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| 7/10 |
| 2005/10/11-13 [Reference/Tax] UID:40044 Activity:high |
10/11 "President Bush's tax advisory commission indicated today that it
would not propose replacing the income tax with a national sales tax
or a value-added tax but would recommend modifications in the popular
tax deductions for mortgage interest and employer-provided health
insurance." http://csua.org/u/dp4
\_ What the hell. That whole article reads like "ok, what can we
fuck with?"
\_ Yay, let's make the tax code ten times more complicated than it
already is!
\_ As long as Paris Hilton's accountants can have her pay
almost no tax ... "MISSION ACCOMPLISHED"
\_ "The generous mortgage-interest deduction in the law
[that the commission is proposing to reduce] now helps
rich people the most, leads to larger houses and
encourages borrowing..." Why cut back the deduction?
Because "the commission agreed to recommend abolishing
the alternative minimum tax for individual" and the
commission has "a mandate to develop an overall proposal
for changing the tax system that is revenue neutral."
\_ This doesn't account much for those parts of the
country where you spend 75% of your take-home on
housing.
\_ I have this suspicion that the parts of the country
that spend 75% of take-home pay on housing are
the parts of the country that bitch loudest about
AMT. Of course, reducing the home mortgage
deduction screws one group of people within those
parts and likely rewards a different group, but
that's what the income tax is all about anyway.
Where did you think the offsetting revenue was
going to come from when you MOTD types were
bitching about the AMT?
\_ By not giving the uber-rich tax breaks? Yeah
I know, it's just a fantasy.
\_ Certainly Teresa Heinz and her ilk are
undertaxed relative what I pay (since I pay
the same order of taxes as she does and I am
worth 2 orders of magnitude less). But
you might find out that taxing the uber-rich
yields less money than you think, simply
because there are so relatively few of them.
In the end, to get the big tax bucks, you
have to tax the upper-middle class.
\_ I am worth one order of magnitude less
than Heinz, but I still consider myself
upper-middle class. I consider you
lower-middle class.
\_ You're worth multiple million, and
think you're middle class? Ha.
Check some statistics on the
average wage in the US.
\_ No, no, no. I am worth multiple
TENS of millions. A mere multiple
million still brackets you within
the lower middle class.
\_ You're probably worth 2 orders
less than Teresa Heinz if your
net worth is in the tens of
millions.
\_ Does that mean I am still in
the lower middle class?
\_ Only if you live in Palo
Alto.
\_ At least in: http://csua.org/u/dp7
The cap on interest deduction to $300,000. If
you're paying $300,000 in interest per year, you
*are* the uber-rich.
\_ You misunderstand. The cap of $300,00 is
not on interest paid per year, but on the
principal owed on the mortgage.
\_ Show me where this is the case. I'm
unable to find that anywhere. -pp
\_ Not from where you picked up the $300k,
but earlier in that article "the
current $1 million cap on deductible
mortgage interest should be reduced,
possibly to about $350,000". From
http://www.irs.gov/taxtopics/tc505.html
we learn million cap came from "you
can deduct the *interest* [emphasis
added] ... [if the debt] totaled $1
million or less".
\_ ^Paris Hilton^Teresa Heinz
How did she do it anyway?
\_ Well ^X^Y syntax really is short hand for !!:s so,
it was pretty straight forward once she had that down.
\_ Paris Hilton bang bang Teresa Heinz? i likes me
some ultra rich girl on ultra rich girl action.
\_ Teresa has her heart set on becoming the First
Lady. Your chances of her dumping Kerry and
going for some hot girl-girl action with
Hilary are much better.
