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Posted: 1/18/2015 1:38:10 AM EST
I have to admit upfront that I am young and largely uneducated in economics. Something that have never quite made sense to me, are tax loop holes. And to be honest, I don't believe I've ever seen a proper discussion on this topic in GD.

Does anyone want to explain why they exist, and why they are good or bad in the grand scheme of economics?

Would a flat income tax percentage across the board for all income - be more or less fair than our current tax system?


Link Posted: 1/18/2015 1:39:54 AM EST
Define: Loophole

Link Posted: 1/18/2015 1:40:24 AM EST
[Last Edit: 1/18/2015 1:42:07 AM EST by midcap]
Originally Posted By Greggo556:
I have to admit upfront that I am young and largely uneducated in economics. Something that have never quite made sense to me, are tax loop holes. And to be honest, I don't believe I've ever seen a proper discussion on this topic in GD.

Does anyone want to explain why they exist, and why they are good or bad in the grand scheme of economics?

Would a flat income tax percentage across the board for all income - be more or less fair than our current tax system?


View Quote



Loop hole is a talking point word the left made to demonized those who make and produce things in this country. You either follow the tax codes or you don't, loop holes are a canard.

Our tax system is generous to the poor and unfair to everyone else especially w2 people.
Link Posted: 1/18/2015 1:46:16 AM EST
[Last Edit: 1/18/2015 1:49:19 AM EST by Greggo556]
Originally Posted By NeoSaffiru:
Define: Loophole

View Quote

I guess that's kind of what I came here to ask.

I've only read that Warren Buffett pays something like 17% income tax, while a doctor pays around 40% income tax. I thought that was due to what are referred to as "loop holes", but like I said above, I am largely uneducated on this topic.
Link Posted: 1/18/2015 1:48:28 AM EST
we need flat tax no loop holes.

You don't get money for making babies or paying daycare
flat tax that everyone pays.
Link Posted: 1/18/2015 1:51:56 AM EST
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Originally Posted By bakkbakk:
we need flat tax no loop holes.

You don't get money for making babies or paying daycare
flat tax that everyone pays.
View Quote

That's what makes sense to me. But I'd like to hear it from someone that understands large scale economics.
Link Posted: 1/18/2015 1:52:15 AM EST
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By Greggo556:

I guess that's kind of what I came here to ask.

I've only read that Warren Buffett pays something like 17% income tax, while a doctor pays around 40% income tax. I thought that was due to what are referred to as "loop holes", but like I said above, I am largely uneducated on this topic.
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Originally Posted By Greggo556:
Originally Posted By NeoSaffiru:
Define: Loophole


I guess that's kind of what I came here to ask.

I've only read that Warren Buffett pays something like 17% income tax, while a doctor pays around 40% income tax. I thought that was due to what are referred to as "loop holes", but like I said above, I am largely uneducated on this topic.


Income Is taxed differently, capital gains versus, earned income versus unearned income, tax free income etc. want to blow your mind, there are bonds I can buy in which I pay 0 taxes on the interest regards if it's 1$ or 100000$ dollars. The media as a whole are ignorant when it comes to the business world
Link Posted: 1/18/2015 1:53:05 AM EST
[Last Edit: 1/18/2015 2:06:31 AM EST by oscardeuce]
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By Greggo556:

I guess that's kind of what I came here to ask.

I've only read that Warren Buffett pays something like 17% income tax, while a doctor pays around 40% income tax. I thought that was due to what are referred to as "loop holes", but like I said above, I am largely uneducated on this topic.
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Originally Posted By Greggo556:
Originally Posted By NeoSaffiru:
Define: Loophole


I guess that's kind of what I came here to ask.

I've only read that Warren Buffett pays something like 17% income tax, while a doctor pays around 40% income tax. I thought that was due to what are referred to as "loop holes", but like I said above, I am largely uneducated on this topic.


Buffet has little "income" at this point he has capital gains which is taxed at a lower rate than income.

Eta beat by :50
Link Posted: 1/18/2015 1:53:52 AM EST
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Originally Posted By bakkbakk:
we need flat tax no loop holes.

You don't get money for making babies or paying daycare
flat tax that everyone pays.
View Quote
But, then people would demand and vote for the government to be smaller.


