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Romney quietly announces a good tax policy idea

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woolfe9999

Diamond Member
Mar 28, 2005
7,164
0
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I think it's a fine idea. There are doubtless many other good ideas. The problem is and remains the Norquist Pledge. Any sort of changes to tax policy which result in net revenue increases the pledge signers are duty bound to reject. And they have made it clear that limiting deductions qualifies as a tax increase. Since 97% of the GOP in Congress have signed that pledge and so far they have not deviated from it, I don't see how this is going to happen, unless it is entirely revenue neutral.
 

DaveSimmons

Elite Member
Aug 12, 2001
40,736
669
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Right. Because 50-75% of middle income people buy $400,000 homes (assuming 5% interest rate) :rolleyes:
You can't buy even a small house for $400K in most of California, and the median price in Seattle is $375K.

So yes, $17K is probably a bit low unless Romney wants to admit to capping the mortgage deduction for large numbers of middle-class citizens.
 

mchammer187

Diamond Member
Nov 26, 2000
9,116
0
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Good idea I think but its not enough.

I think instead of adjusting the LTCG rate just make it 5 years in to get the long term capital gains rate instead of 1 year.

5 years 15% 3 years (22% or marginal tax rate which ever is lower) and 1 year (marginal tax rate).

I think the difference between 364 vs 365 days qualifying as a long term investment is the most ridiculous part of the tax code. That and the carried interest provision.
 

Hayabusa Rider

Admin Emeritus & Elite Member
Jan 26, 2000
50,880
4,211
126
I think it's a fine idea. There are doubtless many other good ideas. The problem is and remains the Norquist Pledge. Any sort of changes to tax policy which result in net revenue increases the pledge signers are duty bound to reject. And they have made it clear that limiting deductions qualifies as a tax increase. Since 97% of the GOP in Congress have signed that pledge and so far they have not deviated from it, I don't see how this is going to happen, unless it is entirely revenue neutral.
It's a fine idea if you consider charities valueless and mortgage defaults and bankruptcies a worthy goal. Why punish the overburdened or highly charitable middle class? Our taxes spiral upwards and our incomes diminish. I think this outstandingly bad.
 

nehalem256

Lifer
Apr 13, 2012
15,670
6
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Good idea I think but its not enough.

I think instead of adjusting the LTCG rate just make it 5 years in to get the long term capital gains rate instead of 1 year.

5 years 15% 3 years (22% or marginal tax rate which ever is lower) and 1 year (marginal tax rate).
It should be based on a % of marginal tax rate.

I think the difference between 364 vs 365 days qualifying as a long term investment is the most ridiculous part of the tax code. That and the carried interest provision.
End carried interest.
 

Dannar26

Senior member
Mar 13, 2012
683
26
91
I am a natural problem solver too. If I get ants in my garden I spray. We could do thins with people who don't pay 35% in taxes. Just spray them. I love being a problem solver. I think I should be elected to the job of impregnating lots of women. Better living thought a better gene pool.
Theatre right? I'll be your counterpart!

Oh please big scary red money man, don't spray me! And while you're at it, please dont take away any of the entitlements I *need* to survive! Without WIC, SNAP, welfare, and disability SSI how on earth could I afford the car payments on my Escalade? I would be the laughing stock of the entire section 8 community! How would my 8 children I get money for look at me the same?!

Oh rich guy who is deemed evil based on his wealth (not to be confused with prejudice, which can only happen to people with higher melanin counts), I will allow you to impregnate me. It won't be for your wonderful genetics, but rather for the opporitunity to drag you through a preju...er...unfair child support system which will leech out of you far more money than I truly need. And make no mistake, I *need* that money. I deserve it.

After all black hearted republican strawman, it's expensive to raise a family in today's world when you don't want to work.
 

DietDrThunder

Platinum Member
Apr 6, 2001
2,262
326
126
Lol I have more than 17k in just mortgage interest deductions.

I am middle class and had over 50k itemized deductions.

17k cap isn't a horrible idea but would hit middle class the hardest.
I'm middle class as well and I don't have enough deductions to itemize. We had a 15 year loan, and after 7 years the interest we were deducting was so low, we could no longer itemize, so we just paid off our house.

I think that once an individual's earnings from income or capital gains reaches $750K per year, itemized deductions should be eliminated and capital gains should be taxed at the normal tax rates.
 

Todd33

Diamond Member
Oct 16, 2003
7,842
2
81
Lol I have more than 17k in just mortgage interest deductions.

