Posted on 11/22/2012 10:52:52 AM PST by SeekAndFind
Hey, let's just simplify the tax code and eliminate loopholes.
It's hard to think of any statement that on its surface sounds less controversial. Eliminating loopholes means more revenue. Everyone likes simplification. Efficiency!
So why doesn't it happen?
This fantastic chart from Credit Suisse's Neal Soss is the answer. It shows the top 20 biggest "Tax Expenditures" which cost the government over $900 billion in the 2012 fiscal year.
Credit Suisse
So you want to simplify the tax code, what are you going to get rid of?
Are you going to eliminate the incentive to provide employers health insurance? Are you going to get rid of charitable deductions or pension contribution deductions? What about dinging the child credit or mortgage interest? Or how about clipping Social Security benefits for retired workers?
(Excerpt) Read more at businessinsider.com ...
It says that these “tax expenditures” “cost” the government. That language drives me nuts. First they steal our wealth from us, then give us small breaks so we can keep a little bit of the wealth that WE earned is a “cost” to the government or somehow letting us keep a little bit of OUR money is a “tax expenditure” for the government. Only in BizzaroWorld.
Get rid of the income tax and go with a 20% ish consumption tax with some modest exempt amount of spending sent via quarterly checks to each tax payer.
This exempt amount needs to be modest to avoid the issues we have not with so few paying income taxes.
Whewn I began work in the 1950s, it took me ten minutes to make out my federal tax return.
It is the government that is a "cost" to us, not the other way around. And the way "we" reduce costs is by eliminating spending. So let's get on with it.
It is the government spending that is choking our economy with huge bureaucracies churning out endless regulations and harebrained "investments".
Who said? “9 9 9”
Corporations do not pay taxes, they pass them on.
Wrong answer. You are describing a “refundable tax credit,” which as we see from the EITC is a recipe for fraud. A flat tax on income (not on consumption) and no rebate is a better way to go. Even setting aside fraud, your suggestion still requires a massive bureaucracy to administer the rebate scheme and to combat fraud.
A no-deduction flat tax has much to commend it (provided “income” is analogous to profit not revenue), but I’m not sure you can get there from here politically.
Romney’s much ignored suggestion of capping deductions and credits has much to commend it both politically — it doesn’t eliminate any deduction or credit that has as — and in terms of increasing the tax base — it encourages maximally productive use of capital in place of tax avoidance as the main consideration in investment. On the other hand, it was both too draconian (his $25K suggestion was too low and including charitable contributions in the capped deductions goes a long way toward destroying the non-state civil society) and not radical enough: what should be capped is the aggregate amount of income (understood as after expenses of producing income) which can be shielded from taxation at normal rates by any means other than charitable contributions.
That would mean fixing a cap, say $100K per individual not claimable as a dependent and say $50K for those claimable as dependents, and adding together the exemptions, all deductions other than cost-of-producing-income and charitable deductions, all income from tax exempt sources, the amounts of all tax credits divided by the taxpayer’s top marginal rate, and the amount of all income taxed at lower rates times the difference in the lower rate and the normal rate, subtracting the cap and if the amount is positive adding it to the income before finding the tax. This scheme should replace the AMT (it does the same thing more effectively without catching the middle class in the net and, as you can see from my description would be shorter to file than the AMT).
In the sort run, if we could replace the AMT with what I just described, I’d be happy to let the marginal rate on incomes over $1M (for an individual and $2M for couples filing jointly) rise to the Clinton-era rate, so long as there were serious spending cuts in the current year and all out years included in the deal. (Alternatively, I’d settle for the abolition of baseline budgeting and the abolition of funding for government agencies to calculate the “baseline” together with one last round of the ephemeral “cuts” Washington has produced intermittently since baseline budgeting was introduced.)
Hmm... editing glitch there.
The first remark between dashes should have read
“it doesn’t eliminate any deduction or credit that has a substantial constituency”.
I agree. But the rate would probably have to be higher than 10 percent with the deficit as it is
How about the Federal Gov’t just quits spending money for functions not authorized by the Constitution?
Bye bye Energy Prevention Agency, Dept. of Indoctrination, Dept. of Constricting Commerce, etc...
If government employee/contractor/vendor/welfare spending is not cut (welfare is almost equal to the entire deficit), then tax policy changes will not help anything.
If the changes result in less revenue, the deficit grows faster.
If the changes result in more revenue, it’s just spent anyway.
Back during Reagan’s terms, the relative size of government debt to Gross Domestict Product was about 40%. Now it’s over 100%. The prosperity boost that lower taxes provided to the economy back then was not overshadowed by a Federal government that was insolvent on such a grand scale as it is today.
IMHO, the only way out is radical reduction of goverernment agencies. Social Security and Medicare need not be affected at all to fix this, nor should they be for those at or close to retirement. For those younger than that, they should be given the option to not participate in the program and it should be phased out for younger citizens over decades.
“What I really want them to do is STOP SPENDING, DAMMIT!”
Well, as the last 3 of 4 elections have shown us, the sheeple want Uncle Sugar to be Santa Claus. There is no turning back now.
Go Galt while you still can.
How about spending less?
"Congress is not empowered to tax for those purposes which are within the exclusive province of the States." --Justice John Marshall, Gibbons v. Ogden, 1824.
In other words, Congress cannot lay taxes for anything that it cannot justify under Section 8 of Article I of the Constitution, SS and Obamacare being glaring examples.
And the only reason that corrupt Congress has been able to establish constitutonally indefensible taxing and spending programs is the following imo. Voters abused their voting power when they repeatedly elected FDR in support of his constitutonally indefensible New Deal federal spending programs as a consequence of likely widespread ignorance of constitutional limits on Congress's powers to regulate domestic government services.
In fact, defense issues aside, one of very few federal government services that citizens should be unquestioningly paying taxes for is the postal service (1.8.7).
Key Points to remember.
1) DON’T PAY TAX FOR RIGHTS
2) NO DOUBLE TAXATION
After being suggested several hundred million times by those in the private sector, those in government still laugh hysterically at this question.
All the Chicago High School graduates are way too old for the rule to be effective.
“How many horn and string players lost their jobs when the Titanic went down?”
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Net effect zero because those who lost their jobs were removed from the labor pool.
I should have mentioned the following concerning Congress’s limited power to lay taxes in my previous post. Belows is my rough estimate for how much Section 8 of Article I should be costing taxpayers per year.
Given that the plurality of clauses in Section 8 are defense related, and given that the Department of Defense (DoD) budget for 2011 was $600+ billion, I will generously round the DoD figure up to $1 trillion, probably much less, as an estimate as to how much taxpayers should be paying Congress annually to fulfill its Section 8 duties.
In other words, we shouldn’t be seeing these multi-trillion dollar federal budgets that the corrupt media, including Fx News is reporting without mentioning Justice Marshall’s clarification of Congress limited power to lay taxes in federal public policy discussions.
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