05-02-2005 06:43									#1
	Unfair Taxation Support Apolyton, buy Galactic Civilizations: Deluxe Edition

I discovered an instance of unfair taxation. The Federal tax codes were changed last year to allow people who live in states that don't have income taxes to deduct their sales tax. How is that fair to those of you who pay state income taxes?

If Florida doesn't tax me on my income, I get to keep that money (except for the portion that the Fed's take). Why should the Fed's then go ahead and give me an additional bonus? Now, not only do I get to keep the money that wasn't taxed, unlike those of you who are taxed, I get to declare the sales taxes I paid, while you don't, and you still had to pay sales taxes.

This isn't fair to the rest of you. Either you should be able to declare your sales taxes also, or we shouldn't be able to. Not that it benefited me, since I don't have enough itemized deductions for it to have made a difference.

	05-02-2005 06:54									#2
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Flat Tax, not.

	05-02-2005 07:17									#3
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Quick question - Does the federal tac code allow people in states with state inccome tax to deduct that income tax in calculating federal tax?? I'm just trying to understand the reasoning

	05-02-2005 07:21									#4
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Unfair my azz! Before states with income taxes (and consequently low sales tax) were able to deduct that on their federal income taxes. States that only had a sales tax could deduct nothing...nada...zero. This new law FINALLY levels the playing field. The system before was the grossly unfair one.

	05-02-2005 07:23									#5
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quote: How is that fair to those of you who pay state income taxes?

Che, you know that you deduct what you pay in state income tax on your federal income tax, right?

	05-02-2005 07:23									#6
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quote: Originally posted by Flubber Quick question - Does the federal tac code allow people in states with state inccome tax to deduct that income tax in calculating federal tax?? I'm just trying to understand the reasoning

You bet it did. Now there is a choice. You can deduct eithier (in states with both) one and therefore choose which gives you the bigger deduction.

	05-02-2005 07:25									#7
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Although what Che is saying is true. If a state has both sales tax and income tax then you should be able to deduct both...

	05-02-2005 07:27									#8
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quote: Originally posted by KrazyHorse Although what Che is saying is true. If a state has both sales tax and income tax then you should be able to deduct both...

I do agree with this statement, but calling the new arrangement unfair is way wrong. It is a HUGE step in the right direction.

	05-02-2005 07:27									#9
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Che, you should ask your friend Polyton accountant first.


You're right, on a state by state basis the sales tax deduction is unfair. The people of your state, Florida, can benefit the most.

Though, here's the kicker. The deduction is such an outlandishly small percent that only on the occasion where you actually pay more in sales tax than in state tax will it really help. So if you're looking to buy a high ticket item nows the time.

If you are a real nut, you could always add up all of your receipts from the year, like they did in ancient times, and hope that it's more advantageous.

Anyways, to answer your question, the sales tax deduction isn't such a big advantage. In fact, it's probably a bigger pain in the ass than most people will stand to deal with.

	05-02-2005 07:27									#10
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quote: Originally posted by KrazyHorse Although what Che is saying is true. If a state has both sales tax and income tax then you should be able to deduct both...

Thats what I was thinking. It seems unfair that a person can deduct all if his state uses one type of taxation but only a portion if his state uses two methods

	05-02-2005 07:31									#11
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quote: Originally posted by Flubber Thats what I was thinking. It seems unfair that a person can deduct all if his state uses one type of taxation but only a portion if his state uses two methods

The table that you have to use to calculate your deduction way underestimates the amount of sales tax you actually pay...unless of course you want to keep all your reciepts for the whole year. It is NOT a boon, but rather a move in the correct direction.

	05-02-2005 07:37									#12
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quote: If you are a real nut, you could always add up all of your receipts from the year, like they did in ancient times, and hope that it's more advantageous.

Don' you guys do that anymore?

	05-02-2005 07:38									#13
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quote: Originally posted by alva quote: If you are a real nut, you could always add up all of your receipts from the year, like they did in ancient times, and hope that it's more advantageous. Don' you guys do that anymore?

I think that deal was cut out of the tax code in the 80's. The IRS was probably sick of receiving shoe boxes in the mail.

	05-02-2005 07:44									#14
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quote: Originally posted by KrazyHorse Che, you know that you deduct what you pay in state income tax on your federal income tax, right?

I'm aware of that, yes. But if I don't pay state income taxes, I'm not being penalized by the Feds. Let's try it like this.

I make 50,000 and pay no state income tax (for sake of argument). I get taxed on the whole amount.

PLATO makes 50,000 and has to pay a state income tax of 1%, so afterwards, the Fed's tax him on 49,500 of income. Even though I don't get a break on that 500, I still come out ahead of PLATO, since I have 500 more than him, before taxes.

Both of us pay sales tax, but only I get to deduct it. So now, not only does he have to pay a state income tax, but I get to declare a tax we both pay, but he doesn't get to declare it.

	05-02-2005 07:48									#15
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quote: Originally posted by Harry Tuttle I think that deal was cut out of the tax code in the 80's. The IRS was probably sick of receiving shoe boxes in the mail.