I would add that if you are on state or federal aid that you should not be able to vote.
Link Posted: 1/18/2015 1:55:57 AM EST
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Originally Posted By NeoSaffiru:
Define: Loophole

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Obeying the law to the letter.

Frankly I hate the word loophole. "Loophole allows gun purchases without background checks." It's not a loophole if its by design.
Link Posted: 1/18/2015 2:01:47 AM EST
[Last Edit: 1/18/2015 2:07:28 AM EST by Greggo556]
Originally Posted By midcap:
Income Is taxed differently, capital gains versus, earned income versus unearned income, tax free income etc. want to blow your mind, there are bonds I can buy in which I pay 0 taxes on the interest regards if it's 1$ or 100000$ dollars. The media as a whole are ignorant when it comes to the business world
View Quote

Why are capital gains taxed differently than income?

Someone could use a shovel all day long and earn an income that requires a 25% income tax, yet a different guy can sit on a computer and trade stocks and pay a much smaller tax percentage on his income.

How does that help the economy on the grand scheme of things? Again, I am just asking, because I really don't understand the economics behind it.
Link Posted: 1/18/2015 2:04:46 AM EST
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By Greggo556:

I guess that's kind of what I came here to ask.

I've only read that Warren Buffett pays something like 17% income tax, while a doctor pays around 40% income tax. I thought that was due to what are referred to as "loop holes", but like I said above, I am largely uneducated on this topic.
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Originally Posted By Greggo556:
Originally Posted By NeoSaffiru:
Define: Loophole


I guess that's kind of what I came here to ask.

I've only read that Warren Buffett pays something like 17% income tax, while a doctor pays around 40% income tax. I thought that was due to what are referred to as "loop holes", but like I said above, I am largely uneducated on this topic.

A loophole would be an oversight that could be exploited. What libs call a loophole is not. It's a deliberate section or clause in the tax code that grants exemptions from taxable income or deductions from tax to encourage behavior the Congress (at some point, anyhow) wanted to encourage. In Warren Buffet's case, that encouraged behavior is investing- putting your money at risk.

The most common example is home mortgage interest deduction - Congress wanted to encourage people to buy homes, which creates a demand for jobs in construction, appliance manufacturing, hardware stores, furniture stores, etc, etc, and all the business that support and supply them. All those jobs get taxed (payroll and income tax).
Link Posted: 1/18/2015 2:05:42 AM EST
[Last Edit: 1/18/2015 2:26:26 AM EST by Woodfiend]
You pay less for capital gains taxes because investments are still a risk. You could lose all your money tomorrow.... All of it. So to offset that risk and still make it worthwhile to invest (and thus to allow companies to grow) the taxes are lower for the investor.


Plus typically investments are normally purchased with money that you have already earned and paid taxes on when you worked your job.... so to tax your gains on investments are already like a double tax anyways.



Link Posted: 1/18/2015 2:08:11 AM EST
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Originally Posted By Greggo556:

Why are capital gains taxed differently than income?

Someone could use a shovel all day long and earn an income that requires a 25% income tax, yet a different guy can sit on a computer and trade stocks and pay a much smaller tax on his income.

How does that help the economy on the grand scheme of things? Again, I am just asking, because I really don't understand the economics behind it.
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Originally Posted By Greggo556:
Originally Posted By midcap:
Income Is taxed differently, capital gains versus, earned income versus unearned income, tax free income etc. want to blow your mind, there are bonds I can buy in which I pay 0 taxes on the interest regards if it's 1$ or 100000$ dollars. The media as a whole are ignorant when it comes to the business world

Why are capital gains taxed differently than income?

Someone could use a shovel all day long and earn an income that requires a 25% income tax, yet a different guy can sit on a computer and trade stocks and pay a much smaller tax on his income.

How does that help the economy on the grand scheme of things? Again, I am just asking, because I really don't understand the economics behind it.

To encourage risk taking. The stock market, and especially day trading, is fraught with peril. Watch Trading Places - that's what the Dukes were doing, but with commodities instead of stocks.
Link Posted: 1/18/2015 2:08:28 AM EST
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Originally Posted By Greggo556:

Why are capital gains taxed differently than income?

