<p>"If your group obtains tax-exempt status, not only is it free from paying taxes on all income from activities related to its nonprofit purpose (see Nolo’s article Tax Concerns When Your Nonprofit Corporation Earns Money), but people and organizations that donate to the nonprofit can take a tax deduction for their contributions. </p>
<p>Forming a nonprofit corporation normally protects the directors, officers, and members of the nonprofit from personal liability for the corporation’s debts and other obligations. Called limited liability, this shield ensures that anyone who obtains a judgment against the nonprofit can reach only the assets of the corporation, not the bank accounts, houses, or other property owned by the people who manage, work for, or participate in the business." cited from Nolo Press</p>
<p>That’s a lot of money upon which no taxes are levied. </p>
<p>BTW…the question of the thread begs a personal opinion…this happens to be mine.</p>
<p>Diets, that’s right. Personal opinion. Posters are doing well keeping politics out of it.
Kajon, the economy is larger now. Revenues would be larger now under the 1986 tax code. </p>
<p>If you look at the links in the op, you can see where govt spending is going.</p>
<p>Only for long term holders would indexing the basis for capital gains be of significant help. Those who hold one year plus one day would only get minimal help from that.</p>
<p>Those who argue for lower capital gains rates than normal tax rates tend to make the argument that some of the capital gain is merely due to inflation (and this is why there have been various exceptions relating to sales of long-held primary residences). Using indexed basis would address that concern, and allow eliminating the complexity of special capital gain tax rates and special treatment of primary residence capital gains.</p>
<p>The current tax structure reminds me of the Jenga game. It is all intertwined and continued stability requires extreme caution when removing any of the supporting blocks.</p>
<p>So are you in favor of keeping the system rigged in order to benefit big companies because the wealth will trickle down to lower class Americans? When in fact, most such wealth tends to be amassed and stored in tax havens? These loopholes and privileges hinder competition from entering the market. The U.S has among the worst income inequality in the world and it is only getting worse. Warren Buffet once stated that he has never seen an investor shy away from an investment because of potential taxes. What needs to be done is to close the biggest tax loopholes and give and invest money in the middle class, “Middle out economics.” </p>
<p>The tax code’s sole purpose is to fund the government and its programs. Once this purpose gets distorted, you get people manipulating the system for their own gain (super pacs, lobbyists, etc).</p>
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<p>No, UCB is right in switching tax rates to 1980s levels. Nearly 40 million jobs were added between 1980 and 2000. Since then tax cuts (cough, Bush tax cuts), have reduced tax rates and there has been far lower job creation.</p>
<p>That’s a pretty odd interpretation. A flat tax gets rid of the loopholes and privileges.</p>
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<p>Any investor, including Warren Buffet, wants to maximize after-tax returns given similar risk profiles. If given a choice of multiple investments with better returns due to taxes, which would he choose?</p>
<p>Warren Buffet once called derivatives weapons of mass financial destruction. Why did he then buy one? Where he lost a lot of money?</p>
<p>Ucb does not want to go back to 1986 tax levels… He wants to add a tax break so some of my ex neighbors who are already filthy rich can be richer. That is the result. Millions in tax breaks.</p>
<p>Get rid of the “carried interest” rule that allows hedge fund managers to treat ordinary income as capital gain. </p>
<p>A flat tax is regressive. People seem to forget that poor people have no money.* If we shift to a flat tax, we’d have to graduate it at the low end or people simply couldn’t pay it. That means it would just become a big tax cut. If we as a society want that, I suggest cutting the defense budget by $300B first. </p>
<p>*See for example Nortan and Ariely. Their work explains that people - including economists - think the poor have more income and more wealth than they actually do. They have found that when asked what the income distribution is now, people underestimate the share of the top group and overestimate the shares of the bottom. Interestingly, they find people across the political spectrum suggest an ideal income distribution that is actually much closer to Sweden than the US actual.</p>
<p>You obviously do not understand what I am actually proposing. (And it can go the other way, if there is deflation. As it is, with current low levels of inflation, it does not much affect any other than very long term holdings, probably mostly houses given the rapid fire trading of most securities these days.)</p>
<p>After the 1986 reform, the long term capital gain tax rate was 28%. There were rates up to 35% in 1987, and 33% in 1988-1990. So even then, there were differential tax rates for capital gains. Eliminating the differential tax rates in exchange for inflation-indexing the basis would result in a simpler tax system (and likely much less of a “tax break” for capital gains, except for the longest held capital). </p>
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<p>Well, if the special tax rate for capital gains were eliminated, then the carried interest loophole has no effect (and can be removed to simplify the tax code).</p>
<p>Why would you think that this would be more than having differential capital gain tax rates that would be eliminated in exchange? Indeed, other than houses, how many people have a lot of long-held capital assets (as opposed to one year and a day “long term” capital assets that they sell)?</p>
<p>Obviously, the rates would matter.