\_ She stands a better chance of becoming
first lady as Hillary's gf than with Kerry. |
| 7/10 |
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| csua.org/u/dp4 -> www.nytimes.com/2005/10/11/politics/11cnd-tax.html?ei=5094&en=e103d62d8f789bb5&hp=&ex=1129089600&adxnnl=1&partner=homepage&adxnnlx=1129078984-5CVggEg6mOoLtRnOlsQvdg Many prominent conservatives have argued over the years that the income t ax is a drag on the economy and should be scrapped in favor of what is c alled a consumption tax - a tax based not on what people earn but on wha t they spend. But the commission members concluded that consumption taxes like the valu e-added tax used in European countries had more drawbacks than advantage s Various proposals for a flat tax - an income tax with everyone paying the same rate - are still under consideration, Jeffrey F Kupfer, the commi ssion's executive director, said. With a mandate to develop an overall proposal for changing the tax system that is revenue neutral - meaning it neither raises nor lowers total ta x receipts - the commission must find enough revenue to offset the amoun t now generated by the alternative minimum tax. That is mainly what led to an examination of ways to modify the deduction s for mortgage interest and health insurance, two of the largest tax bre aks now available to individuals. Together, these two deductions will co st the Treasury about $250 billion this year, with the benefits going di sproportionately to the most affluent taxpayers. The commission members decided that another popular deduction, for charit able contributions, should be expanded rather than cut back. They are lo oking at how to give the tax break to taxpayers who do not itemize deduc tions. President Bush is not committed to adopting the commission's recommendati ons, and the prospects in Congress of limiting the mortgage and health i nsurance tax breaks, sure to be politically unpopular, are problematic. Louisiana, acknowledged the political difficulty but said, "We've got to make bold recommendations without regard to politics." Mr Bush appointed the commission in January, largely so that Congress wo uld concentrate first on Social Security. The panel was originally suppo sed to report in July, but the deadline was extended twice, first to Sep t 30 and then to Nov. One proposal discussed today would cap the deduction at the maximum mortgage the Federal Housing Administration will insure. That level cha nges each year and varies depending on housing costs in each county, wit h a maximum loan limit now of $312,895 in communities where housing is m ost expensive and a national average of $244,000, according to a housing administration spokesman. Another proposal under consideration was to change the interest deduction to a credit, meaning that taxpayers with the same size mortgage payment s would get the same tax break regardless of what tax bracket they were in. A third idea was to limit the deduction to 15 percent or 25 percent of a taxpayer's mortgage interest. The generous mortgage-interest deduction in the law now helps rich people the most, leads to larger houses and encourages borrowing, said James M Poterba, a commission member who is an economist at the Massachusetts Institute of Technology. The panel members said they had not calculated how much revenue any of th ese proposals would generate. But the Congressional Budget Office report ed this year that a $500,000 ceiling on the mortgage principal for which interest can be deducted would raise $48 billion over 10 years. The panel members agreed that any of these changes would have to be phase d in gradually to reduce the financial disruption for homeowners. |
| csua.org/u/dp7 -> www.bloomberg.com/apps/news?pid=10000103&sid=aBeBp7PMoft4 Bush Panel May Curb Tax Breaks for Homeowners, Health (Update3) Oct. The panel, meeting in Washington today, agreed the current $1 million cap on deductible mortgage interest should be reduced, possibly to about $3 50,000, and that the deduction should yield no more than a 25 percent ta x savings, down from a top savings now of about 35 percent. The panel also said it would probably recommend capping tax deductions fo r employer-provided health-care plans. Current law allows employers to d educt the value of premiums paid on behalf of their workers without the benefit being considered taxable income to the employee. The panel discu ssed placing the cap at the maximum amount the federal government pays i n premiums for its workers, currently about $11,000. These are the things we're looking at,'' said panel Vice Chairman John Breaux, a Democrat and former senator from Louisiana. The minimum tax, imposed in 1969 to ensure that 20 0 wealthy families didn't escape tax with excess deductions, is now forc ing millions of middle- income families to pay higher taxes because it w as never indexed for inflation. No Sales Tax The panel decided not to endorse a national sales tax in its final recomm endations and most panel members expressed reservations about a European -style value-added tax, which is in place in most industrialized countri es. Both systems would disproportionately hurt the poor, panelists said, and some members such as Chairman Connie Mack, the former Republican senator from Florida, and former Minnesota Representative Bill Frenzel said the y worry a value-added tax would make it too easy for the government to r aise money and increase spending programs. Mack asked the panel's staff to devise a specific proposal that would lay er a value-added tax on the current system and reduce individual and cor porate income tax rates. Still, he said that as the panel's work begins to wrap up, it's looking m ore and more to making changes within the current system. Value-Added Tax We're getting focused down on the income tax here,'' Mack said. David Walker, the head of the Government Accountability Office, said Sept. The biggest embedded tax breaks subsidize