Should Taxes Be Regionally Indexed?

[Dreadnaught]

Still Dread, the reason why you pay a bigger chunk of your income for housing is because you made the choice to live in an area that is too expensive for you. And tax deductability enabled you to make that choice.

I acknowledge that problem exists. I don't feel it's a big enough problem to be concerned about, much less justify a systemic redesign of the tax structure.

Eh? Tax deductability hasn't enabled my choice. I made my financial considerations outside of deductability, as I don't like to plan my life around government policies like that. Sure, I usually get a check back from my tax bill accounting for the cash I basically lent the government, but it all goes into a cash hoard and I don't factor it into my expenses and savings goals.

But Fuzzy, do you really not think it's a problem that almost half of the US population is expected to not pay federal taxes? You don't think it's a problem when a majority pays nothing, but can vote for politicians who insist on increasing taxes for those who do?

My complaint isn't that I'm in financial trouble. I'm fine. It's that -- due to a change in when I get paid part of my compensation -- my salary for this year will go up by a few thousand dollars. It's just for this one year and it's just a couple of thousand dollars, but suddenly this pushes me into a higher tax bracket. GGT, you want to talk about middle class squeeze? It's present in those who don't magically double their salaries every year, and instead see their temporary income gains slurped away by government.

[agamemnus]

Dreadnaught, paying for my health care since 2010.

[Being]

My complaint isn't that I'm in financial trouble. I'm fine. It's that -- due to a change in when I get paid part of my compensation -- my salary for this year will go up by a few thousand dollars. It's just for this one year and it's just a couple of thousand dollars, but suddenly this pushes me into a higher tax bracket. GGT, you want to talk about middle class squeeze? It's present in those who don't magically double their salaries every year, and instead see their temporary income gains slurped away by government.

Do you realise that the upper tax rate on Americans has decreased from over 75% to less than 40% in the last 50 years? What you are experiencing is the unforseen (being kind) consequences of that. "Put more money in the hands af the wealthey and they will produce enough jobs to offset the loss in revenue without impacting the amount paid by individuals in the lower clases." That was the promise according to Reaganonomists. Hurts, don't it?

[Dreadnaught]

A large portion of my salary is funded by a wealthy megalomaniac so I don't see how it hasn't held true.

[Being]

A large portion of my salary is funded by a wealthy megalomaniac so I don't see how it hasn't held true.

Then why are complaining about being pushed into a higher tax bracket?

[LittleFuzzy]

But Fuzzy, do you really not think it's a problem that almost half of the US population is expected to not pay federal taxes? You don't think it's a problem when a majority pays nothing, but can vote for politicians who insist on increasing taxes for those who do?

That's an entirely different topic, which regional indexes don't really touch on at all.

[Dreadnaught]

Then why are complaining about being pushed into a higher tax bracket?

Because I don't work for the government. He has to have private money to run his business.

That's an entirely different topic, which regional indexes don't really touch on at all.

I think they are quite related, much like how California has such wild budget fluctuations because its tax revenue is heavily dependent on it's higher tax brackets.

[GGT]

Eh? Tax deductability hasn't enabled my choice. I made my financial considerations outside of deductability, as I don't like to plan my life around government policies like that. Sure, I usually get a check back from my tax bill accounting for the cash I basically lent the government, but it all goes into a cash hoard and I don't factor it into my expenses and savings goals.

Without the mortgage interest deduction, you'd have paid more in income taxes. Maybe bumped up a bracket?

But Fuzzy, do you really not think it's a problem that almost half of the US population is expected to not pay federal taxes? You don't think it's a problem when a majority pays nothing, but can vote for politicians who insist on increasing taxes for those who do?

They do pay state sales and consumption taxes, tho. Outside NYC and into the real America where workers don't have good public transit, they have to drive---gas tax, DoT registry and plate tax, tolls and turpikes, emission inspections etc, plus maintenance and insurance costs for cars.

The problem is what to do about moderate to low income, when they can't afford to live in metro areas and have to commute. You said it's not easy to find rent control in Manhattan, the COL is high....think about that when you get a latte, ask if the barista commutes from Jersey....where do all those service workers live? You'd want to take more out of their pockets when they're already barely sqeaking by working 2 or 3 part time jobs with no health care benefits?

My complaint isn't that I'm in financial trouble. I'm fine. It's that -- due to a change in when I get paid part of my compensation -- my salary for this year will go up by a few thousand dollars. It's just for this one year and it's just a couple of thousand dollars, but suddenly this pushes me into a higher tax bracket. GGT, you want to talk about middle class squeeze? It's present in those who don't magically double their salaries every year, and instead see their temporary income gains slurped away by government.

Doesn't the IRS still allow 5 year income-averaging? It's common right out of college, or after a promotion or sale of property, or bonii, to have a big chunk of one-time or sudden income gain. That's a problem with brackets; doesn't matter how or why, but it boils down to one dollar either way. Enter fancy CPA tricks to keep you in the lower one, or hope to offset tax payment and keep larger part of the income, at least deeper into the higher bracket (instead of falling right on the one dollar line).

Middle class has been squeezed for decades, you're only experiencing it now first-hand instead of from behind the student desk and theory. Sucks, huh. Middle class wages and income have been flat for years, savings was at zero, credit and debt was high. Lots of people got too deep into housing (bubble) spending half their income there. Just like you. oops



The Great Recession when millions are laid off, can't find work even tho willing and able, houses underwater, medical bankruptcies, college grads with huge loan debt and no job, people moving home with mom and dad, seniors moving in with kids---probably not the best time to complain about your predicament. It looks like elitism or at least myopia. Ivy League degree, employed right out of the gate with salary higher than average, stock options, health benefits and bonii, buying Manhattan property, vacationing in Asia....

Everyone would like to pay less in taxes and keep more of their own money, duh! Changing tax code would be great. But where are the accompanying cuts in spending you'd make, to offset lowering your taxes? Even with Flat Tax that would have to be part of the plan.

[LittleFuzzy]

Because I don't work for the government. He has to have private money to run his business.



I think they are quite related, much like how California has such wild budget fluctuations because its tax revenue is heavily dependent on it's higher tax brackets.

California has such wild budget fluctuations because something like half the budget is already earmarked for special interests via our insane public democracy system and because a super-majority is required for anything besides cutting taxes *again, established by our initiative system* Regional indexing doesn't make much difference because all those people being shifted into higher brackets were already in a fairly high bracket. It doesn't speak to anything about all those people who don't pay taxes at all because they're still going to be at the bottom of whatever region they're in.

[Being]

Then why are complaining about being pushed into a higher tax bracket?

My point is that you are complaining about the results of economic policy you support. You have options that can change that:

1. Give money to a charity to maintain avoid being pushed into a higher bracket

2. Put money into a 401K to avoid being pushed into a higher bracket

3. Rally against Reagonomics since it obviously hasn't created the jobs it promised.

[GGT]

I do have a question about federal payroll taxes for SS....are they indexed by regional COL?

If the first X amount of income is exempt and/or refunded, is that X the same for each state or is it pro-rated somehow?

[Hazir]

Wow, I just did the routine for 2009. I don't think I've ever done it before the 31st of March before. Turn out that all I needed to fill in was the interest paid on our mortgage and that was it. All the other info was already in the system and all I needed to do was check it against my hardcopies. I could have done it faster even had I not tried to fill it out for myself as well despite getting a letter that I neededn't bother this year. As it turned out just filling out Ronald's was enough and got the same result. A puny €1458 but that was to be expected as we hardly have got any deductables left. Which pretty much makes payroll deductions my final taxes. Funny this; if all goes according to plan after 2011 we'll never have to file again