Panel Looks to End Mortgage Int. and Child Credits

[Ghost of Cutten]

Quote from Rearden Metal:

Wait... what??? That's like saying that my not robbing my local bank today has <i><b>cost</b></i> me about $10,000 in uncollected revenue.

They have it all backwards. The government costs the people money, not the other way around. Besides the fact that no matter how much politicians raise or lower our tax rates, they always end up collecting a bit under 18% of the total U.S. GDP in tax revenue.

If you include state taxes, the USA takes 28% of GDP in tax revenues each year. Some comparisons:

Denmark: 49%
France: 43%
Italy: 43%
UK: 37%
Germany: 36%
Australia: 30%
Switzerland: 30%
USA: 28%
Japan: 28%
Turkey: 24%
Mexico: 20%
Singapore: 13%
Hong Kong: 13%

http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP

So the USA is not that highly taxed, compared to much of the 1st world. Japan is an outlier because they have racked up national debt at insane levels, and have a small defence budget. They will be forced to hike their taxes aggressively at some point. With the USA, if you consider that it probably overspends on defence to subsidise the security of other places like Europe, Japan, Saudi, Taiwan, S Korea etc, it could probably knock that 28% rate down to 25% with no ill effects domestically.

Noticeable outliers are Singapore and Hong Kong, at 13%. This proves that you can have a rich, functioning 1st world society without high tax rates. Given the economic success and social stability of these places, which 50-100 years ago were third world dumps, it seems insane that not more countries are copying their low tax model. Even if there are some effects from being city-states and regional trading hubs, which could not be replicated by most other countries, especially larger ones, it is still a powerful piece of evidence that small government works better than big. And anyone who says that high taxes are necessary is flat-out disproved by these real world examples.

So, if the USA got rid of policies like welfare, and the war on drugs, government spending could be slashed even more, and taxes could be reduced to levels not much more than HK and Singapore, with the resulting positive knock-on effects. The USA could easily provide all the core functions of government with a flat tax of around 15-20%.

 

[377OHMS]

Quote from Hello:

I noticed this quote from the OP as well, and i have mentioned the same thing many times already, this is the entire reason i will never vote for a liberal..... They view my money as government money which has not been properly dispersed.

Republicans dont exactly have a prominent record to lean on in this regard either.

+1

 

[AAAintheBeltway]

Quote from Hello:

Are you saying tax simplification wont happen, OR that it isnt a good idea?

I'm saying this Commission's proposals are going nowhere. To the extent they try to disguise tax increases as tax simplification, they are bad ideas also.

The government's fiscal problem has nothing to do with taxes. It just spends too much. There are hundreds of billions in wasteful spending that should be cut. The government is already taking too big a share of GDP.

The first question at every presidential debate should be "Do you think the government spends too much, and if so, name several specific programs or departments you would eliminate."

A big first step would be to bring our military home from Iraq and Afghanistan, Europe, Korea and Japan. That would also allow us to get rid of hundreds of useless generals and admirals.

Next we should cut every department that either lacks constitutional justification or is there as a payoff to an interest group, which would knock out the Departments of Agriculture, Education, HEalth and Human Services, Labor, Commerce and the entire alphabet soup of regulatory agencies like the SEC and EPA.

 

[trefoil]

1. Tax simplification is indeed on the table: the 1986 tax reform was mentioned favorably.
2. As long as we're on that subject, that tax reform, good as it was, made the housing situation worse, and was one of the thousand things that laid the basis for the recently demised bubble. By eliminating the deduction on state sales and gas taxes, while keeping the one for property taxes, and keeping this silly mortgage interest deduction, they basically said if you're middle to upper middle class, you're going to need to buy a house with a mortgage or you will pay way more in tax than your friend who did.

So, while I'm sure it gives all of you warm & fuzzies to state, in your usual stentorian fashion, finger doubtlessly pointed up and eyebrows mushed in, that the gov is taking all your pay, or something, and then defining the part it doesn't take as a cost, what they mean is that folks who are either renters or who have houses that are paid for are paying tax for the folks who buy houses with big mortgages, in effect. That's what a tax expenditure is, and that's why they say it costs whatever they say it costs.
I know there's only two independent traders on this entire site, because none of you seem to realize that the corporate employee with the mortgaged house is probably the most subsidized person on the planet, between

1. the health care his company pays for and gets a tax break on,
2. the mortgage interest deduction,
3. the property tax deduction,
4. and of course the tax break on retirement contributions, which at least everyone qualifies for.

