Comments on: Don’t fight a tax on deductions http://blogs.reuters.com/felix-salmon/2012/12/17/dont-fight-a-tax-on-deductions/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: TFF http://blogs.reuters.com/felix-salmon/2012/12/17/dont-fight-a-tax-on-deductions/comment-page-1/#comment-45312 Thu, 20 Dec 2012 12:13:01 +0000 http://blogs.reuters.com/felix-salmon/?p=19855#comment-45312 “Would those dollars have a greater impact for good if spent on pre-k for 4 year-olds?”

Elizabeth Seton Academy in Boston, an independent Catholic school serving inner-city families, would be thrilled to have a small fraction of that $500k. The total sum would take 25 girls all the way from 9th grade into college.

So yes, there are ways to spend that money for greater impact. I agree that our medical system should explore hospice care as an alternative — can be better for patients, families, and the taxpayer. Life is measured by the quality of the days, not the number of days.

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By: y2kurtus http://blogs.reuters.com/felix-salmon/2012/12/17/dont-fight-a-tax-on-deductions/comment-page-1/#comment-45309 Thu, 20 Dec 2012 03:26:42 +0000 http://blogs.reuters.com/felix-salmon/?p=19855#comment-45309 I don’t have a link but the accounting was done by the New York Times. They basically said for the current boomer generation social security was a wash with lifetime contributions of that generation as a whole expected to approximate benefits received by that generation as a whole.

On the medicare side The NYT calculated that the average boomer couple paid 100,000 into medicare and would extract on average $300,000.

My plan was not meant to be any more heartless than the way we allocate donated organs. If your resources are X than your budget is X not Y. If you want to offer the entire populous an identical medical benefit without any thought of merit or contribution (pretty much the opposite of the Social Security system) I think lots of people would vote for that plan on the grounds of fairness. That is for the most part the status quo.

In that system my wifes 82 year old grandfather (the most deserving person alive based on his 35 year working life and combat veteran of 2 wars) gets flown in a life flight helicopter from the local hospital to the intensive care unit at the regional medical center to extend his life by 8 months. The cost would be hard to even estimate but I’ll throw out $500,000. I loved that man but what was our return on investment for that care.

Would those dollars have a greater impact for good if spent on pre-k for 4 year-olds?

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By: TFF http://blogs.reuters.com/felix-salmon/2012/12/17/dont-fight-a-tax-on-deductions/comment-page-1/#comment-45287 Wed, 19 Dec 2012 02:45:59 +0000 http://blogs.reuters.com/felix-salmon/?p=19855#comment-45287 Yeah, I still don’t get your accounting on FICA, especially since the value of those future promises is suspect.

I do agree that lower-income households are likely to get back everything they pay in (and then some!), but couldn’t you also say the same of federal programs funded through the income tax? Does it really matter that with Social Security somebody is tallying an account with our name at the top?

Interesting proposal on Medicare. A bit heartless, perhaps, but I suspect we’re headed that direction. The present system is unaffordable.

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By: y2kurtus http://blogs.reuters.com/felix-salmon/2012/12/17/dont-fight-a-tax-on-deductions/comment-page-1/#comment-45286 Wed, 19 Dec 2012 01:54:38 +0000 http://blogs.reuters.com/felix-salmon/?p=19855#comment-45286 FICA is not a tax in my view… I don’t count a program which returns 100% of my contributions (social security) or 300% of my contributions (Medicare) as a tax.

Keep FICA. Lift the cap on social security withholdings to cover all earnings from $1 to infinity just like Medicare (THEN it would be a tax on high earners.)

Then redesign Medicare so with a per capita average spend at 1/2 the current spend rate. Have high blood pressure and high colesteral here’s your $4/month generic prescription fill-able at Walmart.

Need a hip replacement…. not so much… you’re going to need to cover that on your own or have your family or church group raise half the cost. Net result costs drop by half and the people who deserve/earned/worked for the care still get it.

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By: TFF17 http://blogs.reuters.com/felix-salmon/2012/12/17/dont-fight-a-tax-on-deductions/comment-page-1/#comment-45276 Tue, 18 Dec 2012 14:05:43 +0000 http://blogs.reuters.com/felix-salmon/?p=19855#comment-45276 “Don’t tax the first 50,000 of earned income at any level.”

You are exempting a huge amount of income — presently this income is taxed at a 15% rate through FICA, even if deductions and exemptions exclude it from federal income tax. Not sure it is possible to make up for an exclusion of this size.

