Top Of My Head

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Category: Taxes (page 1 of 3)

Rich Men and Camels

I’ve been thinking about what Jesus said about it being easier for a camel to get through the eye of a needle than for a rich man to get into Heaven.  Why was Jesus harshing on rich guys so bad?  Is being rich inherently evil?

If you listen to these megachurch, superstar ministers; no – being rich isn’t evil and in fact, Jesus wants us all to be rich.  I don’t believe anyone who is preaching in a church the size of a stadium has a huge grasp on what Jesus wants.  However; I do believe that being rich doesn’t equate evil…

Unless…

If you have plenty and you don’t share – that’s evil.

If you pay your employees minimum wage — that’s evil.  The fact that we have to have a minimum wage is pretty evil.  Sure, there are some companies who pay fair wages, but there are a lot more companies who would pay less than livable wages if they could just get away with it.

If you don’t provide healthcare for your employees, evil.

We allow businesses – and, I’m talking about corporations, not the mom and pop small businessperson who is barely getting by – I mean the WalMarts, the WalGreens, the companies owned by the Koch brothers – anyway, we allow them to write a lot of expenses off their taxes.  I would like to suggest that we throw these complicated tax laws out.  We need to institute a new plan, so that corporations pay their fair share.  They benefit from our roads, bridges, military, police officers and fire fighters – schools train their next employees; but, when it comes to paying for all of this, well, they don’t want to.

They put out ads saying that it’s wealth distribution, but it’s not – it’s paying your fair share of what it costs, so you can run your business in the land of the free.

I say, we let them write off everything they pay their employees – no taxes on payroll, no taxes on healthcare costs — BUT, if that employee is outside the United States, we tax the hell out of whatever product they made when it gets shipped here.  (They would still have to pay their side of Social Security and Medicare.)

If we allowed companies to deduct the cost of employees, you can bet employees would go back to being well paid and important to companies – consider assets and not just cost centers.  Every tax break the upper 1% has received has not driven them to higher more employees – it’s just given them more to horde.

And, that’s why Jesus said, in a much more elegant way than I’m about to do so, that the rich ain’t getting into Heaven.  It’s all about how you treat others and the rich in this country, aren’t passing the camel test.

Cain’s Tax Plan Again

When I’m wrong, I’ll admit that I am wrong. Apparently, I was wrong in my assumption regarding Cain’s 9-9-9 Tax Plan. There are some items that I overlooked – one of which was the fact that I would no longer pay Payroll taxes of 7.65%. This was pointed out by Bob – thanks, Bob. I dug a little further and discovered I would no longer have any deductions, except charitable and, since I don’t live in the inner city, I don’t receive a tax credit for that.

When I did my original comparison, I just took my salary – what I earn from my employer – and used those figures. I only used the standard deduction and the personal exemption for the current figures. For my spending, I went through the checkbook and took out all of my spending for the month of September.

Here’s what I did this time.

I’m used September’s figures for spending. I’m added in the Payroll taxes for both the current plan. I used my actual deductions – divided out by 12 – from my last year’s income tax return. Since Cain’s plan allows for charitable deductions, I subtracted my charitable deductions from his plan.

This time it worked out that I currently pay $2,890 more in taxes now than I would under Herman Cain’s plan. Since the only criteria I was using for this plan was how it would affect me – and only me – then I have to say, it is a good plan.

Sorry, but I do.

However; here’s what I wrote the last time:

Here’s what I recommend – don’t take my word on whether or not you like the Cain Plan. Do the math for yourself. Figure out exactly how much more or how much less you’ll pay in taxes. Come to your own conclusion. That’s what we should really be doing anyway. Checking out the plans and weighing our options.

I stand by that recommendation. You should figure out whether or not this is a good plan for you.  But, actually do the math and figure it out – don’t just guess or believe what someone else writes.  Too many people will believe whatever someone emails them.  Somedays, I wonder if laziness is the real reason we’re in this mess.