I am middle class and had over 50k itemized deductions.

17k cap isn't a horrible idea but would hit middle class the hardest.
This. Of course him and his friends would still be fine with their 15% special tax rate.


Right. Because 50-75% of middle income people buy $400,000 homes (assuming 5% interest rate) :rolleyes:
You are kidding right? I'm guessing you live in a trailer.
 

woolfe9999

Diamond Member
Mar 28, 2005
7,164
0
0
It's a fine idea if you consider charities valueless and mortgage defaults and bankruptcies a worthy goal. Why punish the overburdened or highly charitable middle class? Our taxes spiral upwards and our incomes diminish. I think this outstandingly bad.
You may be correct here, except for the part about the middle class. Who in the "middle class" has 17K per year in deductions? You can always raise the 17K to any higher number anyway. I was responding more to the general concept than the particular number.

In any event, it wasn't my main point. We can "reform" taxation in numerous ways, some undoubtedly better than others, but the GOP will never sign off on ANY of them unless they are revenue neutral or revenue negative. I don't even understand how we can have a discussion of anyone's idea of how to "expand the federal tax base" when 97% of the GOP in Congress has signed a pledge that says they will never support any legislation, of any kind, which would do such a thing.
 

Thump553

Lifer
Jun 2, 2000
11,808
1,127
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Right. Because 50-75% of middle income people buy $400,000 homes (assuming 5% interest rate) :rolleyes:
Not sure where you get the 400k figure from, but a good rule of thumb is if you have a $1800 monthly mortgage payment you are going to easily be paying more than $1500 per month for interest and taxes, which amounts to $18,000 per year. Pretty common mortgage payment.

BTW no one has yet addressed my question as to how a "revenue neutral" 20% income tax RATE cut is going to generate even one more dollar of funds for economic growth.
 

Fern

Elite Member
Super Moderator
Sep 30, 2003
26,916
172
106
So the wage I earned last year wasn't subject to inflation?

What your implying is money from investments are superior to money earned via labor and should be treated differently. I disagree, whether you make 100k from wages or 100k via investments it money earned.
How about you don't receive your paycheck for 10 or 20 yrs?

That might change your attitude.

Inflation is real, and it is NOT income. Inflation should not be taxed.

But calling 1 yr and a day a "LTCG" is ridiculous. We should adjust for inflation, remove it and tax the true gain at normal rates.

Also, if you're going to tax LTCG at regular rates, you damn well better change the law to let LTCL be fully deductible when incurred. And that's another rather powerful reason you'll never see LTCG taxed at regular rates (That and the economic disincentive to invest regular rates of taxation would result in).

Fern
 

nehalem256

Lifer
Apr 13, 2012
15,670
6
0
Not sure where you get the 400k figure from, but a good rule of thumb is if you have a $1800 monthly mortgage payment you are going to easily be paying more than $1500 per month for interest and taxes, which amounts to $18,000 per year. Pretty common mortgage payment.

BTW no one has yet addressed my question as to how a "revenue neutral" 20% income tax RATE cut is going to generate even one more dollar of funds for economic growth.
http://www.mortgagecalculator.org/

$400,000 house, 20% down, 5% interest rate

Monthly payment = $1717 excluding taxes.

Assuming most of that as interest as it would be at the beginning $1500 for interest is probably about right.
 

Hayabusa Rider

Admin Emeritus & Elite Member
Jan 26, 2000
50,880
4,211
126
You may be correct here, except for the part about the middle class. Who in the "middle class" has 17K per year in deductions? You can always raise the 17K to any higher number anyway. I was responding more to the general concept than the particular number.

In any event, it wasn't my main point. We can "reform" taxation in numerous ways, some undoubtedly better than others, but the GOP will never sign off on ANY of them unless they are revenue neutral or revenue negative. I don't even understand how we can have a discussion of anyone's idea of how to "expand the federal tax base" when 97% of the GOP in Congress has signed a pledge that says they will never support any legislation, of any kind, which would do such a thing.
If we're talking principle then there is room for discussion, but a definite dollar figure was given. Who has those kind of deductions? Lots around here. With 13k taxes on a 220k home, plus medical, plus interests and charitable donations. The local property tax burden was 15% of income. That was before the tax hike because we weren't paying enough towards medicaid. There is a good chance we'll see another 10% increase next year.
 

