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Wednesday, September 19, 2012

September 19, 2012 - Morning Headlines

- A French magazine has published cartoons that satirize the prophet Mohammed. Outrage in the Muslim world is expected (CNN):

- The Mitt Romney campaign responded to its own secret tape release with release of a tape where Barack Obama claims he believes in redistribution (Fox News):

- President Obama addressed Mitt Romney's "47% secret tape" on the David Letterman show last night (ABC News):

- The Chicago Teacher's Union has voted to end its strike and get back to work today (CBS News):

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  1. One topic I’ve been thinking about from yesterday’s discussion, that is on a somewhat different subject.

    The right will typically defend Mitt Romney for paying a 15% tax rate, because he’s doing exactly what he’s allowed to by our tax law (in taking any and all deductions he’s entitled to). Makes sense to me, and I understand and even agree with that… which is why I think the whole ‘Mitt only paid 15%!’ attack is a bit ridiculous, and that if anything we should be upset at the system that allows this as opposed to the people that follow the rules within the law.

    Fair enough, right?

    But what doesn’t make sense to me, is how can the right make that argument and then at the same time villainize people that pay no taxes through the same perfectly legal means? This is only possible because people are taking the deductions that they’re legally entitled to; just like the right defends Mitt over. But why is this somehow different?

    Furthermore, what’s even more troublesome to me is that these deductions that allow people to have a net negative or $0 tax bill are typically pioneered by Republicans or joint Dem-Repub co-ops. As mentioned yesterday the Mortgage Interest deduction, which is by far the most costly deduction in our tax code, is one of the biggest factors that allow people to get away with $0 tax bills. It’s estimated at a cost of $90,000,000,000 a year and rising ($100b projected for 2012).

    And this deduction, by the way, was passed by Reagan in his tax reform.

    And not only would eliminating that deduction alone save another $1T in the projected 10-year budget, but it is also projected to reduce the ‘47% that pay no federal income tax’ to under 25%.

    But it doesn’t make sense to me how fighting against this 47% can be part of the GOP platform when, like Mitt, they're simply following the tax law. Particularly when the GOP was so involved in the policies that created such a high 'non-taxed' base in the first place.


  2. "And this deduction, by the way, was passed by Reagan in his tax reform." ---RKen

    Actually, no it wasn't.

    "The home mortgage interest deduction is a very old tax deduction in the income tax law. Shortly after the 16th Amendment was ratified in 1913, the modern federal income tax was enacted. At that time all interest payments were made deductible.

    In 1986, the Tax Reform Act eliminated many tax deductions in the federal income tax, but it left the home mortgage interest deduction largely intact. It eliminated the deductibility of all consumer interest, including deductions for credit card debt and loans to finance cars, furniture, and other consumer durable items, but it retained a one million dollar limit on home mortgage interest deductions."

    1. Yes it was? Your source just repeated it. I'm not sure how what you just cited is proof that "Reagan didn't pass tax reform that included a mortgage interest deduction"?

      As said in your post, all interest was deductible for a long time. The tax reform in 1986 eliminated everything except mortgages, thereby creating the mortgage interest deduction (which was previously, just a general interest reduction).

  3. Your post implies that interest had never been allowed to be deducted for a mortgage prior to 1986 (or at least to me). I was merely pointing out that mortgage interest (as well as any interest) was an allowed deduction for 73 years prior to that. :-D

    1. Sorry if that was unclear then :) I wasn't attempting to imply that.

  4. We could solve ALL of these 'who pays how much in taxes' debates by instituting a flat/fair tax... no deductions, no loopholes ~ or ~ we could do away with income tax altogether and go with an across the board Value Added Tax for all purchases (Wow! Imagine disbanding the IRS.. and we'd save THAT money to boot ; )

    Unfortunately, the (mostly left) argument against these are the state income and sales tax variables, which would need to be addressed, as well.

    Note: EVERY example of communist 'redistribution of wealth' has resulted in a MORE broken system - and a miserable populace... China is very close to a total meltdown as we speak. WHY would we even CONSIDER adopting that model? re-electing a guy who EMBRACES it?

    Seems like everyone wants to compare today's candidates to Reagan...

    Saw this on twitter: 'Reagan's dead, and I'm unelectable', which pretty much sums up my view of this election cycle.

    We have two candidates - two very clear choices: Free Market? or Socialism/Marxism?