The Senate comes through....

[SuaSponte]

*Originally posted by mangeorge *
**So have we traded a marriage penalty for a single penalty? Single, high middle-income wage earners do pay a lot of tax, what with the lack of deductions and such.
I’m asking this because I don’t begin to understand the tax code, but for every give there’s usually a take.
Peace,
mangeorge **

I’m going to ask Daniel, as the professional, for a more complete answer, but my recollection from Tax Law class is that the “marriage penalty” is really a function of accounting that cannot be made equitable.

It all comes down to whether you consider a married couple’s income as one income or two. If you count it as one, then the couple, while getting a bit more in deductions, loses out because the combined income means more is taxed at a higher marginal rate. If you count it as two, then singles lose out because marrieds usually have less expenses, as they share living space, etc. An additional problem is that married couples can cheat by transferring pre-tax income from the higher-earning spouse to the lower earning spouse, thereby having more money taxed at a lower rate.

The irony is that the marriage penalty wouldn’t exist if marrieds acted as the social conservatives pushing for the rebate wanted them to – the wife stays at home with the kids. Under that scenario, no income from the wife means less income taxed at the higher marginal rates. Combined with higher deductions for married couples, and the traditional family pays less taxes.

Please correct any errors.
Sua

[Myrr21]

I think the point with corporations is more the way they get around those taxes. For example, a major employer of an area threatens to leave, so the city/state/country it’s in gives it a massive tax break. Then, they go and fire people anyway. Watch * Roger & Me * or * TV Nation * , they pretty much sum up the point.

As for reducing the defecit, it’s pretty much a distraction issue. It keeps people from noticing their own personal defecit and voting for somebody who’ll help them with that.
As for the marriage “penalty”, if in fact this is the case (since I don’t know tax law from a hole in the ground), then it seems reasonable that it should be eliminated. If, as Danielinthewolvesden says, the fix actually benefits “traditional” families over others, then the Congress needs a good smack upside the head.

[Goose]

Even if the rich people and the large corporations do alot to get out of taxes they still pay 70% of the taxes. 10% paying 70% and we’re bitching. Who cares if they dont pay it all they’re paying enough.

[mangeorge]

*Originally posted by Goose *
**Even if the rich people and the large corporations do alot to get out of taxes they still pay 70% of the taxes. 10% paying 70% and we’re bitching. Who cares if they dont pay it all they’re paying enough. **

Fifty percent is what some guy said on tv last night, and he was one of the rich guys, bitching about it.
So which is correct?
Peace,
mangeorge

[Goose]

I got my info from another post on the SDMB.

[tracer]

Danielinthewolvesden wrote:

Ok, folks, speaking solely as a professional, an EA, the bill did NOT “kill the marriage penalty”. What it did was increase deductions for married couples.

Really? I’d think it’d be a lot easier just to make the “Married filing separately” tax brackets accelerate on an identical scale to the “Single” tax brackets. Why add “deductions” into the picture? That just muddies the water more.

[mangeorge]

*Originally posted by Goose *
**I got my info from another post on the SDMB. **

I wasn’t picking you, Goose. We hear all these figures thrown around, it’s hard to know what’s fact.
Doesn’t really make much difference anyway. I’m not ready to shed crocodile tears for those top 10% anytime soon.
Let them eat dots.
Peace,
mangeorge

[CurtC]

Dumb Ox wrote:

OK, maybe I missed something, but what’s a “DINK” family?

Two men and a woman were having a discussion in a bar. One man declares “I’m a YUPpie - you know, Young Urban Professional.”

The next man says “And I’m a DINK - you know, Dual Income, No Kids.”

Then the woman says “Well, I’m a WIFE - you know, Wash, Iron, Fuck, Etc.”

[Danielinthewolvesden]

Tradesilicon: well, actually the prez DID “propose” those deficit shrinking budgets, but, yes, the House msut approve them. Why do you say we penalize savers? IRA’s and Keoghs are great incentives, and hardly “penalties”, in fact they are rewards.

