abolishing income tax

[goldmom]

Not necessarily. I have a Roth 401K.

I have a Roth too and I understand how they work.
More people should go that route.

 

[onlyTheObvious]

I’m really sorry for saying this because I don’t think I’ve ever noticed you as a terribly bad poster, but in the bolded section you are either vastly misstating the tax and penalty situation or you are incredibly poor.

If the penalty for misreporting a few hundred dollars was more than the entire income taxes you’ve ever paid in a single year, then you should have been able to access Pell Grants for your kids’ education.

It was what it was. It’s was all bullshit and heavy handed.

It was asinine. Probably should have gotten a lawyer but that would have just been another pile of money pissed away.

I had 3 in college at the time. They tossed out everything for every kid. Since nobody keeps class syllabus’s for every kid for every year you pretty much just bend over.

IRS can go F themselves.

I went from a very modest return to writing a check for thousands. Which is bullshit considering I had no outside income or investment capital gains.

 

[Tenacious E]

Expand on that. It sounds very plausible.

It is a national sales tax on goods and services, rather than income. Let's say it is 10% or the sake of clean math. These are very rough estimates:

• Family A.
  • Family of 4 with a household income of $50K per year. Spends $45K per year, making ends meet.
  • Under the new system, on those purchases, they would pay $4,500 in taxes.
  • Under the current system, with deductions and tax credits, their federal tax income tax would be probably $500 dollars or so.
  • Family A would pay $4K (4,500 - 500) more in taxes per year under the new system.
• Family B.
  • Family of 4 with a household income of $400K per year. Spends $125K per year, making ends meet.
  • Under the new system, on those purchases, they would pay $12,500 in taxes.
  • Under the current system, with deductions and tax credits to the extent they are not phased out, their federal tax income tax would be probably $75K or so.
  • Family B would pay $62.5K (75,000 - 12,500) per year less in taxes under the new system.
• Because there are so many more families making $50K than $400K, the total tax collected, in theory would go up. But, the wealth gap grows. Such a system would benefit the HORT billionaires immensely, but would not be good for most people.

 

[goldmom]

It was what it was. It’s was all bullshit and heavy handed.

It was asinine. Probably should have gotten a lawyer but that would have just been another pile of money pissed away.

IRS can go F themselves.

Agree with you. BTW don’t IRS agents still get a commission on any additional taxes they collect on audits!

 

[QChawks]

I have a Roth too and I understand how they work.
More people should go that route.

when I changed companies this year, I switched from a traditional to Roth IRA

previous company retirement plan provider didn't offer Roth's

 

[goldmom]

It is a national sales tax on goods and services, rather than income. Let's say it is 10% or the sake of clean math. These are very rough estimates:

• Family A.
  • Family of 4 with a household income of $50K per year. Spends $45K per year, making ends meet.
  • Under the new system, on those purchases, they would pay $4,500 in taxes.
  • Under the current system, with deductions and tax credits, their federal tax income tax would be probably $500 dollars or so.
  • Family A would pay $4K (4,500 - 500) more in taxes per year under the new system.
• Family B.
  • Family of 4 with a household income of $400K per year. Spends $125K per year, making ends meet.
  • Under the new system, on those purchases, they would pay $12,500 in taxes.
  • Under the current system, with deductions and tax credits to the extent they are not phased out, their federal tax income tax would be probably $75K or so.
  • Family B would pay $62.5K (75,000 - 12,500) per year less in taxes under the new system.
• Because there are so many more families making $50K than $400K, the total tax collected, in theory would go up. But, the wealth gap grows. Such as system would benefit the HORT billionaires immensely, but would not be good for most people.

So standard deductions now in place like children, child care, other tax credits, etc would go away altogether?
Those currently make that “family of four” with $50K income non-tax payers as it stands now, correct?

 

[Tenacious E]

I have a Roth too and I understand how they work.
More people should go that route.

