Poll

10 votes (35.71%)
18 votes (64.28%)

28 members have voted

MathExtremist
MathExtremist
Joined: Aug 31, 2010
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July 21st, 2011 at 7:48:54 AM permalink
Quote: SOOPOO

ME- as you know 'the wealthy already pay a larger percentage than the middle class'. Just how much more is what society has to decide on. A successful man in the typical 4 person household earning a million a year pays more taxes than 100 4 person households making 40k per year. (Federal taxes)


Yes, I agree, but I think the decision should be based on the overall goal of maximizing economic output, not making the tax rates "fair" for everyone at the expense of economic output.
"In my own case, when it seemed to me after a long illness that death was close at hand, I found no little solace in playing constantly at dice." -- Girolamo Cardano, 1563
Paradigm
Paradigm
Joined: Feb 24, 2011
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July 21st, 2011 at 7:51:42 AM permalink
I need to understand more about this "low-level" employee. When I think of a low level employee, I am imagining someone making an hourly wage of $12-$15 per hour. Hard for me to fathom that someone in that range of income is not working an extra hour due to the income tax consequences of the extra earnings as they should be in a low tax bracket, but I may be missing something. Even if the extra earnings took them from a 15% bracket to a 25% bracket, did they really decide not to work for the extra hour due to the $1.20 to $1.50 difference in taxes?
boymimbo
boymimbo
Joined: Nov 12, 2009
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July 21st, 2011 at 9:32:46 AM permalink
I'd like to add a couple of more cents here.

I have the choice to live and work in Canada or the United States. My job is transferrable, and I do alot of my work in the United States now via a Visa where I can have dual intent. Further, my wife is American as well, and I live pretty much 10 minutes away from the border between the two countries.

I would get equal pay in both countries, but would be subject to different tax rates, deductions and Social Security. I choose to live in Canada. Why?

(1) The United States is 13 trillion plus in debt and has no plan in place to reduce this at this time.
(2) Obama Care does not provide an adequate choice should I lose my job. The cost of medicaid/medicare when I retire will be too expensive I fear.
(3) Though I realize that the tax rate is much less in the United States at my income level, the truth is that I don't require that extra 5 or extra 6 percent of income.
(4) I generally like Canada more.

I generally work around a bunch of folk who make a fair bit of money, and I don't hear any of them complaining about the amount of taxes they pay. And I certainly don't think that a 2 point increase in income taxes overall will force people to change their work behaviour.

And as for the earned income credit, it maxes out between 12,550 and 16,450 for a single parent with two children. If a single parent is not working at all, they receive no credit. At 12,550 with 2 children you would get the full $5,036 credit. It's supposed to be an anti poverty measure. However, given that most of these people are unskilled, to get to 12,550 requires part time earnings of a 1,050 a month or about 142 hours at the minimum wage of 7.25, which is 30 hours a week. For me, if someone is working 30 hours a week at minimum wage and has two kids, I don't mind the government handing them out an extra $5K. This money would probably go to the children. Of course there will be abuse -- alot of it. But I am sure that these single parents would prefer to work at a job that pays them 50K and have no earned income credit. They just are unskilled. Lots of people are. And some are smart enough to abuse the system and prefer to do so.

Call me a liberal, but I would rather see these kids raised properly then continue the cycle of low income poverty. And if the 20K of taxes I pay a year (in the US) goes to support an impoverished child, I'm all for that.
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buzzpaff
buzzpaff
Joined: Mar 8, 2011
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July 21st, 2011 at 10:17:25 AM permalink
(4) I generally like Canada more.

Shouldn't that be number 1 ?
thecesspit
thecesspit
Joined: Apr 19, 2010
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July 21st, 2011 at 11:13:59 AM permalink
Quote: buzzpaff

(4) I generally like Canada more.

Shouldn't that be number 1 ?



Should be number 1 and number 4.

If the current government can get the national debt well under control, I see good things for Canada's economy going forward. I also like the 1.05 exchange rate right now when I travel (though this may cause problems going onwards).

The more conservative members of the board will tell me that it's all downhill due to the high taxes and socialized health care up here. <shrug>
"Then you can admire the real gambler, who has neither eaten, slept, thought nor lived, he has so smarted under the scourge of his martingale, so suffered on the rack of his desire for a coup at trente-et-quarante" - Honore de Balzac, 1829
AZDuffman
AZDuffman
Joined: Nov 2, 2009
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July 21st, 2011 at 8:43:28 PM permalink
Quote: boymimbo

And as for the earned income credit, it maxes out between 12,550 and 16,450 for a single parent with two children. If a single parent is not working at all, they receive no credit. At 12,550 with 2 children you would get the full $5,036 credit. It's supposed to be an anti poverty measure. However, given that most of these people are unskilled, to get to 12,550 requires part time earnings of a 1,050 a month or about 142 hours at the minimum wage of 7.25, which is 30 hours a week. For me, if someone is working 30 hours a week at minimum wage and has two kids, I don't mind the government handing them out an extra $5K. This money would probably go to the children. Of course there will be abuse -- alot of it. But I am sure that these single parents would prefer to work at a job that pays them 50K and have no earned income credit. They just are unskilled. Lots of people are. And some are smart enough to abuse the system and prefer to do so.

Call me a liberal, but I would rather see these kids raised properly then continue the cycle of low income poverty. And if the 20K of taxes I pay a year (in the US) goes to support an impoverished child, I'm all for that.



I used to see the abuse of the EIC when I did taxes. In fact, the level of people you had to deal with was the reason I didn't pursue an income tax prep franchise. They don't understand how to use a checking accout but they sure knew how to max out EIC. The running joke was that it was "rent a kid" to get their money. As to most "going to the kids," uh-uh. First, they never had the money to pay upfornt So they paid at least $80 to just have the prep fee deducted from their refund. Most couldn't wait for their refund so they paid big (800% or so APR, once I saw > 1,000%) to get their money the next day. Then they never had bank accounts so they went to the check cashing store to get their money. Then they went to Rent-A-Center for new furniture, until they had to send it back.

Yes, some did the right thing, most not. And one was crying the blues because she worked more hours and got less EIC. (So much for taxes having no effect on motivation to earn!) A better way to "help kids" would be to get them to keep their legs together until they were married or/and could support them. But in the USA we have a poverty-industrial complex many times bigger than any military-industrial complex.
All animals are equal, but some are more equal than others
AZDuffman
AZDuffman
Joined: Nov 2, 2009
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July 21st, 2011 at 8:47:02 PM permalink
Quote: Paradigm

I need to understand more about this "low-level" employee. When I think of a low level employee, I am imagining someone making an hourly wage of $12-$15 per hour. Hard for me to fathom that someone in that range of income is not working an extra hour due to the income tax consequences of the extra earnings as they should be in a low tax bracket, but I may be missing something. Even if the extra earnings took them from a 15% bracket to a 25% bracket, did they really decide not to work for the extra hour due to the $1.20 to $1.50 difference in taxes?



They don't calculate the rate. They do realize more is coming out of their pay and say "forget it" when you ask them to work. See my other post for an example.

Occasionally even low-level pay can be taxed at the highest marginal rate. Mostly this happens with bonuses paid on a seperate paycheck. And most of the time it is females who have the biggest gripe about it.
All animals are equal, but some are more equal than others

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