You guys are paying the tax for number one though, assuming you're independent traders, but of course you're not, or you would be complaining about that.
If you have a paid in house, you're paying the tax for number two too. And if that paid in house is on a cheap piece of land, so that your property tax is low, you're paying for number three.
That corporate employee is over on the golf course with a real nice set of clubs having a grand time on your dime.
But it's all good, it seems. No one seems to have a problem with that.

 

[Rearden Metal]

Quote from AAAintheBeltway:

I'm saying this Commission's proposals are going nowhere. To the extent they try to disguise tax increases as tax simplification, they are bad ideas also.

The government's fiscal problem has nothing to do with taxes. It just spends too much. There are hundreds of billions in wasteful spending that should be cut. The government is already taking too big a share of GDP.

The first question at every presidential debate should be "Do you think the government spends too much, and if so, name several specific programs or departments you would eliminate."

A big first step would be to bring our military home from Iraq and Afghanistan, Europe, Korea and Japan. That would also allow us to get rid of hundreds of useless generals and admirals.

Next we should cut every department that either lacks constitutional justification or is there as a payoff to an interest group, which would knock out the Departments of Agriculture, Education, HEalth and Human Services, Labor, Commerce and the entire alphabet soup of regulatory agencies like the SEC and EPA.

I agree with you. What I <i>don't</i> quite understand is how you can have these views and still vote Republican! John Boner's agenda is <b>nowhere near</b> the same page as ours.

 

[jem]

Quote from trefoil:

1. Tax simplification is indeed on the table: the 1986 tax reform was mentioned favorably.
2. As long as we're on that subject, that tax reform, good as it was, made the housing situation worse, and was one of the thousand things that laid the basis for the recently demised bubble. By eliminating the deduction on state sales and gas taxes, while keeping the one for property taxes, and keeping this silly mortgage interest deduction, they basically said if you're middle to upper middle class, you're going to need to buy a house with a mortgage or you will pay way more in tax than your friend who did.

So, while I'm sure it gives all of you warm & fuzzies to state, in your usual stentorian fashion, finger doubtlessly pointed up and eyebrows mushed in, that the gov is taking all your pay, or something, and then defining the part it doesn't take as a cost, what they mean is that folks who are either renters or who have houses that are paid for are paying tax for the folks who buy houses with big mortgages, in effect. That's what a tax expenditure is, and that's why they say it costs whatever they say it costs.
I know there's only two independent traders on this entire site, because none of you seem to realize that the corporate employee with the mortgaged house is probably the most subsidized person on the planet, between

1. the health care his company pays for and gets a tax break on,
2. the mortgage interest deduction,
3. the property tax deduction,
4. and of course the tax break on retirement contributions, which at least everyone qualifies for.

You guys are paying the tax for number one though, assuming you're independent traders, but of course you're not, or you would be complaining about that.
If you have a paid in house, you're paying the tax for number two too. And if that paid in house is on a cheap piece of land, so that your property tax is low, you're paying for number three.
That corporate employee is over on the golf course with a real nice set of clubs having a grand time on your dime.
But it's all good, it seems. No one seems to have a problem with that.

Note as we eliminate real estate related tax deductions the real estate buyers pool would shrink and housing prices would go down.

Over time the same salary would be able to afford the same house only the mortgage would be smaller and the taxes would be lower. Govt revenues without the tax deduction might even go down. However, in my opinion for modeling purposes you would expect houses to go down in proportion to the distortion caused by the tax deduction... so in theory govt revenues might stay exactly the same.

It shows how fricken stupid the white house advisors are when it comes to the real world. Doesn't anybody advising the white house have an IQ high enough to think in systems.

By the way the mortgage deduction should be eliminated... especially on high end properties. Right now housing costs suck out way to high a percent of working peoples income.

We need to return to early 90s prices.

 

[Lucrum]

Quote from jem:

It shows how fricken stupid the white house advisors are when it comes to the real world.




Doesn't anybody advising the white house have an IQ high enough to think in systems.

NO!

 

[trefoil]

Quote from jem:

Note as we eliminate real estate related tax deductions the real estate buyers pool would shrink and housing prices would go down.

They would go down to their real values, which may or may not be over or under current prices. The point is not to have the price distorted by all the subsidies that have been thrown at housing.

Over time the same salary would be able to afford the same house only the mortgage would be smaller and the taxes would be lower. Govt revenues without the tax deduction might even go down. However, in my opinion for modeling purposes you would expect houses to go down in proportion to the distortion caused by the tax deduction... so in theory govt revenues might stay exactly the same.

Yes.

It shows how fricken stupid the white house advisors are when it comes to the real world. Doesn't anybody advising the white house have an IQ high enough to think in systems.

Real estate developers and lawyers and agents and all the rest spend a lot of money on politicians. The results are obvious.