Lee/Rubio Tax Plan

[WiseOne]

http://theweek.com/dualstow

It *is* pretty good.

Cute!!

BTW did anyone read through the Marco Rubio tax plan?  There's all kinds of praise for it but no solid info...

[MachineGhost]

BTW did anyone read through the Marco Rubio tax plan?  There's all kinds of praise for it but no solid info...

I really like it.  Two income tax levels for personal (15%<$75K>35%), one for corporate/passthrough (25%).  All tax deductions eliminated but mortgage and charity.

But we've seen this story many times before.  The list of special interests that will cry foul is a mile long.  Why is the USA so screwed up compared to other countries that can do something "radical" like this?  It's sooo frustrating.

[D1984]

BTW did anyone read through the Marco Rubio tax plan?  There's all kinds of praise for it but no solid info...

I really like it.  Two income tax levels for personal (15%<$75K>35%), one for corporate/passthrough (25%).  All tax deductions eliminated but mortgage and charity.

But we've seen this story many times before.  The list of special interests that will cry foul is a mile long.  Why is the USA so screwed up compared to other countries that can do something "radical" like this?  It's sooo frustrating.

Check out the following:

http://nymag.com/daily/intelligencer/20 ... h-won.html

http://www.offthechartsblog.org/lee-rub ... he-bottom/

http://www.huffingtonpost.com/chuck-mar ... 03548.html

How is any of this "radical"? It's just more of the same old, same old from the Guardians Of the Plutocrats.

I hope I'm wrong here, but if their plan seems to do what they say it does (see  http://www.rubio.senate.gov/public/inde ... 7365609942 for details)...which is get rid of the standard deduction and personal exemption, and get rid of the 10% bracket and tax the first dollar earned at 15%, then this will be a HUGE tax increase on unmarried childless members of the lower middle and middle class (of which I am one). A childless unmarried person earning, say, $50,000 a year in wages would see around a $2,000 tax increase thanks to this elimination of the standard deduction, personal exemption, and 10% bracket.

With all the tax increases on the middle class, you'd think that Rubio and Lee would at least have sense to leave the upper middle class (which traditionally leans Republican) alone. Nooooo, far from it. Right now, the 35% bracket starts at about $400,000 (actually around $404,000 thanks to the personal exemption and standard deduction, ....note that it's $404,000 and not $410,000 because of the personal exemption phaseout and Pease limitations on deductions) of earned income. Under Rubio-Lee, the 35% bracket starts at just $75,000. A doctor or midlevel executive earning, say, $295,000 a year in wages will get soaked under Rubio and Lee's new plan thanks to the elimination of the 25%, 28%, and 33% brackets.

Also, because of the way the child tax credits in their new plan (the early 2015 one, not the mid-2014 one) work, most of the poor and middle class wouldn't even get the credits (and to add insult to injury, many of the poor and lower middle class would starting in 2017 actually lose most of their current child tax credit they would get since Rubio-Lee doesn't fix the expiration of the credit in that year) whereas with no cap on incomes those making millions could still get the child tax credit (correct me if I'm wrong, but under current law I believe the child credit starts to phase out at around $75K or $110K for singles and married couples, respectively).

So what do all these tax increases on the poor, the lower middle class, the middle class, and much of the upper middle class pay for, you ask? Why, tax cuts for the Masters of The Universe, of course. In addition to cutting the 39.6% bracket to 35%, capital gains taxes, dividend taxes, and estate taxes are completely eliminated under Rubio-Lee.

To not mince words, this plan is a pile of regressive horseshit that gives tax cuts to those who need it least and raises taxes on those who aren't even making lower middle class incomes (in fact, when combined with the FICA tax, their plan in certain cases even taxes individuals before they have even managed to bring themselves over the poverty line)! Reformicons my ass.

[WiseOne]

Thanks, D1984.  I read the plan and came to the same conclusion:  my taxes would go up a whopping 40%!!!!!! thanks to eliminating the deduction for state/local taxes, as well as a higher base tax rate.  And I'm far from wealthy (hint, I'm not even close to hitting the AMT.)  It would be a disaster for everyone except high earners and retirees/independently wealthy people.

This isn't going to get anywhere.  And may I say, I already knew Mike Lee was a nut case, but this does not speak well for Marco Rubio's qualifications to run for President.  Unless there's something in this plan that I missed, there is now no way he would get my vote.

