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Tax reforms I would like to see

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Tax reforms I would like to see
Post by KNick   » Sat Dec 15, 2012 7:19 pm

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First and foremost, a flat tax rate for everyone for any source of income. Capitol Gains, Wages or rental income). Preferably somewhere around 15-20%

No deductions beyond actual operating expenses and R&D for businesses.

100% of interest on home loans deductable for the primary residence only.

No deduction for charitable contributions beyond $1,000.

R&D funds received from the government to be treated as income by businesses and as a grant if received by a University.

In the cases of fraud involving government funds (including Medicare, Medicaid, and Welfare payments), confiscation of 100% of all real property, income and gifts bestowed by the perpitrator (including anything in the wife's, husband's, chidren's and parents names. Forfiture of any and professional licenses held by the above. Repayment by the children for education paid for with fraudulent money. All recovered funds to be returned to the agency defrauded.

Legalization and taxation of marijuana at the same or higher rates as alchohol.

Any company paid perks, (trips, vacations, medical treatment, etc.) counted as income and taxed accordingly. This would not include medical insurance.

Taxation of income of companies from overseas to be the same as US companies.

US companies operating overseas to be taxed on all income, including that earned overseas.
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Re: Tax reforms I would like to see
Post by biochem   » Sun Dec 16, 2012 12:11 am

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First and foremost, a flat tax rate for everyone for any source of income. Capitol Gains, Wages or rental income). Preferably somewhere around 15-20%


That would be nice, but the politicians in Washington would never give up the power that manipulations of the tax code gives them. It's such a useful way to reward their friends after all. However, in theory it is an excellent idea. The truly rich (Mitt Romney, the Kennedy clan etc) get most of their income from Capitol gains at 15% while the doctors etc that work for a living pay 39%+.

No deductions beyond actual operating expenses and R&D for businesses.


Another one the politicians will hate, but another good idea. There is way too many loopholes. Right now corporations such as GE pay 0% income tax while smaller corporations who can't afford the same accounting expertise but are trying to compete with them pay the highest corporate income tax rate in the world! Limiting corporate deductions would make the situation somewhat more fair.

100% of interest on home loans deductable for the primary residence only.


This is either going to need to be capped or pro-rated otherwise the ultra rich will start using it as a tax loophole.

No deduction for charitable contributions beyond $1,000.


Objection to this one. If an individual contributes the biblically mandated 10%, $1000 isn't going to even be close. Plus there are huge benefits to the tax payer. Charity organizations have proven to be far more effective at accomplishing social welfare goals than government programs and if donations are reduced than that will send even more people to the government trough. It's pennywise pound foolish. That said there is a lot of fraud in this arena and a number of charities which don't deserve the name, so some stricter enforcement is necessary.


In the cases of fraud involving government funds (including Medicare, Medicaid, and Welfare payments), confiscation of 100% of all real property, income and gifts bestowed by the perpitrator (including anything in the wife's, husband's, chidren's and parents names. Forfiture of any and professional licenses held by the above. Repayment by the children for education paid for with fraudulent money. All recovered funds to be returned to the agency defrauded.


This could have a lot of unintended consequences. I could see something like this for major clear cut frauds. But some "fraud" cases are the result of misunderstood regulations etc and while I don't think those individuals should get a clear pass for their negligence, confiscation of every last thing they own is extremely excessive.

Legalization and taxation of marijuana at the same or higher rates as alchohol.


Not a huge fan of Marijuana but since the country seems to be heading in this direction we might as well make money off it. Say 10x the tax rate?

Any company paid perks, (trips, vacations, medical treatment, etc.) counted as income and taxed accordingly. This would not include medical insurance.


This had better be very tightly defined or all the poor people ordered by their company to take business trips are going to suffer more than they do already. Yes the big shots get to take "business trips" to the Bahamas. But a very large number of ordinary individuals have to travel on company business, stay in cheap hotels in boring locations, which they don't get to see much of anyway because the only sites they see are the airport, the hotel and the meeting room. (Yes, I've taken a lot of those awful trips and no I don't want to pay taxes on them)

Taxation of income of companies from overseas to be the same as US companies.

US companies operating overseas to be taxed on all income, including that earned overseas.


That would help get some money from GE.
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Re: Tax reforms I would like to see
Post by KNick   » Sun Dec 16, 2012 12:27 am

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My original post was an off-the-top-of-my-head rant brought on by the seeming inactivity of Congress on fiscal reform currently going on in Washington. They were just the first few pet peeves that came to mind. And naturally, the devil is in the details. It is time to simplify the tax codes!!!!