I have a way to figure it out. Reverse receipts. Send in how much you pay in rent (sales tax exempt), non-junk food groceries (ditto), medical care, tuition etc (all the sales tax exemptions). Call this A. Then send in your bank balance at the beginning of the year and the end of the year. B and C respectively. Then send in your income (D).

D - C + B - A is how much you spent on taxable goods and services. Multiply by your state's sales tax to get E, the amount you spent in sales tax during the year.

	05-02-2005 07:50									#16
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quote: Originally posted by PLATO The table that you have to use to calculate your deduction way underestimates the amount of sales tax you actually pay.

I don't know about that. I actually kept track (using MS Money) of my sales taxes last year (well, for at least half the year). (I stopped when I discovered that I couldn't deduct sales taxes, only to find out later that I could. )The sales tax table was about twice what I estimated I paid in sales taxes, and that includes a big ticket item (the wife's wedding ring). A big chunk of our income goes to things we don't spend sales tax on: rent/mortgage, food, utilities, gasoline, etc.

BTW, anyone know what the statute of limitation on unpaid income taxes is?

	05-02-2005 07:51									#17
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You don't pay sales tax on gasoline? Unlikely. More likely is that gas stations are simply required to include that tax along with all the other taxes in the posted price.

	05-02-2005 07:52									#18
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quote: Originally posted by KrazyHorse You don't pay sales tax on gasoline? Unlikely. More likely is that gas stations are simply required to include that tax along with all the other taxes in the posted price.

I think we just pay gas taxes, which are quite high.

	05-02-2005 08:13									#19
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I thought this thread was going to be about profit.

	05-02-2005 08:16									#20
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If there is a sales tax on gas, they sure don't tell us about it, making it fairly difficult to deduct .

	05-02-2005 08:29									#21
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quote: Originally posted by KrazyHorse I have a way to figure it out. Reverse receipts. Send in how much you pay in rent (sales tax exempt), non-junk food groceries (ditto), medical care, tuition etc (all the sales tax exemptions). Call this A. Then send in your bank balance at the beginning of the year and the end of the year. B and C respectively. Then send in your income (D). D - C + B - A is how much you spent on taxable goods and services. Multiply by your state's sales tax to get E, the amount you spent in sales tax during the year.

I REEEEEEAAAAAALLLLLYYYYYY doubt the IRS would accept that explanation.

	07-02-2005 00:19									#22
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It would be much simpler to eliminate the itemized federal deduction for state and local taxs, and in return raise the zero bracket amount and reduce tax rates a little bit.

	07-02-2005 00:22									#23
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commies talking about unfair taxation.

	07-02-2005 00:24									#24
	Re: Unfair Taxation Tired of ads?

quote: Originally posted by chegitz guevara I discovered an instance of unfair taxation. The Federal tax codes were changed last year to allow people who live in states that don't have income taxes to deduct their sales tax. How is that fair to those of you who pay state income taxes? If Florida doesn't tax me on my income, I get to keep that money (except for the portion that the Fed's take). Why should the Fed's then go ahead and give me an additional bonus? Now, not only do I get to keep the money that wasn't taxed, unlike those of you who are taxed, I get to declare the sales taxes I paid, while you don't, and you still had to pay sales taxes. This isn't fair to the rest of you. Either you should be able to declare your sales taxes also, or we shouldn't be able to. Not that it benefited me, since I don't have enough itemized deductions for it to have made a difference.

most states without an income tax have high sales tax. My state is one example.

this is why. case closed.

	07-02-2005 00:24									#25
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Shhhh, keep it quiet, you don't want people getting upset over this

	07-02-2005 00:25									#26
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quote: most states without an income tax have high sales tax.

What about states with high incomes tax and high sales tax?

	07-02-2005 00:27									#27
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quote: Originally posted by Imran Siddiqui quote: most states without an income tax have high sales tax. What about states with high incomes tax and high sales tax?

probably the states with the most social programs. So they are benefitting from better social programs, better education, and less crime.

You can't expect to live in the best states, and not have to pay something.

	07-02-2005 00:27									#28
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quote: probably the states with the most social programs. So they are benefitting from better social programs, better education, and less crime. You can't expect to live in the best states, and not have to pay something.

So why can't they take their sales tax off their federal tax? That doesn't answer the question, it just avoids it, Diss .

	07-02-2005 00:29									#29
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quote: Originally posted by Imran Siddiqui quote: probably the states with the most social programs. So they are benefitting from better social programs, better education, and less crime. You can't expect to live in the best states, and not have to pay something. So why can't they take their sales tax off their federal tax? That doesn't answer the question, it just avoids it, Diss .

I gave my answer.

they don't deserve it. Their added benefit comes from living in good states.

Would you rather live in my state with the highest smoking rate, the highest suicide, rate, the worst schools, the higest teen dropout rate, high crime rates, etc. etc.

	07-02-2005 00:41									#30
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quote: they don't deserve it. Their added benefit comes from living in good states.

And who decides who are the 'good' states and thus should get taxed more? You aren't making an argument, you just want others to pay more in taxes than you .

quote: Would you rather live in my state with the highest smoking rate, the highest suicide, rate, the worst schools, the higest teen dropout rate, high crime rates, etc. etc.

Would you rather live in Newark or Harlem or Camden or Compton?