Not crazy about Jon Huntsman and his attempts to appeal to moderate voters in the primary, but his tax proposal looks interesting:
Rather than nibble around the edges of the existing tax code, Gov. Huntsman will introduce a revenue-neutral tax plan that eliminates all deductions and credits in favor of three drastically lower rates of 8%, 14% and 23%. Eliminating deductions and credits in favor of lower marginal rates will yield a simpler and more efficient tax code, decreasing the burden on taxpayers.
He also would eliminate the alternative minimum tax, eliminate taxes on capital gains and dividends and reduce the corporate from 35 to 25 percent. This isn't likely to go anywhere -- eliminating all deductions is something even the most daring fiscal conservatives have been afraid to propose. But sometimes pushing the most radical proposal can be a way to get the discussion unstalled.
Comments
If the Republicans were a bit more pragmatic, they would hold there noses and nominate Huntsman. I assume your goal is to beat Obama in the general election, and a Tea Partyer is unlikely to do it. Independents won't vote for people who don't believe in science.
If by "eliminate taxes on capital gains", he means they get taxed the same as any other income, great.
There's a dodge used by some taxpayers, including the Palins.
They buy a snowmobile for $X, and use accelerated depreciation to write it off completely. They spend $Y to fix the sled up for racing, and write those costs off entirely, too.
They save the income tax AND the social security and medicare taxes on X+Y, the year that they buy the sled. I have NO problem with that.
Two years later, they sell the sled for $Z. Now, the sled was a business asset. The IRS rules say that you're supposed to recapture the excess depreciation, and there's a difference between recapture of excess depreciation on a business asset and the appreciation in value of an investment.
However, instead of reporting the sale on their Schedule C, they call it a capital gain, and carry the capital gain to the front of the 1040, where income that's exempt from social security and medicare taxes belongs.
That's tax fraud. It took me about 5 minutes to see what they were doing when they released their tax returns in 2008, but so far, I haven't heard ANY news to the effect that the IRS went after them for the money they stole from us all.
If he wants to simplify taxes, have companies deduct their outlays for capital goods instead of depreciating them, and treat capital gains the same as any other income, because they ARE the same as any other income.
Oh, and if you want to make some money, tell the IRS that the Palins are cheating on their taxes by not following the recapture rules. You get to share in the money they collect from the Palins. You want to make sure your nose is clean before you do that, though, because the Palins aren't the ONLY ones who will get audited as a result.
Speaking of taxes:
Ol' Hopey Changey just can't catch a break this week....seems everyone he surrounds himself with lately just turns out to e a huge disappointment.
Eliminating Schedule A will go along ways.
Eliminating things such as:
extra dependent exemption for those 65 and over
$1,000 child tax credit
$4,000 deduction for college
Energy tax credits
more.
This would butcher a lot of sacred cows, stream line the tax for probably down to a few pages. I am not sure on the "8%, 14% and 23%" tax rates though. I will have to pull up my IRS data file and see what happens when deductions are eliminated.
I agree, eliminating "A" will go a long way. It's basically a way to cut taxes for the rich, since anyone with an old mortgage or none at all will generally do better with the standard deduction.
I don't think 8/14/23 will generate enough tax. I'd go for 8/14/23/35 or even 8/14/23/35/55, though. High income tax rates encourage the super-rich to invest their money, not just sit on it.
Think of high income tax rates at the upper levels as "parking meters" for money. The original argument for parking meters wasn't so much to raise revenue for the city, but to encourage all-day parkers to use free parking a block or two away, opening up the spaces near stores for shoppers who wouldn't be there very long.