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| Limiting Tax Deductions to $17k per person; Romney's new detail; lower figure for higher income | |
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| Tweet Topic Started: Oct 3 2012, 07:43 AM (480 Views) | |
| Axtremus | Oct 3 2012, 07:43 AM Post #1 |
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HOLY CARP!!!
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(hat tip Quirt) http://abcnews.go.com/Politics/OTUS/romney-suggests-uniform-tax-break-possibly-17000/story?id=17374494&wpisrc=nl_wonk#.UGxaEUJEzTT Have to see the math to decide whether $17k is sufficient to compensate for the cuts to tax rates that Romney's proposed, and it's not clear whether healthcare insurance premium (paid by the employer or by the self-employed) would count, but in principle, I can support capping ALL deductions as an aggregate to some number, and I can support graduated cap where the lower-income tax payers enjoy higher caps than the higher-income tax payers. Heck, I think it's pretty good idea. Score one for Mitt. |
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| Mark | Oct 3 2012, 07:49 AM Post #2 |
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HOLY CARP!!!
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Romney is an idiot. I am seriously considering voting for Obama. Seriously. |
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___.___ (_]===* o 0 When I see an adult on a bicycle, I do not despair for the future of the human race. H.G. Wells | |
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| Renauda | Oct 3 2012, 07:56 AM Post #3 |
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HOLY CARP!!!
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There's a tax code entitlement that should be abolished. |
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| blondie | Oct 3 2012, 07:58 AM Post #4 |
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Bull-Carp
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Okay. Now he's seriously stupid. |
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| John D'Oh | Oct 3 2012, 08:14 AM Post #5 |
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MAMIL
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Hush - we get a ton of money back for that one! Actually, since we've just refinanced at a lower interest rate, maybe you're right. |
| What do you mean "we", have you got a mouse in your pocket? | |
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| ivorythumper | Oct 3 2012, 08:31 AM Post #6 |
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I am so adjective that I verb nouns!
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A policy such as this -- the actual numbers of the tax deduction and the subsequent rate to be determined -- makes a good deal of sense. It helps the poor and encourages large families. A single person earns the first $17K tax free, a married couple with one child $51K, a family with 4 kids $102K. That shifts the tax burden to singles with no kids and the really wealth. |
| The dogma lives loudly within me. | |
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| Mark | Oct 3 2012, 08:35 AM Post #7 |
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HOLY CARP!!!
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Oh! 17k per person in the household! That sounds awesome. Can we split the mortgage deduction or assign each category to an individual we want? I'm voting for Romney now!
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___.___ (_]===* o 0 When I see an adult on a bicycle, I do not despair for the future of the human race. H.G. Wells | |
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| John D'Oh | Oct 3 2012, 08:41 AM Post #8 |
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MAMIL
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What he's saying is pretty vague. There's a lot of 'could' and 'might' being used. Generally, when politicans use those words, they're just flapping their gums. |
| What do you mean "we", have you got a mouse in your pocket? | |
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| Mark | Oct 3 2012, 09:12 AM Post #9 |
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HOLY CARP!!!
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Yep |
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___.___ (_]===* o 0 When I see an adult on a bicycle, I do not despair for the future of the human race. H.G. Wells | |
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| ivorythumper | Oct 3 2012, 09:27 AM Post #10 |
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I am so adjective that I verb nouns!
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All politics is local.
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| The dogma lives loudly within me. | |
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| Amanda | Oct 3 2012, 11:37 AM Post #11 |
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Senior Carp
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And just HOW is this majorly different from adjusting the standard deduction and exemptions? |
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[size=5] We should tolerate eccentricity in others, almost to the point of lunacy, provided no one else is harmed.[/size] "Daily Telegraph", London July 27 2005 | |
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| Horace | Oct 3 2012, 11:46 AM Post #12 |
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HOLY CARP!!!
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I gotta look into that. I could probably save myself some money. 2 years of mortgage payments has increased my credit score!
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| As a good person, I implore you to do as I, a good person, do. Be good. Do NOT be bad. If you see bad, end bad. End it in yourself, and end it in others. By any means necessary, the good must conquer the bad. Good people know this. Do you know this? Are you good? | |
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| Klaus | Oct 3 2012, 11:50 AM Post #13 |
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HOLY CARP!!!
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I'm not sure I understand this correctly. Does it mean that a household does not have to pay taxes for the first n*17K $ of income (where n = # of family members)? If yes, then this is more or less the system we have had for decades. |
| Trifonov Fleisher Klaus Sokolov Zimmerman | |
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| John D'Oh | Oct 3 2012, 11:53 AM Post #14 |
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MAMIL
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We got our original mortgage when we first came over, with no Green card, and no US credit history. We're saving about $300 a month on what we were paying, plus we knocked 2 years off the term. If we'd have been more aggressive in shopping around, we could well have saved more. |
| What do you mean "we", have you got a mouse in your pocket? | |
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| Axtremus | Oct 3 2012, 12:55 PM Post #15 |
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HOLY CARP!!!
