# Taxes! Yeah, that's how we solve it! **URL:** \ **Category:** The BBQ Pit\ **Created:** [April 6, 2004, 3:37pm UTC](https://boards.straightdope.com/t/taxes-yeah-thats-how-we-solve-it/238566 "2004-04-06T15:37:51Z")\ **Posts on this page:** 19\ **Page:** 2
**Author:** ![artemis](https://avatars.discourse-cdn.com/v4/letter/a/91b2a8/32.png) [@artemis](https://boards.straightdope.com/u/artemis)\ **Post date:** [April 6, 2004, 6:10pm UTC](https://boards.straightdope.com/t/taxes-yeah-thats-how-we-solve-it/238566/21 "2004-04-06T18:10:59Z")
> [@Bippy the Beardless](#): > > Not agreeing with **duffer** ’s sentiment, but in the UK there has been very significant tax on alcohol and tobacco products, with very little effect on their consumption or dui. Drunk driving was far better controled by the creation (through advertising and news reporting) of a general feeling that drunk driving was socially unexceptable ever. In the early 90’s in UK it wouldn’t seem strange if someone talked about carefully driving home from the pub and being lucky to avoid being stopped by the police. By the late 90’s someone making such a claim would be seen as a social parriah, it was no longer cool or even exceptable to drive after drinking. What Tax hadn’t effected, social ‘engineering’ had. I agree that changing social attitudes toward excess drinking is more effective in the long run if the goal is to reduce drinking-related problems. But I think the people who proposed the increased alcohol tax in the OP’s post were also thinking that it would help to bring in funds for increasing community education programs and such as well as decrease consumption by increasing the price of a drink, and there is a certain logic in that. Since the tax effects the heaviest consumers of alcohol the most, the people who are abusing alcohol the most wind up paying for the cost of the education programs their own behavior has made necessary. (Although I also think **Munch** is right about the real reasoning behind most ‘sin’ taxes - it’s easier to raise state and local revenues by passing that sort of (regressive) tax than it is to raise revenues by increasing state or local income taxes or property taxes. Affluent voters are less likely to object to the former than they are to the latter, as they’re less affected by them. Sin taxes, like sales taxes, hit lower-income people the hardest.) ---
**Author:** ![Otto](https://avatars.discourse-cdn.com/v4/letter/o/bbe5ce/32.png) [@Otto](https://boards.straightdope.com/u/Otto)\ **Post date:** [April 6, 2004, 6:13pm UTC](https://boards.straightdope.com/t/taxes-yeah-thats-how-we-solve-it/238566/22 "2004-04-06T18:13:40Z")
> [@duffer](#): > > Um, yeah, I saw that was what you were calling me. Thought you could catch that little sarcastic rebuke I posted. Sorry **Otto** , I’ll be sure to make the posts more clear. Maybe by typing r…e…a…l…s…l…o…w. 😃 You could make the post more clear by not spouting dumbass shit like how you know poor people are more likely to commit drunken crimes because you saw it on “Cops.” ---
**Author:** ![duffer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/duffer/32/1026_2.png) [@duffer](https://boards.straightdope.com/u/duffer)\ **Post date:** [April 6, 2004, 6:20pm UTC](https://boards.straightdope.com/t/taxes-yeah-thats-how-we-solve-it/238566/23 "2004-04-06T18:20:27Z")
> [@Otto](#): > > You could make the post more clear by not spouting dumbass shit like how you know poor people are more likely to commit drunken crimes because you saw it on “Cops.” Allow me a moment to stop banging my head against the wall and basically do the same as I post this. The “Cops” reference was alluding to the fact that I’ve never seen them respond to Brentwood or the Hamptons. Clear enough? Didn’t mean to get you mad, the OP was because **I** was mad. Sorry to spread the hate. 😃 ---
