That’s the fallacy. We are not wealthy and we itemize. There are tons of families with very high medical costs that itemize.
Increasing the std deduction is great if your prior itemization was less than 24k, the problem is most folks itemized more than that due to SALT and property tax deductions. This will be an increase.
Most importantly they are removing the person exemptions so if you have more than a couple of kids doubling the std deduction doesn’t help.
Well most folks don’t itemize even with the SALT and property tax deductions. 70% don’t itemize. Look it up.
I do agree that the medical cost deduction should be kept. I don’t like penalizing the sick and the old.
Personally my preference is for a progressive but lower flat tax. No deductions at all for anything. Doing that would lessen the influence of special interest groups in Washington.
Progressive but flat tax… only after hell freezes over. Or, as my grandfather used to say, keep your pockets widely open in the hopes that some spare change will fall in there from the sky.
@TatinG, It really doesn’t matter what your preference is since you are not in Congress.
This bill is a crap sandwich for everyone who isn’t extremely wealthy or a corporation. Plus, the few bones they threw to the “unwashed masses” expire in the next 5-10 years (iirc there are several different expiration dates in the bill.)
I’m not surprised they now have the votes given today’s other big news. It’s now critical for the R Congress to get this passed now.
Who else sees the US moving faster in the direction of Latin American country or Russia (before and after the Soviet era) stereotypes – an extremely unequal economy of a few super-wealthy and mostly poor people, with very little upward mobility for the poor but inheritance ensuring the aristocracy of the super-wealthy and protecting their scions from downward mobility, and with government finances in ever increasing debt – if this tax bill passes?
A serious question followed by a hypothetical musing:
What is the reason for rushing to a vote today? Is the perception that as more is learned about the bill, it becomes more unpopular? Is there a year-end recess starting today? Is it a pre-requisite for increasing the debt ceiling and avoiding a government shutdown?
Now the hypothetical musing
Give the days events, if the Vice-President were to become President, who would cast a tie-breaking vote if the Senate was tied 50-50?
This will not happen, but it is a gap in my constitutional knowledge. (Of which there are many!)
AIUI, if the Vice President becomes President then there is a vacancy. No one automatically becomes Vice President.
The new President then selects someone to become Vice-President and that person has to be confirmed by the Senate. This is what happened with Ford and then with Rockefeller.
There are two aspects of a flat tax. One is the rate. The other is a system without deductions. So you could have a flat tax that had no deductions but had progressive rates. At this point I don’t see the US moving away from a progressive rate structure all together. Though we have moved somewhat back and forth in terms of the numbers of different marginal rates.
A flat tax has the same rate for everyone. That’s what makes it flat, by definition. A progressive tax has rising rates with rising incomes. That’s what makes it progressive, by definition. There cannot be a tax that is both flat and progressive.
You’ve said this a few times now, as if it’s actually claiming anything meaningful. I’d argue that it isn’t.
You know what? 80% of the taxpaying units in my own personal household don’t itemize. This means pretty much nothing about the benefits of itemizing for my household, however.
To explain: We are a family of six that lives in Alaska, and so with the Alaska Permanent Fund Dividend, many years every single one of us has enough unearned income that we all have to file. In those years it breaks down as follows:
[ul][]My wife and I file jointly (so we make up a single taxpaying unit), have both earned and unearned income, and itemize
[]D17 has earned and unearned income, and doesn’t itemize
[]D19 has earned and unearned income, and doesn’t itemize
[]D23 has unearned income (plus probably earned income from paid babysitting and musical gigs), and doesn’t itemize
[li]D25 has unearned income, and doesn’t itemize[/ul][/li]So, like I said, 80% of us don’t itemize—but given the massively outsized proportion of income my wife and I bring in compared to the total for the family, it’s effectively as if our whole family itemizes, since the relative effect of all the children’s income put together is a small fraction.
However, my children contribute to that claim that 70% of all taxpayers don’t itemize. Well, of course, they don’t—but even though my family is kind of an edge case, hopefully it underscores how simply saying “X% don’t itemize” isn’t really a useful stat without a lot more context.
If we had one tax rate for all income but still had deductions, would that be a flat tax? People with the same incomes could pay very different amounts of tax depending on their deductions. Effective tax rates would not be flat at all.
This is an overloading of the term “flat”, probably due to the marketing of “flat tax” proposals as significantly less complicated.
However, the question of “what is taxable income?” consumes most of the tax laws and calculations. Having different types of income taxed at different rates (e.g. capital gains, dividends, pass through income attributed to capital) further complicates the tax laws and calculations (because people will try to get their income classified in the lower tax categories – e.g. claim it is from capital rather than labor). Even if all income were taxed at the same rate (eliminating the latter shenanigans and rules to prevent them), “what is taxable income?” can still be a complicated calculation.
Deductions, or the lack thereof, is part of the definition of “taxable income”.
And the deduction question cannot be avoided for things like business (small or large) income, real estate income, etc… Imagine what business taxes would be like if there were no deductions for business expenses, so that taxes would be based on revenue, not net income.
