http://msnbcmedia.msn.com/i/MSNBC/Sections/NEWS/A_Politics/111025_PerryPlan.pdf I love the idea of a flat tax but a few things I don't like about Perry's proposal. 1. Mortgage interest deduction-Why is it that interest on a loan should be subtracted from your taxable income. If you choose to buy a house, your expenses should not be subsidized by the government. I would not object if this was rolled into the personal deduction and given to every American. 2. Charitable contribution deduction-If a person chooses to give/donate a portion of their income away that is their choice. The government should not be paying for 20% of your donations. I also am not sure if this includes non-money donations to charities like clothes, furniture etc, if it does I really am against it.If you cant afford to donate, then don't. 3. Capitol gains and dividend deduction-I will argue this till I am blue in the face. ALL income should be taxed equally regardless of source! No way should investment income be taxed higher or lower than wages. Investment capital will not dry up. People will not set on their money at 0% rather than invest it for a return regardless of the tax. I am fine however with subtracting capital losses being subtracted from gains and the net income being taxed at the 20% Thoughts from others on Perry's plan or the adjustments I propose?
A 20% flat tax rate is completely unnecessary. I don't even propose that high of a tax in my proposed tax system. With my plan, every single form of deduction would be eliminated. Furthermore, capital gains would be taxed as ordinary income. Specifically, derivatives contracts would be restructured so that their notional values become tradeable and taxable income. In my tax proposal, charitable donations and mortgage interests wouldn't even be mentioned in the tax code as deductions or as taxable income.
I agree. Maybe the 20% is a little high, but once capitol gains are taxed as part of this the % could be lowered. Imagine a hard working person making $60,000 a year without a mortgage comparing his return to that of a trust fund baby making $200,000year on investments...LOL that would ruffle some feathers! Let the rich kid who may never work a day in his life by living off investments go his entire life without ever paying a dime in federal taxes? I dont think so
The problem is the misconception that capital gains actually produce extensive revenue for corporations. On the contrary, one of the most profitable forms of capital gains, derivatives, may only generate about $30 billion in revenue this year. In the modern economic system, this is chump change. I you restructured derivative contracts so that capital gains encompasses their notional values, the derivatives market automatically increases from a value of about $30 billion per year to $249 trillion at its current value before trading. If 1% of this value is taxed, federal revenue increases by $2,490,000,000,000, but investment capital ater taxes (if derivatives are the only thing taxed) is $246,510,000,000,000.
