With all of the screaming about the massive “unsustainable” spending in Washington (which I disagree with) and the paranoia from the right about their taxes going up, I thought I’d post a couple of thoughts on taxes.
I sure wish everyone paid theirs. Unfortunately many people don’t. I also have problems with people bitching about certain tax rates going up, the whole, “if you make more than $100,000 ($150,000, $200,000, $250,000 -whatever)” thing. However there are many currently legal loopholes that more financially sound (I refuse to say “rich” -I’m not a key word man) people repeatedly use to lower the taxes that they pay. Here’s my reforms:
1. Only one domicile per person may be used at one time as a tax deduction in federal or state income tax calculations. No more buying 2, 3, 4 homes to hide your money in. If you make that much, you should pay your fair share.
2. Only one retirement (or maybe two other long-term savings) account(s) per person may be used at one time to be used as a federal or state income tax deductions.
3. No more tax exemptions for religious institutions. Now, before the hate mail arrives, I only mean the exemptions above and beyond those given to normal charities. The property taxes, charitable donations not directly used for charitable activities that benefit the people as a whole, not just the faithful. The initial basis of forming tax exemptions (which are not one thing, but a combination of local, state and federal court rulings) was to encourage private citizens to “take care” of problems that the government would rather not, but it has to benefit everyone. It cannot target a single group. This concept has been grossly blown out of proportion and I am tired of people getting rich off of people’s faith (extreme but realistic example: Scientology). If we remove the tax exempt status, we are still not supporting a single religion, nor preventing anyone from their free exercise.
It’s unfortunate that we can’t change the past (spending), but this would sure help towards the future, maybe we could afford to dramatically lower the corporate tax’s and spur real economic growth in this country…
Thoughts?
-Matt
4 Comments
Matt,
You are starting to sound a little to the right, are you okay? Flu bug at your house also?
Rich I don’t think those are “right” ideals at all. I may have severe left leanings but I am and always will be a pure capitalist. We’ve seen too many countries implode financially to not take that seriously. Everything else: Live and let live.
I disagree Matt. I think you are sounding a little more like a right-leaning social moderate. The fact that you support capitalism so strongly pulls you a little further right than I think you realize. Whatever you label yourself I think we agree on far more things than we disagree on. I will try to get a few posts on here about the “left” things I like.
Ok Matt, I like the way you are leaning and the proposed ideas are good, but there is fault in some of your ideas.
1. The tax credit offered individuals does drastically diminish for everything past the first house. It can only be a tax shelter if it is a residential property that you use as your primary home and you can only get additional protection as long as the remaining properties are used as income sources such as rental properties. But these make poor tax shelters as you have to pay hefty maintenance fees and you still have to pay the property taxes which can be more significant, dependent on where the house sits. Most land used as tax shelter is land that can be developed that hasn’t actually been used. Property that has been zoned for use but remains undeveloped can be listed as an investment and therefore can be treated separately in regards to your income sort of as a “loss” to income. It of course gets much more complicated but my point is real estate will remain a tax shelter as long as you have the cash to buy and the smarts to find the right property.
2. Since most retirement accounts have limitations on the amounts you can deposit per year, and are geared towards long term investment, therefore you receive penalties for pulling your cash out prematurely, to make this single account system work, the entire investment system would need a serious overhaul, and if the last year hasn’t proved how unlikely that is to occur then you haven’t been paying attention.
3. Religions / Churches have several layers of tax protection, some legitimate and sustainable and some unfair. Due to the First Amendment the Federal Government determined that it was inappropriate to tax a Religion because it exists. This has been seen as a potential conflict with “Congress shall make no law respecting an establishment of religion, nor prohibiting the free exercise thereof.” Requiring payment to exist has been seen as doing just that. Now this is where it gets a little uglier, politicians were unhappy with the church’s influence over policy, and following certain messes, not the least of which was prohibition, so LBJ, then a senator found an ingenious way to do it. He included them in Article 501c3 of the Tax Code. This article guaranteed that if an organization met certain requirements then they could apply for tax exempt status and could not be required to pay taxes. The reason this was so shady is it gave the government a weapon to say that if a church gets involved in public matters such as campaigning for a cause or a candidate, the Federal Government can then revoke that status, citing it as a political organization and not a religious one and demand taxes. Kind of crafty but it has not been used as effectively as LBJ intended way back in 1954 when this became law. If we remove that status, many politicians feel that the influence of the church would be even harder to reign in than it is now.
I won’t even get into the quagmire that provides them a tax exempt status from property taxes but it runs along the same lines.
You may not agree with these points, and there are many measures that can be taken to fix our system, keep thinking up new ones and lets find some that haven’t been tried before and start a movement. I have some ideas of my own.
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