THE ORIGINAL & LARGEST MILLIONAIRE DATING SINCE 2001
Member's Blog > No Taxes for a Year...Seriously

No Taxes for a Year...Seriously

Members Only
View author's info
1 year ago

April....The start of spring, chirping birds, flowers and for many of us, the time to work with our accountants (or TurboTax :) ) to file our taxes. Every year I file with due diligence, however I find the process annoying. Wasn't income tax historically something that was supposed to be a short-term directive? Please someone break down the history for me.

 

I personally would like a year off from taxes... I remember speaking with a gentleman friend of mine who recommended a no taxes for a year plan.  I quite like the idea. Not only would we be spared the laborious process, but we could keep our hard earned money for use however we like. With more money we could spend and really stimulate the economy! I'm sure there are pros and cons to taxes, but would the world end if we got a year break?

 

Thoughts?

 

Sass

Sort by:
newest post
  • oldest post
  • newest post
Members Only
View author's info
1 year ago
Quoting GentlyWoman

I would certainly not be ok with such an expenditure, IF that were the case.  It turns out that the toilet seats in question were not just for seats, but an entire molded plastic casing that, after Lockheed refunded the DoD for an over-charge, wound up costing about 100 bucks each.  

 

Geithner? China?  There seems to be nobody that doesn't think China is manipulating currency. It also seems clear that Geithner is not prepared to make a strong stand just yet.  

 

But let's be honest...it's all a-buzz, but what for? Americans want cheap stuff.  Does average Joe care how he gets it? Enough to work his butt off for like 6500 dollars a year??  And if the buzz earns us some diplomatic cooperation, isn't it possible this is all Geithner can hope to gain?

star are you still here??

 

the sec took sachs to the floor today....and the market went down.....my guess is it is not over yet.

Members Only
Quoting Star41354

You're ok with the Fed spending $500 for toilet seats?

What about China? Are they manipulating their currency? Do you think Geithner will take them to task?

I would certainly not be ok with such an expenditure, IF that were the case.  It turns out that the toilet seats in question were not just for seats, but an entire molded plastic casing that, after Lockheed refunded the DoD for an over-charge, wound up costing about 100 bucks each.  

 

Geithner? China?  There seems to be nobody that doesn't think China is manipulating currency. It also seems clear that Geithner is not prepared to make a strong stand just yet.  

 

But let's be honest...it's all a-buzz, but what for? Americans want cheap stuff.  Does average Joe care how he gets it? Enough to work his butt off for like 6500 dollars a year??  And if the buzz earns us some diplomatic cooperation, isn't it possible this is all Geithner can hope to gain?

Members Only
Quoting Star41354

If you're the guy selling toilet seats to the Defense Department at $500 per I wouldn't worry about GDP/GNP etc...

 

GDP is defined by LOCATION; GNP is defined by OWNERSHIP.  Our GDP is product produced within US borders, regardless of who (Internationally) owns the venture or where (Internationally) product is sold; GNP is product produced by ventures owned by US citizens, regardless of where (Internationally) produced or where (Internationally) sold. They would be the same if all of the country’s productive ventures were owned by its own citizens, but foreign ownership makes the difference between GDP and GNP. 

 

In the last decade, the US switched from using GNP to using GDP as its primary measure of production, though not a good measure since it does not account for stored surplus.

 

If Newman has a 100% owned toilet production subsidiary in China, and exports US$2billion worth of toilets out of China to the White House, then US$2 Billion will be added to the GDP of China, and US$2 Billion will be added to US's GNP figure since the export is done from China by a US owned company.

 

And NOBODY cares if George's toilets are stored in a White House warehouse or installed and flushable, and so neither calculation can ever measure health, welfare or happiness of US poopers. 

 


 

 

Members Only
View author's info
1 year ago

Boorah...There are some Interesting comments and stats.  I gave my opinions directly below each statement.    I would have liked to seen a similar study done say in 2006 pretty much at the peak before the economy began to go south.   I know you did not write the article, but I do find some of the stats lop sided.  It frustrates me that so many people are constantly slam jammin our system, yet we are still the greatest country in the world.  Do we have probs, or course, but it sure would be nice to hear some good things about our gov't from time to time.

I copy pasted some charts.  If they do not post correctly I will come back and adjust them later.  Thanks…G ...

Posted on 03/07/10 at 11:12am by Professor Mark J. Perry

1. The number of federal employees exceeded 2.8 million for the first time in January 2009, and federal jobs have increased by 82,000 employees since December 2008.

