Rand's Tax Plan
- Thread starter Drop.Tine
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Flat tax is fine with deduction for mortgage interest on your residence---Not a second home.
And no deductions for charitable contributions. And these megachurches
with huge cathedrals and planes--no longer tax exempt. And any charity that pays any employee more than $75,000--no longer tax exempt. You work for a charity, you don't get to be rich.
And no deductions for charitable contributions. And these megachurches
with huge cathedrals and planes--no longer tax exempt. And any charity that pays any employee more than $75,000--no longer tax exempt. You work for a charity, you don't get to be rich.
I'm a nay for three reasons:
- His tax code is a giant tax cut for the rich. It isn't on the poor and middle class. That's not something we need in a country where the rich are doing fine but the bottom 80% are struggling
- Keeping the mortgage interest deduction is dumb; it should be phased out if you're going to phase out a whole host of other deductions
- The Federal government tax revenue shouldn't be cut right now; if anything, given our level of government spending and the size of our entitlements, it should be slightly higher.
Overall, I'm not a flat tax person. It's one of the great cons that the right has pushed much of their base into supporting even though nearly all of the flat tax proposals out there would be terrible for their base.
I found it fascinating that he proposed a VAT - makes me wonder if that idea will start to grow on the right.
- His tax code is a giant tax cut for the rich. It isn't on the poor and middle class. That's not something we need in a country where the rich are doing fine but the bottom 80% are struggling
- Keeping the mortgage interest deduction is dumb; it should be phased out if you're going to phase out a whole host of other deductions
- The Federal government tax revenue shouldn't be cut right now; if anything, given our level of government spending and the size of our entitlements, it should be slightly higher.
Overall, I'm not a flat tax person. It's one of the great cons that the right has pushed much of their base into supporting even though nearly all of the flat tax proposals out there would be terrible for their base.
I found it fascinating that he proposed a VAT - makes me wonder if that idea will start to grow on the right.
In general, when a Republican pushes a flat tax, what they mean is they want to give a huge tax cut to the rich that someday you will have to pay for - either through higher taxes on you (a member of the middle class) or through reduced services for you. It's a con.
S
Stevedangos
Guest
The poor in th eUnited States pay no federal income tax and most get money that they never paid in to start with.
When Ford and GM cant keep up with the demand for new trucks, and when I drive by restaurants every night of the week and parking lots are full I have a hard time believing the middle class is struggling much.
And yet the poor still struggle to get by. That's not a reason to change the tax burden on them.
Besides, my real argument was about the middle class, who are the real losers under a flat tax plan.
We've got a short-term boom in auto sales due to the stimulus resulting from cheaper gas. That stimulus is also incentivizing consumers to select bigger, more gas-guzzling vehicles. It's not wise to draw a broad conclusion about the economy from personal truck sales. All the current boom really tells you is that gas is a dollar cheaper per gallon than last year.
S
Stevedangos
Guest
do you really think people buy $40,000 trucks because gas is $1 a gallon cheaper than a year ago??? Good lord
uhhh...yes, they do. Gas price is a material factor in the selection of vehicles. Why do you think the Hummer died? People stopped buying Hummers when gas when to $4 a gallon.
Car sales down 1% YTD relative to 2014. Trucks and SUVs are up 10%. Cheap gas is a big part of this.
That car sales figure has even been helped by the car companies shoving weak selling models into rental fleets, as was discussed by the WSJ last week. http://www.wsj.com/articles/u-s-auto-industry-develops-a-weak-spot-1434364381
Which saves the average driver what? About $500. That's not enough to make me go buy a new truck.
If all you care about is what you can afford with a monthly payment, though, when your monthly payment for gas goes down, you can buy a bigger car/truck/SUV. And people do it.
A decent % of it is that, when it's time for someone to buy a new vehicle, they pick bigger than they would have had gas been $4 a gallon.
But, the monthly payment game is strong in the USA, and some people do things that you or I would never, ever do.
I like the flat tax but prefer the fair tax/sales tax.
The flat tax would need to exempt the first X number of earnings so the poor aren't hammered. Same with the fair tax (would require reimbursement somehow) but it is simple since you have no deductions and no escape route. I've never thought taxing earnings promoted earning. Taxing sales would promote saving. A home purchase could easily be sales tax exempt if that is a hangup for many.
The flat tax would need to exempt the first X number of earnings so the poor aren't hammered. Same with the fair tax (would require reimbursement somehow) but it is simple since you have no deductions and no escape route. I've never thought taxing earnings promoted earning. Taxing sales would promote saving. A home purchase could easily be sales tax exempt if that is a hangup for many.
