On Fri, 7 Nov 2008 11:22:06 EST, Drew Edmundson
<drewsbeagles[at]hotmail.com> wrote:

- quote -

Obviously I can't read, since GDP for the most recent 4
quarters was actually $14,429,200,000,000 so using my math
the tax rate is 17.8%.

- quote -

--
Drew Edmundson, CPA
Cary, NC

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On Nov 7, 5:21*pm, "Paul Thomas, CPA" <paulthomascp...[at]bellsouth.netwrote:
- quote -

many times, but that's macro econ (multiplier effects, velocity of
money, etc.). Probably more accurate to call it 'aggregate econ.' The
picture of global corps is interesting, I agree, but while foreign
interests here may flow capital back home, I believe U.S. entities pay
tax overseas (usually at lower rates) and then again here if they try
to bring their profits back home (I haven't read up on it, but there
was the 'tax holiday' a few years ago for repatriating foreign
income). Ireland seemed to have attracted a lot of business with their
low taxation rates (and I haven't heard much recently about the IRA,
bombings, etc. - perhaps because there's more ale flowing). And there
is some interstate competition in the U.S.. I think most dividends
paid are taxed - I know U.S. holders of BP pay U.S. tax on dividends.

Someone somewhere on the web I read recently talked about (macro)
taxes as a % of income, and from what I recall, there is a rather
narrow (macro) band between 16%+ and 18%- within which the economy
operates. Sorry I don't have that link.

Wanted to thank everyone for their comments on my topic.


========================================= MODERATOR'S COMMENT:
With this reply, it may be time to consider this thread 'closed'.

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In article <T83Rk.166$Lv6.8[at]bignews8.bellsouth.net> ,
Paul Thomas, CPA <paulthomascpapc[at]bellsouth.net> wrote:

- quote -

The foreign companies have lots of tricks to make the US company show
0 income. (For instance, they license intellectual property of theirs
to the US company for an amount that just happens to eat the profits.)

Seth

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Bill Brown wrote:

- quote -

A couple with 2 married kids and 4 grandchildren (8 people) are able to
gift 16*$12K ($192K/yr), not an insignificant amount of money. I think
the estate tax concerns are overblown. Those who actually have such sums
can afford to structure their assets to avoid much of the hit.

Joe

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On Nov 7, 2:34*pm, dapperdobbs <George...[at]hotmail.com> wrote:
- quote -

The maximum individual income bracket is not 38%. Re your earlier
post, capital gains taxes are not paid unless the capital gains are
realized. Most wealthy people die with a lot of unrealized capital
gains which means that 15% is never paid.

Also, for most people the estate tax is zero which makes the estate
tax rate be 0%. The first $2,000,000 of an otherwise taxable estate is
excluded from the estate tax. Effectively for a married couple with
just a tiny bit of planning, $4,000,000 can be passed onto the
children free of estate tax.

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"dapperdobbs" <GeorgeCFL[at]hotmail.com> wrote
- quote -




The deal with corporate tax rates is this. What you do has to be identical
across the board. So the "foreign" company that sucks it's profits back
overseas will pay the same tax rate as a US company that might not be paying
any dividends to foreign shareholders.

In other words, the Japanese or German owned company with US facilities or
operations would owe tax on their US income or profits at the same rate as a
100% US owned company. So with a 0% income tax rate on corporations, how
much profits would be sucked - untaxed - to foreign shareholders -v- the
same dividend income being taxed to US shareholders.

Total taxes collected would go down unless you dramatically increase the tax
on individuals. By the way, individuals vote. Corporations do not. They
just give large campaign contributions.




As an aside, a single dollar may be taxed hundreds of times at a cumulative
rate in the thousands.

I pay a dollar of salary that is taxed 15% for Social and Medicare, 15%
federal income tax, 6% state income tax, the remaining 64 cents is taxed at
7% sales tax when spent. Roughly 60 cents is income to someone, which could
be again subjected to 15% SE tax and 15% income tax and 6% income tax and 7%
sales tax, leaving...34 cents, which is taxed yet again as income or profits
to someone at some level.

It can be mind boggling till you've had your third scotch - then it all
becomes clear.

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On Nov 6, 9:07*am, "Paul Thomas, CPA" <paulthomascp...[at]bellsouth.netwrote:

[snip]
- quote -

{Humor appreciated :-)

- quote -

Thanks you for the pointer. Very interesting data - actually, I looked
for those numbers about 10 years ago and had no idea where to find
them :-) As to the 26% v. higher, the averages include companies with
losses - I made an assumption that successful investing would result
in owning companies with tax rates higher than average. No big deal.
It just seems to me that the double and triple taxation makes one
wonder if some legislators are experimenting with some asymptote
towards 100% taxation. Where taxation has the most deleterious effects
(according to Greenspan, in any case) is capital. There has been some
talk of lowering corporate tax rates, and I got into trying to
estimate effects. (Accounting is not my forte. I'm far too impatient.)

