Tuesday, March 2, 2010
Partial Kudos to President Obama
President Barack Obama's latest budget proposal, released in February, includes a provision that would shrink deductions for mortgage interest, real-estate taxes, charitable contributions and other items for married couples with annual incomes of more than $250,000, or individual filers earning more than $200,000. Under the proposal, such taxpayers would save 28 cents of tax liability for every $1 of mortgage interest or other eligible expenses, down from 35 cents now.
Good for you, Mr. President!
As flawed by half-measures and a socialistic mentality as the proposal is, basically you call for a move in the right direction, Mr. President.
For that... kudos!
My position... there should be no "tax break" for home ownership - no tax deductibility.
You wanna buy a house...? Buy a house! Good luck! God bless ya! But don't ask the greater society to partially subsidize your lifestyle choice.
Government requires "income." We all "get" that. But for God's sake, make the means as fair and transparent as possible. Jeez... even the thickest reader out there must "get" that in order to balance out the bottom line on revenue for each "break" in the existing tax code there must be corresponding "compensation" in the form of higher overall taxes. In other words... there's no free lunch.
To reiterate my basic tax position, while I concede the inevitability of some level of "progressivity" in the income tax code, I reject the current Frankenstein's monster federal tax code as unfair, burdensome, and economically counter-productive.
If you're going to tax "income" then tax income in the most straightforward manner possible while staying true to the American ethos of personal freedom.
Everyone should pay at least a token "contribution" to the upkeep of government. Set the minimum at 5%... or 3%... or 2%... or 1%... but all Americans should share a part of the burden.
By the same token, in a nation founded upon the principles of liberty it seems to me that no American should ever - at least during periods of peace - be subject to federal income taxes of greater than a third (33.3%) of his or her income.
How Americans choose to spend their hard earned income is their business!
Government should neither "reward" nor "punish" personal choice.
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http://online.wsj.com/article/SB10001424052748704089904575093621148762194.html?mod=WSJ_hps_sections_personalfinance
The latest effort to scale back some tax deductions on mortgage interest, one of the nation's most-enduring tax breaks, is finding little support in Congress. Members from both parties are concerned about how it would affect both the housing market and charitable contributions, says Matthew Beck, a spokesman for the Democratic majority on the House Ways and Means Committee.
The administration believes the proposal would reduce the deficit and "distribute the cost of government more fairly among taxpayers of various income levels," says a Treasury spokeswoman.
Congress has rejected numerous attempts over the years to scale back or eliminate this deduction, which has been available since the federal income tax was created in 1913. The deduction is often defended as a means of boosting homeownership.
Yet critics of the deduction say that, in practice, the deduction does little or nothing to expand homeownership.
Eric Toder, a fellow at the Urban-Brookings Tax Policy Center, a left-leaning Washington think tank, says that low- to moderate-income people—those who might have to stretch to afford a home—typically don't itemize deductions on their tax forms and so get no benefit from this tax break.
The main effect of the deduction, Mr. Toder says, is to lower the cost of borrowing for wealthier people, most of whom would own property in any case. The deduction also may have helped inflate the housing bubble by subsidizing mortgage borrowing, encouraging people to take on more debt than they otherwise would have.
In a 2007 report, the Urban-Brookings Tax Policy Center argued that the deduction drives up land and housing costs.
Under current law, taxpayers are allowed to take deductions from home-purchase mortgage loans with original balances of as much as $1 million...
(*CHEST PAINS*)
...plus another $100,000 of home-equity borrowings. This debt can include loans used to buy second homes or even boats that have sleeping quarters, bathrooms and kitchens, says Gregory Rosica, a partner at the accounting firm Ernst & Young in Tampa.
(*LITERALLY MAKING ME SICK TO MY STOMACH*)
The congressional Joint Committee on Taxation recently estimated that the mortgage-interest deduction this year will reduce tax revenue by about $104 billion.
* BUT OF COURSE CONGRESS STILL SPENDS THIS NON-EXISTENT $104 BILLION - IT SIMPLY BORROWS THE MONEY... THE DEBT IS ADDED TO THE "TAB" OF OUR CHILDREN... IN THE MEANTIME WE'RE ALL PAYING THE INTEREST ON THE DEBT!
About 75% of those benefits go to people with incomes of more than $100,000 a year, a report from the tax committee found.
* ADDING INSULT TO INJURY... (*SIGH*)
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