Tuesday, October 18, 2005
The GOP Says "Tax Reform"
I say "Tax Increase"
Yes, I'm no big fan of the current tax system. It's complicated, but at least it's familiar and my investment, spending and savings decisions key off of it. The continued trial balloons floating out of the President's tax reform (read: Increase) commission have me worried. The commission claims that these deduction reductions (tax increases!) are needed to repeal the AMT...but I don't yet fall under the AMT, so who exactly does this benefit me?
Talk is that they will cap the mortgage interest deduction, eliminate the deduction for state and local income taxes, eliminate the tax deduction for business to provide health insurance among other proposals. I did a quick check to try to understand the impact of these proposals on me. Here's what I've found:
Impact of discussed reforms on Elephant:
Deduction: Current Deduction New Tax Liability
State and local income tax: $7,664 $2,682.40
Mortgage Interest Deduction (eliminated) $14,510 $4,788.30
Mortgage Interest Capped (-20% reduction)$14,510 $3,830.00
On the very basic level, I estimate that if the proposed reforms are approved (a big if, mind you), my tax liability will increase between $6,500 and $7,500 per year on top of the already 5 figure amount I pay the feds now. It would increase my marginal tax rate by roughly 6%!!! That's not tax reform, that's the largest tax increase I'll see in my lifetime to date. Granted these are pretty rough numbers, but since I don't fall under the AMT, I won't see any benefits from tax reform, just a massive increase in my federal tax liability (which by the way, I have no say in how it's spend as I don't have representation in Congress).
Oh, in the weeks and months ahead, we'll hear how visionary this proposal is, but the truth is, just like back in 1986, this isn't reform, it's a tax increase and by the looks of it, one so sizable that it will make Clinton's tax increases look puny. So much for the Republican revolution...and again, with all this spending and forthcoming coming tax reform/increase proposals just how is the current administration different from a democratic one? Oh yes, the Democratic one wouldn't have increased federal spending as fast.
I'm calling this forthcoming proposal exactly what it looks like at this point, the largest tax increase in U.S. history, brought to you by the Republican Party. Gee thanks guys!
Yes, I'm no big fan of the current tax system. It's complicated, but at least it's familiar and my investment, spending and savings decisions key off of it. The continued trial balloons floating out of the President's tax reform (read: Increase) commission have me worried. The commission claims that these deduction reductions (tax increases!) are needed to repeal the AMT...but I don't yet fall under the AMT, so who exactly does this benefit me?
Talk is that they will cap the mortgage interest deduction, eliminate the deduction for state and local income taxes, eliminate the tax deduction for business to provide health insurance among other proposals. I did a quick check to try to understand the impact of these proposals on me. Here's what I've found:
Impact of discussed reforms on Elephant:
Deduction: Current Deduction New Tax Liability
State and local income tax: $7,664 $2,682.40
Mortgage Interest Deduction (eliminated) $14,510 $4,788.30
Mortgage Interest Capped (-20% reduction)$14,510 $3,830.00
On the very basic level, I estimate that if the proposed reforms are approved (a big if, mind you), my tax liability will increase between $6,500 and $7,500 per year on top of the already 5 figure amount I pay the feds now. It would increase my marginal tax rate by roughly 6%!!! That's not tax reform, that's the largest tax increase I'll see in my lifetime to date. Granted these are pretty rough numbers, but since I don't fall under the AMT, I won't see any benefits from tax reform, just a massive increase in my federal tax liability (which by the way, I have no say in how it's spend as I don't have representation in Congress).
Oh, in the weeks and months ahead, we'll hear how visionary this proposal is, but the truth is, just like back in 1986, this isn't reform, it's a tax increase and by the looks of it, one so sizable that it will make Clinton's tax increases look puny. So much for the Republican revolution...and again, with all this spending and forthcoming coming tax reform/increase proposals just how is the current administration different from a democratic one? Oh yes, the Democratic one wouldn't have increased federal spending as fast.
I'm calling this forthcoming proposal exactly what it looks like at this point, the largest tax increase in U.S. history, brought to you by the Republican Party. Gee thanks guys!