I would be more inclined to allow larger deductions for charity if I had not read a study that showed that the majority of charities in the US use between 25% on the low end and 60% on the high end to advertize for more donations. if I recall correctly, 50% of all charitable donations get plowed back into fund-raising, instead of relief work. This includes the Red Cross, where only about 50% of the funds raised actually do something.
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Re: Tax reforms I would like to see
Post by biochem   » Sun Dec 16, 2012 12:37 am

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I would be more inclined to allow larger deductions for charity if I had not read a study that showed that the majority of charities in the US use between 25% on the low end and 60% on the high end to advertize for more donations. if I recall correctly, 50% of all charitable donations get plowed back into fund-raising, instead of relief work. This includes the Red Cross, where only about 50% of the funds raised actually do something.


This is why I would crack down on the definition of charity, at least for IRS purposes. The expansion of so-called charities has been ridiculous. However, the good charities are very good and of significant benefit to society and the taxpayer. So a better solution than limit donations is to tighten the regulations on what constitutes a charity. Perhaps requiring that a cap of 25% of the money be placed on fundraising as a condition for the IRS definition?
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Re: Tax reforms I would like to see
Post by biochem   » Sun Dec 16, 2012 12:41 am

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Here's another one to add. Cap the amount of money in farm subsidies. It would be political suicide to eliminate them, but the vast majority of the money goes to big corporate farms. Therefore, capping the maximum allowable subsidy would save a ton of money and still allow politicians to claim that they support the family farmer.
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Re: Tax reforms I would like to see
Post by KNick   » Sun Dec 16, 2012 12:52 am

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I would even go to 30% as long as all wages paid to non volunters was included in the thirty percent. And each charity should have to submit its budget to the IRS semi-annually for re-licencing.

As for the farm subsidy, to many "family farms" are big corps. They have to be to survive in todays economy. But it should be reduced across the board or eliminated for some crops.
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Re: Tax reforms I would like to see
Post by Daryl   » Sun Dec 16, 2012 7:57 am

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I'd probably disagree with 50% of the proposal. Cut down on loop holes for sure (including capital gains - add it to overall income at same rate).
I don't like flat tax as each should contribute proportunate to their ability to do so.
Taxing US corporations on overseas profits would ensure that none invested elsewhere as they have to pay tax where they earn that profit and double taxation would make it uneconomic to operate.
I agree that the definition of charities needs to be tightened, and I'd ensure that all religious organisations clearly differentiated their charities from the bulk of their enterprise and paid full tax (plus rates etc) on all other scams (sorry business) they undertake.
Despite discussion elsewhere I can't see any reason why personal home loans should have any deduction, but I believe that investment property loans should have interest deductability as they are a business.
Why subsidise farms at all under any circumstances? Just another business (I grew up on a family farm).
Fraud involving government benefits can range from an organised rip off of millions to a semi deliberate forgetting to declare $100 of casual income while on welfare support. You can't have the same penalty for both.
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Re: Tax reforms I would like to see
Post by biochem   » Sun Dec 16, 2012 1:40 pm

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I don't like flat tax as each should contribute proportunate to their ability to do so.


Most flat tax proposals I have seen have a floor. So for example with a 20% rate and a floor of $20,000 per individual a married couple with no children who make $50,000 would only pay taxes on $10,000 of that income or $2000 in taxes annually. But if the same couple made $100,000 they would pay taxes on $60,000 or $12,000 annually. And for a couple making $1 million, the floor would be such a small % of their income, it would effectively cease to exist.

Frankly such a simple system would produce a tax stream which is a lot more fair than the byzantine system we use today. Currently the really rich use a variety of loopholes to pay a very low effective tax rate even though their rate is nominally quite high, the poor pay no income tax at all, and the middle class gets socked. With a flat tax which has a floor, the rich will actually have to pay, the middle class will still have to pay and the poor will still pay no income taxes.
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Re: Tax reforms I would like to see
Post by KNick   » Sun Dec 16, 2012 1:58 pm

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My mistake on the fraud portion of my OP. I should have added one simple line. Until the total amount of the fraud was repaid. That way if someone made a simple error, whether due unfamiliarity with the law or human error, that would be all they were liable for. For cases of wide-spread, systematic criminal fraud, the maximum should be applied.
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Re: Tax reforms I would like to see
Post by Donnachaidh   » Mon Dec 17, 2012 1:37 am

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KNick wrote:In the cases of fraud involving government funds (including Medicare, Medicaid, and Welfare payments), confiscation of 100% of all real property, income and gifts bestowed by the perpitrator (including anything in the wife's, husband's, chidren's and parents names. Forfiture of any and professional licenses held by the above. Repayment by the children for education paid for with fraudulent money. All recovered funds to be returned to the agency defrauded.


This is beyond too far. Repayment of all fraudulently obtained funds and a fine if it was malicious is appropriate. Your suggestion would punish people simply for being related to someone. And it would likely send people (the part about the person's children being made responsible for their parent(s)' fraud) who had NOTHING to do with the fraud into crippling debt. Your idea is unconscionable and incredibly cruel.
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