Now, that I have said that, a consideration should be made for whether or not this is a good plan for the country. I’m not sure that it is. Cain has stated that the country will gain more in revenue from this plan than we do currently. I just don’t see how that is possible. If I’m saving nearly $3,000 per year, shouldn’t everyone in my situation be saving that amount? Will we really gain enough on those people who will pay more to make up the difference for those who will pay less? It’s just a thought.

Herman Cain’s 9-9-9 Tax Plan

When it comes to taxes and being told what’s going to cost me more money and what’s going to save me money, I generally don’t believe the Press, or the person touting the plan.  What I do believe is taking what I pay in taxes now and comparing that to the new plan.

This is what I did when comparing the “savings” Paul Ryan’s plan touted.  This is what I have done with Herman Cain’s plan.

Now, there is something I’d like to add.  Mr. Cain has not made public a lot of details about his plan.  It is possible that I am making incorrect assumptions.  I am listing the assumptions that I have made before the comparison – if anyone knows for a fact that the Cain plan doesn’t do any one of these, please leave a comment and I will make adjustments.

  • No deductions: personal exemption, neither Medical nor the Standard Deduction.
  • Taxes on everything: food, gas, clothing and bills such as electric and cable.
  • Even though when I purchase my next home or car – and only if Cain’s plan passes – I would pay a 9% sales tax on the home or car, I did not include this in my car payments, nor in my mortgage payments.  I made the assumption that the 9% tax would not be retroactive.  Therefore; in my total spending, I did not include my mortgage nor car payments.

I picked last month for my spending.  I figured September is a typical month for me.  Some months I might spend more and some months, I spend less.  For comparison purposes, I included Paul Ryan’s plan in my chart.

 

Current

Ryan’s Plan

Cain’s Plan

Salary

$5,416.67

$5,416.67

$5,416.67

Insurance Deduction

$253.44

$0.00

$0.00

Personal Exemption

$291.67

$316.67

$0.00

Standard Deduction

$483.33

$1,041.67

$0.00

Taxable Income

$4,388.23

$4,058.33

$5,416.67

Federal Income Tax

$784.18

$1,014.58

$487.50

National Sales Tax

$0.00

$0.00

$399.09

Total Tax

$784.18

$1,014.58

$886.59

%

17.87%

25.00%

9.00%

This is based on one month’s salary and all the spending for the household.  In the month of September between bills (cable, electric, cell phone, etc.), food, household items and misc. items (books, software), I spent $4,434.30.

As you can see, I currently pay – each month – $787.18 in Federal Income Tax (after deductions, which really aren’t taken out until the end of the year, but I wanted this to be a fair comparison – apples to apples).  Under the Cain Plan, I will only have $487.50 taken out of my paycheck for Federal Taxes.  That’s a savings of $299.68.  That sounds pretty good.

But, wait – there’s more…

Once the addition of the sales tax on $4,434.30 of goods and services is paid, my federal tax bill is raised by $399.09 – almost $100 more than the initial savings.  This brings my total taxes under Herman Cain’s plan up to $886.59!  Clearly, the Cain Plan is not a winner for me.

Let’s deal with the critics on this.  I’m sure some people are saying, “Just spend less.”  Hmmm, nice idea, but then what’s the point?  If, in order to save taxes, I slow down my spending, then for what am I working?  What’s my motivation for earning more money?  What do I get and how does the economy get rolling along if I cut my spending in half?

Let’s say I only spend the essentials – cut out the extras, like eating out or my passion for books – what happens then?

Well, I would save $52.80 in taxes each month.  And, sure, I could sock the extra money away in savings, but who wants to live like that?  I don’t drive up to Brookfield every single day to not enjoy the money I spend.  I sock away savings and money for retirement, but then I enjoy life.

