Taxes

[Snipe]

Foregone revenue? It's part of the tax code, and has been since the creation of income taxes in this country. When the tax rate is set at 33% of taxable income, do you consider the other 67% that isn't tax as "foregone revenue"? The one time $8,000 home buyer credit was closer to foregone revenue than an original deduction to taxable income.

This is just silly. Our tax code is not written to realize anything close to the nominal tax rate. Deductions are legitimate tools to influence public behavior. There is nothing "regressive" or evil about the mortgage interest deduction. You read something about a mortgage interest deduction being "regressive" and you repeated it here without really thinking about it. Your refusal to admit that you're just wrong about any part of the federal income tax code being anything approaching regressive is bordering on _LHish.

That is my point too! "Reduce spending through the tax code" seems to expect that ALL PERSONAL INCOME IS GOVERNMENT REVENUE, and letting you have some of it back is "spending through the tax code". What they are basically saying with that argument is that they are entitled to everything that you have, and you are lucky to keep what they let you.

I can't believe that someone can say raising taxes is simply "reducing spending through the tax code" and people let that fly. What a vigilant media we have.

I am all for getting rid of deductions and special interest tax deals, but let's be honest about it. And we need to be honest about the unintended consequences as well. Without interest free government bonds people won't buy our massive debt without higher interest rates. Without mortgage deductions housing could suffer and at the margins home ownership could well be affected.

We also need to weigh different interests to see what we want more of. If deficit spending is to be stopped, every special interest is competing with something else. If you are going to take away my mortgage deduction, are you going to do anything about the 75% of Mexican immigrant families on welfare? I would rather have them go first, but we never have these debates. We are cutting pensions to teachers and firemen, and we are talking about eliminating the mortgage interest deduction, but it would be uncouth to talk about the government expenditures on Mexican welfare queens. We need to cut everything, Medicare and Social Security included. But cut the Mexicans first to show people you are serious.

I don't believe that it will ever get done. I don't believe our government can stop spending. I think the whole system is going to have to collapse, and I believe that is a distinct possibility. We are so far out of whack on spending that you can't have a serious conversation about it without a major protest.

Are the rich going to pay for Medicare? Really? I thought they were going to pay for Social Security? What is wrong with teachers and fireman's pensions? Nothing that the rich couldn't solve. But wait a minute, can the rich really pay for everything, as well as pay for the 75% of Mexican immigrant families that are on welfare who have babies at great rates who then go on welfare?

We don't have enough money to pay for it all. You could take all the money of the Forbes 400 and it wouldn't fund our government long.

"The problem with socialism is that sooner or later you run out of other people's money" ~ Margaret Thatcher

Except that money really doesn't belong to other people, it is just simply "Government Spending Through The Tax Code". The only reason we have a nation debt isn't runaway government spending, it is because our government spent an additional 15 trillion dollars through the tax code. We should have a surplus, and they should be able to spend even more with no debt limit.

Welcome to the totalitarian state. Enjoy it while it lasts. If you know your history it won't last very long...

The deliberations of the Constitutional Convention of 1787 were held in strict secrecy. Consequently, anxious citizens gathered outside Independence Hall when the proceedings ended in order to learn what had been produced behind closed doors. The answer was provided immediately. A Mrs. Powel of Philadelphia asked Benjamin Franklin, "Well, Doctor, what have we got, a republic or a monarchy?" With no hesitation whatsoever, Franklin responded, "A republic, if you can keep it."

God Bless The Remnant!

[Kahns Krazy]

My fault on the third home. I'm all for increasing middle class taxes. It has to happen.

Kahns, you might think I'm an idiot for being an opponent of the mortgage deduction. But as the WSJ article that I linked to noted, most economist believe it should be abolished or capped (economists are generally against deductions because they believe they cause distortions).

There's a consensus building. Perhaps it won't be abolished, but I think it will be capped much lower. The government could grab billions in revenue. It's too tempting.

As Snipe noted, in general, deductions will be restricted in the next 10 years. It's a more appealing sell than increasing tax rates.

The mortgage interest deduction is already capped, so you win there. Reducing the cap won't do shit in terms of tax revenues. Cut it from $1m to $300k, and you might raise about $6 billion in brand new federal tax revenue (2 tenths of one percent of the current budget). Of course, as you have noted, you will also cut the market price for those types of homes. Here in ohio, a reduction in the value of high end homes will shift a higher percentage of the tax burden to people who own homes valued under $300,000.

You probably don't even get that much revenue, because once you take the deduction away, mortgage debt becomes far less attractive, and those who can afford to will pull money from other locations to pay down that debt. Now you still don't have that tax revenue, but you have succeeded in cutting consumer spending in other areas, and raised the tax burden for the middle class.


I'm for dramatic spending cuts. I'm also for raising taxes on everyone, not just the top 20% of earners. It is somewhat amazing to me that a family of four making $40,000 not only pays zero federal income tax, they actually get some of my money in the form of a check. The number of people and households that pay zero or less than zero in federal taxes is positively mind boggling.

[Kahns Krazy]

I don't believe that it will ever get done. I don't believe our government can stop spending. I think the whole system is going to have to collapse, and I believe that is a distinct possibility. We are so far out of whack on spending that you can't have a serious conversation about it without a major protest.
!

