How would you reform the US national income tax system?

[jshore]

*Originally posted by Apos *
The “tax system as a whole” is, presumably, what we are talking about. A flat tax (a misnomer, actually) is still progressive in the sense that the rich pay more money for being citizens than the poor. I think the default burden of proof is how exactly THAT justified in terms of “fairness.”

Apos, I think we’ve talked about the fact that the terms “progressive”, “regressive”, and “flat” in taxation have the meaning of being defined in terms of percentage of income. E.g., a tax is regressive if it takes a higher percentage of income from the poor than from the rich. It does not have to take a higher dollar amount to be termed this. You may not like this definition, but since it is the standard one, it makes life rather confusing if you unilaterally adopt a different definition.

As for the justification…We’ve been down that road before and I don’t want to repeat myself in too much detail here. I think one justification is on the basis of benefits received from government. I think these benefits are at least proportional to your income if not more so. For example, the police protection for your property is worth more if your property is worth more. More to the point, I don’t think it is realistic to believe that anyone can acquire the sort of wealth that the wealthy acquire without government being there to enforce contracts, etc., etc.

Other justifications are in terms of marginal utility. I.e., we have to pay for shared services and it certainly causes less burden for a rich person to part with a dollar than a poor person. It even causes less burden for a rich person to give up a certain percentage.

*Originally posted by BURNER *
The last time I checked congress was only in session at certain times of the year. If they arent going to work all year round like most normal people then they shouldnt get paid for the time that congress isnt in session. Kind of like how most normal people dont get paid if they arent working.

Well, Congress is on salary. They are not paid an hourly wage so how do you know that they are getting paid if they aren’t working. Also, I consider meeting with constituents back home to be an important part of their job.

NY’s junior senator Hillary Clinton comes to mind. The last time I looked, houses in the Hamptons were way out of the price range of the majority of the citizens of NY.

Why don’t you look up her salary if you are so concerned about it? It’s not hard to find. The money she used to pay for that house probably came from other things (like the book she wrote).

And, I would say there are a lot of folks who get paid more than the majority of citizens. What about all the heads of corporations who earn more in one year than Senators make in their lifetime?!?

Besides which, is it really good to pay these people such low wages that we don’t attract good people and that we encourage them to have to get money from other sources. I think the deal that was made in the late 80s or early 90s where the senators and reps gave up being able to accept speaking fees in return for a salary raise was a cheap deal for taxpayers since it reduced their dependence on people who might want to influence legislation. (The problem, of course, is that we haven’t reformed the financing of their campaigns in the same way.)

I dont see what your saying. If everyone pays the same percentage then how can the poor end up paying more? If the tax is a flat 10% and you make $30,000 a year , then you only pay $3000 in tax. If you make $300,000 a year then you pay $30,000 in tax. It is all just a simple ratio.

I lost you here but see my comment to Apos concerning the definitions of regressive and progressive. Also, your case is a bit different since it sounded like you might use your flat tax to replace other taxes like sales tax (and social security?) in which case the total tax burden could truly be flat.

IMHO it is a fairer system because everyone pays the same percentage. There are no breaks or advantages for anyone, hence a level playing field.

I’ve just never understood why everyone paying the same percentage is supposed be considered a priori fair and level. Apos seems to be arguing that fair and level might be everyone paying the same monetary amount and, while I strongly disagree with him, I at least understand how that could in principle be an alternate conception of fairness. John Rawls would argue for a social system that maximizes the well-being of the least well-off. Others (like me) wouldn’t be that extreme but would argue for progressivity on the basis of the facts that those who are best off are (almost by tautology) those who are getting the most out of the system and that those folks can more easily afford to pay a larger fraction of their income in taxes without undue burden relative to a poorer person.

I’d also argue that since the economic decisions we have made over the last 20-odd years have resulted in the real incomes of the top 1% growing by >150% while the median income grew much more anemically (again in real terms) and lower incomes basically didn’t grow at all, this is a time in which the tax system should not be adjusted in a direction that puts more burdens on those who have seen the least benefit and produces additional windfalls for those who have already received great windfalls.

[jshore]

By the way, the 2003 salary for U.S. Senators is $155,000 as this link shows. By contrast, I think the CEO of my company receives like $2 million salary plus various bonuses of cash, stock, and stock options and he is one of the more reasonably paid CEOs for a company of our size.

[Apos]

It’s not a matter of not liking the definition: it’s a matter of the definition routinely misused used as a form equivocation, without even considering the issue of competing standards of fairness.

