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1) remove the wage cap on Social Security FICA taxes (the Medicare cap is already gone)
2) remove the sales tax deduction (why are we subsidizing people who spend more on stuff?)
3) remove the mortgage interest deduction (why are we punishing renters and rewarding people who buy expensive houses and punishing people who own their homes free and clear?)
4) remove the filing status completely; just have one form for each person, who cares if you're single or married or head of household, just treat everyone the same
5) increase the standard deduction to $15,000 (helps to mitigate the above changes)
6) apply the same income tax rate to capital gains
7) remove the deduction for state income taxes (why are people in Texas subsidizing the legislature spendthrifts in New York?)
Hopefully this will bring in enough revenue to run the federal government. Continuing to borrow money forever is a path to bankruptcy!
1) remove the wage cap on Social Security FICA taxes (the Medicare cap is already gone)
2) remove the sales tax deduction (why are we subsidizing people who spend more on stuff?)
3) remove the mortgage interest deduction (why are we punishing renters and rewarding people who buy expensive houses and punishing people who own their homes free and clear?)
4) remove the filing status completely; just have one form for each person, who cares if you're single or married or head of household, just treat everyone the same
5) increase the standard deduction to $15,000 (helps to mitigate the above changes)
6) apply the same income tax rate to capital gains
7) remove the deduction for state income taxes (why are people in Texas subsidizing the legislature spendthrifts in New York?)
Hopefully this will bring in enough revenue to run the federal government. Continuing to borrow money forever is a path to bankruptcy!
Wait a minute, let's use a semi-typical family of 4 who own a home.
MFJ current standard deduction is 12,300. You're going to increase that to 30,000.
A reduction of taxable income on the order of 18000
You think a typical household that meets the aforementioned criteria have 18,000 of itemized deductions from sales tax and mortgage interest and state income taxes?
Given that the typical household income for this type of family is about 50-100k none of them will be paying more FICA, their home loan should be at most @250k which would be interest on the order of ~8k , their (using an average of several states) should be about 5k at most.
Those on the lower half of this income scale of this bloc would certainly no longer be paying ANY federal income tax. {woe for another "47%" talking point}
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Hopefully this will bring in enough revenue to run the federal government. Continuing to borrow money forever is a path to bankruptcy!
Doesn't seem feasible as stated. Perhaps if you addressed no longer deducting property taxes as well it might come to a break even of revenue generation for some (certainly not all) of the people that fall in the affected bloc.
I'd like to see the explicit math you came up with when you thought this could be revenue neutral; I know I am ignoring your comments on capital gains and FICA, but with the sheer # of households that fit in the above bloc, I can't see how this proposal comes ANYWHERE close to your goal.
Wait a minute, let's use a semi-typical family of 4 who own a home.
MFJ current standard deduction is 12,300. You're going to increase that to 30,000.
A reduction of taxable income on the order of 18000
You think a typical household that meets the aforementioned criteria have 18,000 of itemized deductions from sales tax and mortgage interest and state income taxes?
If they both work, they are being subject to the marriage penalty under current law. My suggestion removes the marriage penalty. Good.
If only one works, then one of them has no income tax form to prepare, and the other one gets a standard deduction of 15k instead of 12.3. Not a big drop in tax.
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Given that the typical household income for this type of family is about 50-100k none of them will be paying more FICA, their home loan should be at most @250k which would be interest on the order of ~8k , their (using an average of several states) should be about 5k at most.
Those on the lower half of this income scale of this bloc would certainly no longer be paying ANY federal income tax. {woe for another "47%" talking point}
Unlike a nationwide VAT, I don't recommend raising taxes on the poor and lower middle class.
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Doesn't seem feasible as stated. Perhaps if you addressed no longer deducting property taxes as well it might come to a break even of revenue generation for some (certainly not all) of the people that fall in the affected bloc.
I'd like to see the explicit math you came up with when you thought this could be revenue neutral; I know I am ignoring your comments on capital gains and FICA, but with the sheer # of households that fit in the above bloc, I can't see how this proposal comes ANYWHERE close to your goal.