Roth IRAs are not available if you make more than the threshold. For the backdoor Roth for those making too much, i do not understand their appeal for most people despite what is advocated by Dame Ramsey and the like. Most people make more while working than while retired. When you withdraw from a traditional IRA/401K, your marginal tax rate should be lower when you retire. You would be paying more income taxes by converting during your working years. If the tax rate is the same in your working and retired years, the math is neutral.

 

[Doodads and Hoohah]

Sometimes he just says things to trigger the D's.

It obviously works.

Calling something out as stupid, or unrealistic isn't the same as being triggered.

 

[Tenacious E]

when I changed companies this year, I switched from a traditional to Roth IRA

previous company retirement plan provider didn't offer Roth's

You can defer more income per year under a 401K than you can contribute to a Roth, and a Roth is not available if you make too much money.

 

[theiacowtipper]

There is an obvious solution to the federal revenue issue, but no one wants to do it…a modified inheritance tax.

Americans are estimated to inherit $105 trillion over the next 25 years for an average of 4.2 trillion in inheritance per year over that time period. If we taxed that at say 50% that would amount to $2.1 trillion in federal revenue annually. Our deficit in 2023 was ~1.8 trillion so we solve most of that issue and maybe have extra to pay down some of the national debt.

Now, I know people inherit farms, businesses etc. there is a simple solution this too. Only tax those assets when they are sold. The person who inherited them had a cost basis of zero, so just apply the full tax at sale. That way you get to work daddy’s farm without having to cough up the inheritance tax while you are still mourning your loved one. If you sell stock it gets taxed at a zero cost basis. If you inherit cash it is taxed at the point of inheritance.

Doing the above does not foreclose spending cuts which would further help the situation.

If we didn’t have a massive revenue gap that cannot be solved by spending cuts alone I would welcome other ideas. But somehow we have to pay for the services we all use. And yet no one wants to actually solve the problem because it is politically untenable. One side says reduce spending (which they never do because you would have to touch popular programs to make a real dent). The other side says tax the wealthy which won’t happen because the wealthy control Washington. So why not tax the dead. They sure as shit aren’t going to use it and their descendants are free to make a living in this country the same as everyone else while still getting some inheritance.

As to those who say all taxes are theft: given current infrastructure and current deficit obligations how exactly would you pay for all the stuff we use from the military to the bridges to farm subsidies to social security?

This. Absolutely. 100%. No question. My mothers estate when she died this year was about 350k. About 90% of that was in stocks. My stepfather bought BNSF before Buffet bought it and then held it through his life and until my moms death. I inherited that stock. What tax did I owe? Zero. All those years of accumulated gains wiped out. Income that was never taxed. That money should be absolutely taxed when it’s liquidated.

 

[hawkeyetraveler]

Trump's blue collar base would probably rejoice to have income tax and the IRS go away, and instead simply have a pay-as-you-go tax on goods and services purchased.

It sounds good on paper, but is it?

We would need to find something like $6.4 trillion annually just to break even on our budget (that is 2023 federal revenue plus the annual deficit).

I assume such a tax would apply to everything produced in the US (total GDP in the US in 2023 was $27.4 trillion) plus everything we import (total imports were $3.8 trillion). So the total taxable base is $31.2 trillion. If we need to find all of that in a new federal sales tax the equivalent tax rate is 20.5%! That means everything we produce and buy from cars to groceries to surgical procedures to rent would have a 20% federal tax applied on top of all other taxes/fees.

That would have a massive dampening effect on society and dramatically impact the people who live paycheck to paycheck…you know the same folks who swung the election to Trump. A national sales tax of that magnitude is massively regressive.

On the other hand it would help me out as the amount I spend on things is far smaller than the amount of tax I pay. So good for the wealthy, bad for the average Joe.

 

[Tenacious E]

So standard deductions now in place like children, child care, other tax credits, etc would go away altogether?
Those currently make that “family of four” with $50K income non-tax payers as it stands now, correct?

I know. it's a pay as you go sales tax and not a flat tax.