[Libertarian666]

Thanks, D1984.  I read the plan and came to the same conclusion:  my taxes would go up a whopping 40%!!!!!! thanks to eliminating the deduction for state/local taxes, as well as a higher base tax rate.  And I'm far from wealthy (hint, I'm not even close to hitting the AMT.)  It would be a disaster for everyone except high earners and retirees/independently wealthy people.

This isn't going to get anywhere.  And may I say, I already knew Mike Lee was a nut case, but this does not speak well for Marco Rubio's qualifications to run for President.  Unless there's something in this plan that I missed, there is now no way he would get my vote.

I didn't think there was much way to make the tax system worse, but I think Rubio has come up with a way. :-(

Here's my plan:
1. Eliminate all taxes other than those originally authorized by the Constitution (excise taxes), along with all organizations that collect such taxes (e.g., the IRS);
2. Eliminate all governmental activities not authorized by the Constitution.

Simple and easy to do.

[hoost]

Agreed as it's written it's not ideal, but I like the idea of simplification that it offers.  What if the brackets were something like 5/25 and/or change the break-over point?

In this proposal, is the $75k per person or per family?  I guess it eliminates the married categories, etc. and only has one category?  That could be good in some scenarios, although bad in others...I guess however you look at it someone will get screwed, but it seems with the current numbers, most people will get screwed.

[moda0306]

Thanks, D1984.  I read the plan and came to the same conclusion:  my taxes would go up a whopping 40%!!!!!! thanks to eliminating the deduction for state/local taxes, as well as a higher base tax rate.  And I'm far from wealthy (hint, I'm not even close to hitting the AMT.)  It would be a disaster for everyone except high earners and retirees/independently wealthy people.

This isn't going to get anywhere.  And may I say, I already knew Mike Lee was a nut case, but this does not speak well for Marco Rubio's qualifications to run for President.  Unless there's something in this plan that I missed, there is now no way he would get my vote.

I didn't think there was much way to make the tax system worse, but I think Rubio has come up with a way. :-(

Here's my plan:
1. Eliminate all taxes other than those originally authorized by the Constitution (excise taxes), along with all organizations that collect such taxes (e.g., the IRS);
2. Eliminate all governmental activities not authorized by the Constitution.

Simple and easy to do.

Wait... I thought you were an anarchist.  What importance is a document crafted by a bunch of slave-owning statists?  I didn't get to have a say in the laws I live under.  Neither did the vast, vast majority of the population of our territory at that time.  Why do we have to be beholden to that one "legal" document?  I mean... laws are just opinions with guns, aren't they?

That probably sounded a lot more snarky and mean-spirited than I'm thinking it.    This is something I've never had a "Constitutionalist" (for lack of a better term) be able to answer without resorting into arbitrary preferences or utilitarian "ends-justify-the-means" arguments that betray (even if slightly) the entire principal upon which our government operates (that human beings have natural rights to life, liberty and property).



But overall what an awful tax plan... the Rubio one...

[Benko]

What importance is a document crafted by a bunch of slave-owning statists?

QUESTION: Does the word statist really in anyone's definition apply to the founders as well as Der leader?

[Libertarian666]

Thanks, D1984.  I read the plan and came to the same conclusion:  my taxes would go up a whopping 40%!!!!!! thanks to eliminating the deduction for state/local taxes, as well as a higher base tax rate.  And I'm far from wealthy (hint, I'm not even close to hitting the AMT.)  It would be a disaster for everyone except high earners and retirees/independently wealthy people.

This isn't going to get anywhere.  And may I say, I already knew Mike Lee was a nut case, but this does not speak well for Marco Rubio's qualifications to run for President.  Unless there's something in this plan that I missed, there is now no way he would get my vote.

I didn't think there was much way to make the tax system worse, but I think Rubio has come up with a way. :-(

Here's my plan:
1. Eliminate all taxes other than those originally authorized by the Constitution (excise taxes), along with all organizations that collect such taxes (e.g., the IRS);
2. Eliminate all governmental activities not authorized by the Constitution.

Simple and easy to do.

Wait... I thought you were an anarchist.  What importance is a document crafted by a bunch of slave-owning statists?  I didn't get to have a say in the laws I live under.  Neither did the vast, vast majority of the population of our territory at that time.  Why do we have to be beholden to that one "legal" document?  I mean... laws are just opinions with guns, aren't they?

That probably sounded a lot more snarky and mean-spirited than I'm thinking it.    This is something I've never had a "Constitutionalist" (for lack of a better term) be able to answer without resorting into arbitrary preferences or utilitarian "ends-justify-the-means" arguments that betray (even if slightly) the entire principal upon which our government operates (that human beings have natural rights to life, liberty and property).

