Confused by our tax code?

[charrison]

linkage

In an annual, less than pleasant ritual, the taxpayers will prepare their 2003 federal income tax returns. The 113,000 employees of the U.S. Internal Revenue Service will process about 200 million tax returns that will have been filed by April 15.

On Jan. 5, the IRS sent postcards to the 28 million electronic tax filers and 34 million Form 1040 booklets to the paper filers. The IRS expects to process 131 million individual tax returns.

Have you ever wondered how we ever came to adopt such an unwieldy, time-consuming, and frequently frustrating tax system as the federal income tax?

Well, folks, we did it to ourselves.

The people of the United States decided it was a good thing, so we amended the Constitution to have an income tax.

It all occurred 91 years ago, when the 16th Amendment was ad- opted. The people didn't know what they were getting into because at that time, the personal tax exemptions were generous, and less than one-half of 1 percent of the people paid the tax. And they paid very little.

The tax was 1 percent of income. A graduated surtax beginning on incomes of $20,000 (a lot of money in those days) rose gradually to 6 percent on incomes of more than $500,000 ($7 million in today's money value).

Once the income tax law was enacted, the fat was in the fire, because the 16th Amendment is completely open ended with no restrictions or limitations on Congress.

The first few words of the amendment read, "The Congress shall have the power to lay and collect taxes on incomes, from whatever source derived." With this blanket authority, Congress has changed the tax rate many times since 1913, simply by legislative action.

Apparently, the new tax code was not very well understood. Sen. Elihu Root was speaking to a friend shortly after the tax was enacted and is reported to have remarked that they both could go to jail for failing to understand the tax form.

Mind you, the original 1913 code had only 16 pages. Today's Revenue Code is more than 36,000 pages. As we all have learned, it is still not well understood, except by a well-trained cadre of tax professionals.

To put it in perspective, the Gettysburg Address runs about 200 words. The Declaration of Independence is about 1,300 words. The Holy Bible contains about 773,000 words. But the federal income tax code runs about 7 million words, and is growing longer every year. Since 1986, Congress has made more than 4,000 changes to the tax law.

 

[Romans828]

Income redistribution schemes do get complicated.

 

[mfs378]

All the loopholes for the super-rich become difficult to hide after a while.

 

[charrison]

Originally posted by: mfs378
All the loopholes for the super-rich become difficult to hide after a while.

there are loopholes for all, and the rich have been paying an ibcreasinglt larger share of taxes.

 

[mfs378]

Originally posted by: charrison

Originally posted by: mfs378
All the loopholes for the super-rich become difficult to hide after a while.

there are loopholes for all, and the rich have been paying an ibcreasinglt larger share of taxes.

Yup, the loopholes are there for all; all you have to do to take advantage is earn omore than $1 mil a year.

 

[charrison]

Originally posted by: mfs378

Originally posted by: charrison

Originally posted by: mfs378
All the loopholes for the super-rich become difficult to hide after a while.

there are loopholes for all, and the rich have been paying an ibcreasinglt larger share of taxes.

Yup, the loopholes are there for all; all you have to do to take advantage is earn omore than $1 mil a year.

There are numerouls deductions for people of all incomes...

 

[shiner]

Originally posted by: mfs378

Originally posted by: charrison

Originally posted by: mfs378
All the loopholes for the super-rich become difficult to hide after a while.

there are loopholes for all, and the rich have been paying an ibcreasinglt larger share of taxes.

Yup, the loopholes are there for all; all you have to do to take advantage is earn omore than $1 mil a year.

I earn a helluva lot less than that and my wife and I take advantage of several loopholes. Since there is no emotion icon for it I will just say it....you're an asshat.

 

[Gaard]

What consitutes a 'loophole'?

 

[Spencer278]

Originally posted by: charrison

Originally posted by: mfs378
All the loopholes for the super-rich become difficult to hide after a while.

there are loopholes for all, and the rich have been paying an ibcreasinglt larger share of taxes.

The rich have been pay a smaller share of taxes. At one point wasn't the tax on the rich around 90%

 

[charrison]

Originally posted by: Spencer278

Originally posted by: charrison

Originally posted by: mfs378
All the loopholes for the super-rich become difficult to hide after a while.

there are loopholes for all, and the rich have been paying an ibcreasinglt larger share of taxes.

The rich have been pay a smaller share of taxes. At one point wasn't the tax on the rich around 90%

While the rates on the rich have have fallen from about 90% after WWII to a low of 28% in 80, and risen back to the current 35%, they rich are paying a greater percent of total tax returns at a lower a rate.

At higher rates the rich worked much harder to protect their assets from outright theft. You can collect more taxes at lower rates.

 

[charrison]

Originally posted by: Gaard
What consitutes a 'loophole'?

I would call be able to divert you money into non taxable areas.
There are many things in the taxcode that allow people of all incomes to protect their incomes and assets.

