Who pays taxes in the U.S.?

[Guest slamminshaun]

...and Vice President of a major bank's mortgage division.

How much do your bank's mortgage customers pay in the long run for the houses that you are kind enough to buy for them and let them make payments on?

I'll use my original loan as an example. $95,000 for 30 years at 5.875%. If the minimum payment were made for 30 straight years, total interest paid after 30 years would be approx. $107,306.

If anyone thinks this is outrageous, conisder this: I built my home last year for $103,000 after saving up the down payment money for three years!! At the time I was saving, I rented a room for four years. Today, I'm making more money as a result of hard work and dedication. I am refinancing my home from a 30 year loan to a 15 year loan. The appraised value as of this week on my home is $228,000. This means I now OWN $133,000 of equity in this home. If I were to sell my home today, I would be given a check for $133,000 minus Realtor costs. I started with an $8,000 down payment. This was ONLY made possible because of the ability to borrow money from a bank. By taking part in the ownership of property, rather then renting, I am participating in the appreciation of real estate. That appreciation far outweighs any interest I may pay over the course of 30 years. My equity alone, is now worth more then the interest I'd pay over 30 years and I still have 28 1/2 year left on my loan for more appreciation.

Although I won't dive too much into my personal finances, I was also able because of the equity built up in my home, to borrow the down payment money necessary to purchase 3 lots in Port St. Lucie at $15,000 a piece. I BORROWED $11,250 for each lot and only had to use $10,250 of my own money as the down payment for both together. I have since re-sold these lots for $50,000 EACH. After the bank was paid off, closing costs paid, I roughly netted $116,250 before taxes. What I do with that money would be up to me, would it not? As a matter of fact, I now have the cash to PAYOFF the eeeeeeevil bank if I so chose. All of that accomplished in less then two years time, but ONLY because of the ability to borrow the funds necessary to do it.

Let me tell you how banks are good for communities. They hold the economic structure of a community together in good times and in bad. The bank I work for is currently offering ZERO percent loans to hurricane victims. Yes, 0% loans with NO closing costs. Do we have to? No. Is there someway we're getting our share? No. It's just simply the right thing to do. In Port St. Lucie, banks have raised more money for charities and non-profit organizations then all the other industries here combined. So this notion that banks are eeeeeeeevil because they collect interest, is absurd, and quite frankly, not with the mainstream opinions of this country.

[Guest JMT]

along your lines...

im a licensed mortgage broker. the avg home in so fl appreciates at least 15% annually. i dont know of anyone with half a brain who has an int rate anywhere near that. anyone who owns a house (mortgage) is increasing their assets (wealth) by just living and making timely payments.

banks are owned by shareholders and groups of people, a lot of who are joe blow walking down the street. the notion that one evil man rakes in all the interest on the population is not true.

[Guest endymion]

Ms Sphynx, I hope you're happy, we're arguing about accounting now instead of presidents.

You guys are using details to obscure the big picture. Debt is a way for people who have money to make more money off of people who don't have money.

So over time, in a debt society, the rich will naturally get richer and the poor will naturally get poorer. The debt system pushes money over time from poor people to rich people and the further poor people go into debt the more the process is accelerated.

Thus the rationalization for taxing the rich. Taxing the rich and using it to fund socialist programs like welfare is one of a million mechanisms in place in this country to protect the existence of the middle class. Yes mortgage lending is also one of the million mechanisms in place that makes a middle class possible. All of these mechanisms have to exist or the middle class can't exist in the first place in a capitalist society. Without government in place protecting the middle and lower classes from the rich, the rich would just end up owning everything including the lower and middle classes themselves.

Given that, it makes sense to aim the tax burden squarely at the rich. They can afford it. Poor people can't.

If you are concerned about providing incentives to small businesses, they are all over the place. Tax deductions and small business assistance programs are all over the place. You guys say it doesn't make sense to penalize a hard-working small business in an attempt to tax Bill Gates. Well true, that's why all of the small business deductions. That's why S-Corps and LLCs exist in the first place so that you don't have to set up a C-Corp and pay income tax twice. The system in the United States is already heavily rigged to give little entrepeneurs like me a shot. And it works. And if one of those little entrepeneurs ends up making bank off of his little business then yay, he and society both win because then he gets to pay a big tax bill.

I have paid HUGE tax bills, my books went off the charts during the tech boom when huge companies were spending crazy money on stupid projects. Was I upset about it? No, I was rich at the time, it was really easy to pay.

[Guest bcnjunkie]

You guys are using simple numbers to confuse a complex issue

ding ding ding ding ding !!!!!!

[Guest JMT]

You guys are using simple numbers to confuse a complex issue

ding ding ding ding ding !!!!!!

the original comment makes zero sense.

its the other way around, a complex issue confusing the simple facts.

[Guest endymion]

You're oversimplifying and pretending it's really that simple, which leads to incorrect conclusions that don't account for the complexities of the issue.

Oh right, you're a Bush supporter. Never mind, you wouldn't understand.

[tgibson]

You guys are using details to obscure the big picture. Debt is a way for people who have money to make more money off of people who don't have money.