Five years ago, I would have said no freaking way. I'm slowly resigning myself to the idea that it's nearly inevitible because of our government system. At all levels, our elected officials are paid too much to make difficult decisions. They have a personal incentive to "kick the can down the road" and make it someone else's problem so they can keep their cushy job.

[GuyFawkes38]

I'm for dramatic spending cuts. I'm also for raising taxes on everyone, not just the top 20% of earners. It is somewhat amazing to me that a family of four making $40,000 not only pays zero federal income tax, they actually get some of my money in the form of a check. The number of people and households that pay zero or less than zero in federal taxes is positively mind boggling.

I think a VAT would be good for the reasons you note above.

[Kahns Krazy]

I think a VAT would be good for the reasons you note above.

Why create a new taxing mechanism when you already have one? Here's some things I would change immediately.

There should be no such thing as a negative federal tax liability. I don't care if you're unemployed with 100 kids. We already have an enormous network of social services to support you. You do not also need a check from the revenue service. The revenue service does not have the expertise to administer any assistance anyway.

I don't understand personal exemptions. We alredy have a progressive tax rate structure. Why do we then need personal exemptions on top of that? If the tax brackets aren't right, fix them. Ditto the standard deduction.

Why are we in the business of subsidizing breeding? A single person with basic income of $40,000 has a federal tax liability of $4,183. A family of four making that same $40,000 gets a small check from the IRS to reward their breeding.

[Snipe]

Five years ago, I would have said no freaking way. I'm slowly resigning myself to the idea that it's nearly inevitible because of our government system. At all levels, our elected officials are paid too much to make difficult decisions. They have a personal incentive to "kick the can down the road" and make it someone else's problem so they can keep their cushy job.

Looks like I will need some extra room in the Bunker!

Everyone gets so ticked off whenever anyone suggests cutting anything. We need to cut a trillion dollars from the budget. People aren't going to like it. Propose reform and you are throwing granny off the cliff, kicking kids out of school or starving children.

And the answer to every problem is to tax the rich. I think we need to tax the poor. Get some skin in the game. When half the people don't pay federal income taxes, why should they care what the government spends. Why not have more?

Bush suggested entitlement reform and they destroyed him. Paul Ryan is advancing the discussion for entitlement reform and they are trying to use it to destroy the whole party. With every year we weight the worse the situation gets and the harder it is to reform. A reason exists why they call them the "third rail" of American politics.

You can't entertain a serious discussion of our long term problems because every public statement or action will be turned into a commercial for short term political gain. It is always easier to kick the can down the road, but "things that can't go on forever, don't".

[XUglow]

Some things just make my head spin. One congressman proposed implementing the same kind of fraud checking system that even the smallest insurance companies have to run to stay in business. OMB estimated the savings at $3T over 10 years. 1) Why isn't that in place already? 2) Why is he talking about it to the press and not implementing it now? 3) Would someone actually vote against putting such a system in place?

Conservatives should want to save the money. Liberals should want the money out of the hands of the crooks so more money could go to the people that actually need it. Isn't that what we call a "no brainer"?

[xu95]

I like how madness started this conversation and then left it.

xu95

[madness31]

95, back just for you.

I like Glow's suggestion. It is crazy how the Dems fight to install all these programs and the Republicans just fight against them and no one works to improve their efficiency or curb the fraud. Some programs should be cut completely and others like Military need reduced dramatically. Medicare/Medicaid need adjusted to reduce future liabilities but also desparately need fraud prevention.

I hear all the arguments for raising taxes on various groups due to unfair benefits awarded them. It is crazy to encourage people to have children, not work, etc. The problem with all these things is that increasing taxes on these people or reducing/stopping unemployment benifits, etc will cause economic activity to go lower. The lower economic activity will make the expense cuts and higher tax rates less impactful. The government budget may benefit slightly or might be worse off depending on how bad the economy gets. Fairness is great but is it worth causing a depression? A depression is very very possible and almost guaranteed if you raise taxes on the middle class and below. Cutting government programs is already killing job growth. The country is in a bad place and there is only one group of people that can shoulder the burden. This is not about fairness but survival.

In addition to the fraud and efficiency mentioned above for dealing with budget problems, it is also necessary to streamline regulation. Some regulations need eliminated and others changed. I believe some regulation is necessary but believe other regulation does far more harm than good. Smart regulation can dramatically aid in job creation. It must be easy to understand and comply with. Small businesses don't have armies of lawyers and administrators to deal with complex regulations.

[GuyFawkes38]

I just finished watching an interesting Charlie Rose show (yeah, it's been an exciting Friday night). He had four economist on (the only one I recognized was Paul Krugman).

The subject of tax reform came up. All four economist believed that deductions need to be dramatically reduced to increase revenue, including the home mortgage deduction (although Krugman was more apathetic, noting that it's an important deduction for the middle class and that tax reform, in general, isn't very important).

Should donations to charities or the interest on your mortgage really be deductible?

Deductions are stupid. Keep it simple. All income should be taxed.

I'm a big fan of a VAT. European countries do it. And I think the word "VAT" sounds really cool.