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On Nov 6, 12:05*pm, Bill Brown <brow...[at]longwood.edu> wrote:
- quote -


Not included in my original question was earned income. Taking a max
bracket of 38%, ignoring State taxes, and using 45% estate tax, the
total taxation on earned income *that is not spent* is 66%. The time
periods in which the income is generated are not a factor (e.g. higher
earning and saving years after 40 are taxed at 38%, then the estate
tax).

I did work with the other numbers, which should be considered
separately, and I think I see where you say I double counted. The
original capital invested is not taxed (cost basis). But, as it is
invested, gains resulting from it are taxed. Time periods are also a
factor, since presumably major investments would be made in later
years. Using assumptions near a 7% investment return, it doubles in 10
years. If it is realized and reinvested three times, the tax paid
approximates 15% on all gains, then the subsequent unrealized gains
are subject to estate tax.

A table may help show this (in brief):
10 year periods, at 7% return
Investment // Tax [at]15%
$ $
100 //
185 // 15
342 // 27.75
633 // 51.30
Total tax paid $94.05, on total gains of $627 = 15%. Then the final
double over ten years (an assumption of investment horizon) brings the
amount subject to estate tax to $1265, all based on a $100 initial
investment 40 years prior. I'm not sure how reasonable it is to
"assume" an investment return consistent with 7% over 40 years, but if
one considered only the original investment, the effective tax on that
100 is much higher than 15%. I have not worked out a schedule of
investments over time - clearly the later investments would have fewer
years to accumulate gains.

The effects of the corporate tax rate on the returns from investments
in common stock are not a straight-line function, and I don't think
one can assume that a reduction on that rate would translate into
earnings increases (it seems unlikely). But the multiplier rate or the
speed of money is a factor tending towards pushing earnings higher. I
believe this is a widely recognized and accepted principle. If nothing
else, the reduced taxes could be paid out in dividends, or used in
stock repurchases. If dividends were paid out, those would be taxed
annually.

I understand that deductions from income and available loopholes mean
that few people pay the effective max bracket on all their gross
income, and I understand that this isn't a very simple set of
computations, but for those who are very wealthy, is my 70% number
really that far off? A lot of wealth is accumulated from privately
held businesses, where investment returns are higher than 7%
annualized.

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On Wed, 5 Nov 2008 15:48:40 EST, dapperdobbs
<GeorgeCFL[at]hotmail.com> wrote:

- quote -

Total taxes, fees, etc. for fiscal year 2009 -
$2,568,239,000,000 (rounded to the nearest million).

Total GDP $56,905,700,000,000 (rounded to the nearest $100
billion) most recent 4 quarters.

Using these numbers the tax rate is 4.5%.

But since GDP isn't income this isn't a good method either.

--
Drew Edmundson, CPA
Cary, NC

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On Nov 6, 9:05�am, Bill Brown <brow...[at]longwood.edu> wrote:
- quote -

Well said, Bill :-)

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- quote -

No. Not even close.

I can use the same double counting, false assumption process to
dishonestly demonstrate that out of 365 days in a year, a full time
worker doesn't spend one hour on the job.

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"Paul Thomas, CPA" <paulthomascpapc[at]bellsouth.net> wrote in message
news:VQCQk.62769$vX2.47848[at]bignews6.bellsouth.net...
- quote -


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"dapperdobbs" <GeorgeCFL[at]hotmail.com> wrote
- quote -



Some research would be in order. From
http://www.irs.gov/pub/irs-soi/05coccr.pdf we see that 2005 corporate tax to
taxable net income is right at 26%.




- quote -


Currently. But I suspect that before we see a republican back in office
they'll both go higher.




- quote -




Ah, the best-laid schemes o' of mice an men.......I think I got that right.






--
Paul A. Thomas, CPA
Watkinsville, Georgia

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For some years I have wondered about what the guys in top tax brackets
pay, and why some of the very rich move to Bermuda. Is my rudimentary
math below correct ...?

.... For a family with subtantial investments in stocks:

Corporate tax rate 38% (reduces earnings, which reduces the price of
the stock, commensurately)
Capital gains tax rate 15%
Estate or inheritance tax 45%

100 (index) x (1 - .38) = 62
62 x (1 - .15) = 52.7
52.7 x (1 - .45) = 28.99
28.99 = what's allowed to the family after taxes.

It seems to me that the minimum the family pays is an effective 71%
tax. For 28% cap gains tax rates, and 55% estate tax rates, that goes
up to 80%.

Of course the more often one realizes capital gains, the more often
that tax is paid, and the more often one dies, the more often the
estate tax is paid.

========================================= MODERATOR'S COMMENT:
fortunately, I plan to only die once

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