Possibilty................

[magyar123]

One of the provisions in the tax cut part of the socalled stimulus package is to finally get rid of the law that requires folks to list their unemployment benefits on their tax returns as "income".
This provision had been in there since the early Reagan years, when that former actor cut the taxes for the rich, but had to make up the loss by thinking of provisions to **** over the every day working folks.
It was also in those years when tips became taxable income for minimum wage earning waiters/waitresses.

[Trixie007]

I worked as a waitress for about 8 years way back when and I can tell you that I typically made 3-5 times my minimum wage in tips! Absolutely that should be taxable income lol. And even then, you only had to claim 8% of your sales or the credit card tips, whichever was higher, so you still come out ahead - usually to the tune of almost half of your tips being untaxed.

[Willy13]

Income should be income and not tip income or capital gains income etc. Unemployment is more like insurance payments and should not be taxed. Personally I like the fairtax idea which is basically a national sales tax. Property tax and income tax are cruel by nature and should be done away with. Sales tax you pay when you play and so do all the people in the underground economies and tax cheats. The other taxes make you pay when you don't have the money. It's like having a gun put to your head at tax time telling you to pay up or else.

[Trixie007]

Income should be income and not tip income

I agree about the unemployment income, but...

If you have a w-2'd position, pay taxes on every penny you earn, then go to a restaurant and tip the server (who is relying on your tip as income), why should that server not have to pay taxes on that tip? If they don't, that makes them the same as the "underground" earners and tax cheats that you mention who are not paying taxes!

[Willy13]

What I meant was not this type or income or that type of income just plain old income. Tip income and Capital gains should be treated like normal income is what I meant. Sorry my wording was a little confusing.

[Trixie007]

Oh, I see what you're saying. Well, tip income is treated as normal income, ie it is taxed at whatever your tax rate is. Capital gains income is actually taxed at a lower rate than normal income, so it's pretty favorable in comparison.

The national sales tax seems good on the surface - so drug dealers and such would pay taxes, but it also removes a lot of the incentives for both individuals and business' that are good for the overall economy. Just a few examples... home ownership, private individuals & companies providing low cost housing, charitable contributions (not just to churches), investing in retirement. The list is a mile long. Then there's the problem of how on earth do you make the change? Gulp. The ineptitude of our government leads me to believe that they would be incapable of making a change of this magnitude with any degree of clarity or effectiveness.

[Willy13]

Then there's the problem of how on earth do you make the change? Gulp.

Yeah, that is the tough part. They have a VAT in Europe which is simular but they have it and an income tax which is a non starter. I can live with income tax, you just have to spend a lot of time on it and stay organized which can be a pain in the you know what. Property tax is to me the worst of the worst taxes. When you buy and pay for something in full, it should be yours free and clear and not something you have to pay a yearly fee to keep. It's truly sickens me when someone loses their family home because the housing market balloons out of control and they can no longer afford their property taxes. Luckily my state has a tax credit to help with that but it's not the case everywhere. Your right though, the government would probably screw up any new tax program, just look at the old income tax lol

Oh well, it's nice to dream anyway.

[Willy13]

Nice little comparison of tax systems for anyone interested.

http://www.fairtax.org/site/PageServer?pagename=obama_talkingpoints