What percentage of your income would be ok to be deducted for taxes ? What woul

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  1. LAURENS WRIGHT profile image64
    LAURENS WRIGHTposted 4 years ago

    What percentage of your income would be ok to be deducted for taxes ?  What would you do then ?

    In 1963, it is said that the TOTAL TAX that was paid from people's earnings was about 3 percent.  Each time voters come to the polls, there must be more taxes raised and taken from the working class people's pay checks.  How much do you think should be withheld and what would be max that could be taken.  At what point would you say enough is enough and how would you handle the situation at that time?

  2. TaxNerd profile image83
    TaxNerdposted 4 years ago

    Terms are important in order to answer this question properly.

    For example, most tax professionals and economists would regard the phrase "total tax" to mean the many different types of taxes people pay. This would income federal income tax, state and local income tax, sales taxes, employment taxes, excise taxes (special levies on things like cigarettes and alcohol). I have a feeling, however, that you mean to refer only to income taxes since you refer to "working people" and "paychecks."

    By that, you are referring to our system of withholding, which is a central compliance function of the US tax system. Although the US Income Tax was established in 1913, the government didn't begin withholding taxes from wages until 1943, during World War II, when a steady stream of tax revenue was required. The US has had that system ever since; this is the biggest reason Americans are required to file income tax returns every year, so that they may reconcile what they actually owe after claiming proper deductions and and credits with what was withheld from their check. In many cases, the government withholds too much. According to NPR, more than 80% of the 143 million tax returns filed in 2012 generated a refund.

    Most personal finance experts would answer the question of "how much should be withheld" by saying. "just enough so that you don't get a refund, or owe the government a little bit on April 15" because getting a large refund is tantamount to giving the government an interest-free loan. Although these days, with interest rates on savings accounts below 0.5%, that's not as persuasive an argument as it used to be.

    As a bigger tax administration question, the government probably could do a better job aligning paycheck withholdings with taxes actually due, which would result in most Americans getting more in their paychecks every month (but no large refund in April). The upside is they wouldn't have to prepare a tax return anymore. As many as 100 million Americans would benefit from this.

    As a policy matter, the question is at the heart of most debates about how much the government should raise in revenue, and how. As things currently stand, people who work for salary bear a higher burden in tax than those who live off their investments. From the perspective of a free market capitalist, this is a good thing because if facilitates the flow of capital by limiting double taxation. But many think it unfair, since wage earners have less ability to shelter income.

  3. profile image0
    temptor94posted 4 years ago

    Unfortunately, there's tax in everything, and the percentages are not uniform. Tax gets deducted even from gifts and rewards. Don't understand why these should even be considered as earnings. Moreover, the tax payer's money never gets utilized the way it should be. Not at least in several developing countries. In my opinion, income tax is still ok, but lot of things that are not appropriate to be considered income should not be taxed at all, like cash rewards, bank interests, etc.

  4. peeples profile image93
    peeplesposted 4 years ago

    0% would be suitable. I live in a state where we pay vehicle taxes both when I purchase and yearly for as long as I own it, house taxes when purchased and yearly, insane gas taxes,plus a 6% to 8% tax on everything I purchase. I think we need to start paying all politicians less, legalize and tax drugs, stop sending money over to other countries constantly, and get rid of the the income tax.

 
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