DGS49
Diamond Member
Government is the "Fixed Overhead" of life. It's going to cost some amount every year, regardless of anything that happens, how much you make, or whether you like it or not.
But Fixed Overhead in the private sector, for example, a manufacturing company, is the cost of the buildings, capital equipment, central management, and other basic costs of the business. The company will incur these costs regardless of sales or profits, so they have to be allowed for in the company's planning.
Normally, the company will estimate some basic metric like the total expected production hours during the year, then they will divide the Fixed Overhead dollars by that number of hours to calculate a fixed overhead rate. Then, when estimating and charging hours, that factor or amount (say, $30/hr) will be included with every hour, so that at the end of the year, the total fixed overhead cost is paid for (in accounting terminology, "absorbed").
One happy possibility for the hypothetical company is that if they get more work - manufacturing hours - through the plant(s) than they anticipated, these fixed overhead allowances go straight to the bottom line (profit), because the fixed overhead is already paid for by the basic number of hours. This is called, "overabsorption of overhead."
If you have ever gotten a performance bonus in your pay, you are familiar with the great disappointment that follows, when you see the amount that you actually get in your paycheck. Your boss says, "Congratulations, we are giving you a $20,000 bonus!" Then your next paycheck includes maybe $11,000 extra, the rest being taken in federal, state, and local taxes.
I say, "Bullshit!" I earned this bonus, not the government. Why should the government get almost as much as I do for doing NOTHING! The government is paid for by the taxes they take from my basic salary. Taxing the bonus is the equivalent of taking profit on my accomplishment. If this is truly a bonus, the government is stealing money that I am entitled to.
And think about the shareholders of the company. Their money was intended to go to me, an employee who excelled and did something special, and almost half of it goes to the government, which will just piss it away. The shareholders have a stake in this, too.
If a bonus is truly a bonus - that is, if it is truly based on outstanding performance or meeting a vital objective - then it should be tax-free at all levels.
I realize some companies (mainly banks) would take advantage of such a provision in the Internal Revenue Code, but surely the geniuses at the IRS could craft some guidelines to ensure that a bonus is really a bonus, and not just a portion of the person's wages, disguised as a performance bonus.
Taxing bonuses insults my concept of fundamental fairness.
But Fixed Overhead in the private sector, for example, a manufacturing company, is the cost of the buildings, capital equipment, central management, and other basic costs of the business. The company will incur these costs regardless of sales or profits, so they have to be allowed for in the company's planning.
Normally, the company will estimate some basic metric like the total expected production hours during the year, then they will divide the Fixed Overhead dollars by that number of hours to calculate a fixed overhead rate. Then, when estimating and charging hours, that factor or amount (say, $30/hr) will be included with every hour, so that at the end of the year, the total fixed overhead cost is paid for (in accounting terminology, "absorbed").
One happy possibility for the hypothetical company is that if they get more work - manufacturing hours - through the plant(s) than they anticipated, these fixed overhead allowances go straight to the bottom line (profit), because the fixed overhead is already paid for by the basic number of hours. This is called, "overabsorption of overhead."
If you have ever gotten a performance bonus in your pay, you are familiar with the great disappointment that follows, when you see the amount that you actually get in your paycheck. Your boss says, "Congratulations, we are giving you a $20,000 bonus!" Then your next paycheck includes maybe $11,000 extra, the rest being taken in federal, state, and local taxes.
I say, "Bullshit!" I earned this bonus, not the government. Why should the government get almost as much as I do for doing NOTHING! The government is paid for by the taxes they take from my basic salary. Taxing the bonus is the equivalent of taking profit on my accomplishment. If this is truly a bonus, the government is stealing money that I am entitled to.
And think about the shareholders of the company. Their money was intended to go to me, an employee who excelled and did something special, and almost half of it goes to the government, which will just piss it away. The shareholders have a stake in this, too.
If a bonus is truly a bonus - that is, if it is truly based on outstanding performance or meeting a vital objective - then it should be tax-free at all levels.
I realize some companies (mainly banks) would take advantage of such a provision in the Internal Revenue Code, but surely the geniuses at the IRS could craft some guidelines to ensure that a bonus is really a bonus, and not just a portion of the person's wages, disguised as a performance bonus.
Taxing bonuses insults my concept of fundamental fairness.
