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Showing posts with label Blogroll. Show all posts
Showing posts with label Blogroll. Show all posts
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Over at Minnesota Central there is an interesting comparison post between the "Fair Tax" of Mike Huckabee and the "Taxpayer Choice Act" of Michele Bachmann. His conclusion appears to be that this is a case of worse and worser.
Check it out:
The Taxpayer Choice Act “ would make permanent the current capital gains and dividends tax rates and create a voluntary Simplified Tax that would give individuals the option of paying under a highly simplified income tax system or under the regular income tax as it is structured now.
As a main sponsor, Minnesota’s Congresswoman Michele Bachmann issued a press release that the system needs to be changed to “give taxpayers the ability to choose how they wish to pay federal income taxes: 1) through the regular income Tax Code as it is currently structured; or 2) through a "Simplified Tax" that has just two income tax rates: 10 percent for joint income below $100,000 and 25 percent for income above. The Simplified Tax also includes a generous standard deduction of $25,000 for married couples, or $12,500 for individuals and a personal exemption of $3,500. The combination is equivalent to a $39,000 exemption for a family of four.
Now the first reaction is how will this be paid for ? The national debt is rising and the Bush tax cuts are not reducing the debt (see last paragraph).
Second, if the Simplified Tax is elected, income offsets such as those listed on Schedule A Deductions (home mortgage, property tax, medical, etc.) as well as Earned Income Tax credits (Child credits) are eliminated. Thus taxable income would be the same as gross income ( for many that are their wages) with the allowance for the Standard Deduction and Personal Exemption.
Third, once a taxpayer made the choice to switch, it could only be switched back once more during their lifetime unless there is a change in martial status (or death.)
Fourth, the winners win more (or the rich get richer.) The current tax system includes rates at 28%, 33% and 35% levels (which effectively start after the Adjusted Gross Income is over $123,700 for Married filing jointly). So, if you are in the highest bracket, under the Simplified Tax, the rate would be 25%.
Fifth, even if you do not elect the Simplified Tax, the legislation makes the Capital Gains and Dividends rate cuts permanent (they were scheduled to expire in 2009.) A review of IRS records indicate that “13,776 tax filers with adjusted gross incomes in excess of $10 million — a mere 0.01 percent of all filers — received 28.2 percent of the total tax savings. Their average tax break was $1,876,280 each. The affluent win again !
Sixth, if the objection to the current tax system is that it is too complex and filled with subsidies and special allowances, then how is adding one more system going to make it simpler?
The real problem with the Taxpayer Choice Act is that some members in Congress are falling for it. HR 3818 has 86 co-sponsors (including John Kline but no other Minnesota Congressmen) which is more than the FLAT TAX proposal.
The Republican ace in the hole for elections is Tax fear-mongering. As the campaigns start, voters will hear about the Taxpayer Choice Act, but not the nuts and bolts of how it works … and that will be combined with chants that “those Democrats will raise your taxes.”
It is also important to remember that Michele Bachmann is being fed ideas, such as the Taxpayers Choice Act, through her friends at Freedomworks. As you may recall, in November, we discussed the continued relationship between this organization and our representative here and here. It will be interesting to see how she spins doing whatever Freedomworks wishes of her and spending more time attending their rallies than she has spending time in the district with her constituents. She has been using this line of being overworked for some time now and I certainly hope that the people of the 6th don't fall for it.
Michele Bachmann: I just have been too busy to get home to my constituents!Cross Posted on Dump Bachmann
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