For everyone, or just that limited situation that AJ and I have discussed where the money actually is not an advanced tax refund check?Jeemie wrote:I don't know what they're doing, but I've seen in a couple of places where they said this will need to be reported as income on next year's tax return.andrewjackson wrote:For people who pay income tax, it looks to me like this money is coming from temporarily lowering the tax rate on the first $6,000 of income from 10% to zero (on the first $12,000 for couples). If they had done it prior to the start of the year everyone's after-tax pay would have went up slightly and by the end of the year you would have paid about $600 less in taxes.
If this passes, people will continue to have money taken out of their pay that they don't actually owe. Instead of making everyone wait until next year to get that money back they are going to give it to us now.
So I don't see how that would be taxable income. It is money that the person earned and was an overpayment in taxes. And it should not mess up anyone's tax planning since the $600 is a reduction in the amount of taxes owed. It shouldn't reduce any refund or increase tax liability next spring.
The other part of the plan will give money to people who work but don't make enough to have to pay any income taxes. That money is coming from reductions in the funding for food stamps and unemployment benefits. Those $300 checks would probably be considered taxable income since that is not money that the person already earned but most will not have to pay taxes on it because they don't make enough money to pay income taxes.
$2400?
- Appa23
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- Jeemie
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Well- that's the part I don't know.Appa23 wrote:For everyone, or just that limited situation that AJ and I have discussed where the money actually is not an advanced tax refund check?Jeemie wrote:I don't know what they're doing, but I've seen in a couple of places where they said this will need to be reported as income on next year's tax return.andrewjackson wrote:For people who pay income tax, it looks to me like this money is coming from temporarily lowering the tax rate on the first $6,000 of income from 10% to zero (on the first $12,000 for couples). If they had done it prior to the start of the year everyone's after-tax pay would have went up slightly and by the end of the year you would have paid about $600 less in taxes.
If this passes, people will continue to have money taken out of their pay that they don't actually owe. Instead of making everyone wait until next year to get that money back they are going to give it to us now.
So I don't see how that would be taxable income. It is money that the person earned and was an overpayment in taxes. And it should not mess up anyone's tax planning since the $600 is a reduction in the amount of taxes owed. It shouldn't reduce any refund or increase tax liability next spring.
The other part of the plan will give money to people who work but don't make enough to have to pay any income taxes. That money is coming from reductions in the funding for food stamps and unemployment benefits. Those $300 checks would probably be considered taxable income since that is not money that the person already earned but most will not have to pay taxes on it because they don't make enough money to pay income taxes.
I suspect it will be told to us as some point.
1979 City of Champions 2009
- andrewjackson
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I am reading stuff all over the internet where people are claiming that this rebate will have to be claimed as income. I just don't get it.
All these numbers are made up.
Let's say I make $50,000 this year. I get a personal deduction and maybe some other things and I wind up taxable income of $40,000. My federal income taxes would be about $6,000. If I paid in $250 dollars per paycheck, that would be a total of $6,500 so I would get a refund of $500 in 2009 after I file. I don't pay 2009 taxes on that refund because it was money that I earned in 2008 but I allowed the government to take even though I didn't actually owe it. They are just giving it back. I already paid taxes on that during 2008. They were part of the $6,000.
This plan says that the government is going to reduce the tax rates so that instead of owing $6,000 I now owe $5,400. If they waited until next year, I'd get a refund of $1,100 instead of $500. No taxes would be owed on any part of that since I already paid my taxes on income earned in 2008.
But, instead of waiting until I file next year, the government is going to go ahead and give me the $600 reduction in my taxes now. It doesn't change the source of the income or somehow make it taxable next year. It is the same $600.
All these numbers are made up.
Let's say I make $50,000 this year. I get a personal deduction and maybe some other things and I wind up taxable income of $40,000. My federal income taxes would be about $6,000. If I paid in $250 dollars per paycheck, that would be a total of $6,500 so I would get a refund of $500 in 2009 after I file. I don't pay 2009 taxes on that refund because it was money that I earned in 2008 but I allowed the government to take even though I didn't actually owe it. They are just giving it back. I already paid taxes on that during 2008. They were part of the $6,000.
This plan says that the government is going to reduce the tax rates so that instead of owing $6,000 I now owe $5,400. If they waited until next year, I'd get a refund of $1,100 instead of $500. No taxes would be owed on any part of that since I already paid my taxes on income earned in 2008.
But, instead of waiting until I file next year, the government is going to go ahead and give me the $600 reduction in my taxes now. It doesn't change the source of the income or somehow make it taxable next year. It is the same $600.
No matter where you go, there you are.
