Posted on 12/21/2012 6:37:23 AM PST by Kaslin
I take it you don't care about collapsing the banking system completely.
Having recently refinanced my home at a rate of 2.75%, my interest payments will be so small that the deduction is unlikely to give me any help anyway, so I no longer have a dog in this fight.
But there is a question of fundamental fairness. Just as the income which my employer pays me for services is deductible as an expense from their corporate taxes, it is taxable to me personally.
Just as the interest I pay the bank is taxable to them, so it should be deductible to me.
For that matter, working stiffs like me should be able to deduct their cost of commuting (mileage, actual car ownership costs, etc.) from their taxable income just as a contractor who, say, puts new gutters on my house can deduct the cost of bringing the truck, material and crew to the worksite. Typically, these have been handled with a standard deduction (if you are an employee) or business income deductions (if you are self-employed).
A flat tax would be a great idea if it were applied equally to the jag-offs who don't work but suckle at the government teat for a living. Even if they get an ObamaPhone, they should pay the equivalent flat tax rate on the thing. Make everybody a flat taxpayer on equal terms. Sounds great in theory, but how are you going to accomplish it politically?
Agreed! 10% - if it's good enough for the Church, it's more than good enough for the government. Anybody that thinks that's too low can voluntarily pay more of THEIR OWN money.
Your post makes me want to call you a socialist fear-monger who never likes to let a good crisis go to waste.
But I won’t.
The banking system won’t collapse just like the world will not end if we go over the fiscal cliff. Just like we didn’t need TARP.
basic food and clothing....What is that ? Cornmeal and oat meal and pork or beef or lamb? I’m just wondering. What is basic? Cotton clothing? Silk? YOU tell me. Not picking an argument. You brought it up.
What about the use of mortgage interest on a rental property as a business expense? Without that there would be less incentive to provide rental housing, and without the leverage provided by financing only the already affluent could afford to own it.
We just re-fied at 3.75%, VA assumable. One of the future benefits is that in a higher interest rate environment we can offer a buyer a better interest rate, increasing the value and desirability of the property.
That's the problem right there. Suppose a wealthy businessman makes, say, car polish. All he has to do is donate to the right politicians and presto, car polish will be classified as a tax-exempt "basic" item.
The founders were right. No income tax at all.
A sales tax at a flat rate.
Any income tax gets the government unnecessarily into your business.
If we stay with this income tax model, then I also believe that a household is a business as much as a business is, and everything required to make that business work is tax deductible.
IF it takes buildings, machines, transport, wages, etc., to make a business profitable, then it takes the same for the individual or family.
What a business considers “cost of doing business”, then it is the same for an individual.
It takes transportation, food, clothing, shelter, utilities, etc.
Anything above those reasonable expenses is “profit” and taxable.
That is, IF we stay with this income model.
Just get rid of the income tax. There's no way to really remove complication from this tax.
And you don't really mean no deductions, you mean no non-business deductions. Computing business income will always be complicated.
The only advantage of this over the FAIR tax is that the undesirable immediate regressive effect aren't so clear. Removing the deductions for employer paid benefits will cause an immediate reduction in pay for all employees, hitting the lower income folks most. It would not be fair not to do so if the self-employed can't deduct these expenses.
Removing 401K/IRA deductions will hammer the stock market, hurting pensions.
Removing deductions for insurance/annuity payments will hammer the insurance industry.
This is a nice theory, but ugly in the short run. We currently have a heavily progressive tax, made much more progressive by deductions and credits. Dumping it all at once will cause a lot of pain as folks adjust how they handle their money.
And, should we get to a flat tax, and with a firm cap at 20% or so, the government will also adjust. There are already proposals to tax you on imputed rent, the rent that you would have to pay if you rented your home. The definition of income will become very flexible, and not in your favor.
Just kill the evil income tax. The 16th amendment ratification is suspicious in the first place.
And exactly how does the home mortgage deduction (HMD) encourage home ownership? For many taxpayers, the HMD is illusory because (a) they don't itemize their taxes; or (b) as a result of the HMD, they are subject to the alternative minimum tax.
IMHO, the people who benefit the most from the HMD are the real estate brokers and mortgage lenders. They use the HMD to convince buyers to borrow more than they might otherwise borrow because the government is paying part of the cost throught the HMD. In the absence of the HMD, people will still buy houses; rather they may have to buy a slightly less expensive house than they might otherwise buy with the HMD.
A sales tax is the best way to go. If govt raises the rate it has an immediate effect on the economy and it becomes much more difficult to manipulate the public.
I really doubt we will ever see a national sales tax, except if the income tax remains in place. I think the various interest groups that benefit from the existing tax code would fight any change. Realtors will fight because of the interest deduction. Lawyers and accountants will fight because they make a good living with the existing tax code. Politicians don't want to change it because they get a lot of campaign money and power with the existing system.
Name calling without an argument is not an argument, particularly when all you offer is a hand-wave "won't happen."
All banks are required to maintain reserves. Among the principal asset reserves is their loan portfolio. Eliminate the tax shelter of the mortgage interest deduction and the asset crashes in value. At that point the banks won't be able to loan because they must raise cash. They they won't be able to raise cash because people will be paying more taxes.
At that point, sonny boy, what you get is the crash you clearly want. Don't think it would happen? Remember 1992 when GHWB forced banks to raise reserve requirements? Remember those 13% construction loans? That was nothing compared to what you propose.
There. You see, it's not that hard. To make an argument one offers a rationale with examples. You can do that, can't you?
I doubt it.
Now in principle, I don't like the mortgage interest deduction either because it builds a society on debt. I just know better than to cut off a junkie on life support without some narcane on hand. You quite clearly do not.
I agree with you. For those same reasons, we’ll never get a single flat rate income tax.
This tax code is about power as much as anything else.
As far as I know the federal government cannot direct you to purchase a house.
Next question.
I could pay off my house. It would require me to remove money from investments that are helping to create jobs, some of those workers are probably renters.
It would be no real harm to me other than affecting what I’m worth on paper, but it would hurt others.
Unintended consequences are unintended but consequences non-the-less.
You sound a little like the eat-the-rich crowd.
Time to get rid of everything in the tax code other than 9% income tax on every dollar earned. Then fire or retire 90% of the IRS and give the remaining supernumeraries work collating past records.
If there is one deduction it it will be fiddled with and added to. No deductions. At all. None. Give everyone in the country a stake in the taxes and spending. We have come to the present pass because we have eliminated half the population from the income tax. They have no incentive to resist new spending on themselves. They are not paying for it.
A consumption tax would too easily turn into a VAT. Please educate yourself as to how that works.
How about this.
Total taxes paid minus benefits received, if it is positive, you can vote twice, once as a citizen and again as a taxpayer, if it is negative, you only get to vote once as a citizen.
That gives everybody a stake in taxes and spending.
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