OT - Question on Overtime and Taxes

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wrote:

I didn't read that as advocating the abolition of *all* taxes, just *certain* ones.
He's right IMO about most of them. I'd like to see all taxes abolished except sales tax. Main reason? It's the _only_ way of taxing illegally-earned income. Sure, there might be one or two drug dealers somewhere who actually report their income on a 1040, but depend on it, they're in a tiny minority. So how do you tax these guys? Get 'em when they spend it.
-- Doug Miller (alphageek at milmac dot com)
How come we choose from just two people to run for president and 50 for Miss America?
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wrote:

The standard answer on that is that sales taxes are a very regressive way of collecting taxes. I don't necessarily disbelieve that, but I wouldn't mind seeing the data that backs that up.
todd
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todd responds:

Shouldn't be all that difficult, from what I'm told. A 20-25% sales tax on just about everything is going to do one helluva whack job on the grocery bills for poor households and be almost unnoticed in wealthier households. Same on essential clothing, fuel, similar items.
At the same time, it seems to me that the wealthier households will actually pay far more taxes than is now the case, because everything that is bought will carry a sizeable tax load, grabbing money that may come from low tax or untaxed sources. People with more money buy more, period. The guy who pays $300,000 for a Ferrari, though, is well able to afford the extra load (the assumption goes), while the poorer person who pays, say $12,000 for a Kia cannot afford another 25% and will not benefit commensurately with the reduction or elimination of income tax.
Taxes are a crapshoot, it seems to me. Whether it's single tax, sales tax, graduted income tax or some other scheme, some taxpayers are going to get screwed, or, at the very least, feel like they're being screwed.
And I don't see any single tax schemes ever passing. If one did, what would happen to the 175,000 or so IRS employees, not to mention the boxcar loads of bookkeepers and CPAs who are tax specialists. Or even the semi-trained types who get it wrong when you take your tax records to H&R Block.
And you always have the taxpayer who swears up and down he NEVER uses anything any government supplies, so shouldn't have to pay taxes.
Charlie Self
"Man is a reasoning rather than a reasonable animal." Alexander Hamilton
http://hometown.aol.com/charliediy/myhomepage/business.html
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snipped-for-privacy@milmac.com (Doug Miller) wrote in message wrote:

Ever heard of black markets? There are ways around any tax scheme. We were funded by import duties and excise taxes until 1913 (except for a few years during the Civil War when an illegal income tax was imposed).
Dave Hall
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snipped-for-privacy@milmac.com (Doug Miller) wrote in message wrote:

Doug, you hit the tax nail squarely on the tax head. Sales tax. No estate taxes raping your loved ones when you try to pass on all you've worked for your whole life (*that's* a story I could tell), no Internal Revenue Freaking Service tracking down all us do-a-side-job-for-cash-occasionally guys, no complex tax issues and no tax lawyers. A straight percentage of sales price on everything you buy.
How many millions of dollars a year would federal and state governments save in payroll, facilities, etc. by the abolition of the ENTIRE Internal Revenue Service?
I agree with you, Jay. We need police, fire, water and the like. We also need, however, to simplify our current system.
Also, thanks to everyone who replied. I'm clear as mud on the issue now <g>.
-Phil Crow
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Phil Crow writes:

I'm always interested in such tales. But I know in the past the Feds didn't even start taxing estates until the 600K mark had slipped by. I would guess it's a few bucks higher now. And not all that much was taken. There are special provisions for family farms, too, where land and property values tend to be much greater.
Charlie Self
"Man is a reasoning rather than a reasonable animal." Alexander Hamilton
http://hometown.aol.com/charliediy/myhomepage/business.html
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I believe the minimum is now up to $650,000, but I also believe that the tax rate starts at 35% and goes to 55%. So I don't think it can be stated that " not all that much was taken". While Bushes tax cuts will increase the limits over the next 9 years until the tax is eliminated, in the 10th year it all comes back and the minimum goes back to, I believe, the $600,000 amount.
Dave Hall
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Dave Hall notes:

My knowledge of the concept goes back to the early '70s, so a changing eprcentage, or amount, is no surprise. I love that 10 years to eliminate, 11 years to return concept. Brilliant politically, because by the time the taxpayer screwing comes back, the president involved has retired, yet the drops are annual and obvious and make political hay like crazy.
That rate: wonder how many deductions and exceptions there are?
Charlie Self
"Man is a reasoning rather than a reasonable animal." Alexander Hamilton
http://hometown.aol.com/charliediy/myhomepage/business.html
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snipped-for-privacy@aol.comnotforme (Charlie Self) wrote in message

That's what estate attorneys are for, Charlie;) Basically, the deduction (actually a lifetime exclusion) is the $650,000. There is also the $10,000 annual gift exclusion (gifts in excess of the $10,000 are taxed as estate taxes and eat into your $650,000 lifetime exclusion above). The basic estate planning depends on a husband and wife creatively using their $650,000 exclusions so that they get full use of their combined $1.3 million. This of course is little consolation to the unmarried person (another reason that gays want recognition of their "marriages"). While $650,000 seems a lot, ask someone in southern California (or NYC or DC, etc.)with a modest home, a 401K plan and some IRA money. If you own the house and have enough retirement account savings to have enough to make a decent retirement living, your heirs will be paying substantial estate taxes. BTW, your heirs will not only pay a substantial estate tax on the full amount in the IRA's and 401K's, they will also pay income taxes as they take the money out. If they have to cash out the retirement accounts in order to pay the estate taxes, the combined estate and income taxes can be up to 70.75% (55% + (35% x the remaining 45%). There goes quite a bit of that money that dad scrimped and saved to put into retirement accounts. Then you get into life insurance schemes to try to get around estate taxes, buying gold or other "hard" investments that the heirs may not declare in the estate (that's illegal), etc.
Dave Hall
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What would happen if families started to "incorporate?"
What is to stop them from doing so now?

