<p>“You’re assuming that the tax rate goes up with income.”</p>
<p>We live with a progressive tax system in terms of income. I believe it is probably regressive in terms of wealth but we are talking about income. I find it hard to believe that you would argue this point. You’re assuming that tax rate does not go up with income.</p>
<p>The Banks may well sell the homes back to the market but they would still be single family residential units. I do not see why this would cause an increase in supply of multifamily units. Some would be converted to rental housing but it is doubtful whether this would be in significant numbers.</p>
<p>I’d suggest that you actually try filling out a tax return sometime.</p>
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<p>The banks often want someone to live in their foreclosed properties because
abandoned homes run into problems. Homes can be converted to multifamily
units too.</p>
<p>The 40% refers to ALL taxes paid by an individual, not just income taxes. We make around $200k a year and our federal income tax was nowhere near 40% - our overall tax rate probably was, including state, local, property, and FICA. </p>
<p>By the way, tax rate does not always go up with income. If you’re an NFL quarterback and get paid in dollars, yes, but if you’re a trust fund baby or CEO and get it in stocks and the like, call Warren Buffet and ask him.</p>
<p>The best part of tax season is when I finish up with Turbo Tax every year and it shows me how my income, taxes, rate, etc compare with everyone else who uses Turbo Tax. Do this for 20-25 years in a row and you’ll see.</p>
<p>Also referring to the link in # 103, does it look too high that the “all-in marginal tax rates for couples” at incomes near or below $ 30 K are 32-42.5 %?</p>
<p>I’ll definitely give the paper a read after midterms.</p>
<p>I don’t understand why no one reads what I post lol. I clearly said that I am talking about high income individuals. I stated in my beginning posts that I am pushing for my peers to become businessmen and investors, who pay 20% in taxes. Tricky real estate folks can theoretically defer their taxes for…ever. This means they have an effective tax rate of 0% lol.</p>
<ul>
<li>SS is paid in full; not phased out as with higher incomes</li>
<li>Sales taxes hit the poor disproportionately</li>
<li>The poor generally don’t take advantage of 401Ks and IRAs</li>
<li>The poor generally don’t take advantage of favorable capital gains and dividends rates</li>
<li>Don’t have mortgage interest deductions</li>
<li>Don’t have Master Limited Partnership tax benefits</li>
</ul>
<p>I prefer you may have a semi-quantitative response instead. For example in 2010 the Federal portion for couples,</p>
<ol>
<li>10% on income between $0 and $16,750 and 15% on the income between $16,750 and $68,000.</li>
<li>Personal Exemption is $ 7,300.</li>
<li>Standard Deduction is $ 11,400.</li>
</ol>
<p>So the Federal portion is in the neighborhood of $ 1,130 for an income of $ 30,000, or about 3.8 %, and even less for lower incomes.</p>
<p>Then how do you account for the extra 28.2-38.7 % for the “all-in marginal tax rates for couples” at incomes near or below $ 30 K mentioned in the link, as 32-42.5 %, even after state, SS, sales, etc.?</p>
<p>Actually one correction to the above, since the link talked about marginal rates, my earlier message actually showed that the Federal portion of the marginal rate is only 10 %, after Personal Exemption and Standard Deduction in 2010. Then there is still an extra marginal rate of 22-32.5 % to be accounted for, in order to meet the 32-42.5 % as mentioned in the link, for “all-in marginal tax rates for couples” at incomes near or below $ 30 K.</p>