New taxes for 2013

[MarginOfError]

Eventually, we end up back at the trying question: Do we want lower deficits or lower taxes*?

* I'm making the assumption that the current deficits can't realistically be dealt with unless both spending and revenue are modified. Here's hoping some big cuts to spending get made soon.

[Guest]

While you can't get around the double whammy of payroll tax for the self employed, you could organize as an LLC and file as Sub Chapter S and then only pay it on your "salaried portion of income. The "profit" (K-1) would be taxed as income and not hit with the payroll tax.

Yep. That's what we're doing now - seeing how we can "avoid" paying the higher taxes.... but you know how there are people who would think you're greedy if you do that.

And there's another lesson for ya. Congress says - we raise the tax rates of the rich, we'll make $600Billion. You'd be lucky if you see half of that. These rich people have accountants whose main purpose in life is to figure out how to avoid paying that tax increase...

So, it's really a very stupid idea all around.

[NeuroTypical]

If you get tired of partisan bickering, but understand there's a big problem and enjoy a beefy analysis, this article is a good read:

Stratfor Global Intelligence - The Crisis of the Middle Class and American Power

[Windseeker]

My 18 year old son works at a Thai/Sushe place. He said that he's earning $10 less everynight now. So much for this not affecting the poor.

[Daybreak79]

The difference for me due to Social Security is -$40.00 per check.

[pam]

The difference for me due to Social Security is -$40.00 per check.

You need to be investigated then. You aren't paying enough.

[MorningStar]

You are absolutely correct. It's not an increase but just an end to the temporary SS lower rate.

But, for the ones receiving these paychecks, yesterday you got $100, now you don't. Whether you call it an increase or an end to the holiday becomes irrelevant. There's a lesson there somewhere... and it goes in the theme of, what the government giveth, the government can taketh away...

These word games make me so mad. Certain politicans gave a false impression that only the rich would be taxed more when they know what matters to people is, "Will my paycheck be lower?" We will be seeing about $100 less a month, which hurts us. It's no consolation that it was just the temporary reduction ending. Sorry you took such a big hit!

[bytor2112]

Eventually, we end up back at the trying question: Do we want lower deficits or lower taxes*?

* I'm making the assumption that the current deficits can't realistically be dealt with unless both spending and revenue are modified. Here's hoping some big cuts to spending get made soon.

Both. Trusting a politician to reduce spending or use tax revenues to pay down the debt is pure folly and the idea that raising the marginal rates on higher earners sounds delightful if your end game is to continue to foster rich envy. Odd to me given that the "rich" so called pay for all the free goodies.

Why should anyone be required to pay more, when we can't get the elected numbskulls to drastically spend less? All we will get from raising taxes is less money to spend in the "recovering" economy.

Silliness is the idea that the government should have the right to demand more money on the blatantly false notion that they are suddenly worried about the debt problem. This is a problem that exists with both of the major parties and we allow it to continue. Ironically, I understand the President Obama doesn't think we have a spending problem.

[MarginOfError]

My 18 year old son works at a Thai/Sushe place. He said that he's earning $10 less everynight now. So much for this not affecting the poor.

If a 2% increase in medicare tax is costing him $10 per night, he might want to take a look at his W-2 and claim more deductions.

[Just_A_Guy]

If a 2% increase in medicare tax is costing him $10 per night, he might want to take a look at his W-2 and claim more deductions.

The W-4 may be a stopgap measure to delay the inevitable, but his (and everyone else's) ultimate tax liability is going up (or, in the case of 47-percenters, their refund is going down) at the end of the year, any way you slice it.

[idahommie]

Just wait until the bulk of the AHCA (Obamacare) taxes/ increases come into play next year. A great friend lost his job Dec. 20th, "Merry Christmas". Total shock to the eight that were let go. The owner scaled back to below 50 employees, and also reduced the medical benefits package for employees, and dropped the group life/disability coverages altogether. We took a $180 hit for the first 2 week period of this year.

[FunkyTown]

Why should anyone be required to pay more, when we can't get the elected numbskulls to drastically spend less? All we will get from raising taxes is less money to spend in the "recovering" economy.

You can, Bytor - But austerity platforms never get elected.

Blame the American public.

The debt burden hit a low under Nixon and... Carter? I believe, and Clinton balanced the budget via stripping the SS surplus, but the current debt is rising to Truman-esque levels.

Say what you want, those are the platforms that get elected. Barring an industrial boom the likes of which haven't been seen since World War II, there are only a few possibilities:

1) Inflation.

2) Austerity.

The people uniformly hate austerity and would rather see inflation.

[Guest]

You can, Bytor - But austerity platforms never get elected.

Blame the American public.

The debt burden hit a low under Nixon and... Carter? I believe, and Clinton balanced the budget via stripping the SS surplus, but the current debt is rising to Truman-esque levels.

Say what you want, those are the platforms that get elected. Barring an industrial boom the likes of which haven't been seen since World War II, there are only a few possibilities:

1) Inflation.

2) Austerity.

The people uniformly hate austerity and would rather see inflation.

Sad but true. Case in point - statistics showed that the Economy was the most important issue of the 2012 elections. Obama's economic agenda got elected over Romney's. Cut funding for PBS and people panic.

[beefche]

The W-4 may be a stopgap measure to delay the inevitable, but his (and everyone else's) ultimate tax liability is going up (or, in the case of 47-percenters, their refund is going down) at the end of the year, any way you slice it.

Yeah, I had to change my exemptions to account for the tax liability. So, I expect to see a drastic reduction due to that and the SS portion of taxes on my check on Tuesday.