28 percent plus inflation protection… Many wealthy people would take that deal. Some would holdout for lower rates and inflation protection</p>
<p>Long term stock investors would pay higher rates for inflation protection</p>
<p>I hope that they have documentation on their cost basis.</p>
<p>I looked in my 1988 tax folder last night.</p>
<p>There was a printout of a spreadsheet with the cost basis of interest from off-shore accounts. I’ll need those numbers along with the numbers from then until now to calculate my capital gains. We’ve had no reason to use the money and it provides currency diversification. And decent returns for banks.</p>
<p>Sometimes I think that there would be less of an inclination to hoard assets if there were more trust in our governments. The feeling that I get from the very wealthy is that they want to store wealth in various forms and in various places in case TSHTF here.</p>
<p>My friends and acquaintances don’t usually get into the details of documentation. Most people don’t discuss their wealth either, but sometimes it is obvious. Some people are going to inherit a s…load of money too. And I see tax avoidance going on. Legal.</p>
<p>A few people don’t know what they have. We know somebody getting divorced and I was told the wife was worried about money. </p>
<p>I said to my wife that there is no way she has a money issue. No way.
And the wife talked to her CPA and…there is no money issue. It would be nice to be so wealthy you don’t know what you have. Lol</p>
<p>One of my oldest friends is getting divorced and he could have big money issues someday. He doesn’t understand his money may run out.</p>
<p>Everyone wants to get rid of the other guys deductions and not their own.</p>
<p>The whole point about making any actual (HA! like there will ever be a real cut) budget cuts is that the effected group is very defined and very visible with the effect that this will have on them. And their sob story is highlighted on the nightly news. Everyone gets a small negligible benefit from the cut and therefor they are not as motivated to demonstrate for the cuts and they dont get on tv. Therefor it almost impossible to make any cut unless you target some group that are “big meanies” even if there isnt actually economic sense in the cut. So nothing gets done. </p>
<p>The same thing happens with closing tax deductions. We will see non-stop reports on school teachers who buy their own whiteboard markers and can no longer deduct them for the next 3 months if you make the mistake of turning on a tv set. </p>
<p>The big problem is politicians buying themselves votes with the tax code. “I supported schools with blah blah blah”. “We are investing in clean energy with …,”, “We reinvested in our communities with blah…”. All of that costs money which the politicians never pay. And it encourages a lot of activity that maybe isnt beneficial. How much shoudl the country have invested over the last decade in Ethanol? The average Volt buyer make $170,000 a year and yet the government is giving them $7,500 to buy the car. Doesnt make sense. </p>
<p>I am sympathetic to the deductions because a lot of people have built their financial expectations around them in a way that isnt easy to unwind. The mortgage interest deduction feds into how much of a house payment people could afford. Retirees have planned their dividend stream being taxed at a certain rate. A lot of municipalities can only sell their bonds because they are tax advantaged. </p>
<p>I say the first step is slamming shut the door on politicians buying themselves votes with targeted loopholes. Then we can start planning which programs have no payback and need to be closed out.</p>
<p>If you are going to do a flat tax I favor some incremental level of income not subject to tax.
Say the initial $36,000 of family income no tax but every dollar above that taxed at whatever percentage is needed to raise needed revenue.</p>
<p>I would also make it a flat tax so no deductions for dependents</p>
<p>I don’t really have any deductions so I’m all for shooting all of them.</p>
<p>I used to be a lot more enthusiastic about shooting all of them but the software out there is getting better and better. Going from about 30 hours to 10 hours on taxes has made me feel better. Of course getting that down a few more hours would be nice.</p>