**Author:** ![duffer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/duffer/32/1026_2.png) [@duffer](https://boards.straightdope.com/u/duffer)\ **Post date:** [April 6, 2004, 6:34pm UTC](https://boards.straightdope.com/t/taxes-yeah-thats-how-we-solve-it/238566/24 "2004-04-06T18:34:36Z")
> [@artemis](#): > > . I earn nearly a quarter-million a year - I pay Social Security taxes on - ready? - $87,000 of my income. The Social Security tax has an upper income cap; on all the rest of my income I pay NO Social Security taxes. The same thing is true for FICA. > > Does that seem fair to you? How much could we lower the FICA and Social Security tax rates if folks like me paid those taxes on our ENTIRE taxable income, instead of on only a small percentage of it? Congrats on the awesome income! I must say I’m more than a little jealous. But a reality break from someone not making that much. Did you know you can add to the Social Security “contribution”? Or don’t you care about the “little old lady of the week” any random liberal parades across the stage to say Bush is killing with the current Medicare program? Did you know that you can deny any of the deductions you take? Do you know that you can forego any refund? Did you know you can actually add to the payment AND specify it be used for whatever you desire? (debt, welfare, roads, defense, etc) Oh, let’s not forget the fact my wife and I are under the $87k threshhold. Yet, get this, we pay less taxes now than 2 years ago! (Heh, guess we’re part of the 1% richest Americans getting a tax cut) 😕 ---
**Author:** ![artemis](https://avatars.discourse-cdn.com/v4/letter/a/91b2a8/32.png) [@artemis](https://boards.straightdope.com/u/artemis)\ **Post date:** [April 6, 2004, 6:56pm UTC](https://boards.straightdope.com/t/taxes-yeah-thats-how-we-solve-it/238566/25 "2004-04-06T18:56:58Z")
> [@duffer](#): > > Congrats on the awesome income! I must say I’m more than a little jealous. But a reality break from someone not making that much. Did you know you can add to the Social Security “contribution”? Or don’t you care about the “little old lady of the week” any random liberal parades across the stage to say Bush is killing with the current Medicare program? > > Did you know that you can deny any of the deductions you take? Do you know that you can forego any refund? Did you know you can actually add to the payment AND specify it be used for whatever you desire? (debt, welfare, roads, defense, etc) Sure, **duffer** , and in fact I DO donate a considerable portion of my income to programs I support. But regrettably, human nature doesn’t change as income levels go up; most people in any tax bracket won’t give more than the minimum they are legally required to give. It’s more fun to spend money on goodies for your own family than to give it away to other people (just like it’s more fun to spend money than to save it, hence our country’s low savings rate). If you want to get more income from the wealthy, you can’t just rely on them making voluntary contributions, you’ve got to change the taxation policies so they HAVE to pay up. > [@duffer](#): > > Oh, let’s not forget the fact my wife and I are under the $87k threshhold. Yet, get this, we pay less taxes now than 2 years ago! (Heh, guess we’re part of the 1% richest Americans getting a tax cut) 😕 But percentage-wise, you don’t benefit as much as I do - and I don’t benefit nearly as much as the likes of Michael Eisner and Warren Buffet (the sorts of folks these tax polices are REALLY designed to aid). And if decreasing federal revenues cause your state and local governments to raise their taxes to keep essential programs funded, you may not be benefitting at all. It’s no gain for you if you get a $300 tax break on your Federal income tax but your state’s sales tax rises and you end up spending $350 more in sales tax and local property taxes the following year. ---