But overall what an awful tax plan... the Rubio one...

I'm sorry if I was unclear. I was explaining a plan to improve the current tax system under the existing framework of laws.
If I get to redo everything, I get rid of the government entirely.
Is that better?

[moda0306]

What importance is a document crafted by a bunch of slave-owning statists?

QUESTION: Does the word statist really in anyone's definition apply to the founders as well as Der leader?

If you an anarchist, and wish for nothing more than to live a 100% free life, a group of men wanting to impose a government on you that you did not consent to could very well be considered statists.

Similarly, assuming Der leader is referring to Obama (hard to tell with the weird nicknames he gets), yes, he is also a statist.

But that's all semantics. The Founders wished to impose a government different than some (especially anarchists) would prefer. I was wondering why their founding document was of any authority at all to an anarchist. But he answered that.

EDIT:

I'm not trying to be anti-FF here.  I have a huge amount of respect for some of the unique ideas that some of them brought to the table, and the risks they took to bring them there.  I think some of the high-flying poetic language usually falls a bit short when digging into the nuances of actual issues, however.  The Constitution has some great ideas within it with regards to firewalls in government and rules that keep a government robust and transparent.  However, if we really get down to brass tacks, they're just ideas.  And if you're going to reject the idea that someone can force their ideas upon you at the point of a gun, then starting your bridge to get there with a document that does just that just seemed a bit odd.

But I see what tech was saying now... using existing legal frameworks to use the monster to keep the monster in check.

[moda0306]

BTW did anyone read through the Marco Rubio tax plan?  There's all kinds of praise for it but no solid info...

I really like it.  Two income tax levels for personal (15%<$75K>35%), one for corporate/passthrough (25%).  All tax deductions eliminated but mortgage and charity.

But we've seen this story many times before.  The list of special interests that will cry foul is a mile long.  Why is the USA so screwed up compared to other countries that can do something "radical" like this?  It's sooo frustrating.

I didn't notice the limitations on deductions.  This can be a good thing, but the big problem isn't just the deductions, but the phase-outs of said deductions as income rises.  It requires a much more complex form when you have all sorts of exceptions and phase-outs.

However, I'm all for getting rid of a bunch of those.

Almost everything else about it just wreaks, though.  For business-owners to pay a MAX of 25%, while everyone else is stuck with 35% rates on their income, is ridiculous, and will lead to a bunch of tax-scheming.  Further, multiple brackets is not that much of a problem... and it usually is only a problem when you have vast differences between one bracket and the next (this actually gets a lot worse when you put the 35% bracket next to the 15% bracket).  So that actually makes whatever problem there is with multiple brackets worse, IMO.  But what's far worse than multiple brackets for all income is different tax rates for different types of income.

And this is exactly what this tax plan gets horribly wrong.  Employees get hit with 35% + FICA/Medicare tax rates (7.6% (or 15% if you include employer-half)), and a rich dude earning dividends pays 0%.  That's just stupid... and it attracts cronyism like the dickens.  If income is a reasonable taxable event (I think it's as good as any, though I see why state/local governments use sales & property), then let's act like it.  Here's moda's tax plan for our fiat MR economy:

1) Roll Medicare into the general fund.
2) Roll SS into the general fund.
3) Eliminate FICA/Medicare/payroll taxes (SS benefits based on wage history).
3a) This will have a significant effect on low-income take-home incomes and business payroll costs.
4) Have uniform retirement savings rules (401k limits/rules are the same as IRA)... or at least to the degree reasonably possible.  Keep most of the good rules around them, except I'm not opposed to a cap on assets within one (set really high... like 20 million or something).
5) ALL income is taxable income: Wages, Salaries, Tips, Bartar, capital gains, dividends, all forms of interest, even Social Security.  Always have the option of rolling a capital gain over a 5-year period if one chooses (After thinking about it, I don't like inflation indexing, so I offer this as a concession).
6) No deductions, with the possible exception of interest on debt up to a certain level (ALL debt, not just mortgage debt).  Possibly charity as well, but I see that as more of a way for government to muscle charity than anything.  No phase-outs though.  I'm fine with maximum deductions, but don't make it disappear as income rises.
7) Credits around insurance.  Not income-dependent.  Not sure on the size, but some sort of token system of credits around the following types of insurance.... Life, Disability, Health, umbrella (signifies robust home-owners and auto protection).  Very simple... more to help people scratch a mental itch to get properly insured than to be perfect... sometimes people just need an excuse to start a conversation around some of this stuff.
Child Tax Credit: $3,000 on your first.  $1,000 on your second.  None on your third.  Everybody gets these.  Even a billionaire.
9) Eliminate C-Corp income tax.
10) Brackets (double for MFJ):

0%-35% in 5% increments (or at least no larger than 10%).  (you want a tight tolerance between brackets to prevent time/energy spent on scheming (also makes it more difficult to predict revenue)).