housing and health care, Walker said. The details of the mortgage interest and health care proposals will be ir oned out next week, Mack said. He said the proposals are clearly redis tributing'' the tax benefits for homeownership and health care to lower- income Americans. Lower-Income Homeowners Tax breaks for homeownership particularly help the wealthy while lower-in come people don't get enough benefits, said panelists such as Liz Ann So nders, the chief investment officer at San Francisco-based Charles Schwa b Corp. The current incentives, including the fact that most home sales are tax-free, are driving up home prices, making them unaffordable or pu shing lower-income borrowers to take out risky mortgages. We are starting to see some significant pain here,'' Sonders said. The panel agreed to a proposal by former IRS Commissioner Charles Rossott i to make it easier for lower income Americans to get a tax break for do nating money to charity. Investment Income The panel may compensate wealthier Americans who lose some of those benef its by reducing or repealing taxes on investment income. Mack said that proposal would be discussed at the panel's final meeting on Oct. The panel is due to make its final recommendations to the Treasury Departme nt by Nov. Panel member John Poterba, a professor at the Massachusetts Institute of Technology in Cambridge, presented a subcommittee's findings on the rami fications of changing to the mortgage interest deductions. Reducing to a bout $300,000 or $350,000 the cap on mortgage interest deduction and lim iting the tax savings yield would preserve the benefits for the middle c lass, he said. A person who takes out a mortgage that exceeds the cap would lose deducti ons on excessive amounts, while those in top tax brackets would only get a maximum 15 or 25 percent deduction, depending on where the panel ulti mately sets the cap. Panelists also discussed converting the deduction t o a credit, which would allow the 70 percent of Americans who don't curr ently itemize to claim the break for the first time. Earlier, the panel agreed to curb tax preferences for employer-provided h ealth care. Former Federal Trade Commission Chairman Tim Muris, a member of the panel , said the change would end subsidies that favor wealthier Americans. If adopted, the change would increase taxes on workers whose employers pro vide them health plans that are more valuable than those offered governm ent workers. Subsidy' It obviously means that the incentive -- the subsidy if you will -- to take a policy above the cap will be removed and therefore there will be people who will be much more sensitive to that,'' Muris said. There is no consensus about whether to also restrict the deduction employ ers take for providing coverage, Breaux and Mack said after the meeting. Breaux said he realized both proposals may lack political appeal in Congr ess, though he said that wasn't the panel's concern. Our job is to mak e bold proposals without regard of the politics,'' he said. Mohit Ghose, vice president of public affairs at America's Health Insuran ce Plans, a trade group in Alexandria, Virginia, said a recent poll of 4 00 people commissioned by his organization concluded voters want to pres erve tax preferences for health care. |
| www.irs.gov/taxtopics/tc505.html Where To File Topic 505 - Interest Expense Interest is an amount you pay for the use of borrowed money. To deduct in terest you paid on a debt you must be legally liable for the debt. Addit ionally, you generally must itemize your deductions, unless the interest is on rental or business property or on a student loan. If you prepay interest, you must allocate the interest over the tax years to which it applies. You may deduct in each year only the interest that applies to that year. However, there is an exception that applies to po ints paid. Home mortgage interest is interest you pay on a loan secured by your main home or a second home. The loan may be a mortgage to buy your home, a s econd mortgage, a home equity loan, or a line of credit. It can be a house, coo perative apartment, condominium, mobile home, house trailer, or houseboa t that has sleeping, cooking and toilet facilities. A second home can include any other residence you own, and treat as a sec ond home. However, if y ou rent it to others, you must also use it as a home during the year for more than the greater of 14 days or 10 percent of the number of days yo u rent it, for the interest to qualify as home mortgage interest. Fo rm 1098 (PDF), Mortgage Interest Statement, by the financial institution to which you made the payments. If all of your mortgages fit into one or more of the following three cate gories at all times during the year, you can deduct all of the interest on these mortgages: 1 Mortgages you took out on or before October 13, 1987, called grandfat hered debt. The limit is $500,000 if you are married filing separately. The limit is $50,000 if you are married filing separately. Publication 936, Home Mortgage Interest Deduction, to fi gure the amount of interest you can deduct. You may be able to take a credit against your federal income tax if you w ere issued a mortgage credit certificate by a state or local government for low income housing. Form 8396 (PDF), Mortgage Interest Credi t, to figure the amount. Personal interest includes interest paid on a loan to purchase a car for personal use, and credit card and i nstallment interest incurred for personal expenses. Items you cannot ded uct as interest include points (if you are a seller), service charges, c redit investigation fees, and interest relating to taxexempt income, su ch as interest to purchase or carry taxexempt securities. You may be subject to a limit (phaseout) on some of your itemized deducti ons including mortgage interest. For 2004, this limit applies if your ad justed gross income is more than $142,700, or $71,350 if you are married filing separately. |