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Scuba Forum / General / January 2004OT: common sense
http://abcnews.go.com/sections/2020/2020/myths_john_stossel_040123-7.html > http://abcnews.go.com/sections/2020/2020/myths_john_stossel_040123-7.html I particularly liked myth # 5. Dennis http://abcnews.go.com/sections/2020/2020/myths_john_stossel_040123-7.html > I particularly liked myth # 5. sh.t, I wish I had a $50 K tax burden... Dennis (Icarus) wrote: > I particularly liked myth # 5. It's a bit scary. It says "the IRS says the richest 1 percent of taxpayers already pay 34 percent of all income taxes." I could be mistaken, but this sure looks like lying by misdirection. Until you have income figures, make that income, plus appreciation of assets (because it's unreported income), less amortization and depreciation (because they are deductable expenses that aren't actually paid), you really don't know who is paying their fair share. The stated goal was 15% of income, not 15% of the total tax burden. Lee > Dennis (Icarus) wrote: > [quoted text clipped - 7 lines] > that aren't actually paid), you really don't know who is paying their fair > share. Correct me if I'm wrong, but appreciation of assets isn't counted as income until the asset is sold. As far as depreciation, it will be paid when the item is sold. Why they allow you to claim one without claiming the other is unusual, but that's just part of the game. I don't know enough about amortization to say one way or the other. > The stated goal was 15% of income, not 15% of the total tax burden. > > Lee I do agree though that the article changed the focus from percent of their income to percent of the total burden. I would also argue that I don't pay anywhere near 15% of my income (not including appreciation in Roth IRA) in taxes. As a matter of fact, My wife and I made a little over $50k this year (not including Roth IRA or my PD retirement account) and our tax burden was a little less than $4,000. That's less than 10%. > > Dennis (Icarus) wrote: > > [quoted text clipped - 16 lines] > unusual, but that's just part of the game. I don't know enough about > amortization to say one way or the other. Not exactly. Property tax is sometimes levied on the current value of an asset. Also, depreciation is taken over the useful life of the asset, not just when it's sold or disposed of. Alan > > Correct me if I'm wrong, but appreciation of assets isn't counted as income > > until the asset is sold. You're not wrong. This is one of the ways that the rich manage to avoid taxes. You and I, well at least I, get my income from a salary, 100% taxed. The risk increase their wealth by appreciation, whether it is stocks, real estate or other assets. Because they don't have to rely on salary, they are able to shield a substantial portion of their true income. > > As far as depreciation, it will be paid when the > > item is sold. Why they allow you to claim one without claiming the other is > > unusual, but that's just part of the game. I don't know enough about > > amortization to say one way or the other. When was the last time you heard about commercial property selling for less than it was purchased for? OK, so income has to be claimed if the asset is actually sold. I don't know about you, but I'd like to defer the taxes on all my income for 5 to 20 years. I think I might just make a bit extra by investing that money in assets that appreciate instead of in the IRS . . . just like the rich do. > Not exactly. Property tax is sometimes levied on the current value of > an asset. Also, depreciation is taken over the useful life of the > asset, not just when it's sold or disposed of. Property tax is supposed to be levied on the current valud of an asset. This is one benefit that most homeowners receive, one of the few. The assessed value of my property isn't even close to its actual value and is further reduced by my homestead exemption. Of course, if it were commercial property, I'd also benefit from the tax advantage of depreciation. Anyway, I think what he meant is that depreciation catches up with you when you sell the asset . . . which is true if you're honest and don't have a good tax accountant. How many of the richest people in the world do you suppose are honest and don't have a good tax accountant? Lee > > > Correct me if I'm wrong, but appreciation of assets isn't counted as > income [quoted text clipped - 5 lines] > estate or other assets. Because they don't have to rely on salary, they are > able to shield a substantial portion of their true income. But, when the asset is sold, the taxes will have to be paid (barring other means of getting out of it). Maybe I'm wrong, but I don't view it as income until it takes a form I could use to pay bills of some sort. For instance, I have a deferred compensation plan through the PD. Some of the money I earn now goes into this account. I can't touch it until I leave the pd. I don't have to pay taxes on it (AFAICT) until I take the payments. It increases my net worth, but does not increase my income. Again, I'm not a tax lawyer, nor am I an accountant, but