Please explain the benefits of Romney's economic plan.

I'm not a tax expert either.

But, I do know that some of the government regulations make is hard for employers to fund benifits such as dental, health, etc. and the regulations do make it more attractive to work out of country (not to mention the other countries economic state.) Some regulations are good, yes, but some actually end up hurting both employer and employee. If it's harder or more expensive to do business here then why would they?

This should be an easier topic but there's so many hoops it's hard to finish the course.

The US tax system is a mess. And to think this country was founded by people trying to get away from this nonsense. :blink:

ren wrote: Wait. Is this some kind of joke or does the US tax system actually work like this?

It is far more complex and there are a billion loopholes in tax law but for the most part, yes.

If a person makes under a certain amount of income (below the poverty level) they get everything back. For everyone who makes more, it is based on what income bracket you fall in as to what percentage you pay.

In the UK the top 1% of earners actually pay 28% of the total tax revenue

Below is the Laffer Curve:



The theory goes a little like this...

You tax at 0%... the government won't get any money (who'd a thunk it?! lol)
You tax at 100%... no one bothers doing any work, because they won't end up earning any money

And somewhere in between there is a point where you have put taxes up to an extent that people stop bothering to earn money so if they don't earn money the government doesn't earn anything and society doesn't benefit either, because they aren't working

So if you were to lower it then suddenly it becomes more attractive to work, because you will actually earn quite a bit more money

It is at that point that people are attracted to work and so... work... thus bringing in government revenue and wider societal benefit because of the benefits of people providing services

Because this is based on marginal return at much higher rates it is more effective to lower it from 70% to 50% than from 30% to 10% and so on...

This however is dependent on quite a few factors, including but not limited to: the current level of taxation, the availability of work, the capacity of the system to absorb additional work, the level of demand for a service, the level of competition from other tax systems, any additional indirect benefits (moving money - can take 3 days to clear money from non-EU accounts for example)

But that is one of the reasons behind bar-stool economics (the thing Resticon posted)

I could go on... but without getting technical

Making it work is more complicated than simply lowering taxes and hoping for the best because without the right conditions lowering taxes simply reduces government revenue and nothing changes at all(not altogether a bad thing in and of itself if I may say so...)

We all know that is not the way it works in reality. Look at the Repub presidential candidate himself: on his $20 M of income reported in the ONE return he released (probably because the others were an even lower tax rate), he paid about 14%.

Fourteen percent. Let that sink in a bit. A guy worth over $200 M paid a lower rate than just about all of his employees.

That is obscene. And it has got to change.

Sounds pretty close...

The tax breaks however aren't evenly applied...

The 10th guy would also get a break for paying cash, for paying in exact change, and a few others that don't appear in this story...

Because they have the money, they can exploit the loopholes that those of us without money cannot, thereby decreasing their actual percentage paid.....

If I had money, id do the same, but, I don't, do I can't, lol....

well, normally a tax cut is cutting the rate. Amounts are not taken into account. So when you say "incomes over 250000 get a cut" what you're really saying is not that they'll pay x thousand dollars less, but x percent less.

Normally tax rates are set per bracket. I'm not familiar with the US tax code so I'll use examples:

0-10,000 = 0%
10,000-50,000 = 5%
50,000-100,000 = 10%
100,000-150,000 = 15%
150,000-250,000 = 20%
250,000-500,000 = 30%
500,000-max = 40%

meaning someone who earns 700,000 a year will have to pay 0% of 10000 + 5% of 40,000 + 10% of 50,000 + 15% of 50,000 + 20% of 100,000 + 30% of 250,000 + 40% of 200,000.
that's 2000+5000+7500+20000+75000+80000, a total of 189,500 out of 700,000, a rate of approximately 27% tax.

you can give tax breaks by lowering the difference between the brackets (using increments of 2.5% instead of 5 for instance), enlarging the brackets (making the 20% bracket 150-500, 30% bracket 500 to a million), by introducing a low maximum tax rate (15% for everything above 100) or by actually not taxing (or taxing less) anything above a certain amount (0% on 250 and above)

I suspect what was done is decrease the rate on the high brackets or cap the maximum rate at a low bracket (for instance 15% for everything above 100,000) when ideally the brackets should have been enlarged (if they wanted to give tax breaks), effectively giving everyone a tax break.

example:

0-20,000 = 0%
20,000-100,000 = 5%
100,000-200,000 = 10%
200,000-300,000 = 15%
300,000-500,000 = 20%
500,000-1,000,000 = 30%
1,000,000-max = 40%

The thing is they never want to do this, because for the 0-200,000 incomes the break doesnt represent a lot of money, but to the state it represents a massive loss, since a lot of people earn between 0 and 200,000.

To illustrate this example, I'll use someone who earns 200,000 and in this case gets the largest (monetary) break: used to pay 0%.10000+5%.40000+10%.50000+15%.50000+20%.50000 = 24500 (12.25% tax)
With the changes they now pay:
0%.20000+5%.80000+10%.100000 = 14000 (7% tax)
It represents an increase in their income of 186000-175500=10500 (an increase in income of nearly 6%). To the government however that's a reduction in receipts (for this particular individual) of nearly 43%

Also, Jestor's right.

Your home isn't your home. It's your corporate headquarters. Your ferrari is your company car. Your honeymoon in Hawaii is a business trip with a co-worker.etc.

ren wrote: Your home isn't your home. It's your corporate headquarters. Your ferrari is your company car. Your honeymoon in Hawaii is a business trip with a co-worker.etc.

If I can remember the method correctly...

In the Uk you create a new company that you own
You then I think contractually sell yourself to your own company as someone who is self-employed
While doing that you also apply for an entrepreneurial grant from the government for your company, which can be something up to 200,000 (I think)
The result ends up with you paying around 10%, even if you earn 100K a year

That's roughly how I remember it being told to me (by someone who does it)

But sorry for derailing lol, I'll try to keep to topic

In the UK, if you purchase property through a corporation, not only do you not have to pay income tax (or national insurance), only corporate tax which is lower, but on top of that there's an additional tax on property which corporations do not have to pay...

ha...i have a consulting business i use (sometimes) for this purpose.