While some other bloggers have give you some good information regarding your taxes, here is one issue no one else seems to be talking about.
When it comes to taxes in the US, 2010 is going to be as good as it gets for those “rich” people making $250K or more if you file jointly and $200K if you file single.
Barring Congressional intervention, 2011 income-tax rates for top earners will increase to 39.6% from 35%.
The “Bush” tax cuts expire at the end of this year so the top rate returns to the pre-bush levels.
Capital-gains tax rates jump from 15% to 20% in 2011.
Many domainers treat their sales of domains as capital gains.
The increase from 15% to 20% is a a 33% increase.
If you sell $100K in domains in 2010 it would cost you $15K in tax, in 2011 it will cost you 20K.
The news get worse.
Again for those “Rich” US taxpayers, in 2013 the top capital gains rate will go up to 23.8% by 2013 as health-care reform will add an additional 3.8% Medicare tax to all dividends, interest, capital gains.
Singles earning more than $200,000 and households making $250,000 will pay 0.9% more on wages and self-employment income.
This of course does not include those US taxpayers who live in states and cities that have their own tax rates.
So you need to keep these tax increases in mind when considering your tax and business planning.
Uggggggghhhhh
I keep hearing about the “fair tax” that some are trying to get passed.
The plan: No income tax, and the Gov’t gets all their money from sales taxes (in addition to property taxes and other things… but income taxes are ZERO).
Somehow, they’ve run the numbers and it works ok for the government
(when you consider how many IRS workers won’t be needed anymore).
They way to stimulate the economy is NOT to take more money from the spenders… but rather keep money in their wallets so they CAN go spend it.
This 40% tax is getting rediculous.
We already pay property taxes and every other tax imaginable… it’s getting out of hand.
NOTE:
DID YOU KNOW that sales tax was started back in the depression era, and the ONLY reason it passed was because the government said it was a TEMPORARY solution… to help the USA along. Everyone went along with it, assuming it was only for a short period of time.
Nice temporary solution that’s lasted 75 years.
Ugh, don’t get me started 🙂
Aron
Aron
Do you know when the income tax was voted in, it only applied to the top 1% of earners and the top rate was only 1%
Didn’t know that.
40%. Come on now… that’s crazy.
I understand that the higher earners should pay in more…
NEWS FLASH… THEY DO.
They make more, so they would pay more (if the income tax was a flat rate).
What this 40% does is gives the “rich” no incentive to kick butt and make more money.
Why bust your rear end and make more money when the government is there with a hand out ready to take as much as they can?
Then, when you die, they’ll hit up your family for 50% of your assets.
It’s sick.
Aron
Aron
Before Regan took office the top federal tax rate was 70%
http://en.wikipedia.org/wiki/Reaganomics
This is when Idealism collides with your wallet and reality sets in.
Basically this is the formula. If you earn $250k a year you would have taken home about $162,000
Next year you will take home less than $150k and in the following years about $135k. So maybe $27,000 extra in taxes PLUS anything your local and state put in. All this as the $$$ is losing buying power. This is why the standard of living in the USA will decline. It’s all in the numbers and they are even worse than what I have here because there are so many hidden fees and taxes still coming. VAT, increasing property and sales taxes. Nothing is free unless you don’t work. Those that carry the water and those that drink the water. 50% pay no federal taxes whatsoever!
Rick, exactly.
No one has incentive to work anymore…
The “rich” pay in 40% of their earnings and the other 1/2 of the population (as you stated) will never go to work with this free ride.
It’s only getting worse, as you both have said.
I just want it to be fair… for everyone.
There are many who can’t work and truely need support… I’m all for helping them.
Does Mark Cuban make more money than me? YES!
Should he pay 40% of what he makes to the government?
NO.
He’ll pay in plenty because he makes plenty.
Should it be up to him and the “elite” to take care of the rest of us?
NO.
The government is all about forced charity and entitlement these days.
Anyways… I’ll let someone else talk 🙂
Aron
Wow,
Politics Talk amongst Domainer friends huh???
Not sure if that is a good equation but nevertheless,
I have to throw my 2 cents in here.
First off, I do agree that everyone who makes more money than the rest of the population should pay more in taxes, as long as the laws state we have to pay taxes. How much more, whatever it is everyone agrees we should still get more money from the richer taxpayers.
If I am paying 25% on $50,000, then I am paying $12,500.
If I am paying 25% on $500,000, then I am paying $125,000.
