Monday Open Thread: The Tax Man Cometh

Posted on | March 25, 2013 | 42 Comments

Stacy and Smitty both have new jobs that are sucking up most of the time they used to spend on blogging. Unfortunately. Me, I work a weird schedule in the tax mines, so it leaves me free to contribute linkagery and occasional posts like this. Question for today: if you could eliminate ONE THING in the tax code, what would you get rid of? Answers like “the income tax” or “the Sixteenth Amendment” will be mocked as hopelessly Utopian. We’re looking for small changes that might actually get through Congress. Talk among yourselves, and keep it civil.

Category: Blogging, Taxes

Comments

42 Responses to “Monday Open Thread: The Tax Man Cometh”

Chris Wysocki
March 25th, 2013 @ 11:57 am

Easy: The AMT. It’s the spawn of Satan.
Mike G.
March 25th, 2013 @ 11:57 am

Earned Income Credit. Obama care penalty tax…the list is endless.
Zilla of the Resistance
March 25th, 2013 @ 12:04 pm

I could live without some of the plethora of taxes that jack up the cost of gasoline. Five bucks should be able to buy more than one freaking gallon of gas.
Kevin Trainor Jr.
March 25th, 2013 @ 12:12 pm

Kevin Trainor Jr. liked this on Facebook.
Count de Money
March 25th, 2013 @ 12:18 pm

Problem with this is where to start.

AMT for sure. Estate tax too.

Refundable tax credits – OK, you don’t owe any taxes but that doesn’t mean you’re entitled to free money.

Educator expenses adjustment (1040 line 23) – Let them pound sand like the rest of us.

All the tax subsidies that give colleges the headroom to drive up education costs:
Student loan interest deduction (1040 line 33)
Tuition and fees (1040 line 34)
Education credits (1040 line 49)
JeffWeimer
March 25th, 2013 @ 12:33 pm

Refundable credits. I know, it won’t pass, but everyone who files should, as a matter of policy, have “skin in the game”. That is, they should pay something in federal income tax, even if it is a nominal amount, like $10.
gloogle gloogle
March 25th, 2013 @ 12:38 pm

Well, I’d say “FLAT TAX, NO DEDUCTIONS!!!!”, but that prolly won’t pass the “hopelessly Utopian” test…
jakee308
March 25th, 2013 @ 12:43 pm

I also would say the “Earned Income Tax” and taxing Unemployment Benefits. UE is not INCOME it’s a benefit derived partly from Employer taxes. It’s an Insurance payout. (in fact many States call their system Unemployment INSURANCE to show that it is not income or a windfall, it’s an insurance against unemployment. Another one would be if you cannot pay a debt (because you are unemployed and have no money to pay it) and it gets forgiven, how is that fair to be taxed as income?
jakee308
March 25th, 2013 @ 12:52 pm

Do you really think that makes a f’ing difference about anything? You’ve been reading too many fiscon blogs my friend.

It will NOT make a difference to how anyone votes. The only thing it might do is get anyone who vows to repeal it elected. I

t’s a dumb idea that is aimed solely at people who don’t have much money but who offend someone’s sense of fairness by them not “paying” any taxes.

They pay plenty of taxes; gas taxes, State income taxes, sales taxes and other taxes that are levied that have no concern or care whether they have the money or assets to pay it.

Think about where you hear this stuff: THE MEDIA. Why do you think they report that kind of thing? to set folks like you up into thinking it’s unfair or should be stopped. And you fall right into it.
JeffWeimer
March 25th, 2013 @ 1:24 pm

I’m talking about federal income tax. And this is a fiscon discussion, when you get right down to it. And we all pay those other taxes, too – which aren’t levied at the federal level. And you want to get rid of EIC, (largest refundable credit) so what’s your problem, anyway?
JeffS
March 25th, 2013 @ 1:38 pm

I’d stop the direct tax payments, and return to the pre-WWII means of collecting taxes. No more payroll deductions by employers, only by tax payers, either by automatic withdrawals (not unlike paying other bills), or by check on a (say) quarterly basis.