**Author:** ![duffer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/duffer/32/1026_2.png) [@duffer](https://boards.straightdope.com/u/duffer)\ **Post date:** [April 6, 2004, 7:48pm UTC](https://boards.straightdope.com/t/taxes-yeah-thats-how-we-solve-it/238566/26 "2004-04-06T19:48:09Z")
**artemis** this is where I’ll just concede that we won’t sway each other in the opinions we hold. I don’t see how you can argue for a tax increase, but if it doesn’t bother you, then hell, who am I to bitch. Can you at least give me the point of not wanting to pay more taxes? I make MUCH less than you, and any help in not paying for cow-farting research (I know Cecil covered this but can’t get the link, any help Dopers?) is fine with me. BTW, are you hiring? 😃 ---
**Author:** ![SPOOFE](https://avatars.discourse-cdn.com/v4/letter/s/c5a1d2/32.png) [@SPOOFE](https://boards.straightdope.com/u/SPOOFE)\ **Post date:** [April 6, 2004, 7:52pm UTC](https://boards.straightdope.com/t/taxes-yeah-thats-how-we-solve-it/238566/27 "2004-04-06T19:52:21Z")
> [@](#): > > Anyone who buys alcoholic beverages will have to pay the tax. How are “liberals” not paying it? Well, duh, he’s obviously suggesting that the rich should pay a 40% tax, the middle class should pay a 20% tax, and the lower class should be given free liquor. I think having liquored up huddled masses would do wonders for the society! ---
**Author:** ![duffer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/duffer/32/1026_2.png) [@duffer](https://boards.straightdope.com/u/duffer)\ **Post date:** [April 6, 2004, 8:13pm UTC](https://boards.straightdope.com/t/taxes-yeah-thats-how-we-solve-it/238566/28 "2004-04-06T20:13:19Z")
> [@SPOOFE](#): > > Well, duh, he’s obviously suggesting that the rich should pay a 40% tax, the middle class should pay a 20% tax, and the lower class should be given free liquor. > > I think having liquored up huddled masses would do wonders for the society! Leave it to a sarcastic twit to make my point. You hit it **SPOOFE**. Next round is on me bud. ---
**Author:** ![duffer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/duffer/32/1026_2.png) [@duffer](https://boards.straightdope.com/u/duffer)\ **Post date:** [April 6, 2004, 8:16pm UTC](https://boards.straightdope.com/t/taxes-yeah-thats-how-we-solve-it/238566/29 "2004-04-06T20:16:24Z")
Damn, just realized how bad that last post sounded. Sorry **SPOOFE** , no offense meant in that. Just pointing out the sarcasm you posted that I meant to includein mine. ---
**Author:** ![Nametag](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/nametag/32/406_2.png) [@Nametag](https://boards.straightdope.com/u/Nametag)\ **Post date:** [April 7, 2004, 3:08pm UTC](https://boards.straightdope.com/t/taxes-yeah-thats-how-we-solve-it/238566/30 "2004-04-07T15:08:54Z")
Jesus, **duffer** , you really are an idiot. **Artemis** is explaining to you that (a) it’s “conservative” politicians (whom you probably support) who are making taxes higher for guys like you, and (b) explaining why progressive federal tax policies would make YOUR taxes lower. I don’t see how the hell you get from there to THIS: “I don’t see how you can argue for a tax increase.” And this next bit makes so little sense it’s got to be a typo" “Can you at least give me the point of **not** wanting to pay more taxes?” (bolding mine). Assuming that you actually meant "the point of wanting to paying more taxes,: I can easily tell you: there are three: (1) A sense of civic responsibility; (2) a sense of fairness; (3) a sense that rich people whining about money are being silly and offensive. As for the OP, read the article again: > [@](#): > > **Authors of the binge-drinking study** concluded that public health and law enforcement measures are needed to reverse current trends, including increasing alcohol excise taxes… Do you have a single shred of evidence that the authors of this study are liberals, or that ANY increase in liquor excise taxes, was favored by liberals more than by conservatives? ---
**Author:** ![JohnBckWLD](https://avatars.discourse-cdn.com/v4/letter/j/d6d6ee/32.png) [@JohnBckWLD](https://boards.straightdope.com/u/JohnBckWLD)\ **Post date:** [April 7, 2004, 4:56pm UTC](https://boards.straightdope.com/t/taxes-yeah-thats-how-we-solve-it/238566/31 "2004-04-07T16:56:34Z")
> [@Munch](#): > > Wow, this is the first time I’ve ever seen liberals and “sin tax” put in the same sentence. Duffer, why exactly do you think sin taxes stem from democrats? Every state legislature I’ve seen that attempts to raise consumption taxes on things like alcohol and tobacco have been republican dominated. Can’t let that one hang