Paying his fair share?

[Pirata]

From:

https://money.usnews.com/money/personal-finance/family-finance/articles/are-you-rich-how-the-wealthy-are-defined

But Eric Pierre, CEO, owner and principal of Pierre Accounting in Texas, says when it comes to money, this saying holds true: Comparison is the thief of joy.

"Different people make money in different ways, they have different skills and wealth can go up and down for different reasons," he says. "You should set a net worth of what you want it to be, whether it's billions or thousands. Set a goal that will make you happy. Stop worrying about what your neighbor's doing."

 

[cernjSHU]

Let’s talk about what real wealth is. The richest of them all pay the least. The top 400 families pay only 8.2% of income in taxes. https://www.google.com/amp/s/www.cn...y-a-lower-tax-rate-than-average-taxpayer.html

While people quibble about if 200k is rich, the people who are really wealthy are getting away with paying a small percentage of their income.

 

[SPK145]

Let’s talk about what real wealth is. The richest of them all pay the least. The top 400 families pay only 8.2% of income in taxes. https://www.google.com/amp/s/www.cn...y-a-lower-tax-rate-than-average-taxpayer.html

While people quibble about if 200k is rich, the people who are really wealthy are getting away with paying a small percentage of their income.

LOL.

<<< The White House report examines income from “unrealized capital gains” (or, untaxed asset growth), a departure from typical analyses, which often don’t include this income measure, according to the authors. >>>

So just like the disingenuous ProPublica report, this is based on wealth not income. Nice try, LOL!!! Apples to oranges. Actually this report is rotten apples.

For 2018, the top 22,112 taxpayers, the top 0.014%, paid an average of 28% of their taxable income in federal taxes.

 

[HALL85]

Exhibit A on why I never get into a pissing match about stuff like this with my CFO...lol

 

[cernjSHU]

I did not read the WhiteHouse Report. The news story refers to income. Certainly, unrealized capital gains is not income. I would like to see what the top 400 families do pay as a percentage of their income. The way the article was written it referred about IRS returns. "The wealthiest 400 American families paid an 8.2% average rate on their federal individual income taxes from 2010 to 2018, according to a White House analysis published Thursday"

Btw, unless I am reading this report wrong, in 2018, the top 1% paid 25% the 0.1% paid 25.96%, the .01 paid 24.46%, the .001% paid 22.92%.

Btw, isn't that percentage of AGI and not total income? The percentage of total gross income would be lower still.

 

[SPK145]

Just looking at the IRS Stat Book from 2018:

Top 0.014% of taxpayers = 6.7% of total taxable income, 10.1% of total taxes paid at an average rate of 28% of income.

Top 0.129% of taxpayers = 9.2% of total taxable income, 14.2% of total taxes paid at an average rate of 28.6% of income.

Top 5.73% of taxpayers = 46.3% of total taxable income, 62.1% of total taxes paid at an average rate of 23.4% of income.

So when you hear the useful idiots talk about tax unfairness, you know they are full of shit. Or jealous.

https://www.irs.gov/pub/irs-pdf/p1304.pdf#page=22

 

[Pirata]

The operative word here is income taxes.

Anybody that gets to a certain level of W-2 income starts to think about ways to keep a lid on that income so as to avoid income taxes.

One of the simplest ways is deferred income.

Elon musk is a classic example where he has done a few things to minimize the W-2 income he gets.

It makes great political theater to say that they're not paying a lot of income tax, however they are paying other taxes.

But back to the deferred income. If your company is going to offer you a deferred income package it has tax implications for them. The company won't be able to claim the income as an expense and hence they'll have to pay taxes on the money that otherwise would have been distributed to you as wages. When they finally dispersed the income then they can claim the expense and you would have to claim the income.

It gets interesting when the company and the person are the same thing.

