Obama Vows To Rewrite, Simplify 'Monstrous' US Tax Code

[SpartanDem]

Source: WSJ

With a midnight deadline looming for Americans to pay their taxes, President Barack Obama pledged to rewrite the "monstrous" U.S. tax code, which he said is "far too complicated" for most people to grasp.

"We will make it quicker, easier, and less expensive for you to file a return, so that April 15 is not a date that is approached with dread each year," Obama said in remarks Wednesday at the White House.

The brief comments, which coincided with a series of tax day "tea party" protests around the country, focused on the cuts implemented in this year's economic recovery package, including Obama's signature Making Work Pay credit. But the president also honed in on longer-term changes he says are necessary because the tax code has been thrown "out of balance."

"We need to stop giving tax breaks to corporations that stash profits or ship jobs overseas so that we can invest in job creation at home," Obama said. "And we need to end the tax breaks for the wealthiest 2% of Americans, so that folks like me are paying the same rates that the wealthiest 2% of Americans paid when Bill Clinton was President."



Read more: http://online.wsj.com/article/BT-CO-20090415-711395.html

[WriteDown]

1. Please.....PLEASE

Flat tax at around 13% with ZERO deductions, loopholes, etc. If you make under 30K, you pay no taxes.

[Kolesar]

2. No $10,000 deduction for every kid someone has, either

That gimmick shows up in the flat tax schemes that I have seen. One $10,000 deduction per earner is enough. Or one $30,000 deduction per earner, for that matter.

Delete the home mortgage deduction, too.

[WriteDown]

4. Works for me. nt

[TheCoxwain]

3. That will not cover the Federal Budget.

[Lucky Luciano]

8. Sounds marvelous....now explain how to do this without bankrupting the US.

If you can do it, then more power to you. My first instinct would be to cut bloated military spending. How do you suggest making up the difference in revenues. Do you suggest a nation VAT as well to help out? It is too easy to say what you say, but I can't see how it is anywhere near realistic.

[WriteDown]

10. Considering the sheer amount of taxes that are avoided

in loopholes, dubious deductions, etc. The US treasury would likely be awash in cash if they instituted this.

[Lucky Luciano]

15. Do you have any studies that

estimate the revenue the treasury is losing due to dubious deductions and loopholes, etc?

[WriteDown]

16. I do not...

But here is some interesting info..

http://en.wikipedia.org/wiki/Flat_tax#Countries_that_have_flat_tax_systems

[No Elephants]

31. Better to google flat tax.

[WriteDown]

37. Oookay. nt

[christx30]

25. I think it would be a good idea

to simply the tax code with something like a flat tax. Everyone would pay their fair share, because we would all be paying a percentage of our incomes. The poor wouldn't have to spend their money on turbo tax or H&R Block, and the rich would not have tax shelters or feel the need to stash their money in the Cayman islands or a Swiss bank account. One estimate I saw says there are trillions of dollars hidden in overseas accounts because of our overcomplicated tax code. And that would more than pay for the stimulus package by itself.

[No Elephants]

32. No, the rich are not hiding their $$ in the Caymans bc of a complicated tax code. Their

accountants and tax lawyers can handle the tax code just fine. They stash their money to avoid paying taxes.

[christx30]

34. Probably

because they think that what they are expected to pay is too much. And they didn't get rich by spending stupidly. And they probably think that giving money to the government is a stupid use for their money. So they sit on it. And it doesn't get into the US economy in the form of purchases of goods and services, and it doesn't go into the coffers of the US treasury or sales taxes for the states.

[WriteDown]

38. That's why you take it directly from any salary or capital gains...

and don't worry about anyone filling out a "return."

[No Elephants]

30. "Starve the Beast." The RW dream=a society that is as

bankrupt economically as it is morally and ethically. Reaganomics and Reagan de-regulation satisfied all three of those goals, which the next three administrations pursued, leading to September 2008. And now they cry, Socialism!

And no one even requires them to wear helmets.