Someone could use a shovel all day long and earn an income that requires a 25% income tax, yet a different guy can sit on a computer and trade stocks and pay a much smaller tax on his income.

How does that help the economy on the grand scheme of things? Again, I am just asking, because I really don't understand the economics behind it.
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Originally Posted By Greggo556:
Originally Posted By midcap:
Income Is taxed differently, capital gains versus, earned income versus unearned income, tax free income etc. want to blow your mind, there are bonds I can buy in which I pay 0 taxes on the interest regards if it's 1$ or 100000$ dollars. The media as a whole are ignorant when it comes to the business world

Why are capital gains taxed differently than income?

Someone could use a shovel all day long and earn an income that requires a 25% income tax, yet a different guy can sit on a computer and trade stocks and pay a much smaller tax on his income.

How does that help the economy on the grand scheme of things? Again, I am just asking, because I really don't understand the economics behind it.


Really blunt answer: The people we elected, appointed people who were experts in their fields, who designed a tax code they felt would offer the best national income without the least negative economic effect.

We can argue about them being right, or wrong, or corrupt. But at the end of the day: appointed people who are educated in these topics, designed tax codes the way they deemed to be correct.

You are looking at it from a micro economic perspective, and they are looking at it from a macro economic scale.
Link Posted: 1/18/2015 2:08:51 AM EST
I don't have a handy definition of 'loophole' but I find it ridiculous that a company as profitable as General Electric pays zero in taxes.

Year after year.

There are some fucky things in the tax codes that make that possible.

Link Posted: 1/18/2015 2:09:51 AM EST
There are no loopholes so to speak.

If there is an incentive to do something with your money and be taxed less, its not a loophole. It's and incentive to do what your masters want you to do.

Loophole is a word invented to create a divide among the taxed. It creates as false narrative of have vs. have not. When in reality its a master vs. taxed relationship.
Link Posted: 1/18/2015 2:11:36 AM EST
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Originally Posted By Greggo556:

Why are capital gains taxed differently than income?

Someone could use a shovel all day long and earn an income that requires a 25% income tax, yet a different guy can sit on a computer and trade stocks and pay a much smaller tax on his income.

How does that help the economy on the grand scheme of things? Again, I am just asking, because I really don't understand the economics behind it.
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Originally Posted By Greggo556:
Originally Posted By midcap:
Income Is taxed differently, capital gains versus, earned income versus unearned income, tax free income etc. want to blow your mind, there are bonds I can buy in which I pay 0 taxes on the interest regards if it's 1$ or 100000$ dollars. The media as a whole are ignorant when it comes to the business world

Why are capital gains taxed differently than income?

Someone could use a shovel all day long and earn an income that requires a 25% income tax, yet a different guy can sit on a computer and trade stocks and pay a much smaller tax on his income.

How does that help the economy on the grand scheme of things? Again, I am just asking, because I really don't understand the economics behind it.


The reasoning is that capital gains are money made on investments - investments that have already had taxes paid on them once.


If you are a stock trader you don't get the lowest capital gains rate. It only applies to investments held a year or longer. Frequent traders pay a rate that is much higher.

The overall premise though is you had to work and pay taxes on the money you are investing to have it to invest in the first place so it shouldn't get taxed so hard the second time around.
Link Posted: 1/18/2015 2:12:35 AM EST
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Originally Posted By NeoSaffiru:
<snip>

Really blunt answer: The people we elected, appointed people who were experts in their fields, who designed a tax code they felt would offer the best national income without the least negative economic effect.

We can argue about them being right, or wrong, or corrupt. But at the end of the day: appointed people who are educated in these topics, designed tax codes the way they deemed to be correct.

You are looking at it from a micro economic perspective, and they are looking at it from a macro economic scale.
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I think that's a gross simplification or maybe naivete. It may have been true in the past.

Link Posted: 1/18/2015 2:13:04 AM EST
They're not loop holes.
Neither are FTF sales or gun shows...
Link Posted: 1/18/2015 2:14:25 AM EST
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Originally Posted By Greggo556:

I guess that's kind of what I came here to ask.

I've only read that Warren Buffett pays something like 17% income tax, while a doctor pays around 40% income tax. I thought that was due to what are referred to as "loop holes", but like I said above, I am largely uneducated on this topic.
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Originally Posted By Greggo556:
Originally Posted By NeoSaffiru:
Define: Loophole


I guess that's kind of what I came here to ask.