There's a lot of use of the word loophole but I've never looked at it as loopholes I look at it as there's a tax law and you implement tax strategies and tax procedures that minimize the amount of taxes you pay whether it's income tax capital gains tax inheritance tax, property or other tax.

When consider state taxes there's a whole nother challenge to try to minimize those.

Pennsylvania is one state that has unfavorable inheritance taxes and so a lot of people buy Florida residents and avoid the PA taxes. There's nothing illegal about it.

 

[Pirata]

The operative word here is income taxes.

Anybody that gets to a certain level of W-2 income starts to think about ways to keep a lid on that income so as to avoid income taxes.

One of the simplest ways is deferred income.

Elon musk is a classic example where he has done a few things to minimize the W-2 income he gets.

It makes great political theater to say that they're not paying a lot of income tax, however they are paying other taxes.

But back to the deferred income. If your company is going to offer you a deferred income package it has tax implications for them. The company won't be able to clean the income as an expense and hence they'll have to pay taxes on the money that otherwise would have been distributed to you as wages.

It gets interesting when the company and the person are the same thing.

There's a lot of use of the word loophole but I've never looked at it as loopholes. I look at it as there's a tax law and you implement tax strategies and tax procedures that minimize the amount of taxes you pay whether it's income tax capital gains tax inheritance tax, property or other tax.

When you consider state taxes there's a whole nother challenge to try to minimize those.

Pennsylvania is one state that has unfavorable inheritance taxes and so a lot of people buy Florida residents and avoid the PA taxes. There's nothing illegal, immoral, or unethical about it.

Fairness is a another discussion. If you're going to discuss fairness you have to look at all the taxes that the wealthy pay and not just focus on income.

 

[Pirata]

I'm doing a separate post so it's not to have such a lengthy one.

IRS is another discussion. At lower income levels you're eligible to put money in a Roth. As your income grows the amount you can contribute to a Roth reduces and ultimately goes to zero.

That tax law is beneficial to lower income people. I personally have throttled my income in certain years so I could take advantage of a Roth. I recall one year in particular when I had a substantial capital loss that allowed me to convert a bunch of regular IRA to Roth.

Some might say that I took advantage of a loophole. I looked at it that I maximized my benefit by taking advantage of an existing tax law.

 

[Pirata]

For you guys that are really into tax law You should take a look at some of the international implications if you're a manufacturer.

I had one customer who had a guy dedicated full-time to figuring out how he could spread value add of a product into other countries so as to minimize the taxes paid.

They saved millions by implementing a strategies and procedures. All of it was subject to audit and it was all legitimate.

You can bet any multinational company does the same.

 

[SHUSA]

For you guys that are really into tax law You should take a look at some of the international implications if you're a manufacturer.

I had one customer who had a guy dedicated full-time to figuring out how he could spread value add of a product into other countries so as to minimize the taxes paid.

They saved millions by implementing a strategies and procedures. All of it was subject to audit and it was all legitimate.

You can bet any multinational company does the same.

tax strategies fascinate me and i dont understand any of them one bit. my brain just cant understand

 

[Merge]

Just looking at the IRS Stat Book from 2018:

Top 0.014% of taxpayers = 6.7% of total taxable income, 10.1% of total taxes paid at an average rate of 28% of income.

Top 0.129% of taxpayers = 9.2% of total taxable income, 14.2% of total taxes paid at an average rate of 28.6% of income.

Top 5.73% of taxpayers = 46.3% of total taxable income, 62.1% of total taxes paid at an average rate of 23.4% of income.

So when you hear the useful idiots talk about tax unfairness, you know they are full of shit. Or jealous.

https://www.irs.gov/pub/irs-pdf/p1304.pdf#page=22

Average tax rate for returns over $10 million is lower those between $1-$10 million. The rate starts to go down after $2 million, because a higher proportion from capital gains.

I think that is cern's point (correct me if I am wrong Cern) but I think he is saying that there is a bit of a disconnect where a wage earner, even an arguably wealthy one, would be paying less in federal taxes than someone who does nothing in a year other than earning a dividend.