And, how will I pay for that next car?  Sure, I could use my savings, but when the average car price is around $20,000 an extra 9.0% in sales tax is really going to make a huge difference.  That adds – without any other taxes or licensing fees – and extra $1,800 to the price of my new car.

Perhaps, Cain’s plan won’t take food or, maybe, cars will be exempt.  Wouldn’t that be subsidizing certain industries and isn’t that one of the ways we ended up in this mess in the first place?

Here’s what I recommend – don’t take my word on whether or not you like the Cain Plan.  Do the math for yourself.  Figure out exactly how much more or how much less you’ll pay in taxes.  Come to your own conclusion.  That’s what we should really be doing anyway.  Checking out the plans and weighing our options.

Happy Calculating!

Warren Buffet’s Tax Rate…

Warren Buffet released his 2010 taxes for Congress’s review.  He wanted to prove his point that the rich do not pay their fair share in taxes and that they can afford to pay more.  After comparing his tax return to my tax return, I so agree with him.  I earned .10% of what Mr. Buffet earned last year.  That means, for those of you who are math challenged, he earned 1,000 times as much as I did.

Now, if all is fair, then he should’ve paid 1,000 times more than I did in taxes.

Except, he didn’t.  Everything being equal, he should’ve paid $8 million in taxes.  He didn’t, he paid just under $7 million.  I can hear the argument now, that’s more than you paid.  If you don’t like it, why don’t you go get rich.  (Usually, these arguments come from people who make half as much as I do.)

How can a man who make 1,000 times more than me pay a tax rate that is only 2% higher than mine?  How is that fair?

Well, I have to go to work, where 1/3 of my paycheck goes to taxes and insurance before I even come home.

Mitt Romney’s Tax Cutting Plan

I’m reading this week’s Bloomberg Businessweek and there on page 38 is Charlie Rose’s interview with Mitt Romney.    He says, “The President’s plan is another short-term stimulus effort, akin to throwing a cup of gasoline on embers.”

In the interview, he makes some good points – he states that businesses hire because there is demand.  He recognizes that our wages are stagnate.  I give him credit for that.  However; like the rest of the GOP, he wants to see more tax cuts for the wealthy.  His job plan on his website states, “His plan seeks to reduce taxes, spending, regulation, and government programs.”

Don’t you just love that?  Reduce taxes – taxes are the lowest they’ve been since the 1950’s.  Guess what  This isn’t all about the taxes.  Reduce Spending – what spending?  The spending that keeps our schools open and our military protecting us?  Reduce Regulation – Interesting, but which regulations?  We threw out the Seagall – Glass Act, which kept out financial markets safe for over sixty years.  Regulations are not the enemy – bad corporate decisions are.

In short, Mitt Romney may have a greater clue than the rest of the Republican Pack, but he still has a long way to go.

 

The GOP Way: Cutting Taxes on the Rich, Raising Taxes on the Middle Class

According to Huffington Post, the Republican Party is all for raising taxes on you and me.  Actually, I didn’t need to read the article to know that, they’ve been saying it all along.  Paul Ryan – who is unfortunately, my representative in Congress – called the other night with one of them recorded messages.  He stated, “I work for you.”  Really?  Because your roadmap for America plan makes it seem like you’re only working for the rich.

Pay attention, here’s where I’m going to do math.

Current Ryan’s Plan
Salary $1,250.00 $1,250.00
Medical $63.36 $63.36
Taxable Income $1,186.64 $1,250.00
Federal Income Tax $212.04 $312.50
% 17.87% 25.00%

Under Paul Ryan’s plan, health insurance would no longer be pre-taxed. Under his plan, any single making more that $50,000 per year would pay 25% in Federal Income tax. The tax rate for corporate America? 8%.

So, basically, Ryan and his Republican cronies will be financing this country on the backs of the single people.  A family of four can earn $39,000 without paying one penny in taxes, while us single people will only be able to earn $16,000 without paying taxes.  That means that I will end up paying more in taxes – a lot more.  Under Ryan’s plan, I will pay $12,250.00 in taxes.  Under our current tax structure (and using the standard deduction and personal excemption), I only pay $9,917.85.  That’s a difference of $2,332.15.