 

[theiacowtipper]

It is a national sales tax on goods and services, rather than income. Let's say it is 10% or the sake of clean math. These are very rough estimates:

• Family A.
  • Family of 4 with a household income of $50K per year. Spends $45K per year, making ends meet.
  • Under the new system, on those purchases, they would pay $4,500 in taxes.
  • Under the current system, with deductions and tax credits, their federal tax income tax would be probably $500 dollars or so.
  • Family A would pay $4K (4,500 - 500) more in taxes per year under the new system.
• Family B.
  • Family of 4 with a household income of $400K per year. Spends $125K per year, making ends meet.
  • Under the new system, on those purchases, they would pay $12,500 in taxes.
  • Under the current system, with deductions and tax credits to the extent they are not phased out, their federal tax income tax would be probably $75K or so.
  • Family B would pay $62.5K (75,000 - 12,500) per year less in taxes under the new system.
• Because there are so many more families making $50K than $400K, the total tax collected, in theory would go up. But, the wealth gap grows. Such a system would benefit the HORT billionaires immensely, but would not be good for most people.

Adding, one way to make this work is to make the estate tax an option at death except when a spouse survives. If you knew that perhaps 75% of your estate went to taxes maybe you’d spend some of it instead of hoarding.

 

[Tenacious E]

It sounds good on paper, but is it?

We would need to find something like $6.4 trillion annually just to break even on our budget (that is 2023 federal revenue plus the annual deficit).

I assume such a tax would apply to everything produced in the US (total GDP in the US in 2023 was $27.4 trillion) plus everything we import (total imports were $3.8 trillion). So the total taxable base is $31.2 trillion. If we need to find all of that in a new federal sales tax the equivalent tax rate is 20.5%! That means everything we produce and buy from cars to groceries to surgical procedures to rent would have a 20% federal tax applied on top of all other taxes/fees.

That would have a massive dampening effect on society and dramatically impact the people who live paycheck to paycheck…you know the same folks who swung the election to Trump. A national sales tax of that magnitude is massively regressive.

On the other hand it would help me out as the amount I spend on things is far smaller than the amount of tax I pay. So good for the wealthy, bad for the average Joe.

I'm not saying it sounds good at all.

 

[hawkeyetraveler]

I'm not saying it sounds good at all.

Yeah I didn’t think you were - I could have worded that better. I was addressing some of the others that view a national sales tax as a good idea.

 

[Tenacious E]

Adding, one way to make this work is to make the estate tax an option at death except when a spouse survives. If you knew that perhaps 75% of your estate went to taxes maybe you’d spend some of it instead of hoarding.

So spending for the sake of spending for rich people, driving up inflation and the cost of goods/services for people who are not rich?

 

[goldmom]

This. Absolutely. 100%. No question. My mothers estate when she died this year was about 350k. About 90% of that was in stocks. My stepfather bought BNSF before Buffet bought it and then held it through his life and until my moms death. I inherited that stock. What tax did I owe? Zero. All those years of accumulated gains wiped out. Income that was never taxed. That money should be absolutely taxed when it’s liquidated.

I’m going to guess that your stepdad bought that stock with after tax money?
What if that stock had tanked?
I have zero problem with there not being an inheritance tax. When you spend that money you will pay a tax on whatever you buy with it, right? And you will pay tax on any dividend it pays you unless you have it on a reinvestment plan, right?
And lastly if you feel guilty you are absolutely able to send the US Treasury a check. What’s stopping you?

 

[goldmom]

You can defer more income per year under a 401K than you can contribute to a Roth, and a Roth is not available if you make too much money.

That’s also true but you’re limited either way.

 

[Tenacious E]

That’s also true but you’re limited either way.

Well yes, but you are limited less by a 401K. Personally, I don't get why people think Roths are better, unless you think you will have a lower tax rate in your early working years than during retirement.

 

[NorthernHawkeye]

There is an obvious solution to the federal revenue issue, but no one wants to do it…a modified inheritance tax.