Simple Math.
Let’s go with our Governments Policy, $200K – Single, $250k – married combined.
That is an awful lot of money. I am a very hard working guy, and I have a lot of friends who work as hard in the Chicagoland area, Union Construction workers/owners etc. who bust ass each day and still don’t have the quality of life our parents had 20 years ago. Funny thing is, We all work harder than our Fathers did back then.
I can honestly say that I do not have too many friends that are in my circle, and there are Professionals included that are making 200k on their own. So that raises this question. How many percentile fall into that category? 1% ? of our population? 5% of our population?
We all know one thing for sure, taxes will always go up. Infrastructure, Education, Social Programs, HealthCare, Tax Credits for Companies to stay on American Soil, etc. will always keep rising. The price of schooling, and labor will never ever go down, only up.
So unfortunately I do have a big part of me that says, If the money HAS to come from somewhere It can really only come from one place. Thats where the money is now from the Rich part of our population.
or maybe we should legalize porstitution and tax the hell out of that!?
I’m just sayin.
Thx,
Vito.
When they take more than 50% of what you make, then by definition, you are a slave.
Its only going to get worse
Every local municipality is facing a huge financial mess with the collapse of the real estate industry and declining property tax revenues…
Vito
My post was on the coming tax increases and planning for them, not poltical, theoretical or philosophical, however one can’t escape the fact that 50% of the people living in the United States do not pay $1 a year in Federal income tax for the privileged.
So when you are asking the top 5% (that is the number) of those making the amount to classify them as “rich”to pay more than 1/2 of what they make while 50% of the population pays nothing, you can see it would piss them off
Don
Yes even today many are calling on the city of LA to declare bankruptcy
It should be fair…It should be even for everyone. That’s all I’m getting at 🙂
@ Rick Schwartz
If we combine all the taxes …
Federal, State, Municipal aren’t we already slaves ?
@Anthony, I wanted somebody else to say it. Some places already over 60%. It is at a breaking point. You can’t tax your way out of the debt without everything collapsing. You have to grow income and cut expenses. After that, we get political and there in lay all the motives.
@MHB,
“50% of the people living in the United States do not pay $1 a year in Federal income tax ”
Not good. Definitely Very Unfair.
It is a seriously awful time right now, and I don’t see it getting any beter any time soon.
never ending wars, Illegals taking our Jobs, bank bailouts, car Industry Bailouts, Foreclosure assistance. it is a depressing time with a lot of work ahead of to fix the messes we are now in.
It is going to cost more and more money, and The only place you can get money from, is where the money is at.
Maybe the 200k, and 250k mark is too close for some people to feel comfortable with because some of them are not considering themselves rich, IDK.???
What would people be happier with then, A brand new definition of “rich”?
$500K and above…Whatever the magic number is, It is unfortunate but the money has to come from somewhere, and what’s that old cliche, “You cant get blood from a turnip.” kindof makes sense.
I have a philosophy that will take a lot of writing to explain but ‘ll make it as short as possible if I can.
Unemployment in this Country is at the highest ever right now. Our States are going in the red on a weekly basis, just handing out free money. NNow it is a necessarry evil for those that want to work, but I believe it should be initiative based, rather than free. based on looking foer work, scholing, Community Volunteer work, otherwise everyone and their Brother will never ever take a job AGAIN, while the U.S. keeps imposing more and more extensions. Ok, I’m sorry to otake thois out in left field but this is where are tax dollars ARE going so It is actually relevant.
I’m gonna shut up now, and sit on the sidelines and watch, LOL
Either way we divide it up, taxes suck. 🙂
Thx,
Vito.
Just want to make you guy’s feel better
Here that is Europe, Germany
Federal Sales Tax 19% ( also apply to any online business transactions)
Tax on Capital Gains 25 %
42% income tax as you hit 80k euro ( aprox. $ 114 k )
And now here is the biggest hit! While you are only taxed the 40% on every penny you make over the 200k?
Here you are “back taxed” which means as soon as you break the highest taxable limit, for example 200K + 1 dollar you are completly taxed 42 % from dollar 1 – 200 k
Like I said, this just might make you feel better and after all I have never met anyone including me which loves paying taxes.
We pay about 48% in taxes here in California…(state & fed)
The new rates will push us over 50%.
This is not counting all the other taxes we pay like utility taxes and it does not count the taxes we pay when we spend our money which is another 8.75%.
