MA: Mideast Personal Tax Reform Act of 2014 (Debating)

[Queen Mum Inks.LWC]

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Sponsor: TheRileyKeaton

[Queen Mum Inks.LWC]

For reference, here are the numbers from 2013:

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And here are the current tax rates:

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[Potus]

So, like I said in the introduction thread, the income tax system only needs to raise $7.254 billion to leave the surplus untouched. Anything more than that is improving the budgetary situation.

Low earners will pay no income taxes. Everyone gets tax relief. Makes us more competitive, increases sales tax revenue, and maintains a responsible tax expenditure policy.

[Queen Mum Inks.LWC]

What is the rationale for leaving the 8 credits that are left?

[Potus]

What is the rationale for leaving the 8 credits that are left?

   a. Research and Development Breaks
R&D is super important to maintain competitiveness, bring smart business to the region. We would be put at a competitive disadvantage if we didn't have research incentives.

   b. Medical Savings/Health Savings Accounts
Medical savings accounts are good economics. They increase the efficiency of the healthcare system and introduce smart market variables to the system.

   c. Deductibility of Medical Expenses
Everyone has medical costs and they're really expensive. Until our federal government can get health costs under control, people need this sort of thing.

   d. Charitable Contributions
Private charity is great. They're efficient providers of services and developing a more robust civil society is beneficial to everyone.

   e. Child Credit
Raising children is expensive and people at all incomes do it. The child credit is good tax expenditure.

   f. Adoption and foster care credit
I want to make adoption more deductable, as I say in the Foster Care Reform Act, so it would be nonsense to get rid of it here.

   g. Enterprise & Empowerment Zones
Enterprise zones are an important tool to promote economic growth in targeted areas. They make sense and can be very useful.

   h. Earned Income Tax Credit         
The EITC is a great way to incentivize work and deliver aid to low income families.

[Queen Mum Inks.LWC]

Perhaps I worded my question poorly.  All of the existing tax credits have merits (or else we wouldn't have put them in there).  I'm not asking what the merits of the tax credits are; I'm asking what makes them more important (or the eliminated ones less important).

[Potus]

Perhaps I worded my question poorly.  All of the existing tax credits have merits (or else we wouldn't have put them in there).  I'm not asking what the merits of the tax credits are; I'm asking what makes them more important (or the eliminated ones less important).

Oh, okay. Well, I'll take the mortgage deduction as an example. People that own homes and owe a mortgage are likely to pay income taxes. Therefore, we can cut their income tax bill while also getting rid of their mortgage deduction. Gives them more flexibility with the money.

Employer Insurance is a pretty flawed model of delivery. So repealing the credit makes sense.

If you would like me to address each item, I will. But probably not tonight.

[Queen Mum Inks.LWC]

Yeah, I guess I'd like to see rationale for why you want those that you want removed removed.

[Potus]

Yeah, I guess I'd like to see rationale for why you want those that you want removed removed.

The short answer that I can give tonight is this:

This makes our tax code much flatter. It leaves only the bare bones tax expenditure in place. I want to see us do more with healthcare, research and development, foster care and adoption, child care, and civil society. These credits are the most critical part of supporting those things. The rest of the tax code can be leveled, breaks for corporations repealed, and relief provided to low and middle earners. This legislation clears out tax expenditure to make the system simpler in a likely revenue-neutral way.

By the time this is over, people could do their taxes on the back of a napkin.

[Potus]

Corporate tax breaks have got to go. I've already explained why I like the R&D credit, I think its less corporate welfare, more investment. That's why the bond credits are out.

The people using investment credits, except for Enterprise zones, are more likely to be wealthier and pay income taxes. The income tax relief makes for more flexibility for those earners and it also offsets the increase in effective rates.

Getting insurance through your job is sloppy, creates unnecessary stress on the medical system. The self employed should be encourage to create HSA's and buy more catastrophic, extreme cost coverage plans. HSA's are the way forward for healthcare and the deductability of medical expenses should be kept until governments at all levels work on cost containment.

The housing credits benefit either middle earners, which we're reducing their rates, or they're benefiting the people we are removing from paying the income tax at the lower levels.

Local taxes are paid primarily by middle and high earners, we're cutting their rates. Workmen's compensation tax credits are pretty frivolous, if it works the same here as it does in the real world. Part of why education is so expensive is that we have created such huge demand incentives. Cost containment should be looked at, but education credits make things pricier in the long run.

I am currently working on a child care proposal and it doesn't include much, if any, deductability. That's why the child care credit goes. The blind and elderly credit, if it is for businesses doing things like putting braille in their stores, should be handled privately. Parking credits seem frivolous to me, and we're also cutting workers' taxes.

The EITC is a great incentive and its positives outweigh its negatives. Keeping it around is good economics.

[Franzl]

I don't quite understand the bit about healthcare plans. What happened to our national government program?