Debt is a useful tool, that when optimized, allows for current spending in excess of current cashflow.

You're right though, someone has to be willing to lend the money. And at some rate based on the structure of the debt and the risk threshold of the debtor.

I'm not sure where this argument is going though...

I do agree with you on the corporate taxes though...they should be completely eliminated.

[Guest JMT]

keep twisting away man. first, we are using details, then we're oversimplifying, all in the same argument.

[Guest JMT]

You guys are using details to obscure the big picture. Debt is a way for people who have money to make more money off of people who don't have money.

Debt is a useful tool, that when optimized, allows for current spending in excess of current cashflow.

I do agree with you on the corporate taxes though...they should be completely eliminated.

first part - exactly correct, how do you think the Donald has as much as he does? its all financed and leveraged.

not sure what you mean by the second part...

[Guest JMT]

if someone falls into debt they cant manage its their own fault for being risky and/or stupid. since when has anyone on this board felt we owed stupid people anything? im yet to see that view made.

[tgibson]

You guys are using details to obscure the big picture. Debt is a way for people who have money to make more money off of people who don't have money.

Debt is a useful tool, that when optimized, allows for current spending in excess of current cashflow.

I do agree with you on the corporate taxes though...they should be completely eliminated.

not sure what you mean by the second part...

Tax owners, not the corporation. Eliminates double taxation (i.e. company gets taxed, then the shareholders get taxed) also forces companies to make smarter decisions, not simply to seek tax loopholes.

[Guest endymion]

Why are the poor still poor? Show me a poverty-level family in Miami that doesn't have crippling credit card debt. Who makes money off of danging the temptation of consumerism in front of people who can't afford it? Rich people. Big corporations. The poor get poorer, the rich get richer. Without artificial limitations that trend will continue endlessly until you have a bunch of poor people and a ruling class that owns everything, including the poor people themselves.

That's the big picture. Talking about 15%/year appreciation obscures that. Simplifying the situation into "entrepeneurs shouldn't be penalized for success" is not helpful.

This is why spreading capitalism into new, unregulated markets like Iraq is a good thing for rich people. All kinds of creative new ways to screw over a whole new populace. Poor people in Iraq continue to stay poor, rich guys in the US get richer. Capitalism is a steep grade that leads money to slide down from the poor side to the rich side. Invading Iraq creates a big downhill stream of money from Iraq into the pockets of the richest 1% of Americans. We paid with our tax dollars for that stream bed construction, the rich people who benefit can pay up now.

[Guest slamminshaun]

Controlled, responsible debt ALWAYS leads to economic expansion in the macroeconomic and microeconomic sense. While the rich will get richer, so will the middle-class and not-so-middle class. Tech is obviously well educated. I'd refuse to believe he became rich without using debt instruments unless he was lucky enough to invest the cash he had in an IPO that went bananas.

I outlined previously, how I took an $8,000 down payment on my house, and converted it into enough net worth to be able to pay this house off within two years, thus preventing the need for the bank's money anymore. However, I will continue to use the bank's money to further increase my net worth, as long as I use it wisely.

Back to taxes. I estimate gross income of around $70,000 as VP of the bank. I will be paying $2,400 in property taxes for my home, $15,750 for the lots I sold, probably around another $14,000 for income tax, $5,300 for medicare and social security, $1,650 sales tax for the car I just bought, doc stamps of $500 and intangible tax of $210 for refinancing my house, along with the recording fees involved at the court hosue. I also paid to register my car, renew my driver license, taxes on my cell phone bill, taxes on my BellSouth bill, tolls for the turnpike. If I were to just stop at the intangible taxes, I'm paying $40,000 in taxes against $70,000 of earned income. If someone is going to say that's fair because I can afford it they're mistaken. I believe in my fair share, but 57% of my income is NOT fair. Depsite this, I still find money to donate to the United Way....speaking of donating....

Why not leave the tax code alone, and each tax year, those who think they pay too little can DONATE more to the IRS in an effort to fund government spending. Tech, you can lead the charge!! Cmon...you're rich, you can afford it.

[Guest JMT]

everyone in this country has to opportunity to pave their own way.

[Guest web_norah]

everyone in this country has to opportunity to pave their own way.

that's quite disputable, how about if you're handicapped, over 40 and trying to find a job in a tough competitive market....what are your chances then?

we can use the Bush line from last night's question about what he plans to do in solving the unemployment problem....Bush replied "education".....hmm, let's see if you've already earned a Masters and need a job at 40 yrs of age, hows education going to get you work?

[Guest slamminshaun]

everyone in this country has to opportunity to pave their own way.

that's quite disputable, how about if you're handicapped, over 40 and trying to find a job in a tough competitive market....what are your chances then?

we can use the Bush line from last night's question about what he plans to do in solving the unemployment problem....Bush replied "education".....hmm, let's see if you've already earned a Masters and need a job at 40 yrs of age, hows education going to get you work?

I dunno...maybe practice law at the Law Offices of Tony Soprano?

[Guest web_norah]

or possibly join Dick Cheney's daughter fight for gay marriage rights?

