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Atma Weapon
 
Why is the US tax system so needlessly complicated?

I've always wondered this, but attempting this year to file US taxes on both the federal and state levels while living abroad (Korea) has left me in complete confusion, even after hours of research. I honestly have given up, I don't care if I get audited (again) because I already know I make so little I won't have to pay anything regardless. I have always found the filing of income taxes to be needlessly complicated even as someone who has never really made any money, and I think most Americans would probably agree with me, seeing as how so many of us despise the IRS. I have a college degree and I still have trouble just filling out just a 1040EZ form. How can it possibly be expected for the average citizen to figure these type of things out on their own? Is the filing of income of taxes in other countries this bad? I can't imagine so.

I'm not some anti-government libertarian who thinks all taxes should be abolished, but there HAS to be a better alternative to the income tax. When almost half of American households don't even have to pay income taxes to the federal government because they don't make enough money, it seems ridiculous that all of those people would have to spend the time and effort filing. We are all still paying payroll taxes, gas taxes, sales taxes, etc. on both the federal and state levels, so everybody is still contributing.

It seems like it would make much more sense to only apply a progressive income tax (on both the federal and state levels) on the top 1.5% who make over $250K. If this was applied, the size of the IRS could be shrunk dramatically and be run much more efficiently since it has to deal with only a fraction of the amount of people. Discuss.
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Old 04-26-2011, 03:12 AM Atma Weapon is offline  
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DlStreamnet
 
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It's the same over here in the UK, very easy if you have one job, but once you have two or three shit hits the fan.

We get tax codes that give us an untaxed allowance, usually Б6k - then we get taxed 20% on top of that. For some reason if you get another job instead of just having no tax free allowance they share the tax code across the two so on one you have 5230 for example and on the other 1000 or something

Also when you start a new job you are put on emergency tax code which means for the first month or so (or until your companies accountants get their shit together) you earn dramatically less.
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Old 04-26-2011, 03:38 AM DlStreamnet is offline  
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Rancidpunk666
 
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The alternative is a flat tax. Everyone pay the same percentage at the end of the year. It doesn't matter if you make 10,000 dollars or 10,000,000 dollars. Let's say the rate is 30%.

If you like you can have 30% of your paycheck put into a high interest tax free savings account and at the end of the year you just give that money to the government to pay your income taxes.

Also if they got rid of all deductions such as donating money to charities it would make things a lot simpler.

Basically a flat tax is the answer. End of the year you write the government a check for your taxes. End of story. No income levels, no deductions, no special tax breaks for anyone.
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Old 04-26-2011, 04:32 AM Rancidpunk666 is offline  
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Coqui
 
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I've never found income tax filing to be difficult.

And this has been including years I've had three different companies I worked for.
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Old 04-26-2011, 05:11 AM Coqui is offline  
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Gibonius
 
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The alternative is a flat tax. Everyone pay the same percentage at the end of the year. It doesn't matter if you make 10,000 dollars or 10,000,000 dollars. Let's say the rate is 30%.

If you like you can have 30% of your paycheck put into a high interest tax free savings account and at the end of the year you just give that money to the government to pay your income taxes.

Also if they got rid of all deductions such as donating money to charities it would make things a lot simpler.

Basically a flat tax is the answer. End of the year you write the government a check for your taxes. End of story. No income levels, no deductions, no special tax breaks for anyone.

That is an alternative, albeit a stupid one.

Better would be a graduate income system like we have now (seriously, shit is easy to figure out and the only fair way to tax) and just remove about 95% of the deductions. Deductions and different incomes classes (capital gains etc) are what make taxes complicated and prone to fraud.
Old 04-26-2011, 05:20 AM Gibonius is offline  
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teh_rapist
 
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Because of the hypersensitivity of the american political process to the opinions of unqualified morons.
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Old 04-26-2011, 05:48 AM teh_rapist is offline  
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Forever Domon
 
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Quote:
Originally Posted by Rancidpunk666 View Post
The alternative is a flat tax. Everyone pay the same percentage at the end of the year. It doesn't matter if you make 10,000 dollars or 10,000,000 dollars. Let's say the rate is 30%.

If you like you can have 30% of your paycheck put into a high interest tax free savings account and at the end of the year you just give that money to the government to pay your income taxes.

Also if they got rid of all deductions such as donating money to charities it would make things a lot simpler.

