Links to new Tax proposals

http://www.taxreformpanel.gov/final-report/

Chapter One - Four http://www.taxreformpanel.gov/final-report/TaxPanel_1_11-1.pdf
Chapter Five - Six http://www.taxreformpanel.gov/final-report/TaxPanel_2_11-1.pdf
Chapter Seven - Nine http://www.taxreformpanel.gov/final-report/TaxPanel_3_11-1.pdf
Appendix http://www.taxreformpanel.gov/final-report/TaxPanel_4_11-1.pdf

I actually started looking this over from one of your threaded links in GD or LBN.

Has anyone else started looking this stuff over thoroughly?

What I found actually running the numbers on the Simple Income Tax plan is that it will cost my family almost $3000 more a year because we are in a high tax state and they kill the deduction for property tax and State and Local tax, and we don't have children.

Seems like the 78K to 150K range is paying almost all of the nation's taxes. I find the quintile bar graphs interesting because they really don't spell out the tax burden between 25% and 10% income range - only lower 50% and upper 10% - and I think this is on purpose - to present their "simple" plan in the best light. This is where I think the horror show is. It seems to me more of the burden should be on even higher incomes, and I also think that with the high property tax plus child tax exemptions it is becoming more financially prudent (incentivized) to have children than to not have children. (A real shift on this).

Sum up: Simple tax plan is not that different from current income tax plan, but is easier. BUT: Big problems with the Simple Tax plan, (1)too much reward for child rearing (2)Rewards married couples with children with $500 more credit than non married with children (govt legislating morals is screwed up and could lead to poor marriage choices and more divorces for a $500 annual tax break) (3)While they add to the total tax free (Roth IRA type) dollars that people can save they simultaneously tax higher reducing actual savings - an irony - so really allowing only those with the highest disposable incomes to add to tax free savings plans - so tilted toward the highest earners. (4)Education deductions and credits reduced.(5)Top two bracket percentages are too low (make them pay more) - especially in a plan that ends the AMT - these are the people who should be paying for the AMT, not the $78k to $150k married bracket (half for singles). (6)My biggest problem: deliberately penalizes high income and property tax states. This is an anti-blue state tactic and is directly going to affect our personal tax burden, under this plan, by raising it $3000 or more per year. The STP is pro-rural/anti-metropolitan pro-re state/anti-blue state.

I think that this problem number 5, unfair burden on high tax locales, will actually result in reduced property values (a permanent decline of sorts) for properties purchased by high middle income earners - the $500 K houses in large metropolitan areas. This may also result in a long term demographic shift from cities to the country. This also rewards those low property tax located home schoolers. Also, an additional $3000 burden on many of these earners (run the numbers and you'll find it) in the lower portion of the upper quintile - the top 20 to top 10% earners, but not the top 10%, is where they are making up the AMT although most of these people were not under threat of AMT - it was in fact the top 10% who had to worry about this. This will cause more bankruptcies among the tightly budgeted (people squeezed into interest only mtgs on 500K houses on $110 dual incomes/yr) and at the very least $3000 per year less available disposable income available for savings. Finally, the ultimate irony, they are taking off the table a theoretical $40K PER YEAR in Roth type plan's investment income (Save for Fam;Sav for Ret) while penalizing the 78K to 150K earner. Yes the income is taxed once but the investment income is never taxed. This is actually increasing ability for the rich to accumulate investment dollars tax free while simultaneously reducing ability for the former upper middle class (they are killing off upward mobility) to save for retirement by taxing more of their income. People who make less than $150K will not have the money to put in the Sav for Ret accounts so these are really solely aimed at the top 10%. Sav for Fam account is more flexible but people may likely remove money for big expenditures and under-save for retirement.

SITax Incentives are these: Have more children, get married, don't educate your children, live in a low property tax location and home school, move out of high tax states (or work to try to lower the tax rates and property taxes of where you live) and don't buy your home -rent, but if you do buy, keep a mortgage, and don't own a second home.

If this thing comes to pass it is going to kill the Residential Real Estate industry (certainly burst the bubble, but probably permanently lower the values of more expensive homes in high cost of living locations) and promote renting. This may even cause increases in urban blight, as people head out to suburbs to avoid city taxes.

As for the Growth and Investment Plan: This one is regressive and much worse than the above plan - but I think it's DOA and only published in order to make the "Simple Income Tax" look good by comparison. That it was not endorsed by all the panel members gives us a clue, right up front, that it is a flat taxers dream and a working class nightmare and just there to frame the argument and to move it to the right.

Conclusion- give me the complicated and confusing form with deductions where I end up owing $3000 less in taxes, please!

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