Yes, it would be a massive headache for all concerned, but more with getting the computer systems set up to do it. Updating W2 forms on line is already done, at least for federal employees. I expect that setting up such an information system would be far less troublesome than creating the monster network needed for ObamaCare.

And some people already pay taxes by direct payments, so that’s hardly a new idea.

Why this? Because paying taxes is (relatively) painless. You don’t see the money leaving your hands, as an army of accountants and clerks do all the work. Writing that check, or approving a monthly direct payment should make the pain of taxes a lot more personal, and people might take it a lot more seriously.

Although that might make labor in the tax mines a lot harder…..but possibly more lucrative, Wombat. 🙂
JeffS
March 25th, 2013 @ 1:39 pm

Oh, and Uncle Sam’s sense of entitlement would take a direct hit. Make the bastards work for their living, says I.
PineBaroness
March 25th, 2013 @ 1:44 pm

I agree about the AMT, and would add depreciation recapture, what a headache!
matthew w
March 25th, 2013 @ 1:46 pm

AMT

Refundable Credits

Any and all “special interest” deductions (mortgage, upgrading furnace,buying hybrid car etc. Tax code should not be used to reward or punish any segment of the economy.
Charles
March 25th, 2013 @ 1:56 pm

How about eliminating the requirement to file a 1040 tax return to get your tax refund?

OK, if you run a business, you need to report that. And maybe you need to certify your charitable deductions and your eligibility for various credits.

But doesn’t the IRS already have most of the information it needs from your W-2, 1099s, etc, to just calculate what it owes you and send it to you?
matthew w
March 25th, 2013 @ 2:08 pm

sounds like a flat tax plan
richard mcenroe
March 25th, 2013 @ 2:54 pm

I would eliminate the business-only element of the car/gas deduction. Many small businesses and the self-employed can’t afford. One vehicle, deduction apportioned between private and work uses.
M. Thompson
March 25th, 2013 @ 2:56 pm

AMT and credits for state and local taxes.
K-Bob
March 25th, 2013 @ 3:28 pm

If I were made dictator for a day, there’s one rule I’d put in place. Let’s call it K-Bob’s rule of rapid reckoning:

The most significant date, for tax purposes, shall be placed—as primary and only occupant—in the upper, right-hand corner of the first page any contract, financial instrument, receipt, title, or Public Act, and it shall be bordered on the left and bottom by at least one “em” of white space.

A label shall be permitted, such as “Transaction Date:” to the immediate left of the date string. If no such label exists, the date shall apply to the most significant aspect of the instrument, regarding accounting rules for calculation of taxes.

For all the stupid, irritating, and downright evil problems we face in this country today, I would still try like hell to get that rule in place.
K-Bob
March 25th, 2013 @ 3:51 pm

I like that idea. It’s usually acceptable to simply claim a percentage use, and move on, but the accounting rules would expect “thorough documentation,” which is damn difficult for sole proprietors—always up to their ass in alligators—to take the time to do.

I could even live with some table of “usual and customary” percentage splits for various occupations. Just don’t make me keep a stack of receipts and logs of my drive time. (Now, if I’m paying a contractor for his mileage, I’ll expect documentation, because at current rates [0.565/mi], a few hundred miles a week is a LOT of money.)
K-Bob
March 25th, 2013 @ 3:52 pm

They always favor the most-tax-paid formulas. You can be screwed for thousands of dollars that way.
K-Bob
March 25th, 2013 @ 3:56 pm

Anytime people utter the word “progressive taxation” it immediately gets translated into “mathematically illiterate” (or the newer term, “innumerate”). A percentage is a beautiful thing, unless you’re a math-challenged leftist.
scrubjay
March 25th, 2013 @ 4:43 pm

increase the maximum for capital losses.
Bob Belvedere
March 25th, 2013 @ 5:47 pm

You took the words right out of my keyboard.

