Carried interest
If we could expand the tax base to actually TAX people's income that would do more to balance the budget than increasing marginal rates on high incomes.
There are only 500 CEOs of Fortune 500 companies in the United States.
Most people who have incomes over a million dollars only have it for a few years of their lives after spending their entire twenties in graduate school, for example, or during their three year contract with the NBA before they age out at 28. There just aren't that many humongously high income earners in the United States to raise much money.
The REAL money comes from expanding the tax base. Tax INVESTMENT income of people who HAVE millions of dollars (but it only kicks off hundreds of thousands a year, not millions.)
Tax carried interest as wages rather than investment income.
Increase the standard deduction to be high enough to cover the basic costs of food, shelter and medical care and then TAX people's income! That means abolish the absurd mortgage interest deduction (that only benefits people who pay huge mortgages which only happens when you have huge incomes.) And, of course, abolish the tax-free status of health care at work that really only benefits the most well-to-do workers who HAVE health care in their compensation packages. It works out to be a lower effective tax rate on the upper middle class than the lower middle class. The lower middle class never grok this, but they ought to be rioting!
These changes are possible: tax carried interest as SE income, make investment income have the same marginal rate as ordinary income, remove the tax-exempt status of health insurance in compensation packages, raise the standard deduction and remove mortgage interest as a deductible item: voila: a vastly more equitable tax base.
We are two years into the Obama administration. Seen these requests yet?
Want to lay bets on whether any of these basic essential reforms will be imlemented? These are not secret or controversial ideas. They are lifted largely from the editorial pages of the Economist but determinable by ANY SENTIENT PERSON who is familiar with the facts. I completely left off reforming the hugely fraudulent EITC, since the impact on that would fall largely on families making less than $50K. I dislike that they're cheating on their taxes but it's not going to be the best place to start with reforms. The best place to start with reforms would be to simply get people to pay taxes on their income rather than sheltering it.
This is why I don't like talking about tax policy. The answers are really super clear and fairly straightforward and, yet, the sheep will go off baahing to tax incomes over a million dollars and totally fall off a cliff and nothing will get done. So why bother even caring?
There are only 500 CEOs of Fortune 500 companies in the United States.
Most people who have incomes over a million dollars only have it for a few years of their lives after spending their entire twenties in graduate school, for example, or during their three year contract with the NBA before they age out at 28. There just aren't that many humongously high income earners in the United States to raise much money.
The REAL money comes from expanding the tax base. Tax INVESTMENT income of people who HAVE millions of dollars (but it only kicks off hundreds of thousands a year, not millions.)
Tax carried interest as wages rather than investment income.
Increase the standard deduction to be high enough to cover the basic costs of food, shelter and medical care and then TAX people's income! That means abolish the absurd mortgage interest deduction (that only benefits people who pay huge mortgages which only happens when you have huge incomes.) And, of course, abolish the tax-free status of health care at work that really only benefits the most well-to-do workers who HAVE health care in their compensation packages. It works out to be a lower effective tax rate on the upper middle class than the lower middle class. The lower middle class never grok this, but they ought to be rioting!
These changes are possible: tax carried interest as SE income, make investment income have the same marginal rate as ordinary income, remove the tax-exempt status of health insurance in compensation packages, raise the standard deduction and remove mortgage interest as a deductible item: voila: a vastly more equitable tax base.
We are two years into the Obama administration. Seen these requests yet?
Want to lay bets on whether any of these basic essential reforms will be imlemented? These are not secret or controversial ideas. They are lifted largely from the editorial pages of the Economist but determinable by ANY SENTIENT PERSON who is familiar with the facts. I completely left off reforming the hugely fraudulent EITC, since the impact on that would fall largely on families making less than $50K. I dislike that they're cheating on their taxes but it's not going to be the best place to start with reforms. The best place to start with reforms would be to simply get people to pay taxes on their income rather than sheltering it.
This is why I don't like talking about tax policy. The answers are really super clear and fairly straightforward and, yet, the sheep will go off baahing to tax incomes over a million dollars and totally fall off a cliff and nothing will get done. So why bother even caring?