It’s called slavery.
U.S. citizens and politicians have short memories.
We already have a Robin Hood Tax. It is called AMT.
Alternative Minimum Tax.
It was created in 1969 to tax the 220 wealthy people that were
not paying taxes because of legal tax credits and deductions.
By the late 1980’s it was already taking money from the upper middle class.
By the late 1990’s, it was already touching the middle class.
If you had a executive job with a nice salary but also a large mortgage,
you were paying AMT.
I don’t know what is going to happen with the AMT under the new tax structure.
In the 1970’s high taxes had an effect on worker productivity
and business investments. The desire of the middle class started to figure
“why work harder (overtime or 2 jobs) if the gov’t is going to take most of the money?”
Reagan changed that mentality.
I guess the next 10 yrs will be similar to the Carter era.
High taxes, high interest rates, high unemployment, high inflation.
I guess we are in for a bumpy ride.
Who in the domain industry will benefit from the U.S. gov’t future taxes?
Domainers in foreign countries that don’t have high taxes or
weak tax enforcement.
Cayman, China, Russia, etc.
Majority of their revenue can be used for add’l purchases or a higher standard of living.
Duane
But Europeans for the most part can move to a tax free country like the Cayman’s for example and not have to pay anything.
US citizens do not have that option
Poor Boy
“””Who in the domain industry will benefit from the U.S. gov’t future taxes?
Domainers in foreign countries that don’t have high taxes or
weak tax enforcement. Majority of their revenue can be used for add’l purchases or a higher standard of living.””
That has happened since the beginning of domaining.
Who are the most successful domainers?
Where do they live
Case closed
“Who are the most successful domainers?
Where do they live?”
You and Rick live in Fort Lauderdale.
🙂
Poor Boy
Well Florida does not have a state tax
But think bigger
Frank and Kevin
And nameless other that fly under the radar
Taxes are for suckers. I m LEGALLY NOT paying taxes since 1994 (again – legally). How did I do that ? Well, I was not a sucker for the starters. Feels good to know I have never supported any war or any other government bullcrap. I started giving my money to charities this year and I will give a lot more, and more, and everything in the end. I feel better qualified to decide what to do with my money than bunch of (mis) elected burecratus prone to take bribes. I do not buy expensive cars, houses or whatever irrelevant crap. I am confident, I do not need any stuff to proof anything to someone.
Oh, and I am not an American as you might have guessed from my bad english already. Because Americans feel their IRS more than they they fear the “God” – so they will not get what I am talking about. But (some of) my fellow Europeans will…
“……….however one can’t escape the fact that 50% of the people living in the United States do not pay $1 a year in Federal income tax for the privileged.”
Sadly, 28% of the U.S. population is illiterate and 27% functions on an eighth grade level.
That 53% of our popluation……kinda’ matches the 50% doesn’t it? Not sure if the correlation corresponds with the non-tax payers, but it make one think the illiterate are sucking the life out of us.
I have two words of advice for you Mike- “cayman islands”
Owen
Cayman’s only work for Canadians and the rest of the world, not just American’s
Hey l-l-look, over there –> celeb kiss ex-wife hotty gold-miner ad-dream
Ok, now the rest of us can pull the tab.. the worms are def out.
Here’s what I think will KEEP sinking “the markets” (in the US) – ah, er, war. Because the rest of the world seems to be trouncing the USD (and other markers).
War you FOOLS.
Keep pretending that WAR has a zero cost and you ALL (no matter your tax bracket) look particularly pathetic.
Keep thinking that WORKERS give one iota’s worth of gratitude to a rich punk telling them THEY have to slog it out for a diminishing pool while some OLD bunch of punks like a Clinton or other TELLS ’em “Hmmm we just gotta just keep on KILLING folks!!! derp derp derp”.
Get ready – because it aint’ going to go on for much longer. Be thankful you have ANYthing. Anything at all. You know – it’s difficult to fathom the mentality – for one “nice people like nice things”.. then “nice people WANT TO KILL EVERYONE so they can have nice things”.
Borrowed time, with that attitude. Things/markets will only get more volatile (plus NEW world wars with that attitude).
Keep goin’
Keep going. It’s good for my business.
That’s all.
Who needs your rich ass $0 tax dollars when we have 168 military bases and explosions and everyone hating our asses in the world.
Have any of you thought about that.
Crap – I thought domainers where smart.
