The 2012 US Election

[River]

Meanwhile, Romney's got a good idea:

Mitt Romney has been talking vaguely, for months, about expanding the federal income tax base, but in an interview yesterday with Denver's local Fox affiliate he got a lot more specific. The Republican presidential nominee floated the idea of capping itemized deductions at $17,000 per filer.

[snipped a direct quote from Romney to save space]

A few thoughts on this:

1. This is a good idea, and I wish Romney had announced it sooner. Almost every itemized deduction in the income tax code is a bad idea, and this policy would significantly reduce the value of such deductions.

2. This proposal helps to show why the complaint that 47 percent of households pay no federal income tax is a red herring. Romney's plan would greatly expand the income tax base without at all reducing the number of filers whose liability is $0. Mostly it would operate by raising the taxable income of people near the top of the income scale -- because that's where the money is.

Who knows if he'll recant this one or not. There are elements in the GOP base that are very vocally resistant to anything that sounds like sense. It's definitely not enough to get me to vote for the guy. But it's an idea absolutely worth thinking about.

[Frelga]

... If that includes mortgage interest and property taxes deductions, then middle class is screwed.

[River]

Are those really worth more than $17K? I've never qualified for any of the deductions that come with having dependents or owning a home and have no idea how deep they go.

[Voronwë the Faithful]

I think the issue is more that this idea contradicts Romney's oft-repeated assertion that he can tax rates an additional 20% but keep it revenue-nuetral. This suggestion would not even come close to achieving that, so either he would have to reduce deductions for middle class taxpayers far more, or his plan would add to the deficit.

It's just another case of Romney trying to be all things to all people.

[vison]

I had CNN on for a couple of minutes and the guy was saying that a tape of Mr. Obama, from 2007 or some such year, a speech about "race", that is going to be a real problem for him. I guess I'll watch it later.

But what the hell? Are they just going to search and search and search for this crap? (If it IS crap.) Are they going to come up with someone who can recollect that Mr. Romney once recited, "Eeeny, meeny, miney, mo" the bad old way? Or a shaky old video of Mr. Obama hitting someone with a snowball?

Why can't they say stuff like, "I disagree with my opponent's proposals and here's why."

But no. Find some obscure act or word that MIGHT be interpreted to the candidate's discredit. Spend all you time and money on that.

I swear the American voter is so badly served that I am beginning to think that Holbytla's idea of not voting at all is looking more and more attractive.

This is appalling. It is FAR worse every election cycle.

You poor saps.

[Holbytla]

Oh I never said not vote at all. I said I won't be voting for an incumbent.

Unlike most of the people who will read this, I lived under the Romney regime for four years when he was governor here. As politicians go (and politicians are really really low on my list of likability) I found Romney pretty lacking in a whole lot of ways. Not the least of which was his propensity for being the king of flip flop.

However, and regardless of his purported political leanings at any given time, he is not a bad man. Actually he is a pretty decent, even if misguided at times, human being and person.

He is no fool either. He is well educated and hard working and has something to offer this country. I don't believe he is the right choice for a president of this country. I could be wrong, but I don't think he fits the bill and I doubt we would be better off with him in the Oval Office.

The issue that I, and a lot of other people (especially those of us hovering somewhat left of center) have is that we have lived under the Obama regime for the last four years and find him severely lacking as well. I am particularly disappointed in Obama in that I was hoping for "real change" and what we got was the same old political crap, and not very good crap at that.
So disappointed, that I am actually considering voting for good ole Willard.

My vote, either way, isn't going to matter. There is no way that Obama isn't going to carry this state. I'm at the point that I can't stomach either party, the system or the thought of casting a vote for either of them.

This isn't really anything new with regards to politics here. The negativity and attacking has been going on for a long while, and the divisiveness in this country is pretty disgusting.

I will watch tomorrow night, but I am not expecting anything but words and more charades.

Can't wait for election season to be over.

edit:
And abstinence is the best form of birth control. Beyond that, neither the pill nor IUD's offer any protection against STD's.

And if that isn't depressing enough, the "Fiscal Cliff" is still looming and will be until after the election. It won't be all bad, but it won't be all good either.

http://money.cnn.com/2012/10/01/pf/taxe ... tml?iid=EL

[Frelga]

Are those really worth more than $17K? I've never qualified for any of the deductions that come with having dependents or owning a home and have no idea how deep they go.

