There are still people who think if you make (let’s just pick fictitious numbers for the sake of illustration) $100,000, and the tax rate for making between $90,000 and $200,000 is 50% you owe $50,000 in taxes.
NO.
Your taxable income at 50% is only on $10,000 of your income. Otherwise, there would be no reason to make over $89,999.99
You’d be surprised how many people don’t know this, including pundits that try and shape policy.
…a net operating loss is very common in businesses. As Alan Cole of the Tax Foundation pointed out this morning, about 1 million taxpayers had an NOL in 1995. It results from business deductions exceeding business income in a particular year. Under tax rules, this loss can be carried back up to two years, and carried forward up to twenty years. If this is a “loophole,” what are these political reporters suggesting? That a business loss should simply be eaten by the taxpayer? That Uncle Sam should be a full partner in your profits but not in your losses? How is that fair?
We also heard that real estate depreciation–of all things–was a loophole! Could anything be more mundane and ordinary on business tax returns than depreciation deductions? Under the consumption tax base that I and virtually all conservatives support, depreciation would be supplanted by first year full expensing (which, ironically, would cause NOLs in most cases when it comes to structures). But real estate depreciation is no loophole under any theory of tax. Cost recovery for the acquisition of a business asset is universally allowed and always has been. In the case of real estate, the recovery periods are painfully long–forty years, thirty-nine years, or twenty-seven and one-half years, depending on the use of the building. Oh, and there’s no inflation adjustment to the basis, so the real value deducted is far less than the nominal write-off. Taxpayers are also required to capitalize the land portion of real estate and cannot depreciate it.
ht. c. steven tucker
Math is hard.
Is everyone here tired of K Street writing our tax laws?
BFH’s example is only true if the tax rate for income between $0 and $90,000 is 0%. I think he’s trying to describe marginal tax rate increases, but the example is murky.
If the tax rate between $0 and $90,000 is 35%, then if you earn $100,000 you will pay $35,000 tax up to the $90,000 and THEN another $5,000 (the 50% of the $10,000 above $99,000) for a total tax liability of $45,000.
Kevyn “Billy Idol”Kelly was on last night ranting ignorantly about this. I reckon her “Trump Tax” interview with Hillary is not far off.
If you want to know about taxes,ask Brad he is a very wealthy businessman.
“Kevyn”=. ” Megyn” stupid autocorrect
According to Mormon Mitt, 47% haven’t an inkling of what paying taxes is all about.
Playing to the peanut gallery.
The goal of every working person should be to pay no taxes. It isn’t difficult to do, especially if you itemize deductions. For the past 7 years, we have been in a negative tax bracket and damn proud of it! This was achieved by not working to our full potential. Sure it’s been difficult to have money to burn, but we’re not going to be credited with having helped make Zer0 successful.
In the end I’ve learned that you either need to make huge sums or as little money as possible. There is no middle class or ground, that’s just the sweet spot for getting fcuked by the government.
I used to own a store in a very rough area and people really are stupid. About once a week someone
would buy a $5 item. They would look me in the face and say “hey you just made $5
in less that 10 seconds”. (You rich bastard)
I knew what they meant cause it happened all the time.
People don’t realize I buy the items before they come to the store. Wholesale.
A $5 item might cost $4.50 to $4.75 depending on what it is.
I don’t make $5 on a $5 dollar item.I tried to explain it a couple of times but I was not able to get the person to understand.
They hated me because I was rich. They did not work,ever; again that was my fault too.
Yes I open carried in the store. One on my hip two concealed.
Actually I’m Not An Accountant, your federal income tax for an AGI of $100,000(that is, what you have left after all deductions or as Fur put it, “what you made”) using your marginal income tax rate of 35% for the first $90,000(which is no where near the way it really works) is $31,500.
Your next tax bracket of $90,001 to $200,000 being taxed at 50% would mean you would pay 50% on the remaining $10,000 of AGI or $5,000.
So using your tax brackets and tax rates, the taxes due on a AGI of $100,000 is $36,500.
Hate to be picky but you just overpaid your federal income tax by $8500 or IOW you overpaid 23.2%.
“If you want to know about taxes,ask Brad he is a very wealthy businessman.”
That’s pretty funny. I always like to start the morning off with a good laugh. However I have not paid State or Federal income tax personally or corporate due to losses in 2008 and repayment of debt to share holders. That’s 2008 you understand.
“You’d be surprised how many people don’t know this, including pundits that try and shape policy.”
you could fill volumes with what “pundits” don’t know, they are called encyclopedias.
“A $5 item might cost $4.50 to $4.75 depending on what it is.” – MM
And you haven’t even touched on operating expenses. Electricity, rent, repairs and help aint free.
Schools should have hands-on lessons in economics. Experiential lessons are the best.
Oops. Attributed my quote wrongly, sorry The store owner
Here’s what these Marxist idiots don’t understand: When people invest their money, they inherently take on risk. That risk is somewhat mitigated by knowing they can “write-off” losses in the future, if the investment fails. If you take away the incentive for people to invest money, then you can say goodbye to jobs, innovation and increasing quality of life.
If you want to argue that Trump inflated the ~900 million dollar number, then that’s one thing. But saying that people can’t write off investment losses is just dumb and would destroy our economy if put into law.
This is why I use turotax, it can eff up a tax return in microseconds.
And another thing for the ignorant moochers who just hate people who have more than them: tax AVOIDANCE is smart and expected of a business manager. Tax EVASION is illegal. So prove to me that Trump EVADED taxes and i’ll give a crap about your anti-American witch hunt.
Like all other failed attempts to take Trump down, he will make clowns out of them.
Fur’s example was only murky because he used $100,000 as an example.
The tax rate goes to 39% at $415,000. State tax rates are added to that. Had Fur used $2,000,000 or a larger number the lower tax rated income would not really register and his example is spot on.
One thing Fur did not mention is that pesky “alternative minimum tax rate”. That calculation has the effect of COMPLETELY eliminating deductions when you are dealing with non passive income. If you don’t understand how it affects you (I don’t and believe me when I say it is complicated) and you have a high income your deductions become worthless.
I wish I could address it with examples but I can’t without running a bunch of Turbo Tax examples but you talk about depressing when you have to use it.