Will an economic stimulus package help us during recession?

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estesbob said:
No where near 48% of Amricans are under the poverty level-I bleive its around 12% and has been at around that level since the mid 60s
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We’re going to argue back and forth over semantics. You are just upset that a family of four might reasonably take advantage of personal exemptions, standard deductions for dependents, an IRA contribution, child care credit, and whatever and not pay any taxes if their income is low enough. I have capitulated in many another thread that none of these things should be phased out for the rich but they should not be kept back from the lower income people. So logical math says that 48% might reasonably and morally not pay taxes.
 
vern_humphrey said:
Actually, we have a document called “the Constitution” which establishes the limitations and duties of government. If we were to dig up that document and apply the principle of the X Amendment:

We could cut out a lot of spending. For example, where is the United States given the power to pay someone to wrap an island in toilet paper?
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Gee, I hope that is not happening. You’re getting funny. How many drinks have you had?
 
goofyjim said:
We’re going to argue back and forth over semantics. You are just upset that a family of four might reasonably take advantage of personal exemptions, standard deductions for dependents, an IRA contribution, child care credit, and whatever and not pay any taxes if their income is low enough. I have capitulated in many another thread that none of these things should be phased out for the rich but they should not be kept back from the lower income people. So logical math says that 48% might reasonably and morally not pay taxes.
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I am not upset at all. How do you know i am not in the 48%.?
 
goofyjim said:
We’re going to argue back and forth over semantics. You are just upset that a family of four might reasonably take advantage of personal exemptions, standard deductions for dependents, an IRA contribution, child care credit, and whatever and not pay any taxes if their income is low enough. I have capitulated in many another thread that none of these things should be phased out for the rich but they should not be kept back from the lower income people. So logical math says that 48% might reasonably and morally not pay taxes.
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No, logical math says the brackets are being deliberately set too high, so as to generate a near-majority of non-taxpayers. And the purpose is to take the heat off politicians who want to raise taxes – after all, why should that 48% oppose raising someone else’s taxes?
 
vern_humphrey said:
No, logical math says the brackets are being deliberately set too high, so as to generate a near-majority of non-taxpayers. And the purpose is to take the heat off politicians who want to raise taxes – after all, why should that 48% oppose raising someone else’s taxes?
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Well now let’s see. A family of four with two working spouse should be able to do the following:

Personal exemption and dependents: 13,600
Standard deduction(if not itemizing): 3,400
Two IRA contributions: 4,000
Two credits for child care: 1,000
Total to start being taxed 22,000

If they own a home and qualify with medical expenses they might even begin to itemize raising this level even higher. Mind you, I am against any AMT because that penalizes lower income families in the long run.
 
goofyjim said:
Why has a discussion on a stimulus package turned into one on the tax code?:confused:
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vern_humphrey said:
Because taxes are a major drain on the economy, of course!!
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If the current plan is distributed equally that is about $500 per person. Prisoners, babies in diapers, all receive the same. Is that best?

If you return 3 months of FICA (both sides) that is ~$450 per month or $1,350 to the average worker. Nothing for babies and prisoners. I think the latter is a better plan because it returns earned income to spenders.
 
Texas_Roofer said:
If the current plan is distributed equally that is about $500 per person. Prisoners, babies in diapers, all receive the same. Is that best?

If you return 3 months of FICA (both sides) that is ~$450 per month or $1,350 to the average worker. Nothing for babies and prisoners. I think the latter is a better plan because it returns earned income to spenders.
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I believe its 600 a personand 600 each for your first two minor children(Im not sure about the kids). Those who pay no taxes get $300. Individuals whos adjusted gross income is over $75,000 and Couples whos adjusted gross income is over $150,000 dont get anyhting.
 
goofyjim said:
Well now let’s see. A family of four with two working spouse should be able to do the following:

Personal exemption and dependents: 13,600
Standard deduction(if not itemizing): 3,400
Two IRA contributions: 4,000
Two credits for child care: 1,000
Total to start being taxed 22,000

If they own a home and qualify with medical expenses they might even begin to itemize raising this level even higher. Mind you, I am against any AMT because that penalizes lower income families in the long run.
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on average that is $3,150 already paid in FICA

If they are average they will pay a total $10,725 in FICA(both sides) and the $43,000 earned above the $22,000 mentioned above could cause a $5,600 income tax that means about 22% to the federal government. Add state taxes, local taxes, sales tax, and varies government fees and you’ll find the 40% we speak of
 
Texas_Roofer said:
If the current plan is distributed equally that is about $500 per person. Prisoners, babies in diapers, all receive the same. Is that best?

