Texas tax none
 

Why the bushs are from Texas. Because texas has no income tax. If your're big time from spell check: Kennybunkeport or Marthas vineyard you can claim the ahole State of texas as home & skate on tax. :cool: 1 more beer then?

Well, friend, I'm from Texas myself and I am definitely not 'skating on tax'. But you are welcome to have another beer if it will make you feel better.

Are you saying Texas does have an income tax, or that you make up for it in sales and property tax?

I've got no point here, just curious.

We make up for it in sales and property tax. Local sales tax in Austin is 8.25 % (state plus local.)

Was I wrong about the income tax? or just loaded? Last time I did a Google on it, maybe I misconstrued what I found! Sorry

No no, buster, we definitely don't have an income tax here in Texas. But our other taxes are higher to make up for it, so we're not getting any kind of special deal.

Plenty of rich people who live elsewhere put states like Florida down as their home state, to avoid income tax. This is one reason Ditka isn't running against Obama - he'd have to move his legal residence back to his actual residence. I don't think we can tar Bush with this particular brush, though, since he actually lived there for quite a while.

Don't ever come to the People's Republic of California. That's the sales tax here in LA too, plus the highest property taxes in the country (in dollars per person) and a HUGE income tax.

You'd think with all that money coming in we could, you know, fix the roads and keep the hospitals open, buy books for kids and pay our teachers.

Oh well.

-sm

That's a strange way to count property taxes. Not that I'm disputing California's reputation as a high-tax area.

Anyway, I doubt that property and sales taxes can make up for income tax, for the extremely wealthy. For the most part, the wealthier you are, the smaller the percentage of your income goes to property and purchases (assuming a modicum of restraint - see Mike Tyson).

Here's an article on a national sales tax.
Plus, my dad's quoted in it.

Dude! Were you aware that your dad is chief Democratic tax counsel for the Ways and Means Committee??

well done i say

I didn't know about "chief", so that's cool. The rest I knew.

I find that sales tax proposal really scary. :worried:

It might cut into your doodad purchasing power, but overall you should come out ahead if they are not taking the government's cut out of your salary anymore.

Only the extremely wealthy would come out ahead. Everyone else spends a higher percentage of their money. Ironically, the ones worst hit would be those members of the middle class who live on the edge of their means, with massive credit card debt. A distressing number already.

Size of Family Unit
48 Contiguous States and D.C./ Alaska/ Hawaii
1 $ 8,980- $11,210- $10,330
2 12,120- 15,140- 13,940
3 15,260- 19,070- 17,550
4 18,400- 23,000- 21,160
5 21,540- 26,930- 24,770
6 24,680- 30,860- 28,380
7 27,820- 34,790- 31,990
8 30,960- 38,720- 35,600
For each additional
person, add 3,140 3,930 3,610

OK, so the income up to the poverty level is exempt, $8,980 for me. The only way I can see that working is you file for a refund at the end of the year. That would mean a system to process those returns and refunds. That means the IRS still runs the system and everyone has to file or forfeit. It also means they'll be holding $2700 of my money for near a year, unless I can file as soon as I top the $8,980. :(

When dividend tax cuts are mentioned, keep this in mind:

http://graphics7.nytimes.com/images/...06_income2.gif

Do you want to discuss how they fuck with the statistics to get you that chart?

Discuss is a strong word, since I don't know their methodology. But if you do, then I certainly wouldn't discourage you from explaining it.

K. This chart alleges to say "people who make more money, make more money from capital gains" but what it actually says is "people who make more money from capital gains, make more money" - a "duh" statement.

Check it. I'm in sector ONE, right? And I have a house, with a mortgage. If I sell my house without buying another one, and move into an apartment - that's a capital gain. And, it MOVES me from line one to line three. AND, over 70% of my income is in capital gains!

But am I rich? Fuuuuuck no. In fact, I've probably sold the house to recoup for something else, such as a business failure or personal debt or such.

That's just me, let's examine the family farmer whose land is being encroached on by development. His income puts him in the first line but he is not too concerned, because like almost all family farmers, his retirement is tied up in his land. But because of the changing economy, he can't make enough money from the land to make a living, and he has to sell it.