out there. Liquor taxes are a drop in the buck compared w/tobacco. Top 10 highest **State** tobacco taxes, 2003: ([Cite (.pdf)](http://tobaccofreekids.org/research/factsheets/pdf/0202.pdf)): 1-New Jersey Pack $5.81 Tax $2.38 2-Rhode Island Pack $5.07 Tax=$2.04 3-Connecticut Pack $5.16 Tax $1.80 4-Massachusetts Pack $4.82 Tax $1.74 5-New York Pack $5.66 Tax $1.73 6-Washington Pack $4.82 Tax $1.72 7-Michigan Pack $4.34 Tax $1.50 8-Hawaii Pack $4.67 Tax $1.48 9-Arizona Pack $4.44 Tax $1.42 10-Vermont Pack $4.38 Tax $1.40 Almost everyone of those (red) states listed has a GOP legislative minority. Both parties are to blame for political pandering & regressive “sin” taxes. Those total state tax ‘per pack figures’ don’t include LOCAL city taxes. In NYC the local tax is and additional **$1.50** / pack…Retail $8.00 (With no more than a handful of Republican City Councilmen) An interesting (ant-tax) study on New York City’s cigarette taxes:[Cigarette Taxes, Black Markets, and Crime Lessons from New York’s 50-Year Losing Battle](http://www.cato.org/pubs/pas/pa468.pdf) ---
**Author:** ![JohnBckWLD](https://avatars.discourse-cdn.com/v4/letter/j/d6d6ee/32.png) [@JohnBckWLD](https://boards.straightdope.com/u/JohnBckWLD)\ **Post date:** [April 7, 2004, 5:00pm UTC](https://boards.straightdope.com/t/taxes-yeah-thats-how-we-solve-it/238566/32 "2004-04-07T17:00:05Z")
> [@World Eater](#): > > …Plenty of rich people get DUIs No argument from me, but it is rather annoying to see the people with [wealth and power](http://www.newsday.com/news/local/wire/ny-bc-ny--judgearrested0401apr01,0,386545.story?coll=ny-ap-regional-wire) get off (in the legal sense of the word). > [@](#): > > A Manhattan civil court judge was acquitted Thursday of driving while intoxicated in a July 2002 incident in which she backed a Rolls-Royce into two parked cars in the Bronx…Mills was arrested around midnight July 22, 2002, in the parking lot of a Loehmann’s department store in the Riverdale section. While trying to back out of a parking space, she struck the two cars, authorities said…The arresting officer described her as “unsteady on her feet,” with bloodshot eyes and slurred speech. Prosecutor Jenna Rizzo told the jury that Mills “reeked of alcohol” on that night. > > The key witness in the case, Tracy Mendelsohn, said she spent five hours drinking with the judge before the accident. > > But defense attorney Paul Gentile charged that Mills was targeted because she is black, and he accused police of lying about what happened. > > If convicted, Mills, a former criminal court judge in the Bronx, could have faced up to a year behind bars and disciplinary action by the state Commission on Judicial Conduct. ---
**Author:** ![Munch](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/munch/32/5281_2.png) [@Munch](https://boards.straightdope.com/u/Munch)\ **Post date:** [April 7, 2004, 5:07pm UTC](https://boards.straightdope.com/t/taxes-yeah-thats-how-we-solve-it/238566/33 "2004-04-07T17:07:44Z")
> [@JohnBckWLD](#): > > Almost everyone of those (red) states listed has a GOP legislative minority. Both parties are to blame for political pandering & regressive “sin” taxes. Fine, but when were those taxes enacted? I’m not saying you’re wrong, but your statement is meaningless without saying that it was a democratic legislature that \*enacted \* those taxes. Certainly, there are a couple states on there that have always been Dem, but there are several swing states there as well. Besides, my main point was that it is GOP legislators that enact “sin taxes”, Democrats enact “consumption taxes”. Plus, if you factor in the anomoly of blue laws, you’re going to get more GOP meddling. ---
