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Pro Athlete Tax Returns Illustrate Complexities of U.S. Tax Code

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Old
07-15-2013, 11:55 AM
  #26
Ugmo
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Originally Posted by Burke the Legend View Post
Steve Forbes owns a large publishing empire that can afford an army of lawyers/accountants. I don't think he has a problem working any tax system so it's both petty and cynical to say he's just advocating a national policy for small personal gain.
Steve Forbes wanted to pay a 20 percent federal income tax back in 1992, which most certainly would have been a decrease for him.

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07-15-2013, 12:10 PM
  #27
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I get the principle involved. I just don't see how a Kings road game in Chicago is "earning income" in Illinois. The Kings are paying their employee to go to California and do something. The Kings income is generated in California through their home games. The ticket sales of the Kings at Blackhawks game isn't going into the paychecks of the Kings players. The Kings are paying him out of their revenues from the home games.

If the NHL employed all the players, and all 30 teams in the league shared all their revenues, so that the gate reciepts in Chicago actually DID pay the Kings players salaries, then yeah, totally makes sense they gotta file in all the states.
The Kings get paid for games on the road. Every game they get paid (or have a training day) they are subject to tax in those jurisdictions. Doesn't matter where the company is earning its revenue from (its beyond ticket sales) its how the employees earn there salary. They earn it over 82 games, and taxes are paid over those games.

BTW our company deals with the Toronto Blue Jays taxes, baseball has essentially skirted the system. They set up spring training in Arizona/Vegas/Florida, all tax free (state/provincially speaking). So they all claim training days in Florida, and include those 50-70 days in there returns, significantly lowering there burdens. Toronto Blue jays which should have the highest or second highest taxes (depending on income, California is the other one where you could be at the highest rate), they actually fall to about 13th highest tax rate.

Toronto raptors set up training in Nevada over summer, and if players show up gets added to there training days and lowers there over all taxes. Happens with other fields do, we do comedian Russel Peters who earns millions a year, and he recently moved his permanent residency from California to Nevada saving him significantly in terms of taxes. 3 years of tax savings essentially pays for his new house.

Doing the actual tax work is actually pretty easy, its the auditing, going over new laws, interpretations and confirmations that take time.

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07-15-2013, 12:27 PM
  #28
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I would like to see the context Carlin said this in. He was a pretty astute guy, but it's obvious that the people he is talking about would in most cases benefit from a flat tax, which is why Steve Forbes was so in favor of it.

I will never for the life of me understand why regular working schlubs so adamantly defend the wealthy. It's not like they aren't already gaming the system at the expense of the rest of us.
It might have something to do with me making well above the Canadian household average. That and we pay a lot more taxes than you do. I would absolutely love to see a flat rate tax.

That and everyone should strive for simple effective laws and regulations. Do you honestly think that the current tax regulations are simple and effective?

And that's also part of it. They are gaming the system. Put a system in place that they can't game. You (or your company) makes 10m, you pay x% - just like everyone else. No loopholes, minimal (if any) deductions, etc. I remember hearing/reading that Warren Buffet's secretary paid more in taxes than he did... Fixing things would correct that.

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07-15-2013, 12:28 PM
  #29
Julius Caesar Milan
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Originally Posted by Riptide View Post
So why is it 'fair' that someone who earns 10m in income is taxed at 40% (4m) while someone who earns 50k is taxed at 25% (12.5k)? Even if they're taxed at the same rate, the guy making 10m is still paying a lot more money into the system.

The thing is there's so many loopholes that the guys making 10m are not actually paying 40% (or whatever the real number is). Remove ALL the loopholes, and adopt a flat rate tax for those over x%.

Everyone would be better off. The rich would likely pay about as much as they do now - or even more, as their team of accountants is no longer finding every loophole in the system to get them out of paying taxes. The average Joe can now understand the system, and saves money on an accountant, and the Gov't now needs less bodies in the accounting/revenue office.
The more money you make, the more you are benefiting from public programs (police, fire, public school, etc)

It also helps to keep the middle class bigger

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07-15-2013, 12:55 PM
  #30
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Originally Posted by Riptide View Post
It might have something to do with me making well above the Canadian household average. That and we pay a lot more taxes than you do. I would absolutely love to see a flat rate tax.

That and everyone should strive for simple effective laws and regulations. Do you honestly think that the current tax regulations are simple and effective?