[Ikonoklast]

12. It would destroy most businesses.

No depreciation for investing in capital assets? No deductions for legitimate operating expenses?

Never happen.

[Lucky Luciano]

14. Maybe he does raise a point,,,,

Instead of a 34% bracket or wherever they may be, they can pay 15% - that may make up for the depreciation factor.

Still, I am not sold overall (at all).

[PSPS]

20. Flat tax is a fraud -- it means another big tax cut for the rich

The "flat tax" makes an appealing sound bite to some, but it is arithmetically impossible. Besides, why should someone making $100 million a year pay the same rate as someone making $100K?

Obama should go back to the rates before Reagan slashed them. Back then, it was a progressive tax that taxed anything over $3 million in today's dollars at 70%. (It was 90% until Kennedy cut it to 70%.) Nobody needs more than $3 million a year and they could avoid the high bracket by investing the excess in a deductable way, such as domestic capital investment.

By the way, marginal tax rates are not the same as effective tax rates. When someone complains that a 70% tax rate is too high, they're thinking that the billionaire would pay that rate on the entire amount. That isn't how a progressive tax works.

Let's make up an imaginary tax schedule:

$0 - 30K = 10%
$31K - 100K = 12%
$101K - 200K = 15%
201K - 1,000,000 = 20%
1,000,001 - 2,000,000 = 35%
2,000,001 - 3,000,000 = 50%
3,000,001 - up = 70%

Using the table above:

Someone making $55K would pay $6,000 in tax (11% effective rate.)
Someone making $500K would pay $86,400 in tax (17% effective rate.)
Someone making $5 million would pay $2,436,400 in tax (49% effective rate.)

Anyway, you get the idea. To get sufficient tax revenue, you need to go where the money is. It's that simple.

[dysfunctional press]

24. when you exempt the first 30k(or more/less) a flat tax can work out nicely.

say it was 15%, with a 35K exemption-

someone making $55k would pay $3000(5.5% effective rate)
someone making $100k would pay $9750(9.75% effective rate)
someone making $500k would pay $69750(13.9% effective rate)
someone making $5million would pay $745750(14.9% effective rate)

it's unrealistic to think that we'll be returning to 50% or 70% brackets anytime soon, if ever.

the 15% number and 35k exemption are arbitrary, and could be adjusted to provide the proper amount of taxation required for the federal budget.

[No Elephants]

27. Except that the single man or woman gets the same one $30K exemption as the single parent of five.

[WriteDown]

39. So having five kids should get you a a big tax discount?

Which one of the Duggars are you?

[dysfunctional press]

42. and...?

:shrug:

[toopers]

45. That is why we should not tax income . . .

Instead tax spending. The benefit is tremendous for everyone!

[No Elephants]

29. At least you're consistently RW. Not erratic. Something comforting about that.

[alarimer]

36. The flat tax is a regressive tax.

It hurts the poor way more than the rich, no matter where you put the starting point. Graduated income tax is the way to go but we need to RAISE the top marginal rate back to 90%.

Only libertarians and idiots favor the flat tax. Google it sometime and you'll see why.

[WriteDown]

40. How exactly does that work?

So if you make the cutoff 30K or 35K then you are hurting the poor? Back when the income tax was 90% there were more deductions and loopholes then there are today so no one really paid 90%. Things like car loan interest and even credit card interest were deductible. Seems like everyone is for a simpler tax code until someone actually tries to make it simple.

[dysfunctional press]

44. a flat tax with a decent exemption doesn't have to be very regressive at all.

do the math.

or see my post above for an example.

btw- there's NO WAY that we'll be returning to a 90% top marginal rate. it just ISN'T going to happen, no matter how many stars you wish upon for it to be so.

[LiberalEsto]

5. Even the IRS doesn't understand the tax laws

I called their "help" line to ask how to calculate an underpayment penalty, and the person I spoke with was just about useless.

I beg President Obama to do whatever he can to make the tax process simpler.