**Author:** ![JohnBckWLD](https://avatars.discourse-cdn.com/v4/letter/j/d6d6ee/32.png) [@JohnBckWLD](https://boards.straightdope.com/u/JohnBckWLD)\ **Post date:** [April 7, 2004, 5:11pm UTC](https://boards.straightdope.com/t/taxes-yeah-thats-how-we-solve-it/238566/34 "2004-04-07T17:11:38Z")
[From FNN: Animal Lovers Weigh In on Pet Food Tax Plan](http://www.foxnews.com/story/0,2933,116379,00.html) It’s another type of ‘sin’ > [@](#): > > RALEIGH, N.C. — An overflow crowd of pet lovers, breeders and hunters jammed a legislative committee room Tuesday to praise and condemn a measure that seeks to reduce animal neglect through a **tax hike on pet food** …the so-called _“Puppy Chow penalty”_ proposal that is designed to stop dog and cat overpopulation in North Carolina and raise standards at public animal shelters…More than 227,000 cats and dogs were taken to North Carolina shelters and euthanized in 2001, and the state’s pet euthanasia (search) rate is more than double the national average…Legislators say one way to reduce the death toll is to place an “assessment” on pet food manufacturers equal to 10 cents per 20-pound bag of food and about 2 cents for every can. It could generate as much as $8 million annually… ---
**Author:** ![artemis](https://avatars.discourse-cdn.com/v4/letter/a/91b2a8/32.png) [@artemis](https://boards.straightdope.com/u/artemis)\ **Post date:** [April 7, 2004, 6:28pm UTC](https://boards.straightdope.com/t/taxes-yeah-thats-how-we-solve-it/238566/35 "2004-04-07T18:28:34Z")
Interesting link, **JohnBckWLD**. I’m not sure if I’d classify this as a “sin” tax, or something more analagous to a road toll or the dog/cat license fees many local governments already charge pet owners - a way of shifting the major cost of dealing with the pet overpopulation problem onto the people most responsible for creating it. Certainly non-pet-owners aren’t responsible for the apparently burgeoning population of unwanted animals in North Carolina, so why should they have to foot the bill for the shelter operation and euthanasia costs? Of course, there are risks to this type of tax. It could actually worsen the problem if people respond to it by dumping more dogs and cats off at the pound rather than pay the increased cost of feeding them. And what if the money raised via this tax turns out to exceed what the animal shelters require? Color me cynical, but I don’t see the legislators subesquently reducing the pet-food tax in that case, but rather diverting the “excess” into other government programs, in which case the whole thing becomes just another regressive tax like the state sales tax rather than a targeted solution to a specific problem. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [April 7, 2004, 8:12pm UTC](https://boards.straightdope.com/t/taxes-yeah-thats-how-we-solve-it/238566/36 "2004-04-07T20:12:05Z")
> [@duffer](#): > > **artemis** this is where I’ll just concede that we won’t sway each other in the opinions we hold. I don’t see how you can argue for a tax increase, but if it doesn’t bother you, then hell, who am I to bitch. Can you at least give me the point of not wanting to pay more taxes? I make MUCH less than you, and any help in not paying for cow-farting research (I know Cecil covered this but can’t get the link, any help Dopers?) is fine with me. You realize that we are also not paying for the War on Terrorism, right? Tax cuts are a reasonable way to deal with a recession, but the cuts should be for people like you, not people like Artemis. You’d rather vote for someone who would give you a $1,000 cut and Michael Eisner $1 million, or someone who would give you $2,000, Eisner $100K, and not having to pay for it through a big deficit later? ---
**Author:** ![artemis](https://avatars.discourse-cdn.com/v4/letter/a/91b2a8/32.png) [@artemis](https://boards.straightdope.com/u/artemis)\ **Post date:** [April 7, 2004, 8:45pm UTC](https://boards.straightdope.com/t/taxes-yeah-thats-how-we-solve-it/238566/37 "2004-04-07T20:45:14Z")
> [@Voyager](#): > > You realize that we are also not paying for the War on Terrorism, right? Tax cuts are a reasonable way to deal with a recession, but the cuts should be for people like you, not people like Artemis. You’d rather vote for someone who would give you a $1,000 cut and Michael Eisner $1 million, or someone who would give you $2,000, Eisner $100K, and not having to pay for it through a big deficit later? Exactly - the big winners with these tax cuts are the people who can enter $0 on that Form 1040 line labeled “wages, salaries, and tips” because