Back to School: 2010

[Skwish-E]

If you have 5 kids (or 5 Skwishlets, as the case may be) to put through college, you might be in a real bind. Maybe you are middle class, and make enough money to not qualify for a needs-based scholarship or grant, but not enough to pay for 4 kids in college at the same time.

[A less presumptuous name.]

Originally Posted By: Kelandon

That is, there's a strange middle space occupied by people who have enough income not to qualify for grants but not enough cash on hand to pay outright. I think those people are the people we're talking about, the "giant loan" crowd. Many people are daunted by the size of the indebtedness and end up not being able to attend universities to which they were accepted. I know that happened to me when I applied.

This. Because of our income, we have very little demonstrable need for most schools, and are thus left to pay the majority of the price for schools. Due to our family size and financial situation (remember that housing market crash that happen right as we were forced to move half way across the country?), we aren't able to meet nearly as much as schools think. Thus, both of my brothers are coming out of college with high loans.

My brother still in college went to a school not participating in the National Tuition Exchange Program (the benefit of having parents teaching in colleges), and will be coming out of school with debt up to his ears. Sure, he could have gone to an in-state public school, but his quality of education will be far better. And because of oversight in the demonstrable aid programs, this is the case with lots of upper-middle class families.

[Callie]

It's not that I don't like liberal arts classes. I thought my Ancient and Medieval Culture class last semester was fun. The problem is that I study these kinds of things in my own time, so the classes end up being redundant. As I already mentioned, English should be a bare minimum requirement.

 

Originally Posted By: Dintiradan

But I must know: how exactly is capitalism the highest form of altruism?

Who has done more for society? Mother Teresa or Bill Gates? I would say Bill Gates. Capitalists innovate and make improvements out of motivation for money. That's kind of the principle for that idea, but it's really a whole lot more complicated at heart.

[Skwish-E]

It is interesting to note that Middle Class has been defined by some as household income between $20,000 and $100,000, but the 2009 US Poverty Guidelines put a family of 4 with a household income of $22,050 or less in the poverty class. What does Middle Class mean anyway? Five minutes of research on the subject will tell you that nobody really knows what middle class is as an absolute, but everybody uses the term to argue some point.

 

Of course, more research may find better answers. Do any of you have a chart of what middle class household income should be adjusted for family size (and location/cost of living)?

[Dantius]

Originally Posted By: Skwish-E

It is interesting to note that Middle Class has been defined by some as household income between $20,000 and $100,000, but the 2009 US Poverty Guidelines put a family of 4 with a household income of $22,050 or less in the poverty class. What does Middle Class mean anyway? Five minutes of research on the subject will tell you that nobody really knows what middle class is as an absolute, but everybody uses the term to argue some point.

Of course, more research may find better answers. Do any of you have a chart of what middle class household income should be adjusted for family size (and location/cost of living)?

Middle class is a category that everyone wants to apply to themselves. The poor want to be middle class, and the rich want to seem to be middle class. This means that the boundaries are constantly being pushed wider and wider- which is how a family of 4 making $20,000 a year and a family of 4 making $200,000 a year will both try to be accepted as "middle class"

[Alorael at Large]

Originally Posted By: Excalibur

Who has done more for society? Mother Teresa or Bill Gates?

Norman Borlaug.

The "everyone is middle class" phenomenon can be attributed to peer groups. You're likely to have income relatively similar to that of your neighbors and coworkers. That puts your frame of reference right around your income, so your income is normal to you.

—Alorael, who also thinks that the American mythos of the middle class has something to do with it. As best he can tell, citizens of other countries tend to be more willing, and sometimes eager, to claim to be either rich or poor.

[A less presumptuous name.]

Some of the middle class mystery may have to do with the poverty line. Does the poverty line separate the lower and middle class, or does it separate the impoverished from the lower class?

[Dantius]

Borlaug is my hero. Well, him and Malthus. Which is kind of an odd pair of heroes, when you think about it.

