State of the Union

[Chisoxfn]

Where are you trying to lead me with this? I'm not an expert when it comes to tax codes, etc, but I absolutely believe that CEOs shouldn't be paying LESS in tax than their middle management, which is often the case.

 

A consistent rate, and closing the loop holes, seems like a pretty sensible idea - potentially with caveats for ultra-low income folks.

I support a proportionate tax. I am just surprised you are supporting it.

[Reddy]

I support a proportionate tax. I am just surprised you are supporting it.

yeah, I definitely don't think the rich should pay proportionally MORE than everyone else, so I agree with you re: estate tax. I just think they should be forced to pay their share and not dilute it by taking advantage of loopholes.

[caulfield12]

Year Exclusion Amount Max/Top tax rate

2001 $675,000 55%

2002 $1 million 50%

2003 $1 million 49%

2004 $1.5 million 48%

2005 $1.5 million 47%

2006 $2 million 46%

2007 $2 million 45%

2008 $2 million 45%

2009 $3.5 million 45%

2010 Repealed

2011 $5 million 35%

2012 $5.12 million 35%

2013 $5.25 million[26] 40%

2014 $5.34 million[27] 40%

 

 

Source: wikipedia

 

Also, the yearly (tax-excluded) gift amount has increased from $10,000 to $14,000 (per individual).

[ChiSox_Sonix]

Where did I suggest that? We should all pay an equal proportion. Kinda simple.

 

I agree with this and also don't understand why there are objections to it. I do think there should be a buildup to the flat tax % but that floor should not be too high.

[LittleHurt05]

To be frank, the estate tax might be one of the most unfair taxes in the world. You made it, lets just retax it and make it a burden on your families.

 

Not to mention, there are so many smart accountants and lawyers out there who know to avoid the estate tax, that a lot of that money just goes to them and not the government anyway.

[StrangeSox]

I agree with this and also don't understand why there are objections to it. I do think there should be a buildup to the flat tax % but that floor should not be too high.

 

Because it would result in massive cuts.

[NorthSideSox72]

yeah, I definitely don't think the rich should pay proportionally MORE than everyone else, so I agree with you re: estate tax. I just think they should be forced to pay their share and not dilute it by taking advantage of loopholes.

Wow. Possibly the most liberal poster in here likes a flat tax? Kinda surprised.

 

You may not be aware, but the (primary) argument against a flat tax is that it functions as regressive due to the difference between necessities and everything else. The lower someone's income, the larger percentage goes to true needs - food, clothing, housing, utilities for example. So if the tax rate is flat, that means the tax burden is actually greater on those of lower income.

 

There are ways to combat that of course while still having a flat tax - exemption on income below a certain level (the Forbes model if you will), changes in sales tax structure to lower or remove it for store-bought food and some other necessities.

 

Not agreeing or disagreeing by the way, just was curious if you thought it through.

 

[StrangeSox]

Bitter that in this country I and others like me (middle to upper middle class) have to shoulder the burden of both the rich and poor? Yep, I sure as hell am.

 

I think it's odd that you make this complaint shortly after strongly defending 529 plans that primarily benefit the upper class and labeled any removal of that preferential tax treatment as punishment.

[farmteam]

I've seen lots of good arguments for reforming student loan financing in here.

[caulfield12]

Wow. Possibly the most liberal poster in here likes a flat tax? Kinda surprised.

 

You may not be aware, but the (primary) argument against a flat tax is that it functions as regressive due to the difference between necessities and everything else. The lower someone's income, the larger percentage goes to true needs - food, clothing, housing, utilities for example. So if the tax rate is flat, that means the tax burden is actually greater on those of lower income.

 

There are ways to combat that of course while still having a flat tax - exemption on income below a certain level (the Forbes model if you will), changes in sales tax structure to lower or remove it for store-bought food and some other necessities.

 

Not agreeing or disagreeing by the way, just was curious if you thought it through.

 

 

Not only that, but then how do you make a "fair" flat tax out of property taxes so that the poorer pockets of the US don't always end up with substandard schools.

 

Even with the massive subsidies and reallocation of state and Federal funding, "inner city" schools are nowhere close to performing adequately. Imagine if that funding was cut by 25-50%. If it hasn't happened already, it would essentially be creating a permanent underclass of citizens with little to no chance at upward mobility.

 

Maybe we need to look at the Finnish solution, which is only allowing the Top 10-15% of the top universities in the country to become teachers...and allocate them "evenly" across all the public schools.