Besides, in the last five years we’ve seen the corrosive effect of policies like this. A Republican candidate declaring that 47% of American households believe the government owes them a living, simply because they don’t owe income tax. Better to have a low marginal rate that kicks in early — so everybody contributes something, even if it isn’t much. Find ways other than redistributive tax policies to get wealth into their pockets, such as subsidized food/housing/medical care for those in need.

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By: y2kurtus http://blogs.reuters.com/felix-salmon/2012/12/17/dont-fight-a-tax-on-deductions/comment-page-1/#comment-45270 Tue, 18 Dec 2012 03:07:26 +0000 http://blogs.reuters.com/felix-salmon/?p=19855#comment-45270 @KenG_CA “I’m a believer in taxing capital gains at a rate inversely proportional to how long they were held. Own an asset for under a year, pay 70% in tax on the gain. Own it for 10 years, pay 10%. Or something along those lines.”

-That is a BRILLIANT idea… reward real long-term investments in productive assets while heavily taxing short-term speculation. That would be a fantastic improvement on the status quo!

The larger issue of a cap on deductions is harder… the government wants to reward people for providing for their own healthcare, retirement, housing, education, and retirement. All those things make sence to me.

They should pick the low hanging fruit first. Double the tax credit for the 1st child and don’t offer any credit for any 2nd 3rd 4th… child born after 2013. That would bend the curve slightly and reward people to think about family planning. After all if we are going to offer a path to citizenship to anyone who successfully illegally enters the country then we should encourage smaller families unless we want to wake up in 2040 with 500 million people who all expect a American (circa 2006) standard of living.

Next lower the cap on the mortgage interest deduction and exclude all 2nd homes. We need to strongly strongly encourage the ownership of a moderately valuable 1st home. That gives people access to low cost credit (because they have collateral), provides for stable neighborhoods, and gives people something to lose if they decide to become a meth dealer.

Next lets enhance the value of work and investment. Don’t tax the first 50,000 of earned income at any level. Don’t tax the first 10,000 of dividend or gain income at any level. Boost the rates on higher levels of income earned or otherwise but lets pull more people into the pool of workers and investors.

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By: KenG_CA http://blogs.reuters.com/felix-salmon/2012/12/17/dont-fight-a-tax-on-deductions/comment-page-1/#comment-45267 Mon, 17 Dec 2012 23:22:58 +0000 http://blogs.reuters.com/felix-salmon/?p=19855#comment-45267 Auros, I’m a believer in taxing capital gains at a rate inversely proportional to how long they were held. Own an asset for under a year, pay 70% in tax on the gain. Own it for 10 years, pay 10%. Or something along those lines. There’s no reason to reward short term speculation, and lots of reasons to encourage people to hold assets for a long period.

As far as share buybacks go, the money spent buying those shares would not be deductible, so companies would have to use after-tax income to buy the shares. I think this plan would stop that practice.

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By: Auros http://blogs.reuters.com/felix-salmon/2012/12/17/dont-fight-a-tax-on-deductions/comment-page-1/#comment-45266 Mon, 17 Dec 2012 22:57:44 +0000 http://blogs.reuters.com/felix-salmon/?p=19855#comment-45266 The one issue with taxing dividends, though, is that you’d pretty much _have_ to then also treet LTCG as regular income, b/c otherwise you have simply created a massive incentive for companies to process payouts to shareholders through stock buy-back programs, so that many shareholders can hold for a year and then sell into the buy-back.

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By: Auros http://blogs.reuters.com/felix-salmon/2012/12/17/dont-fight-a-tax-on-deductions/comment-page-1/#comment-45265 Mon, 17 Dec 2012 22:56:32 +0000 http://blogs.reuters.com/felix-salmon/?p=19855#comment-45265 On the expensable dividends question, I’d be perfectly happy to see that (with dividends then treated as ordinary income), _or_ see the deductibility of interest payments eliminated. It’s ridiculous that we have this massive incentive built into the tax code to shift your capital structure towards fixed payments. It makes our entire economy more prone to de-leveraging shocks or “Minsky moments”, in the face of even a small shortfall of aggregate demand.

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By: KenG_CA http://blogs.reuters.com/felix-salmon/2012/12/17/dont-fight-a-tax-on-deductions/comment-page-1/#comment-45264 Mon, 17 Dec 2012 22:20:33 +0000 http://blogs.reuters.com/felix-salmon/?p=19855#comment-45264 I can’t login from some browsers, including the latest Chrome on windows 8 (it works on all other versions of chrome on older windows and mac). So on this system I have to use FF to comment. It’s clear Reuters isn’t investing a lot in their website.

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