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Pekenoe · 03-05-2015, 08:27 PM

Partially thought provoking but unfortunately too true in lots of cases. Why is it so difficult to see the fairness in a consumption tax rather than an income tax? Added benefits be the no paperwork, no record keeping, lots of lawyers out of work, laying off the entire IRS department.

Pekenoe · 03-05-2015, 08:32 PM

Evidently the definition of ordinary and necessary has changed considerable over the years. Seems as I remember one actually had to prove that whatever the purchase was had to be necessary and not just an expenditure to beat paying taxes, back in the old days?

wnytaxman · 03-06-2015, 06:52 AM

Quote:

Originally Posted by Pekenoe

Evidently the definition of ordinary and necessary has changed considerable over the years. Seems as I remember one actually had to prove that whatever the purchase was had to be necessary and not just an expenditure to beat paying taxes, back in the old days?

The need to prove the necessity of any business expenditure is still there and probably more difficult to "prove" than ever before. The IRS has a whole new stable of auditors who are very poorly trained and seem intent on "getting" those whom they perceive to be tax cheats. Translation.....everyone. The attitude of most the auditors we come in contact with is that they don't really care what the law is so if you don't like the results you can take it to Appeals and spend the money it costs to appeal their findings.

The idea of a consumption tax is always popular until people start thinking about what really occurs. When NYS enacted a sales tax in the early 60's or so, it was a temporary tax to raise money for education. It was around 2% or so. Then they authorized the counties to add on to it. Bottom line is that the politicians saw the sales tax as a really neat way to get an unlimited amount of funding for whatever they wanted to spend the money on. We are now paying just under 9% sales tax and I'm sure it will continue to go up. Also the sales tax laws are the most complex and hard to understand laws that we have to deal with.

Old Radios · 03-06-2015, 07:00 AM

The interest you pay on a motor home loan can be deducted in some cases just like interest on a home mortgage if the motor home is considered a second home. There are requirements but for some with large RV loans it would be worth looking into.

Superslif · 03-06-2015, 07:57 AM

A consumption tax for everyone is good for one class of person, the "well off", "rich" and "filthy rich". In Ohio 6 or 7 years ago the state added items or increased the tax rates (fees) for 75 items. Things like: fishing licenses, tag fees, drivers licenses fees, general state sales tax, RV storage lots.

Now in the new budget proposal ( State of Ohio) they want to greatly reduce the states income tax, but raise the state sales tax another 1/2% and add in more items to be taxed. The over-all goal is to eliminate the income tax and replace it with a consumption tax. The the higher income couples making $300k a year pays about $16k state income tax (minus deductions) The lower income person making $20k pays about $240 in state income tax.

So both individuals go to the store to buy a new $1000 flat screen. Both pay a $85 tax on the purchase. Who do you think the additional $85 effects most? Someone who just saved $16,000 a year or the person who saved $240 on not having to pay the income tax, but then will have to anti-up another 1/2% sales tax and also have more items being taxed for the first time, everyday items both the rich and the struggling families use.

Below is just a sample of the new tax base proposed. Just one note...look at the part that says "trade-ins" will now only receive a 50% tax reduction towards a new vehicle, which includes all new cars and RV's. That by itself would cost people big time. So say you are buying a new $30k vehicle and are trading in a $15k vehicle. As it is now you paid tax on the difference, if this "new" tax adjustment goes in effect you would pay an extra $700 tax.

Quote:

Sales tax base would be expanded to include additional services such as cable TV subscriptions, parking, lobbying, public relations, market research/opinion polling, management consulting, travel packages and tours, and debt collection services.
The 100% discount for used car and watercraft trade-ins would be reduced to a 50% discount.

CampingCajun · 03-06-2015, 10:01 AM

When I was self employed I deducted expenses while using my 5ver for business use from time to time. I didn't depreciate the 5ver. I did claim my truck as a business vehicle & would trade them when they had been about fully depreciated. I also deducted expenses while working from home. I had a home office but I did not claim it as such. If you claim a home office deduction you must deduct the value of that room in your home when you sell your home. It wasn't worth it for me as I knew we would not be in that house forever.
I have been thru an IRS audit & it was not a pleasant experience. After security escorted me out of the building I pretty much gave up on trying to prove or justify anything with those clowns.

kenhouse123 · 03-06-2015, 03:18 PM

One reasonable thing to think about, a tax deduction for travel related to medical attention. While we do not live in California, we travel there a few times a year to see our cardiologist, the City of Hope and other health care providers. These are the doctors we went to when we lived in southern California and have all our medical records. I write off reasonable travel, some meals and RV park fees only for the times we see a doctor. I also keep receipts for these expenses. It can add up.