 

[Dissipate]

In the United States, studies indicate that it takes businesses and individuals approximately 5.5 billion worker-hours (the equivalent of 2.7 million full time workers) each year to just complete the taxation paperwork. This means that every dollar of tax revenue raised by the government costs taxpayers approximately $1.15

Microeconomics Public and Private Choice Ninth Edition Page 121 paragraph 3.

 

[mfs378]

Originally posted by: shinerburke
I earn a helluva lot less than that and my wife and I take advantage of several loopholes. Since there is no emotion icon for it I will just say it....you're an asshat.

What loopholes are you exploiting? Do they allow you to pay $700 in taxes on income of millions? Because there are examples of that floating around.

And I really appreciate the asshat comment.

 

[Gonad the Barbarian]

The rich won't be paying their fair share of taxes until capital gains and dividends start being taxed as income.

 

[ElFenix]

Originally posted by: Dissipate

In the United States, studies indicate that it takes businesses and individuals approximately 5.5 billion worker-hours (the equivalent of 2.7 million full time workers) each year to just complete the taxation paperwork. This means that every dollar of tax revenue raised by the government costs taxpayers approximately $1.15

Microeconomics Public and Private Choice Ninth Edition Page 121 paragraph 3.

 

[charrison]

Originally posted by: mfs378

Originally posted by: shinerburke
I earn a helluva lot less than that and my wife and I take advantage of several loopholes. Since there is no emotion icon for it I will just say it....you're an asshat.

What loopholes are you exploiting? Do they allow you to pay $700 in taxes on income of millions? Because there are examples of that floating around.

And I really appreciate the asshat comment.

I would like to see such an example....

 

[ReiAyanami]

deploy offshore bank account. raid enron. retire.

 

[Bowfinger]

Originally posted by: charrison

Originally posted by: mfs378

Originally posted by: shinerburke
I earn a helluva lot less than that and my wife and I take advantage of several loopholes. Since there is no emotion icon for it I will just say it....you're an asshat.

What loopholes are you exploiting? Do they allow you to pay $700 in taxes on income of millions? Because there are examples of that floating around.

And I really appreciate the asshat comment.

I would like to see such an example....

Do you doubt that such examples exist? I can't offer specifics off the cuff, but I can confirm there are many reports offering examples of abuses just like that. Last week's Frontline investigated tax shelter abuses and mentioned cases of people getting paid by the government, i.e., a negative net tax, even though they actually earned millions of dollars. I believe you can watch the program online. There are similar reports of blue chip corporations paying virtually no tax or a negative tax on billions of dollars of revenue thanks to corporate tax loopholes. IIRC, General Electric was one of many household names cited. I can't verify mfs378's specific example, but I can confirm it is accurate in a general sense.

 

[shiner]

Originally posted by: mfs378

Originally posted by: shinerburke
I earn a helluva lot less than that and my wife and I take advantage of several loopholes. Since there is no emotion icon for it I will just say it....you're an asshat.

What loopholes are you exploiting? Do they allow you to pay $700 in taxes on income of millions? Because there are examples of that floating around.

And I really appreciate the asshat comment.

A. None of your damn business

B. Show me some proof of what you are saying.

 

[Gaard]

A. None of your damn business

?

Are you a cheater? Or are you filing perfectly legit tax claims?

 

[shiner]

Originally posted by: Gaard

A. None of your damn business

?

Are you a cheater? Or are you filing perfectly legit tax claims?

They are legit. My Father in law is a tax attorney so that helps A LOT.

 

[Gaard]

Yeah, it helps when family is in the tax biz.

<--- sister works for H&R Block.

 

[CaptTuna]

Guess which big company used the "foresight of upper management" as an asset on their taxes. Did you guess Enron? They are now being audited in several stated for that bit of tax lunacy.

 

[charrison]

Originally posted by: Bowfinger

Originally posted by: charrison

Originally posted by: mfs378

Originally posted by: shinerburke
I earn a helluva lot less than that and my wife and I take advantage of several loopholes. Since there is no emotion icon for it I will just say it....you're an asshat.

What loopholes are you exploiting? Do they allow you to pay $700 in taxes on income of millions? Because there are examples of that floating around.

And I really appreciate the asshat comment.

I would like to see such an example....

Do you doubt that such examples exist? I can't offer specifics off the cuff, but I can confirm there are many reports offering examples of abuses just like that. Last week's Frontline investigated tax shelter abuses and mentioned cases of people getting paid by the government, i.e., a negative net tax, even though they actually earned millions of dollars. I believe you can watch the program online. There are similar reports of blue chip corporations paying virtually no tax or a negative tax on billions of dollars of revenue thanks to corporate tax loopholes. IIRC, General Electric was one of many household names cited. I can't verify mfs378's specific example, but I can confirm it is accurate in a general sense.

While I dont doubt there are high income people paying little in taxes, I would like ot see more than income and tax paid. Without any background info, this is useless date.