For instance, I don’t see how any standard of fairness can possible demand that a rich person pay more simply because they’ve gotten richer. You can’t just infer that out of nowhere, certainly not as a tautology: people can get more wealthy in many many different sorts of ways, and not all of them have the same effect on the rest of society: so why treat them all the same?

Further, if a person has an obligation to provide for others in society, that obligation shouldn’t shrink or grow jsut because they decided to lie about watching cartoons vs. start a bussiness. That demonstrates nothing more than a desire to acquire things from others simply because they’ve had or made good fortune.

[jeff_lebowski_s_brother]

Do away with the IRS and replace it with a National Sales Tax (NST). Set the NST by law at a certain percentage not to be exceeded except through constitutional convention or direct vote from the American people every two years.

Since, I would privatize almost everything (Postal service, education, social security) except the national defense, close down worthless government agencies, and cancel welfare and entitlements except to those worthy or infirmed, the NST would be very, very low.

Sick of your candidates? Check out www.lp.org!

[Will_Repair]

*Originally posted by jeff lebowski’s brother *
Do away with the IRS and replace it with a National Sales Tax

Here, here! (Except for food and medicine.)

Set the NST by law at a certain percentage not to be exceeded except through constitutional convention or direct vote from the American people every two years. Since, I would privatize almost everything (Postal service, education, social security) except the national defense, close down worthless government agencies, and cancel welfare and entitlements except to those worthy or infirmed, the NST would be very, very low.

And I’d like a pony too.
You’d have to abolish the IRS at the same time you institute an NST or you’d wind up with both forever and ever. Remember that when considering the income tax amendment it was suggested that it be capped at 10%. But that idea was nixed because people were afraid that it would allow the rate to actually rise to that level.

[rogue4007]

In defense of Apos concerning flat rate of tax, one of the advantages of it would be that the wealthy couldnt employ accountants and tax advisers to help them avoid tax. Millions are spent by people to avoid tax. If it was flat rate no special concesions or deductions, there could be no place to hide, or no grey areas allowing tax avoidance.
Tax should never be used to social engineer society, lets not forget, this is our money. The government dosnt have any money,
it dosnt produce any money, its sole income is the taxpayer. It should take only enough to allow it to function. It is their responsibility to administer that money in the most productive efficient manner posible. Allways remember it is not their money it is ours. No corporations should get tax breaks or our money to help them.

Rogue

[Palo_Verde]

*Originally posted by rogue4007 *
In defense of Apos concerning flat rate of tax, one of the advantages of it would be that the wealthy couldnt employ accountants and tax advisers to help them avoid tax. Millions are spent by people to avoid tax. If it was flat rate no special concesions or deductions, there could be no place to hide, or no grey areas allowing tax avoidance.

This would also be true if the tax rate were progressive but without deductions. For example, those who make under 50K pay 10%, 50-100K pay 15%, over 100K pay 20% or whatever. Still no grey areas for avoiding taxes.

Tax should never be used to social engineer society

You say this as if it’s a given. Why not?

lets not forget, this is our money. The government dosnt have any money, it dosnt produce any money, its sole income is the taxpayer… Allways remember it is not their money it is ours…

Rogue **

It’s not quite that simple. Think of the money you pay as payment due for your last year’s use of the roads, the security you benefited from by having a national defense, the sicknesses you didn’t get from having non-contaminated fruits, the pleasure you received from going to a National Park, etc.

[Boo]

*Originally posted by autz *
**?

Flat tax?

**

I don’t like the flat tax.

There would be a much larger standard deduction than what we have today, many lower-income families would not have to pay any income tax at all. Meanwhile, higher income taxpayers would receive a large tax cut from the reduction in the tax rates. People don’t realize that wealthy people often have over 50% of their income for a year go to taxes. The brunt of taxes paid would go from the wealthy upper class to the middle class. Businesses that rely on capital investment and equity financing would see big gains as well. Finally, the flat tax would greatly simplify the current tax system, saving potentially billions of dollars in administration. If it sounds too good to be true, you’re right. Not everyone stands to benefit.

First, tax revenues would fall far below their current level. Unprecedented spending cuts would be required to make the budget balance…let along pay off the debt.

