Legal to tax taxes?

[Valiant Champion]

I was checking over my tax booklets this year and noticed that if I itemized deductions that my state will not give me a deduction for the sales tax I have paid into them this year for products i purchased in state.

I got to wondering if this isnt some kind of double jeapordy or something.

It has probably always been like this but I can't seem to understand how money the state has already taken from me in tax can be taxed again legally.

Also what about prepayment of taxes? I never could understand how the state can legally force me to prepay or have withheld a certian amount of my income tax before it is officially even due.

[Thorn777]

I was checking over my tax booklets this year and noticed that if I itemized deductions that my state will not give me a deduction for the sales tax I have paid into them this year for products i purchased in state.

I got to wondering if this isnt some kind of double jeapordy or something.

It has probably always been like this but I can't seem to understand how money the state has already taken from me in tax can be taxed again legally.

Also what about prepayment of taxes? I never could understand how the state can legally force me to prepay or have withheld a certian amount of my income tax before it is officially even due.

Wiki

It has probably always been like this but I can't seem to understand how money the state has already taken from me in tax can be taxed again legally.

This happens everywhere you go. From buying pampers from your already taxed income in consumer-taxes, to paying heritage-taxes on the usually already taxed estate-assets you're passing on to whoever.

[Bleda]

Wiki


This happens everywhere you go. From buying pampers from your already taxed income in consumer-taxes, to paying heritage-taxes on the usually already taxed estate-assets you're passing on to whoever.

Yup, its an unfortunate trait of so many governments, where the people are there to service the needs of the government, not the other way around. Its a especially evident in socialist societies, they tax you coming and going.

[Viking Prince]

This is how various government units raise revenue. Yes they are slicing out of the same pie, but in a manner the you are not aware what the total take is. The Federal government taxes income and also takes a slice out of earning income for various social security withholdings from wages. State and local governments take slices from you with realestate taxes, sales taxes, income taxes. Then the federal government also takes a slice via booze, smokes, communications, fuel, etc.

When you add up all the spending (since deficit spending is also a tax one way or another) you have a bit under 40% of GDP a few years ago. The Bush-Obama spending balloon has hiked that up considerably.

Governments have been doing this shell game woth the splitting of taxes since the beginning of time. Heck, the USA was founded on the British attempts to be creative in expanding the tax base.

[GrnEyedDvl]

There was a big story sometime last year that people living in 30 states now have a total combined tax burden of over 50%; federal, state, and local. By the time you add in tax every time you buy gas or food its even higher. Its beyond out of hand now. I will try to find it.

EDIT:Trying to find a specific article a year old about taxes is almost impossible.

But Wikipedia had some good information that relates, they claim 40% on most, I specificallt remember reading 30 or more states at over 50%:

The National Bureau of Economic Research has concluded that the combined federal, state, and local government average marginal tax rate for most workers to be about 40% of income.[10][11]
Inflation and tax brackets

Most tax laws are not accurately indexed to inflation. Either they ignore inflation completely, or they are indexed to the Consumer Price Index (CPI), which some argue understates real inflation.[12] In a progressive tax system, failure to index the brackets to inflation will eventually result in effective tax increases (if inflation is sustained), as inflation in wages will increase individual income and move individuals into higher tax brackets with higher percentage rate. One example is the Alternative Minimum Tax; since it is not indexed to inflation,[13][14] an increasing number of upper-middle-income taxpayers have been finding themselves subject to this tax. From 1971 to 1977, as the CPI increased 47%, taxpayers faced 60% more taxes at the local, state and federal levels.

[Chlodwig I.]

The problem is that voters demand services from the Government for their votes (security, utility, infrastructure)
so the government is spending money on providing this to get the votes.

In overall the Government will try to gain more votes from spending taxes on certain voter demands, then they loose from raising Taxes from all voters.

[Viking Prince]

Moved from the Mudpit.

VP

[Nietzsche]

Americans everywhere are getting "poorer." That's why so many families have both parents working just to afford a standard of living that was far easier to attain a few decades ago. The Federal government has stealthily and not so stealthily expanded its rich into all sectors and reduced or destroyed the productivity and wealth of America. Bush-Obama have only made that worse.

[Thorn777]

^I have a hard time believing this trend is related to taxation in any substantial form. Income taxes for the bottom percentages and the middle-class steadily went down the last decades, and this "double-taxation" isn't an invention of Bush-Obama, but has been ever since.

I think I know what the real causes are for the problem you addressed, but thats I think something for another thread.

[Nietzsche]

^I have a hard time believing this trend is related to taxation in any substantial form. Income taxes for the bottom percentages and the middle-class steadily went down the last decades, and this "double-taxation" isn't an invention of Bush-Obama, but has been ever since.

I think I know what the real causes are for the problem you addressed, but thats I think something for another thread.

I wasn't referring to income taxes. Regulation costs Americans more money, indirectly, than direct taxation. Regulation creates poverty. Taxes only make poverty more accessible.

[Valiant Champion]

I wonder when double taxation came into practice?

I wonder if it has a long history?

[Viking Prince]

Double taxation as you refer to it is a result of income taxes coupled with other forms of taxation which are expenditure or asset based and thus net of earned income. So I would submit as old as any form of income tax. Such a system to be effective, you would need a modern cash economy, good record keeping, and a strong rule of law. For the USA, that would mean starting with the income tax to pay off the bonded debt for financing the Civil War.

[Sphere]

When you add up all the spending (since deficit spending is also a tax one way or another) you have a bit under 40% of GDP a few years ago. The Bush-Obama spending balloon has hiked that up considerably.

Its somewhat disingenuous to equate borrowing with taxation levels as economic growth and inflation will substantially reduce the costs of debt overtime. E.g if your revenue pool (GDP) is growing 3-5% a year and your currency is inflating 2-4% a year and you are borrowing at ~3.5%, every ten years you are reducing the tax rate you would need to pay off that debt by a third or so. This is the biggest reason why most countries run deficits. This all changes if your borrowing cost get above 6%.

Looking just at revenue we have....

Total Government Revenue


Federal Revenue

[Viking Prince]

Its somewhat disingenuous to equate borrowing with taxation levels as economic growth and inflation will substantially reduce the costs of debt overtime. E.g if your revenue pool (GDP) is growing 3-5% a year and your currency is inflating 2-4% a year and you are borrowing at ~3.5%, every ten years you are reducing the tax rate you would need to pay off that debt by a third or so. This is the biggest reason why most countries run deficits. This all changes if your borrowing cost get above 6%.

Your looking at just federal revenues -- my point was about aggregate spending. The federal government mandates local overnment spending and then the local government raises taxes to support the spendings.

My point was and still is that aggregate spending includes both direct taxation and indirect taxation through borrowing. To suggest that such spending is not resulting in taxation is a spurious argument. Your example and explanation is only marginally valid if you take a single year deficit and is not valid on a continuing basis.