geojanes wrote:Top line, yes, but I don't think they reached down to changing how income is counted, at least as I heard. Moving from realized gains to mark-to-market is pretty radical when it comes to personal income tax. The Republican messaging I heard was that everyone should pay something, not Warren Buffett and his ilk should pay a boatload more.

Well, it was specifically keep the current rates for everybody and cut rates by an additional 20%, (so those in the 10% bracket would be paying 8% while the top bracket of 35% would be reduced to 28%) and reducing the corporate tax rates. It also included eliminating and/or limiting deductions. One of the ideas was to cap total deductions allowed to something like $25,000 a year.

However, it did also include eliminating all taxes on investment income. This is the part I think you are talking about so yes that was not included in the Republican plan to count investment income as regular income.

Doctor Fate wrote:

geojanes wrote:To be consistent, calculate your effective tax rate by taking your total Federal Tax and divide it by your Adjusted Gross Income or AGI.

29.5%

That is quite high. You might want to consider some better tax shelters.

Archduke Russell John wrote:

Doctor Fate wrote:

geojanes wrote:To be consistent, calculate your effective tax rate by taking your total Federal Tax and divide it by your Adjusted Gross Income or AGI.

29.5%

That is quite high. You might want to consider some better tax shelters.

Doesn't tell the whole story. If you want more info, email me. It's not as bad as it seems.

Let me put it this way: if I had any more tax shelters, I could not run for President.

geojanes wrote:Holy cow! That's huge!

Just paying my fair share.

I'm guessing that Doctor Fate is self-employed and that his tax rate includes both employee and employer FICA.

Ray Jay wrote:I'm guessing that Doctor Fate is self-employed and that his tax rate includes both employee and employer FICA.

True.

Same boat...

but if you add your state taxes, real estate taxes, licenses and fees to the government, sales tax, "other" taxes (look at that cost of gas and how much of that goes to the government), then add your health care expenses (that other countries include in their taxes) and what are you left with? ...I got about 30 cents leftover or so it would seem

GMTom wrote:but if you add your state taxes, real estate taxes, licenses and fees to the government, sales tax, "other" taxes (look at that cost of gas and how much of that goes to the government), then add your health care expenses (that other countries include in their taxes) and what are you left with? ...I got about 30 cents leftover or so it would seem

At best.

Ray Jay wrote:I'm guessing that Doctor Fate is self-employed and that his tax rate includes both employee and employer FICA.

Yeah, I guess that would do it, adds close to 8 percentage points on earned income. I guess clergy are still considered self-employed for tax purposes.

You would pay both employer and employee FICA on the 1040 so it adds about 15%.

There are some unusual tax benefits for clergy. I know that our Rabbi gets to deduct most of his mortgage payments.

Oh right, the whole thing gets paid on the 1040, which makes about 15%.

So, I just finished my taxes, and I'm so astounded at how low my rate is, that I've been checking it and checking it again for errors, but I'm certain that it's right.

Our Federal rate this year is 4.5% (!)

We're a beneficiary of a few tax credits and pretty hefty deductions. We avoided the AMT for once (which ironically is for keeping people with a lot of deductions from paying too little tax,) and it all boils down to a pretty tiny rate.

Our last 10 years of rates:
2003: 23.6%
2004: 25.8%
2005: 26.3%
2006: 26.4%
2007: 28.4%
2008: 26.5%
2009: 26.5%
2010: 17.7%
2011: 13.1%
2012: 4.5%

You'll see a big change in the rate starting in 2010. That change has nothing to do with the amounts (they are actually slightly higher on average in the 2010-2012 period, than the 2003-2009 period) and everything with where that income comes from. We shifted from mostly wage and salary income to majority other sources of income, most of which get preferential tax treatment. I also became much more aware on how we manage things for tax benefits.

So starting in 2010, we started to work less hard, and because we work much less hard than we used to, we are rewarded for paying lower income tax rates than most people who are on unemployment benefits. Don't get me wrong, I enjoy the benefits of very low tax rates, but from a national policy perspective this is completely messed up: we should be rewarding work, not penalizing it.

I keep telling my wife that and she says, "Be quiet. This is good. I don't have to go work at a regular job." I guess I should be thanking DF for subsidizing her lifestyle.

it seems like the tax code has taken away some of your incentive.

I'm not sure how you get to such a low tax rate: child tax credits, favorable divs and cap gains, state taxes (since you line in NYC), energy credits. Is there something else?

If you are self employed there are very good ways to shelter your income through pensions, but that won't protect you from FICA. I guess I don't get how the rate can be so low.

Deductions cut our AGI by about 40% (fair amount of charitable giving, high tax state, etc.) Tax credits (child, child care and foreign tax credit) cut the tax owed by about 1/3. No one in the family is self-employed so we escape the self-employment tax. The spot we're in is sweet when it comes to Uncle Sam's cut.

And, no, I'm not volunteering to pay a higher rate DF.

geojanes wrote:Deductions cut our AGI by about 40% (fair amount of charitable giving, high tax state, etc.) Tax credits (child, child care and foreign tax credit) cut the tax owed by about 1/3. No one in the family is self-employed so we escape the self-employment tax. The spot we're in is sweet when it comes to Uncle Sam's cut.

And, no, I'm not volunteering to pay a higher rate DF.

Why ever not? Isn't it patriotic?

:)