I think to make that relevant to the debate you'd have to translate this into the costs of financing a 2BR in Manhattan (coz that's the place we're really talking about).Quote:
Originally Posted by Loki
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I think to make that relevant to the debate you'd have to translate this into the costs of financing a 2BR in Manhattan (coz that's the place we're really talking about).Quote:
Originally Posted by Loki
Why? The costs of renting are dependent on the cost of the mortgage.Quote:
Originally Posted by Hazir
Not necessarily in NYC, there are way too many people who don't pay market prices down there. It just complicates talking about the issue if you don't limit your scope. And we are just talking about should people get a (higher) subsidy on buying a house in Manhattan than on buying a house in West Virginia?Quote:
Originally Posted by Loki
Anyone who spends half of their income on housing has some "problems". Whether they're making $250,000 or $25,000. If anyone needs some help with that in the form of tax breaks or government intervention, it's not the higher earner, IMO.
http://www.nytimes.com/2008/04/02/ny.../02prices.html
Presumably the prices in Manhattan aren't substantially higher now than in 2008. The median price of a one-bedroom apartment in Manhattan is $750,000. Assuming a decent down payment, I believe the mortgage payment would end up around $9-10,000 a month. Since half of that would be in interest, the person can already write it off, meaning the actual cost is maybe a quarter lower (since someone making $250,000 would otherwise be paying a ~45% tax rate). Unless my math is wildly off, that would still leave the person something like $50-60,000 to spend on other things, which happens to be higher than the median income of the city.
I'm wondering if Dread is really complaining about gentrification, not the proposed tax hike. ??
I doubt it, he's bought a place of his own, gentrification works in his favor.Quote:
Originally Posted by GGT
:bulb:Quote:
Originally Posted by Dreadnaught
I can't tell if I'm not making myself clear or if everyone is missing the point. :bulb:
First off, forget about rent control. I think 2-3% of apartments in NY are rent controlled. Rent stabilization exists for a chunk of housing stock, but it's not as distorting. And not relevant to my point.
The mortgage interest deduction is essentially the same for everyone in every place. And you can deduct no more than 35 cents on every dollar of mortgage interest. If you pay a higher mortgage, you can deduct more...but you can only deduct 35% of it so it's still money out the window. Which means you need to make more to support the debt.
Circling back to the larger point, everyone seems to agree that certain places are more expensive to live in. Which requires making more money. The problem is that the federal government sets brackets that assume that everyone above that bracket is "wealthy", when the costs of living in that particular area can totally negate the elevated salary.
We can argue about the vagaries and costs of living all day -- that's the point, if we can't agree on what's "reasonable", why is it reasonable for the government to impose universal tax brackets on areas with disparate wages and costs-of-living? This does actually make a case for flat taxes...
Maybe I need more coffee :coffee:
COL does matter, tho. Flat taxes would treat all areas the same, which (I thought) is what you were criticizing.
Unless there's some exemption for lower income folks, if we all pay say 25% of our income in taxes---that leaves less for living expenses for poor or even middle class. Still gets back to defining what's rich or poor or middle.
Flat taxes treat all income groups the same. The set-up now dictates that living in an expensive area with a higher salary means I pay higher taxes on absolute and relative basis, as I fall into higher tax brackets for "the wealthy" when I'm just not. IE not only do I pay a greater dollar amount than someone in a lower-cost area, but I pay a higher proportion of my income, even though my expenses are higher.
Assuming a flat tax of 15%, it would mean 15% of my salary goes to the US Treasury, and 15% of the income of someone in South Dakota gets the same deal. If I live in an expensive area that justifies a higher salary, so be it -- the Treasury gets more money from me (yay!), but not a higher proportion of my income.
Also remember that part of the "deal" of theoretical flat taxes is a lot of loopholes, exceptions and deductions are eliminated. That way I spend more time making money for the Treasury instead of rapidly ramping-up my 401k contributions to prevent myself from bleeding into another tax bracket when I still stock my cupboard with bulk packages of Velveeta Shells and Cheese.
What about those making 50k or under? Everyone pays same rates, 15% on income, 20% on health care, 20% on housing, add in food and misc, sounds great? Until you figure middle class and lower has less to actually live on....