To the degree that my plan would either be too harsh or not collect "enough revenue" that we'd either have excess inflation or unemployment, I'm willing to goof around with bracketology, and possibly credit amounts.

Key parts to your tax return would be total income and list of household people/SSN's, a couple easy-to-calc deductions, a couple easy-to-calc credits.  A few extra support-pages (more for the individual's organizational purposes than the IRS or complex calcs).


This gets more complex as you factor in pass-through business calculations.  For this, I'd have no complex business credits, very few "M-1" adjustments (that re-state income/expense items for tax purposes), very simple depreciation methods to choose from, with rich expensing options on fixed assets, and fewer useful-life options).

"Passive-Losses" would be allowed to be taken against ordinary income.  "Capital Losses" would as well.  Similar to gains, you could also spread them over 5 years, if you wish.


I'm also willing to submit a version where, for now, we keep payroll/SE taxes and SS/Medicare "funding."  In this case, leave all that stuff as-is, but have a higher exemption amount before taxable income kicks in.  But ALL income is subject to FICA/Medicare.  Reset rates to whatever they would have to be to keep it revenue-neutral.

[MachineGhost]

This isn't going to get anywhere.  And may I say, I already knew Mike Lee was a nut case, but this does not speak well for Marco Rubio's qualifications to run for President.  Unless there's something in this plan that I missed, there is now no way he would get my vote.

I never understand why no one in the Republican party ever has any sense of economic justice.  Once you look at the devil in the details, you realize how batshit crazy they really are.  Rubio is toast.

I mean, I could come up with a tax plan better than these jokers.   The "simplification" just goes too far, which really sucks to say.

[Libertarian666]

This isn't going to get anywhere.  And may I say, I already knew Mike Lee was a nut case, but this does not speak well for Marco Rubio's qualifications to run for President.  Unless there's something in this plan that I missed, there is now no way he would get my vote.

I never understand why no one in the Republican party ever has any sense of economic justice.  Once you look at the devil in the details, you realize how batshit crazy they really are.  Rubio is toast.

"No one" is a very broad brush. I'm happy to have Rubio and Lee ruled out, as there will be less competition for my candidate.

[WiseOne]

I mean, I could come up with a tax plan better than these jokers.   The "simplification" just goes too far, which really sucks to say.

Totally agree!  So what's your tax plan?

The Republicans have been in love with the flat tax for decades.  I've always wondered just what was the problem with multiple tax brackets?  Are all their calculators broken or something?

I actually did like some of the ideas about removing some of the complicated gotchas in the tax code, like "itemized" deductions, but those were eclipsed by the bald-faced robbery the plan would perpetrate on some 95-98% of taxpayers.  Presumably that money would be enjoyed by the top 1% and also large corporations.  Just the people most in need of some government largesse!

[MachineGhost]

Totally agree!  So what's your tax plan?

I think my tax plan would be a hybrid of negative income tax rates and a flat tax, with the justice tweaks necessary so that the majority of the benefits would go to the lower and middle income and not the upper income (personal not business).  I'd have to think on how to prevent re-structuring income as capital gains, but I'm sure there's a common sense way.  Probably best thing to do is just exclude all earned income up to $120K indexed for inflation and tax all unearned income.  Lots of countries have zero capital gains taxes (like NZ) so they must have figured it out.  I believe you can do your income taxes in NZ on a simple postcard, so that's worth emulating.

What really irks me is how Democrats refuse to understand or acknowledge that the entity passthrough rules is bad for "Job Creators".  They want to use it as an excuse that its a "Giveaway to the Rich" when fixing that.  No business should pay more than the corporate tax rate (which is all passed onto the consumer, anyway!).  Corporate taxes should all be eliminated anyhow since they're no longer a noteworthy source of revenue.

Republicans are either brain-dead or they really are just in it for the upper class elitism.  Choose your poison.

[Libertarian666]

I still haven't heard any objections to my plan. Is it too simple to discuss?

[MachineGhost]

I still haven't heard any objections to my plan. Is it too simple to discuss?

You're a dreamer.  Dreamers are not allowed in DC.

[Mountaineer]

I still haven't heard any objections to my plan. Is it too simple to discuss?

tech for galactic president and chief domo!  Here, Here!  Endorsement for the universe will depend on success of galactic accomplishments.