Anyone who is single, shouldn’t vote Republican.  It’ll cost you in the long run.

Bumper Sticker Politics

On my drive home from work yesterday, I saw a bumper sticker that said, “Cut taxes, secure our borders” and went on to mention other right-wing propaganda.  I had to laugh.  We cannot cut our taxes anymore.  We are at the lowest point since the 1950’s.  Taxes are lower now than they were during Ronald Reagan and still, the right carries on with their bumper sticker politics.  Part of our debt comes because we cut taxes in 2001 and 2003 and never made spending cuts to offset it.  The only thing the Republicans, Tea Partiers and the right-wing are good at is spending misleading and sometimes outright lies about our economy.  Apparently, not enough of us took enough economics classes to understand the problem in order to find a solution.

If Obama signs off on a plan that makes huge cuts to Social Security and Medicare and does not include a tax raise, it will be a huge mistake.  Pay attention.  The “Taxed Enough Already” Partiers do not know what trouble they’re causing.  Paying taxes is how we maintain our schools, our secure borders.  We pay taxes to pay our military.  If the tax revenue does not go up – our military cannot get a raise, did you think of that?

Tax breaks handed over to the rich, who benefit most from our capitalistic society, does NOT create jobs.  Jobs are created by consumption – no consumption = no jobs.

Corporations are making their highest profits in years and they aren’t hiring because they are not compelled to do so.

Let’s start finding some real solutions to our nation’s problems and leave the half-baked signs and bumper stickers at home.

Tax Rates 2000 – 2011

Below are all of the tax rates, along side their respective income levels.  I found the data at Money Chimp, so you can review it for yourself.  Remember, all these tax rates are on NET, not GROSS income.  For those that do not know the difference, Gross is what you earn and Net is what you actually bring home, after all deductions.

