The Top Ten Exemptions for the Wealthy and All of America

[kentuck]

Notice the Number 1 exemption.

[slackmaster]

1. So I am now "wealthy" because I have a home mortgage and a 401k, and make charitable contributions?

:argh:

[kentuck]

3. No, but most help the wealthy more than you.

and I. Look at the other exemptions before you throw your computer. :-)

[slackmaster]

5. I disagree. The middle class would suffer much more than the wealthy if the mortgage interest...

...deduction was eliminated. Or the deductions for state and local taxes.

[Warren Stupidity]

8. which argument is the same rightwing argument used

against raising taxes on the wealthy: they already pay 'more than you'. What they do not pay is as large a proportion of their income in taxes as you do. These deductions are huge to working families, proportional to their income.

[kentuck]

12. "proportional to their income"

Yes. Personally, my mortgage deduction was less than the standard deduction. I'm sure I am not alone?

[Warren Stupidity]

2. How many times is this going to be posted today?

Mortgage deduction: huge for the middle class.
State and local taxes: huge for the middle class.
401K: huge for the middle class.

There is an all out BULLSHIT BARRAGE against income tax deductions that, if eliminated, will raise taxes AGAIN on the middle class. Once again we are talking subsidizing BILLIONAIRES by cutting benefits and raising the taxes on working families.

[Earth_First]

4. +1

+1

[kentuck]

6. Maybe this will help a little?

<snip>
Some of these terms may require a little explanation:

1. Tax-free health insurance contributions. The tax exclusion for employer-provided health benefits is the single largest tax break -- it alone will cost the government $1 trillion in foregone taxes over the next five fiscal years. This huge tax expenditure massively subsidizes the nation's employer-based health insurance system. It also provides an incentive to employers to overspend in health benefits (which are tax free) and pay less in salary (from which, of course, the IRS takes a bite). This tax break only helps families with at least one member employed by an employer who offers them health benefits. Others have to buy health insurance with after-tax dollars.

2. The mortgage interest deduction. The second-largest tax break is essentially the nation's largest housing program. By letting taxpayers who itemize deduct the interest they pay on their home mortgages, the government massively subsidizes home ownership. The more expensive the home -- and the higher the homeowner's tax bracket -- the bigger that subsidy is.

3. Treatment of capital gains at death. When you die, the government forgives your capital gains tax on appreciated assets that you pass on to your heirs. In accounting terms, this is the "step up in basis" on death. From the heirs' perspective, it means that the "basis" going forward (the amount above which anything is considered taxable capital gains) is the value of the asset at the time they received it. So if you buy stock at $1,000 and it's worth $10,000 when you die, your heir gets $10,000 as the basis. No one ever pays taxes on the $9,000 in appreciation. Now imagine a multi-million-dollar stock portfolio and multi-million-dollar homes -- and you're talking real money.

4. Tax-free contributions to 401(k)s. Federal government policy encourages savings for retirement by allowing employees and employers to make tax-free contributions to retirement plans, the most common of which is the 401(k). This break is a big gift to the financial securities industry, which is where most of this money goes, and to the very wealthy. Indeed, the bulk of benefits go to high-income households, while little goes to the lower and moderate income households. There are limits to how much can be contributed tax-free, but the amount of tax foregone through contributions to 401(k) plans, along with employer plans, when combined still make tax-deferred retirement savings the second largest tax expenditure.

....more

http://www.huffingtonpost.com/2011/04/18/the-top-10-tax-breaks-_n_850534.html

[Warren Stupidity]

7. It helps to convince me you do not understand

that the three deductions I listed, if eliminated, would constitute a giant tax increase on working families.

[kentuck]

10. Who said anything about eliminating them??

This is just a list of what people and businesses exempt. Most "working families" could give a big crap.

[Warren Stupidity]

14. Most "working families" could give a big crap?

Really? 67% of households own their own homes, most of those homes have mortgages, and consequently a huge proportion of working families are paying those mortgages and qualifying for a tax deduction. This is a middle class benefit.

[kentuck]

15. Yes.

The graph shows that.

It does say anywhere on there that any of these should be eliminated or done away with. It only shows where the money goes. Over $1.1 trillion per year in exemptions, business and personal. Are you a millionaire with a second home?

[Curmudgeoness]

9. Aren't 401(k) investments just tax-deferred, as opposed to

tax exempt? If this is the case, the person will reduce income this year, and pay taxes on that money at retirement, or when they withdraw it. And if this is the case, it really isn't an exemption. It just means that they are not getting taxes on that money this year. They will get it.

[Warren Stupidity]

11. yes of course but the BULLSHIT BARRAGE

is out promoting eliminating all middle class sched A deductions, even if they are deferred rather than actual deductions.

[kentuck]

13. You would be the expert...

on BS.

[AndyTiedye]

16. The Medical Insurance Numbers Make a Better Argument for Single-Payer

The exclusion of employer health insurance contributions benefits everybody who works and gets health insurance through their employer, even if they don't itemize deductions.
The vast majority of these people are far from wealthy.

It could be more fruitfully argued that removal of this particular deduction would be a natural outgrowth of moving to a single-payer healthcare model,
and would thus partially offset the costs thereof.