Newman wrote

This is not surprising to me.  In approximately 14 months the feds hired about 2.9% more employees to their payroll.  We are fighting 2 wars creating many new civilian jobs inside of DoD.  In addition, the feds hired 48,000 (about 58% of the 82,000) employees for the census; we had an incoming President which usually adds thousands of jobs to the fed gov’t payroll and we have had two major stimulus packages that have to be administered to.  Additionally the government is hiring and training because within the next 5 years many federal agencies may lose up to 50% of their employees as they reach retirement age (civilians at 55 years old and 30 years experience with the feds). 

2. Average federal salaries exceed average private-sector pay in more than eight out of 10 comparable occupations. From USA Today.

Newman wrote

I often question these types of examples.  Were the comparable occupations picked at random or hand picked to meet the goal of the article?  I am a consultant for vendors who do business with the federal government.  The way the feds contract, and account for dollars is very different than the way Corp America typically does.  That is what keeps me in business.  Therefore a contracting officer for the feds may make more than a contracting person in the commercial sector.  I am quite confident in Corp America for a company who does a lot of work with the feds I could make double maybe even triple of what a federal contracting officer makes. 

3. Also from USA Today, the typical federal worker is paid $11,091 more per year (20% higher salary) than private-sector workers in the same occupation, based on median annual salaries.

Federal Employees: $66,591

Private-Sector Employees: $55,500

Newman wrote

This does not surprise me.  Most federal employees by far are living in higher rent districts (DC and other major cities).  I would bet the farm, that if a survey was done (heck it probably has been done), comparing private sector jobs in northern VA and metro MD, that feds would make significantly less than the private sector in these regions.  For three years in a row MD (all of MD not metro MD) has the highest median household income at slightly over $71,000.  As the pay chart documents fed employees are getting pay raises, where many private sector jobs have not received pay increases or have taken pay cuts (this is one reason why I would like to have seen a similar study in 2006).  Additionally there is not as much turnover in the federal arena so the feds tend to have employees in higher steps of their grade levels.  Here are the pay scales for federal employees in the DC, MD, Northern VA areas.  Usually the various steps are achieved based on year’s experience.  And as a baseline it is not uncommon for every GS Grade 15 employee, you have almost 900 GS 14’s and below.  In a larger agency it is very common for a GS 15 to be managing 1500 employees.  In corporate America if you are managing 1500 employees you are probably earning more than double what a GS 15 is earning.  You are not getting rich in metro MD making $125,000.  For example in Bethesda the average house exceeds $500,000 and a dozen of eggs nearly $2.00.

 

TOTAL INCREASE: 2.42%-EFFECTIVE JANUARY 2010-Annual Rates by Grade and Step

Grade   Step 1     Step 2     Step 3     Step 4     Step 5     Step 6     Step 7     Step 8     Step 9     Step 10

1           22115      22854      23589      24321      25056      25489      26215      26948      26977      27663

2           24865      25456      26279      26977      27280      28082      28885      29687      30490      31292

3           27130      28034      28938      29843      30747      31651      32556      33460      34364      35269

4           30456      31471      32486      33501      34516      35531      36546      37560      38575      39590

5           34075      35210      36346      37481      38616      39752      40887      42022      43158      44293

6           37983      39249      40514      41780      43046      44312      45578      46843      48109      49375

7           42209      43616      45024      46431      47838      49246      50653      52061      53468      54875

8           46745      48303      49861      51418      52976      54534      56092      57649      59207      60765

9           51630      53350      55070      56791      58511      60232      61952      63673      65393      67114

10         56857      58752      60648      62544      64439      66335      68230      70126      72022      73917

11         62467      64548      66630      68712      70794      72876      74958      77040      79122      81204

12         74872      77368      79864      82359      84855      87350      89846      92341      94837      97333

13         89033      92001      94969      97936      100904    103872    106839    109807    112774    115742

14         105211    108717    112224    115731    119238    122744    126251    129758    133264    136771

15         123758    127883    132009    136134    140259    144385    148510    152635    155500    155500

 


4. According to USA Today, average annual benefits (health, pension, etc.) in 2008 for federal employees was more than 4 times greater than benefits for private workers, a difference of almost $31,000 per year:

Federal employees: $40,875

Private sector worker: $9,882

 

Newman wrote

To me this is most startling.  The wording seems strange to me too.  Are they stating the costs are roughly $41,000?  It  does not quite read that way.  Yes I would anticipate that federal employees would have a higher average annual benefits cost, but not my over 400%.  I would be really curious to know the formulas used.  I would suspect at a minimum the stats include private sector workers who receive no benefits.  I have a very hard time believing that federal employee’s benefits costs are close to 70% of their salaries. 

