I can't believe this article I just read in the NYT pimping *'s tax advisory panel:
http://www.nytimes.com/2005/10/18/politics/18cnd-tax.html?ex=1130299200&en=17871d7f1318f9e1&ei=5043&partner=EXCITEWhat's clear to me is that this panel does not represent Americans.
Here are some excerpts:
President Bush's tax advisory commission agreed today to recommend two alternative tax plans, both of which would limit or eliminate almost all tax deductions, including the ones for state and local income and property taxes.
TWO plans, same outcome (not much of an alternative eh?): the incentive to OWN a home is now removed. The housing market is in for a major correction.
The recommendations, due to be submitted to the president by Nov. 1, were designed so that the tax burden borne by the rich, the middle class and the poor would be roughly the same as they are now.
So, why DO IT AT ALL if the bottom line is going to be the same?
"Simplification has driven this," he said. "Also fairness."
FAIRNESS to WHOM?
For individuals, ... some of the main elements:
(I'll keep score: good things = 1 point, bad things = -1 point)
The alternative minimum tax, a steep levy faced by an increasing number of middle-income taxpayers, would be abolished.
No poor and very few middle class pay this. ATM is reserved for collecting sudden gains from Stock Options / Equity investments made typically by Upper Middle and Upper class investors.
1 For the Rich, 0 For the Poor.The tax break on home mortgages would be sharply limited, especially for expensive houses.
This will prevent first-time home buyers from entering high-population markets (like New England, California and many more markets in high-population areas across the nation) since the new law will lower the limit to $300,000 mortgage. A large percentage of first-time homebuyers (unless they are rich) borrow at between 250 and 450 to buy their first home. Not surpisingly, these areas tend to vote heavily democratic. And we know the Upper class consists mostly of republicans. The wealthy (top 5%) first time home buyers don't need to borrow this much money to buy a house regardless of location. They will not be affected.
1 for the Rich, -1 For the Poor.No deduction would be allowed for state and local income and property taxes.
I can't imagine who this will affect more? The rich guy who has no state income (majority dividend based -- wait till you see what's coming below) and who already can easily afford to pay property taxes on his mansion and yacht or the poor guy who now has to be taxed TWICE for his income?
1 for the Rich, -2 for the Poor.Employer-paid health insurance premiums above $5,000 a year for an individual and $11,500 for a family policy would be treated as income to workers and taxed accordingly.
Ok, this one really gets me. There are VERY FEW health care plans that cost less than this. The average middle class worker is now going to have another $2000 / year taken out of his taxes to pay for his health care. WHO'S THAT GOING TO HURT?!?!?
1 for the Rich, -3 for the Poor.All taxpayers could deduct charitable donations, but only to the extent they exceeded 1 percent of a taxpayer's income.
This forces everyone to give at least 1 percent or nothing. Sorry charities, but you just lost a lot of donations (that could help the poor).
1 for the Rich, -4 for the Poor.Personal exemptions and deductions and credits for children would be eliminated and replaced by a credit of $1,600 for a single person, $3,200 for a couple, $1,500 for each child and $500 for each other dependent.
This one is hard to say which way it will turn out... the poor will likely pay more, but so will the rich (if they can no longer itemize deductions).
0 for the Rich, -5 for the Poor.The six tax brackets ... would be replaced by four, with a low bracket of 15 percent and a top rate of 33 percent. The top rate now is 35 percent.
Bad, bad and bad. Poor lowest income braket is 10%. These people will now pay more (especially since they do not get a standardized deduction) and the Rich will get a 2% break at the top.
1 for the Rich, -6 for the Poor.The two plans differ on ... investment income.
One would eliminate taxes on dividends entirely, lower the top capital gains rate to 8.25 percent on the sale of stock in American corporations and tax interest income at the same rate as wages and salaries.
The other plan would have a 15 percent rate on dividends, interest and capital gains. The rate now is 15 percent on dividends and capital gains, and interest payments are taxed like earned income.
Either plan is a BOON for the RICH. They either pay NOTHING on dividend income and see nearly a 50% reduction in capital gains taxes OR they pay the MINIMUM income tax on dividends, interest and capital gains. How much do poor/middle class make on these types of investments? Oh yeah, NOTHING.
2 for the Rich, -6 for the PoorSo there we have it, a shift in wealth by ROBBING the POOR 6 TIMES and splitting the BOOTY with the RICH.
The ANTI-THESIS of Robin Hood. Canada, as high as their income tax is compared to the U.S. may actually be more economical for the poor and middle class. And now Americans won't be able to claim they aren't paying HIGH TAXES FOR HEALTHCARE!
I hope Americans welcome this like they welcomed Bush's Social Security Reform. My only question is, WHY DO THIS AT ALL IF IT ISN'T GOING TO INCREASE or DECREASE REVENUE TO THE GOV'T?
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