Contest to Improve Tax System

Joetaxpayer has an interesting little contest going on at

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have been unhappy with the fact that now even many college graduatesdo not have the time and intelligence to wade through all the minutiaeand decision-making of doing their yearly taxes. It is obscene thattypically more than a high school education (in my opinion) isnecessary to get one's taxes right and with little stress. I do my owntaxes but spend a lot of time on it each year, despite havingexcellent records and using free online taxware. I still mess up attimes. (Goofed with a Roth IRA contribution this year and had toarrange for a withdrawal of an excess contribution. Oh the paperworkgenerated to move $77 from point A to point B and conform with taxlaw.)

Coming up with something sound-bitable that truly would make a difference in the tax system is thought provoking. I encourage folks to give the contest a try.

Reply to
Elle
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Coming up with something sound-bitable that truly would make a> difference in the tax system is thought provoking. I encourage folks> to give the contest a try. Much thanks. Disclosure - I am a paid blogger at the TurboTax Blog, and this was an offer of a free online premier ed of their software. They didn't give me any particular guidelines, left it to my imagination, so I put up a contest, instead of just a random drawing. I have 3 copies and only 5 entries as of this morning.

Reply to
JoeTaxpayer

Cross-posted for your reading pleasure.

I would love to see a flat tax with a very large exemption. The current exemption is way too low. For a family of 4, the standard deduction plus personal exemptions comes to $23,300. But a living wage for that family is more like $53k. So let's fix that first - stop taxing people in and into poverty. After that, get rid of all the exemptions and deductions. In other words, stop social engineering through the tax code.

I'd also do away with payroll taxes, excise taxes and corporate income taxes. Why do we need all these other taxes when we already have a progressive tax code? The worst is the corporate income tax. Some people say it's just a pass-through. But the corporate income tax is actually WORSE than a pass-through. Levying taxes on corporations enables the them to divvy up those taxes any way they like. Does anyone really believe they're going to divvy up their taxes in a progressive fashion? Let's see... take the tax liability out of the CEO's pay or pass it on to rank-and-file employees... Tough decision.

Reply to
Bill Woessner

[snip for brevity]

Did this kvetching feel good or what? I think at least one goal of Joe's contest is to encourage a good cry and then--ta dah!-- acceptance.

The Stepford wives have nothing on most American citizens.

;-)

Reply to
Elle

Is this how the AMT works? Sounds like those in the higher bracket might want to opt IN to the AMT to get a lower max rate of 28%. Or, is this just some example you are making up?

Reply to
Pico Rico

I was under the impression that the Congress would LOVE to do away with charitable deductions, but the populace will not allow that. Congress would get more revenue, and less competition in their quest to "do good".

Reply to
Pico Rico

No, it's how it actually works. However, you pay the HIGHER of the regular tax and the AMT so you can't choose to be taxed under the AMT. Though if you'll be in the AMT anyways it can make sense to accelerate income into that year to be subject to the 28% rate.

-- Rich Carreiro snipped-for-privacy@rlcarr.com

Reply to
Rich Carreiro

Snipped

Not so much the populace, but the lobby that represents the non-profit and/or tax exempt world. THEY are the ones that continually lobby to keep itemized deductions.

Can you imagine what would happen to - Pick One A - banking industry B - construction industry C - churches, synagogues , temples, etc D - state revenue departments; E - and various other sectors of our economy

If you could no longer deduct -

1 - mortgage interest 2 - real estate taxes 3 - charitable contributions

Its a sad thing to think it, but I cannot help but wonder - if we no longer got a deduction for charitable contributions HOW much public support would charities get? I'd venture a guess that it would go down substantially, too many people contribute to charity, or contribute MORE, because they get a deduction for it.

It would also cause a shift away from home ownership - which is supported for various reasons, including: a - home ownership generally raises the standard of living over those who rent; owners tend to take better care of something that actually belongs to them; b - with no mortgage interest or real estate tax deduction, how many folks would simply choose to rent? One of the big selling points to home ownership is that with the interest and taxes being deductible you can BUY more house than you can rent. The tax subsidy lowers your overall out of pocket costs AND it builds equity. With no deduction for mortgage interest my mortgage payment would "FEEL" more like rent (especially in the short term) so I'd be tempted to either just rent or buy less house.

No friends, the sad reality is that tax system we have today will change when we reach the point in social and technological evolution to the point where we live they do on Star Trek - money is meaningless because everything we need is supplied to us without cost.

