I’ve studied the FairTax extensively (I used to write here for the FairTax Blog. I’m convinced that it — as written — is unambiguously better in just about every way than our current tax system.

But I no longer advocate for it, despite its benefits. I know that it will never be enacted as written. I know that despite Neal Boortz suggesting that we as voters can ensure the politicos don’t muck it up, their incentive to muck it up is just too strong.

This is why I’m not a huge “flat tax” advocate either. It may be better than what we’ve got, but it won’t last long.

You know what I am? An anti-tax advocate.

He added, “Nobody wants to leave New York. Just economically, it makes so much sense to leave it, and that’s because of the irresponsible government we’ve had.”

That is outrageous. In my original post I was referring to letting the Bush federal tax cuts expire in 2010 which would increase the current top rate by 3%. But 50%? Wow. I’d move too.

http://www.cato-at-liberty.org/2009/05/22/the-laffer-curve-in-action/

Great point.

I think I have left the impression that I am against a flat tax, I in fact am not – I have only learned that the status quo will never let that happen – it is too radical of a change regardless if for better or worse, and the tax code as it is does benefit those in the higher income hiearchy because the result is that they pay less as a percentage of income – they have an element of control that they would lose with a flat tax – and they financially support campaigns of candidates that will actively continue to ensure that the code not only stays the way it is, but implement new code that provide even more benefits.

If this element of control is removed, by say reducing the above formentioned benefits in the tax code through a more aggressive, progressive tax, those in control may think differently about actively keeping in place our current tax system.

The point is the gov’t should not be in the business of pushing people to do certain things over other things with taxpayer money. The gov’t shouldn’t be in the business of influencing our decision to buy or rent or buy more health insurance over using the money for something else. It definitely shouldn’t be in the business of influencing us about which vehicle we should be buying through the tax code.

Charity, for me, is about giving without expecting something in return. I rarely deduct donations from my income tax unless they are particularly significant, and then you’re supposed to save the receipt. I consider this a form of charity as well.

The point I was trying to make was that the leviathan that is our tax code encourages far more bad behavior than good and makes criminals out of otherwise law abiding folks. I’m still trying to noodle it all out myself, but I can’t help but think there’s got to be a better way.

I would still give to charity. But, in all honesty, I really can’t say that I would give as much as I currently do. It’s not like it is all THAT much (not like ‘tithing’ or anything) last year it totaled approximately 3% of our total net (“take home”) pay. That “do-gooder” thing is, I must confess (and again, this is NOT something I am proud of) enhanced and yes incentivized by the knowledge that my final April 15th bill to Uncle Sam is going to in turn be lower.

If the local pee-wee football team is outside the the supermarket with their helmets, asking shoppers for donations to help fund their trip to the state championships – most just walk past. Some toss in a quarter. Some start to pull out a quarter, but then when he sees that in exchange for the donation, he gets a cherry lollipop or a cool sticker for his shirt handed to him, for some reason it causes him to toss in a buck instead. I do not know the reason for what causes people to act the way they do.

And perhaps that is a stupid analogy. But the way I look at it, yes I’m out a whole buck, but I DID get a 15 cent lollipop back, out of the deal, on top of the polite thank you from the 7 year-old, not to mention the very warm smile from his cute Mom, so it’s kind of win-win. :)

As for the house issue – as I recall we were paying around $300-350/month in rent before buying (this was a LONG time ago – I think our COMBINED income for the two of us working full time, was under 30K) I can’t recall now what the mortgage payment was going to be – but the monthly payment (mortgage plus the tax/insurance escrow) was going to be considerably higher than $350. It was intimidating to us, and gave us cold feet. But then the realtor ran numbers for us showing that almost all of the payment was interest on the loan – and combined with the property taxes, it totaled up to a HUGE deduction. That was going to result in a HUGE refund (if we kept our withholdings the same)…which changed the whole picture on the “affordabilty” of that monthly payment.

Same with charitable donations, if my goal is to save money, why not just keep it in my pocket?

As for the business health care deduction, as Quincy pointed out,
“One could argue that this historical accident has been the costliest tax credit in the history of the world.”

Yes I suppose pigs really can fly. :)

When considering whether to purchase our first home a long long time ago, the deductibility of the mortgage interest and property taxes – and the impact that would have on our tax return – WAS factored in when comparing buying vs continuing to rent. (Along with the anticipated appreciation we would have by owning an asset which ALWAYS (until 2008-09) goes up in value over time, and never down).

And to this day, as I get to year-end, I will confess and admit (and I am not proud of it) that the deductiblity of charitable contributions DOES act as an incentive. I end throwing as much extra and spare $$ as I can to the local Salvation Army, Disabled AmVets, and the other charities I donate to, which got a modest amount earlier in the year, but then got forgotten about. My biggest month for giving ends up being December of each year.

Whether it is right or wrong to have a tax code set up that way is a different debate.

I still favor some version of a “Flat” or “Fair” tax. Not because I think that I personally would ultimately pay less to the Feds. But because I think it would do things like shift power completely away from DC, would encourage business growth (which leads to employment/prosperity) and would allow people more independance and control over their own finances.

“Businesses providing health care for their employees are actually trying to dodge taxes by compensating their employees with something other than wages.”

Exactly – that is the incentive.

One could argue that this historical accident has been the costliest tax credit in the history of the world.

Really, it makes no sense whatsoever. Why not kill the tax credit for businesses to buy their employees insurance and give the individual taxpayer a credit on money spent on health care, in whatever form?

Businesses providing health care for their employees are actually trying to dodge taxes by compensating their employees with something other than wages. Not to mention the unintended effects on the self employed, small business owners, and the overall cost of health care.

Taking what is not yours is bad — that’s pretty simple.

deductions for home-mortgage interest encourages home ownership, charitable contributions encourages giving, heath insurance deductions for businesses that provide it, to name a few.

To think that people will “voluntarily” partner in a re-distribution of wealth is up for debate.

I am not opposed to a national flat sales tax, I am only being realistic about the pros and cons. There are many implications, it’s not as simple as you may think.