General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsI don't normally advocate tax cuts BUT...
What taxes would have to be raised to allow taxpayers with Line 22 income of $75,000 or below (total income, not AGI) to take both Standard Deduction and Schedule A itemized deductions, and to use medical deductions without having to have spent 4.5 percent of their income on medical bills? Raising the top two brackets by 1.5 percent comes to mind but would it be enough?
HassleCat
(6,409 posts)I am in favor of eliminating the deductions so many rich people use to pay a lower effective tax rate than I pay. That would provide enough revenue to cover allowing both the standard deduction and medical expenses. You idea is excellent, by the way. If we're not going to make real reforms to the health care system, we should at least let people deduct all that money they have to spend.
tonyt53
(5,737 posts)jmowreader
(50,555 posts)The GOP uses two tools to defeat any attempt to fix the capital gains tax rate, aka "the de facto income tax rate for rich people who can afford to wait two years to cash their paychecks."
The first tool is talking about senior citizens and how they would be hurt by raising the rate because the income from a 401(k) or other retirement investment vehicle is classifiable as capital gains. This is in fact true and it's a huge problem.
The second is the notion that a person who invests in stocks is providing funding to a company to hire workers to create new and interesting products. Sometimes that happens - if you can get stock at the initial issue, the money does go back to the company. Most stocks are bought from other investors, which makes them "used" stocks. A "used" stock is like a used car. If someone buys a used Studebaker*, how much of his money goes to the Studebaker Corporation?
My feeling is, we need three capital gains tax rates.
Rate 1 is for anyone over the age of 65 who receives at least 51 percent of his or her income from investments, pensions and Social Security, and whose adjusted gross income is $250,000 or less. In gratitude for their services to America over a long and productive life, their total tax rate will be Zero Percent. Being that Saint Ronnie taxed Social Security, we will refer to this as the Cutting Republicans Off At The Knees Plan. I wonder if Al Dunlap still has that statue he used to keep in his office.
Rate 2 is for anyone who is the first buyer of a security issued by a company incorporated in the US, and who holds it at least one year. To thank them for risking their money making America a better place, they will be taxed at 15 percent.
Rate 3 is for all other investors. Their gains will be taxed as ordinary income.
* A brand of car last made in 1962.
kentuck
(111,079 posts)the present tax rate was cut by 5% but all the corporate exemptions were done away with, would that be an increase or decrease in what they are presently paying?
If it indeed brought in more revenues to our Treasury and these new cuts could be enforced, then I would endorse a "tax cut" in that instance.
jmowreader
(50,555 posts)Let's take my company. We print newspapers. We can deduct:
the salaries we pay our workers
state and local taxes
depreciation on our capital equipment
fuel for our delivery trucks
paper, plates, ink and chemistry, mailroom supplies and all the other purchases we have to make
and so on and so forth
If you eliminated corporate exemptions, we would be paying income tax on the money we paid out as property tax.
History proves a high-rate, high-exemption tax structure does two things: provides a decent return to the Treasury, and motivates companies to spend money in ways that make them more profitable.