Other key findings from USA Today:

• Federal. The federal pay premium cut across all job categories — white-collar, blue-collar, management, professional, technical and low-skill. In all, 180 jobs paid better average salaries in the federal government (83%); 36 paid better in the private sector (17%).

 

Newman wrote

One area the feds are noticeably and extremely out paid is in both their career and politically appointed Senior Executive Staff (SES).  Of course we have all heard what corp executes earn at large firms.  They dwarf what SESer’s make.

 

RATES OF BASIC PAY FOR THE EXECUTIVE SCHEDULE (EX)

EFFECTIVE JANUARY 2010…Level 1-199700—Level 2—179700—Level 3—165300-Level 4—155500—Level 5--145700

 

 

Members Only
View author's info
1 year ago
Quoting Star41354

If you know the difference between GDP and GNP and 42% seemed reasonable you might want to look at the 2010 Federal Budget and try to understand why the "deficit" will increase the "debt" to about 100% of GDP. Income tax, payroll tax, corporate tax and excise tax represent 97% of Federal income... and there will be a shortfall.

A VAT will basically tax spending. It will require that we also increase social spending in order to make sure that those who exist solely on the public dole maintain a certain standard of living.

LOL.  Like I said I am not an economist or a federal bean counter so no I do not know the difference between the GDP and the GNP.  But I can copy and paste (from investors dictionary)


It is important to differentiate Gross Domestic Product from Gross National Product. GDP includes only goods and services produced within the geographic boundaries of the U.S., regardless of the producer’s nationality. GNP doesn't include goods and services produced by foreign producers, but does include goods and services produced by U.S. firms operating in foreign countries

 

And I am still confused.  And my guess is most others are too.  :)

 

I was able to find one of the articles I had read from CNN in Mid March.  In some areas, my memory served me poorly.  Here is a partial copy paste from CNN.com.


There are two key ratios used to highlight when a government is reaching the crisis zone of fiscal imbalance: the debt-to-GDP ratio and deficit-as-a-percentage-of-GDP. Historically, a debt-to-GDP of north of 90% and a deficit-as-a-percentage-of-GDP north of 10% have been the lines in the sand to watch. As governments cross these barriers, they enter the Pig Zone.



and continuing



As we watch the Greece situation unfold, the fiscal metrics in the United States become even more concerning. According to my estimates, the United States is running a debt-to-GDP ratio of 84% and deficit-to-GDP of almost 11%.




I think as you said earlier, if Treasury ever loses it AAA rating yes we are all in deep do, do.

Members Only
View author's info
1 year ago
Quoting Conyersguy

Wasn't Moody's included with all the other rating firms in failing to downlist the funny-mortgage based securities? My memory says yes. So what good is a bond rating from firms that fail to recognize crap as crap? See the old truism below:

IN THE BEGINNING WAS THE PLAN;

And then came the ASSUMPTIONS; And the ASSUMPTIONS were without FORM;

And the PLAN was completely without SUBSTANCE;

And the darkness was upon the faces of the WORKERS;

And they spake amongst themselves, saying, “ It is a Crock of Sh*t, and it Stinketh;”

And the Workers went to their Supervisors, and sayeth unto them, “It is a Pail of Dung, and none may abide the Odor thereof;”

And the Supervisors went to their Managers and sayeth unto them, “It is a container of Excrement, and it is very strong, such that none may abide it;”

And the Managers went to their Directors, and sayeth unto them, “It is a vessel of Fertilizer, and none may abide its Strength;”

And the Directors went to their Assistant Vice President and sayeth, “It contains that which aids plant growth, and it is very strong;”

And the AVP went to the Vice President and sayeth, “It promoteth growth, and it is very powerful;”

And the VP went to the President and sayeth unto him, “This powerful new plan will actively promote growth and efficiency of the department, and this area in particular;”

And the President looked upon the PLAN, and saw that it was good;

AND THE PLAN BECAME POLICY (and remained so, despite periodic “review.”)


CG,

 

Yes I think Moody's was one of several, if not most, if not all major bond rating firms who missed the signals of the financial nightmare.  And I have to ask myself where were the federal regulators and the non profit watchdogs? 

 

 

Members Only
Quoting billzeke

George and Shaz. It's not that surprising. Someone once said "It's a matter of probability. If you give 1000 monkeys 1000 typewriters and let them type for 1000 years they will eventually reproduce all of the worlds great books." lol...

Just think of the poor Editor , though !

Members Only
Quoting Star41354

.. love that joke!

" to be or not to be, that is the jgortanplatz"

totally OFF subject , but this reminded me of it....

I saw a utube video the other day of a Discovery Channel Cameraman getting mobbed by monkeys climbing all over his camera and tri-pod. One pushed him away, peered into the eye piece and looked like IT was taking the shots. Very funny

jgortanplatz, indeed.

Members Only
The thing to remember when dealing with gov't generated figures is: That when LIARS figure; figures LIE... The Administration will try to implement a VAT or a National sales tax this year and Obama will run all over the country trying to sell it as a refund. It will hurt the poor the most because they don't pay income taxes but they still have to buy things. Mark my words...
Members Only
View author's info
1 year ago
Quoting Star41354

I think you might have been using old info. Economists have been using GDP since the late 90s. Either way, since GDP and GNP are relatively close, 42% is way off. At the end of 2009 our GDP/GNP was about $14T and our debt was about $12T. The proposed 2010 Budget estimates that the debt/GDP ratio will be 100%. At any rate it is increasing.

Income Tax and Payroll Taxes account for 80% of the Fed revenue stream. The Treasury Department has the second largest expense in the federal budget. Only income redistribution (The Departments of Health and Human Services, HUD, and Agriculture (food stamps)) is higher. As the debt increases, so does the interest payment. Social spending is the largest item in our federal budget followed by Defense spending.


The articles I read have been in the past 6 months, but again I was typing based on memory vs. having the articles directly in front of me.  I'll try to dig them up and see the "exact" wording.

 

If you add in Social Security and Medicaire taxes along with unemployemt taxes with income taxes  I suspect your 80% number is close to accurate (although I would guess a little high).  In round numbers SS, Medicare and Unemployment is about 25% of payroll withholdings. 

 

You lost me regarding the Treasury Dept has the second largest expense in the federal budget?  Are you referring to interest expense??  So much of the %'s have to do with wording.  For example when you say Social spending what does the include and exclude?  Is Social spending synonomous with re distribution of wealth or does it include different items?  For example does a % of the NPS efforts include Social spendings? 

 

I have worked in government finance and contracting for over 20 years and one thing I have learned it is all in the words (as I have stated 3 times in these comments). 

 

 

Members Only
Quoting billzeke

George and Shaz. It's not that surprising. Someone once said "It's a matter of probability. If you give 1000 monkeys 1000 typewriters and let them type for 1000 years they will eventually reproduce all of the worlds great books." lol...

OMG 2! I AGREE WITH YOU BOTH >............declare a National Holiday !

Members Only
Quoting thenewman

OMG Shaz.  This probably means we should retire from MM and call it a victorious day!!  Then call HallMark and have them declare it a commercial Holiday and begin designing cards for annual distribution.  :)

George and Shaz. It's not that surprising. Someone once said "It's a matter of probability. If you give 1000 monkeys 1000 typewriters and let them type for 1000 years they will eventually reproduce all of the worlds great books." lol...

Members Only
View author's info
1 year ago
Quoting thenewman

OMG Shaz.  This probably means we should retire from MM and call it a victorious day!!  Then call HallMark and have them declare it a commercial Holiday and begin designing cards for annual distribution.  :)

Wow, a meeting of the minds! I love it!!!


Sass

Members Only
View author's info
1 year ago
Quoting Star41354


That might happen anyway. I understand that revenue collected through the income tax just covers the interest on our debt. Sooner or later we'll have to stop printing money. If the Treasury ever loses their AAA rating we'll all be in deep do do.... and there will be no place to hide.

Hello Star.

 

I am not an economist or a bean counter for the feds.  I did read several months ago that Moody's had considered lowering the U.S. rating, but did not.  I read another article (about Greece) that had said when a government debt or maybe it was deficit exceeds 85% of their GNP that failure of the countries financial infrastructure was imminent.  And then I read another article that stated the U.S. was at a 42% level.  I could be off with the stats as I have read these articles over a period of time. 

 

From your comments, I think it is important to understand that income tax is just one of many different revenue sources the U.S. receives in taxes. 

Members Only
View author's info
1 year ago
Quoting shazbot82

George, I agree  with you  100%.

 

Its a FIRST ladies and gentleman ! I knew,  Geo,,eventually, if we were here long enough, this would happen. YEAH!

OMG Shaz.  This probably means we should retire from MM and call it a victorious day!!  Then call HallMark and have them declare it a commercial Holiday and begin designing cards for annual distribution.  :)

Members Only
Income taxes are a relatively new annoyance. The bane of the working person didn't become law until the 16th Amendment was ratified in February 1913. You'd think this amendment, the granddaddy of tax laws, would have been written in a needlessly complicated manner. Not so. In fact, it's only 30 words long:

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
So the modern federal income tax didn't become law until the early 20th century. However, a similar law known as the Revenue Act was introduced decades earlier during the American Civil War. Its purpose was to help pay the North's war expenses. The act was repealed 10 years later, but the income tax eventually made a comeback, thus proving that Ben Franklin was right all along.

Check out this link for more tax info...
Income taxes are a relatively new annoyance. The bane of the working person didn't become law until the 16th Amendment was ratified in February 1913. You'd think this amendment, the granddaddy of tax laws, would have been written in a needlessly complicated manner. Not so. In fact, it's only 30 words long:

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
So the modern federal income tax didn't become law until the early 20th century. However, a similar law known as the Revenue Act was introduced decades earlier during the American Civil War. Its purpose was to help pay the North's war expenses. The act was repealed 10 years later, but the income tax eventually made a comeback, thus proving that Ben Franklin was right all along.

Check out this link for more tax info
Income taxes are a relatively new annoyance. The bane of the working person didn't become law until the 16th Amendment was ratified in February 1913. You'd think this amendment, the granddaddy of tax laws, would have been written in a needlessly complicated manner. Not so. In fact, it's only 30 words long:

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
So the modern federal income tax didn't become law until the early 20th century. However, a similar law known as the Revenue Act was introduced decades earlier during the American Civil War. Its purpose was to help pay the North's war expenses. The act was repealed 10 years later, but the income tax eventually made a comeback, thus proving that Ben Franklin was right all along.
Income taxes are a relatively new annoyance. The bane of the working person didn't become law until the 16th Amendment was ratified in February 1913. You'd think this amendment, the granddaddy of tax laws, would have been written in a needlessly complicated manner. Not so. In fact, it's only 30 words long:

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
So the modern federal income tax didn't become law until the early 20th century. However, a similar law known as the Revenue Act was introduced decades earlier during the American Civil War. Its purpose was to help pay the North's war expenses. The act was repealed 10 years later, but the income tax eventually made a comeback, thus proving that Ben Franklin was right all along.

Income taxes are a relatively new annoyance. The bane of the working person didn't become law until the 16th Amendment was ratified in February 1913. You'd think this amendment, the granddaddy of tax laws, would have been written in a needlessly complicated manner. Not so. In fact, it's only 30 words long:

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
So the modern federal income tax didn't become law until the early 20th century. However, a similar law known as the Revenue Act was introduced decades earlier during the American Civil War. Its purpose was to help pay the North's war expenses. The act was repealed 10 years later, but the income tax eventually made a comeback, thus proving that Ben Franklin was right all along.
Check out this link for more tax information.

http://www.incometaxindia.gov.in/HISTORY/PRE-1922.ASP
Members Only
Quoting thenewman

While the idea sounds nice the reality and outcome would be devastating.  The worlds largest economy would cease to exist as we know it.  Many States are already strapped for cash.  Busineses would be out of business, unemployement would go through the roof, the stock market would crumble, crime would rise to the point that martial law would be declared and the Air Force would have a bake sale that no one could come to even if brownines were being sold at an inflated price of $50 each.  Universities and hospitals would close, infant mortality would rise, senior citizens would die.  I can think of no good outcome.  Taxes to our governments are their sources of income.  Imagine if you employer said you were not going to be paid for a year. 

 

No one likes paying their taxes, but at the end of the day it should be viewed as an honor to pay our fair share to live in the greatest country in the world. 

George, I agree  with you  100%.

 

Its a FIRST ladies and gentleman ! I knew,  Geo,,eventually, if we were here long enough, this would happen. YEAH!

Members Only
View author's info
1 year ago

All,

You'll have to excuse me for having a "moment."  

I pay my taxes knowing it's the right thing to do and that hopefully the money is being used approrpriately.

But it would be great to have one year off if there was a win/win scenario that fairly supported the people and government-driven initiatives. I'm not holding my breath for that one.

 

Sass

Members Only
View author's info
1 year ago

While the idea sounds nice the reality and outcome would be devastating.  The worlds largest economy would cease to exist as we know it.  Many States are already strapped for cash.  Busineses would be out of business, unemployement would go through the roof, the stock market would crumble, crime would rise to the point that martial law would be declared and the Air Force would have a bake sale that no one could come to even if brownines were being sold at an inflated price of $50 each.  Universities and hospitals would close, infant mortality would rise, senior citizens would die.  I can think of no good outcome.  Taxes to our governments are their sources of income.  Imagine if you employer said you were not going to be paid for a year. 

 

No one likes paying their taxes, but at the end of the day it should be viewed as an honor to pay our fair share to live in the greatest country in the world.