Edited January 28, 2015 by caulfield12

[ChiSox_Sonix]

Not only that, but then how do you make a "fair" flat tax out of property taxes so that the poorer pockets of the US don't always end up with substandard schools.

 

Even with the massive subsidies and reallocation of state and Federal funding, "inner city" schools are nowhere close to performing adequately. Imagine if that funding was cut by 25-50%. If it hasn't happened already, it would essentially be creating a permanent underclass of citizens with little to no chance at upward mobility.

 

Maybe we need to look at the Finnish solution, which is only allowing the Top 10-15% of the top universities in the country to become teachers...and allocate them "evenly" across all the public schools.

 

I think the "flat tax" usually is just in reference to income tax. Property taxes would still depend on other factors

[Jenksismyhero]

I think it's odd that you make this complaint shortly after strongly defending 529 plans that primarily benefit the upper class and labeled any removal of that preferential tax treatment as punishment.

 

It is punishment, and I also said raise taxes on the rich in other areas if you really want to even out the benefit. I like to reward good behavior (saving long term for something). Not just give people things because (going to school).

[Reddy]

It is punishment, and I also said raise taxes on the rich in other areas if you really want to even out the benefit. I like to reward good behavior (saving long term for something). Not just give people things because (going to school).

 

Unless it's MY good behavior I guess!

 

(and encouraging people to go to school by making it affordable is how you grow the middle class and help put a dent in poverty, which are good things)

[Reddy]

Wow. Possibly the most liberal poster in here likes a flat tax? Kinda surprised.

 

You may not be aware, but the (primary) argument against a flat tax is that it functions as regressive due to the difference between necessities and everything else. The lower someone's income, the larger percentage goes to true needs - food, clothing, housing, utilities for example. So if the tax rate is flat, that means the tax burden is actually greater on those of lower income.

 

There are ways to combat that of course while still having a flat tax - exemption on income below a certain level (the Forbes model if you will), changes in sales tax structure to lower or remove it for store-bought food and some other necessities.

 

Not agreeing or disagreeing by the way, just was curious if you thought it through.

 

I don't know about that. I went on an anti-muslim rant just a few days back! And I've consistently hated on Obama up until the last few weeks!

 

And yes, I did mention having caveats for the lowest income folks, but outside of that, from middle class on up, I do support a flat tax as long as the fuggin' loopholes are closed for the wealthiest Americans.

[Jenksismyhero]

Unless it's MY good behavior I guess!

 

(and encouraging people to go to school by making it affordable is how you grow the middle class and help put a dent in poverty, which are good things)

 

It's not like there aren't other benefits provided by the government to students: pretty favorable lending, tax deductions of interest on the loans, continuing education credits, etc.

[Reddy]

It's not like there aren't other benefits provided by the government to students: pretty favorable lending, tax deductions of interest on the loans, continuing education credits, etc.

 

Income-based Repayment.

[illinilaw08]

It's not like there aren't other benefits provided by the government to students: pretty favorable lending, tax deductions of interest on the loans, continuing education credits, etc.

 

You income out of the tax deduction on student loan interest pretty quickly. I haven't been able to take it in years - and I definitely consider myself squarely within the middle class.

 

If I were changing student loan policy, I'd do the following:

 

1) Increase the amount of direct loans you can take in a school year. When I was in law school, the combination of subsidized and unsubsidized direct loans I could take in a given year barely covered tuition plus rent for the year - and I had a scholarship. The goal should be to continue to provide low-interest loans to students - in my experience, the private loans have higher lending costs (taking away one of the above referenced incentives from Jenks);

 

2) Make it easier to discharge student loans in bankruptcy after a time. Something like no discharge unless (1) you've been out of school for greater than some number of years (so students can't graduate and immediately head into bk); (2) you've made consistent payments over those years (with exceptions for hardship cases); (3) your current income falls below a certain threshold; and (4) you have made reasonable efforts during those years to find a job in your field.

 

Almost any other debt you can make go away when circumstances change and you can't afford it anymore. Lost your job? Surrender your house in foreclosure, get rid of the giant deficiency in bankruptcy. Credit card interest killing you? Get rid of it in bankruptcy. Business gone belly up, get rid of those personal guarantees in bankruptcy. The fact that student loan debt - which is basically a necessity - is given such preferential treatment - is mind boggling. As a result, I'd be strongly in favor of a system that provided an out from under student loan debt for people who were struggling under it.