I've only read that Warren Buffett pays something like 17% income tax, while a doctor pays around 40% income tax. I thought that was due to what are referred to as "loop holes", but like I said above, I am largely uneducated on this topic.



Wealth and income are two different things.

Should you be continuously taxed on what you already own?
Pay a percentage of your net worth each year?
Link Posted: 1/18/2015 2:15:08 AM EST
Lots of interesting answers so far....

"Capital gains are taxed at a lower rate than income tax because of the inherent risk involved" - that does make sense.
Link Posted: 1/18/2015 2:15:43 AM EST
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Originally Posted By LePew:


I think that's a gross simplification or maybe naivete. It may have been true in the past.

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Originally Posted By LePew:
Originally Posted By NeoSaffiru:
<snip>

Really blunt answer: The people we elected, appointed people who were experts in their fields, who designed a tax code they felt would offer the best national income without the least negative economic effect.

We can argue about them being right, or wrong, or corrupt. But at the end of the day: appointed people who are educated in these topics, designed tax codes the way they deemed to be correct.

You are looking at it from a micro economic perspective, and they are looking at it from a macro economic scale.


I think that's a gross simplification or maybe naivete. It may have been true in the past.

completely wrong and over simplified... lobbyists created a tax code through negotiation. It makes absolutely no sense at all.
Link Posted: 1/18/2015 2:18:46 AM EST
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Originally Posted By LePew:
I don't have a handy definition of 'loophole' but I find it ridiculous that a company as profitable as General Electric pays zero in taxes.

Year after year.

There are some fucky things in the tax codes that make that possible.

View Quote


While I agree to some extent who is GE really? They just like Exxon and the evil oil companies are owned by virtually every American who has a 401k.

The tax codes are what they are. GE doesn't get any special treatment they just choose to do what it takes to not pay taxes based on existing laws and credits.
Link Posted: 1/18/2015 2:25:01 AM EST
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Originally Posted By LePew:


I think that's a gross simplification or maybe naivete. It may have been true in the past.

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Originally Posted By LePew:
Originally Posted By NeoSaffiru:
<snip>

Really blunt answer: The people we elected, appointed people who were experts in their fields, who designed a tax code they felt would offer the best national income without the least negative economic effect.

We can argue about them being right, or wrong, or corrupt. But at the end of the day: appointed people who are educated in these topics, designed tax codes the way they deemed to be correct.

You are looking at it from a micro economic perspective, and they are looking at it from a macro economic scale.


I think that's a gross simplification or maybe naivete. It may have been true in the past.




Lol.. sure. I paid roughly 10k in income tax last year. All of GE (to reference your other post) paid 0. In the end GE contributed exponentially more to the GDP, employment figures, and overall community benefit than I or my measly 10k could hope to accomplish.

Shit, assuming you're totally correct, how much did all of GEs employees pay in income tax combined? Is the incentive of "no income tax" on one entity, worth the enticement of an ungodly number of employees?

Na.. I'm nieve
Link Posted: 1/18/2015 2:27:48 AM EST
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Originally Posted By Greggo556:
Lots of interesting answers so far....

"Capital gains are taxed at a lower rate than income tax because of the inherent risk involved" - that does make sense.
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Investing grows the economy and provides benefit to everyone, hence it makes sense to tax those gains at a lower rate.
Link Posted: 1/18/2015 2:33:10 AM EST
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Originally Posted By Bassman2:
completely wrong and over simplified... lobbyists created a tax code through negotiation. It makes absolutely no sense at all.
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Originally Posted By Bassman2:
Originally Posted By LePew:
Originally Posted By NeoSaffiru:
<snip>

Really blunt answer: The people we elected, appointed people who were experts in their fields, who designed a tax code they felt would offer the best national income without the least negative economic effect.

We can argue about them being right, or wrong, or corrupt. But at the end of the day: appointed people who are educated in these topics, designed tax codes the way they deemed to be correct.

You are looking at it from a micro economic perspective, and they are looking at it from a macro economic scale.


