Who will benefit?

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Who will benefit?

Post by T on Thu Mar 12, 2015 5:13 am

Under his proposal, LeBuffoon seeks to reduce the state's top income tax rate from 7.95 percent to 5.75 percent. His sales tax proposal includes increasing the state's sales tax from 5.5 percent to 6.5 percent and broadens it to include most products and services sold in the state. Many services currently are exempt from the sales tax.

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Whether you agree ideologically with LeBuffoon's proposal or not, the facts are, 95% of the River Valley's citizens will remain in the same income tax bracket, and 100% will pay more in sales tax.  Only a select group will benefit from this tax proposal, and we all know what group that is.

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Re: Who will benefit?

Post by Big Jim on Thu Mar 12, 2015 10:00 am

Same "bracket" but double the exemption so darn near 100% of River Valley citizens will pay zip in income taxes.  They aren't paying now with now with the $9,400 individual deduction which will be pushed up to $20,000 with the change.  Not many in the valley earn $20,000.  That means they will pay nothing while still getting earned income tax credit, child credit, sales tax credit still getting back more than they paid in.

On second thought you are right T, "95% of the River Valley's citizens will remain in the same income tax bracket" the ZERO income tax bracket.  The only people in the valley  with incomes over the $20,000 in the valley are government workers and most of them don't live in the valley, just get their paychecks and bennies from the valley property tax payers.

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Re: Who will benefit?

Post by T on Thu Mar 12, 2015 6:28 pm

Of course I'm right.  Was there ever any doubt?  Very Happy

...and yet, you fail to mention the increase in sales tax.  Nice spin there Candy.

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Re: Who will benefit?

Post by T on Thu Mar 12, 2015 6:34 pm

Big Jim wrote:They aren't paying now with now with the $9,400 individual deduction which will be pushed up to $20,000 with the change.  Not many in the valley earn $20,000.  That means they will pay nothing while still getting earned income tax credit, child credit, sales tax credit still getting back more than they paid in.

Which is why LeBuffoon's proposed pension exemption will only help the people who don't need the help.  

My father-in-law worked in "the mill" for 40+ years and has been retired for 30+ years.  He collects Social Security and a pension from "the mill".  His income is so low, he pays absolutely no federal or state income tax. But, he's going to pay a lot more sales tax, and more than likely property tax as well.

So, you're agreeing with me. LeBuffoon's proposal is going to hurt everyone in the River Valley, unless you're wealthy. If your wealthy, your situation will improve.

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Re: Who will benefit?

Post by Big Jim on Fri Mar 13, 2015 8:08 am

No, I am not agreeing with you on your father's pension or social security, both of which weren't being taxed before because they are pension and social security taking them out of the taxable earned income category. Under LePage's plan he will continue to not be taxed on his pension and continue to not be taxed on his social security, AND he will receive a sales tax credit he will not only continue to get back than paid in he will get even more back.

Out of curiosity, what is your definition of "wealthy" and specifically who in the River Valley meets your definition? Names and source of "wealth" please.

I see recognizing sarcasm isn't your strong point. My earlier "agreement" was sarcastic as those who are already paying nothing and will continue to pay nothing aren't being harmed as explained by this ditty written by a University of South Dakota Accounting and Business Law Professor explains. This version I was able to copy from the Sun Journal from a comment by a Candice Casey who I believe hales from your neck of the woods. Over the years I have seen it many times, it does make you think, and it is in easy to understand terms. It also goes to the heart of your "people being hurt" who are already not only getting a free ride, but being paid to ride for free. Hope you enjoy it.

How Taxes Work. . .

This is a VERY simple way to understand the tax laws. Read on it-- does make you think!!

Let’s put tax cuts in terms everyone can understand. Suppose that every day, ten men go out for dinner. The bill for all ten comes to $100. If they paid their bill the way we pay our taxes it would go something like this:

The first four men – the poorest – would pay nothing; the fifth would pay $1, the sixth would pay $3, the seventh $7, the eighth $12, the ninth $18, and the tenth man – the richest – would pay $59.

That’s what they decided to do. The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement – until one day, the owner threw them a curve (in tax language a tax cut).

“Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily meal by $20.” So now dinner for the ten only cost $80.00.

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still eat for free. But what about the other six – the paying customers? How could they divvy up the $20 windfall so that everyone would get his “fair share?”