Americans are estimated to inherit $105 trillion over the next 25 years for an average of 4.2 trillion in inheritance per year over that time period. If we taxed that at say 50% that would amount to $2.1 trillion in federal revenue annually. Our deficit in 2023 was ~1.8 trillion so we solve most of that issue and maybe have extra to pay down some of the national debt.

Now, I know people inherit farms, businesses etc. there is a simple solution this too. Only tax those assets when they are sold. The person who inherited them had a cost basis of zero, so just apply the full tax at sale. That way you get to work daddy’s farm without having to cough up the inheritance tax while you are still mourning your loved one. If you sell stock it gets taxed at a zero cost basis. If you inherit cash it is taxed at the point of inheritance.

Doing the above does not foreclose spending cuts which would further help the situation.

If we didn’t have a massive revenue gap that cannot be solved by spending cuts alone I would welcome other ideas. But somehow we have to pay for the services we all use. And yet no one wants to actually solve the problem because it is politically untenable. One side says reduce spending (which they never do because you would have to touch popular programs to make a real dent). The other side says tax the wealthy which won’t happen because the wealthy control Washington. So why not tax the dead. They sure as shit aren’t going to use it and their descendants are free to make a living in this country the same as everyone else while still getting some inheritance.

As to those who say all taxes are theft: given current infrastructure and current deficit obligations how exactly would you pay for all the stuff we use from the military to the bridges to farm subsidies to social security?

We shouldn't be in the business of disincentivizing wealth accumulation.

 

[Tenacious E]

I’m going to guess that your stepdad bought that stock with after tax money?
What if that stock had tanked?
I have zero problem with there not being an inheritance tax. When you spend that money you will pay a tax on whatever you buy with it, right? And you will pay tax on any dividend it pays you unless you have it on a reinvestment plan, right?
And lastly if you feel guilty you are absolutely able to send the US Treasury a check. What’s stopping you?

For me personally, i selfishly want there to be no inheritance tax for my parents, me, or my kids. Then the more money my parents or I can throw on our collective piles, the more money our money makes for us, while we do not work as much or at all. Enough so that my parents, me, and my kids never really have to spend it all. We can just let it keep growing.

 

[srams21]

There is an obvious solution to the federal revenue issue, but no one wants to do it…a modified inheritance tax.

Americans are estimated to inherit $105 trillion over the next 25 years for an average of 4.2 trillion in inheritance per year over that time period. If we taxed that at say 50% that would amount to $2.1 trillion in federal revenue annually. Our deficit in 2023 was ~1.8 trillion so we solve most of that issue and maybe have extra to pay down some of the national debt.

Now, I know people inherit farms, businesses etc. there is a simple solution this too. Only tax those assets when they are sold. The person who inherited them had a cost basis of zero, so just apply the full tax at sale. That way you get to work daddy’s farm without having to cough up the inheritance tax while you are still mourning your loved one. If you sell stock it gets taxed at a zero cost basis. If you inherit cash it is taxed at the point of inheritance.

Doing the above does not foreclose spending cuts which would further help the situation.

If we didn’t have a massive revenue gap that cannot be solved by spending cuts alone I would welcome other ideas. But somehow we have to pay for the services we all use. And yet no one wants to actually solve the problem because it is politically untenable. One side says reduce spending (which they never do because you would have to touch popular programs to make a real dent). The other side says tax the wealthy which won’t happen because the wealthy control Washington. So why not tax the dead. They sure as shit aren’t going to use it and their descendants are free to make a living in this country the same as everyone else while still getting some inheritance.

As to those who say all taxes are theft: given current infrastructure and current deficit obligations how exactly would you pay for all the stuff we use from the military to the bridges to farm subsidies to social security?

Post of the freakin' year!

I've been trying to say this for a long time. There is very little way to cut our way to zero without significant changes to the major popular programs.