Yes, delete the property tax deduction as well. Again, poor and lower middle class people would see no change in their income taxes. The upper middle class who deducts a lot of mortgage interest, property taxes, state income taxes and sales taxes would see their taxes go up. Not a lot, but some. The rich who make a lot of money in capital gains would pay much more.
I don't have the data needed to prove it's revenue neutral. I would hope it's not. Taxes need to be higher in order to eliminate the deficit.
Too many Fair-tax proponents are as much or more motivated by their opposition the the U.S. Treasury's Internal Revenue Service rather than the tax proposal's economic benefits.
Regardless of the net economic benefits derived from a federal general sales tax levied upon everyone, and continuing to tax net incomes of enterprises and wealthier individuals at lower rates. (Lower rates facilitate simplifying the taxes' regulations and lesser differentiating between incomes' tax rates).
those Fair-tax proponents would prefer that there should be no federal sales tax, rather than lose what they believe is their opportunity to eliminate the Internal Revenue Service.
It's ironic that although sales taxes require individual purchasers do little or nothing, all but the smallest and simplest enterprises will perceive no lesser than current IRS ubiquity and pervasiveness.
How can there be a "Fair" tax when we are talking about taxing WAGE INCOME???? The only "Fair" tax is a trade levy and tariff tax system that would support a federal government about 1 millionth of its current size (which is what we originally had).
So, if you go to work and sell the best days/years/decades of your lives, what is a "Fair" percent to send to Washington (to be spent on the graft, pork, keeping the ultra-wealthy that way, keeping the poor from revolting, feeding the Military Industrial Complex, supporting the huge groups that haven't worked for generations, feeding the new "normal" of single mothers heavily subsidized by taxes, etc?
As Mitt said, the bottom 50% doesn't pay Federal income taxes and has no skin in the game. Is that fair?
I've been a 5%er my whole working career. Other than lifting the Medicare tax income cap, my effective tax rate has done nothing but go down since Ronnie was elected. The Obama ACA tax hike didn't touch me since it goes after 2%ers leaving 5%ers alone. You could roll me back to George H W Bush tax rates (inflation-adjusted) and it wouldn't change my life any.
My concern is that the constant tax hikes on those evil rich people is going to cause capital flight. Your typical multi-millionaire can make most of it vanish offshore with a few mouse clicks. We've seen a steady stream of that with our nutty corporate income tax rates.
As Mitt said, the bottom 50% doesn't pay Federal income taxes and has no skin in the game. Is that fair?
I've been a 5%er my whole working career. Other than lifting the Medicare tax income cap, my effective tax rate has done nothing but go down since Ronnie was elected. The Obama ACA tax hike didn't touch me since it goes after 2%ers leaving 5%ers alone. You could roll me back to George H W Bush tax rates (inflation-adjusted) and it wouldn't change my life any.
My concern is that the constant tax hikes on those evil rich people is going to cause capital flight. Your typical multi-millionaire can make most of it vanish offshore with a few mouse clicks. We've seen a steady stream of that with our nutty corporate income tax rates.
You're right on all points, and the only solution -- fundamental change to a totally different system that removes money from the economy without "taking" it from someone/some entity (trade levies as products come in and out of the nation)--won't happen until half the population is starving and has lost even their family members.
Pointless discussion until there is an agreement regarding the definition of "fair".
YourWakeUpCall, the word “fair” within this discussion thread's title is not used simply as a synonym for the word “equitable”. There's been proposals for replacing our taxing of net incomes with a general sales tax. The proposal now being considered in Congress is not the first and likely will not be the last of such proposals.
References to proposals such as this are commonly known and described within political discussions as a “Fair-tax” concept.
The name is derived from those contending that the amounts of aggregate peoples purchases, rather than their income tax filings, equally or more accurately indicate their comparative wealth and incomes. I'm among those that believe that this particular contention is correct.
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