they don’t EARN a salary - they live entirely off of capital gains from their enormous investments (stock and bond dividends, profits from stock trades and real estate deals, etc.). They’re now being taxed on those gains at a top rate of only 20%, in addition to not paying any FICA or payroll taxes on those earnings. And that’s the reason why so many Fortune 500 CEOs are compensated primarily with stock options rather than more salary - it’s a great tax dodge for them, they’ll pay far less tax on the profits from the sale of those stock options than they would if they were given the equivalent value of those stock as cash. Give Michael Eisner $10 million in salary, he pays at the top marginal rate of 37.5 %; $10 million from the sale of stock options is taxed at 20%. That’s the equivalent of a 17.5% tax cut! Very wealthy people are already doing quite well in this country; they don’t need more help in the form of tax cuts or a tax policy that grossly favors investment income over salary income. And certainly not if it’s coming at the expense of increasing the deficit! Save the tax cuts for the people in the bottom 2 or 3 tax brackets; those of us in the upper brackets can afford to pay our way (and could even afford to pay more, really). ---
**Author:** ![MemoryLeak](https://avatars.discourse-cdn.com/v4/letter/m/6f9a4e/32.png) [@MemoryLeak](https://boards.straightdope.com/u/MemoryLeak)\ **Post date:** [April 7, 2004, 10:01pm UTC](https://boards.straightdope.com/t/taxes-yeah-thats-how-we-solve-it/238566/38 "2004-04-07T22:01:54Z")
> [@artemis](#): > > I’m betting you earn less than $87,000 a year. If I’m right, you’re paying Social Security tax on 100% of your income. I earn nearly a quarter-million a year - I pay Social Security taxes on - ready? - $87,000 of my income. The Social Security tax has an upper income cap; on all the rest of my income I pay NO Social Security taxes. The same thing is true for FICA. and > [@artemis](#): > > Exactly - the big winners with these tax cuts are the people who can enter $0 on that Form 1040 line labeled “wages, salaries, and tips” because they don’t EARN a salary - they live entirely off of capital gains from their enormous investments (stock and bond dividends, profits from stock trades and real estate deals, etc.). They’re now being taxed on those gains at a top rate of only 20%, in addition to not paying any FICA or payroll taxes on those earnings. And that’s the reason why so many Fortune 500 CEOs are compensated primarily with stock options rather than more salary - it’s a great tax dodge for them, they’ll pay far less tax on the profits from the sale of those stock options than they would if they were given the equivalent value of those stock as cash. Give Michael Eisner $10 million in salary, he pays at the top marginal rate of 37.5 %; $10 million from the sale of stock options is taxed at 20%. That’s the equivalent of a 17.5% tax cut! > > Very wealthy people are already doing quite well in this country; they don’t need more help in the form of tax cuts or a tax policy that grossly favors investment income over salary income. And certainly not if it’s coming at the expense of increasing the deficit! Save the tax cuts for the people in the bottom 2 or 3 tax brackets; those of us in the upper brackets can afford to pay our way (and could even afford to pay more, really). You know, for a guy making 250K, I sure hope you have somebody managing your financial affairs for you. FICA consists of a social security tax and a medicare tax. You pay medicare tax (I believe it’s close to 3%) on all your income. There’s a cap on the income on which you pay social security. In an employer/employee setting you each pay half. For those of us self-employed, we pay both ends via the self-employment tax. Gains from exercised stock options are not always treated as capital gains - it depends on what kind of options you have. Incentive stock options must be held 1 year after exercise for capital gains tax treatment. Non-incentive stock option gains are ordinary income. So to take advantage of ISOs, you must either come up with the money to buy the options at the strike price and then hold that stock for a year, or sell enough when you buy (which is treated as ordinary income) to cover the exercise. I put $0 on the “wages, salaries, and tips” line and I sure as hell ain’t living off capital gains. ---