 

[goldmom]

For me personally, i selfishly want there to be no inheritance tax for my parents, me, or my kids. Then the more money my parents or I can throw on our collective piles, the more money our money makes for us, while we do not work as much or at all. Enough so that my parents, me, and my kids never really have to spend it all. We can just let it keep growing.

I think that’s what’s called “old money”? 💰
Not sure - I just know I don’t have any of it, LOL
My parents were blue collar folks who were super tight with money and no one was more surprised than the four of us to find out we each got some “hidden” money when my Mom passed. Not a lot but a nice little boost.

 

[Bulldogs1974]

I've never understood the hate for the people at the bottom of the tax brackets while at the same time cheering for people that lie on their taxes about the "business" expenses. I'd be willing to bet their is more fraud on the top ends than the bottom.

 

[Tenacious E]

I think that’s what’s called “old money”? 💰

That's the dream!

 

[uihawk82]

I know Trump says a lot of things, but this one is hard to phantom

Would the plan to be raise tariffs so much to cover the trillons lost?

Or just the tax the shit out of things we purchase instead?

You can have sales tax and use taxes to start with. This could be more fair because rich people buy $50K diamonds would pay more than a poor people buying a box of instant mashed potatoes. But I am sure Trump and his cronies would probably tip the scales or put in some ratio or percentage factor to make poor and middle class people pay more sales tax per dollar purchased, it is just what they do.

And the federal govt could start putting tolls on many stretches of interstate and on bridges. You want to drive you pay.

Add a use tax at the airport to pay for Air TRaffic Control system. They know how many people fly each year roughly from past years so easy to figure this out.

If they did this right and fair it would be fine with me and probably more people than income taxes.

Still need taxes for Soc Sec and Medicare though which is fine

 

[uihawk82]

His "idea" is that tariffs can fund our entire government.

This is easily as stupid as making Mexico pay for the wall.

Is that what he said???? He is delusional. Better off if you get rid of income taxes to move to sales and use taxes.

 

[goldmom]

You can have sales tax and use taxes to start with. This could be more fair because rich people buy $50K diamonds would pay more than a poor people buying a box of instant mashed potatoes. But I am sure Trump and his cronies would probably tip the scales or put in some ratio or percentage factor to make poor and middle class people pay more sales tax per dollar purchased, it is just what they do.

And the federal govt could start putting tolls on many stretches of interstate and on bridges. You want to drive you pay.

Add a use tax at the airport to pay for Air TRaffic Control system. They know how many people fly each year roughly from past years so easy to figure this out.

If they did this right and fair it would be fine with me and probably more people than income taxes.

Still need taxes for Soc Sec and Medicare though which is fine

It sounds intriguing.

 

[onlyTheObvious]

You can have sales tax and use taxes to start with. This could be more fair because rich people buy $50K diamonds would pay more than a poor people buying a box of instant mashed potatoes. But I am sure Trump and his cronies would probably tip the scales or put in some ratio or percentage factor to make poor and middle class people pay more sales tax per dollar purchased, it is just what they do.

And the federal govt could start putting tolls on many stretches of interstate and on bridges. You want to drive you pay.

Add a use tax at the airport to pay for Air TRaffic Control system. They know how many people fly each year roughly from past years so easy to figure this out.

If they did this right and fair it would be fine with me and probably more people than income taxes.

Still need taxes for Soc Sec and Medicare though which is fine

Rich people will buy their diamonds outside the country. Going to do body searches for Jewelry at customs and also force all travelers to declare everything of value before they leave?

To get enough tax revenue will need to tax the day to day items we all use. That’s insignificant portion of a rich persons income.

People will barter or pay cash for casual services and escape taxes.

I don’t think a wealth tax is realistic and I don’t think no income tax is realistic.

 

[Hawk_82]

Unless we make competing products domestically (which we mostly do not) tariffs are a tax on the shit we purchase.

