How do we fix the inequity in tax deductions?
Our current system, for example, allows for an individual person who's marginal tax rate is 39.6% to get 39.6 cents back for every dollar they can deduct from their taxes that's above $400,000.00 while an individual whose marginal tax rate is 25% and makes $50,000.00 a year only gets 25 cents back for every dollar they deduct for income levels between $36,250 - $87,850.00
To make the math easy, let's say that the person making above $400,000.00 made $500,000.00 and bought a Chevy Volt. That person would receive a tax credit / deduction of $7,500.00. They don't actually save $7,500.00. What they really save is $7,500.00 x 39.6% = $2,970.00
To the person making $50,000 a year with a marginal tax rate of 25% and using the same deduction of $7,500.00, that person would only save $7,500.00 x 25% = $1,875.00
The difference is between $2,970.00 and $1,875.00 is $1,095.00. That's real money. It's not right that the person with more money saves more money on their deduction than the person with less money -- it should, at a minimum, be equal.
How do we make these deductions equal in dollar value regardless of marginal tax rate?
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