The year he sells the land, it is a massive capital gain. He goes into the fifth line that year. But is he rich? Naw, he has no other means of income. 100% of his income that year is the sale of the land... 100% capital gains.

Interesting. Do you think that people making large one-time sales make up a large percentage of high-income households each year? And does the entire sale price count as a capital gain, or just the difference between purchase and sale price?

It's the difference, but due to inflation that difference is large on items held for a long time... say, in a plan for retirement (as opposed to a retirement plan ala 401k which is something else entirely).

My house has appreciated in value since I bought it, but that doesn't really help me day-to-day, unless/until I get some money out of it.

I don't know from what numbers these things make for, but every homeowner faces that fact whether they realize it or not, and I'll guess that 98% of family farms have turned over in the last 50 years.

I haven't looked at the rules in a long time so I may be rusty on some of this...

BTW - not to threadjack, but if you are really concerned about capital gains hits on your real estate, you can shelter that in a self directed IRA. not too many companies handle that specific type due to the EXTREMELY tricky tax issues, but if you are really concerned you can look into it.

****back to your regularly scheduled discussion******

the reality of that chart is that people only need XX amount to live on. if they make a XXXX money they will spend more but not substantially more on a consistant basis. and the simple fact of the matter is that somewhere around $80-100K/year people start becoming more wealth maintenance focused rather than survival and wealth creation focused.
when that happens they get to the point where cars and such are paid for in cash and they strive to put as much money as possible to work for them. they invest it in
A) 401K or similar plans
B)Roth, IRA, SEP, SIMPLE or similar plans
C) overfunded insurance plans (LIRPs)
D) real estate
E) standard investment accts.

all of these vehicles hold the same investments they are just sheltered in a different way.

a person who makes $50K per year has access to the same types of investments as a person who makes $300K per year. the person who makes more is just going to put more money into the plan annually.

5 years down the road the guy who made $50K probably makes $55-60 and saves a little more than he did. the guy who made $300 probably still makes $300-310 and saves a little more. (a smaller percentage of income growth)

where your chart comes in is that the power of compounding causes the "rich" guy's investment income grow at a greater percentage than his working income. because he is at the peak of his career his annual salary won't increase much, but his investments continue to compound so that each year a larger and larger portion of his earned income is from Cap gains and dividends.

Precisely. I think that that demographic is larger than the group of people who need to sell large real estate investments to pay other bills - especially in the sixth bar. The chart isn't supposed to denigrate the use of capital gains and dividends. It is just supposed to show who gets the benefits of a dividend tax cut.

There are probably people who, as Undertoad says, end up in a high income bracket for one year due to a major sale, but I doubt it's a large percentage of the people in the bracket.

but it is key to remember that 93% of americans currently are gaining something from capital gains and dividends, whether or not the realize it. anyone with a 401k, pension, or insurance policy is gaining from capital gains and dividends.

obviously, those with more money at risk in the market, stand to gain more in the market.

That is included in the chart.

This isn't so. The more people make, the more they spend -- substantially more. There are lots of high income people living paycheck to paycheck.

Sorry, that doesn't work, because the capital gains are only realized when the investment is sold. Tony's hypothesis that the chart reflects mostly events where someone in a fairly low income level realizes a one-time gain from a long-held investment makes lots more sense. It's not just selling the farm, either -- consider that any successful IPO will likely generate such an event for the founders of a company

The chart includes capital gains and dividends, which are more obviously compounding. It would be interesting to see them separated, but I didn't make the chart.

these type of people wouldn't be getting a large portion of their money from capital gains and dividends though, as they don't have the discipline to save and invest. the majority of high income individuals do invest though. maybe not as much as they could, but more than many others are able to do.
the average investor has a very large portion of their portfolio in mutual funds which pay out capital gains annually and dividends more frequently. stocks and bonds do work how you were describing though.

Well I started this. I put most of my money in beer. The rest I pissed away, on women & whiskey. :-)

At least you didn't waste it. :thumbsup: