Getting a jump on 2012 taxes

dstark · November 27, 2012, 4:49pm

Notrichenough, so now you are changing your numbers. Those new numbers work better.

Simpson Bowles has brackets 9, 15 and 24 percent on one of their plans. And they have other plans.

I am going to go with their plans because they studied the tax issues.

<a href=“http://www.taxpolicycenter.org/taxtopics/Bowles_Simpson_Brief.cfm[/url]”>http://www.taxpolicycenter.org/taxtopics/Bowles_Simpson_Brief.cfm</a>

As far as SS goes…time value of money…

lerkin · November 27, 2012, 5:01pm

Dstark,

if you are talking about public payment system that we have right now that pays doctors ridiculously low rates, then you are right. Except that the doctors limit the number of medicare patients in their practices and raise their rates on everyone else to make up for lost income.

Nobody likes to work for free. The doctors will find a way to get their fair share or we will have far fewer doctors.

In terms of cutting, let’s start with defense. I don’t want to go into a lot of details, but DARPA, DHS, etc. give a lot of money for the technology R&D to private sector that private sector should be investing themselves instead of looking for government handouts.

I also don’t want to offend military personnel, but the 20 year deal in exchange for a very generous pension and other benefits is ridiculous. I think it should be graduated payment system, so that people could retire from the army at any time they want, with pension starting at normal retirement age proportional to years of service and the pension should not be so generous after 20 years of service.

I also would like to point out that S in SSI stands for supplemental. It means everyone, and I mean everyone, should be saving for their retirement separately from payroll tax. Then we can start cutting SS benefits and maybe give them only to those who throughout their life did not have a lot of earning to save too much. I prepared enough tax returns to tell you that so many people with decent incomes do not plan for retirement, because they think SS will be there for them.

dstark · November 27, 2012, 5:16pm

It is more than pay structure. Private health insurance companies have more bloated bureauracies and they do have to make money.

As far as defense goes, I might agree with you in those.

As far as SSI goes, that is a program the government where the government should be involved. Do you know who receives SSI? It is a pain to receive SSI. You have to go through hoops to get it, at least in Cal. You have to save records. Send information constantly to the govt. You have to send the government info on your disability on a regular basis, even when the disability is permanent. You can’t live on SSI. In California,
SSI is something like 7,000 a year for people who are special needs people. For ill people. Really? That is what should be cut?

As far as SS goes, people don’t save enough. That is one reason programs like SS exist. Some people don’t do things that benefit them in the long run. So, how do we deal with this? Do we let these people live in poverty on the streets? We used to do that. That impacts people who aren’t in poverty. What about people that would end up in poverty because of the breaks in life? Poverty was a lot higher before SS. There is a social good
along with an individual good with programs like SS. I benefit by my neighbor getting SS instead of my neighbor being flat broke.

lerkin · November 27, 2012, 5:23pm

Dstark,

I think I mixed up the terms. I thought all social security is called supplemental. I did not mean that program for poor people. I meant social security. And I do believe that it should be bare minimum payment (maybe equal to what I call welfare payment, but I think you call SSI). I did not say we are supposed to cut it completely, just make people realize that they should not be relying on it for their retirement.

notrichenough · November 27, 2012, 5:29pm

People my age will on average see a zero or maybe negative return on their money in absolute terms from SS. It is only going to get worse for future workers. So I don’t see where the time value of money factors in.

From that tax plan:

I assume this is without a corresponding increase in the maximum benefit? Why should SS’s money woes be balanced on the backs of the upper middle class?

BCEagle91 · November 27, 2012, 5:31pm

From a legislator’s perspective: because there are so many of them.

notrichenough · November 27, 2012, 5:55pm

There are over 8 million people collecting SSI. This is not all special needs people.

Adding in SS disability, there are 14 million people receiving disability benefits right now. This number has skyrocketed in recent years as people who are unable to find a job somehow wind up disabled. 6 in 10 of these receive money for mental disabilities.

Do you think 1 in 20 people in our country are truly disabled?

Sure there are millions who depend on it. But the amount of fraud is astounding.

Only around 5-6% of taxpayers make in the $110K-$140K range. That’s not that many.

BCEagle91 · November 27, 2012, 6:27pm

If we have 100 million taxpayers, that’s 5 million. 5 million counts as many in my book.

notrichenough · November 27, 2012, 6:32pm

It just seems odd to nick that group for an extra $1000 a head.

It’s only going to raise $5bil or so. Why not spread that out over the people who will actually receive the benefit?

dstark · November 27, 2012, 7:17pm

"Quote:
The public paid for their social security. It’s not a gift.
No they didn’t. Yes it is.

But we’ve had this discussion before."

I try to take what people write seriously and I “try” to respect people’s opinions, but is this a joke?

Because you can’t write the above and then write this and be taken seriously…

“People my age will on average see a zero or maybe negative return on their money in absolute terms from SS. It is only going to get worse for future workers. So I don’t see where the time value of money factors in.”

I said people paid for their SS and then you wrote the above. The above
that you wrote says people pay for their SS.

The time value of money argument means that people paying into the
SS system before they start receiving money should receive a lot more of their money back than they put into the system.

You are arguing with me while making my argument. The argument that people are not getting enough out of SS compared to what they put into
the system is a good argument. Cutting SS benefits is a ridiculous way to solve that issue. What is really happening is SS is a tax on the middle and upper middle class.

As far as SSI , I am not and never been on SSI but I have a little experience with SSI and I see how difficult it is to get it. So, where is the fraud? Show me something concrete. Or is it just a feeling? By the way, mental illness can be debilitating.

And because a program has fraud, it should be shut down? Then everything should be shut down, in both the public and private industry.

We are never going to get rid of all the fraud. Some people commit
fraud. Seeing how hard it is to get SSI, I would love to see something on fraud in the SSI program.

BCEagle91 · November 27, 2012, 7:18pm

Everything seems to be discussed over ten years so let’s call it $50B.

notrichenough · November 27, 2012, 7:45pm

SS is, and has always been, primarily a pay-as-you-go system. Yes, recently more taxes have been collected than benefits paid out, but that money was immediately spent. The people currently collecting are getting paid with Other People’s Taxes, not some sort of return of their own taxes with interest.

In addition, it is well established in case law that you have no legal right to receive benefits, and no vested interest in what you have paid in. Congress can change the benefits or the rules at their whim.

Why do you insist on the fiction that SS is some sort of pension plan?

What I meant was (and I guess I should have been more specific) is that if you if you do a thought experiment where you considered SS to be an actual pension, you would not even get your principal back. If this was a private plan, people would be going to jail.

At this point it is impossible to get out what you put in. Simple demographics. How does taxing the remaining taxpayers more to give to current beneficiaries help this?

I agree there are many people who need it, and are genuinely disabled. But there has been a huge increase in recent years, and IMO it is economically driven and not disability driven. Unless being unable to get a job is now a disability.

My W rents apartments for a living, you would be shocked how many able-bodied being are on disability. The numbers are from the SSA web site - 1 in 20.

dstark · November 27, 2012, 8:46pm

There are quite a bit of disabled people in this country.

[How</a> Many Disabled Americans Are There?](<a href=“http://ezinearticles.com/?How-Many-Disabled-Americans-Are-There?&id=1918829]How”>http://ezinearticles.com/?How-Many-Disabled-Americans-Are-There?&id=1918829)

[Rules</a> and Qualifications for Receiving SSI and the Biggest Loophole in the Social Security SSI Program - Yahoo! Voices - voices.yahoo.com](<a href=“Yahoo | Mail, Weather, Search, Politics, News, Finance, Sports & Videos”>Yahoo | Mail, Weather, Search, Politics, News, Finance, Sports & Videos)

The taxpayers of today help the elderly out and in return someday the taxpayers of today will become elderly and they will be helped out. May
not happen. But at least we are taking care of the elderly today.

We are taxing taxpayers to pay other people. We do this all the time. Or we receive tax benefits that other people don’t. I don’t have a mortgage so I don’t get the deduction. I pay for my own healthcare. I haven’t
contributed to a retirement plan in a decade. Those last 3 deductions cost the country over $300 billion a year. I never qualified for tuition tax credits. I pay amt. If your federal tax rate is an average tax rate in the 20 to 28 percent range, well, that is what it costs to run this place we call home. (Those are really my average rates most of the time).

The private sector pension plans are severly underfunded. As far as people going to jail if the pensions aren’t paid out, what are you talking about? Who went to jail when United Airlines pension plan was gutted?

Right now, SS is partially a “pension” plan. Maybe SS won’t be in the
future, but right now, SS does exist.

