Droopy's False Prophets: Inflation that never was

[_mledbetter]

One more interesting point:
http://en.wikipedia.org/wiki/Federal_In ... ns_Act_tax

Some argue that since Social Security taxes are eventually returned to taxpayers, with interest, in the form of Social Security benefits, the regressiveness of the tax is effectively negated.[citation needed] That is, the taxpayer gets back what he or she put into the Social Security system. Others, including The Economist and the Congressional Budget Office, point out that the Social Security system as a whole is progressive in the lower income brackets; individuals with lower lifetime average wages receive a larger benefit (as both a percentage of their lifetime average wage income and a percentage of Social Security taxes paid) than do individuals with higher lifetime average wages.[22][23][24]

[_mledbetter]

Throw in sales tax, excise tax (e.g. tax on gas), and property tax, the working poor pay a higher percentage of their income in taxes than most of the rich.

Sales and property taxes vary by state. I believe that here in Georgia at least, if you make less than 20k annually, you get a low income credit to offset sales taxes. They are also entitled to a low income housing credit to offset property taxes and to encourage more home sales among the lower income brackets. I think state taxes should be irrelevant to this discussion, because they are so varied.

[_Analytics]

If you are correct ( and I have no reason to believe otherwise ) then you are certainly correct that this is a highly regressive tax, and I apologize for not understanding this. Thanks for showing me the light. :-)

Any time, lol.

About my last question though, aren't these kind of burdens offset by earned income tax credit?

For some people. The earned income credit (EIC) formula is weighted heavily towards how many kids you have. If you make the right amount of money and have kids, the EIC can more than offset payroll tax. If you don't have kids or make a little too much money, then it does not.

Also, isn't the FICA tax accounted for in adjusted gross income calculations (the taxable gross income)? I always thought that this was factored in when I did my taxes. If so, the data I provided was based on adjusted gross income, after all writeoffs, deductions, earn income tax calculations, child credits, state tax credits, and so forth. That's what adjusted gross income represents, I thought, and included FICA, as well. I'll do more reading on this, but that was my understanding.

They might be deductible for purposes of calculating taxable income--I don't recall. But that doesn't change the fact that it is a very large, very regressive tax that is distinct from federal income tax.

[_mledbetter]

Thanks for your polite replies to my questions, Analytics.

Given this discussion, would you agree that our tax system in the country is ridiculously complicated for the layperson? Would you support a flat tax, with offsets at the lower income levels, that would replace our current income tax system? What about the fair tax (which I know DOES have offsets/credits at the lower income levels)?

[_Analytics]

One more interesting point:
http://en.wikipedia.org/wiki/Federal_In ... ns_Act_tax

Some argue that since Social Security taxes are eventually returned to taxpayers, with interest, in the form of Social Security benefits, the regressiveness of the tax is effectively negated.[citation needed] That is, the taxpayer gets back what he or she put into the Social Security system. Others, including The Economist and the Congressional Budget Office, point out that the Social Security system as a whole is progressive in the lower income brackets; individuals with lower lifetime average wages receive a larger benefit (as both a percentage of their lifetime average wage income and a percentage of Social Security taxes paid) than do individuals with higher lifetime average wages.[22][23][24]

That is the level of analysis required to have a fair and intelligent conversation about Social Security. You'll notice that when you drill down to that level, we are talking about people taking out of the system an amount roughly porportional to what they put in. It's slightly means-tested, but it is financed entirely by the first $100,000 of everybody's income and not by the mega-dollars that the high earners take in.

In contrast, the tools represent Social Security Benefits as government entitlements, which are given to people among the 47% who refuse to take responsibility for their own lives and think the government owes them something. According to the tools, the people who receive these entitlements don't pay income taxes and aren't really entitled to anything. The tools imply that the system is funded on the backs of high-earners who are being killed because they pay all of the income taxes.

You see the irony and dishonesty in that analysis now, right?

[_Analytics]

Thanks for your polite replies to my questions, Analytics.

Given this discussion, would you agree that our tax system in the country is ridiculously complicated for the layperson? Would you support a flat tax, with offsets at the lower income levels, that would replace our current income tax system? What about the fair tax (which I know DOES have offsets/credits at the lower income levels)?

I totally agree that the system is way too complicated.

I'd support a major simplification of the tax code. I'd get rid of all deductions that aren't legitimate business expenses. For example, home-mortgage interest shouldn't be deductible and charitable contributions shouldn't be deductible. I'd eliminate the Social Security trust fund and have SS benefits be paid directly out of the general account. I'd support a flatter tax system. But it should be progressive--in our winner-takes-all society, the people who win the record deals, the major-league sporting jobs, and jobs as an investment bankers should pay a higher rate than people who actually perform labor for a living.

[_mledbetter]

You see the irony and dishonesty in that analysis now, right?

Well, yes I certainly do. However, I hope that you didn't feel that I was being dishonest. I recognize where I may have been misinformed and demonstrated that I was able to admit where I was wrong. I'm still convinced, however, that our government is dishonest about:
*real unemployment
*real inflation
*the true share of the tax burden

Also, one could argue that this tax system is so unfair because the people on both sides of the isle who are making these tax policies are in the most part members of the super rich. How do we ever expect to have this system fixed and fair?

Why do policies from the populist side of the isle always end up hurting the little guy the most? When tax policy and regulation meant to make the system more fair ends up being too complicated for normal people to figure out and too expensive for small to medium sized business to abide by, it's the super rich and giant corporations that benefit the most. What better way to kill off your competition?

Anyway, that's my last comment on this. I realize that I'm a little out of my league here in this debate. I don't know why I get involved in these debates when I'm at work and really should be writing code instead of arguing. :)

[_Analytics]

You see the irony and dishonesty in that analysis now, right?

Well, yes I certainly do. However, I hope that you didn't feel that I was being dishonest.

No, not at all. I have no problem with people disagreeing with me or having different opinions.

You've come to the table with a willingness to have an actual discussion about the issues and learn something. That is all I could ask from anybody.

I hope you stick around.

[_mledbetter]

I hope you stick around.

I certainly will, but I won't be doing anymore arguing with you on taxes until I do me some more reading on the subject. :p