Foil, bit of a cheap shot, but nice insight very pertinent in todays climate. God bless America. Sorry US guys, there is an entire World out here, make your choices wisely, it’s a global environment and if you want to offshore, you can. Probably wise move for some of you looking forward. Think about it anyway. Will = way.
Boo hoo. So we make $1 million in domain sales and have to pay a little more taxes so we can’t buy that new Ferrari we wanted.
I don’t give a crap about taxes. What I do CARE ABOUT is whether the middle class and below are happy. Seems like the way the corporate world is working, there are a lot of people that used to work for them, now laid off, are also pissed off… and that phony “Tea Party” group is just a Fox News club being fed all they need to be “mad” about — ummm… the fact that people who don’t have healthcare will get it? I guarantee that not one “tea party” member is lacking in a solid healthcare plan…. for now. Wait until they have to call in their “medical problems” and find out their HMO locked them out. Wait until they try to use their healthcare plans when they’re 50 and for some reason, their job was terminated, and “where did my pension go? You invested in Merrill Lynch? WHAT!!!???”
Point is this: We bailed out lots of rich mutherfckers with our taxes. If there’s a domainer out there who makes over $1million a year in selling domains or PPC or website rev, then count your lucky stars. Keep the poor, out of work, disenfranchised Americans happy with something, even if you sorrowful little millionaires, including myself, have to pay a little more in taxes. I’d rather get things “even” in this country than wait until a violent revolution starts because our $700 Billion bank bailout spent over $50 billion in bonuses to the CEO’s and “high performers” prior to the collapse. What a joke.
How much money do I need to be happy? Enough to take care of my family and a few friends. Do I need to flash my cash, buy large mansions, fast cars, eat out at expensive restaurants every week? Nope. Even if I had $20 Million, at least half of that would go to charity, because THAT’S WHAT’S RIGHT.
So quit whining about taxes, hope that the angry middle class stops watching Fox News, and starts learning that the things they fight against are actualy GOOD for their best interest.
When I sell my next domain for $100k, and have to pay $20k in taxes, I’ll know that this money is being spent on helping create jobs (FDR, where are you?), and hopefully new infrastructures like bullet trains and other national projects. If it’s spent bailing out corporate assh*les who take their bonuses even though they killed us… that’s another story for another time.
FACTS: We don’t live in a time where “greed” is good anymore. We live in a time where “good god, can we keep people who used to be middle class working families from killing us because they think we have no heart after they lost their job, or their mom died of cancer because she couldn’t get adequate healthcare, and the company they worked for shut down their American plant in favor of foreign workers – so they could give their stockholders better returns?” How stupid do we have to be? It’s not Reagan fantasy world anymore, people. The “trickle down” theory is now a “avalanche of destruction” reality.
Capitalism is not democracy. Capitalism is synonymous with GREED. Period.
Schwartz can whine all he wants. I’ll bet he never gave a $20 bill to a beggar on the street. Ever.
If he did, I want to see a pic of that!
A government is a service provider. Speaking on soley financial grounds, if a provider is not providing adequate services for what they charge, find another provider.
I am not saying “love it or leave it”. it is a financial decision, Find a better governement and move. It is the flipside to a global economy.
Those that have achieved in life (listening, Rick?) can take their assets, business smarts, and tax base to a nicer climate and live like a king for less.
I hear Belize is nice….
The toad
US citizens can’t simply do this.
Does it have to do with the feds demanding that you liquidate all your worldly goods so they can take 50% upon your departure?
If so, there are many people who leave on vacation and simply never return.
The Toad
Actually the feds make you treat as if you sold all your assets for FMV and then want you to stroke out a check for that amount
Mr. Moore
(Capitalism)
“”Schwartz can whine all he wants. I’ll bet he never gave a $20 bill to a beggar on the street. Ever.”””
Me neither but my wife makes me do it all the time.
However when I’m walking through Central Park I give money to everyone playing an instrument who has a jar or the case opened.
I’ll spend $100 walking through the park
The difference, the guy playing an instrument is working and trying, the guy begging is not.
So now that we are WAY off topic, for me here’s the deal.
We are suppose to be a nation of “freedom”, that what I hear the politicians on both parties always saying and that’s what I hear them always say we they explain way we are in a war, we are “fighting for” Freedom.
So you should be free to spend your money like you want and so should I.
If you want to piss away $300K on a Ferrari, god bless, if you want to hand $300K to the homeless guy on the street god bless.