401ks aren’t working too well. Either are IRAs, and Keoghs, etc. People didn’t save enough with those programs. Financial people are thankful for the fees, but the investors, they are a little short. it is real easy to
trash SS, but how many people rely on SS. Millions and millions and millions of people.

What do you want to see happen to SS? You want it ended? Gutted? Do you want you SS taxes lowered and your benefits lowered? What do you want?, notrichenough?

notrichenough · November 27, 2012, 9:49pm

Yes, it is true that millions and millions collect. In fact, 1 in 6 Americans receive benefits. It might be 1 in 5, or even 1 in 4, by the time all the boomers retire. Do you think the framers of this program ever anticipated that? There were 12 taxpayers per beneficiary when SS start. There are now under 3 IIRC, and it is headed for 2.5. The retirement age hasn’t been significantly raised in 70 years, but people live much longer.

Do you not see the bus careening out of control towards the cliff?

Even if you believe the “surplus” can be used to maintain current benefit levels, it won’t last forever. When it runs dry, revenues will only cover 70% of current benefits. So either everyone takes a 30% haircut, or taxpayers get a 50% FICA tax increase.

Something has to give.

I don’t want it ended, I have no desire to see old people out on the street eating cat food. (Although, I have read that senior citizens as a class are the wealthiest in America.)

Raising taxes every time the gov’t needs more money can’t always be the answer either, though.

A good start might be for people to get out of the mindset that SS is a pension that they are entitled to.

On a personal level, we have planned for our retirement assuming we will get nothing from SS. So if we do get 70%, or 50%, or by some miracle 100%, of the current benefits, it will be gravy. If people took more personal responsibility, that would be good too.

dstark · November 27, 2012, 10:09pm

Ok…but those aren’t SS solutions.

The fiscal cliff is a political issue. It is made up. Politicians can fix it or not. I don’t see any bus going over a cliff.

I don’t care what was the intent of social security when it was started.
Do I think SS is a large fiscal issue?
No. I don’t.

I am not going to rely on SS either because SS has become a toy of the politicians.

Medicare, I want. I do not want to be at the mercy of private insurers. I have conservative friends that complain about deficits and taxes, but I notice they all want their medicare. Well…maybe not the guy who is very wealthy. The other conservatives are well off, but not
that wealthy. They know they can be screwed by healthcare costs. I notice they complain, but they want their social security too.

Social security funding issues flatten out over time. Medicare is a whole
different story.

BCEagle91 · November 27, 2012, 10:47pm

Whether they need it or not.

I get a tax break on health insurance but I only use about ten percent
of the price of the insurance. I imagine that part of that other 90%
is cost shifting from people that use services but can’t or don’t pay
for them. I’d guess that some goes to the CEO of United Healthcare
too.

I haven’t had a mortgage in ages.

I think that the government is going to make more in taxes on 401Ks
than they would if we didn’t have 401Ks. Eventually. We get a tax
deferral but we’re going to pay higher rates in the future and we
don’t get the benefits of lower capital gains and dividends rates.

I personally would have saved a lot of tax preparation hours if we
had a much simpler tax system. Sounds like you would have too. Did
you ever get your 2012 return in?

Some are in good shape, others aren’t. Private companies have good
lawyers and play around with pensions.

There are rules for pension plans on funding. The rules for private
pensions are tighter than the rules for public pensions. Private
companies can cheat but it seems that in practice, public pensions
cheat more.

Well, Wall St hasn’t worked out so well so 401Ks should be similar.
Right now returns generally stink everywhere. But at least you know
where you stand with a 401K. At least until confiscation. It may be
better to have a bar of gold in a foreign bank vault.

That would at least project some realism into what will happen. It’s
really a transfer program.

busdriver11 · November 28, 2012, 10:45am

To answer an earlier question, off the current topic, " Busdriver11, even with the mishap, and all the other expenses, are the properties cash flow positive?
Is depreciation making the properties show a loss?"

The properties bring about a $300-$400 cash flow each month, and will bring in more as the money borrowed for them is paid down. I’m not even bringing depreciation into the equation. But the year they go into service, they aren’t profitable. It’s been taking us a couple of months to fix them up, and some of them we have had to put a couple grand into to get them ready. The one with the water loss will take a long time to show a positive on, (though we did get a new floor and some upgrades because of it). The properties aren’t really anything we expect to get more than a meager cash flow, we bought them because they were highly discounted, and will get rid of them when they are either too much of a pain to handle, or prices go up. So far, they are getting to be a pain to handle!