I think that's a gross simplification or maybe naivete. It may have been true in the past.

completely wrong and over simplified... lobbyists created a tax code through negotiation. It makes absolutely no sense at all.



This is more of the typical talking head crap. Evil lobbies everywhere, assaulting us through "special interest".

Give me one example if tax code that is written specifically in reference to a single corporation or interest group by name.

Truth is, you too can benefit from tax code. Just build a multi generation, publicly traded, corporation that benefits the entirety of the nation (or globe). Then hire several hundred people for accounting and tax law compliance they'll hook you up, for an annual price higher than your entire life time tax contributions.
Link Posted: 1/18/2015 2:40:47 AM EST
[Last Edit: 1/18/2015 2:42:03 AM EST by cschaeff]
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Originally Posted By Greggo556:
Someone could use a shovel all day long and earn an income that requires a 25% income tax, yet a different guy can sit on a computer and trade stocks and pay a much smaller tax percentage on his income. How does that help the economy on the grand scheme of things? Again, I am just asking, because I really don't understand the economics behind it.
View Quote

The money used for investments has already been taxed as income when it was earned. You can take your earned income and blow it on hookers and blow or you can invest it into companies that provide jobs for people and produce a product or service. If you tax investment earnings too much you stifle investment business and job growth. Taxes don't produce anything, it takes money away from the producers.
Link Posted: 1/18/2015 2:42:41 AM EST
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Originally Posted By NeoSaffiru:



Lol.. sure. I paid roughly 10k in income tax last year. All of GE (to reference your other post) paid 0. In the end GE contributed exponentially more to the GDP, employment figures, and overall community benefit than I or my measly 10k could hope to accomplish.

Shit, assuming you're totally correct, how much did all of GEs employees pay in income tax combined? Is the incentive of "no income tax" on one entity, worth the enticement of an ungodly number of employees?

Na.. I'm nieve
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Originally Posted By NeoSaffiru:
Originally Posted By LePew:
Originally Posted By NeoSaffiru:
<snip>

Really blunt answer: The people we elected, appointed people who were experts in their fields, who designed a tax code they felt would offer the best national income without the least negative economic effect.

We can argue about them being right, or wrong, or corrupt. But at the end of the day: appointed people who are educated in these topics, designed tax codes the way they deemed to be correct.

You are looking at it from a micro economic perspective, and they are looking at it from a macro economic scale.


I think that's a gross simplification or maybe naivete. It may have been true in the past.




Lol.. sure. I paid roughly 10k in income tax last year. All of GE (to reference your other post) paid 0. In the end GE contributed exponentially more to the GDP, employment figures, and overall community benefit than I or my measly 10k could hope to accomplish.

Shit, assuming you're totally correct, how much did all of GEs employees pay in income tax combined? Is the incentive of "no income tax" on one entity, worth the enticement of an ungodly number of employees?

Na.. I'm nieve


Your argument is that GE should be off the hook because their employees paid income tax. The same is true of every company in the US, so you're really saying that no company should pay tax.

GE benefitted from being in a secure country, with a good infrastructure, and stable policies. That is clearly of value and GE ought to be paying for the value it gives the company.

If that isn't of value, they should have already moved to Argentina.

But they won't because they're getting a free ride where they can garner the benefits of being in the US without having to pay for those benefits.


GE is
Link Posted: 1/18/2015 2:45:36 AM EST
[Last Edit: 1/18/2015 2:48:01 AM EST by Bassman2]
If you study the tax code you'll find all kinds of nonsense.

Loopholes are a myth. But there are instances where a farmer (or other business) on one side of the street gets a break, and the farmer on the other side of the street doesn't. That is due to a lobby effort.

Don't get me wrong though....The biggest corps have the biggest risk and I don''t fault them for playing the game.

Flat tax would simplify and level the field.
Link Posted: 1/18/2015 2:49:48 AM EST
Again, I don't mean to beat a dead horse or sound like a broken record, butttttt....

Get rid of any and all income tax. Go with strictly a flat sales tax.

No more 1040's to have filled out by whatever tax preparer or accountant who is trying to look for whatever loopholes for you. No more submitting bullshit paperwork to the government.

You pay the sales tax at the register.

