Archives For Taxes

One of the local TV Stations posted this question on their facebook page this morning:

Six This Morning Wants To Know : Would You Be Willing To Pay More In Taxes For Additional Security In Public Schools?

The facebook question linked to this article from the Houston Chronicle.

The article doesn’t mention anything about the cost of such a program. To be fair, the proposal doesn’t mention anything about doing this statewide. However, my thoughts went immediately to wondering how much such a program would cost taxpayers.

Let’s see…

There are 8,317 public schools in Texas.

If we put one policeman/guard at each school and paid them $40,000 a year, it would cost…

$333.6 million per year.

Can we afford that? Do we need to afford that?


Interesting piece from IBD: Six Reasons to Keep Capital Gains Tax Rates Low

Two interesting points that I hadn’t really thought about:

Inflation. If an individual buys a stock for $10 and sells it years later for $12, much of the $2 in capital gain may be inflation, not a real return. Inflation — and expected inflation — reduce real returns and increase uncertainty, which suppresses investment, particularly in growth companies.

One solution is to index capital gains for inflation, but most countries instead roughly compensate for inflation by reducing the statutory rate on gains or providing an exclusion to reduce the effective rate.

Double Taxation. Corporate share values generally equal the present value of expected future earnings. If expected earnings rise, shares will increase in value, creating a capital gain to the individual. But those future earnings will be taxed at the corporate level when they occur; thus hitting individuals now with a capital gains tax is double taxation.

Dividends are also double-taxed, with the result that the U.S. tax system is biased against corporate equity and in favor of debt. This destabilizes companies and the overall economy.

Ernst & Young calculates the current U.S. combined corporate and individual tax rate on capital gains at 50.8% — compared to an OECD average of 42.0%.

Our tax burden on dividends is equally out of line. The U.S. disadvantage will get much worse next year with the scheduled tax hikes on capital gains and dividends.

I know I’ve said this many times before but I’m 100% for a low flat tax rate (say 10% to 15%) on capital gains, dividends (not taxed at corporate level), and earned income. Then, we could move on from these discussions. Our government should be able to operate on a 10% to 15% tax.

A Black Market for Coca-Cola!

December 17, 2008

It’s gonna happen…

New York governor, David Paterson, unveiled his budget. He’s recommending tax increases (or new taxes altogether) on all kinds of stuff. Here’s a list of some of the new taxes I found in this article:

• An “iPod tax” that charges state and local sales tax for “digitally delivered entertainment services” – in other words, that new Beyonce song you download.

• State sales tax at movie theaters, sporting events, taxis, buses, limousines and cable and satellite TV and radio.

• Costlier driving with the repeal of the 8-cents-per-gallon sales tax cap on motor and diesel motor fuel, plus and increase in the auto rental tax.

• Tuition increases at SUNY and CUNY, $620 and $600 a year respectively.

• A 50 cent tax on cigars. The current tax is equal to 37% of the wholesale price, or 34 cents a cigar.

• No more sales tax break on clothes and shoes worth $110 or less, except during two weeks a year.

• Higher taxes on wine, beer and flavored malt beverages. He would also impose an 18% tax on non-nutritional drinks like soda.

• The rich would pay more for luxury items through an additional 5% tax imposed on cars costing more than $60,000, aircraft costing more than $500,000, yachts costing at least $200,000 and jewelry and furs costing in excess of $20,000.

• In addition, a host of a fees, including those related to motor vehicle licensing and registration, parks and auto insurance, would go up, as would various state-imposed fines.

You watch. People will drive over to New Jersey to buy their Coke.

Couldn’t picking and choosing various items to tax more than others be considered discriminatory? Also, what happens after the state overcomes their budget crisis? Will they drop these silly taxes? My guess is no. Once they get a taste of that money coming in, they’ll spend it!

What are your thoughts on Governor Paterson’s proposed budget? Is he crazy or on the right track?

Check this out.

Using 2008’s Federal Income Tax Brackets for Married Filing Jointly, I ran some numbers comparing the tax burdens for two incomes. First, here’s a look at the 2008 Federal Income Tax Brackets for Married Filing Jointly:

2008 Federal Income Tax Brackets (Married Filing Jointly)

Using those numbers, I ran the numbers for two different taxpayers. One taxpayer (Joe) has a taxable income of $50,000 and the other (Pete) $500,000. Here’s what their tax burden looks like:

Income Tax Comparison

So, Pete makes 10 times more than Joe but pays nearly 22 times more in taxes.

I have a hard time understanding what Obama means when he says it’s time for people with higher incomes to start paying their fair share in taxes.

Oh, and I didn’t even mention the AMT, which I think would most likely would affect someone with a taxable income of $500,000, making their tax burden even higher. I could be wrong about that as I’m not exactly sure how the AMT works.