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Tax Reform

BigRat
Posts: 465
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3/25/2013 12:32:21 PM
Posted: 3 years ago
We should eliminate the state and local tax deduction, health benefit tax deduction, and home mortgage tax deduction and then increase the child tax credit, eliminate the marriage penalty (I support income splitting to achieve this), and implement a home mortgage tax credit.

We would make the numbers so we would achieve static revenue neutrality. The benefits would be as follows:

1.) Elimination of the state and local tax deduction would allow low tax states to stop subsidizing high tax states and would stop encouraging states to pursue higher tax policies.

2.) Elimination of the health benefit deduction would encourage individuals and families to get their own health care plan without having it dominated by their employer.

3.) Elimination of the home mortgage deduction would raise revenue in a fairly progressive way. Replacing this with a home mortgage deduction would make for a less expensive and more progressive way of encouraging home ownership.

4.) Expanding the child tax credit helps get rid of the inherent biases against child rearing that are inherent in our entitlement system and looks at parents as investors in our future economy.

5.) Eliminating the marriage penalty gets rid of the bias against marriage and thus encourages marriage as a bedrock foundation of the nation.

6.) If conservatives were to embrace this plan, they would get much more public support from middle and working income parents than they currently do.
DanT
Posts: 5,693
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3/25/2013 1:12:15 PM
Posted: 3 years ago
At 3/25/2013 12:32:21 PM, BigRat wrote:
We should eliminate the state and local tax deduction, health benefit tax deduction, and home mortgage tax deduction and then increase the child tax credit, eliminate the marriage penalty (I support income splitting to achieve this), and implement a home mortgage tax credit.

We would make the numbers so we would achieve static revenue neutrality. The benefits would be as follows:

1.) Elimination of the state and local tax deduction would allow low tax states to stop subsidizing high tax states and would stop encouraging states to pursue higher tax policies.

2.) Elimination of the health benefit deduction would encourage individuals and families to get their own health care plan without having it dominated by their employer.

3.) Elimination of the home mortgage deduction would raise revenue in a fairly progressive way. Replacing this with a home mortgage deduction would make for a less expensive and more progressive way of encouraging home ownership.

4.) Expanding the child tax credit helps get rid of the inherent biases against child rearing that are inherent in our entitlement system and looks at parents as investors in our future economy.

5.) Eliminating the marriage penalty gets rid of the bias against marriage and thus encourages marriage as a bedrock foundation of the nation.

6.) If conservatives were to embrace this plan, they would get much more public support from middle and working income parents than they currently do.

We need to simplify the tax code; Implement a flat tax, eliminate deductions and tax credits, and eliminate joint filing status. We also need to switch from direct taxes to indirect taxes; as is, the brunt of the federal tax revenue is derived from direct taxation (which originally was unconstitutional unless appropriated).
"Chemical weapons are no different than any other types of weapons."~Lordknukle
lewis20
Posts: 5,093
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3/25/2013 1:25:04 PM
Posted: 3 years ago
At 3/25/2013 12:32:21 PM, BigRat wrote:
4.) Expanding the child tax credit helps get rid of the inherent biases against child rearing that are inherent in our entitlement system and looks at parents as investors in our future economy.

Disagree with this one.
Taxpayers subsidizing other people having kids isn't right. Taxes shouldn't serve to encourage procreation, they should be a person paying their fair share, not paying to help someone else raise their kid.
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Khaos_Mage
Posts: 23,214
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3/25/2013 2:28:29 PM
Posted: 3 years ago
At 3/25/2013 12:32:21 PM, BigRat wrote:

We would make the numbers so we would achieve static revenue neutrality. The benefits would be as follows:

1.) Elimination of the state and local tax deduction would allow low tax states to stop subsidizing high tax states and would stop encouraging states to pursue higher tax policies.

I don't get your point on this. Generally, high tax states have more income, which leads to higher post-deduction income, which would still mean more tax revenue for the IRS. Let's say NY has $20K and 10% tax, and MS has 0% tax and $15. NY's IRS income would be $18K vs. $15K, so how is MS subsidizing NY?

Also, as a matter of principle, this deduction is one of the few that I truly support out of merit. I do not think it is fair for one entity (feds) to tax me on income that I do not have due to taxation by another entity (state).

2.) Elimination of the health benefit deduction would encourage individuals and families to get their own health care plan without having it dominated by their employer.

If this translates to an individual deduction, I would agree. Perhaps the medical expense deduction's floor could be reduced...

3.) Elimination of the home mortgage deduction would raise revenue in a fairly progressive way. Replacing this with a home mortgage deduction would make for a less expensive and more progressive way of encouraging home ownership.

Could you expand on this?
I don't see the value of offering a credit for simply having a mortgage vs. the potential (you must itemize) to deduct the interest paid on said mortgage.


4.) Expanding the child tax credit helps get rid of the inherent biases against child rearing that are inherent in our entitlement system and looks at parents as investors in our future economy.

Inherent biases? Entitlement system?
How does increasing the tax credit not increase entitltement? Welfare would still be unaffected, as it is based on gross income (and also not taxed).

5.) Eliminating the marriage penalty gets rid of the bias against marriage and thus encourages marriage as a bedrock foundation of the nation.

What marriage penalty specifically? I am not sure what people mean by this term. I had always assumed it referred to the accelerated tax rates, but less than half of married couples are affected by this.

The biggest one would be the earned income credit and/or the ability to file head of household.

6.) If conservatives were to embrace this plan, they would get much more public support from middle and working income parents than they currently do.

Most people don't know how taxes work, so opposition forces would spread misleading information. Plus, the only reasons this would be done are to make more money for the feds or make things more fair in terms of payment of taxes. Either way, people would think it would hurt them, and support is unlikely en masse.
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