Seems high to me, but what do I know?

I have a child in college. No expenses to speak of for the first two years for two reasons:

1) We planned ahead financially
2) Hard work that resulted in academic scholarships and an activity-based scholarship and a couple of character-related scholarships

Despite this, said child is still working part time, and earns about $500 / month. Most of the earnings are going straight to savings so that when it comes time to 'launch', there'll be some funds from which to do so.

Said child got a Christmas bonus of $1,000.

The federal income taken out was over $250.

Total taxes taken out were $370.

Child is left with about $630 of a $1000 bonus.

Is this 'fair'?

What constitutes 'fair'?

I'm not sure what the percentage is now since it's been a few years since I've dealt with it. But 25% FWT sounds reasonable on a Christmas Bonus.

Although it has nothing to do with the bonus, tax rates for a single child who can be claimed as a dependent on their parent's return is very high.

When he/she files his/her income tax, he/she might get some of that returned. Perhaps putting all that he/she can into an IRA would be a better idea than just a savings account to launch whatever you have in mind. Whatever he/she puts into the IRA would not be taxable and would greatly reduce the income tax liability.

Yes - that's what we're going to encourage him to do - put it in some savings vehicle. He also does some donating, and so that can possibly be a deduction. We'll have to see how it all shakes out in the wash.

Had he not worked hard to get scholarships and done a lot of dinking around in high school instead, that money would be going to pay for college, and he probably wouldn't end up paying any federal income taxes on it.

I don't think much of anything about the tax codes are fair. Too bad he doesn't have a million deductions to offset it. What really annoys me is when people hardly work but because of their children they get big tax refunds of thousands of dollars while those of us who were responsible enough to stop at one child pay for their children to go to school, etc. I pay they get all their money back plus thousands they never put in no wonder there is not enough money to go around for schools.

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The political system is broke and it's a joke.

That's one place - at least where I live - that the rich pay through the nose: Schools.

Our schools are funded almost entirely by property taxes, and there aren't any deductions to be taken there. It's a straight percentage of the value of your home.

Buy - or own - an expensive home? Pay for the schools... whether you had kids or not, whether you homeschool or not, whether you yourself went to public school or not.

I gladly pay taxes to educate kids. You want to see the US go to hell in a hand basket? Eliminate public schools. We'll be a third-world country in no time.

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If this is going to be a Christian nation that doesn't help the poor, either we have to pretend that Jesus was just as selfish as we are, or we've got to acknowledge that He commanded us to love the poor and serve the needy without condition, and then admit that we just don't want to do it.

- Stephen Colbert.

I just wish it were more fair. People with more children should shoulder more of the tax burden for schools.

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The political system is broke and it's a joke.

Amen. But that, (unless it's changed recently), doesn't even happen in private schools. More kids, less tuition in most cases. But in the case of public schools, since the people with no children pay, then I see nothing wrong with people with a lot of kids paying what their property taxes call for. what could be done, and I've mentioned it before is removing the federal deduction for any child past number two. I would like to see exceptions for adoption and perhaps some handicaps, but two kids and that's it in general.

Who said they wanted the US to go to hell in a handbasket?

We're fortunate in that we have a great public school system.

Unfortunately, many people cannot say that, yet they're still forced to pay through the nose.

I can't disagree with the last part of your post any more than I do - the part about eliminating the tax deduction for every child over the first two. This isn't China.

Why?

Because I don't think it's the government's job to do social engineering like that and try to create a system that 'favors' a specific number of children.

If there is a tax deduction per child then it should apply to all children in the home.

What is interesting to me is that we... well... I guess I'll just say that we we were starting from scratch, I'd be a flat tax kind of a girl.

The only things I'd allow to be deducted are the costs of doing business, so to speak, so that you are only paying taxes on your net, and money that is donated to charity that a person doesn't even keep for himself. If somebody earns $100 and donates $50 of that to the local homeless shelter and only kept half of it for his own needs, then I'd just tax him on the $50.

Otherwise... I'd base the taxes on a percentage of the amount earned and NOT on any 'social engineering' that some politician thinks needs accomplished. I wouldn't give benefits for having kids or penalties for having them, either. Somebody earns $10K? They pay the flat percentage. They earn $100K? Same flat percentage. $1M? Same flat percentage.