Secondly, eliminating itemized deductions could have harmful effects on the housing industry and on charitable organizations. Without the mortgage interest and property tax deductions, some have predicted that the market values of homes could drop as much as 15%. There would therefore be a trickle down effect to property taxes collected by cities/municipalities. Also, over half of all charitable contributions made in 1992 were claimed as deductions on tax returns. The inability to deduct contributions could adversely affect people’s willingness to give. Supporters of the flat tax claim that these are only short-term problems. they believe that the long-term boost in the economy from such a system would eventually outweigh its shortcomings. IMO, if we did the flat tax, there would still have to be some allowable deductions.

Another obstacle facing the flat tax is how such a system would be phased in. What would happen to all of the unused depreciation deductions currently sitting on corporations’ books? What would such an abrupt change in taxation do to the housing industry and the securities markets?

[Boo]

*Originally posted by jeff lebowski’s brother *
**Do away with the IRS and replace it with a National Sales Tax (NST). Set the NST by law at a certain percentage not to be exceeded except through constitutional convention or direct vote from the American people every two years.

www.lp.org! **

Sales taxes are classified as “regressive” taxes. Low income people spend rather than save a greater percentage of their income than high income people. Because of this, low income households would bear greater sales tax burden then high income people. Example

Family has has 4 people and income of $20,000. Assume $16,000 of this income is spent with a 15% sales tax rate. They spend an additional $2,400 dollars in taxes.

Family B has 4 people and income of $100,000. They spend $30,000 of this at a15% sales tax rate. They spend and additional $4,500 on taxes.

The effective tax (compared to income) rate for family A is 12% and family B’s is only 4.5%.

Another drawback is things like food and medicine would also be taxed which again will have a much bigger impact on low income people than high.

Businesses would have a higher burden because they’d have to collect the tax at the point of sale.

Services such as those provided by lawyers and accountants would also be taxes (most states do not tax these types of services)

[RTFirefly]

*Originally posted by Debaser *
Social engineering is what made such a mess of taxes in the first place. Taxes exist to raise money for government to function. Not to attempt to change the behavior of citizens.

That is an amazingly ignorant statement.

No matter how the government raises taxes, it will encourage some forms of behavior and discourage others. That’s ‘social engineering’, intended or unintended, like it or not.

The question is, should our representatives consider the possible ramifications of a given means of taxation before voting on it, or would it be best if they left themselves as wide open as possible to the Law of Unintended Consequences?

I’m not sure what the argument for the latter position would be, but that’s the position you’re taking, if I understand you: you’re arguing for making decisions out of ignorance. Give it your best shot.

[Jonathan_Chance]

*Originally posted by jeff lebowski’s brother *
**Do away with the IRS and replace it with a National Sales Tax (NST). Set the NST by law at a certain percentage not to be exceeded except through constitutional convention or direct vote from the American people every two years.

Since, I would privatize almost everything (Postal service, education, social security) except the national defense, close down worthless government agencies, and cancel welfare and entitlements except to those worthy or infirmed, the NST would be very, very low.

Sick of your candidates? Check out www.lp.org! **

Allow me to point you here, JLB. Please join the fun.

[Debaser]

By having a flat tax with no deductions it would be fair.

By allowing our representatives to consider the possible ramifications of every means of taxation we have allowed the tax system to become rediculously complicated.

There will be unintended consequences to the actions of those in government with or without a complicated tax structure.

Having complicated tax laws that attempt to modify behaviors we end up with more unintended consequences than if there was just a simple flat tax with no loopholes or deductions. A good example is the marraige penalty. Do you disagree with this?

I’m not arguing for making decisions based on ignorance, I am arguing that those decisions shouldn’t be made at all. Tax everyone at the same rate, no deductions or special exemptions, or loopholes, and it will be fair, simple and efficient.

We can set the rate at whatever you like, because that is a different argument altogether relating to the size that the gov’t should be. We can set an exemption amount at whatever you like, say $50K so that the poor aren’t paying taxes. But, lets let the people that are paying taxes all pay the same rate. Simple. Fair. Why not?

[RTFirefly]

As far as the OP is concerned, it’s silly to consider income taxes - or any tax - in a vacuum. Making income taxation more ‘reasonable’ can’t even be intelligently discussed except as it relates to the effects of payroll taxes, sales taxes, property taxes, inheritance taxes, and so forth.

But it’s a good way to win support for income-tax cuts. Then one day you wake up and most of the remaining taxes are those that fall most heavily on the people who can least afford them.

IMHO, we need income tax progressivity to balance out the taxes I’ve mentioned above, all of which are regressive - except for the inheritance tax, which is apparently being done away with. Either that, or we can come up with an overall system that’s more balanced, which would make a lot more sense to me.

