Tuesday, October 4, 2011

Tax "equality"

Much has been made recently of the need to raise the tax rate on the richest Americans, because much of their income is taxed at the capital gains rate of 15% rather than the higher progressive rates plus payroll taxes (Social Security and Medicare) that are taken from wages.

Citizens are beginning to realize, and pundits are starting to admit, that the tax code is structured to favor investment (read: passive income) and disfavor work.

While the rate disparity does bother me, I am waiting for the pundits to address the total inequity regarding deductions. Businesses are allowed to deduct even the most trivial expenses, because "it costs money to make money"; meanwhile, individuals who attempt to deduct the cost of the car that gets them to work, or the house where they sleep and shower, or the food that keeps them alive and able to work, will find themselves on the wrong end of an IRS audit. These expenses are somehow not considered to be germane to one's ability to produce labor. BULLSHIT.

The rate means little if the amount of taxable income can be reduced to nearly nothing via deductions.

Before they start talking about closing the home mortgage deduction "loophole" — the one major deduction individuals have left — how 'bout taking a chunk out of deductions businesses can take for rent, utilities, furniture, and all the other things that "the little people" are stuck paying for out of our own pockets? Something tells me that would put quite a dent in the national deficit!

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