Let us all feel the pain of taxation then many of us would not so blithly allow tax hikes to be passed.
Thane_Eichenauer
March 25th, 2013 @ 6:25 pm

The shorter the law the better. I would suggest abolishing as many lines of the law as possible. The smaller the tax impact is probably the most doable change. However given that I don’t believe that 50%+1 of Congress plus the President want a smaller, shorter tax law I think this pursuit is futile (please forgive me my lack of faith). I think secession is the only path that will “simplify” the tax law. http://www.secession.net/
Thomas L. Knapp
March 25th, 2013 @ 7:43 pm

Legislatively set up an automatic annual increase in the personal exemption — every year, everyone gets a tax cut and some people who pay little or no tax anyway fall off the tax rolls and stop cluttering up the database.
Dave
March 25th, 2013 @ 8:39 pm

The biggest problem this country has is nobody knows what “Direct taxes shall be apportioned among the several states” means. The founders thought it so important that direct taxes were basically banned TWICE in the Constitution, the only thing mentioned two times. See Article 1 Section 2 and section 9. And before you say anything stupid, the 16th Amendment DID NOT change that requirement. If the country ever figured that out the government would shrink 90% immediately, like it should
Wombat_socho
March 25th, 2013 @ 9:29 pm

You’re right.
Wombat_socho
March 25th, 2013 @ 9:29 pm

Yes, but you have to start somewhere.
Wombat_socho
March 25th, 2013 @ 9:29 pm

Wesley Snipes tried your argument. Maybe you should ask him how well it worked.
Wombat_socho
March 25th, 2013 @ 9:33 pm

I’ve filled out enough Form 982s to disagree with you on this. Most people who get slammed by the 1099-C actually don’t have that much “personal property” and usually have more than enough other debt that they can get the forgiven debt waived.
Wombat_socho
March 25th, 2013 @ 9:33 pm

Imputed depreciation is a major pain in the butt, agreed.
Wombat_socho
March 25th, 2013 @ 9:34 pm

You trust the IRS. How touching.
Eric Ashley
March 26th, 2013 @ 2:53 am

Pick the one thing that is tiny, and so obviously, totally useless, and get rid of it, just to show you can. Prove to me you can do this one tiny thing.
dancermommd
March 26th, 2013 @ 6:45 am

I like the Fairtax concept. Based on consumption I can’t spend enough to equate what I spend in Federal taxes now. It would save me money even with a high sales tax. The system is already set up to collect sales taxes so there really is no implementation cost (or very little) and no one has to file anything ever. I get depressed every year come tax time because every year, no matter how hard I try, I always seem to owe money I don’t have.
Wombat_socho
March 26th, 2013 @ 7:41 am

Much like gloogle, you are a hopeless Utopian.
Quartermaster
March 26th, 2013 @ 9:16 am

Alas, the courts are lawless, except when it suits their purposes.
Quartermaster
March 26th, 2013 @ 9:19 am

Bluntly, hoping for any serious change to the tax code is hopelessly utopian. We’ve basically been disenfranchised when it coems to tax issues and no amount of good sense will have any sway in the unhallowed halls of FedGov.
wimjim19
March 26th, 2013 @ 5:52 pm

The “marriage penalty” was my first thought.They got rid of it for a couple of years but the jerks brought it right back. Why should a married couple be counted as less worthy to keep more of their OWN MONEY than two single people?

These political parties are not worth the hot sir they breathe over the people.
Charles
March 26th, 2013 @ 7:11 pm

No. What I’m saying is I shouldn’t have to do their paperwork. I shouldn’t have to sign something every year under penalty of jail. And if they can’t figure it out themselves, they can’t tax it.
Mike Rogers
March 27th, 2013 @ 2:26 pm

The progressive rate structure.
The changes since Reagan have taught us that reducing the number of rates leave the door open to tinkering and increasing the number of rates again.
Therefore, the simplest fix would be one rate for all, and a high initial deductible. IE a flat tax, if we can keep it.
Mike Rogers
March 27th, 2013 @ 2:27 pm

And, yes, I love the idea of the fair tax, or an even simpler form of it, but that is a bigger leap than moving to(ward) a flat tax.