abolishing income tax
- Thread starter QChawks
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No one is really serious about “solving” this issue. I think that’s where the truth lies.Fairly obvious we won't solve this issue
Which is ridiculous behavior from the supposed President of the United States. Republicans love to explain to everyone what Presidential behavior but they seem to think that creating ridiculous distractions is acceptable.
How much did these items go up under biden? 30 - 40 - 50%? But we were told it was the best economy ever. I will wait until it happens before I panic.
Consumer Price Index for All Urban Consumers: Fruits and Vegetables in U.S. City Average
Graph and download economic data for Consumer Price Index for All Urban Consumers: Fruits and Vegetables in U.S. City Average (CUSR0000SAF113) from Jan 1947 to Dec 2024 about fruits, vegetables, urban, consumer, CPI, inflation, price index, indexes, price, and USA.
fred.stlouisfed.org
I have always been amazed at how people admire folks based on the wealth. I thought for a long time it was a small-town or “Dutch Reformed” character flaw. I have known, lived with and associated with wealthy folks all my life….snall town with a couple of huge, international manufacturing (family owned) businesses gave me that opportunity..I have seen both sides of the coin here…rich folks quite unassuming in their daily lives and interactions and then I have seen some that use their wealth and reputation to get what they want every time. I have seen how folks damn near tremble and bow down to rich/wealthy folks (a concept that has deep routed in Calvinism and predestination).
I am completely taken aback by so many folks being in awe of a jerk like our President. To me, he’s the bad one to have money. Selfish, shallow and ethically challenged and in love with money, which is exactly what Jesus warned us about….the love of money is itself, evil. . Greed is one of Tge 7 Deadly Sins… and not something to be held in awe.
So about 308 when Biden took office, and 355 EOY, for about a 15% increase over 4 years, or 4.25% per year. Certainly not insubstantial, but certainly not 50%.
It wax a booming economy Hawk… all this stuff jumped in price following Covid… it’s pretty simple to see… we went from shortages back to “normal” supplies but with a huge rise in profits as EVERYBODY in the supply chain was charging premium prices to overcome their losses from Covid.. and in a capitalist economy once prices rise they don’t go down unless there is no demand… and for most stuff, foods especially, there will always be demand.
That's not entirely true. Someone posted a link on here the other day showing how some categories of food, like bananas, actually have gone way done in price. But by and large, once prices go up, they don't come back down.
hawkeyetraveler
HB Heisman
Well the money has to come from somewhere eventually or we will default and turn into freaking Argentina.
I know it sucks and wish someone smarter than me would come up with a better viable alternative. I’m all for a better solution, but I haven’t found one yet. And my way, you can keep the farm without paying tax on it. If you sell the land then the government takes its share.
hawkeyetraveler
HB Heisman
Well it’s better for me for sure. But I don’t think it is better for the country…here’s why.
If we move to a sales tax the amount has to be so high it will crush blue collar workers already struggling economically (see my other post at what I think the incremental tax would have to be to balance the budget). I believe our country is strongest when those types of workers are doing well. These are the same folks that voted Trump in.
It would also depress sales if everything costs that much more. It seems to me a consumption tax is more likely to drive a recession as companies sales drop and they start laying off workers.
hawkeyetraveler
HB Heisman
My way is 100% incenting income. There is no negative incentive to work harder as you keep all that money while you are alive. My way is 100% incenting consumption. If you know the money will go when you die you are likely to spend more of it, thus helping the economy. Yes, in my proposal your kids are going to have to make a living. No more living off mommy and daddy’s riches. It sucks, but it seems better than other methods.
one other point: it is easy to poke holes in any of these ideas. But we HAVE to do something or we end up in hyperinflation. Spending cuts are critical but won’t get us anywhere close…you have to cut, but you also have to increase revenue. America is like any business going bankrupt you have to work on both revenue and cost to save it. So what would you do?
And it would depress the economy, as people would spend less.
