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If you ever wonder, "why is the tax code so complicated?" this is the answer. Every time there is a proposal to eliminate a specific deduction, credit, or loop
by nostromo 9y ago
If you ever wonder, "why is the tax code so complicated?" this is the answer.
Every time there is a proposal to eliminate a specific deduction, credit, or loophole, special interest groups crawl out of the woodwork to fight it tooth and nail.
- leggomylibro 9y agoHow about the estate tax loophole? We've got better places to go looking.
- ensignavenger 9y agoIt is my understanding that the tax proposal deals with that, too.
- jdavis703 9y agoEveryone thinks someone else's loopholes are better places to go looking. Even I succumb to this thinking, at first I was pretty pissed at the retirement saving plan elimination. But all us voters need to grow up and vote in people who have spines and will make us drink our spinach juice. It'd be really nice to have a tax code so simple it puts TurboTax and their ilk out of business.
- blackbagboys 9y agoWhy do we - ordinary workers and students - have to drink the “spinach juice”? Why not the people who have amassed utterly unprecedented amounts of wealth and power?
- conanbatt 9y agoTaxes are that fantastic thing that does good to everyone, specially when other people pay it.
- pishpash 9y agoBecause ordinary workers and students don't or aren't able to effectively exercise political power, ceding the polity to those who do so.
- JonFish85 9y agoBecause there is so much more money in the “ordinary workers and students” subset of society than there is in the top 0.x%.
- sidlls 9y agoNot on an individual basis.
- wahern 9y agoI can't tell if you're being sarcastic. FWIW, in 2011 the top 0.01% earned 5% of national income, the top 0.1% earned 10%, and the top 1% earned 20%. Source: http://ritholtz.com/2011/10/forget-the-top-1-look-at-the-top-0-1/ http://ritholtz.com/2011/10/forget-the-top-1-look-at-the-top... In 2016 the top 25% earned 51% of national income. Source: https://www.statista.com/statistics/203247/shares-of-household-income-of-quintiles-in-the-us/ https://www.statista.com/statistics/203247/shares-of-househo...
- mattkrause 9y agoAll those filthy rich grad students pulling in $20-35k/yr!
- SamReidHughes 9y agoOrdinary workers aren't the main beneficiaries of retirement savings plans. It's the people that can afford $20K/yr to save that benefit.
- jdavis703 9y agoYou can eliminate all tax deductions, tax the wealthy, and cut middle class taxes at the same time. All of that requires that everyone in society drink some "spinach juice" though. Of course doing those three things are politically impossible in the current environment, but that's a different problem.
- AnimalMuppet 9y agoBecause, despite all the rhetoric to the contrary, raising other peoples' taxes isn't going to be enough. We're going to have to raise yours, too.
- gnicholas 9y agoCurious to know what you're referring to. The fact that it doesn't apply to all estates? That's also true of any tax that is progressive.
- drawkbox 9y agoGifting when alive you are taxed at 15k+ or so. Gifting when dead you aren't taxed until 5m or 10m for married. The GOP tax plan doubles that to 10/20m and then removes it after 6 years. The estate tax was already a huge benefit when compared to the gift tax. What would be nice is if they could up the amount on the gift tax rate if they aren't going to collect any tax on gifting after death (inheritance). This could free up money that will only be in an estate and not used for years maybe even decades. When you compare the gift tax when alive to the gift tax after death (the estate tax) it is already a massive benefit.
- tssva 9y agoThere is a lifetime $5.49 million exemption from the gift tax. Gifts above $14k are taxed. If you gave me $30k this year, you would not have to pay any taxes on it but your $5.49 million lifetime exemption would be reduced by $16k.
- drawkbox 9y agoWow never knew that. I always thought the person receiving the gift had to pay taxes on any amount above the gift tax rate per year if the tax wasn't paid by the giver i.e. 14k currently. Basically then any money you receive or earn is taxable except loans and gifts up to the gift tax limit, all other money movement is taxed. Of course winnings are still taxed at normal rates because that is income not gifted per se, I guess I was conflating the two. Example: If you win a car you owe taxes on the whole thing. So essentially it is the same limit as the estate tax, so I wonder if that also doubles and also goes away in the tax bill.
- nostromo 9y agoThat will never happen because nearly all of our elected officials use trusts to minimize or eliminate entirely the estate tax they would otherwise pay. The Clintons, Kennedys, Romnys, Bushs, etc... http://time.com/money/4344981/hillary-clinton-estate-plan-taxes/ http://time.com/money/4344981/hillary-clinton-estate-plan-ta... https://www.forbes.com/sites/carlodonnell/2014/07/08/how-the-1-billion-kennedy-family-fortune-defies-death-and-taxes-3/ https://www.forbes.com/sites/carlodonnell/2014/07/08/how-the... http://www.wealthmanagement.com/wealth-planning/unlocking-mitt-romney-s-family-trust http://www.wealthmanagement.com/wealth-planning/unlocking-mi... Heck, even Noam Chomspky has used estate planning to avoid paying the estate tax. https://www.hoover.org/research/noam-chomsky-closet-capitalist https://www.hoover.org/research/noam-chomsky-closet-capitali...
- topspin 9y agoI've never wondered this. The complexity and growth of tax law is a proxy for corruption.
- kristopolous 9y agoOk, but it's far simpler elsewhere. In many places (such as Japan), doing your taxes takes a few minutes and you don't need to pay someone hundreds of dollars to someone who has made a career out of the tax system.
- chimeracoder 9y ago> Ok, but it's far simpler elsewhere. In many places (such as Japan), doing your taxes takes a few minutes and you don't need to pay someone hundreds of dollars to someone who has made a career out of the tax system. The process of filing taxes is separate from how complicated the tax code itself is. And to be honest, you don't need to pay hundreds of dollars to anyone in order to file taxes in the US. In fact, you can file your taxes using a form that fits on a single sheet of paper. You may want to opt for one of the other methods of filing, if you qualify for special deductions that might significantly reduce your tax burden, but most people already qualify for the option that takes "a few minutes".
- seanmcdirmid 9y agoI had absolutely zero tax obligation in the USA for 9 years, and I still had to file more than a few sheets of paper, taking around a day or so to prepare.
- xellisx 9y agoWell the IRS could do your taxes for you and send you a bill/confirmation for you to correct, but companies have lobbied to get an agreement put in place that this will never happen.
- chimeracoder 9y ago> Well the IRS could do your taxes for you and send you a bill/confirmation for you to correct, but companies have lobbied to get an agreement put in place that this will never happen. The difference between that and filling out a 1040EZ is negligible. It takes as long to write out a 1040EZ as it would to properly verify the information on one that's already filled out for you. For people who want to utilize the more complex deductions available - there's no way that the IRS could do that for you. Contrary to popular belief, they don't have sufficient information to do that until you give it to them, and quite frankly you wouldn't want them to have access automatically to all of that.