Let's say you're just some poor schlub who can only afford Dickies work jeans. They cost $20 a pair. Let's say the federal flat sales tax is 25%. So out the door, your jeans cost you $25.

Your brother is some white collar managerial type who likes to flaunt his wealth. He has to have Ralph Lauren or Tommy blue jeans. They cost $90 a pair. His pants are $112.50 out the door.

You don't want to pay X amount in (sales) taxes to the government, buy your shit second hand or from Goodwill or Salvation Army...or just don't have "champagne taste on a beer budget".

There! That's your loophole.

Link Posted: 1/18/2015 2:57:41 AM EST
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Originally Posted By LePew:


Your argument is that GE should be off the hook because their employees paid income tax. The same is true of every company in the US, so you're really saying that no company should pay tax.

GE benefitted from being in a secure country, with a good infrastructure, and stable policies. That is clearly of value and GE ought to be paying for the value it gives the company.

If that isn't of value, they should have already moved to Argentina.

But they won't because they're getting a free ride where they can garner the benefits of being in the US without having to pay for those benefits.


GE is
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Originally Posted By LePew:
Originally Posted By NeoSaffiru:
Originally Posted By LePew:

I think that's a gross simplification or maybe naivete. It may have been true in the past.




Lol.. sure. I paid roughly 10k in income tax last year. All of GE (to reference your other post) paid 0. In the end GE contributed exponentially more to the GDP, employment figures, and overall community benefit than I or my measly 10k could hope to accomplish.

Shit, assuming you're totally correct, how much did all of GEs employees pay in income tax combined? Is the incentive of "no income tax" on one entity, worth the enticement of an ungodly number of employees?

Na.. I'm nieve


Your argument is that GE should be off the hook because their employees paid income tax. The same is true of every company in the US, so you're really saying that no company should pay tax.

GE benefitted from being in a secure country, with a good infrastructure, and stable policies. That is clearly of value and GE ought to be paying for the value it gives the company.

If that isn't of value, they should have already moved to Argentina.

But they won't because they're getting a free ride where they can garner the benefits of being in the US without having to pay for those benefits.


GE is


Off the hook? How in the fuck is GE off the hook??

You picked seriously the worst example of an emotional beef over a singular number.

I'm not even arguing the idea that GE paid 0 in income tax, because frankly I can see why we would beg an entity like that not to abandon our nation.

GE builds the turbines that power the infrastructure, they build the electrical components that power our defense equipment, they fund research and development that makes us a first world nation and seperate us from people who don't have what they've conjured into existence.

They haven't moved to Argentina because the government there is so corrupt that it wouldn't be cost effective.

I'm stunned you would compare yourself, or any one person, to the likes of Lockheed or Honeywell or Raytheon or GE.... Those are names that literally make America what it is, not the other way around. When you contribute the legacy, the annual GDP, and the sheer intellectual value that those names do, then I'll be arguing that we shouldn't be taxing you either. Until then stop whining about the titans of industry that make your entire world, and pretending that you're somehow their equals.
Link Posted: 1/18/2015 3:15:52 AM EST
I wish "loopholes" existed! Thi IRS is going to make me its bitch this year.
Link Posted: 1/18/2015 3:29:52 AM EST
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Originally Posted By cschaeff:

The money used for investments has already been taxed as income when it was earned. You can take your earned income and blow it on hookers and blow or you can invest it into companies that provide jobs for people and produce a product or service. If you tax investment earnings too much you stifle investment business and job growth. Taxes don't produce anything, it takes money away from the producers.
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Originally Posted By cschaeff:
Originally Posted By Greggo556:
Someone could use a shovel all day long and earn an income that requires a 25% income tax, yet a different guy can sit on a computer and trade stocks and pay a much smaller tax percentage on his income. How does that help the economy on the grand scheme of things? Again, I am just asking, because I really don't understand the economics behind it.