**Author:** ![artemis](https://avatars.discourse-cdn.com/v4/letter/a/91b2a8/32.png) [@artemis](https://boards.straightdope.com/u/artemis)\ **Post date:** [April 7, 2004, 10:51pm UTC](https://boards.straightdope.com/t/taxes-yeah-thats-how-we-solve-it/238566/39 "2004-04-07T22:51:40Z")
> [@MemoryLeak](#): > > You know, for a guy making 250K, I sure hope you have somebody managing your financial affairs for you. Yes, I have an acountant. And I’m not self-employed or a business owner, so I don’t have to deal with the various tax wrinkles that come with those situations (thank God). > [@MemoryLeak](#): > > FICA consists of a social security tax and a medicare tax. You pay medicare tax (I believe it’s close to 3%) on all your income. There’s a cap on the income on which you pay social security. In an employer/employee setting you each pay half. For those of us self-employed, we pay both ends via the self-employment tax. I think the medicare portion is 2.9% now; I’d forgotten it wasn’t affected by the income cap when I made my first post (should have double-checked it before I posted). The income cap on Social Security is currently running $87,000. The point I was trying to make to **duffer** still stands; I pay percentage-wise less of my income on that tax than he does, even though my earnings are higher than his. And because my income is so high, I’m also better able to take advantage of tax-advantaged retirement and long-term investments such as 401k/403b accounts and variable annuities than the “average” worker, many of whom can’t fully fund their IRAs or 401ks because they require that income for meeting their immediate needs. > [@MemoryLeak](#): > > Gains from exercised stock options are not always treated as capital gains - it depends on what kind of options you have. Incentive stock options must be held 1 year after exercise for capital gains tax treatment. Non-incentive stock option gains are ordinary income. So to take advantage of ISOs, you must either come up with the money to buy the options at the strike price and then hold that stock for a year, or sell enough when you buy (which is treated as ordinary income) to cover the exercise. True - but the situation you describe (where a highly-compensated executive sells off a portion of his ISO to pay the cost of purchasing the rest and takes an ordinary income tax hit on that sale) is still quite tax-advantaged compared to the option of receiving the equivalent amount of compensation as salary. And that was the point I was trying to make to **duffer** ; very wealthy people aren’t simply folks with huge salaries. The ways they are compensated are often fundamentally different than the ways ordinary workers are paid, and some of the taxes that **duffer** finds so objectionable (such as the capital gains tax) are in place precisely to capture some tax revenue from important income streams that otherwise wouldn’t be touched by a simple salary-based income tax. And when those taxes are reduced, guys like **duffer** who are compensated entirely in salary wind up bearing a greater share of the overall tax burden - or the government is forced to resort to deficit spending, like it’s doing now. > [@MemoryLeak](#): > > I put $0 on the “wages, salaries, and tips” line and I sure as hell ain’t living off capital gains. Oh, I know not everyone who puts a $0 on that line is living on capital gains. But you have to admit that a person who has tens of millions invested in securities certainly can do so. Needless to say, a reduction in the capital gains tax is something that makes them quite happy. And they benefit from the reduction far more than folks like **duffer** ever will. A more progressive tax structure is in his economic interest - but he doesn’t seem to see that. [Previous page](https://boards.straightdope.com/t/taxes-yeah-thats-how-we-solve-it/238566.md?page=1)