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They do. Mostly farms. A farmer spends his entire career "Buying retail and selling wholesale" as they say.
Then he passes and his family "inherits" $1M worth of land and machinery and animals. The farm is sold to settle the estate taxes to an agribusiness concern or to a developer.
Then the politicians who write estate tax laws bemoan the loss of the family farm.
The same thing happens to site contractors, who might be a sole proprietership owning a dump truck, a roller loader, and a bulldozer.
I know several farming families who have incorporated in order to avoid just this sort of situation.
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I believe that many family farms are corporations. Still the farmer owns the stock. When he/she dies and leaves the stock to the kids, estate taxes apply. If you incorporate with the corporation owning the house and car, etc. and you owning the stock, when you die the stock must be valued and included in your estate. Believe me, serious and well paid people play the "what-if" game all day long trying to develop and exploit loopholes in the tax structures. If that was a good one, it would heavily utilized.
Dave Hall

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Dave Hall responds:

IIRC, family farms get special exclusions. Somehow the figure 4 million sticks. But since I don't and won't have such a farm, that is about all I retained.
Charlie Self
"Man is a reasoning rather than a reasonable animal." Alexander Hamilton
http://hometown.aol.com/charliediy/myhomepage/business.html
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What if the various members do not own stock in the corporation, but simply provide stewardship of the assets? Some members might have more "say" in the matters, as set out in the corporations by-laws. The entity is lead by a board of directors that just happen to require blood or marriage lines.
In the event of death of one of the board of directors, the ownership of the pool of resources is not affected -- the corporation still owns itself one hundred percent.
As time goes by, the membership of the board is filled with family members once they reach the age of majority in their land. In the case of a major disaster causing large scale deaths in the land, and the sole remaining board of director is underage, then that person would have a trustee appointed to oversee the corporations assets until the "sole remaining board of director" (known today as "the inheritor") was of legal age.
The by-laws would have to include verbose legalese verbage such that no one can "cash out," which implies ownership of stock. They could certainly draw an income for "services rendered," and taxed appropriately as personal income.
The net effect is to keep the bulk of the family assets under family control, with drawn off income from the interest or profit from the various corporate activties the corporation finds itself involved with.

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The most basic fact about Corporations ( or any other profitable entity) is that someone MUST own them (via ownership of their stock for corporations) and that ownership must pass to heirs (or be donated to a charity) upon their death. You can't have an "ownerless" entity with members providing "stewardship" and family succession......except in the case of 501(C)(3) tax exempt entities normally called charities. Needs to have a valid tax exempt purpose to get IRS recognition, regularly expend large percentages of receipts on the charitable purpose, etc. If you can fit that however, there is a bit of a dodge possibility here. I know of a number of companies set up as charities, getting tax deductible donations, whose real purpose is to provide jobs (and eventually pensions) to the people who set them up and to their progeny for as long as they can keep the operation operating. They do, however, have a valid charitable purpose and a substantial portion of the funds raised are expended on the charitable purpose - the "mamagement" just gets pretty nice salaries and benefits and all have the same last names and the Board of Directors also seem quite familiar to each other ;)
Anyone can set up a charitable organization. It isn't really very hard to do if you can come up with some charitable purpose (how about a "Community Woodworking Center"). It is somewhat more difficult to get enough money for your charitable purpose to give yourself a great income while doing enough charity work to retain your tax exempt status and convince fools to keep giving you money.
If you are donating money (or even buying from a charity) always check the background of the charity. Get information on the percentage of funds spent DIRECTLY on the charity. It also doesn't hurt to look at the names of the management and Board members. Lastly, you can check out their Form 990 tax returns somewhere on the IRS website - these will list major management salaries, Board members and give some accounting for expenditures. Just because they have a 501(C)(3) certification from the IRS and are tax deductible doesn't mean that they are a reasonably charitable charity ;)
Dave Hall
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Thank you for the detailed follow up.
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snipped-for-privacy@yahoo.com (Phil Crow) wrote:

work force.
The biggest savings would come in the disappearance of the burden of complying with that silly-ass overgrown tax code. _That_ would be enormous.
-- Doug Miller (alphageek at milmac dot com)
How come we choose from just two people to run for president and 50 for Miss America?
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On 14 Dec 2003 06:32:25 -0800, snipped-for-privacy@yahoo.com (Phil Crow) wrote:

but since I'm stuck with it I would at least like to

when it comes to taxes....... expect the worse and you won't be dissapointed. :-]\ skeez
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