The deduction per child should be done away with. Yeah, nothing is fair, but this sure isn't. Those who have none, or 1 get hosed the most. Those who have multiples are fililng up the schools, and some - if not all of the following: reduced or free lunch, healthcare, and the biggies are earned income credit and head of household. There is more dependent upon where you live, those are a few.

Those who have children are rewarded and those who don't are not. Wrong in so many ways!

dl

That's too high of taxes to be taken out, almost 42%, should be around 28 to 32%. Back in the mid to late 80s all bonuses started to have taxes taken out. Very unfair, employee's were shocked and the employers were embarassed when that happened. So a lot of them gave CASH instead of a payroll check, depended where you worked tho.

Starting next year when and IF ObamaCare is able to take affect, starting with your 2013 taxes the biggest deduction a home owner can take will be gone. The Mortgage interest. WHY do you ask? because in that porked up BS, the sale of your real estate will be taxed 3.8% SALES TAX, and that means it will no longer become a deduction.

BTW the USSA (United Socialist States of America) have been in effect for over 50 years, since the government decided which is best for its 'citizens' and we are a third world country, we don't manufacture here, all done over seas.

Huh??? First off, our income doesn't come close to the $250,000 that you need to make to even begin to worry about this. Second, if that income should come our way, the day my house is worth more than $500,000, minus all capital improvements, more than I paid for it, then I will happily pay that 3.8% tax on the profits.

Let's see. I paid $300,000 for my house, I sell it for $800,000. No sales tax because the tax only starts at $500,000 of profit per couple, assuming the couple has income of over $250,000. Same house and I sell it for $900,00 and I pay tax on the 100,000 over the $800,000 of 3.8% or $3800 dollars? I'm not that good at math, but I think I'm in the ball park. At any rate, I'll take that tax bill any day.

For those of you on this board who qualify for this, good for you. For the rest of us, we can only hope.

Oh, wildwood. You and your facts. It's so much more fun to tell half-truths.

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If this is going to be a Christian nation that doesn't help the poor, either we have to pretend that Jesus was just as selfish as we are, or we've got to acknowledge that He commanded us to love the poor and serve the needy without condition, and then admit that we just don't want to do it.

- Stephen Colbert.

Well it's alright with me if there aren't any deductions for children. I just figured that a couple should be able to deduct for two, one per parent, to avoid a major fuss over doing away with the deduction entirely. It was a compromise suggestion. The deduction is social engineering in itself.

A flat tax is impossible for someone making a small salary. If you are existing on 12,000 a year that flat tax is much more of a burden than the person making 120,000 a year.

What do you mean "cost of doing business", other than your reference to charity?

And to your original question, no I don't think those taxes are fair. But perhaps when the income tax form is done it won't look quite so bad. I too would suggest some sort of IRA type plan.

I know. What can I say. I'm a Libra. I like things fair and balanced.

I understand what you're saying about the 10% being more of a burden on the $12K than the $120K... but to me, that's not the issue. To discriminate based on success or lack thereof is still social engineering. "We feel bad for you, so we're giving you a better deal. Hey, you seem to be in good shape so we want you to give up more."

I like the idea that everybody contributes, and that there is no favoritism shown. I feel a greater level of commitment to the things I have a financial stake in than I do to things that just give stuff to me. I think that we all benefit from being Americans, and that everybody should make SOME commitment to the roads we use, the police forces that protect us, etc..

When I said 'the cost of doing business', I should've clarified. When I read the eBay boards I am always surprised at how many people don't GET taxes. They say, "Paypal says I took in $20K this year. Do I have to pay taxes on the WHOLE THING!?!"

Um... duh... no. How much did you pay for the stuff you sold? How much did you spend on postage? On eBay and Paypal fees? You only pay taxes on what is LEFT after your expenses.

So... I was thinking in terms of the self-employed, not those who are employees and who have no 'cost of doing business.'

So people should be free to murder and rape? Laws that punish people for doing so are social engineering.

I think an opinion about "what's fair" is at the heart of the issue. Some people think that a tax based on proportion of income is "fair", while others think an across-the-board percentage is "fair." Fortunately, most politicians, even Republicans, think a flat tax is unfair.

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If this is going to be a Christian nation that doesn't help the poor, either we have to pretend that Jesus was just as selfish as we are, or we've got to acknowledge that He commanded us to love the poor and serve the needy without condition, and then admit that we just don't want to do it.