 

Further, I don't think there would be significant abuse of the system. For me, I'd love to get rid of my student loan debt. But I wouldn't intentionally tank my career to get rid of it.

 

To Reddy, on the income based repayment, how frequently do you have to update your income information with the feds?

 

[Jake]

I see no reason why anyone should pay a different percentage of their income than anyone else. Doesn't make sense to me.

 

As has been mentioned, you can't look at it quite that way. Mark Cuban could lose 10% of his current take-home income and not even notice. If I lost 10% of my income, I'd have to make big changes to my lifestyle to accommodate it.

 

There is also the vague notion that people who make more money tend to be more reliant on public goods and other people. If I'm going to, say, let Google Fiber do all kinds of digging in my town, then I think they owe society more for that use than does the person who pays Google for the Internet. Wal-Mart's business falls to shambles if we have inadequate transportation infrastructure - both in that they need to move goods from place to place AND that they need customers who can reach them. When someone uses food stamps to buy food at Wal-Mart, W-M has lucked out tremendously that the state has ensured this person can be their customer. It doesn't always work out in such black and white ways, but you get the idea. A person's wealth is not much stronger than the society it rests on, so they both need and should want to pay it back for their good fortune.

 

Then the quibbles come down to what is enough payback, what should this payback be spent on, etc. which is just your liberal vs. conservative take on things.

 

Side note about poor people losing chunks of their income: Over a quarter of American households have limited or no access to banking services. These people use check cashing services, prepaid debit cards, and occasionally payday lenders to access their money. Of these households, they spend more on financial service fees (like the portion of your check that a check cashing service takes from) than they do on food. These are by and large fees just to access their own money. This is why there have been murmurs of the government using USPS offices as minimal profit banks; it is estimated that a scheme that would aid the financial stability of the USPS would still save this underserved population 90% of their current financial fees costs. http://www.newrepublic.com/article/116374/...f-and-help-poor

[Chisoxfn]

I think it's odd that you make this complaint shortly after strongly defending 529 plans that primarily benefit the upper class and labeled any removal of that preferential tax treatment as punishment.

I think there are a lot in the upper middle to upper ends of the middle class who depend and utilize 529 plans. To be frank, the real upper class could pay for college any which way, so even if you taxed them a bit more, it is the others that also use it who would be more penalized anyway. And it isn't like someone in the upper class could use it to kite millions in taxes or something. If they aren't using it for tuition, it is going to be penalized and taxed anyway.

[Jake]

You income out of the tax deduction on student loan interest pretty quickly. I haven't been able to take it in years - and I definitely consider myself squarely within the middle class.

 

If I were changing student loan policy, I'd do the following:

 

1) Increase the amount of direct loans you can take in a school year. When I was in law school, the combination of subsidized and unsubsidized direct loans I could take in a given year barely covered tuition plus rent for the year - and I had a scholarship. The goal should be to continue to provide low-interest loans to students - in my experience, the private loans have higher lending costs (taking away one of the above referenced incentives from Jenks);

 

2) Make it easier to discharge student loans in bankruptcy after a time. Something like no discharge unless (1) you've been out of school for greater than some number of years (so students can't graduate and immediately head into bk); (2) you've made consistent payments over those years (with exceptions for hardship cases); (3) your current income falls below a certain threshold; and (4) you have made reasonable efforts during those years to find a job in your field.

 

Almost any other debt you can make go away when circumstances change and you can't afford it anymore. Lost your job? Surrender your house in foreclosure, get rid of the giant deficiency in bankruptcy. Credit card interest killing you? Get rid of it in bankruptcy. Business gone belly up, get rid of those personal guarantees in bankruptcy. The fact that student loan debt - which is basically a necessity - is given such preferential treatment - is mind boggling. As a result, I'd be strongly in favor of a system that provided an out from under student loan debt for people who were struggling under it.

 

Further, I don't think there would be significant abuse of the system. For me, I'd love to get rid of my student loan debt. But I wouldn't intentionally tank my career to get rid of it.

 

To Reddy, on the income based repayment, how frequently do you have to update your income information with the feds?

 

We could also do what governments are supposed to do - not try to profit from public programs like student loans. Do what Warren's bill proposed - lend at the same rate the Federal Reserve does to banks (0.75%) - and you have a great economic stimulus that better aligns with the purposes of the program. Last year the CBO reported that we made about 14% profit on student loans. This is a thing where it would be better to lose money than to make money. It's not a tax, it's a benefit!