Either they'll drop health care or stop saving for retirement, now there's more needing a safety net, which would require more taxes. Instead of shells and cheese, maybe live in a less expensive area. Everyone has to live within their means, I don't have much sympathy if anyone makes over $250,000 and spend half on housing.
Flat taxes generally don't tax apply to earnings below a certain amount. In the US, that would probably be $15-25k.
...that's why I said there would have to be some exemption, but that still gets us back to what's rich/poor/middle.
People making 50k and under pay 25% federal at the moment. :bored:
And those who make 30k and under pay 15%. But with deductions, exemptions, etc. we've now found ourselves at a point where almost a majority of Americans will pay no income tax, and happily vote to keep the status quo until it blows up in our faces.
Flat tax may sound "equitable" on paper. Just not sure how you make it work in reality so it doesn't just benefit the rich who're left with more discretionary income.....and everyone else living on the edge. :noob:
I made nearly 50k last year and paid negative % taxes. Granted a chunk of my check goes to 401k/health insurance (your taxed on the amount after that) but still its pretty crazy. My wife and son helped me out in that regard but still.Quote:
People making 50k and under pay 25% federal at the moment
Still Dread, the reason why you pay a bigger chunk of your income for housing is because you made the choice to live in an area that is too expensive for you. And tax deductability enabled you to make that choice.
I acknowledge that problem exists. I don't feel it's a big enough problem to be concerned about, much less justify a systemic redesign of the tax structure.Quote:
Originally Posted by Dreadnaught
Poor dready; everybody telling him he should have traded down :D I can imagine you didn't want to do that. When I moved to Amsterdam we had a look at houses outside the beltway, in the end we went for a flat inside the canal belt because we didn't think it would feel like really living in Amsterdam out there in the fields. Despite the fact that we'd have a bigger space for less money. But being able to walk to 3 cinema's in less than 10 minutes really is something that makes it worth it.
Quote:
Originally Posted by Hazir
Eh? Tax deductability hasn't enabled my choice. I made my financial considerations outside of deductability, as I don't like to plan my life around government policies like that. Sure, I usually get a check back from my tax bill accounting for the cash I basically lent the government, but it all goes into a cash hoard and I don't factor it into my expenses and savings goals.Quote:
Originally Posted by LittleFuzzy
But Fuzzy, do you really not think it's a problem that almost half of the US population is expected to not pay federal taxes? You don't think it's a problem when a majority pays nothing, but can vote for politicians who insist on increasing taxes for those who do?
My complaint isn't that I'm in financial trouble. I'm fine. It's that -- due to a change in when I get paid part of my compensation -- my salary for this year will go up by a few thousand dollars. It's just for this one year and it's just a couple of thousand dollars, but suddenly this pushes me into a higher tax bracket. GGT, you want to talk about middle class squeeze? It's present in those who don't magically double their salaries every year, and instead see their temporary income gains slurped away by government.
Dreadnaught, paying for my health care since 2010.
Do you realise that the upper tax rate on Americans has decreased from over 75% to less than 40% in the last 50 years? What you are experiencing is the unforseen (being kind) consequences of that. "Put more money in the hands af the wealthey and they will produce enough jobs to offset the loss in revenue without impacting the amount paid by individuals in the lower clases." That was the promise according to Reaganonomists. Hurts, don't it?Quote:
Originally Posted by Dreadnaught
A large portion of my salary is funded by a wealthy megalomaniac so I don't see how it hasn't held true.
Then why are complaining about being pushed into a higher tax bracket?Quote:
Originally Posted by Dreadnaught
That's an entirely different topic, which regional indexes don't really touch on at all.Quote:
Originally Posted by Dreadnaught
Because I don't work for the government. He has to have private money to run his business.Quote:
Originally Posted by Being
I think they are quite related, much like how California has such wild budget fluctuations because its tax revenue is heavily dependent on it's higher tax brackets.Quote:
Originally Posted by LittleFuzzy
Without the mortgage interest deduction, you'd have paid more in income taxes. Maybe bumped up a bracket?Quote:
Originally Posted by Dreadnaught
They do pay state sales and consumption taxes, tho. Outside NYC and into the real America where workers don't have good public transit, they have to drive---gas tax, DoT registry and plate tax, tolls and turpikes, emission inspections etc, plus maintenance and insurance costs for cars.Quote:
But Fuzzy, do you really not think it's a problem that almost half of the US population is expected to not pay federal taxes? You don't think it's a problem when a majority pays nothing, but can vote for politicians who insist on increasing taxes for those who do?