Paul's proposal does have an exemption for under X of income. I believe it also eliminates payroll taxes, which fall disproportionately on the poor and middle class (which, to be fair, the benefits are even more heavily subsidized in their favor)
Paul's proposal also includes a VAT - a regressive tax that would offset what we're talking about above. It isn't just a proposal to eliminate taxes. it's not a sales tax but it's not that far off, either.
Keep in mind his overall proposal is for a huge tax cut - the fact that he needed a 14.5% income tax on top of the VAT is a reminder of the amount of revenue you would need to raise to keep the government functioning. SS, Defense, and Medicare are big programs.
The economist in me has to point out that taxing consumption isn't any better than taxing earnings, and that the goal of tax policy should definitely not be to make saving materially more appealing than consumption. Consumption is economic activity. It drives jobs, profits, etc. Savings are generally sinks of potential economic activity. This is why changes in tax policy which affect the poor and middle class affect economic activity materially more than those which affect the rich.
Paul's proposal also includes a VAT - a regressive tax that would offset what we're talking about above. It isn't just a proposal to eliminate taxes. it's not a sales tax but it's not that far off, either.
Keep in mind his overall proposal is for a huge tax cut - the fact that he needed a 14.5% income tax on top of the VAT is a reminder of the amount of revenue you would need to raise to keep the government functioning. SS, Defense, and Medicare are big programs.
The economist in me has to point out that taxing consumption isn't any better than taxing earnings, and that the goal of tax policy should definitely not be to make saving materially more appealing than consumption. Consumption is economic activity. It drives jobs, profits, etc. Savings are generally sinks of potential economic activity. This is why changes in tax policy which affect the poor and middle class affect economic activity materially more than those which affect the rich.
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I do NOT favor a compilation of sales AND income taxes. The income tax would have to be eliminated for me to support any national sales tax. As long as there is some form of exemption for basic cost of living, the sales tax is fair or moral. The elimination of the ability to hide income from taxation goes a LONG wat towards replacing the revenue "lost" from the highest tax rates being eliminated.
You spend and i'll save. See who comes out ahead.
You spend and i'll save. See who comes out ahead.
I rent. Why should you get a tax deduction for mortage interest? What makes homeowners more special than people who rent? If taxes on your home and mortage interest are a problem, get a cheaper, smaller home.
Same with deductions for children. I don't have children. Why should I pay a higher % of taxes when I am costing the government less than you and your kids. If you can't afford to pay your share of taxes because you have children, then don't have so many kids.
Everybody wants to reform the tax code but just don't touch your deductions. I say bull crap! Make it the same for everyone. Most importantly, make it the same for the rich who benefit the most from loopholes and deductions for this and that.
Same with deductions for children. I don't have children. Why should I pay a higher % of taxes when I am costing the government less than you and your kids. If you can't afford to pay your share of taxes because you have children, then don't have so many kids.
Everybody wants to reform the tax code but just don't touch your deductions. I say bull crap! Make it the same for everyone. Most importantly, make it the same for the rich who benefit the most from loopholes and deductions for this and that.
Bogey - you're right, homeowners don't deserve that break. It's not good public policy; it rewards people for doing something they would have done anyway. If anything, it encourages people to buy slightly larger houses, which isn't the sort of thing we should be spending tens of billions on per year.
you ignored the health care tax break - as distortive break as any of them.
you ignored the health care tax break - as distortive break as any of them.
If homeowners don't deserve that break, then vacation homeowners sure as hell have never deserved it on their second home. That still blows me away.
And why is the 401k contributions limit so much higher than IRAs? everything is geared to favor the rich.
And why is the 401k contributions limit so much higher than IRAs? everything is geared to favor the rich.
Blame Congress.
401ks were never intended to be the retirement plan of the masses. They were originally a tax shelter for high income employees. The laws have been patched together.
Also, don't forget that 401(k) participants can fund an IRA as well. I can really defer the full 401(k) limit, plus an IRA for me, plus an IRA for my spouse who doesn't work. And I can do a backdoor Roth conversion to maximize tax effectiveness.
Small employers. Yes, nearly every large organization offered some account-based retirement plan.
I'm not opposed to child tax deduction. From a theoretical standpoint, people with kids are supporting more heads on one income, so their ability to pay taxes is less than a single person or a married couple with no kids. They need more of their income to provide the basic necessities of life.
And, it's income limited like it should be. There's a fair argument to be made that this is better policy than offering larger personal exemptions for dependents since it phases out with income.
In terms of targeted tax credits, this credit is pretty efficient at achieving a desired societal aim that makes sense from a theoretical standpoint.
