would make permanent just about everything in place from the Bush tax cuts, except the top marginal tax rates on the over-$200/$250K crowd. So that $50-$100K increase for the hypothetical $500K earner wouldn't happen.

And if you talk about uncertainty, it's the Republicans who are injecting the uncertainty. If they weren't so adamant about protecting the interests of the richest 2%, the tax cuts for the other 98% would have been made permanent long ago.

[Baron Von Raschke]

Put another way, if the Dems hadn't wanted to single out one politically unpopular minority group to penalize, this would also have been resolved.

[Incredible Hulctuary]

As a result of the bailouts, defense contracts, low capital gains tax rates, corporate welfare, and anti-shareholder securities laws, the "minority group" you refer to now has the largest share of wealth and income that they ever had in history. The government has rewarded them far more than they will be "penalized" by a 4% increase in their top marginal rate.

[Baron Von Raschke]

Let's concentrate on one wrong at a time, and not assume two of them make a right.

[independent]

He could have $2.5M in CQP which pays 8.5% dividend. He's already used his stock as collateral on other loans and is thus tapped out. Or maybe he inherited the stock which is in a trust and he only has access to the dividends. There are at least a million explanations. I'm getting tired of all the nit pickin going on.


I'm sure you can find one person who owns a business and gets lots of dividends from some other source - your example of inherited wealth seems most likely to me.

But, for macroeconomics the numbers matter. I'm having trouble imaging the "typical" small business owner being in the very unusual tax situation you suggest. Maybe 5% of them would see the kind of tax increases you're talking about, the other 95% would see much smaller increases.

It seems to me that the economic damage of moving those taxes to somebody else (where somebody else includes kicking them down the road) is at least as great as simply collecting them now from higher income people.

[Maybe part of the disagreement here is which tax cuts we're talking about. You specify greater AMT impact, which is the result of simply letting prior law expire. But the bill the House Ds passed yesterday includes the AMT fix.]

[notreallyme]

As a result of the bailouts, defense contracts, low capital gains tax rates, corporate welfare, and anti-shareholder securities laws, the "minority group" you refer to now has the largest share of wealth and income that they ever had in history. The government has rewarded them far more than they will be "penalized" by a 4% increase in their top marginal rate.

I don't think this applies to the people making $250K working for 'the man'.

[Blue Eyes White Dragon]

As a result of the bailouts, defense contracts, low capital gains tax rates, corporate welfare, and anti-shareholder securities laws, the "minority group" you refer to now has the largest share of wealth and income that they ever had in history. The government has rewarded them far more than they will be "penalized" by a 4% increase in their top marginal rate.

There are a LOT of small business owners and upper middle class professionals who do not benefit at all from bail outs, defense spending, corporate welfare,... etc who will be paying a lot more in taxes if the dems get there way. People here keep forgetting about the loss of deductions in addition to the changes in marginal rate (small effect) and the increase in div and cap gains taxes.

The economy is pretty fragile and hitting small business owners and upper middle class professionals with big tax increases could well tip the balance back into recessionville. It's funny how the government hands out all the stimulus to big business, banks and wall street. And then wants to tax and penalize upper middle class main street guys who are often the key to job growth.

[Blue Eyes White Dragon]

I'm sure you can find one person who owns a business and gets lots of dividends from some other source - your example of inherited wealth seems most likely to me.

If a couple professionals have salaries in triple digits, dual earners, it's not that hard to accumulate a couple/several million dollars and then start investing in high yield dividend paying assets. Maybe one or both are running some small businesses and it is not that hard to imagine that they derive a fair share of income from dividends.

I know you don't care if their tax bill goes from $100,000 per year to $160,000+ per year, but taking that extra $60,000+ from them and giving it to the government will likely have a ripple effect on the economy and drive us back into recession in 2011.

[independent]

If a couple professionals have salaries in triple digits, dual earners, it's not that hard to accumulate a couple/several million dollars and then start investing in high yield dividend paying assets. Maybe one or both are running some small businesses and it is not that hard to imagine that they derive a fair share of income from dividends.

I know you don't care if their tax bill goes from $100,000 per year to $160,000+ per year, but taking that extra $60,000+ from them and giving it to the government will likely have a ripple effect on the economy and drive us back into recession in 2011.

Okay, in this scenario two triple-digit(k) professionals accumulate millions in unusually high dividend-paying stocks, then start a business, but don't use their stock wealth to fund it but decide to borrow instead, then want to expand the business in a bad economy but can't because of the taxes on their dividends. That happened maybe once this year.

Taking $60,000 from anybody and giving it to the government in this economy will slow the recovery. Any money the high-income don't pay has to be made up by the lower income eventually, that's just as bad. With corporations sitting on cash, the problem with jobs isn't lack of dollars for investing, but lack of demand to justify the investments.

[Blue Eyes White Dragon]

Okay, in this scenario two triple-digit(k) professionals accumulate millions in unusually high dividend-paying stocks, then start a business, but don't use their stock wealth to fund it but decide to borrow instead, then want to expand the business in a bad economy but can't because of the taxes on their dividends. That happened maybe once this year.

Taking $60,000 from anybody and giving it to the government in this economy will slow the recovery. Any money the high-income don't pay has to be made up by the lower income eventually, that's just as bad. With corporations sitting on cash, the problem with jobs isn't lack of dollars for investing, but lack of demand to justify the investments.

The issue is not deciding to borrow or not, the issue is having an extra $60,000 to invest in your own company or through the capital markets in other companies or spending it on goods to spur the economy.

What is bad is NOT people who are successful and making money wanting to spend their money instead of handing it over to the government so poor people don't have to pay for government services. What is bad IS the government trying to be more involved in your life and taking more money from people. Government is too big. Corporations are sitting on cash because they are afraid the government is going to send the economy back into a recession with tax policy, health care policy, energy policy,...