[Boo]

we have a progressive tax rate system…the more you make, the higher percentage you pay…it is not uncommon for wealthy taxpayers to have an effective tax rate over 50%.

[RTFirefly]

*Originally posted by Debaser *
By having a flat tax with no deductions it would be fair.

Oh really? I disagree. And this is the problem: there is no abstract standard of ‘fair’, like you seem to think there is.

For instance, take your flat tax with no deductions. What’s fair about someone making $10K a year having to pay $2K in taxes, when they can barely afford to live as it is? I’m not asking to debate this; I’m just illustrating the problems with ‘fairness’.

By allowing our representatives to consider the possible ramifications of every means of taxation we have allowed the tax system to become rediculously complicated.

I’m sure that helps. But you’re failing to take into account the reality that property and income take on many different forms, and figuring out what a flat tax is, in some situations, would be extremely challenging.

There will be unintended consequences to the actions of those in government with or without a complicated tax structure.

That’s my point, but thanks for reiterating.

I’m all in favor of a simple tax code. I think too simple a tax code makes no sense, though. For instance, do you tax capital gains the same as regular income, even though they’re very different?

Having complicated tax laws that attempt to modify behaviors we end up with more unintended consequences than if there was just a simple flat tax with no loopholes or deductions. A good example is the marraige penalty. Do you disagree with this?

I’m not for the marriage ‘penalty’, but what are the unintended consequences? Are there any studies showing that it’s undermined the institution of marriage?

I’m not arguing for making decisions based on ignorance, I am arguing that those decisions shouldn’t be made at all. Tax everyone at the same rate, no deductions or special exemptions, or loopholes, and it will be fair, simple and efficient.

It will be simple and efficient, certainly. It is your opinion that it will be fair, but that’s all it is.

For instance: the Federal government has a $2.1 trillion budget. We have 300 million Americans. (I may be off by a few hundred billion dollars and maybe 10 million people, but bear with me.) That’s $7000 per man, woman, and child. Why isn’t it ‘fair’ for income taxation to be the sole means of taxation, and for each family to pay their $7K per person per year, up front? What’s unfair about that? (We shouldn’t consider the consequences, right?)

We can set an exemption amount at whatever you like, say $50K so that the poor aren’t paying taxes.

OK, deductions are verboten, but exemptions are fine. While I’m all in favor of certain exemptions (and deductions), I don’t understand the principle behind your view that one’s OK and the other isn’t. Exemptions can be used in funky ways, just like deductions can. (Attorney and stockbroker fees are exempted from sales tax in most jurisdictions, for instance.)

[Debaser]

*Originally posted by RTFirefly *
Oh really? I disagree. And this is the problem: there is no abstract standard of ‘fair’, like you seem to think there is.

For instance, take your flat tax with no deductions. What’s fair about someone making $10K a year having to pay $2K in taxes, when they can barely afford to live as it is? I’m not asking to debate this; I’m just illustrating the problems with ‘fairness’.

You need to read my posts. I said that the lowest earners will not pay any tax. I mentioned $50 K but pick a better number if you like. Either way, no one is saying that $10K a year earners should be taxed.

I’m sure that helps. But you’re failing to take into account the reality that property and income take on many different forms, and figuring out what a flat tax is, in some situations, would be extremely challenging.

How would figuring out what the flat tax is be challenging? You pick a number that would generate the same amount of gov’t revenue that the current tax system is now, and go with it. Where’s the extreme challenge? You need to explain what you mean here for me to disagree or agree with it.

That’s my point, but thanks for reiterating.

I’m all in favor of a simple tax code. I think too simple a tax code makes no sense, though. For instance, do you tax capital gains the same as regular income, even though they’re very different?

This thread is talking about income tax. Read the OP. Making a flat tax would improve the complexity problems and unfairness of the income tax. Other taxes are a seperate issue.

I’m not for the marriage ‘penalty’, but what are the unintended consequences? Are there any studies showing that it’s undermined the institution of marriage?

It doesn’t matter.

I just used that illustration to show that the system has unintended consequences. I don’t care if it undermines marriage or not. What it does do is make married people pay more taxes than if they were single. This is wrong.

It will be simple and efficient, certainly. It is your opinion that it will be fair, but that’s all it is.

Well, if you agree that it would be simple and efficient and fair, then why not do it?

For instance: the Federal government has a $2.1 trillion budget. We have 300 million Americans. (I may be off by a few hundred billion dollars and maybe 10 million people, but bear with me.) That’s $7000 per man, woman, and child. Why isn’t it ‘fair’ for income taxation to be the sole means of taxation, and for each family to pay their $7K per person per year, up front? What’s unfair about that? (We shouldn’t consider the consequences, right?)