Sua: You pretty well got it right. It can be made equitable, but not easily.

OK, here are our choices, re marriage “penalties” and rewards. 1. Allow joint filing, at twice the sep rate, even if one has no income- great for “traditional” families, OK for Singles, and sucks for DINKS (our current system).
2. Allow joint filing, but at double+ the SINGLE deduction, - REALLY great for single income “traditional” families (TF), OK for DINKS, sucks for singles (the new Senate proposal). 3. Everyone files as Single- good for DINKS, OK for Singles, sucks for TF’s.
4. Bring back the old “two-earner” deduction, or something like that- Good for TF’s, OK for everyone else, great for tax preparers and aspirin makers.

I will point out that they figured getting rid of the old “2 earner” deduction in the 1986 Tax relief Act was going to be acceptable to all, as nearly all got a tax break, even DINKS, but they just got the least.

Myself, I would like to go for #3, as that would also get rid of the wife getting stuck with the tax bill after the divorce, but the Republican will never buy it. They also knew #2 could not fly, they just wanted anti-Clinton ammo- “he vetoed our tax cut!!!” #$ will have to do.

[C_K_Dexter_Haven]

Cecil has spoken on the question of Do the rich pay little tax?

On the question of whether the legislation favors one group (such as traditional family) over another, let’s face it, there’s no way not to favor one group over another.

If you tax each person on their own income, then a double-income family where each spouse earns $40,000 pays less tax than a double-income family where one spouse earns $70,000 and the other earns $10,000. The question is whether you tax people as individuals or as family “units.” Let’s face it, stuff like cost of living, rent, etc is cheaper for a family than for an individual.

There’s no such thing as a tax that is fair to everyone. I pay high city and property taxes, but I never needed to call the police or fire departments last year… so am I tax “unfairly”? The government, in its infinite wisdom, decides which groups get more favorable tax treatment than others.

As an example, the U.S. government allows favorable tax treatment (that is, tax deferral) on money allocated to you in a qualified retirement plans (such as 401(k)), compared to just any old savings account. The government of New Zealand doesn’t do that; they don’t see any reason to tax retirement funds different from savings accounts. This reflects a difference in attitude and emphasis in the two governments and the two populations.::: shrug :::

Repeating, there’s no such thing as a perfectly fair tax. Under any tax system, someone gets an advantage, and someone gets screwed. The questions are who? and how much?

((PS - I am an EA as in Enrolled Actuary, for pension plans… and I also deal with non-US tax treatment of executives.))

[UncleBeer]

Here’s the text of the Whitehouse press release explaining Clinton’s official postion on this bill.

                 THE WHITE HOUSE

                 Office of the Press Secretary
                     (Camp David, Maryland)

---

For Immediate Release July 18, 2000
STATEMENT BY THE PRESIDENT
While I strongly support targeted marriage penalty relief, the marriage penalty bill put forth by the majority in Congress is one part of a fiscally irresponsible, poorly targeted, and regressive tax plan. If this strategy succeeds, more benefits will go to the top one percent of taxpayers than to the bottom eighty percent of all Americans, while ignoring tax cuts I have proposed for college tuition, long-term care, savings, and childcare. By itself, I would veto this bill. In the spirit of bipartisanship, however, I am willing to accept marriage penalty relief on this scale if Congress passes a plan that preserves the Medicare surplus to pay down the debt and passes a plan that gives real, voluntary Medicare prescription drug coverage that is available and affordable for all seniors. This is the best way to break the partisan logjam and help the tens of millions of older Americans across this country who face rising prescription drug costs.

[DoctorJ]

–If I’m not mistaken, members of Congress are in the highest tax bracket already. As such, revising the scale to eliminate the “marriage penalty” wouldn’t benefit them at all, but simply increasing deductions for married people would. Never discount the effect of self-interest.

–This is less about giving tax relief to Americans and more about the fact that the tax structure makes it advantageous to be single, shacking up, or even <gasp> homosexual. This really gets the collective Republican goat, so they revise the code to make it disadvantageous to be anything but the Cleavers.

