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Old 04-12-2015, 11:04 PM
 
8,860 posts, read 5,141,353 times
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Quote:
Originally Posted by Larry Siegel View Post
Actually, I think deductions for IRA contributions should be unlimited, making the income tax more of a consumption tax. If you can save a dollar, you don't pay tax on that dollar until you spend it.

The RSC is already pretty broad. Expanding it would mean that people making $100,000 would be subsidizing the retirement savings of people making $75,000, instead of keeping the money for their own retirement. Is this fair?

Only if the new income limit were somewhere between 75k and 100k.

Every tax credit and deduction shifts tax liability away from one group of taxpayers to another group; your suggestion in the first paragraph is no exception. Yet we do it, as it encourages people to behave the way government wants them to behave.
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Old 04-13-2015, 01:38 AM
 
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Quote:
Originally Posted by Petunia 100 View Post
Only if the new income limit were somewhere between 75k and 100k.

Every tax credit and deduction shifts tax liability away from one group of taxpayers to another group; your suggestion in the first paragraph is no exception. Yet we do it, as it encourages people to behave the way government wants them to behave.

One person's incentive is another person's penalty. The mortgage interest deduction is no incentive to those who cannot procure a mortgage.

It's ironic that one arm of government incentivizes homeownership while a different arm of government hinders homeownership.
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Old 04-13-2015, 05:05 PM
 
Location: Sacramento
13,784 posts, read 23,815,442 times
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Quote:
Originally Posted by mysticaltyger View Post
I am. Australia has a privatized social security system where everyone has to put in something like 7% or 8% of what they earn into investment accounts. Employers match the same percentage. Wealth levels in Australia are much higher than in the US. The system works.

Since privatizing Social Security outright isn't feasible, politically or financially, universal 401K access coupled with automatic enrollment and auto escalation of contributions is the next best thing.
I would support it too, with the matching employer contribution. My objection is that the original discussion was a proposal focused just on employee contributions.
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Old 04-13-2015, 07:48 PM
 
8,860 posts, read 5,141,353 times
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Quote:
Originally Posted by freemkt View Post
One person's incentive is another person's penalty. The mortgage interest deduction is no incentive to those who cannot procure a mortgage.

It's ironic that one arm of government incentivizes homeownership while a different arm of government hinders homeownership.
Well, the mortgage interest deduction doesn't provide a whole lot of incentive to lots of people. My mortgage is down to 170k. I file head of household, and for 2014 was just about 1.5k over the standard deduction. In 2015, my mortgage interest will go down and the standard deduction will rise. The tax break isn't much now and will continue to decrease.

It's not unusual in this low interest rate environment for MFJ homeowner's to just take the standard deduction, especially in L and M COLAs.
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Old 04-15-2015, 03:04 AM
 
6,353 posts, read 5,164,700 times
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Quote:
Originally Posted by Petunia 100 View Post
Well, the mortgage interest deduction doesn't provide a whole lot of incentive to lots of people. My mortgage is down to 170k. I file head of household, and for 2014 was just about 1.5k over the standard deduction. In 2015, my mortgage interest will go down and the standard deduction will rise. The tax break isn't much now and will continue to decrease.

It's not unusual in this low interest rate environment for MFJ homeowner's to just take the standard deduction, especially in L and M COLAs.
Agreed, at today's low interest rates the mortgage interest deduction has almost no effect except in the highest-cost areas. So the government is providing an incentive, completely unintended, to live in California or New York.

Most people without a mortgage don't know this and assume that the taxman will help them buy a house. Unless the house is fairly expensive, it ain't so.
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Old 04-15-2015, 03:42 AM
 
71,700 posts, read 71,801,099 times
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according to the center for tax research it is only the wealthier homeowners who can even itemize.

most americans in the median income range cannot even get beyond the standard deduction especially if married.

whether you itemize or not is income and location driven more than whether you own a home or not.

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Old 04-15-2015, 04:09 PM
 
33,046 posts, read 22,072,092 times
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Quote:
Originally Posted by Petunia 100 View Post
Well, the mortgage interest deduction doesn't provide a whole lot of incentive to lots of people. My mortgage is down to 170k. I file head of household, and for 2014 was just about 1.5k over the standard deduction. In 2015, my mortgage interest will go down and the standard deduction will rise. The tax break isn't much now and will continue to decrease.

It's not unusual in this low interest rate environment for MFJ homeowner's to just take the standard deduction, especially in L and M COLAs.

The primary incentive serves to prop out the bidding on market.
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Old 04-15-2015, 05:52 PM
 
Location: Maryland
282 posts, read 306,166 times
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Since lower income workers tend to not save for retirement, the govt should force payroll withholding on those workers and put them in a S&P 500 ETF and not allow them to start "retirement" withdrawls until 15 years before their life expectancy. And eliminate Social Security altogether. It has been twisted over the years from "subsistance" addition to a person's own savings to a "retirement" entitlement. Back then the life expectancy was very close to 65 years old.
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Old 04-15-2015, 05:54 PM
 
Location: Maryland
282 posts, read 306,166 times
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Quote:
Originally Posted by mathjak107 View Post
according to the center for tax research it is only the wealthier homeowners who can even itemize.
I think this just shows how generous the standard deduction is. A simple tax system with no itemized deductions or special exemptions would be even fairer.
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Old 04-15-2015, 08:52 PM
 
8,860 posts, read 5,141,353 times
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Quote:
Originally Posted by freemkt View Post
The primary incentive serves to prop out the bidding on market.
Well, if we follow the prime directive, then we do not interfere with the primary incentive.
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