The money used for investments has already been taxed as income when it was earned. You can take your earned income and blow it on hookers and blow or you can invest it into companies that provide jobs for people and produce a product or service. If you tax investment earnings too much you stifle investment business and job growth. Taxes don't produce anything, it takes money away from the producers.



this.
Link Posted: 1/18/2015 4:47:36 AM EST
So I, or someone else, figures a way to lawfully be robbed of less of our earnings because of the Byzantine tax laws and this is a bad thing?
Link Posted: 1/18/2015 5:24:25 AM EST
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Originally Posted By NeoSaffiru:
Define: Loophole

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OP failed right out of the gate.
Link Posted: 1/18/2015 5:58:56 AM EST
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Originally Posted By Desert_AIP:



Investing grows the economy and provides benefit to everyone, hence it makes sense to tax those gains at a lower rate.
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Originally Posted By Desert_AIP:
Originally Posted By Greggo556:
Lots of interesting answers so far....

"Capital gains are taxed at a lower rate than income tax because of the inherent risk involved" - that does make sense.



Investing grows the economy and provides benefit to everyone, hence it makes sense to tax those gains at a lower rate.


Because presumably if the tax system didn't favor investing people would burn their money for sport?
Link Posted: 1/18/2015 5:59:41 AM EST
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Originally Posted By midcap:

Our tax system is generous to the poor and unfair to everyone else especially w2 people.
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Not really. The system is dramatically tilted towards wealthy homeowning parents.
Link Posted: 1/18/2015 6:06:12 AM EST
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Originally Posted By Mariner82:

The most common example is home mortgage interest deduction - Congress wanted to encourage people to buy homes, which creates a demand for jobs in construction, appliance manufacturing, hardware stores, furniture stores, etc, etc, and all the business that support and supply them. All those jobs get taxed (payroll and income tax).
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And despite a tax deduction worth hundreds of billions a year the homeownership rate in the US is lower than that of Canada, where they have no deduction, and equal to Switzerland where not only is there no deduction, but a homeowner who lives in his home owes tax on the rental income he foregoes by living in his own home.

The MITD, combined with favorable capital gains taxes for selling homes, is the reason for the housing bubble, inflation in home pricing and to some extent and increase in costly suburban sprawl.
Link Posted: 1/18/2015 8:58:01 AM EST
good less cash for commiecrats
Link Posted: 1/18/2015 9:03:48 AM EST
If a taxpayer receives a refund in excess of the taxes they pay in, does that qualify as a tax loophole? The reason Buffet pays 17% tax is he has the best accountants and tax lawyers in the country figuring out the best way to set up his ownership interests and acquisitions to minimize the tax burden on him.
Link Posted: 1/18/2015 9:08:24 AM EST
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Originally Posted By Woodfiend:
You pay less for capital gains taxes because investments are still a risk. You could lose all your money tomorrow.... All of it. So to offset that risk and still make it worthwhile to invest (and thus to allow companies to grow) the taxes are lower for the investor.


Plus typically investments are normally purchased with money that you have already earned and paid taxes on when you worked your job.... so to tax your gains on investments are already like a double tax anyways.



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Excellent post.
Link Posted: 1/18/2015 9:09:35 AM EST
Flat tax.....I'm the type of person that would do very well under a flat tax.
Link Posted: 1/18/2015 9:10:37 AM EST
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Originally Posted By Combat_Jack:


Not really. The system is dramatically tilted towards wealthy homeowning parents.
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Originally Posted By Combat_Jack:
Originally Posted By midcap:

Our tax system is generous to the poor and unfair to everyone else especially w2 people.


Not really. The system is dramatically tilted towards wealthy homeowning parents.


Disagree, if you are "wealthy" you get 0 tax credits for having kids, home interest deductions mean little when rates are 3.75% and when the kids go off to college they don't qualify for subsidized loans.
Link Posted: 1/18/2015 9:12:44 AM EST
I heard from a tax guy who works with people paying $100k+ in taxes every year (they deal with a lot of things like off shore entities and other tax strategies) that a lot of fortune 500 companies don't pay the taxes that they're supposed to but rather just hire a legal team to constantly fight the IRS as the cost of doing that is less than the taxes. Don't know if it's true, just something this guy was saying, but I wouldn't be surprised either.
Link Posted: 1/18/2015 9:13:12 AM EST
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Originally Posted By rooster4bravo:


Obeying the law to the letter.

Frankly I hate the word loophole. "Loophole allows gun purchases without background checks." It's not a loophole if its by design.
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Originally Posted By rooster4bravo:
Originally Posted By NeoSaffiru:
Define: Loophole



Obeying the law to the letter.