–This is a fairly expensive tax cut. Has anyone seen a plan for either what services and programs will be cut, or how the difference will be made up without shifting the burden to single people? In short, did I just get screwed?

Dr. J

[IzzyR]

The text of the Whitehouse press release, helpfully suplied by UncleBeer does not seem to support the assertion made earlier by tradesilicon that “The way I heard it, Republicans tied in a whole lotta other stuff to the afore mentioned tax cut, and Clinton was in a position of having to veto, or face too much complaining from Demos”. Instead it appears that he objects to too much of the benefits going to “rich people”. This is a standard Democratic argument that can be used against almost any tax cut. Because almost all taxes are progressive (especially the Federal income tax), and rich people may most of them, any tax cut is going to disproportionately benfit the rich people. What they really should focus on is if the percentage of the benefits going to the “rich people” is larger than the share of taxes that they pay. But then, that would make the demogoguery less convincing.

[IzzyR]

DoctorJ

This is less about giving tax relief to Americans and more about the fact that the tax structure makes it advantageous to be single, shacking up, or even <gasp> homosexual. This really gets the collective Republican goat, so they revise the code to make it disadvantageous to be anything but the Cleavers

This seems to be the attitude of several posters. But it as not even remotely supported by any facts. The Republican bill basically says, take two families, one has earnings of $80,000 and $0, one has $40,000 and $40,000. Both these families are living on incomes of $80,000. Both can afford the same lifestyle. Both are equally wealthy. Both should pay the same taxes. In what way is this “disadvantageous to be anything but the Cleavers”?

[SouthernStyle]

By DoctorJ,

In short, did I just get screwed?

As opposed to those getting screwed now?

[DoctorJ]

Izzy–I’m basing my understanding on DanielITWD’s explanation, since he is, after all, a professional. If I understand, it isn’t quite that simple, and even those who were previously unaffected by the “marriage penalty” (i.e., the single-income family) will reap the benefits of the bill. My understanding could be incorrect.

SouthernStyle–

As opposed to those getting screwed now?

My question was, how are they going to make up the lost revenue, or are they going to? Does this bill just shift the screwing from one group to another?

Dr. J

[Mr.Zambezi]

How can a tax cut for one group be a screw job to another group?

They lowered the tax for a portion of the population. This does not mean that any other segment has to pay more.

Why the aversion to lowering taxes in a surplus situation?

[IzzyR]

DoctorJ,

Daniel did not dispute that my facts were correct when I pointed them out earlier. He merely pointed out the fact that a “traditional family” with $80,000 and $0 income is now better off than two singles with $80,000 and $0 (generally a hypothetical scenario). The only issue is one of fairness, and in this even non-professionals are entitled to equal say.

The question boils down to - do you compare married couples with one income to two singles with one income (Daniel’s view), or do you compare them to married couples with two incomes that total the same amount, and, for that matter, two singles with incomes that total the same amount (my view)?

There is no way that this can be said to be disadvantageous to anyone but the Cleavers.

[Danielinthewolvesden]

Well, Dr J, lets look at this situation this way. There is a large profit at your company. They decide to do “profit sharing”, but the $$ is going only to people with families and the executives, none to others. But you still get your regulars wages, right? So, are you screwed?

In this case, as the tax cut could go to all, instead of just couples, then yes, we are “screwed”. WE ALL paid into the “surplus”, we ALL should get tax cuts. I have no real prob with the rich getting a bigger slice of the pie, they paid in more, but all I’m gettin’ is the “smell”. All the Rebublican tax cuts have not saved me a nickle.

And Izzy, remember the 3rd “family”, the single guy with 80K, now he will pay more than either. Why? He earns the same, why should he pay more taxes?

[mangeorge]

Simple;
If you have an income, you pay taxes. No income, no tax.
Deductions? What for? Pay your own damn bills. If you decide to have dependents, that’s your choice. Why should I have to buy you a minivan, fer crissakes?
Peace,
mangeorge