I don’t know what this strawman is supposed to have to do with anything so I will ignore it.

OK, deductions are verboten, but exemptions are fine. While I’m all in favor of certain exemptions (and deductions), I don’t understand the principle behind your view that one’s OK and the other isn’t. Exemptions can be used in funky ways, just like deductions can. (Attorney and stockbroker fees are exempted from sales tax in most jurisdictions, for instance.)

Deductions have caused the mess we are in with the tax code, not exemptions. Just because I am for a national deduction doesn’t mean that I would be for 10,000 different kinds of exemptions. I don’t know by what logic you have linked the two. Having one, simple, flat rate exemption would be a fair and efficient and easy way to give the poorest earners a break.

The problem with deductions is that the government can’t stop with just one. They make more and more until the tax code is an unreadable mess that no one understands. Having a single exemption amount set at the same level for anyone isn’t comparable to this.

[Boo]

*Originally posted by Debaser *
**

Deductions have caused the mess we are in with the tax code, not exemptions. Just because I am for a national deduction doesn’t mean that I would be for 10,000 different kinds of exemptions. I don’t know by what logic you have linked the two. Having one, simple, flat rate exemption would be a fair and efficient and easy way to give the poorest earners a break.

The problem with deductions is that the government can’t stop with just one. They make more and more until the tax code is an unreadable mess that no one understands. Having a single exemption amount set at the same level for anyone isn’t comparable to this. **

the tax code is not complicated at all…unless you are a wealthy person getting income from partnerships, trusts, dividends, rent, etc, etc, etc. for average joe six pick, he deducts his home mortgage interest, signs the return, and mails it. When I read the code, it is pretty cut and dry what you can itemize and what you can’t.

Most people don’t even reach the threshold to itemize unless they have mortgage interest to deduct and therefore use the standard deduction. Rarely do people reach the threshold for medical expenses. People forget that just because something is deductible doesn’t mean the person is entitled to deduct it…there are tests to meet which are also not complicated.

If H&R block can teach the mentally challenged people they employ to do tax returns, then anyone can learn it.

I think the word “intimidating” might be better choice.

Did you know you are not actually required to file a return by law? You can elect to have an IRS officer come to your house and collect taxes. Ever hear those “don’t pay anymore income tax” seminar commercails? that’s what they base their claims on. They leave the part out about the IRS collector coming to your house. they beleive the law makes paying taxes voluntary…which isn’t true. Most of these people have done or will do jail time in the near future.

[Apos]

I am NOT a proponent of a flat tax. If anything what I said above made me a provisional proponent of an equal head tax, wherein the same amount of money was demanded from everyone. That’s probably utterly impossible, but I wasn’t seriously proposing it: it’s just worth considering when we think about what “fair” means. I don’t deny that your idea of the perfect tax system is going to depend very heavily on what you understand fairness to be. And no one else should deny it either (and fall into the trap of simply accusing, without argument, someone of being “unfair” when they have an entirely different standard of fairness). We need to agree on what is “fair” before we can start meaningfully accusing each other of being unfair.

I think, however, that I’ve already shown that, whatever “fair” is to the people talking about progressive, regressive, or even flat taxes, it DOESN’T mean anything like “equal obligation.”

However, though I’m not particularly interested in arguing for it, there are a lot of misconceptions about the flat tax. First off:

—First, tax revenues would fall far below their current level. Unprecedented spending cuts would be required to make the budget balance…let along pay off the debt.—

No. What is commonly not understood about the flat tax is the basics of tax revenue. TR is determined, in a very simple estimated sense, by the average tax rate times the tax base. A flat tax would indeed lower the effect tax rate considerably. How does it make up for this? By widening the tax base.

—Without the mortgage interest and property tax deductions, some have predicted that the market values of homes could drop as much as 15%. There would therefore be a trickle down effect to property taxes collected by cities/municipalities.—

Yes, so? So what? Obviously, cities states and municipalities have to work around the federal tax system. But this has always been a problem. You can’t argue that something is wrong JUST because it’s different. Homeowners are recieving a HUGE subsidy compared to everyone else. You can’t argue that it’s wrong to take this subsidy away from them JUST because it’s become a tradition!