[Potus]

I don't quite understand the bit about healthcare plans. What happened to our national government program?

Fritzcare is still in place. The HSA credits are staying because HSA's make healthcare more efficient, reduce stress, and cut down on overutilization. That's why the credit is staying. There is a senate bill in the queue right now to increase emphasis on HSA's.

[Franzl]

I don't quite understand the bit about healthcare plans. What happened to our national government program?

Fritzcare is still in place. The HSA credits are staying because HSA's make healthcare more efficient, reduce stress, and cut down on overutilization. That's why the credit is staying. There is a senate bill in the queue right now to increase emphasis on HSA's.

OK, I misunderstood then. Thanks for clarification.

[Potus]

I don't quite understand the bit about healthcare plans. What happened to our national government program?

Fritzcare is still in place. The HSA credits are staying because HSA's make healthcare more efficient, reduce stress, and cut down on overutilization. That's why the credit is staying. There is a senate bill in the queue right now to increase emphasis on HSA's.

OK, I misunderstood then. Thanks for clarification.

Any further questions? Do you support the bill?

[Njall]

I have concerns about certain tax credits that you have as being  phased out.  For instance, I believe that the transit expense tax credit should be kept; it would encourage more people to use public transit, and would also benefit those of lower incomes who have no choice but to use public transit.  I'd also prefer to see the tax credit for low income housing investment stay around.

Additionally, I don't like this proposed move partially away from our progressive tax structure.  Perhaps the cuts could be incorporated at the lower levels, simplifying the structure while leaving rates for high-earners in place.  For example:

0.0%:  $0.00 - $50,000.00
1.0%: $50,000.01 - $100,000.00
2.0%: $100,000.01 - $400,000.00
3.0%: $400,000.01 - $750,000.00
4.0%: $750,000.01 - $2,750,000.00
5.0%: $2,750,000.01 - $10,000,000.00
6.5%: $10,000,000.01 +

[Queen Mum Inks.LWC]

I'm leaning toward a NO vote on this at the moment.  Is there any support or any questions / potential amendments?

[Potus]

Njall, I'd be willing to reach a compromise with you. PM what you'd like to see.

[Franzl]

I also prefer a relatively progressive taxation system. I don't feel tax cuts (particularly for the wealthy) are good policy.

[Potus]

Njall and I are developing a compromise.

[MyRescueKittehRocks]

I also prefer a relatively progressive taxation system. I don't feel tax cuts (particularly for the wealthy) are good policy.

There are far better methods of taxation than a highly progressive tax system. The bills tax structure as it currently stands is just fine. Wealthy individuals already pay higher in terms of sales taxes. If anything we need to scrap taxing income and go more towards other methods.

[Franzl]

I also prefer a relatively progressive taxation system. I don't feel tax cuts (particularly for the wealthy) are good policy.

There are far better methods of taxation than a highly progressive tax system. The bills tax structure as it currently stands is just fine. Wealthy individuals already pay higher in terms of sales taxes. If anything we need to scrap taxing income and go more towards other methods.

Absurd.

[MyRescueKittehRocks]

How is it absurd Franzi?

[Franzl]

How is it absurd Franzi?

Because there isn't any better fairer way to tax than through a progressive income tax. Saying wealthy individuals pay "higher" in sales tax is....well....a nonsense comment. Of course they pay more, as they buy more, because they make more money with which they can buy things. That doesn't mean they're being treated unfairly. Quite the contrary.

What you're implying is....absurd.

[MyRescueKittehRocks]

How is it absurd Franzi?

Because there isn't any better fairer way to tax than through a progressive income tax. Saying wealthy individuals pay "higher" in sales tax is....well....a nonsense comment. Of course they pay more, as they buy more, because they make more money with which they can buy things. That doesn't mean they're being treated unfairly. Quite the contrary.

What you're implying is....absurd.

Taxing the rich persons income progressively higher is simply immoral. Exodus 30:11-15 clearly supports a uniform flat tax which is proven to work. So yes the rich person is being unfairly treated in the current progressive taxation structure.  A fair and just tax system is one where the rate is uniform if there must be an income tax.

[Franzl]

How is it absurd Franzi?

Because there isn't any better fairer way to tax than through a progressive income tax. Saying wealthy individuals pay "higher" in sales tax is....well....a nonsense comment. Of course they pay more, as they buy more, because they make more money with which they can buy things. That doesn't mean they're being treated unfairly. Quite the contrary.

What you're implying is....absurd.

Taxing the rich persons income progressively higher is simply immoral. Exodus 30:11-15 clearly supports a uniform flat tax which is proven to work. So yes the rich person is being unfairly treated in the current progressive taxation structure.  A fair and just tax system is one where the rate is uniform if there must be an income tax.

This isn't a theocracy, using a passage from Exodus isn't a valid argument. (Not to mention, it's a very odd interpretation of that passage)