http://www.mercurynews.com/business/ci_ ... be-trimmed

Looks like home mortgage deductions for tax purposes is going to be on the chopping block ... in time, perhaps, but eventually, this deduction is going to go the way of the do-do.

BTW, for what it is worth, I am in favor of this although I know it will be rough on many people. Particularly in the SF Bay Area (among others), where house prices are high and it does not mean the people are rich - merely that they have to maintain high mortgages to make it work.

Yes, this will impact the housing industry for a while, but in time, it will be the right thing to do.

Z

I think it needs to go. But I don't think it needs to be singled out. Child care deductions should go away as well. Refundable tax credits should go away. If a tax credit nulls your tax liability, fine, but no one should pocket the difference.

Honestly, if we are going to retain income taxation, there should be no deductions, credits, or anything special interest.

Still believe we need to go with consumption tax instead.

stebo0728 wrote:I think it needs to go. But I don't think it needs to be singled out. Child care deductions should go away as well. Refundable tax credits should go away. If a tax credit nulls your tax liability, fine, but no one should pocket the difference.

Honestly, if we are going to retain income taxation, there should be no deductions, credits, or anything special interest.

Still believe we need to go with consumption tax instead.

Agreed on all points above.

I have been in favor of removing all tax deductions for a long time. Many of them cater to a small percentage of the tax-paying population (with some exceptions, of course).

Yes, my personal income taxes would go up as a result, but we would all be in the same boat and that makes it "fairer".

Z

Along with removing deductions. I say move the tax rates of all incomes up to your tax bracket. That way if Mr. Joe who earns 30K/year gets some sort of payout he pays the 15% that his bracket is at. However, if Mr. Bob who earns 75K/year gets some sort of payout, he pays the 25% that his bracket is at.

THAT is fair. It removes the arguements against flat tax and makes things completely "fair" across the board.

But, if you do just so happen to be that cheap a** bum who only earns 14K/year by working at McCrackyDs and you have a rich uncle.. I guess that means that you pay 15% (this really depends on which scenario happens after the fiscal cliff) and walk away.

Whats "fair" about 2 different percentages? I know that's the basis of a progressive tax, but what's "fair" about it? One single across the board percentage rate means that everyone is hit with the same degree of force. If I'm hit harder just because I earn more, what's fair about that? Instead, keep the rate the same across the board, but keep the standard deduction in place. Allow everyone to take the standard deduction, which is based on the metric of taxation on necessities. Its basically the same functional component of the FairTax's prebate.

I can see it going both ways, stebo.

If you had 10$ would you lend somebody 1$ to buy a drink? In most cases, people wouldn't care much about the 1$ seeing as how they would still have the 9$ left over. If you had 10 Mil, would you lend somebody 1 Mil? No, you wouldn't. Even though the percentage would be the same, you're seeing it as a different perspective. 1$ is inconsequential (well, okay, not if you're hard up) where as 1 Mil is such an inordinate amount of money.

I love the idea of a flat tax, I want a flat tax. 10% of all income, flat.. nothing is exempt.. I'm down for that.

Marenta wrote:I love the idea of a flat tax, I want a flat tax. 10% of all income, flat.. nothing is exempt.. I'm down for that.

I am all for paying more, actually!

In my opinion:

1. Ownership of a house is a privilege, not a right.
2. Kids are a choice, not a way to get tax deductions.
3. Capitals gains are a choice to play in the stock markets, not a luxury. However, I also believe that capital losses can be excluded 1-for-1 in the same way that capital gains are included.
4. However, if capital gains are NOT included, then capital losses are NOT excluded from income.

So, I'd like to see:

1. A single $25k deduction - the "for people in poverty" support. The actual number can be different (my $25k is simply a proposal to set a poverty level) and indexed for inflation as needed. This means that anybody making less than 25k a year does not pay any tax whatsoever, but they also do not get any refunds either!

2. A flat federal 20%. All actual capital gains are included, and all actual capital losses are excluded - however, if we choose not to include capitals gains as income, then we also will not exclude capital losses against income.

3. A flat State 5%.

This would simplify taxes totally, IMHO!

With my calculations:

A person making $25k (or less) would pay zero tax.
A person making $50k a year would pay 0.2 * (50k - 25k) = 5k to the Feds and 1.25k to the State.
A person making $200k a year would pay 0.2 * (200k - 25k) = 35k to the Feds, and 8.75k to the State.
A person making $1M a year would pay 0.2 * (1000k - 25k) = 195k to the Feds, and 48.75k to the State.
Etc.

Yes, it is not "progressive", but the total amounts paid by high-income people is also quite high.

Z

Maybe we could wait until after we get the current glut of foreclosures off the market first? Before we start piling more on? A good idea can still come at a really bad time.

IBCoupe wrote:Maybe we could wait until after we get the current glut of foreclosures off the market first? Before we start piling more on? A good idea can still come at a really bad time.

I can agree with that.

Phase it in for sure.

Z

The problem with phasing it in is that the longer it takes Congress peel that band-aid off, the greater opportunity exists to put it back on.

Now try to guess which of my comments is the devil's advocate.