I did some quick math with an online calculator. 17K/year = ~1,400/month. This comes up to the monthly payment of a bit over 1,500, most of which will be the tax-deductible interest and taxes (does not include insurance) on a 250K loan, which will buy you about 300K worth of a house (or a small condo in San Francisco and surrounding areas). I don't think that's exactly a luxury house, even in the less expensive areas of the country.

And what other itemized deductions are there? Medical and dental expenses. Charitable contributions. Business expenses. Educational expenses if they are required to maintain you in your current profession. Disaster and theft losses. Most of these (not charity) have to be >=2% of your taxable income. Even then, taxpayers are only able to take advantage of them if they also can write off mortgage interest, otherwise standard exception is usually better.

Are those really the best areas to "expand federal tax base"?

Eta: the bolder part is to clarify the math in view of V's post below.

[Voronwë the Faithful]

Um, you don't get to deduct the full amount of your mortgage payment, you only get to deduct the interest.

(Here's the relevant code section, if anyone is interested: http://www.law.cornell.edu/uscode/text/26/163)

Many of us wouldn't have to pay any taxes at all if we could deduct our full mortgage payment amounts.

[Frelga]

You are correct, but this is mostly relevant for those who have been paying off an amortized loan for many years. Otherwise the majority of your payment IS interest.

I amended my post to clarify the math I used.

[Túrin Turambar]

Are those really worth more than $17K? I've never qualified for any of the deductions that come with having dependents or owning a home and have no idea how deep they go.

I did some quick math with an online calculator. 17K/year = ~1,400/month. This comes up to the monthly payment of a bit over 1,500, most of which will be the tax-deductible interest and taxes (does not include insurance) on a 250K loan, which will buy you about 300K worth of a house (or a small condo in San Francisco and surrounding areas). I don't think that's exactly a luxury house, even in the less expensive areas of the country.

And what other itemized deductions are there? Medical and dental expenses. Charitable contributions. Business expenses. Educational expenses if they are required to maintain you in your current profession. Disaster and theft losses. Most of these (not charity) have to be >=2% of your taxable income. Even then, taxpayers are only able to take advantage of them if they also can write off mortgage interest, otherwise standard exception is usually better.

Are those really the best areas to "expand federal tax base"?

Bluntly, yes. The American middle class pays lower-than-average income tax rates than comparable taxpayers in other OECD nations. Any plan to fight the deficit on the revenue side must get more out of the middle class. Unlike the wealthy, they're numerous enough to make a difference, and unlike the poor, they actually have income and assets. And while, in macroeconomic terms, raising taxes and cutting spending has the same effect, taxing individuals more would not threaten employment growth as quickly and directly as taxing corporations more would. That's a significant point in current economic conditions. Obviously restoring pre-Bush tax rates on the wealthy would help a great deal as well.

[Frelga]

The American middle class pays lower-than-average income tax rates than comparable taxpayers in other OECD nations

But we get less for our federal taxes, too. No healthcare, education is funded mostly through local property and state income taxes, when it's not private, and Social Security and Medicare are separate payments.

Really, Curiosity was one of the best things I got for my money in a long time.

I'd trade my mortgage interest deduction for universal healthcare, but that's not what Romney is proposing.

I actually don't know, do other places have a comparable system of local, state/province/city taxes?

[Dave_LF]

Merits of the plan aside, it sounds to me like we're going into bizarro world again. The meme is that Democrats want to raise your taxes while Republicans want to cut them, yet taxes have fallen over the four years a Democrat has been in office, and it's the Republican candidate who's proposing that we eliminate tax breaks for ordinary people.

[axordil]

What Frelga said. The US is a low-tax, low-service state in comparison to other industrialized republics, with a tax structure that privileges the means of income utilized by the rich (investments) and punishes the means of income the rest of us subsist on (wages).

[Primula Baggins]

And there are taxes that affect only a few wealthy people but still have tremendous fiscal consequences. If the tax on estates worth more than $30 million is eliminated, I've read, the cost would be $1 trillion over 10 years. Romney wants to do that, of course; it would save his own sons literally billions when he and his wife die.

To eliminate a tax that more than 99.7% of estates are too small to pay, while demanding that people making $100K a year pay significantly more in taxes, seems ridiculous to me. When the wealthy and corporations are paying a reasonable tax rate they can't easily dodge, squeezing the middle class and the poor even further might not even be necessary.

[vison]

I think we've had this discussion before, but I wonder why no one uses the term "working class". What you guys keep calling "middle class" is working class to me. If you work for wages, you're working class. Something to be proud of, I think. The backbone of civilization.

Doctors, lawyers, engineers, etc., that's middle class. Most business owners.