And that's also part of it. They are gaming the system. Put a system in place that they can't game. You (or your company) makes 10m, you pay x% - just like everyone else. No loopholes, minimal (if any) deductions, etc. I remember hearing/reading that Warren Buffet's secretary paid more in taxes than he did... Fixing things would correct that.
Canada has a progressive system and very few loopholes, America's problem is there tax law not progressive/flat tax issue. You can have just as many loopholes with flat tax and progressive tax. Flat taxes would also hurt most people. Ontario's highest rate is 49% and Alberta's is 39%. Ontario is progressive, Alberta is flat. If you make under $140,000 (household) you pay less income tax in Ontario vs Alberta.

Warren Buffet's secretary has an income tax, Warren Buffet makes most of his money form investment income. Want him to pay more tax, have him get rid of investment income and treat all income the same. Over night he will pay more taxes than his secretary on a progressive system. But at the same time you hurt the economy and slow the economy.

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07-15-2013, 12:58 PM
  #31
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It might have something to do with me making well above the Canadian household average. That and we pay a lot more taxes than you do. I would absolutely love to see a flat rate tax.

That and everyone should strive for simple effective laws and regulations. Do you honestly think that the current tax regulations are simple and effective?

And that's also part of it. They are gaming the system. Put a system in place that they can't game. You (or your company) makes 10m, you pay x% - just like everyone else. No loopholes, minimal (if any) deductions, etc. I remember hearing/reading that Warren Buffet's secretary paid more in taxes than he did... Fixing things would correct that.
If Warren Buffett's secretary paid more taxes than her boss, a flat tax rate wouldn't have solved the problem.

If the problem is loopholes and deductions, remove the loopholes and deductions. The tax code's perceived complexity has very little to do with progressive tax rates, and everything to do with the dozens of deductions, credits, alternative minimum tax calculations, and so on.

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07-15-2013, 01:00 PM
  #32
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The more money you make, the more you are benefiting from public programs (police, fire, public school, etc)
Wait, what? How so? How am I benefiting from a police presence or from public schools more so than anyone else? I'm not. I'm getting the same benefits as the guy that lives beside me, and the guys that live across town. And I received the same schooling opportunities as everyone else had (public schools), and that are available to everyone else.

As for loopholes... the only way that you could really move to a flat tax would be to get rid of those.

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07-15-2013, 01:01 PM
  #33
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Originally Posted by barneyg View Post
If Warren Buffett's secretary paid more taxes than her boss, a flat tax rate wouldn't have solved the problem.

If the problem is loopholes and deductions, remove the loopholes and deductions. The tax code's perceived complexity has very little to do with progressive tax rates, and everything to do with the dozens of deductions, credits, alternative minimum tax calculations, and so on.

I don't remember the exact figures, but his effective rate was something around 6% while she paid something in the 30% range. The exact figures aren't important, point being he felt that it was simply too easy for people like him to get away with paying very little in taxes as a percentage of income.

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07-15-2013, 01:04 PM
  #34
Julius Caesar Milan
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Originally Posted by Riptide View Post
Wait, what? How so? How am I benefiting from a police presence or from public schools more so than anyone else? I'm not. I'm getting the same benefits as the guy that lives beside me, and the guys that live across town. And I received the same schooling opportunities as everyone else had (public schools), and that are available to everyone else.
If you make more money you have more to steal so you benefit more from police protection. If you have a larger house, you have more to burn down and benefit more from fire services. The schooling portion came from having an educated workforce that business owners employ. Road factor in the same way as well.

It all factors in to the bigger equation. Think about is from a macro standpoint, not micro.

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07-15-2013, 01:06 PM
  #35
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I don't remember the exact figures, but his effective rate was something around 6% while she paid something in the 30% range. The exact figures aren't important, point being he felt that it was simply too easy for people like him to get away with paying very little in taxes as a percentage of income.
Sure, but it's exactly my point -- the deductions (which make the effective rate go down) are the problem, not progressive tax rates. Progressive tax rates actually lessen the problem.

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07-15-2013, 01:06 PM
  #36
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Originally Posted by Riptide View Post
So why is it 'fair' that someone who earns 10m in income is taxed at 40% (4m) while someone who earns 50k is taxed at 25% (12.5k)? Even if they're taxed at the same rate, the guy making 10m is still paying a lot more money into the system.