Engineer

Elite Member
Oct 9, 1999
39,255
698
126
You work hard for your money. You pay a higher tax rate then someone who does nothing. Seems like this is opposite of what it should be.
So people like Romney should be paying more, since I pay a higher rate than him? :cool:

My feeling on this is that this will cause increases in many middle class people's tax burden even when coupled with a 20% cut of rate. Don't think it will effect the upper class much at all and will be a big boon to them should they get a 20% cut of rate (except those that make their money via capital gains and they already have a sweet deal as it is).
 
Last edited:
Feb 4, 2009
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Taxing super wealthy people is always going to be tough, the keep almost all of their money in Realestate, stocks and maybe a few super valuable things like art work. They will never sell these assets to actually have to pay taxes, they will take loans against their assits then pay the loan off. When you have tons of money its easier to control your tax burden. I believe this is what the intenetion of the original AMT was supposed to fix, the law makers just f'ed it up by not indexing for inflation.
 

Thump553

Lifer
Jun 2, 2000
11,808
1,127
126
http://www.mortgagecalculator.org/

$400,000 house, 20% down, 5% interest rate

Monthly payment = $1717 excluding taxes.

Assuming most of that as interest as it would be at the beginning $1500 for interest is probably about right.
As I pointed out a few posts above, your methodology completely disregards the fact that real estate taxes on your (first or second) home is also an itemized deduction.

Romney's $17,000 cap on itemized deductions is going to screw over a lot of homeowners-horrible timing when the real estate market is already devastated. And for us average Joes, hardly revenue neutral.
 

mwtgg

Lifer
Dec 6, 2001
10,491
0
0
dividends are no different than wages as an expense for a business, there's no less double taxation of wages than there is of dividends.

the real difference is people get dividend income by owning something, they get wages by working.

That's no justification for one or the other having favorable tax treatment.
Dividends are paid out of post-tax corporate earnings. Unlike wages, they are NOT an expense for the business.
 

Fern

Elite Member
Super Moderator
Sep 30, 2003
26,916
172
106
Folks, this ain't gonna happen.

With the housing market what it is, seems like a baaaad time to cap the mortg interest deduction.

Charities will scream, as will all those who support charities.

State and local income taxes not deductible? Please, people in urban areas (Read: Dems) will freak.

I can easier see the phase-out rules for higher income types returning.

Fern
 

yllus

Elite Member & Lifer
Aug 20, 2000
20,583
430
126
Folks, this ain't gonna happen.

With the housing market what it is, seems like a baaaad time to cap the mortg interest deduction.

Charities will scream, as will all those who support charities.

State and local income taxes not deductible? Please, people in urban areas (Read: Dems) will freak.

I can easier see the phase-out rules for higher income types returning.

Fern
Damn you, Fern. That makes perfect sense. This thread is over. :(
 

werepossum

Elite Member
Jul 10, 2006
29,876
460
126
How about you don't receive your paycheck for 10 or 20 yrs?

That might change your attitude.

Inflation is real, and it is NOT income. Inflation should not be taxed.

But calling 1 yr and a day a "LTCG" is ridiculous. We should adjust for inflation, remove it and tax the true gain at normal rates.

Also, if you're going to tax LTCG at regular rates, you damn well better change the law to let LTCL be fully deductible when incurred. And that's another rather powerful reason you'll never see LTCG taxed at regular rates (That and the economic disincentive to invest regular rates of taxation would result in).

Fern
Agreed, completely. If we taxed all capital gains as wage income we'd have almost zero investment in the nation. However - if we taxed all capital gains as wage income after adjusting for inflation, we'd still take something of a hit as some investments became economically unfeasible, but we might end up with just as much money and it would be more fair, in my opinion.

If I can't have the FairTax, my own preference would be to tax everyone at something 10% on every dollar earned above the poverty level, with long term investments adjusted for inflation. Want to contribute to charity? Great, use your after-tax income. Want to buy a house? Great, use your after-tax income. But it would only work if there were no deductions and the rate was very low. I have no philosophical objections to Romney's proposal, but I suspect that for political reasons the rate would be set so high as to neuter it.

Folks, this ain't gonna happen.

With the housing market what it is, seems like a baaaad time to cap the mortgage interest deduction.

Charities will scream, as will all those who support charities.

State and local income taxes not deductible? Please, people in urban areas (Read: Dems) will freak.

I can easier see the phase-out rules for higher income types returning.

Fern
You are of course 100% right here too.
 

DLeRium

Lifer
Feb 19, 2001
20,161
20
81
but i thought Romney's getting rid of deductions?

I don't see the point of deductions. If you setup your tax rates up policy, then you should be OK.
 

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