The problem isn’t the status quo. Any tax system will eventually equalize at some acceptable level, as has the current tax system. The issue is in changing the status quo. The net effect here is that eliminating deductions is a defacto tax increase. Perhaps the Canadian way is correct or maybe not; in either case it doesn’t matter. What we are really talking about is a tax increase.
The administration is raising taxes without admitting doing so. They want to spend more and have to find money somewhere. This is somewhat similar to the stop loss program in effect for the armed forces in that they are not willing to institute a draft, so they’ll just keep their current soldiers on the pay roll indefinitely. Its not really a draft, but it has the same effect in that it keeps the numbers up. Eliminating deductions isn’t really a tax hike as the tax brackets remain the same, you’ll just end paying more because the new rules make it look like you are making more money.
Not addressing this particular exemption, I think this is a dangerous sentiment. The Status Quo is wrong often enough that questioning it should be the default. Every law should have to stand on it’s merits rather than be supported by “tradition” or “status quo”.
I read somewhere recently that this was being discussed as a way to pay for proposed tax-free savings accounts.
If so, we will lose the deduction for state and local taxes, but will gain a deduction for the money we save in these acounts.
Depending on the threshold on the savings deduction, and one’s state and local tax burden, this might actually be a tax break.
E.g., people who live in a high-tax state may not get screwed if they are allowed to salt away tax-free more than they pay in state and local taxes. (And assuming that they have the disposable income and fiscal discipline to do so).
FWIW, I live in Maryland, where my state and county tax is 7.5%. But I save a lot more than 7.5% of my income, so I might do better under this arrangement.
I am not optimistic about this though – the government might implement the tax increase and not follow through on the tax cut. Or it could set the savings threshold too low to make up for the loss of the state-and-local deduction in high-tax states.
You may consider that so. In law and government, this is not the case, however.
Addressing the point I was referring to, while ignoring the status quo, begs the question: Why should we receive any deductions at all? Kids, houses, taxes, educational spending-the list goes to infinity. Maybe if we eliminated all deduction taxing, and requested a more clear, concise, simple method of collecting taxes, we’d not run into these problems. Say, maybe a flat tax. THat way, the bags of bones sitting in their government-funded perches, passing harsher tax laws against the working masses would have to pay his taxes, too.
Well, think about taking 15% of a family’s earnings who earn just enough to keep them above poverty but not enough to really live comfortably.
That 15% ends up hurting them a lot more than 50% would hurt your average multi millionair.
I’ll readily admit that I do not have a strong foundation in economics so I may be barking up the wrong tree.
Yes, but how do we decide where to set it?
And even if that’s done, a small percent of a small number still ammounts to a lot of money, especially if you don’t have deductions for children, etc…
Say, poverty level for given family size plus the tax rate? Thats just off the top of my head, but something along those lines would work.
Say, did anybody notice that y’all are screaching and arguing about one tax reform proposal amongst many months before the bi-partisan committee has even looked at any of them, much less made any recomendations? Just wondering…
You have some of the same problems with a flat income tax as you have with a sales tax. Both are regressive in that the tax affects lower income earners more than higher earners. True, the percentages are about the same, but let’s assume a 15% tax. Someone earning $100,000 pays $15,000 in tax, leaving him $85,000 to live on. Someone earning $40,000 pays $6,000 in tax, leaving $34,000. Now, the percentages are the same, but the effect in real dollars is greater. Now, assume someone working a job for $5.15 an hour with no vacation, so call it $10,712. This is theoretically the most you could make working minimium wage with no overtime and no vaction. 15% of $10,712 is $1,606.80, leaving $9,105.20. Of course, if we were to actually attempt a flat tax, we’d put in an exemption like grienspace says. So the question is who is affected the most and the least by this tax. If you are rich enough, sure you’ll be paying a lot of money in terms of actual dollars, but your buying power will not be decreased nearly as much. After all, $85,000 is not a small chunk of change. The guy earning $10,000 a year will be exempt. So, really, how it affects the middle-class is what would make a switch to a flat-tax live or die.
I file a long form only because I have a part-time job as an independent contractor and need to file Schedule C and Self-Employment Tax forms.
Otherwise, I’m strictly standard deduction.
So long as the standard deduction didn’t drop as a result of the removal of state income and property tax exemptions I would be unaffected.
BTW, I am in favor of much higher standard deductions paid for by eliminating tax credits,personal exemptions and most if not all current itemized deductions. I think every single taxpayer should have $24K/year totally exempted from tax–double that for married couples.
The problem with the “family friendly” measures of personal exemptions for children and child tax credits is that economic factors keep kids living at home longer than they
used to. A family with 2 kids 16 years old or younger pays $2000 less taxes than their next door neighbor with 2 kids 17 and 18 because the tax credit ends at 16.
And both households get $8K worth of exemptions that the household with 22 and 23 year old year old kids living at home and not attending schoool any more gets.
