WASHINGTON — Say you live in Massachusetts (or New York, or California, or Illinois). You and your spouse earn salaries commensurate with your advanced degrees, together bringing home $250,000 to $500,000. You make monthly mortgage payments on a nice house in a suburb where property taxes are steep.
Whether you call yourself rich, fairly well-off, or merely upper-middle-class, you are in the crosshairs of the Washington tax debate.
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The fact of the matter is they are looking at this deduction simply because they refuse to man up regarding tax rates. Taxes paid by Americans are at an all time low, not just low for the wealthy, but across the board low. Time to grow up and pay the piper and it would be helpful if both R's and D's would quit pandering to various interest groups and start talking turkey to the public regarding benefits that the public desires and the revenues necessary to pay for them.
Good article.
It not only gets into the main topic, and the differences between GOP trying to keep protecting the super rich, by hitting the upper middle-class instead. But also becuase I think I finally understand a bit more about tax deductions with this paragraph:
“By limiting itemized deductions, you will hit the rich harder than the middle class. They are more likely to itemize. And when they itemize, they itemize a lot more stuff. And their tax savings is bigger. At a 35 percent marginal rate, every dollar deduction saves you 35 cents,’’ said Roberton Williams, a senior fellow at the Tax Policy Center, a nonpartisan research group in Washington
Great article...thanks for the insight into the politicians thinking. Not happy with either party...they should consider America...not political gains!
this is the group Dems and Obama are directly going after w/ higher taxes
No it's not. Read the article.
YES IT IS. $250k+ is where Obama wants to start the tax on the "rich"
Capping the interest mortgage deduction actually makes a lot of sense. And I say that as a home owner. The problem for me is that when the government subsidizes the interest paid on large, expensive, expansive suburban homes-it ends up promoting the worst of American culture. It promotes the culture of the car and the culture of waste. The culture of a society removed from a civic lifestyle. People who make their entire lives about driving to work every day and then spending a few minutes with their families at the end of the day, just don't have much of a life. They are isolated, lonely, disengaged, anxious, angry, nervous freak-a-zoids who are about as functional as their twisted lives will allow, but not much more. It's just not a healthful way to live. They literally don't have time to eat right or exercise. People will say you can't engineer a pro-urban, pro-environment lifestyle but I would say we don't need to promote the exact opposite either.
The deductions that are currently allowed are unfortunate and should be scrapped. Why someone paying rent should pay more taxes than someone paying a mortgage is beyond me. Limiting overall deductions allows the middle class to keep their deductions while giving fewer to higher earners. Republicans want this because 1) they can try to say they didn't raise taxes "just closed loopholes" and 2) this will raise far less revenue than Obama's rate increases: the balance between cuts and raises is further toward cuts for Republicans. Really wealthy people won't pay much more in taxes.
Be nice if they focused on trying to get the economy moving again, with this being just 1 component
Why can't they compromise and have a combination of rate increases and reduced deduction so there's not one class of people feeling all the pain?
Hypocrisy:
On July 22, 2011 President Obama offered raising the debt ceiling last summer by closing loopholes and not raising taxes.
OBAMA: What we said was give us $1.2 trillion in additional revenues, which could be accomplished without hiking tax rates. It could simply be accomplished by eliminating loopholes, eliminating some deductions and engaging in a tax reform process that could lower rates generally while broadening the base.
http://www.realclearpolitics.com/video/2012/12/05/obama_in_2011_we_can_get_12_trillion_in_revenue_without_raising_rates.html
I'm not sure why you consider this to be hypocritical. Obama hasn't turned down the idea of eliminating loopholes or deductions - or capping deductions. But we need more than $1.2T and the rates on the top 20% need to go up. There isn't enough time now to discuss and enact a tax reform. That process will take 6 months at least, so, it will have to wait until next year (and it shouldn't be done with a lame-duck congress).
If Obama made this offer, why wasn't it passed by Congress? Do you think the Republican House would have voted for this plan?
You do understand that "broadening the base" just means raising taxes on the middle-class and letting the top 20%, who can well afford it, pay less. Until all investment income is taxed at the same rates as other income, there is no tax reform.
If he thinks it put the President in a bad light, he'll copy and paste it. That's the entire text of the article, BTW.
The NYT puts it in context:
http://www.nytimes.com/2012/12/05/us/politics/limiting-tax-deductions-may-work-but-not-easily.html
But since 2010, Mr. Obama and lawmakers in both parties have promoted — and oversold, in the minds of some experts — the idea that Washington could overhaul the tax code, strip out deductions, tax credits, exemptions and loopholes and use the resulting revenues to both lower tax rates and reduce annual budget deficits. That idea was the core of recommendations from the bipartisan Simpson-Bowles fiscal commission in 2010 that Mr. Obama created, and cleared the way for a majority of liberals and conservatives to agree.