[Lilith]

Originally Posted By: Excalibur

Who has done more for society? Mother Teresa or Bill Gates? I would say Bill Gates. Capitalists innovate and make improvements out of motivation for money. That's kind of the principle for that idea, but it's really a whole lot more complicated at heart.

not every moral system is consequentialist. for example immanuel kant would argue that an act is only good if motivated by a good intention, and so whether Bill Gates did any good for society is irrelevant if his motives were self-interested. i do not quite agree with kant but his is certainly a respectable position that has historically been widely held

in any case, whether Microsoft is a force for good in the world, and a fortiori whether it is more of a force for good than it could have been if it had been founded with purely altruistic intentions, is equally debatable

[Nicothodes]

Also, Mother Teresa had some serious issues.

[Harehunter]

Originally Posted By: Alorael

Some tips, though: as SoT says, you will need writing (and speaking!) skills in nearly every career path. Foreign languages come in handy more often than you might guess. Basic knowledge of science and economics can help you avoid some very stupid mistakes and misinformation. And those who don't know history are doomed to repeat it.

Originally Posted By: Excalibur

It's not that I don't like liberal arts classes. I thought my Ancient and Medieval Culture class last semester was fun. The problem is that I study these kinds of things in my own time, so the classes end up being redundant. As I already mentioned, English should be a bare minimum requirement.

Originally Posted By: Dintiradan

But I must know: how exactly is capitalism the highest form of altruism?

Who has done more for society? Mother Teresa or Bill Gates? I would say Bill Gates. Capitalists innovate and make improvements out of motivation for money. That's kind of the principle for that idea, but it's really a whole lot more complicated at heart.

I have to heartily concur with Alorael. In fact the uber-geeks are the ones who need this exposure the most. As for their being redundant, I used liberal arts classes to lighten my load each semester. With three higher level science courses, including a lab for each one, a math course, and mil.sci. with a fourth lab, I needed something a bit lighter to fill out my schedule.

With regard to capitalism, I think altruistic may not have been quite the right word, although I got your meaning anyway. Capitalism provides a strong motive force to compete for economic gain. This motivation provides impetus to do something that will help us to compete. This leads to creativity, say a theme for a restaurant, to inventiveness, say an iphone. Most of the things that make our life more comfortable, were born out of this competition to succeed, beginning with the earliest advances in agriculture. Commerce was born so that the products produced by one region could be enjoyed in another. Money was invented to make commerce easier. I know that I've skipped a ton of steps here, but I'm trying to be brief (((too late!!!)))

But let's not get too carried away with that notion. Not all inventions were motivated by profit, if I may use the internet as an example here, or should I say Arpanet as it was originally conceived. That was true altruism.

And then along came the .coms who have overtaken the .edus and .orgs to dominate the .net. Without their financial backing though, Arpanet would not have evolved into the World Wide Web it has become today, with the volume of content and world wide reach. The internet has become a vehicle whereby people from around the world can communicate with each other and discuss ideas such as this, and in so doing become closer than we otherwise would have.

As to the question of who has contributed more to society, Gates or Mother Teresa, that is an apples to grapefruit comparison. Mother Teresa gave her whole life, but had limited reach; Bill Gates began his altruism only later in life, but his reach to build the technology whereby we now converse was much greater.

[Sudanna]

Never mind that doing nice things is not quite the definition of altruism.

[Harehunter]

Sorry, I just try to stick to the definitions I have learned, wherein altruism is basically a selfless act. Gates industry in the personal computer explosion did indeed benefit mankind, but his motivation was not selfless. Edison's invention of the light bulb would be a second example. The Bill and Melinda Gates foundation, on the other hand is what I consider true altruism.

[Callie]

I'm skeptical of businesses/business owners when they donate money to charity. Maybe they're really doing for moral reasons, or maybe they're just buying a better public image.

[Harehunter]

A healthy bit of skepticism I should say.

[Skwish-E]

Don't forget the tax write-off. A properly sized deduction can mean more money to the bottom line if it is just barely enough to change your tax bracket.

[Lilith]

Originally Posted By: Skwish-E

Don't forget the tax write-off. A properly sized deduction can mean more money to the bottom line if it is just barely enough to change your tax bracket.

that's not how tax brackets work

the tax rate for each bracket isn't charged on your total income, it's only charged on the fraction of your income that falls into that bracket

so if the tax brackets were, say, 10% up to $10,000 and 25% above $10,000, and you earned $10,001, then you'd pay 10% on the first $10,000 and 25% on the last $1, for a total of $1,000.25 in taxes

[Skwish-E]

Well, well. Thanks Lilith. I had been working under a false assumption for years, it seems. Good thing I always give for the right reasons instead of for a tax deduction. I might have felt cheated otherwise!