Frankly I hate the word loophole. "Loophole allows gun purchases without background checks." It's not a loophole if its by design.

I'm inclined to agree with you EXCEPT that the tax code is constantly modified to pick winners.

In *that* case they really are manufactured loop holes to assist in buying votes. Whether those votes come from huge corporate machines, the incredibly wealthy and their friends and neighbors or the very poor.

Make no mistake, the progressive tax system we employ is designed to encourage certain behaviors and punish others. It is used as a stick and a carrot and in many cases the carrots are put there to give someone a loophole as a favor.
Link Posted: 1/18/2015 9:16:15 AM EST
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Originally Posted By Greggo556:

I guess that's kind of what I came here to ask.

I've only read that Warren Buffett pays something like 17% income tax, while a doctor pays around 40% income tax. I thought that was due to what are referred to as "loop holes", but like I said above, I am largely uneducated on this topic.
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Originally Posted By Greggo556:
Originally Posted By NeoSaffiru:
Define: Loophole


I guess that's kind of what I came here to ask.

I've only read that Warren Buffett pays something like 17% income tax, while a doctor pays around 40% income tax. I thought that was due to what are referred to as "loop holes", but like I said above, I am largely uneducated on this topic.


Dr apparently has a really shitty accountant
Link Posted: 1/18/2015 9:17:55 AM EST
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Originally Posted By LePew:
I don't have a handy definition of 'loophole' but I find it ridiculous that a company as profitable as General Electric pays zero in taxes.

Year after year.

There are some fucky things in the tax codes that make that possible.
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GE pays a metric fuck-ton of taxes, including property taxes on the buildings it owns, utility taxes on the power and water it consumes, fuel taxes, etc.

GE's profits are also taxed, it's assessed as income taxes on the dividends it pays out to shareholders.
Link Posted: 1/18/2015 9:20:25 AM EST
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Originally Posted By Bubbles:

GE pays a metric fuck-ton of taxes, including property taxes on the buildings it owns, utility taxes on the power and water it consumes, fuel taxes, etc.

GE's profits are also taxed, it's assessed as income taxes on the dividends it pays out to shareholders.
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Originally Posted By Bubbles:
Originally Posted By LePew:
I don't have a handy definition of 'loophole' but I find it ridiculous that a company as profitable as General Electric pays zero in taxes.

Year after year.

There are some fucky things in the tax codes that make that possible.

GE pays a metric fuck-ton of taxes, including property taxes on the buildings it owns, utility taxes on the power and water it consumes, fuel taxes, etc.

GE's profits are also taxed, it's assessed as income taxes on the dividends it pays out to shareholders.


I'm surprised we have members who can't comprehend this.
Link Posted: 1/18/2015 9:21:32 AM EST
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Originally Posted By Greggo556:

Why are capital gains taxed differently than income?

Someone could use a shovel all day long and earn an income that requires a 25% income tax, yet a different guy can sit on a computer and trade stocks and pay a much smaller tax percentage on his income.

How does that help the economy on the grand scheme of things? Again, I am just asking, because I really don't understand the economics behind it.
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Originally Posted By Greggo556:
Originally Posted By midcap:
Income Is taxed differently, capital gains versus, earned income versus unearned income, tax free income etc. want to blow your mind, there are bonds I can buy in which I pay 0 taxes on the interest regards if it's 1$ or 100000$ dollars. The media as a whole are ignorant when it comes to the business world

Why are capital gains taxed differently than income?

Someone could use a shovel all day long and earn an income that requires a 25% income tax, yet a different guy can sit on a computer and trade stocks and pay a much smaller tax percentage on his income.

How does that help the economy on the grand scheme of things? Again, I am just asking, because I really don't understand the economics behind it.


You should first figure out the difference between wage and income tax. Then we can work from there.
Link Posted: 1/18/2015 9:25:47 AM EST
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Originally Posted By LePew:
I don't have a handy definition of 'loophole' but I find it ridiculous that a company as profitable as General Electric pays zero in taxes.

Year after year.

There are some fucky things in the tax codes that make that possible.

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This is why we can't have nice things. GE capital lost $32 billion, they then carried forward some of those losses. Stop parroting the talking points of the left and read their financial statements for yourself.
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