That just states that prices have been on a steady increase. How strange.Consumer Price Index for All Urban Consumers: Fruits and Vegetables in U.S. City Average
Graph and download economic data for Consumer Price Index for All Urban Consumers: Fruits and Vegetables in U.S. City Average (CUSR0000SAF113) from Jan 1947 to Dec 2024 about fruits, vegetables, urban, consumer, CPI, inflation, price index, indexes, price, and USA.fred.stlouisfed.org
It makes perfect sense…Trump didn’t like all the aspects of ACA, but he certainly didn’t dismantle it during his first term.
Thanks to John McCain. Please tell me you are just a tad bit more intelligent that you appear.
I do look at all those retirement vehicles as a form of “investment” as the employee has the option/responsibility to choose the investment vehicles held inside their retirement accounts. It’s a balancing act…invest too conservatively and your “nest egg” won’t grow enough, but invest too risky and perhaps compromise your future?
Sounds like gov’t working together on a project…in this case ACA. So, Trump didn’t dismantle ACA then…correct? Now tell me you weren’t dumb enough to know why another poster said you were “splitting hairs” on this topic.
They are an investment for the future Hans, but this thread is about taxes and how those retirement options should be viewed and taxed.
I don’t think that’s quite true. In a 401k, taxes are deferred on dividends and distributions within the account. However, those same distributions and dividends are immediately taxable in a brokerage account.
And sadly, no “reasonable person” truly expects those who reap the most will ever come close to paying their fair share of the burden. The rich/wealthy will always be able to “game” the system because they control the system.
This will never change until “citizen’s united” is revisited and undone by the Supreme Court. Citizen’s United is the Roe/Wade of the 21st century.
It takes a certain amount of money to fund the government, and the only place to get that money is from the people who have it,.. Doesn't really matter how it's done, the money will always come from those who have it... The varying manners in which these dollars can be collected is just a phucking shell game.
So you do not differentiate between regressive and progressive taxes? If it takes $6T to run the government, so long as we have $6T in the kitty, it makes no difference from who it is collected, so long as they have the dollars thrown in?
That's not the point,.. Point is that It will always come have to from those who have it..
Middle and lower class people have money too, just not as much per individual. But there are many more such individuals than upper class individuals. More taxes can be extracted from the lower and middle classes via a sales tax, as I explained in my post earlier in this thread. That sales tax - while everyone pays the same rate - would have a much higher impact on the lower and middle class than the upper class. So yes, every dollar of taxed received came from someone who had that dollar, but that does not mean it is some arbitrary shell game. And I say this as someone who personally would very much benefit from replacing the income tax with a sales tax. I just do not believe that is a good way to run the country.
Hard to phantom that income tax didn't exist for the first 137 years of this country and when it did it only meant the top 1% paid any tax?
At some point relying on a sales tax will fail, because a majority of your contributors will run out of money,.. This isn't rocket science,.. If you need cash you choose the path of least resistance and that will always tend to be a progressive scheme with a majority of the money coming from those who can most easily provide it... How it's collected, sales tax, income tax, higher consumer prices to offset tariffs,... That's the shell game.
The appeal is tax free growth that a Roth provides.
Let's say you contribute $10k to a pretax IRA/401k with your tax rate at 30%. You saved $3k in taxes in the year you contributed. In 30 years with 7% growth that original $10k will be worth $75k. If you withdraw it all you would pay $22,500 in taxes for a net tax cost of $19,500.
Now let's say you contribute $10k to a Roth vehicle. The tax you paid related to that contribution costs you $3k. But in 30 years that is also worth $75k. You can now withdraw that money tax free for a net tax cost of only the original $3k. Plus if you die with it, your beneficiaries don't pay tax on the withdrawals either. You or your heirs have escaped income tax on $65k of growth. Titties.
I do not think there will be a national sales tax or that there should be one, but the article below says a 17% sales tax, or a 30% sales tax if food, healthcare, and housing are not taxed, would be required to replace both the federal income tax and the estate tax. I don't know if the article's conclusions or true. But, if implemented, it would be pretty devastating for the lower and middle classes, and a great deal for the upper class, compared to the status quo.