Beware the attitude - From, according to their ability TO, according to their need

If you want to be really shaken up, read "Atlas Shrugged" by Ayn Rand, then ask yourself - Who is John Gault?

Gene E. Utterback, EA, RFC, ABA

Reply to
Gene E. Utterback, EA, RFC, AB

In Canada there has never been a deduction allowed for mortgage interest, and home ownership is still alive and well with millions of home owners relatively well off. As a matter of fact, the collapse of the housing market and foreclosures seen in the USA have not occurred in Canada. The difference in economic conditions in the two countries is explained more by the strict and sensible regulations imposed on the banking industry in Canada than by details of tax policy. Also, the giving of people according to their needs and taxing of those who can afford it is a philosophy supported by many peole without leading to disastrous results. And, as far as I know, Ayn Rand's novels do not sell too well in the bookstores!

Reply to
Don

Just out of curiosity, would you continue to allow IRA and 401(k) and similar deductions? It's arguable how much these "cost" the government in the long-term, as income taxes are eventually paid on most of that money - in fact on greater amounts of money - but the near-term "cost" is considerable and it's been on the table amongst tax conversations along with other major middle-class deductions such as home mortgage interest and state income taxes.

There's a very strong argument to be made for lower marginal rates but the broadest possible base. It's the least economically distorting and the least "politickable" option. It's also not very likely because of this last feature.

Agreed - it makes little sense to treat income from wages differently from income earned in other ways. And corporate taxes are, of course, simply passed along to the consumers anyway (while the ones which aren't so passed along are ripe for additional politicking - the last thing we want).

Reply to
BreadWithSpam

[snip for brevity]

[As they say in tennis -- ]

Game.

Set.

Match.

Well rebutted.

Joe, I propose that Don be given one of the TurboTax subscriptions (Canada version?) as an "honorable mention" for his suggestion(?) that the U.S. government simply let itself be absorbed by the Canadian government.

Reply to
Elle

Hmmm. I only have the US version, even though it's online they sent me "gift cards" with the codes to use. Don's points are well taken.

My observation is that it's the change that has the effect, when you flip a switch, say to kill the mortgage deduction, the impact is a rise in taxes, however that falls. As I remarked on Kay Bell's site, when my mortgage interest was pushing $40K/yr, the loss of deduction would have hurt. Had their been no deduction at all, we'd have budgeted accordingly. Now, at less than $10K/yr interest, I have no real stake in it, only the observation that an orderly phaseout is needed to avoid market shock. I'll be reading through the comments again tonight and announce winners tomorrow. Joe

Reply to
JoeTaxpayer

Unfortunately, I have to file returns in both Canada and the USA, because I have income from both countries. But I have a good tax preparer who is familiar with the rules in both places. It is interesting that many accountants in the Vancouver area are familiar with both Canadian and US tax codes. I could be mistaken, but I would bet that US accountants who know much about Canadian tax matters are rare.

Reply to
Don

Absolutely not. That's just more social engineering. And most of those tax expenditures go to the wealthy, any way. People don't need an incentive to save. The incentive to save is having savings and being able to retire.

--Bill

Reply to
Bill Woessner

Also,

you must not be very observant, then.

Reply to
Pico Rico

Is there a specific reference in Star Trek to this effect? I do not recall seeing it, but I also wondered how people paid for things. There were, of course, Farengi traders and merchant star vessels, so there must have been money, no?

Reply to
Pico Rico

I observe that the Clinton Admin started in a deep Republican hole and left with a surplus. I observe that the G. W. Bush Admin started with that surplus and left with the worst financial disaster and deficit since 1929, which was caused by another Republican fiasco. How's that for observation?

Chip

Reply to
Chip Wood

I observe that Canada is in better fiscal shape than the U.S. I observe that Australia is in much, much, much, much better fiscal shape than the U.S. Both have a national health care program among other things.

Reply to
Bill

Yes, in several episodes, although I can not recall which ones.

Reply to
Bill

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provides a number of references to this. In TOS (the original series) there were money references (I'm thinking of "The Gamesters of Triskelion" in which the aliens wagered quatloos on the outcome of events. Humans seemed to not need currency.Next Generation and Deep Space 9 added more commerce (and scenery) along with latinum, the currency of value. By the 24th century, gold could easily be replicated, which pretty much rendered it worthless, except as a containers for latinum, thus "gold pressed latinum."Sorry, I know, I need a life. (Winners of the contest were announced today. A free TurboTax online edition)

Joe

Reply to
JoeTaxpayer

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