And, it's income limited like it should be. There's a fair argument to be made that this is better policy than offering larger personal exemptions for dependents since it phases out with income.
In terms of targeted tax credits, this credit is pretty efficient at achieving a desired societal aim that makes sense from a theoretical standpoint.
This is the theory, yes, but the rate of home ownership in the US is not higher than in many other developed countries that don't have one (Canada, UK, Australia are notable examples.) The US is an outlier on this practice
In practice, the credit is extremely inefficient for a number of reasons:
- People want to own homes anyway; they don't need a credit to want to do so
- The value of the credit accrues heavily to high income taxpayers (in 2012, 77% went to taxpayers making over $100k). Part of the reason for this is that a number of low/middle income taxpayers don't itemize.
- Plenty of people live in parts of the country where owning a home is extremely costly; the deduction is functionally not available to the average person in a number of large cities
- Plenty of homeowners don't have a mortgage
- The US already subsidizes home ownership through Fannie/Freddie interest rate subsidies
The US spends around $70 billion a year on the mortgage tax deduction. It's real dollars you could use to lower rates or close the deficit.
I don't know your age, but you may recall prior to TRA 86 you could deduct interest on all loans, including credit card debt and car loans.
Amazingly, the current policy is better than it once was.
I didn't know that owning a home makes you a better citizen. What facts/studies support this theory?
And homeowners are building equity and getting a tax break on that money at the same time if you break it down to basics.
Most families today have two incomes with wife working and in many cases making a damn good income. A married couple with 2 good jobs, like lots of people have, are much better off financially than a single person. i would venture a guess that those of you that have a wife working have a helluva lot more money in the bank as I do. Don't agree that a single person has more money than a married couple with kids, and therefore should shoulder a higher tax burden. Again, what facts/studies support this theory.
Seems to me that there is a lot of rationalization without facts going on to justify loopholes for the traditional family unit to take their turn on the government teet at my expense. But since it is you getting the tax breaks, somehow you are entitled to it. BS I SAY, LET'S ALL PAY THE SAME - RICH, MIDDLE CLASS, POOR, MARRIED, SINGLE, CHILDREN, NO CHILDREN, OWN A HOME, LIVE IN AN APARTMENT, BLACK, WHITE, GAY, TRANSGENDER, CATHOLIC, BAPTIST, ATHEIST.
And homeowners are building equity and getting a tax break on that money at the same time if you break it down to basics.
Most families today have two incomes with wife working and in many cases making a damn good income. A married couple with 2 good jobs, like lots of people have, are much better off financially than a single person. i would venture a guess that those of you that have a wife working have a helluva lot more money in the bank as I do. Don't agree that a single person has more money than a married couple with kids, and therefore should shoulder a higher tax burden. Again, what facts/studies support this theory.
Seems to me that there is a lot of rationalization without facts going on to justify loopholes for the traditional family unit to take their turn on the government teet at my expense. But since it is you getting the tax breaks, somehow you are entitled to it. BS I SAY, LET'S ALL PAY THE SAME - RICH, MIDDLE CLASS, POOR, MARRIED, SINGLE, CHILDREN, NO CHILDREN, OWN A HOME, LIVE IN AN APARTMENT, BLACK, WHITE, GAY, TRANSGENDER, CATHOLIC, BAPTIST, ATHEIST.
The homeowner idea is that you're tied to your community. A renter can be transient and leave at a moment's notice. It's a nice idea but it doesn't require a tax break.
As for the rest of your post. What facts support this? Do you have kids? You'll know the answer pretty quickly when you see those credit card bills.
You've got to give them a place to sleep, food, clothing, health care, supplies for education and whatever else, etc. There is a basic amount of support you have to provide to a child. It's more than the value of the child tax credit of $1,000 per kid.
This idea underlies far more than tax policy - look at how the thresholds/benefits for government programs vary by the number of dependents. Each foster kid is more money. Your eligibility for EITC varies with the # of kids. The definition of the Federal Poverty Line varies with family size. Etc.
This is a basic tenet of economic analysis that underlies tax and benefit schemes all over the world.
I'm with you on the other stuff but I think there's logic behind accounting for family size in tax policy, especially in a world where the average woman doesn't have enough kids to produce even a stable US population size (the only reason we are growing is immigration.) We need the next generation to pay for our SS and Medicare. Becoming Japan or Korea should not be a goal for the US.
As for the rest of your post. What facts support this? Do you have kids? You'll know the answer pretty quickly when you see those credit card bills.
You've got to give them a place to sleep, food, clothing, health care, supplies for education and whatever else, etc. There is a basic amount of support you have to provide to a child. It's more than the value of the child tax credit of $1,000 per kid.
