Irrelevant
Well-known member
I readily admit I don't understand the nuance of this dynamic.
Retire early to hunt more?
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BigHornRam
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So this isn't working as intended?
Alternative Minimum Tax (AMT) Definition, How It Works
An alternative minimum tax (AMT) places a floor on the percentage of tax that a filer may be required to pay to the government.
VikingsGuy
Well-known member
I am no expert but there are at least 4 other forces at work beyond just wage inflation at the bottom - wage inflation in positions already paying more than minimum wage, input cost inflation/deflation, price elasticity of the relevant good/service, ability to replace labor with automation (or foreign labor).
D
Deleted member 28227
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The AMT recalculates income tax after adding certain tax preference items back into adjusted gross income.So this isn't working as intended?
Alternative Minimum Tax (AMT) Definition, How It Works
An alternative minimum tax (AMT) places a floor on the percentage of tax that a filer may be required to pay to the government.www.investopedia.com
These individuals have strategies giving them low or zero income. So AMT does nothing.
VikingsGuy
Well-known member
Nope, AMT is meant to address excessive tax deductions/credits - but it still uses the flawed definition of "income" as the basis of its formula. It does nothing to fix the gaming of gain realization and creative non-taxable "income" techniques (as mention by wllm & others).So this isn't working as intended?
Alternative Minimum Tax (AMT) Definition, How It Works
An alternative minimum tax (AMT) places a floor on the percentage of tax that a filer may be required to pay to the government.
Leaving tax rates out of the equation, I would think it wouldn’t be too difficult for even the most staunch conservative to agree we should all pay our fair share, despite disagreement over total amount that should be paid in. Maybe I’m wrong.
VikingsGuy
Well-known member
One would like to think, but both parties are now primarily concerned about managing our crony capitalism mess and culture wars, not about efficient/effective governance. Also, many issues have turned into "blind litmus tests" for one party or the other - not surprisingly tax policy is one for both of them - there is very little thoughtful tax policy being advanced these days.
Similarly one would think even if we disagree on the level of government spending, it should not be too much to ask that we at least agree that the chosen amount should be within our means, there should be accountability for the efficacy of the spending, and we should be very attentive to negative unintended consequences of the chosen spending. But alas, we are in the same boat here.
Right now we are saying the rich don't pay near enough because there are all these loop holes. Cut out the loop holes. Now that doesn't work because the poor would pay a higher percentage. The poor already pay a higher percentage. With a consumption tax at least the rich pay for everything they consume. It could also be set up where food, gas, clothing is taxed at a different rate than teslas and ferraris
SAJ-99
Well-known member
Agree, though I think there is a huge difference between electricians/plumbers and waitresses/bartenders (add retail worker to this mix). Every job requires some training, but the former is a specialty. Mixing a gin and tonic isn't the same as wiring a house. The latter job category was often used as a part-time, second job to fill in a gap. Retail was often filled by high-school students to earn extra income. That % has steadily declined. Probably because high school work is more intense as students compete for college entry.
SAJ-99
Well-known member
Don't mean to make it look rosy. It certainly isn't all "wine and caviar" in China. But it isn't here either. Just think the article is interesting in that when China faces a pension funding deficit caused by people living longer, they fix it by raising the retirement age. Problem solved, even if temporarily. Can you imagine what would happen if the US raised the age of SS benefits to 72*?
Sure they have cans kicked, but not nearly like we do. They plan decades in advance, and we make fun of them for doing it. WE talk about all the shortcomings in our system and then argue about who pays to fix them. Consequently they never get fixed.
*Note this will probably happen about a month before I want to submit by SS benefit papers.
VikingsGuy
Well-known member
I am not saying loopholes should stay or go, I am saying we need to redefine "income" so that how you choose to make your living does not cause all or nothing tax consequences, and I do not believe that consumption taxes at all are a substitute for the needed solution given the shockingly small percentage of "income" spent by the well off. A tesla is $80,000 - even a 100% sales tax on that does nothing to address a $100 million gain of an insider stock option. Dems tried this "luxury tax" idea in the early 80s and it did nothing to address the real problems with the system and the only effect anyone could find was it put the boat workers in Boston out of business because the rich just flagged their yachts in the Bahamas.
I am not a fan of heavy taxation, but I much prefer income taxes over consumption taxes (or sin taxes) as consumption taxes do little to fund government equitably and are too likely to be manipulated by politicians to pick and choose industry winners/losers. We simply need to fix our income tax system by properly defining income.
D
Deleted member 28227
Guest
Bezos isn't eating 725000 times more skippy than you are...
What your driving at makes sense if your taking about a teacher versus a doctor. Doctor has nicer house, nicer car, maybe eats out more, etc. therefore pays more tax because of the expenditure.
But that's 50k versus 250k.
Problem is 50,000 versus 100,000,000 coupled with, again all the ways you can avoid paying that tax if you have the means.
Like creating a company to own your dressage horse, and then taking a $77,000 loss on that horse from "care and feeding expense".
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VikingsGuy
Well-known member
But given my covid induced weight gain, I may be.
SAJ-99
Well-known member
The press doesn't lie about the inflation rate. It comes from the government.
ignorethefringes
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It sounds like we're beating around the bush of getting to a tax on net worth growth rather than income?
Edited to add: I'm not trying to nit pick, argue, whatever. I'm just trying to clarify for my own understanding.
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BigHornRam
Well-known member
Okay. They report what they are told and don't question the source. Better?
I hear ya. I don't see it ever changing as long as there are loopholes and complex tax systems. I think our country could buy into some sort of simple flat tax where EVERYONE pays. Right now it feels as though the middle class is paying most of the "real" taxes. With a consumption tax billionaires with no income pay. Illegals pay. Everyone has skin in the game. I don't think there is a way to ever get it perfectly equitable.
BigHornRam
Well-known member
Is a 1031 exchange considered "gaming" in your opinion? Plenty of doctors, lawyers, farmers, and construction working stiffs utilize it. Should it be means tested or eliminated all together?
SAJ-99
Well-known member
They repay the loan, but only when they have to. If you want an example, this is the one that comes to mind for me. You have to sort of get over the source, I assure you it is accurate. A lot of those listed got margin calls in 2008 and had to sell equity to pay down the debt. The entire process previously describe for Bezos, Buffett, Bloomberg, etc is that they become highly levered to the value of the company. When that value falls, the broker wants the debt paid back. Ironically, they get big tax bills that year to. But one thing that hasn't been mentioned and is the key driver to the whole thing is compounding. The longer the taxes can be deferred, the larger the asset base on which the return can compound over time. Keep in mind you only hear about the successes, never the failures (unless spectacular), and even more irony, those losses are a tax write off.
Big guys get margin calls, too
Media moguls are among those sighing with relief after Monday's market rally.
www.hollywoodreporter.com