The six men realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would end up being PAID to eat their meal. So the restaurant owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And sot the fifth man paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $12, leaving the tenth man with a bill of $52 instead of his earlier $59. Each of the six was better off than before. And the first four continued to eat for free.

But once outside the restaurant, the men began to compare their savings. “I only got a dollar out of the $20,” declared the sixth man who pointed to the tenth. “But he got $7!

“Yeah, that’s right,” exclaimed the fifth man, “I only saved a dollar, too . . . It’s unfair that he got seven times more than me!”

“That’s true!” shouted the seventh man, “why should he get $7 back when I got only $2? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison, “We didn’t ge anything at all. The system exploits the poor!”

The nine men surrounded the tenth and beat him up. The next night he didn’t show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered, a little late what was very important. They were FIFTY-TWO DOLLARS short of paying the bill! Imagine that!

And that, boys and girls, journalists and college instructors, is how the tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore.

Where would that leave the rest? Unfortunately, most taxing authorities anywhere cannot seem to grasp this rather straightforward logic!

T. Davies
Professor of Accounting & Chair,
Division of Accounting and Business Law
The University of South Dakota

Besides wondering what your definition of "wealthy" is, I also wonder how you think those "wealthy" will have their situation improved?

My understanding has always been that the "American Dream" is to own a home. My idea has always been quite different. If indeed, the American Dream is to own a home and that defines "wealthy" the Governor's plan would not allow the "wealthy" to keep more of what they earn it will just be taken by the towns in the form of property tax instead of running through the state coffers with much siphoned off to cover overhead. So you see it will very likely take more of what the American Dream achievers earn away from them to be transferred to that 95% who less than pay nothing already and will continue to pay even more less than nothing under the plan. The American Dream Achievers will see even more taken by from them by Towns like yours who can't control their unabashed propensity for spending. Towns like Rumford will no doubt continue to seize and spend other people's hard earned money with abandon until every last one of the money earners stops showing up for dinner like the professor's pay for dinner "wealthy" individual did. The consequences for your town will be the same as they have been for the latest examples of bye-bye mill, Millinocket, E. Millinocket, and Bucksport. I understand Rumford is already finding itself to be the largest single holder of real estate in the town with all that tax acquired property.

I have a couple more questions for you since you are living this in Rumford. What is it that keeps you people from seeing how it went in those other mill towns? Do the people there really think it can't happen to Rumford? We keep being told you just don't see what is happening in your own yard, which I find really hard to believe. The rest of us just shake our heads when we pass through Rumford on Route 2, the reality is as clear as the nose on your face. Do the people there really not see it? Are the people there really going to continue spending the town to destruction to the bitter end like Millinocket, E Millinocket, Bucksport and so many other Maine Mill towns have?

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Re: Who will benefit?

Post by T on Fri Mar 13, 2015 6:16 pm

Candy, some people must pay taxes on part of their Social Security benefits. Others find that their benefits aren’t taxable.

Generally, if Social Security benefits were your only income, your benefits are not taxable and you probably do not need to file a federal income tax return.

If you received income from other sources, earned or not (like a mill pension), your benefits will not be taxed unless your modified adjusted gross income is more than the base amount for your filing status.

If you receive retirement benefits in the form of pension or annuity payments from a qualified employer retirement plan, all or some portion of the amounts you receive may be taxable.

The pension or annuity payments that you receive are fully taxable if you have no investment in the contract due to any of the following situations:

    *You did not contribute anything or are not considered to have contributed anything for your pension or annuity
    *Your employer did not withhold contributions from your salary, or
    *You received all of your contributions (your investment in the contract) tax free in prior years

Unearned income is taxable.

So Candy, my father-in-law's Social Security is not taxed only because his modified adjusted gross income is so low.

Finally, my point was...

**My father-in-law will not be helped by LeBuffoon's effort to removed pension income from the tax code.  

**My father-in-law will not be helped with a reduction of the top income tax rate from 7.95 percent to 5.75 percent.  

**My father-in-law will not be helped with any favorable adjustment in the standard deduction, $7750 in 2014.
 
**My father-in-law will not be helped with any favorable adjustment in the personal exemption, $3950 in 2014 (I guess you just made up $9400).

BUT
 
**My father-in-law will pay more in sales tax.

**My father-in-law will pay more in property tax.

**My father-in-law's standard of living will decline.

No matter how you spin it Candy, only a select group will benefit from LeBuffoon's tax/budget proposal, and we all know what group that is.

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