Isn't this still better than tax on income? You get to keep the money you make tax free and only pay the tax if you choose to buy the goods

 

[Tenacious E]

You can have sales tax and use taxes to start with. This could be more fair because rich people buy $50K diamonds would pay more than a poor people buying a box of instant mashed potatoes. But I am sure Trump and his cronies would probably tip the scales or put in some ratio or percentage factor to make poor and middle class people pay more sales tax per dollar purchased, it is just what they do.

So under this scenario do we all carry around IDs with a barcode based upon the previous year's income, that we scan when making a purchase?

 

[uihawk82]

Income tax is theft

So you dont want it, OK then, you cant drive on any interstates and most state highways etc that have Fed money in the construction. You cant fly at all because you dont pay taxes to keep up the FAA air traffic control. So you are stuck on your side streets.

You cant watch the weather because all the weather shows and websites, etc use the US Weather Service data. You cant use google maps for any of your very short trips around you city because the US govt put up the GPS system.

No help for you from the defense dept/nat guard etc, anybody can dump nuclear waste near your house because there is no dept of energy, AG prices would skyrocket because a lot of farmers would go broke and not produce because there is no protections for crop failures.

You are very shortsighted. American's taxes and DARPA pushed the building of the Internet and so many great innovations in this country. The Space Program as probably a $Trillion dollars or more in spinoffs

 

[joelbc1]

He did try to overturn the ACA without a replacement.

But then “healthcare” is difficult… who knew?

 

[uihawk82]

Isn't this still better than tax on income? You get to keep the money you make tax free and only pay the tax if you choose to buy the goods

Dont want tariffs which raise prices. tariffs only for aiming at a country at a time on what they dump on the market at artificially low prices.

Instead use sales taxes and tolls/use taxes on Fed land, buildings, roads, bridges, and air space

 

[jasonrann]

There is an obvious solution to the federal revenue issue, but no one wants to do it…a modified inheritance tax.

Americans are estimated to inherit $105 trillion over the next 25 years for an average of 4.2 trillion in inheritance per year over that time period. If we taxed that at say 50% that would amount to $2.1 trillion in federal revenue annually. Our deficit in 2023 was ~1.8 trillion so we solve most of that issue and maybe have extra to pay down some of the national debt.

Now, I know people inherit farms, businesses etc. there is a simple solution this too. Only tax those assets when they are sold. The person who inherited them had a cost basis of zero, so just apply the full tax at sale. That way you get to work daddy’s farm without having to cough up the inheritance tax while you are still mourning your loved one. If you sell stock it gets taxed at a zero cost basis. If you inherit cash it is taxed at the point of inheritance.

50% is bananas, dude. My sister, brother and I inherited a small piece of land from my dad when he passed 11 years ago. He paid tax and insurance on that land every year, paid taxes on the rental income for the land, to then hit 50% on the sale is rough. I could see levying something, but 50% is nuts. Not to mention the fact that when we sold the land, probably half of the money went to buying homes, cars and other things taxed bigly.

 

[QChawks]

Isn't this still better than tax on income? You get to keep the money you make tax free and only pay the tax if you choose to buy the goods

exactly

if you are not a big spender then you keep more money

Milk will go to $15 a gallon and eggs $10 a carton

 

[Hawk_82]

Dont want tariffs which raise prices. tariffs only for aiming at a country at a time on what they dump on the market at artificially low prices.

Instead use sales taxes and tolls/use taxes on Fed land, buildings, roads, bridges, and air space

Are we sure that Trump won't do those things as well? Obviously tariffs are a major talking point, but I have not heard they are the only option either.

 

[seminole97]

For the average person every piece of income and taxes is somewhere online, they should be able to tell me without any forms what I owe or what I should get back, with the option for me to file if I don’t care for what they presented to me.

 

[Hawk_82]

exactly

if you are not a big spender then you keep more money

Milk will go to $15 a gallon and eggs $10 a carton

I don't buy my milk or eggs from other countries. I think we will be ok.

 

[Tenacious E]

I don't buy my milk or eggs from other countries. I think we will be ok.

How about fruits, vegetables, and nuts?