[Alorael at Large]

The Bill and Melinda Gates Foundation, at least, seems to be Bill using his money to do good separately from his business ventures. Is it good publicity for Microsoft and himself? That might be a concern, but ti doesn't seem like he's going about brand-building optimally. All signs point towards real philanthropy.

 

—Alorael, who thinks the question frames consequentialism nicely. You can't ask who did more for society in a Kantian way. Deontological ethics don't really care very much what was done. (Or you could ask who did more for, meaning as motivated by, society. That's also not going to get you much deontological traction, and the consequentialists don't care except in also calculating how to best use this apparent societal leverage do accomplish more good.)

[Lilith]

Originally Posted By: Your Ad Here

—Alorael, who thinks the question frames consequentialism nicely. You can't ask who did more for society in a Kantian way. Deontological ethics don't really care very much what was done. (Or you could ask who did more for, meaning as motivated by, society. That's also not going to get you much deontological traction, and the consequentialists don't care except in also calculating how to best use this apparent societal leverage do accomplish more good.)

anecdotally, i don't know very many libertarians who identify as consequentialists, or vice versa

[Slawbug]

Originally Posted By: Skwish-E

I had been working under a false assumption for years, it seems.

You aren't the only one. I learned this fact as a child, and was always confused by the number of people who claimed their donations actually saved them money on their taxes. I don't understand why this is so misunderstood.

[VCH]

Originally Posted By: HOUSE of S

Originally Posted By: Skwish-E

I had been working under a false assumption for years, it seems.

You aren't the only one. I learned this fact as a child, and was always confused by the number of people who claimed their donations actually saved them money on their taxes. I don't understand why this is so misunderstood.

Well some people like getting money back, or at least not having to pay anything, so that's one benefit of donating money. It's also a matter of controlling where your money goes--to the government or somewhere else.

[Mysterious Man]

I cheat on my taxes.

 

It's because I love America too much.

[Student of Trinity]

Donations can certainly lower your taxes, though in the US you normally have to donate an awfully large amount to make it worth itemizing your deductions in order to claim for your donations, rather than taking the blanket deduction that anyone can get even if they donate nothing. But there's no way cash donations can save you more money than you donated.

 

What you can do is donate goods, and claim some cash value for them. (That is, get some registered charity to write you a receipt valuing them at that amount.) You might grossly inflate that value (in which case you hope you're not audited), or you might simply feel that the things you gave were worth nothing to you, whatever their intrinsic value, because you weren't using them. In these ways you can make money from tax deductions for donations.

[Micawber]

Originally Posted By: Lilith

the tax rate for each bracket isn't charged on your total income, it's only charged on the fraction of your income that falls into that bracket

True, for income taxes. You have to watch it though because sometimes the rules can be perverse. For example in the UK, neither Corporation Tax nor Stamp Duty (on home purchases) work that way. Fortunately for CT, the bands are tapered, but for Stamp Duty your tax rate is actually discontinuous (gasp!).

[nikki.]

On the flip side, you only pay Stamp Duty on properties and shares, and it only kicks in on properties over £125,000. I'm not sure of the rates, but if I recall, they're pretty low (though you know, 2% on £250,000 is still a couple of grand). There's also a higher threshold if you're a first-time buyer (some friends of mine just got their first home and didn't pay any), so it's not all doom and gloom.

[Rowen]

Sometimes I read threads like this one and then get depressed.

[Dantius]

Wouldn't it just be so much easier if tax brackets were replaced by a single monotonic increasing function of income that you'd just evaluate, multiply by your income, and subtract any deductions from? It's be so much easier than bothering with pages of tables of tax brackets and "subtract line 4 from line 5 and mix according to page 5 in Joy of Cooking" that we have now.

[A less presumptuous name.]

Originally Posted By: Lilith

the tax rate for each bracket isn't charged on your total income, it's only charged on the fraction of your income that falls into that bracket

so if the tax brackets were, say, 10% up to $10,000 and 25% above $10,000, and you earned $10,001, then you'd pay 10% on the first $10,000 and 25% on the last $1, for a total of $1,000.25 in taxes

I've actually wondered much about that myself, but have always been too lazy to look it up. Thanks for the info.