- ne1410s
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AJ:
And what's wrong with the Huckster's 23% sales tax--and doing away with the income tax? Would we just resort to a barter system?
Seriously.
Oh, my head hurts. A flat tax appeals to those like me who are learning disabled in math.This plan says that the government is going to reduce the tax rates so that instead of owing $6,000 I now owe $5,400. If they waited until next year, I'd get a refund of $1,100 instead of $500. No taxes would be owed on any part of that since I already paid my taxes on income earned in 2008.
But, instead of waiting until I file next year, the government is going to go ahead and give me the $600 reduction in my taxes now. It doesn't change the source of the income or somehow make it taxable next year. It is the same $600.
And what's wrong with the Huckster's 23% sales tax--and doing away with the income tax? Would we just resort to a barter system?
Seriously.
"When you argue with a fool, there are two fools in the argument."
- MarleysGh0st
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There's a good deal wrong with it for those of us who have been dutifully saving for retirement in Roth IRAs with the promise that said money would not be taxed on withdrawal.ne1410s wrote: And what's wrong with the Huckster's 23% sales tax--and doing away with the income tax? Would we just resort to a barter system?
Seriously.
But I suppose I should just be going into debt to the Chinese instead of saving, like all patriotic Americans.

- andrewjackson
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A flat tax has nothing to do with this issue.ne1410s wrote:AJ:Oh, my head hurts. A flat tax appeals to those like me who are learning disabled in math.This plan says that the government is going to reduce the tax rates so that instead of owing $6,000 I now owe $5,400. If they waited until next year, I'd get a refund of $1,100 instead of $500. No taxes would be owed on any part of that since I already paid my taxes on income earned in 2008.
But, instead of waiting until I file next year, the government is going to go ahead and give me the $600 reduction in my taxes now. It doesn't change the source of the income or somehow make it taxable next year. It is the same $600.
And what's wrong with the Huckster's 23% sales tax--and doing away with the income tax? Would we just resort to a barter system?
Seriously.
The biggest problem with the sales tax is that it is usually very regressive. That is, people with low incomes pay a higher percentage of their money in taxes than do rich people.
Examples:
Income - $10,000 Sales taxes paid - $2,300 since pretty much all their income goes to buying things. Tax rate on income - 23%
Income - $100,000 Sales taxes paid - $18,400 since this person saves or invests $20,000. Tax rate on income - 18.4%
The rich guy only pays 18.4% of his income in taxes as opposed to the poor guy who pays 23%.
There are other problems with it and the cynic in me says it takes away the biggest advantage in the current tax code: the ability of the government to attempt to manipulate your behavior. They could still do that with a national sales tax but they would have to start all over again.
No matter where you go, there you are.
- PlacentiaSoccerMom
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At least drug dealers, pimps and money launderers would pay their fair share.andrewjackson wrote:A flat tax has nothing to do with this issue.ne1410s wrote:AJ:Oh, my head hurts. A flat tax appeals to those like me who are learning disabled in math.This plan says that the government is going to reduce the tax rates so that instead of owing $6,000 I now owe $5,400. If they waited until next year, I'd get a refund of $1,100 instead of $500. No taxes would be owed on any part of that since I already paid my taxes on income earned in 2008.
But, instead of waiting until I file next year, the government is going to go ahead and give me the $600 reduction in my taxes now. It doesn't change the source of the income or somehow make it taxable next year. It is the same $600.
And what's wrong with the Huckster's 23% sales tax--and doing away with the income tax? Would we just resort to a barter system?
Seriously.
The biggest problem with the sales tax is that it is usually very regressive. That is, people with low incomes pay a higher percentage of their money in taxes than do rich people.
Examples:
Income - $10,000 Sales taxes paid - $2,300 since pretty much all their income goes to buying things. Tax rate on income - 23%
Income - $100,000 Sales taxes paid - $18,400 since this person saves or invests $20,000. Tax rate on income - 18.4%
The rich guy only pays 18.4% of his income in taxes as opposed to the poor guy who pays 23%.
There are other problems with it and the cynic in me says it takes away the biggest advantage in the current tax code: the ability of the government to attempt to manipulate your behavior. They could still do that with a national sales tax but they would have to start all over again.
I think a flat tax would work if certain items (necessities) were exempted, but then somebody would have to make a judgement call about what a necessity is and I don't know if I want my elected officials doing this.
- andrewjackson
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Correct. Nothing to do with this.ne1410s wrote:I meant a flat rate income tax. Still nothing regarding this thread?A flat tax has nothing to do with this issue.
