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Do the math

Posted by H6163741 9 years, 2 months ago to Economics
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So, it's tax time again, and again I am furious. Apparently, the federal and California governments believe that we make too much money. Unfortunately, 'too much money' is not enough to buy a house in Los Angeles, so we get royally screwed every April 15th. We are a family of three; my husband claims 1 on his W4, and I claim 0 AND have extra money taken out! I would love to go Galt, but I really do like my job. (I get to fight the looters!). I am seriously wondering if I should asking company to reduce my pay. Does anyone know the math formula? Is there some 'magic number' that will keep us from feeding the looters, but not so much that I become one?


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  • Posted by scojohnson 9 years, 2 months ago
    I live in California as well, you really need to buy a house, condo, whatever, or at least buy one outside of LA, pocket the rent and deduct the mortgage like its a primary or something. Unfortunately, there isn't an easy answer.

    Max out your 401k before you take a reduction. Same thing, but you keep it, not your employer, you can go up to something around $18k a year plus whatever matching (in my case), the amount varies to a high range of average for your employment group...
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    • Posted by $ jdg 9 years, 2 months ago
      If you rent the place out, you deduct the mortgage payments as a business expense on Schedule E. There's no need to lie and I don't recommend it.
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      • Posted by scojohnson 9 years, 2 months ago
        Nah, I'd do something more creative like buy a farm, lease out the land to the neighbor and use the mortgage as a personal tax deduction and put the lease payments on a farm schedule. It's common in Northern California with the vineyards, almond farms, etc.
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  • Posted by DrZarkov99 9 years, 2 months ago
    Flat tax is the only rational solution. Everyone contributes, and people start to pay attention how the money is spent.
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    • Posted by $ prof611 9 years, 2 months ago
      Wrong. NO tax is the rational solution.
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      • Posted by DrZarkov99 9 years, 2 months ago
        Alternatives? Fee for service is one way for an agency to be funded. Certainly that avoids paying for school by people with no children. Law enforcement paid as a security firm (and how does that work for low income areas?). Just curious. I understand the "Fair Tax" idea, that winds up about as complicated as our current system, so I'd like to see your solution.
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        • Posted by $ prof611 9 years, 2 months ago
          I was simply objecting to your statement, since a tax is a violation of our property rights. Your solution of fee for service is certainly an acceptable alternative. There are others. As to "Fair Tax", that is certainly an oxymoron.
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          • Posted by DrZarkov99 9 years, 2 months ago
            Fee for service is the direction South Africa appears to be going. The wealthy employ more security forces than all of the nation's law enforcement, living behind walled fortress communities, while the outside communities become more lawless and dangerous each day. Fee for service works, if you have the money.
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            • Posted by $ prof611 9 years, 2 months ago
              And if you don't, you don't get the service. However, it might be in the best interest of others to provide it.
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              • Posted by DrZarkov99 9 years, 2 months ago
                The question is how long does it take before the cost of security becomes prohibitively high, or for chaos to overcome any vestige of civilization? As the cost of security rises, the population that can be truly secure shrinks, and the population of the lawless grows. At some point, the privileged become the target of a lawless population too large to control, and chaos reigns.

                Part of progressive taxation is based on that idea: that the wealthy must cover enough of the cost of security for the rest of the population to keep chaos at bay. A flat tax makes the expense of security pretty much the same per capita. The wealthy pay their share the same as everyone else, without the image of privilege.

                By the same token, I don't believe in exemptions for charity. Real compassion isn't bought, but given.

                I also don't support estate taxes. What I choose to do with my property should be my decision, and those who benefit pay their share at the same flat tax rate as any other form of income.
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            • Posted by Temlakos 9 years, 2 months ago
              So what you're saying is, South Africa is descending into chaos.

              In the bygone days, I would have suggested sending in the troops to occupy those other communities. Now I'm not so sure how that would work. Because what you get is Ferguson, Missouri. Sooner or later some local "tough" gets himself killed, and the people sympathize with the local "tough." Why? Because they see the police as an army of occupation, not an enforcer of the laws under which they wish to live.
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              • Posted by $ prof611 9 years, 2 months ago
                There is just too much wrong with your reply for me to spend my time remarking on your logical errors. Suffice it to say that you are obviously not an objectivist.
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                • Posted by Temlakos 9 years, 2 months ago
                  I'm only tellilng you how those people in Ferguson, Missouri, think. I didn't say I approved.

                  But that example shows you can't expect people to think and act rationally.

                  Do you deny that South Africa is turning lawless, hence chaotic?
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    • Posted by sumitch 9 years, 2 months ago
      I like the idea of a flat tax of a reasonable percentage, say 18%. There should be a lower level of earned income so that those that are working hard just to put food on the table and a roof over their head don't pay. No deductions for anyone for anything. It would also apply to business so that those like General Electric don't get away with no taxes paid at all.

      The problem that I see is the federal government; congress will just starting boosting the tax level to 20% then 22% etc., etc. They'll rob you of ever dime they can get so they can buy the votes to keep them in office. In my opinion that's why Obama refuses to close the border and provide sufficient border guards to watch for illegals crossing. It's also why he's working to get the amnesty for millions. That's votes for the Democrats in the bank. Anyone that thinks he's doing it for concern of the Mexicans needs to review his history In office.
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      • Posted by DrZarkov99 9 years, 2 months ago
        A flat tax can be introduced "progressively", by reduction and eventual elimination of exemptions; reducing the number of tax percentages until there's only one; lowering the level of untaxed income until all income is taxed. Any savings interest should be untaxed until spent (that does not mean savings isn't taxed, like a 401K, but the savings comes from taxed income like a Keogh account).

        The problem with the tax system now is that so many taxes are hidden that people have no idea how much the government is stealing from them. One seriously obscene tax is the Social Security/Medicare system, which is blatantly regressive, with the low income people paying much more of their gross pay than the wealthy. A truly flat tax makes hiding taxes a real challenge.

        You sort of went off track with bringing up the immigration thing, which I consider a crime of both liberals and conservatives. The liberals have the delusion that poor immigrants will become part of the voting population that will bring about their fantasy society where "social justice" reigns supreme; the conservatives just want cheap labor. Both sides are a pattern for disaster.
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        • Posted by $ jdg 9 years, 2 months ago
          The big problem with the tax system is all the rent-seeking it attracts. (Rent-seeking is an economics term, it refers to the huge and expensive contest of lobbying to put special cases in the tax code. David Friedman explains why the money spent on doing this is a net loss to the whole economy.)

          I could go along with a flat tax, but what I'd want to do is fix not only the rate but all the details in the constitution, so this rent-seeking can no longer occur. Have an emergency method to raise the rate but make it hard enough to use (say, 2/3 of both houses + president's signature) that it won't happen without a real emergency.

          And don't let the politicians exempt themselves from it.
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          • Posted by DrZarkov99 9 years, 2 months ago
            Oklahoma just instituted a system that requires a supermajority to change the tax base. OK has almost a flat tax, since it has about a 5% standard rate with a very low income start (<$15,000). The goal is to eventually eliminate the income tax by reducing it in proportion to growth in other state revenue sources. By making the requirement a supermajority, the Governor is automatically out of the loop, since the deal is already veto-proof.
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        • Posted by 9 years, 2 months ago
          Any chance you'd consider running for office?
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          • Posted by DrZarkov99 9 years, 2 months ago
            A great compliment, but since I'm past 70 I doubt the media would let me get past that fact (even though my average family life span is over 90). If you think any of these are good ideas, push them hard with every honest politician (assuming you can find any), and get behind those you think you can support.
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