Posted on 01/20/2011 11:25:40 AM PST by 92nina
...-Repeal the Alternative Minimum Tax (AMT): The AMT was first created to trap a handful of taxpayers who some officials felt didn’t pay their “fair share.” Today however, the AMT affects a large portion of taxpayers and essentially forces many to compute their taxes twice and pay the higher amount. The AMT operates on a complex and completely different set of rules and does not offer deductions for dependants or taxes paid to state and local governments. This is an outdated and biased system that now affects about 4 million Americans and will affect up to 24 million Americans if a current patch “sunset” is allowed to expire. The elimination of this tax would free up taxpayers and IRS employees from a complicated system while also eliminating the “trapping” of certain taxpayers.
- Extend the due date for S-Corporation elections: This would allow businesses, usually small businesses, to avoid overlooking a paperwork problem that usually results in the taxation at a corporate rate without the benefit of deducting operating costs on individual tax returns. The problem is so wide-spread among small businesses that many have had to seek retroactive relief, straining the resources of the businesses and the IRS. In 2009, 24 percent of new S-Corporation filings were unprocessed returns. The extension of the deadline allows a greater time for businesses to complete their election and paperwork. It also allows for filing at a more convenient time so as to end the need for retroactive relief efforts and reduce the load put on both the IRS and businesses currently.
Read more: http://www.atr.org/irs-calls-tax-reform-a5777#ixzz1BbSwaclm
(Excerpt) Read more at atr.org ...
Take the fight to the Libs on their own turf; put the Left on the defensive at at Digg and at Reddit and in Delicious and Stumbleupon
Scrapping the AMT is a splendid idea. The impulse behind it would be far more usefully implemented by the simple expedient of putting a cap on the total amount of income that can be excluded from taxation by deductions, exclusions, exemptions, and tax-exempt sourcing. Personally I advocate a cap of $250,000 for individuals, $500,000 for couples filing jointly, and $100,000 for persons able to be claimed as dependents, with the parent/guardian able to use any portion of the dependents’ cap not used by the dependent on his or her own return.
The point is, this is the unique soak-the-rich scheme that actually has a market benefit: it encourages the wealthy to seek productive use for their money, rather than tax-shelters. I’d couple the institution of the cap on income excluded from taxation with a cut in the top marginal rate, maybe even just abolishing the top bracket and indexing the cap on excludable income, all brackets, exemption caps, the standard deduction, tax-credit maxima and the like to inflation (with inflation for this purpose being the maximum quarter by quarter of the CPI, PPI and GDP Deflator).
It is also more feasible politically than abolishing tax shelters, as it doesn’t remove any particular tax-shelter, each of which has a large constituency, simply limits the benefit persons with very high incomes can derive from tax-shelters generally.
Incidentally, I should point out the Calvin Coolidge’s Secretary of Treasury, Andrew Mellon, hardly a raging anti-market leftist, advocated getting rid of tax-shelters entirely. I’m merely staking out a moderate version of his position.
All good ideas that should be considered. How should the capital gains rate be modified then?
Hey how about instead of scraping the AMT, we modify it so that EVERYONE regardles of tax breaks or tax credits the taxpayer is entitled to, they have to pay no less than 10% in taxes.
I’d love to see the dems collective head explode over that one.
The proper capital gains tax rate is zero. Consider. Why does a capital asset have value? Because it produces an income stream. The sale price represents the joint best estimate, on the part of buyer and seller, of the present value of that income stream. Who will get the income stream? The buyer. Who will pay income tax on that income stream? The buyer. Why, then, should we tax the seller on income that will be received by the buyer? This is taxing the same income stream twice.
But, it may be objected, some people may avoid taxes if their capital gains are not taxed. I respond, are we taxing income, or are we taxing people? If the former, we should tax the same income only once. If the latter, I see no justification for anything other than a flat head tax, the same for everyone regardless of income.
Thus, aside from its evil effects on capital formation, the capital gains tax is an evil tax in and of itsef.
Cut 99% of special deductions and introduce a lower, but uniform, tax. Maybe leave a tax break for each kid since kids cost money, and are good for the state.
This is the most disgusting of all, hedge fund managers pay only a 15% tax. http://www.google.com/search?ie=UTF-8&oe=UTF-8&q=hedge%20fund%2015%25%20tax
Your analysis would be spot on if financial assets’ only value was that of an income stream. On the other hand, capital gains can be earned on land, commodities, works of art, and even shares in a company that is not paying dividends, none of which have value as an income stream, and all of which can be bought at a low price and sold at a high price (or vice-versa for a loss). If the party trading in such goods or financial instruments only derives income from price appreciation, then the “income stream” is the capital gain. While there are strong arguments, in terms of capital formation, for favorable treatment of capital gains, the argument that a tax on capital gains is double-taxing an income stream is not one of them.
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