Tuesday, November 29, 2011


A while back in “What Would You Keep?” I discussed how I would rewrite the Tax Code, and asked my fellow tax professionals to identify “What current ‘tax expenditures’ would you want to see remain in a new, simpler Tax Code?”.  

I heard from only two tax pros – disappointing.  Their responses were published as comments to the original post.  However,  as comments are rarely overlooked, I thought I would report on, and respond to, these guys in a post.

Here is what my two colleagues had to say –

(1) Bruce McFarland, the MISSOURI TAX GUY:

I would disagree with the SS income.  This should remain leveled as a lot of SS recipients don’t get receive much and truly would be more desolate by the burden of losing 15% to our crooked government.  { What I had said was “I would tax Social Security and Railroad Retirement benefits the same way that other retirement income is taxed, amortizing employee contributions over the recipient’s assumed lifetime”.  My tax code could have a generous personal exemption to wipe out much of the tax for the elderly living on Social Security – rdf} 

USA – “Universal Savings Account”. This is a great idea.  {Not my idea – actually I think Dubya had proposed it – rdf}

A fair tax solution would need to take COLA into effect/thought by geography. Currently like you mention it does not. I don’t believe it would be that hard to solve this as this country is divided really well geographically. Our US Postal code Zip code does this for us. The idea of using homeowners’ mortgage interest is decent enough, but I fear is not a plausible solution. The amount of one’s house payment is the same, month after month, generally, yet on a fifteen year loan, the interest paid reduces considerably year to year. Thus in your proposed plan would raise the taxpayers AGI, (I am assuming that your “acquisition debt” mortgage interest paid on a residence, is above the line). {Yes – there would be no more “line”.  Determining some kind of geographical adjustment by Zip Code still appears to me to be too complicated and would not necessarily accomplish the same result.  The deduction for state and local taxes, including real estate taxes, would help to “equalize” the geographical differences more than the mortgage interest deduction. – rdf}

The one thing I would rid ourselves of is the financial assistance program our tax code offers those who have nothing better to do with their time then have babies. EIC is a good program but we need to get our children out of the equation and make it more of a program that helps low-income taxpayers. If not do away with it all together. {Do away with it altogether – at least in the Tax Code. – rdf}”

(2) dbltall -

Foreign Earned Income Credit or Foreign Tax Credit. People working outside the US shouldn't have to pay taxes twice to two different governments on the same income.  {I do not support any kind of double-taxation, so I would agree with the inclusion of some kind of foreign earned income adjustment. – rdf}

As to Bruce's comment about EITC, NO REFUNDABLE CREDITS!

Seriously. No refundable credits of any kind to anyone. No getting back more than you paid in. It's an invitation to fraud. If Congress wants to give money to people they can find another mechanism than the income tax return.  {Right on, dbltall!  NO REFUNDABLE CREDITS!  That would be non-negotiable. – rdf}”  

I am still interested in hearing more on this subject from my fellow tax professionals.  So once again I ask - What current ‘tax expenditures’ would you want to see remain in a new, simpler Tax Code?


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