A flat rate would just mean that all income would be taxed at the same rate. No changing rates for higher levels of income. You could still have personal deductions, withholding, and refunds.
The government could still reduce the tax rate mid-year and give rebates so that people would get the reduction earlier than waiting for their refunds the following year.
I don't see how anything about this discussion would change.
No matter where you go, there you are.
- MarleysGh0st
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This reminds me of all those tax preparation businesses hawking those tax refund anticipation loans, complete with fees that work out to outrageuos rates of interest. Those commercials aren't complete without an actor whining about how they "need that money now".andrewjackson wrote:The government could still reduce the tax rate mid-year and give rebates so that people would get the reduction earlier than waiting for their refunds the following year.
Damn the long-term effects--charge it!

- PlacentiaSoccerMom
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Or better yet, they should look at their income on a monthly basis and modify their deductions accordingly. My goal each year is to owe $100 because I don't want to loan the government my money for free.MarleysGh0st wrote:This reminds me of all those tax preparation businesses hawking those tax refund anticipation loans, complete with fees that work out to outrageuos rates of interest. Those commercials aren't complete without an actor whining about how they "need that money now".andrewjackson wrote:The government could still reduce the tax rate mid-year and give rebates so that people would get the reduction earlier than waiting for their refunds the following year.
Damn the long-term effects--charge it!
- andrewjackson
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Sure, flat taxes and national sales taxes could work. I'd be in favor of either but politically they are suicide. Both are automatically framed as benefiting the rich in the best case and "crazy" in the worst cases.PlacentiaSoccerMom wrote:At least drug dealers, pimps and money launderers would pay their fair share.andrewjackson wrote:A flat tax has nothing to do with this issue.ne1410s wrote:AJ: Oh, my head hurts. A flat tax appeals to those like me who are learning disabled in math.
And what's wrong with the Huckster's 23% sales tax--and doing away with the income tax? Would we just resort to a barter system?
Seriously.
The biggest problem with the sales tax is that it is usually very regressive. That is, people with low incomes pay a higher percentage of their money in taxes than do rich people.
Examples:
Income - $10,000 Sales taxes paid - $2,300 since pretty much all their income goes to buying things. Tax rate on income - 23%
Income - $100,000 Sales taxes paid - $18,400 since this person saves or invests $20,000. Tax rate on income - 18.4%
The rich guy only pays 18.4% of his income in taxes as opposed to the poor guy who pays 23%.
There are other problems with it and the cynic in me says it takes away the biggest advantage in the current tax code: the ability of the government to attempt to manipulate your behavior. They could still do that with a national sales tax but they would have to start all over again.
I think a flat tax would work if certain items (necessities) were exempted, but then somebody would have to make a judgement call about what a necessity is and I don't know if I want my elected officials doing this.
The tax code is pretty flat now. People are paying between 25 and 28% on income between $30,000 and $160,000 for singles and between $63,009 and $195,000 for couples.
There are 10 and 15% rates below that and 33 and 35% rates above that but most income is getting taxed at either 25 or 28%. That's pretty flat.
I have to add that I'm talking about rates only. If you want to put deductions and tax credits into the discussion to make it really flat based on actual income rather than taxable then the current code is not flat at all.
No matter where you go, there you are.
- Bob78164
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You've overlooked AMT. Most people in the upper end of these ranges are subject to AMT. The effective marginal rate for AMT (until you completely use up the AMT exemption) ranges from 32.5% to 35% (based on nominal AMT rates of 26% and 28%). --Bobandrewjackson wrote:The tax code is pretty flat now. People are paying between 25 and 28% on income between $30,000 and $160,000 for singles and between $63,009 and $195,000 for couples.
"Question with boldness even the existence of a God; because, if there be one, he must more approve of the homage of reason than that of blindfolded fear." Thomas Jefferson
- peacock2121
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I hadn't thought of the barter system to get around the flat (fair?) tax - the 23% thingie. I had thought about the black market. Barter would be a less offensive way around it.ne1410s wrote:AJ:Oh, my head hurts. A flat tax appeals to those like me who are learning disabled in math.This plan says that the government is going to reduce the tax rates so that instead of owing $6,000 I now owe $5,400. If they waited until next year, I'd get a refund of $1,100 instead of $500. No taxes would be owed on any part of that since I already paid my taxes on income earned in 2008.
But, instead of waiting until I file next year, the government is going to go ahead and give me the $600 reduction in my taxes now. It doesn't change the source of the income or somehow make it taxable next year. It is the same $600.
And what's wrong with the Huckster's 23% sales tax--and doing away with the income tax? Would we just resort to a barter system?
Seriously.
to me anyway
- fantine33
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