- Stephen Colbert.

Everyone does share the burden. You buy anything and you pay sales tax. The poor are, by necessity paying sales tax on virtually their entire income. So much more, percentage wise, goes to sale taxes than many in higher brackets. Even all those illegal aliens are in that boat. There probably are some places that don't tax groceries, but I don't live there. There may even be some that don't tax things like soap and toothpaste, but again I don't live there. Even if you rent, you might not, on the surface be paying taxes, but a good portion of your rent is used to pay the owners taxes and you can't take that as a deduction on your income like we who have houses do. Even if you buy your clothing at a thrift shop there can be taxes.

These are people who make this country run. Without them, there are no workers for all the menial jobs that most of us don't want to do. What state was it that passed a law about illegals and now can't get anyone to bring in their crops? Magnify that many fold and you have a really big problem. We either pay people enough to live on and pay taxes and be fairly comfortable or we have a tiered tax bracket that eases their burden. You can't have it both ways.

On the surface a flat tax sounds good, but in reality it solves nothing. What percentage tax do you think it would take to fund the running of this country? And what is considered income? Income from a job, stock sales, house sales, second home sales, business income, stock options, perks such as country club memberships, inheritance, bartering, royalties, capital gains?

I believe that no one deserves to make millions a year. That person is no more deserving, nor do they work harder than that kid flipping burgers at a hamburger joint, or that woman cleaning two or three houses a day. If the one making millions a year has the same tax bracket, then the ones who don't make much have to pick up the burden for them.

f there was a lot more income equity I could be persuaded. But that's not what's happening today. In 1980 CEO's were getting 40 times the salary of their lowest paid employee. Now it's something like 260 times and climbing rapidly. Pass a law mandating some salary restraints at the upper levels and we can talk flat tax.

I would not say that people don't deserve to earn millions. Innovation, motivation, hard work should be rewarded. However I do object to someone making millions when the people under them who are the ones who actually do the work can't make a decent living. However I don't support legislation to do this. I just wish that the ones who are greedy who make so much they could never spend it would be more equitable and allow the people that enable them to live that way to be financially secure in their own lives.

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The political system is broke and it's a joke.

Anna, I don't disagree with you. As a Christian, my thoughts are that it's wrong to muzzle the ox that treads the grain. Being a fair boss is a moral issue.

From a practical standpoint, I don't think the government has any business determining what anyone's ceiling should be. I also don't like the idea of them legislating what people pay out in wages. As it attempts to make the minimum wage be fair, well... it's all just skewed, and I blame government intervention for that. People complain that nobody can survive on a minimum wage job... and yet, there have always been those bottom-rung jobs, and they have generally been filled by people who are not trying to support a family (like my teenager - who does happen to make a couple of bucks more than minimum, but who recognizes that he is at entry-level, and therefore is earning entry-level pay).

There is the utilitarian mindset that says government has a responsibility to attempt to ensure that things are distributed in a way that the greatest number of people receive the greatest benefit. The opposing side of the coin looks instead at the individual, and his/her duties. I tend to fall on the side of 'duty', and think we all have duty, and that it is not government's job to try to make things fair when 'duty' is not being performed. Ultimately in a free market, an employer who comes along offering a solid wage and good treatment will get better employees. Our problem right now is NOT that people at the top are hoarding the money and the people at the bottom can't have any because there is a finite amount and it's all just sitting in a bank somewhere. Our problems are not nearly that simple. They have to do with national debt and the fact that China seems to own more of our money than we do.

The cost of living has risen as a result of that, and yet generally, businesses have not had any deeper pockets than they did five years ago. That means they can't pay their employees more, and yet the employees are having to spend more because everything - groceries, fuel, etc. - costs more. The results is a great loss of disposable income. That's where we are, personally, right now. We have no debt, and for quite awhile that meant we had a monthly cushion and could do 'fun stuff' with it. There's not that much 'fun stuff' money anymore because raises have been virtually non-existent, yet our cost of living has risen.

We don't LIKE it, but we figure it will not last forever. Our area of the country is relatively untouched by the jobless issue and the home foreclosure issue... but we're definitely paying more for groceries and energy.