This idea underlies far more than tax policy - look at how the thresholds/benefits for government programs vary by the number of dependents. Each foster kid is more money. Your eligibility for EITC varies with the # of kids. The definition of the Federal Poverty Line varies with family size. Etc.
This is a basic tenet of economic analysis that underlies tax and benefit schemes all over the world.
I'm with you on the other stuff but I think there's logic behind accounting for family size in tax policy, especially in a world where the average woman doesn't have enough kids to produce even a stable US population size (the only reason we are growing is immigration.) We need the next generation to pay for our SS and Medicare. Becoming Japan or Korea should not be a goal for the US.
And if you are married with kids you most likely have 2 incomes. Hey I understand kids are expensive. But I see lots of teenage kids driving nicer cars and more expensive phones than I have, living in nice homes, have every thing they want, so mom and dad aren;t hurting. So why should they get a deduction I am not entitled to received? Answer: So congress can say "Hey, see how we are helping the middle class?" It's pure politics and since the majority of Americans are married with children, then it's all good. Does a family with $200K income really need a $1000 tax deduction per kid?
Family making $200k is ineligible for the child tax credit. It phases out fully at $130k of AGI.
This gets to my point above about it being targeted pretty well at the families who need it to supply a basic level of necessities to their kids.
A family with kids will spend a substantial amount of those earnings on child care (be it through income lost by having a stay at home spouse or the cost of daycare/aftercare.) There is a difference in expenses between a family of two wage earners making $75,000 and a family of two wage earners + two kids making $75,000 that should be accounted for in the tax code.
Not all kids are old enough to drive cars. Have you checked the day care prices? If both parents work they most likely have to send young children to day care 5 days a week. Even most of those in school have to go to day care after school. I can tell you it ain't cheap and getting them to and from day care when both parents work is another issue depending on their work schedules. I know this because my daughter is married with 2 kids, 3 and 6, that have had to be in day care since they were babies. I have filed a long form at tax time ONCE so I've only been able to claim a deduction on my mortgage that ONE time. I've bought 4 different houses in my life with the one I'm in now being by far the most expensive and I've never paid enough interest on my home loans to get that deduction. The only time I got it was because I had a self employed job on the side one summer and got to claim depreciation on my truck which made me show a loss and I could use the long form and claim my mortgage interest. I've been in the same boat as you all but that one year but I don't begrudge those that can claim their mortgage interest and whatever they get to claim on day care costs. I hope my grandsons get to live in a nice house and have nice things when they're teenagers too.
I didn't realize the child tax credit was phased out on higher incomes. I am playing devil's advocate in this debate. The child tax credit and mortage interest deductions are minor in the grand scheme of things. I do realize the major tax inequity problems exist because of the loopholes for the rich and big business - things like off shore accounts and moving a company's headquarters to an office in some foreign country.
But I do want to point out how hypocritical it is to accuse some poor people of living off the government for getting a couple hundred dollars of food stamps per month when many people with money in the bank take tax credits and deductions for things that are a part of normal life - owning a home and raising kids.
Again, I do realize our country's financial problems run deeper than food stamps and child tax credits. Just not kid ourselves, we all benefit from some form of socialism.
But I do want to point out how hypocritical it is to accuse some poor people of living off the government for getting a couple hundred dollars of food stamps per month when many people with money in the bank take tax credits and deductions for things that are a part of normal life - owning a home and raising kids.
Again, I do realize our country's financial problems run deeper than food stamps and child tax credits. Just not kid ourselves, we all benefit from some form of socialism.
So, are you saying that I shouldn't deduct the mortgage interest on my 3 homes?? That would suck.
Property and other tax exemptions are incredible to me. I think it is silly that Federal government thinks it is good policy to subsidize people for living in higher tax areas.
The deductions aren't minor when you add all of them up. When you think about mortgage interest, health care, income/sales/property tax, retirement, child tax credit, EITC, chartiable donations, etc...the spending through the tax code on deductions and credits is much higher than the average person would guess.
Corporations also have a ton of these. It's why the corporate tax rate is so high.
http://www.taxpolicycenter.org/UploadedPDF/1001542-Spending-In-Disguise-Marron.pdf Estimate that the Federal government spends nearly $1 trillion per year on these special deals for companies and individuals.
You have to itemize to claim those tax deductions - benefits of state tax being deductible accrue very heavily to the top 10% of income earners.
Plus, the residents of those states do receive benefits for those taxes. Why are people in Florida subsidizing me for living in MO?
Probably the same reason that I am subsidizing 43 million people on food stamps. Because we are just good people who want to help.
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