[Critters2]

7. When I've had underpayment penalties, I've stopped trying to figure them.

I just let 'em send me the bill. Don't think I'll have one this year, but I have yet to meet anyone, accountant, IRS employee, normal human being, who knows how to calculate that.

[biopowertoday]

6. Ah, the Tea Parties got his attention. They worked.

[blackspade]

18. Sarcasm icon missing?

Because those tea-bagging folks are nuts!
The whole 'tea party' thing is a sham.

[biopowertoday]

19. most of

what i have read had to do with the gov. bailouts. many of us here on DU have the same concerns.

I do not think we should dismiss this movement, and yes I do think they have a grassroots movement. I do not know where it is headed. today it was co-opted by by some right wringers getting the attention.

It seems all the Democrats have is public ridicule. I do not think that will work for us so I am staying out of the ridiculing part (which seems to all we have at this point).


And btw. I do not think Obama should have made a public statement today.

[Iowa]

22. That's not what I'm seeing....

"most of what i have read had to do with the gov. bailouts."

That's not what I'm seeing. I'm seeing the same right-wing anti-tax zealots that have been around forever. No real ideology. No real principles. By and large this appears to be a "movement" that just doesn't like to pay taxes and wants to stick it to a Democratic President. Where were they when Bush was running up the debt to unimaginable heights? They were silent then, and that should tell you a lot.

I believe there are many decent government programs worth paying taxes for. These anti-tax, anti-government-services zealots really don't. They'd tear it all down and replace it with "every man, woman, and child for himself".

I agree with you on the bailout of bankers though. I just don't think that's what's driving these turds.

[No Elephants]

28. All Democrats have is public ridicule? Odd statement for a Democrat.

[bluestateguy]

9. Everybody wants a simpler tax code until "their" pet deduction or credit is messed with

nt

[Bluenorthwest]

11. I'd easily pay 15% more if there was not all the stress and

difficulty. I've been under one form of tax grief or another since I was about 23. No amount of money solves it, no amount of professional help. It is just ongoing stupid.

[phantom power]

13. If he actually pulled that off...

... and that's a big If. But if he did: can you imagine all the GOP heads exploding when they discovered that the Evil Liberal Democratic Socialist Satan was the one who finally simplified the tax code, after 40 years of the GOP blowing smoke up everybody's ass about it?

[Demeter]

17. If I Only Had a Job....

I'd be glad to pay taxes.

I'd also be ABLE to pay taxes.

Think about it, Mr. President, next time you shell out billions to the banksters.

[Igel]

21. Most politicians look at the tax code as an opportunity for

changing people's behavior. Don't like a habit, tax it. Want to encourage something as a public good, give it a tax break. Want to reward thrift, you find a way to make it less taxed. You want to reward consumption, you find a way to make it less taxed. In other words, it's an attempt to manipulate people on a grand scale.

Most politicians also look at the tax code as a way of getting votes. Give a "tax break" that involves not so much not reduce the taxes paid but the amount returned, get votes. Give a tax break to a business to encourage it or its workers to donate to your re-election campaign. I.e., it's essentially a form of slow-motion corruption.

When there are calls to simplify the tax code, it's usually because a politician has either found a way to reward his favored group or a way to horse it to push society towards what s/he considers ideal *and* say something that makes him/her look good. A two-fer, at the very least.

[w4rma]

23. Extremely good! This will make it easier to start small businesses! (nt)

[Angleae]

26. Here we go again.

Every new president vows to "simplify" the tax code but never does.

[Kolesar]

41. The US tax code was greatly simplified in 1987, then the lobbyists went to work ...

... creating tax incentives and loopholes.

[Vidar]

33. Everybody says this, but it never seems to happen.

[Bragi]

35. Yeah, right...

The tax code will be simplified right about the same time as a pacified Afghanistan espouses liberal democratic values.

[ShareTheWoods]

43. I've heard this for 35 years

Will it really happen this time?

One can only hope.