that is my understanding of the situation. > > > As far as depreciation, it will be paid when the > > > item is sold. Why they allow you to claim one without claiming the [quoted text clipped - 4 lines] > When was the last time you heard about commercial property selling for less > than it was purchased for? I don't watch commercial property very closely. I haven't ever heard (TICR) of commercial property selling for less than it was purchased for, but I haven't ever heard of the opposite either. > OK, so income has to be claimed if the asset is > actually sold. I don't know about you, but I'd like to defer the taxes on > all my income for 5 to 20 years. Even if it means you can't touch that income in the same amount of time. > I think I might just make a bit extra by > investing that money in assets that appreciate instead of in the IRS . . . > just like the rich do. I agree. That's why I have two retirement accounts set up (one Roth and one through the PD). I have to pay taxes on my Roth contributions now (or, at least 90% of them), but I don't have to worry about paying those taxes when I take the money out (assuming I wait long enough). I've also been considering getting into rental properties, but I'm not sure I want the headache yet. > > Not exactly. Property tax is sometimes levied on the current value of > > an asset. Also, depreciation is taken over the useful life of the [quoted text clipped - 9 lines] > accountant. How many of the richest people in the world do you suppose are > honest and don't have a good tax accountant? I'd wager that it's very few... > Lee >When was the last time you heard about commercial property selling for less >than it was purchased for? ... This is not at all uncommon, even if we don't ofthen hear about it. It is probably less common here on the Gold Coast (Miame, Ft Lauderdal, Palm Beach) than in the industrial mid wet, but it does happen a lot. If allow the purchse price to be increaed by inflation (i.e. "constant dollars") it is even more common.  SignatureCharlie Hammond -- Hewlett-Packard Company -- Ft Lauderdale FL USA (hammond@not@peek.ssr.hp.com -- remove "@not" when replying) All opinions expressed are my own and not necessarily my employer's. > > > Dennis (Icarus) wrote: > > > [quoted text clipped - 19 lines] > Not exactly. Property tax is sometimes levied on the current value of > an asset. I hadn't thought of that... Although, That really shouldn't affect income taxes, which is what the discussion was about. It seems similar to stock loads to me. You pay the fee when it's due, but the increase/decrease in the stock value doesn't count (for tax purposes) until the stock is sold. > Also, depreciation is taken over the useful life of the > asset, not just when it's sold or disposed of. > > Alan Yeah, that's what I meant by the third sentence in my previous post. "Why they allow you to claim one without claiming the other is unusual, but that's just part of the game." I was saying that I found it odd that they allow you to depreciate an item over it's lifespan, but they don't charge you for an item that increases until you sell it. Interesting stance for them (those who created the tax code) to take. >Correct me if I'm wrong, but appreciation of assets isn't counted as income >until the asset is sold. There are numerous ways to value assets: Cost, Cost less Depreciation, Market, Replacement, and probably many more. If the method ov valuing recognizes a increased value, that increase becomes income; if it recognizes a decreased value, that is an expense. The valuation of assets for tax purpose may or may not bear any discernable realtionship to realilty. SignatureCharlie Hammond -- Hewlett-Packard Company -- Ft Lauderdale FL USA (hammond@not@peek.ssr.hp.com -- remove "@not" when replying) All opinions expressed are my own and not necessarily my employer's. > Dennis (Icarus) wrote: > [quoted text clipped - 3 lines] > already pay 34 percent of all income taxes." I could be mistaken, but this > sure looks like lying by misdirection. As it was presented, it was. > The stated goal was 15% of income, not 15% of the total tax burden. Agreed. And if you're talking about 15% of Adjusted Gross income, the 'rich' are already paying that. Nut the injustice perception lies in the magnitude of the deductions between the 'True' Gross and Adjusted Gross income, and there very well may be a good point there...as you went on to say, the Rich have better resoruces to get their sources of income defined as something other than "salary" and thus, are subject to lower (or no) Income Tax on them. IMO, let's create a simple law that says that there's a new Alternative Minimum Tax ...a mere 5% of your _Unadjusted_ Gross. Those would be interesting number to see. FWIW, a fun rice-bowl fight experiment to try sometime would be to limit each State no more than 2 tax loopholes for their constituents. :-) -hh > > The stated goal was 15% of income, not 15% of the total tax burden. > > Agreed. Not agreed. The stated goal was 15% of their unadjusted gross income. Lee |
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