 

[Jenksismyhero]

You income out of the tax deduction on student loan interest pretty quickly. I haven't been able to take it in years - and I definitely consider myself squarely within the middle class.

 

I think it's 75k single, 155k married before it phases out. That's upper class definitions, not middle class.

 

If I were changing student loan policy, I'd do the following:

 

1) Increase the amount of direct loans you can take in a school year. When I was in law school, the combination of subsidized and unsubsidized direct loans I could take in a given year barely covered tuition plus rent for the year - and I had a scholarship. The goal should be to continue to provide low-interest loans to students - in my experience, the private loans have higher lending costs (taking away one of the above referenced incentives from Jenks);

 

I mean this is gong to have to happen as tuition continues to go up and up at the crazy pace it's going. It's going to cost my son $250k/year to go to school in 2031.

 

 

2) Make it easier to discharge student loans in bankruptcy after a time. Something like no discharge unless (1) you've been out of school for greater than some number of years (so students can't graduate and immediately head into bk); (2) you've made consistent payments over those years (with exceptions for hardship cases); (3) your current income falls below a certain threshold; and (4) you have made reasonable efforts during those years to find a job in your field.

 

Almost any other debt you can make go away when circumstances change and you can't afford it anymore. Lost your job? Surrender your house in foreclosure, get rid of the giant deficiency in bankruptcy. Credit card interest killing you? Get rid of it in bankruptcy. Business gone belly up, get rid of those personal guarantees in bankruptcy. The fact that student loan debt - which is basically a necessity - is given such preferential treatment - is mind boggling. As a result, I'd be strongly in favor of a system that provided an out from under student loan debt for people who were struggling under it.

 

I'm fine making it dischargeable, but it will have to be clearly defined what hardship means. Student loans are a different animal because there's nothing to repossess in a loss, like your home or other property. It's held by the government, not a private entity. And the government works with you to pay it off unlike most private lenders with use of deferments, different payment plans, etc. I think it's a different animal. Maybe the private student loans should be dischargeable, but not the government ones.

 

 

To Reddy, on the income based repayment, how frequently do you have to update your income information with the feds?

 

Should be annually since it's based on your reported income.

[illinilaw08]

I think it's 75k single, 155k married before it phases out. That's upper class definitions, not middle class.

 

 

 

I mean this is gong to have to happen as tuition continues to go up and up at the crazy pace it's going. It's going to cost my son $250k/year to go to school in 2031.

 

 

 

 

I'm fine making it dischargeable, but it will have to be clearly defined what hardship means. Student loans are a different animal because there's nothing to repossess in a loss, like your home or other property. It's held by the government, not a private entity. And the government works with you to pay it off unlike most private lenders with use of deferments, different payment plans, etc. I think it's a different animal. Maybe the private student loans should be dischargeable, but not the government ones.

 

 

 

Should be annually since it's based on your reported income.

 

This is, to me, an important point. My understanding is that most of the terrible student loan stories involve private debt rather than direct loans.

 

To your other point, student loans are the exact same as any unsecured debt - credit cards, medical bills, etc. - you get a judgment and then try to collect. I'm not sure why that makes them a different animal.

[Jake]

It's worth noting that state support of public universities is dropping dramatically, which is a very big contributor to the rise in costs. It's not the only one, since these universities are also under intense pressure to add more and more services. Most of the day-to-day operations of a big university have little to do with education and more to do with taking care of people. That stuff costs money.

[StrangeSox]

Right, all the student loan reform in the world won't really help the problem of 22-23 year olds graduating with over a hundred thousand dollars of debt for an undergrad degree, several hundred thousand if its a medical or law degree (or they had to pay for their masters).

[Jenksismyhero]

This is, to me, an important point. My understanding is that most of the terrible student loan stories involve private debt rather than direct loans.

 

To your other point, student loans are the exact same as any unsecured debt - credit cards, medical bills, etc. - you get a judgment and then try to collect. I'm not sure why that makes them a different animal.

 

Well I've pointed out the main reasons - private lenders versus the government, and re-payment options. The government also can't selectively choose who it loans money to. The only requirement, that i'm aware of, is whether the person is going to school. A person could be dirt poor with no prospect of paying it back and the government is still giving them money. Private lenders can appreciate that risk and build it into the loan and/or their business. Same with credit card companies. The government can't.