I, myself, me, that is, am working class. So is my entire family. And it is the working class, more than any other, that has suffered most in this last mess.

At one time a working man could buy a house, raise a family, and retire with a decent pension. Those days are gone forever, I'm afraid.

[tinwë]

I actually don't know, do other places have a comparable system of local, state/province/city taxes?

I don't know, but here are some calculations I did of my taxes to put this into some perspective:

My 2011 gross income was slightly above the median income for that year. According to this that should put me squarely in the 25% marginal tax rate, however gross income is not what is taxed. What is taxed is the “taxable income” which is adjusted gross income minus your personal exemptions and itemized or standard deductions.

With my itemized deductions my income actually fell into the 15% marginal rate, but it’s still not that simple. They tax the first $8,700 at the lowest rate of 10%, or $870. Whatever is left, up to $35,350 is taxed at 15%. The end result is that I actually paid 13.6% of my taxable income in Federal Income Taxes.

Had I not taken the itemized deduction my taxable income would have remained in the 25% rate, however once the initial $8,700 was taken out what was left would have not exceeded $35,350, so it would have been taxed at 15%. My total would have been 13.9% at that point.

However, and this is a big however to me, when I go back to my gross income the percentage I paid actually drops down to 8.1%.

When I add in Social Security and Medicare witholdings that jumps up to 13.7% of gross income and 22.9% of taxable income. S.S. and Medicare are based on gross income, not taxable, btw.

With my State income tax added it goes to 18.1% of gross and 30% of taxable. And with local property taxes and a very rough calculation of sales taxes added in I estimate that I am paying slightly over 25% of my gross income and 42% of my taxable income in taxes.

I don’t know how that compares to other countries. 25% does not seem low to me, but I consider it to be a reasonable amount to pay to live in a safe and prosperous environment with reasonably good prospects for the future.

I can also say that the itemized deductions, and primarily the mortgage interest deduction, are very substantial for me. Taking away the mortgage interest deduction would result in a 23% increase in my Federal income tax, more than 3% of my gross income. Capping it at $17,000 would not have any effect on me, however, although it would come very close.

One last thing - if I were to add in what my employer pays for my health insurance to my gross income and then add that same amount to my taxes, the tax rate would jump up to 30% of my gross income.

[vison]

So, how do you qualify for SS? How is it decided, if it is not a "pension"? How do you figure out how much you get?

We have the Old Age Security pension, which everyone gets at 65 whether they worked a day in their life or not. Then we have Canada Pension, to which working people contribute a portion of their wages. The employer contributes an equal amount. You collect according to your contributions, beginning at 60 if you wish, but at 65 regardless. There is a survivor benefit if your partner dies, and orphans' benefits for kids whose parents die.

Oz and Tay get the orphans' benefit from their Mum's Canada pension and also from Chris, who was their guardian when he died. This ends when they are 18 unless they are in school, or dependent on their parents as disabled, etc.

In BC our sales tax pays for hospitals.

[Holbytla]

I've heard it been estimated, that if a person making say $50,000/year added all of the fees, fines and taxes they pay during the course of a year, the tax rate would be near half, and I can believe it.

Around here there is a federal and state tax on gasoline, federal and state income tax, Social Security, FICA, cable tv tax, state sales tax, local property tax, local excise tax, state meal tax, fishing tax for both fresh and salt water though they call it a license, dog tax but they call that a license too, car inspections, energy and conservation charge for utilities, hotel tax, airport tax, driver's license fee, car registration fee, parking fees and more.

If you are single and have no itemized deductions, like mortgage interest or children, you are pretty well screwed.

[Primula Baggins]

You get SS if you have contributed to it at all, meaning worked at any job for which payroll taxes are collected. Some federal employees have a separate pension plan and don't contribute to SS, so they get it only for the years when they were working other kinds of jobs. The amount you get is based on the average of the top 35 years of your earned income; years you don't pay any SS taxes count as zero income. Also, the maximum income they count is the income level at which they stop taking out SS taxes, about $110,000 per year. So, up to a point, the more you earn, the more you get.

The amount you get is also adjusted depending on whether you retire early, on time, or late.

It is, too, a pension.

[Holbytla]

The system was never designed for SS to serve as a pension. It was enacted to keep elderly people, orphans and the like off of the street.
Yes the system has evolved since then, but it is still more of an insurance plan and supplement than anything else. That is why children and disabled people can receive benefits long before they reach "retirement" age.

Currently, the average monthly Social Security benefit for a retired worker (as opposed to someone on disability) is a little over $1200/month, and the max is somewhere around $2500/month.