... Mountaineer

[Libertarian666]

I still haven't heard any objections to my plan. Is it too simple to discuss?

tech for galactic president and chief domo!  Here, Here!  Endorsement for the universe will depend on success of galactic accomplishments.

... Mountaineer

Thank you. I'll do my best to live up to your high praise!

[moda0306]

Pulling back to a type of federal government we had in 1800 would foment the same revolutionary forces that full-on disbanding of the government would.  I'm starting to wonder why this is considered the "pragmatic" approach, due to its adherence to original documents.  It abandons so much of what so many people as legitimate, lawful, and necessary government that the "constitutional" nature of it is almost a moot point.

[Kbg]

I still haven't heard any objections to my plan. Is it too simple to discuss?

Sure, just one. That whole line of tax reasoning came directly from the mercantilist philosophy of the day which thankfully was pushed to the dustbin of bad economic theory that should stay dead. In it's modern formulation we would likely call it a value added tax unless you wanted to leave it up to Congress to blatantly punish and promote various business types based on the unlucky payers or lucky non-payers of the specific excise tax levied. If you have a problem with Obama tax breaks for clean energy, then you SHOULD have a problem with excise taxes. It's the exact same coin only different sides. (Not that Congress doesn't do this to a great degree anyway via the tax code and deductions, but at least they have to give a sop to fairness.) I'm firmly in the camp of a no-deductions tax code, but I don't have a problem over different tax rates with the wealthy paying more and the poor getting rebates (negative tax rates). It does get significantly more complex when it comes to business though.

Sure, just one. Effective tax collection is required by government to function properly. Greece is a great example of where taxes are not collected effectively and just about any and all third world tin pot countries have poor and corrupt tax collection as a signature feature. So in the interest of fairness, if I have to pay them, I want everyone else required to pay taxes to pay them. Someone has to be the hammer, just as well be the IRS. Should there be oversight of the IRS, yes. Should there be legal recourse against the IRS if an agent acts illegally or a group is targeted via tax collection, also, yes.

If we want to debate tax code complexity or size of government I'm on the side of less and less. Stupid taxation and inefficient and ineffective collection of taxes I'm against.

[MachineGhost]

Sure, just one. Effective tax collection is required by government to function properly. Greece is a great example of where taxes are not collected effectively and just about any and all third world tin pot countries have poor and corrupt tax collection as a signature feature. So in the interest of fairness, if I have to pay them, I want everyone else required to pay taxes to pay them. Someone has to be the hammer, just as well be the IRS. Should there be oversight of the IRS, yes. Should there be legal recourse against the IRS if an agent acts illegally or a group is targeted via tax collection, also, yes.

I suspect that effective tax collection is only required by governments that issue debt.  They could print money instead.

[Libertarian666]

I still haven't heard any objections to my plan. Is it too simple to discuss?

Sure, just one. That whole line of tax reasoning came directly from the mercantilist philosophy of the day which thankfully was pushed to the dustbin of bad economic theory that should stay dead. In it's modern formulation we would likely call it a value added tax unless you wanted to leave it up to Congress to blatantly punish and promote various business types based on the unlucky payers or lucky non-payers of the specific excise tax levied. If you have a problem with Obama tax breaks for clean energy, then you SHOULD have a problem with excise taxes. It's the exact same coin only different sides. (Not that Congress doesn't do this to a great degree anyway via the tax code and deductions, but at least they have to give a sop to fairness.) I'm firmly in the camp of a no-deductions tax code, but I don't have a problem over different tax rates with the wealthy paying more and the poor getting rebates (negative tax rates). It does get significantly more complex when it comes to business though.

Sure, just one. Effective tax collection is required by government to function properly. Greece is a great example of where taxes are not collected effectively and just about any and all third world tin pot countries have poor and corrupt tax collection as a signature feature. So in the interest of fairness, if I have to pay them, I want everyone else required to pay taxes to pay them. Someone has to be the hammer, just as well be the IRS. Should there be oversight of the IRS, yes. Should there be legal recourse against the IRS if an agent acts illegally or a group is targeted via tax collection, also, yes.

If we want to debate tax code complexity or size of government I'm on the side of less and less. Stupid taxation and inefficient and ineffective collection of taxes I'm against.

I'm in favor of the government's collecting as little as possible and with the least intrusiveness on the public.
Your notion of oversight of the IRS and legal recourse against it is chimerical, to be as polite as possible.
The only way of preventing the IRS from being tyrannical is to get rid of it.