Quote:
Originally Posted by petegz28
Tax policy is a rouse. We always hear "pay their fair share" when it comes to the rich but it's just lip service. We have 3 paradigms when it comes to tax policy:
1. The wealthy
2. The middle class
3. The poor
We eliminate changing #3 since the poor will not pay taxes at least as income tax goes.
We eliminate changing #1 since the wealthy often have the influence over the policy makers and have the financial ability to take advantage of any and all tax breaks, loopholes, etc.
That leaves you with one paradigm left that you can constantly manipulate. The middle class makes enough to pay taxes but not enough to take advantage of tax breaks. Itemization vs. Standard deduction is where it starts. It has always been a one or the other paradigm. They want it that way. They being the politicos. If you really wanted to see tax fairness in an unorthodox way you blend the two.
For example:
Scenario:
You want to make health care more affordable for the middle class
Solution:
Allow middle class tax payers to take both the standard deduction plus write off legitimate medical expenses.
This makes health costs more affordable while increasing the spending power of the individual thus generating tax revenue through means other than direct income tax.
Scenario:
You want to make retirement more attainable and stable for he middle class.
Solution:
Allow 100% tax-free withdrawals from pre-tax accounts such as traditional 401k and IRA plans.
Again as with the medical aspect, this puts more money into the pocket of a person who will actually spend it.
The "fair share" argument comes down to not who is paying what but who is TAKING what. The Fed Gov has a habit of increasing the burden on the tax payer under the guise of easing the burden. For instance, increasing the amount you can put into a retirement plan. That doesn't make it easier on the individual. What it does is give that appearance while the Fed Gov continues to collect instead of not collecting.
It can get down to politics purely but the fact is the tax system is not being used as intended thus the means of collecting taxes is not being done as intended.
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This is spot on in every aspect for the middle class.