[NeuroTypical]

The Canadian and the lady from the Phillipeans are saying things that I wish more Americans understood.

However, resistance to Austerity isn't just an American thing. It's a "mature empire begining to show signs of decline" thing. It's a "political success is divorced from financial accountability" thing. Greece is the most visible austerity-resister, but other countries in Europe are looking similar.

[Just_A_Guy]

. . . 2) Austerity.

The people uniformly hate austerity and would rather see inflation.

They hate austerity because all of the majority party, and much of the minority party, in this country have been telling them that they have a right to receive government-funded goodies in perpetuity and that there's always an "other" who will be able to fully fund this largesse in perpetuity.

[Guest]

They hate austerity because all of the majority party, and much of the minority party, in this country have been telling them that they have a right to receive government-funded goodies in perpetuity and that there's always an "other" who will be able to fully fund this largesse in perpetuity.

Hence the necessity of class warfare. You gotta have enemies to "stick it to". What's sad is that the society actually buy into all that garbage.

[Guest]

The Canadian and the lady from the Phillipeans are saying things that I wish more Americans understood.

However, resistance to Austerity isn't just an American thing. It's a "mature empire begining to show signs of decline" thing. It's a "political success is divorced from financial accountability" thing. Greece is the most visible austerity-resister, but other countries in Europe are looking similar.

Philippines, LM.

It's not just an American thing. It's a HUMAN thing.

[bcguy]

because the taxes were reduced, not increased to pay for the war. The taxes on Americans were raised to pay for WWII.

Look at these charts. It shows Americans have not had these good tax rates for almost 100 years.

Historical US Tax Rates Poster | The Big Picture

File:USTaxRevenue1945-2011.jpeg - Wikipedia, the free encyclopedia

Canadians pay more in taxes but we also get better social services. Top income earners did have to pay 50% provincial/federal tax but that got hacked down to 45%. Still expensive.

If I have to pay more of my income to the Us so be it. I save it a head of time so its not so painful.

[Wordnerd]

[quote name=

Canadians pay more in taxes but we also get better social services. Top income earners did have to pay 50% provincial/federal tax but that got hacked down to 45%. Still expensive.

It is common for us to look at our top tax rates and say "wow", however because we have marginal tax rates no one actually has a tax rate of 45% on all their income, only the income over a certain threshold. Every province has a different top rate, so in New Brunswick the top rate is close to 50% still and in Alberta it is just under 40%. But as far as figuring out what the effective tax rate is - my math isn't good enough for that because it requires figuring x percent of income up to x amount, and then y percent of income up to y amount and so on... I don't think that we actually pay significantly higher taxes than the US. It is possible that our effective tax rates are somewhat higher, but our costs are higher. Not only the social services, but infrastructure etc because we have a greater landmass with a much more spread out population.

Interesting little factoid from the Wikipedia comparison of Canadian and American health spending here- and I'll let the academics hash out its validity. The US government spends more on health care per capita than the Canadian government - but we have universal coverage. "In 2004, government funding of health care in Canada was equivalent to $US1,893 per person. In the US, government spending per person was $2,728." So is the US system simply not cost effective?

I'm just an opinionated Canadian but if I was an American, I'd be asking why we are spending more to get less, and yes I'd be upset to see taxes going up and my paycheque going down. I don't think its a simple cut spending increase taxes scenario that will fix things, I think you need to look at the efficiency of the programs you are spending money on.

[bcguy]

Even medication has a cap on its cost. Canada will not pay what US pharmaceutical companies will charge for medication because by law, medication is capped. In BC we do pay monthly medical insurance and everyone is required to do so. I think I pay 40 dollars per month as the other half pays it.

The medical system is partly what draws immigrants here but...its becoming a burden when they being little in the form of high paying skills and can become a burden on the medical wait times.

[yjacket]

You can, Bytor - But austerity platforms never get elected.

Blame the American public.

The debt burden hit a low under Nixon and... Carter? I believe, and Clinton balanced the budget via stripping the SS surplus, but the current debt is rising to Truman-esque levels.

Say what you want, those are the platforms that get elected. Barring an industrial boom the likes of which haven't been seen since World War II, there are only a few possibilities:

1) Inflation.

2) Austerity.

The people uniformly hate austerity and would rather see inflation.

The US is in a huge mess, and its not a problem that will be solved easily and it will involve a lot of pain. The bottom line is that we have too much debt, on a National, State, Individual and Corporate level.

Thankfully, individual debt has been declining a good bit since the Housing Bust as people thankfully defaulted on their debt obligations. Unfortunately, the same thing is not happening at corporate/state/national level.

Nationally there are only a couple of ways out. 1)Inflate (soft default) 2) Pay it back/Grow out of it, 3) Hard default. Growing out of it is impossible, too much debt exists. Paying it back is Austerity. The problem with Austerity is the saying you can't get blood from a turnip. Simply balancing the current budget doesn't do much, we've still got over 16T in debt that rolls over every year. Eventually interest will rise . . . paying try paying 8-10% interest on 16T worth of debt. So we will get inflation.

The solution we should take is to balance the budget by cutting spending. I think if we cut to something like 2007 levels of spending the budget would be balanced. And then default on the rest.

But since everyone wants their piece of the pie and is unwilling to give up that slice, we will continue along the current path until the Bond market explodes. Then things will get real interesting. Either way what we will have is a lower standard of living.

There is a really good reason why the Jew had a debt Jubilee every 49 years.