Originally Posted By: Dantius

Wouldn't it just be so much easier if tax brackets were replaced by a single monotonic increasing function of income that you'd just evaluate, multiply by your income, and subtract any deductions from? It's be so much easier than bothering with pages of tables of tax brackets and "subtract line 4 from line 5 and mix according to page 5 in Joy of Cooking" that we have now.

I'm sure that a system like that would be much easier, but that would just be smart. We can't have that.

EDIT: See also - round off error. Not to mention that we would then have to make sure every tax-paying citizen knew math up to maybe the pre-calc level. That's a pretty steep step for some people, unfortunately.

[Dantius]

Originally Posted By: Master1

EDIT: See also - round off error. Not to mention that we would then have to make sure every tax-paying citizen knew math up to maybe the pre-calc level. That's a pretty steep step for some people, unfortunately.

1. Accountants

2. Table of values

3. Significant figures.

[Harehunter]

Originally Posted By: Dantius

Wouldn't it just be so much easier if tax brackets were replaced by a single monotonic increasing function of income that you'd just evaluate, multiply by your income, and subtract any deductions from? It's be so much easier than bothering with pages of tables of tax brackets and "subtract line 4 from line 5 and mix according to page 5 in Joy of Cooking" that we have now.

It has been proposed, but it never seems to go anywhere. And the system of deductions is designed to promote certain activities, such as home ownership. At least on the surface, of course. The real reasons are, I am sure, more insidious.

In TX, at least, we do not have a state income tax; just property taxes paid to the city, county, and school districts, and sales taxes for the city, county and state. It has been proposed, but the people of Texas do not trust our politicians when they say they'll reduce our other taxes to match. Maybe so, but for how long before they start raising them again. I know that most of the country accuses us of underfunding our schools, and so on, but TX has has the largest growth in jobs of any other state in the union. In fact our population growth as of the last census has awarded the state with two more Congressional seats and two electoral votes.

[Dintiradan]

I don't know about tax forms in the States, but up here there's only half a page devoted to figuring out your tax bracket and computing the modified tax based on that. It's just an if statement, subtraction, multiplication, then addition. Slightly complicated, sure, but no more than the rest of the tax form, and not enough to justify the inclusion of a table of values to figure out your tax rate.

 

As for me, there is a tax bracket effect where donations are less useful when I make less, but that's due to the different ways federal and provincial taxes are calculated. When I claim a donation, I get a credit both federally and provincially. However, my provincial basic tax credit is higher than the federal basic tax credit (provincial tuition credits are also different). So I wait to claim my donations until the credits can be fully used against my federal and provincial taxes (which isn't often, seeing that I usually have a backlog of tuition credits and don't make that much money).

[A less presumptuous name.]

Originally Posted By: Dantius

Originally Posted By: Master1

EDIT: See also - round off error. Not to mention that we would then have to make sure every tax-paying citizen knew math up to maybe the pre-calc level. That's a pretty steep step for some people, unfortunately.

1. Accountants

2. Table of values

3. Significant figures.

Originally Posted By: Master1

but that would just be smart. We can't have that.

[Callie]

The problem with all that population growth is that it has increased unemployment in the state.

[Tyranicus]

Originally Posted By: Master1

Not to mention that we would then have to make sure every tax-paying citizen knew math up to maybe the pre-calc level. That's a pretty steep step for some people, unfortunately.

How many people actually do their taxes by hand and do the math themselves anymore? Most people I know either do it on the computer with a program like TurboTax or have a professional do it.

[Alorael at Large]

I don't know about tax forms in the States' date=' but up here there's only half a page devoted to figuring out your tax bracket and computing the modified tax based on that./quote']

In the US, figuring out how much you have to pay is a major undertaking. The USA has a population of about 300 million, and it has been estimated that just over 6 billion total hours were spent on tax preparation. That makes it somewhere around 20 hours per person. That's probably a bit lower for those who pay professionals and higher for those who do it themselves.

 

—Alorael, who doesn't actually mind forking over part of his hard-earned income. He does mind having to spend hours figuring out how to do it. Sometimes it's overwhelmingly tempting to make up a plausible number instead.

