Are new taxes fair?
The presidential election may have decided in favor of Obama, but a creepy reminder of Mitt Romney tax policy keeps creeping into view. With the fiscal cliff just around the corner every American is waiting with bated breath for these tax talks to be resolved.
A new idea from an unlikely source is getting bipartisan attention as a way to broaden the base of taxpayers while limiting loopholes and deductions taken by the wealthy. This proposal that just so happens to be the brainchild of the failed presidential contender Mitt Romney would limit the amount of itemized deductions to a certain monetary limit.
“There’s renewed interest” in the cap on deductions, Senator Kent Conrad, the North Dakota Democrat who heads the Senate Budget Committee said.
This seems like a too good to be true generic way of taxing everyone equally without getting any sore feelings from lobbyists or or powerful interests. Since it seems as if no one can pin down the actual specifics of any plan a politician puts forward until the thing is passed and already effecting our lives. Tax experts disagree that this methodology would serve as a quick fix for our broken tax system claiming that it would disproportionately effect different tax bases.
But this solution doesn’t tackle the larger tax preferences, which make up a large part of the Buffet rule, saying that no wealthy person should be paying less in taxes than their secretary.
These experts have their suspicions that this tax proposal may be a wolf in sheep’s clothing that disproportionately increases the tax burden on the poor and middle class while do nothing to curb the favorable tax environment for the wealthy. This would also effect the entire donor model which so many nonprofits, schools, and museums require to survive.
Martin Feldstein, a Harvard economist and the chairman of the Council of Economic Advisers under President Reagan, thinks that this methodology is a great way to lower the deficit. His proposal calls for capping deductions at 2 percent of income for all individuals.
But this cap on deductions would hit the lower socioeconomic classes where they need it the most… in the charitable sector. That is because this deduction is largely discretionary and at the will of the taxpayer to how much he or she would deduct from their tax bill.
Will this cap on deduction send the charitable sector or our economy into dire straights or is capping deductions that silver bullet needed put the breaks on the economy that is heading towards a fiscal cliff.
Categories: Federal Tax, Income Tax, Tax Law Tags: buffet rule, charitable deduction, corporate tax, federal income tax, federal tax, mitt romney, tax deduction, tax increase, tax reform
Tax hikes on the rich “negligible” for growth on the economy
Washington- A recent report was re released after Republicans tried to claim that tax hikes on the wealthy would be detrimental to growth in the economy. The report states that revoking the Bush era tax cuts on the wealthiest Americans will have a “negligible” impact on the economy. The report also states that the the Bush Era tax cuts did very little to help spur the growth of the economy. The report also stated that the Bush Era tax cuts helped fuel the income inequality among income classes.
“Analysis of such data conducted for this report suggests the reduction in the top tax rates has had little association with saving, investment, or productivity growth,” the study says. “It is reasonable to assume that a tax rate change limited to a small group of taxpayers at the top of the income distribution would have a negligible effect on economic growth.”
The study takes into account tax rates and economic growth that dates back to the world war 2 era. Needless to say Democrats pounced on the opportunity to prove to Republicans that tax cut for the wealthy don’t necessarily equate to growth and that the top two percent of earners should go back to Clinton Era tax rates when growth was substantial. Republicans, as they always seem to, complain and swear that raising taxes on the wealthy will only bring gloom and doom for the US economy.
“What this report demonstrates is at the core of the debate we’re having right now,” said Maryland Rep. Chris Van Hollen, the top Democrat on the House Budget Committee, adding that it “put a stake in the heart of the Republican argument that small increases in marginal tax rates for wealthy individuals somehow hurt economic growth.” He also noted that during the Clinton years with tax hikes the US economy was doing a lot better off than when Bush introduced his tax cuts.
“What this CRS report does is take away the last little fig leaf that [Republicans] had to justify big tax cuts for very wealthy individuals,” Van Hollen said.
“Republicans have simply failed to face up to the reality,” said Rep. Sander Levin (D-Mich.), the top Democrat on the House Ways and Means Committee. “I hope that this CRS report will add further impetus to the speaker to sit down with Republicans, because when I’ve talked to a few of them, I don’t think they’ve had this discussion.”
Republican lawmakers claim that the report was written by a left wing study group and that its findings are biased and therefore fallacious.
This is a continuing trend with Republicans denying the facts when they stare them point blankly in the face. Maybe this report will be the wake up call needed to raise taxes on the top 2 percent.
Categories: Federal Tax, Income Tax, Tax Law Tags: federal income tax, federal tax, fiscal cliff, income tax, republican, Republican Tax, Repulbican Tax, tax code, tax pledge, tax reform, tax the rich
Companies avert paying taxes AGAIN before their taxes go up
The wealthy are scrambling to take advantage of the current tax code by exploiting the system in mass numbers and driving profits into their pockets before the tax hikes on the rich Obama wants go into effect.
Countless companies including Costco and the Las Vegas Sands have declared what they call “special dividends’ to liquidate tax free capital. This amounts to over $20 billion dollars in this last quarter alone. Other firms are shelling out bonuses, commissions, and dividends early before the wealth bombshell is to be dropped on the wealthiest few.
“We’re going to have a big jump in household income in the fourth quarter” said Crandall. “It’s going to be in excess of $50 billion.”
A majority of this scrambling is occurring in the uppermost crust of the elite. The 2% of the wealthiest Americans will be the benefits of this early cashout. President Barack Obama wants to target these wealthiest of individuals to help solve the fiscal crisis that lies before us by raising their rates.
Of interest in 2009 52% of the 124 billion dividends reported by federal government went to this 2% according to the IRS. A definite symbol of how backwards our world has become with income inequality.
This statistic alone proves just how unequal income distribution really is as the rich get richer and the poor get poorer. The wealth has shifted from labor income to capital income, an income with yields the benefit of lower taxes
How will this increase in taxes effect us in the long run? The rich typically save rather than spend so it is a good indication that a tax increase won’t hurt the economy by too much. It is about time that the wealthy began paying their fair share of this American Dream rather than being the gold tipped parasites that they are.
Categories: Federal Tax, Income Tax, Tax Law Tags: avoiding taxes, corporate tax, federal income tax, federal tax, federal tax fraud, income tax, tax code, tax court, tax evasion, tax fraud, tax law, tax reform