There was a lot of good information from some of these posts about rental losses and depreciation, I got more from that then trying to read about it on the internet!

dstark · November 28, 2012, 10:50am

Ok busdriver11… Hopefully next year your properties will look good.

This unfunded liability stuff is not as scary as the numbers look…
SS can be fixed in a day. Medicare is part of a larger health care cost issue.

The public is being manipulated…

[Is</a> Our Debt Burden Really $100 Trillion? - Derek Thompson - The Atlantic](<a href=“Is Our Debt Burden Really $100 Trillion? - The Atlantic”>Is Our Debt Burden Really $100 Trillion? - The Atlantic)

“Now, about our laws. Strictly speaking, the U.S. doesn’t have an entitlement problem, or even a Medicare problem. Rather, we have a health care cost problem – medical insurance and hospital costs and so on are getting expensive faster than our ability to pay for them. Medicare and Medicaid are part of this big expensive system. If we cut these programs without changing the system, we won’t be “saving” money, so much as shifting costs to old folks, who will be forced to pay much more for their health care, or else see much worse coverage.”

DocT · November 28, 2012, 11:20am

“If we cut these programs without changing the system, we won’t be “saving” money, so much as shifting costs to old folks, who will be forced to pay much more for their health care, or else see much worse coverage.”

For some bizarre reason, the concept that somebody is going to have to pay seems to be foreign to a lot of people here.

dstark · November 28, 2012, 11:23am

Warren Buffett was on the Daily Show yesterday. The show can be watched on On-Demand for those that have cable. The show is probably on the internet also.

Buffett talked about taxes. This talk that 47 percent of the people don’t pay income taxes implying that the 47 percent don’t pay taxes and don’t have skin in the game is bs.

Buffett says the federal govt should have revenues of 18.5 perecnt and expenditures of 21 percent.

Hmmm…I wonder who else wrote something similar yesterday…

“But he thinks the end result should have U.S. revenues at 18.5 percent of GDP and expenditures at 21 percent.
Those levels would be “sustainable” because the ratio of the nation’s national debt to GDP wouldn’t increase, and might even fall over time, as economic growth makes up for the revenue gap.
Buffett said the “fiscal cliff” is having no effect on his long-term investing decisions.
He repeated his call for a minimum tax rate for the ultrarich, saying that the small minority that don’t pay any taxes at all are among the “moochers” Mitt Romney referred to in his “47 Percent” comments.
Buffett argues that many middle-class people are unfairly burdened with payroll taxes for Social Security and Medicare, calling them very “regressive.” Those taxes only apply to income under a cutoff just above $100,000. He said $800 billion, or one-third of U.S. revenue, comes from payroll taxes.”

[Buffett</a> Expects ‘Fiscal Cliff’ Fix, But Not By December 31 - Yahoo! Finance](<a href=“http://finance.yahoo.com/news/buffett-expects-fiscal-cliff-fix-135631531.html;_ylt=AnFI3QtLIwelt.guXLuciEmiuYdG;_ylu=X3oDMTN1YThobWF2BG1pdANGaW5hbmNlIEZQIE1lZ2F0cm9uIDIEcGtnAzU1ZGQ1NjdiLTY4ZDYtMzFiNS05YjliLWZlYTI4MjFlNGMwYQRwb3MDMQRzZWMDbWVnYXRyb24EdmVyAzAyYzNjNjcyLTM5NjYtMTFlMi04YTNkLTNjZDkyYmZmMjAxNg--;_ylg=X3oDMTFpNzk0NjhtBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25z;_ylv=3]Buffett”>http://finance.yahoo.com/news/buffett-expects-fiscal-cliff-fix-135631531.html;_ylt=AnFI3QtLIwelt.guXLuciEmiuYdG;_ylu=X3oDMTN1YThobWF2BG1pdANGaW5hbmNlIEZQIE1lZ2F0cm9uIDIEcGtnAzU1ZGQ1NjdiLTY4ZDYtMzFiNS05YjliLWZlYTI4MjFlNGMwYQRwb3MDMQRzZWMDbWVnYXRyb24EdmVyAzAyYzNjNjcyLTM5NjYtMTFlMi04YTNkLTNjZDkyYmZmMjAxNg--;_ylg=X3oDMTFpNzk0NjhtBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25z;_ylv=3)

Getting a jump on 2012 taxes

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