If you return 3 months of FICA (both sides) that is ~$450 per month or $1,350 to the average worker. Nothing for babies and prisoners. I think the latter is a better plan because it returns earned income to spenders.
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My preference is to return the FICA surplus to the wage earner, paying it into a Personal Retirement Account (PRA) which he owns and controls (just like an IRA.) I constructed a computer model which indicates (very conservatively) that in about 32, the average wage earner would have enough in his PRA to cover his entire Social Security entitlement, and by the 40th year, the average wage earner would have enough in his PRA to replace his working wage 100%.

But for economic stimulus, I’d like to see a tax** cut**. One reason is two points we have not discussed yet:

It is important for people to see the government is doing something about the economy. And . . .

A tax cut has more permanence. One great drag on our economy is that our tax situation is never stable – that discourages long-term investment, because you cannot be sure what the tax laws will be when your investment matures.
 
If an American company makes a product in America and sells it anywhere in the world, it pays the highest corporate tax on earth on any profits made on that sale. 35%, I think, on the first dollar and every dollar thereafter. (one more knowledgeable in the tax rates could possibly correct me on the exact rate.)

Foreign manufacturers of the same product pay nothing in American income taxes, and, if they pay any income tax at all, and many don’t, it’s lower than ours.

And we wonder why the balance of payments is so bad, and why manufacturing jobs leave the country.
 
estesbob said:
Here is a great analysis of the so called “Fair Tax”

taxprof.typepad.com/taxprof_blog/files/bartlett_fair_tax.pdf
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There are TWO competing tax proposals (to replace the current income tax structure).

One is the “fair tax” … which is a national sales tax, somewhat different from the Value Added Tax which is used in Europe, and folks should study the differences.

The second is the “flat tax” … which is an income tax that would basically use a form the size of a post card and have minimal deductions.

The problem is that they sound alike and folks get them mixed up.

Steve Forbes (of Forbes Magazine) has been pressing for one of them. *

And just to make life more interesting, there are all sorts of variations. Such as coming up with a new form, the 1040SIMP or some such. So you would have the option of either filling out the current morass of forms and schedules OR using the post card.

Just for fun, you older folks out there, or you young folks who have not thrown away your parents personal papers. Take a look at your tax return from the 1950’s and 1960’s. Very simple. (The tax percentages were onerous for folks who made very much money … the tax rates didn’t get cut until Reagan was president)

AND that is yet another confusion … the difference between tax rates and taxes.

I had a large debate with my former member of congresss who didn’t understand that if you cut tax rates, that the actual amounts of tax collections would increase because high tax rates inhibit economic activity. And the economy suffers as a result.

A lot of rhetoric about increasing taxes “on the rich”, end up hitting people who work. Because the truly rich are protected with trusts and all sorts of devices that you need a staff to maintain.*
 
My husband and I were chatting about this last night…we set up a payment plan for the taxes owed last year…we really should just sent the lump sum–it’s not a terribly high amount, around $500. With all that comes out of our bonus checks, (taxed at a very high rate–around 38%) I was surprised that we owed. My question is…if the plan is passed to give couples a check to stimulate the economy this year–will part or all of the money go to pay what we owed from last year first? My husband thinks so, but not 100% sure. Our accountant is one of our sister in laws who is a CPA, and I should have asked her, but didn’t find the time this weekend. Thoughts?
 
whatevergirl said:
My husband and I were chatting about this last night…we set up a payment plan for the taxes owed last year…we really should just sent the lump sum–it’s not a terribly high amount, around $500. With all that comes out of our bonus checks, (taxed at a very high rate–around 38%) I was surprised that we owed. My question is…if the plan is passed to give couples a check to stimulate the economy this year–will part or all of the money go to pay what we owed from last year first? My husband thinks so, but not 100% sure. Our accountant is one of our sister in laws who is a CPA, and I should have asked her, but didn’t find the time this weekend. Thoughts?
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Nobody knows whether the IRS is going to apply that check to past-due taxes or not . We won’t know until they start mailing them out . The logical thing is they would not apply it to the past-due taxes as that would defeat the purpose of getting money into the economy to stimulate it, however as one who had dealt with IRS for 27 years one can never depend on logic to try and figure out what the IRS is going to do.
 
estesbob said:
Nobody knows whether the IRS is going to apply that check to past-due taxes or not . We won’t know until they start mailing them out . The logical thing is they would not apply it to the past-due taxes as that would defeat the purpose of getting money into the economy to stimulate it, however as one who had dealt with IRS for 27 years one can never depend on logic to try and figure out what the IRS is going to do.
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Ok–I was thinking of calling. I think they should just apply it…it would then at least take care of the past owed amount. Or I could pay it, and get the refund. Thanks for the reply, bob.
 
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