—Also, over half of all charitable contributions made in 1992 were claimed as deductions on tax returns. The inability to deduct contributions could adversely affect people’s willingness to give.—

This is not, at least by empirical study, a real problem at all. The elasticity of people’s willingness to give is very close to one. That means that the extra giving the deduction encourages is almost the exact same amount we lose to the tax system because of the deduction. In other words, the only difference made in having the deduction is that the rich givers decide where the extra money goes. If there was no deduction, the government would end up with that exact same amount of money (via the fact that it’s taxing it away)… which it could just as easily give to social services or charity itself (which, hey, could mean less opera for hoity-toity set, and more housing subsidies). That is, the potential problems with not having the deduction are almost entirely political, not economic.

[DrDeth]

Ok, fist of all- a “flat tax” isn’t really any simpler than a graduated “progressive” tax. You look at your income in a book, and whing-zowie, there’s your tax. How difficult can that be?

Then- what would be taxed under a 'flat tax"? All income? Or just earned income? (ie, mostly wages). Most flat tax proponents like taxing only earned income. Ie, us “wage slaves”, but not the “fat cats”.

Well, then let’s suppose you said ALL income. Then you have to make any tax reform “revenue neutral”, ie it brings in the same amount as it does now. No bring up imaginary 'cost cutting", which everyone agrees should be & can be done until the time comes to decide what is being cut.

Ok, then- who here pays the highest FIT rate on a large chunck of your income? That’s a TAXABLE income of over $300K. You’ll pay less income tax- congrats. Everyone else here- you’ll pay more. Let me explain that again- in any revenue neutral flat tax scheme- unless you are in the top bracket- you’ll pay MORE income tax. I know, I knwo- you think- “hey, why don’t they just take a flat 10% of everyones income and that’ll be fair, and hmm, carry the 9, divide by … and yes! I’ll pay less that they are withholding.” Sorry, dude. The rate will be much higher that 10%- likely somewhere around 20%. That’s on every dollar, not just your highest (“marginal”) tax bracket. Ok, go get last years 1040. See the amount of taxes there? No, not your freaken refund- the actual tax. Then- what’s you gross income? Divide. Did you pay 20% of your gross in FIT? Probably not.

Remember- they are just talking FEDERAL INCOME TAX here- not every damn thing they take out of your taxes. You likely pay about as much other taxes (Social security, etc) as you do FIT. And that’s another thing that makes the whole “flat tax” idea unfair- Social Security & Medicare are REGRESSIVE, which means that the middle class & poor dudes pay a much larger % of their incomes into them. Soc security tops out at some $80K, you know- you stop paying anything after that. Sure- the lowest 20% of the population pay close to 0 as a % of their income for FEDERAL INCOME TAX. But their tax burden overall is something like 19% of their incoem- about the same as the richest 20%.

Then, there are the upper middle class home owners who will lose their home mortage deduction- which is the only thing which allows them to make the payments. Whoops- many, many foreclosures, families out in the streets, etc. Good news- property values will come down- a LOT.

Oh boy! “Lets get rid of the IRS and go to a national sales tax”! Umm, dude- who is going to collect that tax, hmm? Ok, they’ll rename the IRS, maybe, but they’ll still be there. Oh, and that rate will be something between 15 & 20%, depending. Combined with a State & local sales tax rate of 8+% out here, that means a sale tax rate of around 25%. Whoodoggies! Dudes will certainly try to get around that by shopping in the black market… then the rate will have to be raised…

So rather than some “pie in the sky” flat tax- let us simplify the tax system. Get rid of the “misc itemized deduction”. No more “casualty loss”. No more "NOL"s, no “AMT” no “EITC”. No more medical expense. No more confusing misc credits. For individual wage earners, that means you take your wages, subtract taxes & Mortgage (and I’d limit this to a max deduction of 100K), then exemptions- then that’s your Taxable income. Check that against a graduated rate chart (which rates would be a bit lower to account for some small lost deuctions), and there you are. The 1040 “long form” would be about as complex as the “short form”. All income, including captal gains is taxed at the same rate. Then, only dudes with businesses, like Scd C & E filers would have to go to CPAs. It would be carefully balanced so that the average homeowning wage- earner would pay just about the same taxes as now- but with less hassle, and less “social engineering”.

[Apos]

Wow, so prices will come down and this will make in general people LESS able to afford houses?

It’s true, if we subsidize people’s mini-mansions, then cutting the subsidy certainly wont help out the people that were relying on it. But what sort of argument is that? Why do they deserve the subsidy in the first place? And if prices fall, how can homeowners lose more than homebuyers would gain?