Defining "disposable income" would then be as big a business as defining "deductions". Really, it's the same thing.
Romney's Tax Problem- it's back
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Not at all. Like I said, the expenses would be determined by family size and living area. Like the standard exemption is now, only bigger and with COLAs. Not like now, how you can itemize and... oh, look, I get to deduct the $100,000 in mortgage interest I paid this year on my three million dollar home! Yay me!
Well, not me.
And there's the problem.
If these loopholes are legal, then *why* wouldn't people take advantage of them? I would if I had the cash and I bet anyone here would.
The problem is getting them closed, not trying to make new laws.
Politically, I think it'd be hard to get rid of persona income tax deductions, because there are so many special interests that benefit from those deductions now.
But it would certainly clean up the tax code a lot....
But it would certainly clean up the tax code a lot....
Why just family size and living area (I assume you mean the area in which you live, not square footage)? What if a family has one child who has a rare disease and insurance will not pay for treatments? Might that family have more expenses than a family of four with healthy children?Not at all. Like I said, the expenses would be determined by family size and living area. Like the standard exemption is now, only bigger and with COLAs. Not like now, how you can itemize and... oh, look, I get to deduct the $100,000 in mortgage interest I paid this year on my three million dollar home! Yay me!
Well, not me.
Not at all. Like I said, the expenses would be determined by family size and living area. Like the standard exemption is now, only bigger and with COLAs. Not like now, how you can itemize and... oh, look, I get to deduct the $100,000 in mortgage interest I paid this year on my three million dollar home! Yay me!
Well, not me.
Much of the Canadian ITA is comprised of determining what is income and how it is to be calculated. About 60% of 2400 pages.
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Yeah, I was gonna say that too. Though single payer would be so, so much simpler and fit much better with my "tax plan."
Single payer is the logical, cheapest, and fairest way to do healthcare. Therefore it will take us a couple of decades to get there. But we will get there, after we've tried all the other sleazy options we've met in bars at closing time.
Sure. Let's go back and look at your two existing "expenses": family size and living location.
The size of a family is not always easy to calculate, especially in cases of divorce and shared custody and that's without throwing remarriage into the mix. Secondly, it would seem to encourage large families, and I'm not sure that's universally considered a good thing. (Not that I'm saying it is or not, just that it's not a given.) Why should someone who chooses to have a large family pay less tax than someone who choses to have a smaller one. A smaller family will place a smaller burden on public services than a large one, and yet the large family will pay less tax.
As for living location, the cost of living in Manhattan is higher than, say, Queens. Is it really fair that someone who can afford to live in Manhattan gets a larger expense deduction than someone who lives in Queens? This would simply be a tax break for the rich.
There are two opposing goals here:
1. Simplify the tax code and the administration thereof.
2. Tailor taxation to an individual's situation (e.g. hardships are accounted for)
You can't have both.
If you go for #1, you're going for rough justice that may shaft some individuals stuck in bad situations.
If you go for #2, you end up making the tax system ever more complex.
One compromise is to simply exempt an X level of income for everyone.
For example, we can say, first $30,000 (or whatever) of income -> No income tax. Anything above that is taxed, no deductions for anything.
You can use your $30,000 however you like: Buy a Porsche, live in Manhantan, have a child, donate to the Humane Society, support your mom, pay for healthcare, whatever.
The point is that such a system is focused on raising revenue, and gets the government out of the difficult situation of deciding what consumption to favor.
1. Simplify the tax code and the administration thereof.
2. Tailor taxation to an individual's situation (e.g. hardships are accounted for)
You can't have both.
If you go for #1, you're going for rough justice that may shaft some individuals stuck in bad situations.
If you go for #2, you end up making the tax system ever more complex.
One compromise is to simply exempt an X level of income for everyone.
For example, we can say, first $30,000 (or whatever) of income -> No income tax. Anything above that is taxed, no deductions for anything.
You can use your $30,000 however you like: Buy a Porsche, live in Manhantan, have a child, donate to the Humane Society, support your mom, pay for healthcare, whatever.
The point is that such a system is focused on raising revenue, and gets the government out of the difficult situation of deciding what consumption to favor.
"a couple of decades" is a far more optimistic estimate than mine is. Sometimes I despair of us ever getting there. Especially when all those sleazy options seen at closing time through the haze of political expediency and lobbying look so attractive. At the time.
We already have these issues and rules to deal with them when it comes to dependent allowances. The person who pays the majority ("more than half") the support for the child gets the deduction.