Giving all the above families the same tax exemption is fairer.
We should also end the sham of allowing custodial parents make believe that child support isn’t income while denying deductibility to the non-custodials.
Make both sides pay taxes on any and all income exceeding his/her $24K exemption.
Damn, I get so sick and tired of the liberal assholes blaming Bush for everything without bothering to rub two brain cells together and see if a spark happens.
This is not new. This has been discussed since the concept of tax overhaul really started kicking in about 10 years ago. Whether you go to a flat tax or a national sales tax is immaterial - you lose your deductions. Period.
Trying to blame that on Bush is just plain goddam stupidity, both on the part of the LA Times for writing a halfassed bullshit article and on World Eater’s part for not bothering to think before he posted what he did. :wally
Depends on when they bought the house. If they bought it 20 years ago, no way are they paying $7,000 in taxes, or anywhere close to it. If they just bought it, then they’re screwed. It’s our wonderful Prop 13. I benefit, having paid somewhere close to your lower price for a house now worth somewhere near your higher one. But it’s still unfair.
I have another, more paranoid reason why they’re proposing this - to penalize those states and municipalities with the nerve to levy enough taxes to pay for decent schools and public services. If New Jersey has higher taxes and better schools than Alabama they need to be punished. Give a kid too much education, and he might turn into a Democrat or liberal or something awful like that.
The last time the Internal Revenue Code was given a good scrubbing was 1986. A lot of politicians and lobbyists had a bunch of ideas (much like today).
There was much talk of eliminating deductions and closing loopholes for favored businesses. The final bill eliminated the deduction for sales taxes and the employee’s portion of social security tax but preserved the deduction for state and local income taxes. The delegations of New York and California wanted to preserve the income tax deduction. The Texas delegation wanted to keep the percentage depletion method for oil drilling. Both groups got their wish.
These deals are simply done. It would be better from a simplicity and equity perspective to eliminate both but that is not the way the system works.
The standard deduction largely removes the poor from the debate. This is a matter of what tax benefits are steered to the middle and rich of any given state.
Ah, but my original statement was that the Republicans used one-issue voters who tended to be groups low in education and intelligence to win the election. So it’s only those one-issue voters I was referring to.
First of all, I hope you’ll accept the notion that education and intelligence are generally linked – while there are plenty of exceptions to this rule, as a general rule, the more education a person has, the higher the likelihood that they’ll be intelligent, too. I’m not saying that education causes intelligence or that it is necessary to intelligence, only that people who are educated are more likely to be intelligent. And vice versa.
To start with, here’s a survey detailing the differences between inhabitants of states with strong anti-abortion laws vs. states with pro-choice laws:
See? As a general rule, anti-abortion equals lower levels of intelligence, and lower levels of education. Easy. Now let’s move on to gun control:
Here’s a link citing a study showing that gun ownership tends to be concentrated in the less affluent, less educated states
Relevant quotes:
As for believing that Iraq was linked with 9/11 – on the face of it, you’d have to be either stupid or ignorant to buy something so thoroughly debunked. Probably both.
Yeah, *that *describes the folks who are being sneered at as “liberals.” The “conservatives” have a political philosophy that’s summed up best as “I’ve got mine, and if you don’t have yours, tough.”
You gotta love the people who claim to want “small government” and who then turn around and vote for the guys who will use the government to mandate “morality.”
In California, Prop 13 declares that property tax is 1% of the assessed value of the property, and the base value of the property can not go higher than 2% per year than the previous year, prop 8 assessment notwithstanding. Cite
For a $540K home, that’s $5400 in prop taxes, plus any locally approved school or water bonds which is negligible. How are you getting the $7000 - $15000 range?
And that’s based on someone purchasing the house this year at $540K, not someobody who bought the house 5 years ago at $270K…that base value would have only risen to $298,102. (250,000 x 1.02^5), they would only be paying $2981 annually.
Prop 8 kicks in only when the actual values of the homes drop below the the base value amount described in Prop 13. I just had my taxes realigned, when I discovered that the previous owner of my house had a prop 8 assessment in place when I purchased the house back in 1997 and the county assessor never removed it. Now in 2004, I found that the prop 8 value was removed, and the property value of the house jumped from $217K to $448K in 2 years! Two visits to the assessors got back to where it should be…$226K. Either way, your range is more realistic for property owners who have $700K-$1.5M homes, and thats on base value alone.
And what’s with this red state/blue state shit again? It’s PURPLE, people…PURPLE!
The people we bought our house from were paying well under $1,000 a year in property taxes, having lived in it for at least 20 years. We probably paid 4 times as much, no big deal since it was less than we were paying in New Jersey for a house worth less.
Of course in New Jersey the schools ran 8 periods instead of 7, and the teachers didn’t have to pay for supplies, and our trash was picked up by the town free - but we paid more taxes.
