Which deductions would you be willing to give up to avoid tax hikes?
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Republicans have officially gotten on board with raising revenue for deficit reduction — by curbing tax breaks in conjunction with lowering tax rates.
The idea of curbing tax breaks isn’t new. Tax policy experts have touted it for years and Democrats, including President Obama, have proposed it in one form or another. That’s why it may offer a key to resolving the fiscal cliff.
The biggest benefits of curtailing breaks: It broadens the base of income and activities subject to tax, simplifies the code and reduces what tax geeks call “distortion” — that is, the phenomenon of individuals and companies choosing to do one thing over another because of the tax implications.
Which, if any, federal income tax deductions are you willing to give up as long as your tax rate doesn’t increase?
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This is where the battle begins. Some states have no state income tax and people in those states would gladly give up their state income tax deduction. People in other states would oppose that. Older people often have no mortgage and they would gladly give up the mortgage interest deduction. Younger people who purchased their home relying on a mortgage interest deduction would oppose that. People who give generously to charity would oppose losing their charitable deduction. Others could care less. It goes on and on.
I say restrict all deductions, in aggregate, to X dollars. That will avoid a heated argument over mortgage interest versus charity versus state income tax etc. X would be negotiated but I would advocate that it be a fixed dollar amount (not a percent of AGI). It could vary by year, going down a little each year to minimize the shock factor. It could also vary between joint filings and single payer filings.
Currently, people in states which do not have state personal income taxes can deduct the amount of sales tax they pay. Actually, anyone has the choice to deduct sales taxes, but cannot deduct both sales taxes AND state income taxes. One has to choose one or the other.
Thats a proposal offered up by Romney that never gost a mention in the press. They ignored it while portraying Romney as unwilling to compromise. It better fit the narrative they created to aid Obama’s re-election.
What I dont see here is what services are individuals willing to do without, to facilitate reducing spending by the same $’s as increased spending????
Everyone ‘claims’ (wink wink) to have agreed to a balenced approach to debt and deficiet reduction. Where are the true reductions of spending coming from. Not just a slowing in the growth of spending?
I still remember the grand compromise to pass the last raise in the debt ceiling. That compromise was the right agreed to raise the debt ceiling in return for the left reducing spending. The debt ceiling got raised, where are the reductions in spending?
Giving up a deduction IS a tax hike.
In essence, you’re asking for a tax hike either way. Perhaps a better question for Californians who voted to raise their own taxes.
Didn’t President Obama say he wouldn’t raise taxes on the middle class which is what you would do if deductions are reduced? So here we are, one week after the election with promises already flying out the window!
Still, if I had to pick one exemption it would be to limit the dependent child exemption to three. Should we be giving tax breaks (encouragement) to those who have eight kids?!
Let’s hear it from all the Californians reading the World-renowned Cedar Rapids Gazette.
Bazinga!!! Now that was good!!!
Curt,
What promises.
Obama campaigned on a promise to let the Bush tax cuts roll back to 2000 levels but only for those earning more than $200,000/$250,000. He didn’t say anything about eliminating deductions. That was Romney’s schtick.
Negotiations on those taxes has not even started.
Calm down before you have a stroke.
Deductions are the same as taxes? John Boehner doesn’t think so. Here’s a recent (this week) quote from the big whiner:
“For purposes of forging a bipartisan agreement that begins to solve the problem, we’re willing to accept new revenue, under the right conditions.
What matters is where the increased revenue comes from, and what type of reform comes with it.
Does the increased revenue come from government taking a larger share of what the American people earn through higher tax rates?
Or does it come as the byproduct of a growing economy, energized by a simpler, cleaner, fairer tax code, with fewer loopholes, and lower rates for all?”
Encouraging more kids? I guess that woud depend on whether you think a country can survive, let alone flourish with a birth rate near zero, and a steadily aging population. A look to Europe gives a glimpse. Maybe thats why the USDA is advertising on Mexico media informing them about our food stamp program. Why have kids when you can lure them up here with promises of free food?
Nobody has said anything about removing deductions for people making less than $200,000 (couples filing jointly – $250,000). None of President Obama’s promises have been broken.
Kudos to Mr. Greer for showing the leadership to offer a solution. Rich, are you suggesting no itemized deductions – just the standard deduction? Interesting!
It’s funny when Romney proposed a plan to limit deductions as a % of income for the higher earners the left said, “it didn’t add up.” The mortgage deduction he talked about, was on higher income individuals, not on the middle class. So now the left want to include the middle class and call it a compromise? Figures. Now it adds up? Well no doubt.
When they look into simplifying the tax code I would suggest a one stop shopping approach. Look at General Electrics tax return to see what deductions they took that qualified them to pay no income tax while making billions in income.