The problem is what to do about moderate to low income, when they can't afford to live in metro areas and have to commute. You said it's not easy to find rent control in Manhattan, the COL is high....think about that when you get a latte, ask if the barista commutes from Jersey....where do all those service workers live? You'd want to take more out of their pockets when they're already barely sqeaking by working 2 or 3 part time jobs with no health care benefits?
Doesn't the IRS still allow 5 year income-averaging? It's common right out of college, or after a promotion or sale of property, or bonii, to have a big chunk of one-time or sudden income gain. That's a problem with brackets; doesn't matter how or why, but it boils down to one dollar either way. Enter fancy CPA tricks to keep you in the lower one, or hope to offset tax payment and keep larger part of the income, at least deeper into the higher bracket (instead of falling right on the one dollar line).Quote:
My complaint isn't that I'm in financial trouble. I'm fine. It's that -- due to a change in when I get paid part of my compensation -- my salary for this year will go up by a few thousand dollars. It's just for this one year and it's just a couple of thousand dollars, but suddenly this pushes me into a higher tax bracket. GGT, you want to talk about middle class squeeze? It's present in those who don't magically double their salaries every year, and instead see their temporary income gains slurped away by government.
Middle class has been squeezed for decades, you're only experiencing it now first-hand instead of from behind the student desk and theory. Sucks, huh. Middle class wages and income have been flat for years, savings was at zero, credit and debt was high. Lots of people got too deep into housing (bubble) spending half their income there. Just like you. oops
The Great Recession when millions are laid off, can't find work even tho willing and able, houses underwater, medical bankruptcies, college grads with huge loan debt and no job, people moving home with mom and dad, seniors moving in with kids---probably not the best time to complain about your predicament. It looks like elitism or at least myopia. Ivy League degree, employed right out of the gate with salary higher than average, stock options, health benefits and bonii, buying Manhattan property, vacationing in Asia....
Everyone would like to pay less in taxes and keep more of their own money, duh! Changing tax code would be great. But where are the accompanying cuts in spending you'd make, to offset lowering your taxes? Even with Flat Tax that would have to be part of the plan.
California has such wild budget fluctuations because something like half the budget is already earmarked for special interests via our insane public democracy system and because a super-majority is required for anything besides cutting taxes *again, established by our initiative system* Regional indexing doesn't make much difference because all those people being shifted into higher brackets were already in a fairly high bracket. It doesn't speak to anything about all those people who don't pay taxes at all because they're still going to be at the bottom of whatever region they're in.Quote:
Originally Posted by Dreadnaught
My point is that you are complaining about the results of economic policy you support. You have options that can change that:Quote:
Originally Posted by Being
1. Give money to a charity to maintain avoid being pushed into a higher bracket
2. Put money into a 401K to avoid being pushed into a higher bracket
3. Rally against Reagonomics since it obviously hasn't created the jobs it promised.
I do have a question about federal payroll taxes for SS....are they indexed by regional COL?
If the first X amount of income is exempt and/or refunded, is that X the same for each state or is it pro-rated somehow?
:noob:
Wow, I just did the routine for 2009. I don't think I've ever done it before the 31st of March before. Turn out that all I needed to fill in was the interest paid on our mortgage and that was it. All the other info was already in the system and all I needed to do was check it against my hardcopies. I could have done it faster even had I not tried to fill it out for myself as well despite getting a letter that I neededn't bother this year. As it turned out just filling out Ronald's was enough and got the same result. A puny €1458 but that was to be expected as we hardly have got any deductables left. Which pretty much makes payroll deductions my final taxes. Funny this; if all goes according to plan after 2011 we'll never have to file again :)