Not out out of jealousy at all. Just what is best for overall economic prosperity for the whole country.

 

[SPK145]

I think that is cern's point (correct me if I am wrong Cern) but I think he is saying that there is a bit of a disconnect where a wage earner, even an arguably wealthy one, would be paying less in federal taxes than someone who does nothing in a year other than earning a dividend.

Dividends are ordinary income, taxed the same as wages.

Capital gains are taxed lower for reasons like spurring investment, etc.

 

[Merge]

Dividends are ordinary income, taxed the same as wages.

Capital gains are taxed lower for reasons like spurring investment, etc.

Not qualified dividends. Those are capital gains.

I get why capital gains have lower taxes. Just happens that in some cases, people are benefiting from the law which was not really designed for their benefit.

 

[Pirata]

Elon Musk faces a $15 billion tax bill, which is likely the real reason he's selling stock

Elon Musk faces a tax bill of over $15 billion in the coming months on stock options, making a sale of Tesla stock this year likely regardless of the Twitter vote.

www.cnbc.com

 

[sami]

Elon Musk faces a $15 billion tax bill, which is likely the real reason he's selling stock

Elon Musk faces a tax bill of over $15 billion in the coming months on stock options, making a sale of Tesla stock this year likely regardless of the Twitter vote.

www.cnbc.com

He’s no dope. This makes him look like a “good citizen” with a big tax bill, while at the same time he avoids what most think will be an increase in cap gains rates upcoming. His move to Texas makes it all the more obvious this was coming, not just a result of his public Twitter stunt, which he’s all too famous for…

 

[cernjSHU]

I respect and love what Musk has done with Tesla proving that an electric vehicle can not only look beautiful but outperform combustion engines. Love the look of the Solar panels and can’t wait till they get massed produced.

But he is a petulant child. Personally, Musk is an ass. 1) His manipulation with his tweets of the market especially crypto, 2) him championing that he doesn’t take a salary as we are to say what a guy when he is the richest man in the world, 3) the latest whine against his latest and greatest competitor-Rivian, 4) his poll to the Twitter verse about selling stock to pay taxes when he knows damn well he has to pay taxes for stock options that he just received, 5) Not for anything, but how much has Tesla benefitted from government incentives and tax credits that Tesla has sold in past years to show profit.

He’s a genius and great what he does but that doesn’t make him a good person or someone to be listened to except for those areas in technology.

Steve Jobs is probably the person he can be compared to. Genius but not the best human being. But Jobs stayed in his lane. It was all about Tech. It wasn’t about himself or getting political or manipulating the markets.

 

[ed odowd]

When will we force the politicians to pass a flat tax and stop all the jockeying on deductions ?

 

[dehere23]

Put it this way - if I made $200k a year, I'd consider myself to be very wealthy.

Depends on context. When I was a single guy making $200k I felt pretty wealthy to be honest. But married with 3 kids collectively bringing home $200k. Not wealthy IMO. Not destitute of course, either.

Also depends on how that $200k is earned. Are you a normal W-2 where the government is taking a chunk of that? Or do you make that via your own business that you can use tax loopholes and creative strategy to avoid tax liability? Are you in Bergen County like me in the highest taxed state in the freaking country, or a state like Florida or down south/Midwest? Also what’s your health insurance cost.

When my wife was still a public school teacher, pre-kids, we essentially had free healthcare with a great plan. Now my healthcare costs are high for a family plan with good coverage, and I can only offset that so much using a HSA account. Two public school teachers making $200k don’t have anywhere near the healthcare costs for their family compared to a couple that don’t work in the public sector and make the same amount.

 

[Pirata]

When will we force the politicians to pass a flat tax and stop all the jockeying on deductions ?

Let me see... what's today... Tuesday....Wednesday....Thursday..... Perhaps in about 300 years