Assuming the average rate of return is the same, the math is neutral, unless the tax rates are different in the first and last year. Here is a 10 year example, with a 10% tax rate on a $1,000 initial amount, with a 10% rate of return. In the first table is a traditional 401K, and you end up with $2,334.37, after 10 years. The second is a Roth IRA, and you end up with $2,334.37, after 10 years.
| Year | Initial AMT | Net AMT | Tax rate | Tax Paid | You get |
| 1 | $ 1,000.00 | $ 1,100.00 | n/a | n/a | n/a |
| 2 | n/a | $ 1,210.00 | n/a | n/a | n/a |
| 3 | n/a | $ 1,331.00 | n/a | n/a | n/a |
| 4 | n/a | $ 1,464.10 | n/a | n/a | n/a |
| 5 | n/a | $ 1,610.51 | n/a | n/a | n/a |
| 6 | n/a | $ 1,771.56 | n/a | n/a | n/a |
| 7 | n/a | $ 1,948.72 | n/a | n/a | n/a |
| 8 | n/a | $ 2,143.59 | n/a | n/a | n/a |
| 9 | n/a | $ 2,357.95 | n/a | n/a | n/a |
| 10 | n/a | $ 2,593.74 | 10% | $ 259.37 | $ 2,334.37 |
| Year | Initial AMT | Net AMT | Tax rate | Tax Paid | You get |
| 1 | $ 1,000.00 | $ 990.00 | 10% | $ 100.00 | n/a |
| 2 | n/a | $ 1,089.00 | n/a | n/a | n/a |
| 3 | n/a | $ 1,197.90 | n/a | n/a | n/a |
| 4 | n/a | $ 1,317.69 | n/a | n/a | n/a |
| 5 | n/a | $ 1,449.46 | n/a | n/a | n/a |
| 6 | n/a | $ 1,594.40 | n/a | n/a | n/a |
| 7 | n/a | $ 1,753.85 | n/a | n/a | n/a |
| 8 | n/a | $ 1,929.23 | n/a | n/a | n/a |
| 9 | n/a | $ 2,122.15 | n/a | n/a | n/a |
| 10 | n/a | $ 2,334.37 | n/a | n/a | $ 2,334.37 |
Ah I agree if you only put $900 into the Roth initially it is a wash.
To expand on the backdoor Roth, the contribution into the traditional IRA is not deductible, which means the conversion to Roth is not taxable since you have basis in your traditional IRA. Now those dollars are in a Roth vehicle and get tax free growth. Compare that to your other option of putting those same funds into a brokerage account where dividends and capital gains will be subject to tax and the Roth is a good deal.
I guess I still don't get it. You have to pay the piper at some point. You have more money up front growing in a 401k because you haven't paid taxes yet, or you have less money up front in a Roth because you paid taxes up front. While you grow tax free and pay less taxes in a Roth, as noted above in the tables, dollars in your pocket are still the same. You pay more taxes in a 401K at the end because your investment has grown more. There is only a net benefit between the two plans if you have different tax rates. I would think most people make more money while working than when retired, and thus are in a higher bracket while working, and thus a traditional 401k is the better option. What am I not getting?
After looking at this further, I think the main advantages to a backdoor Roth over letting it ride in a traditional 401k is that in the Roth there are no RMDs, and you could convert incrementally to not have a massive taxable event all in one year. Otherwise if you convert $1M+ all at once, you better have the wherewithal to cut a check for hundreds of thousands of dollars, as you cannot pay the tax bill out of the retirement account without incurring the 10% penalty. Other than that, the downside is that you have to wait 5 years to withdraw funds, if you are already nearing or at retirement.
Best thing about a Roth is if you plan on retiring early and getting health insurance via the ACA, your withdrawals from Roth don’t count as income.
Outside that you could make an argument that it’s a wash. Tax rate on 401k withdrawals in your retirement might be lower than when you were working.
Outside that you could make an argument that it’s a wash. Tax rate on 401k withdrawals in your retirement might be lower than when you were working.
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