I saw some stat - and I have no clue where to find it again - that illustrated what would happen if the wealthy boss of one specific large company opted to take absolutely no pay, and divided everything he earned equally among every one of the company's employees. The result was really... unimpressive. Divide a few million out over a few hundred thousand employees and none of them get enough to make an appreciable difference.

I still think it's immoral for a boss not to pay a fair wage. I'm just not convinced that that's what has gone wrong here.

I understand that the economy is cyclical. My worry is that manufacturing is what saved us in the past and we don't have that to pull us out.

I know I might get flamed for this but I also see what I perceive is the federal government making it so that more and more people have to rely on them for meeting basic needs.

That is scary to me. I don't want to live in a country where people rely on a handout and there is no reward for hard work or ingenuity.

As I said I totally agree with your beliefs that we don't need more regulation or intervention. I guess at heart I"m a bit of an idealist and the little girl in me wants to yell "why can't life be fair or at least a little more fair.?"

About the redistribution of the top guy's money I can see if it's an organization that has several thousand or more employees that it might only be a few dollars per employee. I don't think that's true in every case especially where they are actually several or tens of millions a year.

I know it's not the only reason we're here. I also feel that the change from a gold based currency system to one where the government just prints money will nilly is a big reason our currency is worthless. There are also other forces at work trying to purposely collapse our financial system, both for personal gain and to manipulate the world political season.

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The political system is broke and it's a joke.

Of course there is a reward for hard work and ingenuity. You get paid a fair wage and you get to do what you like to do. There are very few top people that have any ingenuity. That is not what rises you to the top in most industries. It's who you know, and how you know them. If you are naming a top person are you going to pick the brilliant designer who is smarter than you, or the guy that lives in your neighborhood that you play golf with and has the same country club membership? If you pick the brilliant designer he won't have time to design, which is what you need him to do. Also you don't run in the same circles. After all he's brilliant and you aren't. You got that job on the board because of, you guessed it, who you know and how you know them. The boards decide who the top positions go to and who decides the boards?

A corporation is not run by one overfed person, it's run by many. For every overfed CEO, there are numerous other overfed tiers of feeders at the trough. For every CEO that's making 5M, there are maybe 10 to 20 second tier people making 3M or more. There are 50 to 100 third tier people making 1M to 2M. That's a lot of jobs that could be funded. For every 1M in salaries overpaid at the top you lose 10 to 25 jobs. For every job not funded a community loses several more peripheral jobs.

Now lets talk about Boards of Directors. Most boards are hand picked by the upper tier people in a company. The board then picks the salaries for the people that just picked them. You can look at boards across many companies and many high level positions and find the same names over and over again. It's incestuous. It has nothing to to with hard work or ingenuity. People give money and jobs to their own, not to outsiders. Votes by stock holders are just a formality because the people put up for vote have already been picked, not to mention that very few company's stocks are in the hands of the everyday investor. Most are owned by groups that are Wall Street affiliated and here we have the incest once again. The voting rights for the everyday investor do not count because they either rubber stamp management picks, or there are not enough outstanding votes to be able to make a change, even if they knew what was going on and wanted to change things. The shareholders are being screwed as much at the people who need jobs. Have any of you made any significant money in the market in the last 10 years?

One of the most important perks of getting a job like this are the stock options. A stock option is a contract where the company buys the stock at market and give it to the execs at a price set by the contract that is usually much lower. They are cost free to the recipient and allow the stock to be purchased at a given price. They are not considered salary. When sold they are taxed at the 15% capital gains rate. Stock options are the method through which corporate execs become major stockholders in the company they work for. When a new top exec starts to work at a company one of the first things that happens is he or she is granted a kings ransom in stock options. Often when a top exec retires or leaves, a temporary dip in the stock is the result making the stock options even more attractive.

I have to admit I agree with what you've posted here and it's very well expressed.

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The political system is broke and it's a joke.

Not sure I understand your question, and honestly, have not read all of the replies. I will tell you this, tho. My son has a small income and was still in school when we encountered a similar situation. What I found on the IRS sight was that anything over $6,500 was taxed, no matter the age or anything else. As far as that amount being "too much", when your son files his taxes after Jan. 1st it will be finalized.

Not much help, but, again, I don't know if I understood the post.

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Doing the right thing isn't always the same as doing the easy thing.