As far as "who will place a larger burden on public services"--you could say the same thing for really sick people and really old people. Unemployed people. Disabled veterans. The mentally ill. A child is a human being, no matter who its parents are. Some stuff is fair just because it is.
And really, anyone who has extra kids just to save a few bucks in taxes probably needs to be on medication.
You could create a good COLA based on surrounding areas if you were deaing with an "exclusive" community.
Right.
And the simpler the code, the cheaper the administration costs. So there's billions of dollars saved each year right there.
Not to mention.... No more shaningans. No more lobbying. No more rich versus poor when it comes to taxes. Fair. IMO.
Typically that is not an issue as compensation [one's gross income (Intl definition)] already factors in those costs.
My point as I stated here:
is that once you've started making exceptions (old people, unemployed, veterans, mentally ill, etc.) you start making more and more. Eventually you get to a point where it is as complicated as the deduction process we use now.
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Quite right. Furthermore, when you do this you create a much more complex system for people to understand than a graduated income tax.
A graduated rate (no matter how many brackets it has) can always be pre-calculated into tax tables or pre-programmed into tax apps. As a result, a graduated income tax with no deductions is actually far easier to deal with and administer than any system with deductions.
The form would be:
1. Add up what you took in from each of your sources of income.
2. Enter this amount.
3. Look up this amount on the supplied tax table. This is how much you owe.
4. Pay it.
It doesn't matter if this is a flat tax, or has 1000 different brackets, the process is equally simple for the tax payer.
Generating the tax table is a matter of less than an hour's programming for someone who has taken one computer programming class.
I tend to see it similarly.
A flat tax rate does have its virtue - it's the simplest.
However, the complexity in our income tax system stems mostly from issues of income, expenses, deductions, exemption, etc. That's where the fight is.
Also, assuming a declining marginal utility of income, it seems fairer to have progressive rates.
But I can live with either flat or progressive.
I probably haven't made my point well about simplicity. I'm not saying the flat tax is simpler than the graduated rate. I'm not saying it's a simpler calculation. It's not. The computer does it anyway.
The simplicity would come from stripping the tax code of deductions, exceptions, limits, thresholds, etc. Most people have no clue how truly convoluted it is. (Btw, tax software costs thousands of dollars each year for one preparer.) And also, how many rules are enacted to close loopholes, which create more loopholes, and then more rules/exceptions are created, with loopholes, which are then closed... it's mind-boggling. And it's so complex that, like I said before, the costs to adminstrate all of these rules are insane, and getting higher every year.
As far as a flat rate, I'm saying that, imo, it would be more fair. This is just my opinion, of course, but I don't believe that because someone has more money that they should pay proportionately more tax than someone who has less. Nor should they have proportionately more deductions because they incur more expenses.
The simplicity would come from stripping the tax code of deductions, exceptions, limits, thresholds, etc. Most people have no clue how truly convoluted it is. (Btw, tax software costs thousands of dollars each year for one preparer.) And also, how many rules are enacted to close loopholes, which create more loopholes, and then more rules/exceptions are created, with loopholes, which are then closed... it's mind-boggling. And it's so complex that, like I said before, the costs to adminstrate all of these rules are insane, and getting higher every year.
As far as a flat rate, I'm saying that, imo, it would be more fair. This is just my opinion, of course, but I don't believe that because someone has more money that they should pay proportionately more tax than someone who has less. Nor should they have proportionately more deductions because they incur more expenses.
I'm not so much talking about the flat-tax, but your earlier statement that it should be on *net* salary. Calculating that *net* would be every bit as convoluted (eventually) as deductions are now.
Well, I can't disagree that Teh Government always makes things more complicated than they need to be.
I hate my job right now. This tax season is going to suck! Must. Write. Bestseller. ASAP.
But seriously, I'm thankful I have a job. And thank you everyone for humoring me and my bright ideas.
The good news for Romney is that he's now free to go seek out tax avoidance schemes to his heart's content again.
Unless he wants to run again. Could happen. See Richard Nixon.
Although I reckon he's done. I think Ann said so.
But then again, Nixon also said he was done after losing to Pat Brown.
Romney's a bit older than Nixon was when he said that, and I don't see the Republicans giving him a second shot in 2016 even if he does run.
But McCain was like 200 when he ran.
Though he does have super healthy genes.Yeah, I agree with you. Maybe if Mitt was someone the GOP was really passionate about. But given that the GOP primary was filled with an "Anyone but Mitt" eagerness, probably not.