Your money, your choice.
Now once the government takes more than 1/2 your money and tells you that they are going to decide how to spend it, then that part of freedom is gone.
What I think is that society works best if each person has an unalienable legal right to life, liberty and the pursuit of happiness as long as he doesn’t infringe on the equal right of others to the same. The right to life means the right to the minimum necessities of life as long as there enough of such for everyone, and the right to liberty includes freedom of commerce, or the right to enter into honest, mutually agreeable economic transactions where no dangerous materials are involved.
So yes, the government should help the truly needy through funds collected from a simple proportional system of taxation, but no, the government should not try to force businesspeople to be charitable through wage and price controls on those who have not been granted a special license or other assistance which gives them a competitive advantage in the marketplace. Not only is that an infringement of basic freedom but it upsets the natural balances of things.
Hell, you shouldn’t even need to pay for a business license to engage in honest business, any more than you should need to pay for a license to express your point of view. That is government extortion. Just like individuals, businesses should be considered innocent until proven guilty.
But politicians like writing endlessly complex laws and regulations as it justifies their salaries, gives them more power and encourages bribery in one form or another. That’s why the “trademark lobby” has been given such unfair power over domainers. As Alan Watts said, the government is simply the most successful group of gangsters.
And as William Winpisinger once said, the Democratic and Republican parties are like two heads of the same beast. In America we are more or less locked into a two-party system because of the relatively undemocratic way in which elections are held. People don’t realize that they should be allowed to cast a vote for more than one of the candidates in elections, which would break the two-party system.
Jon, well said.
(furthering what you stated…) This isn’t about Democrats vs. Republicans… this is about what’s right and fair.
While Democrats are typically for bigger government and higher taxes… both sides are full of dirty politicians, with agendas, who look to further their own careers and buy votes wherever possible.
As Mike (original poster) says, it’s only going to get worse. Reports say we could peak at 70% for the upper tax bracket… which is absolutely insane.
Let’s help those who can’t help themselves and who need it… I’m all for it… I love supporting charity organizations… but the abuse of the system is what most of us are frustrated with.
As Jon stated above, the constitution says we have the RIGHTS of life, liberty and the pursuit of happiness.
Our government seems to think that there are other RIGHTS that each citizen deserves… but that’s not true, and that’s not constitutional… which is forcing the upper percentage of income earners to foot the bill for our governments entitlement programs.
The entitlement is going to force taxes to skyrocket… hang on (as Mike says) it’s going to get out of hand very soon.
Very informative post.
Thanks
Most 200k+ people reduce their tax rates with lots of deductions (as I do). The increased tax rate is stepped and just in that bracket of income above the next bracket so you do not pay 39% on all your income. When you average it out it is more like 25% at 200k, so the math of going 39.5fed + 7% state is all wrong.
I looked at 5 tax returns and I averaged 15% to 20% in total fed tax paid even in some big years……Personal exemption, kids, losses on real estate from depreciation, mortgage interest, real estate taxes, reduce your overall %.
Of course 50% of people do not pay any income tax. Try living on $20,000 a year with 2 kids. I gladly make what I make and pay taxes vs make what those people make and not pay taxes.
Eric
There are limitations on deductions now for “rich” people so that your deductions are capped at 28% while your tax rate is 39%.
Also if your subject to the AMT, your deductions are further limited and in some case eliminated.
“Try living on $20,000 a year with 2 kids.”
No thanks
That why I took out student loans to go to school which I had to pay back, started working at 14 and decided long ago not to have children.
We all have decisions to make in life.
Don’t just life happen be a little proactive about it.
Finally you still can’t defend a system where 1/2 the people pay not a dime.
Everyone should have to pay something, even $100 a year to live in a country.
Okay. I get it. Nobody likes paying high taxes. When I read the post what I was hoping to get more of from responses are actual tax saving strategies that are useful for people in our industry…both the rich and not so rich.
Here is a question; How many years can you carry losses before you have to claim them? For example can you carry losses from 2007 and reduce your capital gains penalty in 2010? Does this affect the 28% cap rate?
“Do you know when the income tax was voted in, it only applied to the top 1% of earners and the top rate was only 1%”
wow, just think of all those damn freeloaders. it is almost disgusting to think of those 99% of the country not paying a dime and living off the backs of that 1%. jeez, how did the roads get built before 1913 anyway? amazing how society ever managed to function back then …