The thing is there's so many loopholes that the guys making 10m are not actually paying 40% (or whatever the real number is). Remove ALL the loopholes, and adopt a flat rate tax for those over x%.

Everyone would be better off. The rich would likely pay about as much as they do now - or even more, as their team of accountants is no longer finding every loophole in the system to get them out of paying taxes. The average Joe can now understand the system, and saves money on an accountant, and the Gov't now needs less bodies in the accounting/revenue office.

I think what's fair is to have everyone give up the same portion of their income. The wealthy like to throw out the total paid as if it actually has meaning, but who can afford to give up 30%, for example, more easily-- Bill Gates or the Average Joe? Fairness is often measured in terms of equal treatment and standards.

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07-15-2013, 01:08 PM
  #37
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Originally Posted by Riptide View Post
Wait, what? How so? How am I benefiting from a police presence or from public schools more so than anyone else? I'm not. I'm getting the same benefits as the guy that lives beside me, and the guys that live across town. And I received the same schooling opportunities as everyone else had (public schools), and that are available to everyone else.

As for loopholes... the only way that you could really move to a flat tax would be to get rid of those.
What loopholes in Canada are you talking about?
USA has loopholes because they are built into tax laws.

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07-15-2013, 01:09 PM
  #38
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Sure, but it's exactly my point -- the deductions (which make the effective rate go down) are the problem, not progressive tax rates. Progressive tax rates actually lessen the problem.

One also has to consider the way we define income, which as you know is taxed at different levels if it's investment income vs a salary. "Normal" people don't have much of the former, so they're already at a disadvantage. I think the incentive will always be there for money to find a home in order to get more money, so if you do realize a gain, it's still income and shouldn't be treated differently.

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07-15-2013, 01:09 PM
  #39
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If you make more money you have more to steal and benefit more from police protection. If you have a larger house, you have more to burn down and benefit more from fire services. The schooling portion came from having an educated workforce that business owners employ. Road factor in the same way as well.

It all factors in to the bigger equation. Think about is from a macro standpoint, not micro
That's obviously not true for all public expenditures, especially when wealthier people (who are healthier in general) do not qualify for many social programs.

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07-15-2013, 01:12 PM
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One also has to consider the way we define income, which as you know is taxed at different levels if it's investment income vs a salary. "Normal" people don't have much of the former, so they're already at a disadvantage. I think the incentive will always be there for money to find a home in order to get more money, so if you do realize a gain, it's still income and shouldn't be treated differently.
I agree, but I guess I should qualify my previous comment by saying that a flat tax is better than a regressive tax. Somehow I don't think that's what Riptide had in mind, but I could be wrong.

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07-15-2013, 01:13 PM
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That's obviously not true for all public expenditures, especially when wealthier people (who are healthier in general) do not qualify for many social programs.
People who qualify for social programs generally don't make enough to pay taxes in the first place...so that was a little out of left field

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07-15-2013, 01:21 PM
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People who qualify for social programs generally don't make enough to pay taxes in the first place...so that was a little out of left field
Don't move the goalposts. I was responding to your claim that "the more money you make, the more you are benefiting from public programs". I also disagree with the idea of a flat tax rate but that claim is false.

edit: besides, even if it were true, I don't see how that's relevant in a discussion between "flat tax vs. progressive tax", since wealthier people would still pay more under a flat tax.

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07-15-2013, 01:31 PM
  #43
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What loopholes in Canada are you talking about?
USA has loopholes because they are built into tax laws.
There's all sorts of deductions and crap that one can use. Do I know them all? No. I pay an accountant every year to deal with that.

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07-15-2013, 01:43 PM
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There's all sorts of deductions and crap that one can use. Do I know them all? No. I pay an accountant every year to deal with that.
I am an accountant. There are very very very few in Canada unless you have a business.
Here is what they are:
-Renters get credit for energy costs
-90 bucks a month of you have a kid
-hst rebate if you are poor
-deduct kids sports too 500, 200 actual benefit.
-Public transit tax credit.

Thats the list.

There are small ones, and if you live in Northern Canada or are on a pension there are more.

I just realized I missed the big one of RRSP and charity.


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07-15-2013, 01:50 PM
  #45
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It might have something to do with me making well above the Canadian household average. That and we pay a lot more taxes than you do. I would absolutely love to see a flat rate tax.

That and everyone should strive for simple effective laws and regulations. Do you honestly think that the current tax regulations are simple and effective?

