Payments made on student loans…
I think this is true generally. If something is worth gov’t support, the gov’t should just…support it. With money. Deductions are too untargeted and too easy to easy to abuse.
I’m a bit ambivalent on entirely removing the ceiling. It’s a worthwhile deduction but I don’t see a great societal benefit to giving a great tax break to ultra wealthy parents, either.
The person receiving the benefit of the support is, in theory, the child, not the caretaker. In effect, this simply reduces the amount of money that goes to support the child, which defeats the very purpose.
I can see allowing the person giving the support to claim dependents based on it, though, which would somewhat reduce the tax burden.
This would simply increase the amount you are to pay. The courts order a dollar amount that says will take care of that child that’s within your means. The amount to care for the child will stay the same, but with taxes coming out, now the court will simply order you to pay more because it still costs X dollars to feed, clothe, and shelter the child.
Additionally, what if the paying party was a jerk and didn’t file whatever form was necessary to document the transfer, or perhaps make it look like the partner got WAY more?
Don’t take it personally, but I think the simplicity of the current method is fairly effective, even if the onus does fall on the parent that’s paying for the welfare of the children in the other parent’s care.
You want to be able to deduct tuition and student loan payments? 
Well, you do get an exemption for a dependent. Kind of like deducting the money you spend feeding, clothing and housing your child.
Only that portion of income spent on either, inclusively.
If there are more deductions, there will need to be higher tax rates. Since the government operates on a budget…they still have to generate enough tax revenue to cover the budget.
Why can’t everything I spend money on be deductible? I mean, I have to pay the mortgage, the car payment, internet, the kid’s braces, and so on. I should be able to subtract my yearly payments from my yearly income, and only pay taxes on what’s left over. And if I’ve spent it all, then the government shouldn’t get anything, after all, I don’t have anything left over either.
Wait, I’ve got an even better idea. Why not just abolish the income tax?
Interesting idea. I’m not sure how the feds will get revenue, though, unless there is a federal sales tax.
It’s an old idea. There are plenty of proponents of an entirely consumption based tax system.
Doesn’t really simplify matters. The poor already spend their entire income on necessities and pay no federal income tax. And it gives higher income people disincentive to spend money.
You’d have to some increase minimum pay or implement a system of deductions and exemptions based on means. At that point, you’re replacing one complex system with another.
A portion of rent to balance the distortions caused by the mortage interest deduction. Better yet, just eliminate the mortgage interest deduction.
Well there you go. The purpose of the income tax is to raise money that the government can spend on things like food stamps and Tomahawk missiles. We decide how many missiles we want and how much that would cost, so then we have to either raise the money through taxes or borrow it.
The more things we add as “deductions” the higher overall taxes will have to be, unless we want to stop spending so much money on missiles. I thought my proposal–make everything deductible–would illustrate the problem. If you follow my plan then only people who save money would pay income taxes. That doesn’t make sense, does it?
If you want to implement a national consumption tax or value-added tax and scrap the income tax, well, that would be fine with me. The only problem is that we’re never going to do that. And the sales tax would be pretty damn steep, especially once we start exempting half the goods and services on the market.
Nothing. A ‘standard deduction’ amounting to whatever the ‘poverty limit’ is set at, and that’s it.
Warren Buffett famously noted that he effectively pays a lower percentage than his secretary. Why? Deductions. A rich guy can afford to pay 20k a year to an accountant who can find him every possible deduction, saving him 100k in taxes. Us working stiffs can’t. We have to either do all the accounting and tax lawyer work ourselves, or just take the standard deduction. Lefties (also famously) bitched that GE paid no taxes, one year. Well, duh. That’s because you people made tax credits for fucking windmills and shit, which GE then produced, as you encouraged, and dutifully wrote them off. Now they’re evil for doing what you wanted them to do, then wrote off the expense you people wanted them to write off for doing what you wanted them, and specifically wrote the law to encourage to do.
A reasonable argument can be made for each individual deductible item. No good argument justifies them all collectively. Of course, alternatively, I could get on board with a ‘maximum itemized deduction’, to go with the ‘standard’ AKA ‘minimum’ deduction, as that would solve the problem equally well, while allowing us working stiffs to sometimes deduct more than the ‘standard’ for hardship type expenses, without letting the rich guys knock their effective rate down lower than ours. Also, with our progressively graduated tax code, (pulling rates out of my ass based on poor memory) the poor guy gets only about a third of the benefit the rich guy gets from any given deduction. Why? He can more easily afford those braces for his kid than the poor guy. Why should he get three times as much knocked off his tax bill for it? Shouldn’t it be the other way around?
Our current tax code is just a way for rich rent-seekers to find ways to convince the congressclown they contributed to, to allow the rich guy to suckle the government tit. And it happens even if he has a (D) after his name. Obama’s no different. Nor is Hillary. Or Bill. Nor are any of the ‘right-wing’ jackii.
I’m not sure I follow your logic here. Are you saying that since we can’t make everything deductible, then it follows that we cant talk about what things should be deductible? I hope your not saying that, because, well, that would be a silly thing to say.
But it’s not remotely comparable. It’s far, far more expensive to raise a kid than the basic exemption saves you. In the USA the exemption is a deduction of just $3900, which obviously does not save you anywhere near $3900 in taxes.
Erm. I think you’re entirely missing the issue of taxation on capital gains.
What we should cut out of the budget should probably be separated out from what should be a deduction, in terms of discussion. I mean, that could be a whole other thread.
I agree it is not enough but that’s the point of the deduction nonetheless. X amount of income, per person, is considered “tax exempt” for whatever reason. It seems to me that this should, at the very least, be an exemption shared by both parents in the case of child support. Paltry, I know, but I think it should be deductible for the parent paying support.
No, the big reason Buffett pays a lower percentage is the way he earns his money. Money made from salaries and wages are taxed at a higher rate than money made from investments. Buffett makes most of his money from investments so he pays that lower rate.