Deficit Commission Proposal

[moda0306]

http://firedoglake.com/2010/12/01/fisca ... /#comments

A few key points as they would apply to investors:

- Lowering of rates, and elimination of certain deductions.

- Tax dividends as capital gains as ordinary income (no word on collectibles (gold)).  Hopefully gold is at ordinary as well.

- Streamline retirement plans

- Expand retirement contributions credit (probably for the young, poor folks in here (like me)).

I know we're not supposed to talk politics, but overall, I like it a lot.  Simplifies the tax code, but lowers rates (It's the deductions that complicate it the most).  If only they'd get rid of the "kid" credits that incentivise having babies.  I, for one, am for taxing capital gains as ordinary income.  It actually complicates things quite a bit to have a 25% ordinary rate and a 0% capital gains rate.  Trust me.  It skews how businesses operate and planning costs are high, plus there is a huge gray area between the two.

[Storm]

I like some of their recommendations, like eliminating or reducing the interest deduction on mortgages.  It seems crazy to incent the most risky, over-leveraged interest only mortgage loans like the current system does.

Get rid of the marriage penalty, please, why should my wife and I pay higher taxes just because we have a marriage certificate?  This was a shock to us to find out that if we had delayed our wedding by 2 months (we got married in October, 2009) we would have paid about $5K less in taxes.

I don't like the capital gains proposals at all.  If you tax capital gains as normal income, you reduce the incentive to invest money.  I'm not sure how that would help the economy.  It seems like the last thing we need to do right now is put more taxes on investing.

[Jan Van]

Two more articles for your reading pleasure:
http://www.businessweek.com/magazine/co ... op+stories
http://www.economist.com/node/17520102? ... d=17520102

I'm afraid nothing will be done except for some meaningless cuts. But hopefully they'll prove me wrong...