The problem SHZ is the states. Let's assume your tax bill is signed into law. The Federal government would pass many liabilities to the state. The state would pass to the counties whenever possible. The bottom line is that property taxes would go up, as would other fees (car registration, sales taxes, etc) and we'd still be paying what we're paying now. I'd love to see a study of what an average American actually pays in taxes (all fees and taxes included) as a percentage of his income. I'll bet it would be mind blowing.

Z's plan could work through a Constitutional Amendment. Federalism ends where the Constitution says it does. Whether that results in a system that's too rigid to account for fluctuating expenses is another matter.

stebo0728 wrote: Refundable tax credits should go away. If a tax credit nulls your tax liability, fine, but no one should pocket the difference.

Yay!

IBCoupe wrote:Maybe we could wait until after we get the current glut of foreclosures off the market first? Before we start piling more on? A good idea can still come at a really bad time.

Yay!

IBCoupe wrote:The problem with phasing it in is that the longer it takes Congress peel that band-aid off, the greater opportunity exists to put it back on.

Now try to guess which of my comments is the devil's advocate.

R/T Hemi wrote:The problem SHZ is the states. Let's assume your tax bill is signed into law. The Federal government would pass many liabilities to the state. The state would pass to the counties whenever possible. The bottom line is that property taxes would go up, as would other fees (car registration, sales taxes, etc) and we'd still be paying what we're paying now. I'd love to see a study of what an average American actually pays in taxes (all fees and taxes included) as a percentage of his income. I'll bet it would be mind blowing.

Boo!

IBCoupe wrote:Z's plan could work through a Constitutional Amendment. Federalism ends where the Constitution says it does. Whether that results in a system that's too rigid to account for fluctuating expenses is another matter.

Yay Again!

IBCoupe wrote:The problem with phasing it in is that the longer it takes Congress peel that band-aid off, the greater opportunity exists to put it back on.

True.

IBCoupe wrote:Now try to guess which of my comments is the devil's advocate.

I dunno.

I like the idea of removing mortgage deductions ... so, maybe I am being short-sighted.

Z

It's a trick question; you're all in hell anyways.

R/T Hemi wrote:The problem SHZ is the states. Let's assume your tax bill is signed into law. The Federal government would pass many liabilities to the state. The state would pass to the counties whenever possible. The bottom line is that property taxes would go up, as would other fees (car registration, sales taxes, etc) and we'd still be paying what we're paying now. I'd love to see a study of what an average American actually pays in taxes (all fees and taxes included) as a percentage of his income. I'll bet it would be mind blowing.

It is indeed mind-blowing. I looked at on once a long time back.

Tpoday, simplistically My "percentage" to the Feds is about 19% of my total income, and about 7% to the State of California.

If you add in ALL the other taxes that are paid (SS, Property tax, sales tax, cell-phone tax, city tax, registration fees, etc.), the number became over 50% of my annual income that one time that I tried to it out.

Z

IBCoupe wrote:It's a trick question; you're all in hell anyways.

Tax hell, yes.

Z

R/T Hemi wrote:The problem SHZ is the states. Let's assume your tax bill is signed into law. The Federal government would pass many liabilities to the state. The state would pass to the counties whenever possible. The bottom line is that property taxes would go up, as would other fees (car registration, sales taxes, etc) and we'd still be paying what we're paying now. I'd love to see a study of what an average American actually pays in taxes (all fees and taxes included) as a percentage of his income. I'll bet it would be mind blowing.

Sure would be alot easier to know, day to day, if we had a much simpler system.

It'd also be a lot easier if the rest of the world cooperated with our local budgets. Darn world!

IBCoupe wrote:It'd also be a lot easier if the rest of the world cooperated with our local budgets. Darn world!

Nah! Let's leave the ROW alone for a change.

Z

I've often pondered whether the Federal government should even be collection tax directly from the individual. In my gut, I feel the answer is no. In my mind, in a world I believe our fore fathers envisioned, the Federal government would levy a tax upon the states, proportioned based on census population data. The state is then responsible for collecting the taxes from its citizens, in whichever way they deem appropriate. They levy enough to pay for their own administration, plus that which is owed to the Federal government.

EDIT - Oh, and to those of us complaining about all this wealth distribution. You should know, you enable it when you answer any question on the Census past question 1) how many people live in this household. If you'd stop telling the government just how much wealth is out there, they'd have a whole lot harder time redistributing it. Its none of the government's business how much wealth is out there, and who has it and who doesnt.

I don't think that's what the founding fathers envisioned. Originally, the federal government survived on excise taxes placed upon things individuals bought, pretty exclusively. What you propose is actually a far cry from anything we had.

True, I guess I was extrapolating a bit. Remember in the early days, the federal government was smaller than any state government, it stayed in the kennel the constitution gave it. Since its outgrown its bounds, and become almost larger than ALL state governments, it has a much higher price tag. You can argue whether or not the growth is legitimate, thats another thread. We're beyond just excise taxes now. I believe, were our founders around today, seeking to solve the puzzle at hand, the model I mentioned above would be favorable. Remember, states rights were still popular in their days.

The growth of the American government can be attributed easily to the growth of our national needs. The War of 1812 resulted in drastic changes in our buying, spending, borrowing, and taxing habits.

IBCoupe wrote:Maybe we could wait until after we get the current glut of foreclosures off the market first? Before we start piling more on? A good idea can still come at a really bad time.

I agree with this. There are still many problems to be solve first before having a new one. Hopefully the government is aware of that.
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