Basically a flat tax is the answer. End of the year you write the government a check for your taxes. End of story. No income levels, no deductions, no special tax breaks for anyone.
I always liked this option
Old 04-26-2011, 05:52 AM Forever Domon is offline  
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Gibonius
 
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I always liked this option

Why, because it makes the poor and lower middle class suffer disproportionately?


SOUNDS GOOD TO ME!
Old 04-26-2011, 12:23 PM Gibonius is offline  
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Originally Posted by teh_rapist View Post
Because of the hypersensitivity of the american political process to the opinions of unqualified morons.

basically the fault of every democracy

the alternatives however aren't much better
Old 04-26-2011, 12:56 PM Fiah is offline  
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Forever Domon
 
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Why, because it makes the poor and lower middle class suffer disproportionately?


SOUNDS GOOD TO ME!
derp. Thats not how percentages work.

To compensate for deductions, have a cutoff. Flat tax only applies to incomes above 15k or whatever.
Old 04-26-2011, 01:00 PM Forever Domon is offline  
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pyramid
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flat taxes are stupid and the rich will just continue to avoid those with capital gains anyway.

the progressivity of our tax scale is not what makes it complex. the myriad of deductions, credits, exceptions, etc is what makes it complex. Also all the corporate lobbyists who have carved out all the business exceptions, credits, refunds, deductions, etc for their clients.

what we need is a uniform progressive scale with minimal deductions/exceptions and that progressive scale needs to apply to federal income tax and capital gains. then we need to do the same thing to business deductions/exceptions and put them on a either a flat 25% rate (current is flat 35% but no one pays that because of all the BS in the code) or a different progressive rate for them too.

the 45% of households who don't pay any federal income tax make less than 33k a year. Their average income is around 15k a year.
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Old 04-26-2011, 01:10 PM pyramid is offline  
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also, we need to fully fund and staff the IRS, SEC, MMS and all the other regulatory agencies with people who will actually do their jobs and not be industry shills willing to rubber stamp anything the industry wants so that they can kick back and wait to get a cushy industry job through the revolving door between government and industry.

right now we lose hundreds of billions in tax revenue because the IRS doesn't have the manpower or money to go after those dollars. Every one extra dollar spent on tax enforcement brings in another 30 dollars in revenue compliance but the geniuses in congress will likely cut the IRS budget and staff under the guise of "saving money".
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Old 04-26-2011, 01:44 PM pyramid is offline  
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Gibonius
 
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derp. Thats not how percentages work.

To compensate for deductions, have a cutoff. Flat tax only applies to incomes above 15k or whatever.

derp income after expenses is the relevance percentage, not the tax rate. The poor and lower middle class pay most (many times more than all) of their salary to mandatory expenses: food, clothing, shelter, education. No matter where you set the cap, you will hurt the people at the lowest end of the cap the most since a much higher fraction of their income will always go to fixed expenses.

Pretty basic math here. If you reduce taxes on the high end, that money has to be made up on the low end. That means more money out of the pockets of poor or middle class Americans than right now, which is exactly the opposite of what we should be doing. Income disparity is bad enough right now, the well-off don't need a tax cut in the guise of "fairness in taxation."
Old 04-26-2011, 02:07 PM Gibonius is offline  
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Forever Domon
 
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derp income after expenses is the relevance percentage, not the tax rate. The poor and lower middle class pay most (many times more than all) of their salary to mandatory expenses: food, clothing, shelter, education. No matter where you set the cap, you will hurt the people at the lowest end of the cap the most since a much higher fraction of their income will always go to fixed expenses.

Pretty basic math here. If you reduce taxes on the high end, that money has to be made up on the low end. That means more money out of the pockets of poor or middle class Americans than right now, which is exactly the opposite of what we should be doing. Income disparity is bad enough right now, the well-off don't need a tax cut in the guise of "fairness in taxation."
ok, the fixed percentages thing make sense. I didnt think of that aspect of it.

But would a 25-30% flat tax really be a tax cut for the rich?
Old 04-26-2011, 02:09 PM Forever Domon is offline  
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pyramid
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Quote:
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ok, the fixed percentages thing make sense. I didnt think of that aspect of it.

But would a 25-30% flat tax really be a tax cut for the rich?

the top fed income tax rate now is 35%. That's a 5%-10% cut right there.
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