And that's also part of it. They are gaming the system. Put a system in place that they can't game. You (or your company) makes 10m, you pay x% - just like everyone else. No loopholes, minimal (if any) deductions, etc. I remember hearing/reading that Warren Buffet's secretary paid more in taxes than he did... Fixing things would correct that.
Her effective tax rate is higher than his. He pays more taxes.

I just started studying for the REG portion of the CPA exam, so it's funny I came across this thread today. At the expense of my future employment, I'm completely for fairtax. It is absolutely absurd that Joe Average needs to pay someone to interpret the tax code for him. It should be simple. It should be easy. Pay your taxes at the register. The only forms sent to the gov't is the number of claimed dependents, so they know how big of a rebate to send. It'll never happen though.

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07-15-2013, 01:52 PM
  #46
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[QUOTE=barneyg;69233699]Don't move the goalposts. I was responding to your claim that "the more money you make, the more you are benefiting from public programs". I also disagree with the idea of a flat tax rate but that claim is false.
Public programs are not the same thing as social programs


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Originally Posted by barneyg View Post
edit: besides, even if it were true, I don't see how that's relevant in a discussion between "flat tax vs. progressive tax", since wealthier people would still pay more under a flat tax.
They wouldn't pay as much though. Their percentage paid would go down meaning that they would pump less dollars in to the system

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07-15-2013, 02:11 PM
  #47
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Originally Posted by Swarez99 View Post
I am an accountant. There are very very very few in Canada unless you have a business.
Here is what they are:
-Renters get credit for energy costs
-90 bucks a month of you have a kid
-hst rebate if you are poor
-deduct kids sports too 500, 200 actual benefit.
-Public transit tax credit.

Thats the list.

There are small ones if you live in Northern Canada or are on a pension.
I live in Northern Canada. I get a northern living allowance, travel deductions, RRSPs, and can write stuff off for my business (having a business is great... even if you make almost no money with it). Years ago I used to get the GST credit/cheque (back when I was poor).

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07-15-2013, 02:14 PM
  #48
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Her effective tax rate is higher than his. He pays more taxes.

I just started studying for the REG portion of the CPA exam, so it's funny I came across this thread today. At the expense of my future employment, I'm completely for fairtax. It is absolutely absurd that Joe Average needs to pay someone to interpret the tax code for him. It should be simple. It should be easy. Pay your taxes at the register. The only forms sent to the gov't is the number of claimed dependents, so they know how big of a rebate to send. It'll never happen though.
Which is my issue. The fact her tax rate is higher is completely mind boggling!

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07-15-2013, 02:19 PM
  #49
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Originally Posted by Swarez99 View Post
I am an accountant. There are very very very few in Canada unless you have a business.
Here is what they are:
-Renters get credit for energy costs
-90 bucks a month of you have a kid
-hst rebate if you are poor
-deduct kids sports too 500, 200 actual benefit.
-Public transit tax credit.

Thats the list.

There are small ones if you live in Northern Canada or are on a pension.
I wouldn't call those "loopholes", they are credits that our representatives in parliament believe were needed to promote certain positive social behaviours. They have a trade off cost, and their merits are debatable but they aren't "loopholes" in the sense that they would allow a rich guy to get around the principles of taxation and pay significantly lower rates.

Loopholes are more along the lines of certain charity donation deals (over-valued artwork used to be popular, but the CRA has stopped that), (international) corporate structures, registration tricks, trusts, or offshore holdings to massively lower your tax % on property or types of income.

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07-15-2013, 02:19 PM
  #50
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Originally Posted by Riptide View Post
I live in Northern Canada. I get a northern living allowance, travel deductions, RRSPs, and can write stuff off for my business (having a business is great... even if you make almost no money with it). Years ago I used to get the GST credit/cheque (back when I was poor).

So you have a business, hence the deductions- that will not change if there is a flat tax (look at corporate tax rate, its flat, its all deducted). Every business gets deductions.

What I said was Canada has very few loopholes if you don't have a business, you said I get deductions because I have a business. OK.

Look at me, Single, make good money own a home, single. I get RRSP, Charity, public transit credit. Nothing complicated about it.

Alberta (who has flax tax) and Ontario (which doesn't) have the same complexity in there tax code.
On the topic note, none of this will make it easier for athletes. Florida has no taxes, must still file taxes there.

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