Pekenoe · 03-10-2015, 09:53 AM

why do you have a problem with a tax system that treats everyone the same? Sounds fair to me. You think the "rich" should be gouged and the "poor" should get off scot free? The poor enjoy the same freedoms the rich do, what's the problem in asking them to contribute a bit? Maybe give some of the poor incentive to better themselves in the bargain?

wnytaxman · 03-10-2015, 11:09 AM

Quote:

Originally Posted by Pekenoe

why do you have a problem with a tax system that treats everyone the same? Sounds fair to me. You think the "rich" should be gouged and the "poor" should get off scot free? The poor enjoy the same freedoms the rich do, what's the problem in asking them to contribute a bit? Maybe give some of the poor incentive to better themselves in the bargain?

There are several problems with what some have termed a "fair" tax system. One of which is that right now 75% of all federal income taxes are paid by 5% of the population. What that means is that a lot us will be getting hit with a major tax increase for a "fair" tax. The second major problem is that much of what is in the tax code is social legislation. For example, religious exemptions, earned income tax credits, work incentives, and so on. Although most people don't look at the tax code as social legislation it is very much that way. And before someone gets on a high political horse, I don't write the tax laws, I just help people navigate the jungle of taxation.

My biggest problem with any consumption tax is that I have yet to see any political arena where a consumption tax was not treated as a blank check. Let's say they raise the consumption tax by a quarter of a percent. No big deal, right? You wouldn't picket the Capitol for that, now would you? Look at how many billions that would raise and without even a whimper from the general population.

wildtoad · 03-10-2015, 11:26 AM

I was for a flat tax or the fair tax until a couple of years ago when I looked at my taxes. After all deductions I was paying less than 5% so I quit talking. I agree that most of what is in the tax code on the personal side can be considered social engineering or middle class welfare which I'm sure will be considered inflammatory. Sorry if it is. I have no issue with eliminating taxes on personal income from all sources and tax what I spend my money on. I'd like to see some real numbers on what this would mean in real dollars though. I just know when almost half the population is not paying to run the country there is a stability issue coming.

wildtoad · 03-10-2015, 11:42 AM

Quote:

Originally Posted by Pekenoe

why do you have a problem with a tax system that treats everyone the same? Sounds fair to me. You think the "rich" should be gouged and the "poor" should get off scot free? The poor enjoy the same freedoms the rich do, what's the problem in asking them to contribute a bit? Maybe give some of the poor incentive to better themselves in the bargain?

I totally agree that everyone needs to contribute to the running of the country, so much that I could make a case that if you don't pay taxes you don't get a vote, but that would also go no where. You should not have a say in wether someone else should pay more taxes especially if those taxes then go to you.

One of the problems of course is sales taxes do harm the poor more than the more affluent and its a really hard sell. The less affluent use more of their income for necessities with little free cash to spend. There are ways to make it work. Unfortunately there are those like me who don't pay much in taxes now, for $39 bucks can get tax software that does it quickly, and my refunds end up in my bank account automatically thus have little interest in changing it.

Pekenoe · 03-11-2015, 09:26 AM

If a consumption tax is set up proper there would be no "hardship" caused by it, basic food stuffs, medications exempt. A consumption tax is different than a sales tax, in Canada, the GST taxes apply anytime money changes hands, not just on merchandise, the PST only applies merchandise (I think but may be wrong)

I agree with the premise that if you don't contribute (pay taxes) you should have no vote in how it's spent, guarantee the political landscape would change drastically.

And even if you raise the percentage of taxes the rich pay, they will hire lawyers and buy politicians to get out of it.... exercise in futility.

gfs1943 · 03-11-2015, 09:50 AM

I think they should tax the #@x* out of poor people. Gives them incentive to make something of themselves.

Doug Sage · 03-11-2015, 09:54 AM

There was a new federal court decision last year that determined you cannot deduct costs of an RV as a business deduction. They say that if you spend even one night in the RV or cook one meal then it is being used for personal use and you cannot prorate the expenses for that month.