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OK, first you have to understand what US tax system means by "deduction" -- it means the amount that you can subtract from income BEFORE calculating the income tax you have to pay. E.g. Suppose a tax payer earned $50,000 this year, and the "deductions" he is allowed to take is $5950, then the way he'd calculate his income that would be subjected to income tax as ($50,000 - $5950) = $44,050. Whatever the income tax rates applicable to him, he calculate his tax off the $44,050 figure. Over decades, politicians have been slowly adding various categories of things through which a tax payer can "deduct". E.g., the most popular one is the "mortgage interest deduction" -- the interest on the mortgage you pay for your primary residence, you can deduct from your income before calculating your income tax. Another example: If you spend money on healthcare beyond certain % of your income, you can also deduct that before calculating your income tax. Yet another example: the money you donate to certain non-profit organizations (which include many religious organizations), you can also deduct that before calculating your income tax. Of course, if you do not pay any interest on the mortgage of your primary residence, or you do not buy healthcare insurance, or you do not donate money to qualified non-profit organizations ... you would have no such expense to "deduct" from your income, you would not take these "deductions." Right now, there is no statutory maximum on the total amount of "deductions" you can take. Theoretically, you can deduct to the point where you don't have to pay any income tax at all (e.g., you donate all your income to a qualified non-profit organization and hence deducting you taxable income to zero). So, in essence, Romney was suggesting that he might limit the aggregate deduction to some figure, e.g., $17,000, per person. The interpretation that suggests calculating the cap as (# of family members) * $17,000 is rather fanciful, since the US tax system generally does not allow ALL family members to file taxes together. Husband and wife can jointly file under one tax account. But if a child has income beyond certain threshold, the child would have to file hie taxes under his own account. So I can imagine 2*$17,000 as the cap for couple filing taxes jointly as plausible, but not the generalized case of (n*$17,000) where n>2. |
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| ivorythumper | Oct 3 2012, 01:00 PM Post #16 |
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I am so adjective that I verb nouns!
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That is a simple matter of changing the arbitrary tax code to make it optionally family unit based. We already have dependent deductions which do not even begin to redress the real cost of supporting family members and are punitive to the poor who love their children. I'd have thought you'd be all supportive of such a scheme (and FWIW, I have not delved into the Romney plan, but if my conjecture it correct it would make a much better tax structure than we currently have). |
| The dogma lives loudly within me. | |
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| Klaus | Oct 3 2012, 01:02 PM Post #17 |
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HOLY CARP!!!
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Thanks for the explanation, Ax. So his proposal does actually mean that nobody pays less taxes, but some people pay more (namely those who used to have deductions higher than 17K$), right? It is just a limit on how much deductions one can claim. |
| Trifonov Fleisher Klaus Sokolov Zimmerman | |
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| Axtremus | Oct 3 2012, 01:04 PM Post #18 |
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HOLY CARP!!!
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Clarification: The post I wrote for Klaus describes what I think are the most likely interpretation of what Romney said, not what I personally think should be done to the tax code. |
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| Axtremus | Oct 3 2012, 01:14 PM Post #19 |
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HOLY CARP!!!
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Yes, the most recent Romney statement on limiting deduction is just about limiting how much deductions one can claim. But that's a new piece to Romney's stated tax plan. For a long time, Romney's tax plan calls for reducing the income tax rates by 20%, and claims that he could reduce the tax rates and still take in the same amount of taxes by eliminating various deductions and tax credits. So you cannot say for certain that nobody pays less because Romney also proposes to lower the tax rates. (Actually, if you have very high income, you are quite likely to pay less because the amount of taxes you save from having a lower tax rates will most certainly exceed the tax savings you'd get by deducting miscellaneous things such as healthcare insurance premium, mortgage interests, and charitable donations.) Of course, with a position like that, people are bound to (and have been asking): Just what tax deductions/credits you want to eliminate to make up for the rate cuts? Up until now, the Romney campaign has been unwilling to specify any particular deductions/credits they will seek to eliminate. Today, rather than specifying which deductions he will seek to eliminated, Romney suggests this idea of "capping" the aggregate amount of deductions instead. |
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| Renauda | Oct 3 2012, 02:05 PM Post #20 |
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HOLY CARP!!!
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Seems to me that would give every homeowner an incentive to increase mortgaged debt and take away any incentive to pay off home mortgage. What's in place to prevent lending institutions and borrowers from stacking mortgage loans with additional tax deductable amortized debt? |
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| jon-nyc | Oct 3 2012, 02:09 PM Post #21 |
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Cheers
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I read it very differently.
Admittedly its not clear, but my read was that you'd get deductions per normal but they would be capped at 17k per taxpayer (thus 34k for married couple). Note he says 'up to' a 17k deduciton. And you'd fill that bucket using x, y, and z deductions. Again, I'm trying to read into one paragraph that isn't clear, but that's my read. |
| In my defense, I was left unsupervised. | |
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| Mark | Oct 3 2012, 06:36 PM Post #22 |
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HOLY CARP!!!
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If that's the case then he's an idiot. Flippin' and Floppin' all the way to the voting booth this year. Here's a better idea. Eliminate income based taxes. Thanks! |
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___.___ (_]===* o 0 When I see an adult on a bicycle, I do not despair for the future of the human race. H.G. Wells | |
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| ivorythumper | Oct 3 2012, 07:19 PM Post #23 |
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I am so adjective that I verb nouns!
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Yes it's vague and can be interpreted either way. |
| The dogma lives loudly within me. | |
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| Axtremus | Oct 3 2012, 07:29 PM Post #24 |
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HOLY CARP!!!
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There is vagueness for sure, but not enough of it to accommodate your interpretation. The whole bit on "filling the bucket" using various deductions simply does not imply giving every one $17,000 deduction. If that's he meant at all, he would not have had to mention the various specific deductions. A simple statement to raise the standard deduction to $17,000 while eliminating all other deductions would suffice. |
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| Axtremus | Oct 9 2012, 05:34 PM Post #25 |
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HOLY CARP!!!
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Romney reinforces the "capped deduction" idea (CNN interview): " ... there are a number of ways one could approach this. One would be to have a total cap number. It could be $25,000, $50,000. And people could put whatever deduction in that total cap they'd like. Or, instead, you could take the posture that Bowles-Simpson did, which is going after specific deductions and limiting them in various ways. ..."[/quote] |
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