Months later, when Mr. Obama was engaged in ultimately unsuccessful negotiations with Mr. Boehner on a debt-reduction deal in the summer of 2011, he recounted his pitch to Republicans for reporters: “What we said was, give us $1.2 trillion in additional revenues, which could be accomplished without hiking taxes — tax rates — but could simply be accomplished by eliminating loopholes, eliminating some deductions and engaging in a tax reform process that could have lowered rates generally while broadening the base.”
Now, with time running out for a budget deal that would head off the automatic tax increases and across-the-board spending cuts scheduled to occur in January, some Democrats and Republicans predict a compromise that combines a higher top rate and reduced tax breaks for upper-income Americans.
Mr. Obama has called for tax increases on the wealthy that would raise about $1.6 trillion more in the first decade, or twice the Republicans’ offer. About $1 trillion would result from not extending the top Bush rates, the rest by limiting deductions but with a different approach than Republicans have offered.
Obama and Democrats don't want to go after deductions because one of the biggest for the wealthy is the deduction for state and local taxes, which just happen to be vastly higher in "blue", Democrat controlled, states like New York, California and.....Massachusetts. Why should low tax states subidize other states "rich" folks? Deductions also make for great employment for lobbyists and special interest groups as well as allow politicians to do favors that can be repaid in campaign donations and fund raising targeting. Get rid of all deductions (virtually none benefit much of the "middle class" who, largely, don't itemize). Of course, this isn't feasible because it reduces Democrat (and Republican) politicians power. Raising marginal tax rates is foolish economic policy. The government has never been able to get more than 20% of GDP from taxes. Why? Because when marginal rates get too high, business goes underground and the "wealthy" all begin to find ways to avoid reporting income.
Why can't they COMPROMISE? A little of each proposal? Restore the middle class tax cuts for those making under $300,000, SLIGHT increase in taxes for those making above $300,000, a SLIGHT increase in Capital Gains taxes of 1 or 2%, SOME caps on deductions for high income earners, SOME cuts in spending. Get the basics done and refine it later as necessary.
Republicans and Democrats are both too doctrinal - they should listen to some of us who are more practical, more reasonable and whose positions are less rooted in quicksand.
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whistle while I wait....
Have you considered getting a job outside of the trolling industry?
Harry Reid refuses to hold a vote on Obama's #FiscalCliff proposal.
https://twitter.com/StewSays/status/276427350529425409
Is there anything sadder than posting other people's tweets?
Obama's plan would hit EVERYBODY. Boehner's plan is the SAME as Democrat Erskine Bowles' deficit reduction plan. It's also the SAME plan that Obama proposed a year ago.
So apparently the Globe doesn like the same plan that was proposed by Democrats.
Why doesn't the Globe say something about Obama Tax and Spend plan? And where's Obama's "Compromise"? Actually where's his PLAN?
I think you may have gotten a pre-election talking point. You might want to hit Freep for some fresh ones.
The Tea Party controls the GOP and we all know it. Dick Armey has dropped out over "philosophical" reasons regarding the future direction of the Tea Party. As it is stated: eliminating deductions mostly effects the very wealthy (I know "Begolfing" they need to be coddled and given welfare by the state as they are the "job creators"...LOL). True...upper middle class folks will feel some pain as well. But, those folks and their wealthier class mates are doing quite well these days. They aren't shopping at Walmart and Target who's management would like nothing better than to see slave labor made legal so they could indenture people off the streets like the British forced people into the Navy in the good old days. The government needs to take care of those who aren't as well equipped to take care of themselves in this rapacious economy we now live in. The cost of living keeps rising, and yet with all the Bush era tax breaks that have been in place for some time now...their earnings relative to those in the top percentiles have droppe percipitously. This is not a formula for success as a nation or as a economy. The lake must rise all the boats..not just a few of them. Obma's election win still stings with so many....but the reality is that he did win and he does have a mandate to get fairness back into the tax code. The GOP/Tea Party/Grover Norquist party has dug in it's intransient heels at the idea that the favored few shold have to bear the indignity of helping those lower on the food chain. Boo Hoo. Tough noogies....If Boehner/McConnel/Angry White Man McCain et al want to play this game, then lets get it on. Sometimes wrecking the building is the best way to rebuild it.
once again, ESF has no facts.....