[Harehunter]

Originally Posted By: Excalibur

The problem with all that population growth is that it has increased unemployment in the state.

But it has reduced the unemployment of the other states from where we are getting all those people. The license plates in Houston represent a regular United Nation.

[Dikiyoba]

Originally Posted By: Tyranicus

How many people actually do their taxes by hand and do the math themselves anymore? Most people I know either do it on the computer with a program like TurboTax or have a professional do it.

I do, but my taxes are so simple right now I hardly have to do anything. The hardest part is usually finding the correct form to download.

Dikiyoba hates sales tax (guess who was raised in Oregon) but wouldn't mind paying a little bit more in income tax. A couple hundred dollars once a year doesn't make much of a difference to Dikiyoba's budget.

[nikki.]

Oh, that's right, Americans have to do taxes by hand. I'm glad I live in a country where the government takes what I owe it out of my wages. If I had to pay taxes at the end of the year, it'd feel like I'm handing over a huge sum of money I couldn't really afford, whereas the way I do pay taxes, I never actually see the money so it's not quite as bad.

 

Edit: And by "see", I mean I never have it to be able to spend, since it goes right out of my pay packet. Just to clarify.

[Lilith]

Originally Posted By: Nikki.

Oh, that's right, Americans have to do taxes by hand. I'm glad I live in a country where the government takes what I owe it out of my wages. If I had to pay taxes at the end of the year, it'd feel like I'm handing over a huge sum of money I couldn't really afford, whereas the way I do pay taxes, I never actually see the money so it's not quite as bad.

the US has a withholding tax system too, but if you want to claim tax deductions and so on to get a refund at the end of the year then you still have to prepare a tax return. i am pretty sure that this is true in the UK as well

[nikki.]

Not all the time. I got a tax refund without doing anything one year because my old employer actually filled the paperwork out for me. If I wanted to do one now I have to fill in a form, true, but it's pretty easy to do - basically you state how much you earn, and how much you paid in taxes and they do the rest. I'll admit I know little about the US system, but it seems far more difficult than that.

[A less presumptuous name.]

Originally Posted By: Dikiyoba

The hardest part is usually finding the correct form to download.

That seems to be the case to me. I'm still a minor, but I filed my own return for last year. Pretty much every drop of information is on your W2 (which you get from your employer) and you just copy that onto your state and federal returns, and then attach a copy of the W2 to the return if you're mailing it in. My dad has been using TurboTax for a long while now, and he knows which forms to use, so he can pretty much plow through the returns for my family in a few hours.

Also - the best part of being a minor is that I get all of my non-welfare taxes back. The tax bracket for minors doesn't start until you get to some pretty serious income (at least, serious to a financially dependent minor). The worst (and it's not really even bad) part is that I didn't get much back since I didn't pay much in the first place.

[Skwish-E]

What would work well is No Tax on the first $25,000 you make in the year (An adjustment for larger families would not hurt my feelings. Maybe $10,000 per person on the return instead of a flat $25,000.), then 10% of all the rest as a tax. Period. The end. No deductions for interest paid on your mortgage, no deductions for anything. Do your taxes in 10 minutes. The longest part would be writing down the social security numbers of the people on the return. This would raise a lot more money, and would put a fair burden on people who make a lot of money while meeping a low burden on the poor.

[A less presumptuous name.]

The problem with a flat tax rate like that is that it doesn't take into account cost of living. For a family in a rural town in the Midwest, that seems like a pretty decent amount. For a family living in NYC, that's a huge amount.

 

Let's bring this back up after this year... after I've finally taken an econ class.

[Kelandon]

Originally Posted By: Skwish-E

What would work well is No Tax on the first $25,000 you make in the year (An adjustment for larger families would not hurt my feelings. Maybe $10,000 per person on the return instead of a flat $25,000.), then 10% of all the rest as a tax. Period. The end. No deductions for interest paid on your mortgage, no deductions for anything. Do your taxes in 10 minutes. The longest part would be writing down the social security numbers of the people on the return. This would raise a lot more money, and would put a fair burden on people who make a lot of money while meeping a low burden on the poor.