[Guest slamminshaun]

or possibly join Dick Cheney's daughter fight for gay marriage rights?

She gave up. She's taking a desk job at Halliburton.

[Guest web_norah]

and i thought nepotism was frowned upon :

**maybe Teresa Heinz can hook her up, at least the Kerrys admit they married UP

[Guest endymion]

Tech is obviously well educated.

I started an S-Corp in 1996 with $500 in earnings from a student job, I have not used debt at any point to build it to where I am now. I took a two-year 50% down loan on my car for no other reason than to build credit and it's paid off. I do use mortgages so you do have me there. I have been learning how to pole vault using a mortgage into a huge capital gain situation and gee that's fun. Thank you, Mr Banker. I would not have that option if I didn't have the money in the first place to make any move.

Poor people living month-to-month don't have the resources to pull together down payments and closing costs to get into the business of truly making money, so banks stick them with crappy interest rates. I get much better rates in the long run by putting down 20% instead of the guy who puts down 3% using a lender's funky math that is all designed to get him on the hook for the long term. Poor people get penalized just for being poor, I get a break just for having the money available to do it right. I end up making money over the long run, the guy with an interest-only mortgage makes payments that are nothing but bank profit and builds no equity and then loses his house when the balloon payment hits and he can't afford it. Same property, same selling price, different loan parameters make the decision between whether I end up richer off of the deal or further into crippling debt. The ONLY deciding factor is how rich I am in the first place going into the deal. I'm rich enough, I get richer. I'm not rich enough in the beginning, I get poorer. Same property, same price.

That sucks. That is the process of rich people getting richer simply for being rich, while poor people get shafted further into debt, two guys living right next to each other could be going in completely different directions because one had money to begin with and the other didn't.

Suck.

[Guest JMT]

everyone in this country has to opportunity to pave their own way.

that's quite disputable, how about if you're handicapped, over 40 and trying to find a job in a tough competitive market....what are your chances then?

we can use the Bush line from last night's question about what he plans to do in solving the unemployment problem....Bush replied "education".....hmm, let's see if you've already earned a Masters and need a job at 40 yrs of age, hows education going to get you work?

so age and handicapped are related? thats a new one. youre off topic but....

higher education makes you an asset. stay in school is the message.

bush's unemployement rate is only .3% different then when Clinton was in office, and he didnt have to deal with 9/11 where 1 million jobs were lost in the first month!

lets ask tereza heinz, shes all for outsourcing.

the truth is people just dont want to work that bad, not everyone is going to be able to do their "dream job."

[tgibson]

Tech is obviously well educated.

I started an S-Corp in 1996 with $500 in earnings from a student job, I have not used debt at any point to build it to where I am now. I took a two-year 50% down loan on my car for no other reason than to build credit and it's paid off. I do use mortgages so you do have me there. I have been learning how to pole vault using a mortgage into a huge capital gain situation and gee that's fun. Thank you, Mr Banker. I would not have that option if I didn't have the money in the first place to make any move.

Poor people living month-to-month don't have the resources to pull together down payments and closing costs to get into the business of truly making money, so banks stick them with crappy interest rates. I get much better rates in the long run by putting down 20% instead of the guy who puts down 3% using a lender's funky math that is all designed to get him on the hook for the long term. Poor people get penalized just for being poor, I get a break just for having the money available to do it right. I end up making money over the long run, the guy with an interest-only mortgage makes payments that are nothing but bank profit and builds no equity and then loses his house when the balloon payment hits and he can't afford it. Same property, same selling price, different loan parameters make the decision between whether I end up richer off of the deal or further into crippling debt. The ONLY deciding factor is how rich I am in the first place going into the deal. I'm rich enough, I get richer. I'm not rich enough in the beginning, I get poorer. Same property, same price.

That sucks. That is the process of rich people getting richer simply for being rich, while poor people get shafted further into debt, two guys living right next to each other could be going in completely different directions because one had money to begin with and the other didn't.

Suck.

So let the government give tax breaks to any institution that lends to risky debtors...

Oh wait - but there's another "tax cut" for the rich.

If you don't fit a lending profile (assets, income, history), you can't get cheap debt. Doesn't that make sense?

[Guest web_norah]

so pose this question

you've got an MBA. you're over 30. what the hell are you going to do with more education?

you're handicapped, you cant be available for all sorts of industries, you're educated with a bachelors. you have student loans. what the hell are you going to gain from education at this point?

more importantly. how are you going to pay rent and eat food?

answer this for me.

the truth is, the market was already on a downslide from Clintons administration and it sunk even lower during Bush's administration. then the country went to war - - not as a last resource, i might add..........

[Guest JMT]

people who make 200k are FAR FROM the top 1%

[Guest slamminshaun]

Thank you Mr. Banker? The bank can't put you in any capital gain situation.....only what you buy and sell along with the IRS's codes can. Blame the banks for making money available for use? Well, if they don't do it.....who will? Thank you Mr. Professor for educating me so that I can earn more money and be in a higher tax bracket!!! You're smart dude, I'll give ya that...but that one was lame.