Comments on: Tax Credits Sound Good, But …

By: Kevin Beck

Kevin Beck — Fri, 06 Feb 2009 04:57:10 +0000

I would cast my vote for the Fair Tax. This would eliminate all taxes related to income, and instead would have two components:
1: A flat consumption tax built into the price of all goods and services sold;
2: A rebate based upon family size in the amount of the tax that would be paid by a household at the poverty level.
This would make all investments with tax-free dollars; it would eliminate all tax deductions; it would eliminate having to keep records available to the Feds regarding your entire financial life; it would repatriate trillios of dollars into the United States economy; and best of all, it would end the political power that comes from being able to set all these thresholds and barriers to the individuals who are achievers in our economy.

By: Donal

Donal — Tue, 03 Feb 2009 20:05:02 +0000

Let’s pass the incentive package NOW and fine tune it later.

By: Cindi Showalter

Cindi Showalter — Tue, 03 Feb 2009 17:11:54 +0000

As far as tax credits go, there really is no reason to phase them out at all. Let’s assume they apply equally to all taxpayers. The $1000 tax credit for someone paying $2000 in taxes is a whopping 50% reduction in their total tax bill. For someone paying $50,000 in taxes, it amounts to a reduction of 2% of their liability. Basic math takes care of fairness issues.
The real issue is complexity and phase-outs just add to the problem. If our tax code is so complex that our current Secretary of the Treasury (who is also head of the IRS) and several of our Congressmen can’t seem to fill out their own tax returns correctly, then what are the rest of us poor folks to do?

I would suggest repealing the whole darn thing and lock them (our Congressmen) in a room until they re-write the entire code in 5000 words or less.

The first income tax return was one page long and that included the instructions. I bet even our Congressmen could figure out to fill that one out.

By: Holly

Holly — Tue, 03 Feb 2009 16:56:34 +0000

It’s like my daddy always said: “If you give the people a reward for not succeeding, that’s exactly what they will do!”

By: Sally G

Sally G — Tue, 03 Feb 2009 09:04:39 +0000

I’m on the fence about this. I realize that income levels are arbitrary, and will hurt those on the borderlines more than others. However, I don’t think tax consequences should be the main determinant for lifestyle decisions, such as buying a new house. Owning rather than renting is a huge difference in everyday life, from doing repairs or paying for them, to doing landscaping or paying for it, to freedom to relocate or being tied to the property you own, etc.
Even Warren Buffett acknowledges that when taking payroll taxes into account, his assistant pays a greater rate than he does, and that that situation is not right—especially when you realize that a single dollar makes up a greater proportion of a smaller income than of a larger one. (E.g., if “basic living expenses”—food, shelter, clothing—average (put any number here, say $30,000), someone making $100,000 has $70,000 in discretionary inocme, whereas someone making $50,000 has only $20,000.) Therefore, the $1,000 credit is worth more to someone making a lower wage.
Capital gains and dividend taxes? Again, I’m not sure. Things are just so complicated, what with depreciation, carryover losses, etc., that it seems hard to determine the “real” tax rate anyone pays. Besides, whether you do physical labor for your income (which takes its toll on your body), have a desk job (which can be very stressful, but which has a less-intense impact on physical health and stamina), or make most of your money from investments (i.e., capital gains and dividends), all dollars spend the same.
So no conclusions, except that FICA and unemployment insurance shouldn’t have a top cutoff regardless of salary: those with the largest salaries can certainly afford to pay it, and those programs meed the cash. Social Security was put in when life expectancies were much lower than they are now; nobody expected to draw SS payments for 20 to 25 years, nor was the system designed for that.