2000 Tax Rates:

Income

Beginning Salary Ending Salary Tax Rate

$0.00

$26,250.00

15.0%

$26,250.00

$63,550.00

28.0%

$63,550.00

$132,600.00

31.0%

$132,600.00

$288,350.00

36.0%

$288,350.00

 above

39.6%

2001 Tax Rates:

Income

Beginning Salary Ending Salary Tax Rate

$0.00

$27,050.00

15.0%

$27,050.00

$65,550.00

27.5%

$65,550.00

$136,750.00

30.5%

$136,750.00

$297,350.00

35.5%

$297,350.00

above

39.1%

2002 Tax Rates:

Income

Beginning Salary Ending Salary Tax Rate

$0.00

$6,000.00

10.0%

$6,000.00

$27,950.00

15.0%

$27,950.00

$67,700.00

27.0%

$67,700.00

$141,250.00

30.0%

$141,250.00

$307,050.00

35.0%

$307,050.00

above

38.6%

2003 Tax Rates:

Income

Beginning Salary Ending Salary Tax Rate

$0.00

$7,000.00

10.0%

$7,000.00

$28,400.00

15.0%

$28,400.00

$68,800.00

25.0%

$68,800.00

$143,500.00

28.0%

$143,500.00

$311,950.00

33.0%

$311,950.00

above

35.0%

2004 Tax Rates:

Income

Beginning Salary Ending Salary Tax Rate

$0.00

$7,150.00

10.0%

$7,150.00

$29,050.00

15.0%

$29,050.00

$70,350.00

25.0%

$70,350.00

$146,750.00

28.0%

$146,750.00

$319,100.00

33.0%

$319,100.00

above

35.0%

2005 Tax Rates:

Income

Beginning Salary Ending Salary Tax Rate

$0.00

$7,300.00

10.0%

$7,300.00

$29,700.00

15.0%

$29,700.00

$71,950.00

25.0%

$71,950.00

$150,150.00

28.0%

$150,150.00

$326,450.00

33.0%

$326,450.00

above

35.0%

2006 Tax Rates:

Income

Beginning Salary Ending Salary Tax Rate

$0.00

$7,550.00

10.0%

$7,550.00

$30,650.00

15.0%

$30,650.00

$74,200.00

25.0%

$74,200.00

$154,800.00

28.0%

$154,800.00

$336,550.00

33.0%

$336,500.00

above

35.0%

2007 Tax Rates:

Income

Beginning Salary Ending Salary Tax Rate

$0.00

$7,825.00

10.0%

$7,825.00

$31,850.00

15.0%

$31,850.00

$77,100.00

25.0%

$77,100.00

$160,850.00

28.0%

$160,850.00

$349,700.00

33.0%

$349,700.00

above

35.0%

2008 Tax Rates:

Income

Beginning Salary Ending Salary Tax Rate

$0.00

$8,025.00

10.0%

$8,025.00

$32,550.00

15.0%

$32,550.00

$78,850.00

25.0%

$78,850.00

$164,550.00

28.0%

$164,550.00

$357,700.00

33.0%

$357,700.00

above

35.0%

2009 Tax Rates:

Income

Beginning Salary Ending Salary Tax Rate

$0.00

$8,350.00

10.0%

$8,350.00

$33,950.00

15.0%

$33,950.00

$82,250.00

25.0%

$8,250.00

$171,550.00

28.0%

$171,550.00

$372,950.00

33.0%

$372,950.00

above

35.0%

2010 Tax Rates:

Income

Beginning Salary Ending Salary Tax Rate

$0.00

$8,375.00

10.0%

$8,375.00

$34,000.00

15.0%

$34,000.00

$82,400.00

25.0%

$82,400.00

$171,850.00

28.0%

$171,850.00

$373,650.00

33.0%

$373,650.00

above

35.0%

2011 Tax Rates:

Income

Beginning Salary Ending Salary Tax Rate

$0.00

$8,500.00

10.0%

$8,500.00

$34,500.00

15.0%

$34,500.00

$83,600.00

25.0%

$83,600.00

$174,400.00

28.0%

$174,400.00

$379,150.00

33.0%

$379,150.00

above

35.0%

 

Obama’s Big Mistake

By offering cuts to Social Security and Medicare in exchange for a rise in tax revenues, President Obama is making a huge mistake.  There are a lot of people out there who will be relying on both Social Security and Medicare for their retirement needs.  We will have to deal with them later and that is a mistake.

As far as I’m concern, any spending cuts – which Obama has given in to plenty – that do not come with a raise in taxes for the wealthy are unacceptable.  We’re going to leave those who can ill afford it vulnerable and we’re already rewarding those who caused this mess in the first place.  It’s time to hit the fancy bankers and CEOs who have laid off their fellow Americans in the pocketbook.  If we tax the hell out of them, maybe they’ll start hiring to avoid paying taxes.

We, also, need to cut every subsidy for nearly every corporation – especially oil.  But, that’s a discussion for another time.

Cantor’s Running

Eric Cantor has walked away from the Debt Ceiling talks. He doesn’t want to be in a position to actually admit that raising taxes must become a reality if we’re serious about paying off the National Debt.

Unfortunately for Cantor and the other Republicans, their grass roots base and their big business base are totally against tax raises. However; we can pay money we don’t have. Rehauling medicare and cutting social security and education outlays are NOT going to make us debt free.

Welcome to the real world.

Just like I can’t cut my hours and still pay my car loan, the goverment cannot cut taxes and pay off the debt. Our federal taxes are the lowest they’ve been in fifty years. Our regulations on businesses are the smallest they’ve been in forty years and, still our national debt grows and our jobless jumped 9,000 higher last month.

Cutting taxes – which is the big plan of the Republicans – isn’t going to build a strong economy so far.

Cantor needs to come back to the table and face the music.

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