Well, okay, but why only two tax brackets? (That is, the 0% bracket and the 10% bracket.) Why not make it more progressive, say, by having four or five brackets, so as to put the greater burden on those who can actually afford it? Was "simplicity" your response? But a flat tax without brackets at all is the simplest possible tax, and you're not proposing a flat tax. So on the one hand you're arguing for simplicity, but on the other hand, you're admitting that progressive taxation is a good idea. How do you balance the two to get two brackets, and not, say, four or five? Or fifty? (Not to say that there isn't an answer to this question, just that you'd have to give one in order to argue for what you're arguing.)

Eliminating deductions would, likewise, make things simpler, but the objection regarding cost of living in various areas is relevant, along with a whole bunch of other things. The number and types of deductions are impossibly complex right now, and we need to simplify them (and probably eliminate a bunch of them), but eliminating deductions altogether would probably wreak havoc. (Though, admittedly, I don't know enough about the tax code to speak intelligently to this. Ask me again in about two years.)

[Lilith]

Among other things, it'd be impossible to run low-profit-margin businesses if business expenses weren't tax deductible. (Or rather, low-profit-margin businesses would have to overhaul their entire business model to become high-profit-margin businesses, which would make a lot of goods and services more expensive all of a sudden.)

 

And once you get into deciding what counts as a legitimate business expense, you immediately introduce a huge amount of complexity.

[Randomizer]

There used to be more tax brackets, but they were reduced to 3 under Reagan to "simplify" the tax code. Right now special interest groups are still fighting hard to keep their deductions in the tax code.

 

As an example, Warren Buffet's purchase of Bank of America's preferred shares lowers his effective corporate tax rate on that money to about 10% from 35%. BoA doesn't need the money, but anything not to give it to the tax man.

[Harehunter]

Originally Posted By: Skwish-E

What would work well is No Tax on the first $25,000 you make in the year (An adjustment for larger families would not hurt my feelings. Maybe $10,000 per person on the return instead of a flat $25,000.), then 10% of all the rest as a tax. Period. The end. No deductions for interest paid on your mortgage, no deductions for anything. Do your taxes in 10 minutes. The longest part would be writing down the social security numbers of the people on the return. This would raise a lot more money, and would put a fair burden on people who make a lot of money while meeping a low burden on the poor.

A flat tax and many variants have been proposed, and cut off at the knees. A couple of issues keep coming up that the two parties are diametrically opposed on;
1) Is money you inherit income to be taxed, usually at twice the rate of normal income, or have the tax been already paid by the benefactor?
2) How do you figure in capital gains, where the value of someones stock portfolio increases? Keep in mind that the money invested in the stock market is at risk of de-valuating suddenly as it has done repeatedly. Also keep in mind that the capital these people have is used to startup and maintain businesses which in turn create a need for more jobs.

Another option that has been shot down is to do away with the federal income tax altogether and institute a federal sales tax.

[Skwish-E]

Mine is actually one tax bracket 10% for every dollar earned over the poverty level. It is a fair tax, because those who make more, pay more. It would be unfair to tax a person a higher percentage because they make more money. The "He can afford to pay more" argument is not one that I hold to at all. It sounds too much like "To each according to his needs; from each according to his ability," which may be a noble thought but unworkable when it comes to human beings.

[Alorael at Large]

You have two explicit tax brackets: 0% and 10%.

 

Crying "communism!" is not a helpful way to argue taxes. Communism also, in theory, has a single tax bracket: 100% for everyone. You're already asking for different amounts of taxes based on income: you pay a lot more if you make $200,000 than if you make $50,000.

 

If you are making the somewhat arbitrary judgment that $40,000 is necessary for basic needs, why not make further cutoffs? Maybe up to $100,000 is taxed at 20%, because that's for unnecessary but basic comforts and amenities and some luxuries. $100,000-$200,000 could be taxed at 30%; at that level you're really paying for unnecessary luxuries, not into your daily needs or even standard costs like transportation and basic housing, so you don't cause hardship by taxing so highly.

 

At no point do you run into the communist problem of lack of incentive. You get more money for more work and more salary. You just get less of that more money. You may think it is suboptimal, but it isn't unworkable.

 

—Alorael, who will point out that the current taxation system taxes according to ability, roughly, and there are many services that you have to demonstrate need to receive. America is not communist either.