Q. Can anyone help me with an answer?
Is some one who labors 9-5 taxed similar to someone with Capital gain from Capital investment? If not, how does the irs seperate the two?
Bash, could you at least give a reason why?
Stephen, 9-5 laborer is not receiving income. The laborer is working to 'create' value for the pay he receives. Unlike a business, the fiat currency the laborer receives, requires value to back it.
A business or Corporation is receiving the fiat currency already backed with value, the 9-5 worker (or laborer) has worked to create the value for.
The laborer works to 'create' the value that the fiat currency requires.
A business receives income (value coming in).
The average worker 'creates' the value, a business or corporation receives.
If everyone received income (value coming in) then who would work to create the value?
Fiat currency is different then the currency once backed by gold and silver. There is no value with fiat currency until we work to create its value.
NG, I disagree with you.
Someones labor is the reason fiat currency exists.
We exchange our labor for a product. The currency needs value from our labor to be used as a medium of exchange.
With a mortgage, homeowner gives a 'promise to pay' so the Lender can have homeowners credit changed into the fiat currency. The homeowners 'promise to pay' was needed to gaurantee the homeowner will work over the years to CREATE the value required to back the fiat currency. Lender invests homeowners credit because homeowner allowed then to "cash in" homeowners credit with the promise to cover the value through working.
The reason taxes are taken out of someones account AFTER they work is because the fiat currency is backed by labor. Why else would the Gov take funds out of someones account AFTER they work?
From the comment Ive read, it looks like you have a lot more "in depth" research to do before we can properly communicate.
NG "all income from whatever source derived"...why is it difficult for you to grasp the difference between income (value coming in) and value created?
Do you think a business that has millions 'coming in' (income) compares to someone waking up and slaving a 9 hour work day and 40 to 50 hour work week and be lucky to make 350.00?
There is NO comparison. Million of paper dollars are 'coming in" as profit, currency already backed with value. The average worker slaves to CREATE value before he can paid. He is not paid with currency containing "pre-existing value", he is working to CREATE its value needed to back the currency.
Im not trying to sound rude but feel like saying "this is not rocket science to figure out" how the irs, a collection agency for the agency called the F. reserve is receiving income of aprox 2.3 trillion a year (if I remember correctly) 2.3 trillion collected from not just business profits (income) but also the average wo
cont.... but also the average worker who uses his own time/energy and labor to create value for the currency the irs collects for profit.
You are refering to 'value created' as 'income, but income is 'value coming in' , not value created!
When yiou have to work before receiving currency, you are not receivng profit, you are not receiving currency already containing value, you do not have 'value coming in' because you must work first before getting paid...you MUST work to create the value to back what you are paid with.
Concerning someone exchanging their labor directly for a TV , sounds like he cut out the middle man (the medium of exchange), the currency. But you are saying he would still be required to pay a percentage of the tv? But he didn't use the currency, then why would he still have to pay for its use? Do you know usage fees are attached to the currency we use? He would have to labor for a few extra hours, use his time/energy and labor to create value for the currency he must use to mail in taxes (profit) to/for the irs. Does that seem fair?
why else would the irs collect funds from someones account AFTER they have worked, if the workers energy and labor did not back the currency the irs collects? The irs, i imagine, would have access to the printing machine to print whatever they need.....then why collect yours if you did not create value?
A. No.
Section 61 of the Internal Revenue Code defines âgross income,â from which taxable income is calculated, as âall income from whatever source derivedâ and gives a number of examples of the types of income included in âgross incomeâ in section 61, including compensation for services (i.e., wages, salaries, and other forms of earned income).
Whether you think that a person must work in order to 'create' the value of fiat currency is irrelevant. In fact, the form of compensation is irrelevant. For example, if one person agrees to do some handyman work on a second person's home in exchange for a 50" HD TV, the person receiving the TV is responsible for including the fair market value of the TV on his income tax return. Whether the handyman person owns a handyman business or not is irrelevant in regards to the compensation.
EDIT: I'm not the one having difficulty understanding concepts here. You are. BTW, the reason the IRS collects taxes from a person after they have worked is BECAUSE THAT IS WHEN THE PERSON HAS RECEIVED INCOME. This is a really simply concept that even a two year old can understand, why are you having such a hard time with it?
EDIT: Going back to the TV example I provided, as I already stated, the form of compensation is irrelevant. It is the fact that the handyman received compensation for services he performed. Whether he has to work additional hours to earn money to pay the taxes and whether that is fair or not is also irrelevant.
The handyman could sell the TV in order to have the money to pay the taxes. And, no, he would not incur additional income tax for the sale of the TV. Example, if the fair market value of the TV is $450, then the handyman has $450 in income when he receives the TV as compensation for his service. That becomes what is called his basis in the TV. If he sells the TV for $450 in cash, that is NOT another $450 in income because his basis in the TV is $450, so he has $0 income from the sale. However, the receipt of the TV is still $450 in income.
Before you ask it, a person's basis in their labor is NOT what they get paid for their labor. A person's basis in their labor is $0. See http://evans-legal.com/dan/tpfaq.html#exchange
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