Among tax deductions that you use, which would you be willing to give up?

One of the options under consideration by fiscal-cliff negotiators in Washington is to close so-called tax loopholes by ending certain deductions. Today’s Question: Among tax deductions that you use, which would you be willing to give up?

  • Clark

    I like the idea of capping all deductions at $25K. Penalizes the blue states that voted for democrats. As blue states continue to raise income and property taxes to pay off the public unions, blue state taxpayers will be hit with higher federal tax bill, with cap on deductions.

    Will hit high income taxpayers and will also raise more revenue then just increasing top marginal tax rate.

    Increasing taxes will still not solve the problem as this was and remains a spending issue. Obama continues to lie to voters on our unsustainable spending.

  • Mike

    The one that benefits us all the least.

  • Kurt

    All of them.

  • GregX

    Mortgage tax deduction, Child tax credit, education credit. In return – I expect every single business tax credit, adjustment, holiday or any other named or un-named industry favoring loop-hole or code to disappear – no questions allowed.

    I’d rather help business by reducing the national debt and obtaining public infrastructure (utilities, roads, health, safety) than by buying things I don’t need.

    Corporate American is holding a collective 2.4 Trillion dollars in “reserve”. To them I say … spend to innovate, modernize and improve – that activity will provide jobs and improve your “private economy”.

    Bankers and fianciers last year took home a collective 1.4 trillion in salary, benefits and bonusses. To them I say , cease all of the back-slapping and bonussing… America bailed you out… you hae a severe ethical and moral debt to rebuild American business small and large. Start putting your money where someone else’s mouth is. and accept the risk – yourselves.

  • Rich

    All we need to do is to give those at the very top of the income distribution – the “job creators” – more income through tax breaks, and then sit back and wait for the magic happen.

    The Bush tax cuts were a test of these claims about supply-side economic policies. The reality, of course, has been quite different.

    The Bush tax cuts have already cost us trillions in revenue, and if they are extended for high income tax payers, they will cost us roughly another trillion over the next decade.

    In addition to restoring the temporary tax cuts to the top 2%. I also agree with Clark about limiting deductions. Raising taxes alone will not raise enough revenue.

  • Elaine

    A certain former candidate for the US Presidency, Mitt Romney, pays an average tax rate of 14% and yet STILL pushes his wealth overseas into tax avoidance schemes. When people are paying that little and still avoiding I think this argument is as close to moot as possible.

  • Emery

    We also should consider these:

    1 – Close the carried interest loophole, or

    2 – Treat all cap gains and dividends as ordinary income in exchange for eliminating corporate income taxes.

    3 – Treat inheritance as ordinary income.

    4 – Tax carbon in exchange for lower payroll and income taxes and

    5 – A VAT (including services and internet sales) in exchange for sales taxes.

    6 – A general overhaul on deductions. Limit mortgage interest, questionable business expenses, personal foundations, corporate health care, etc.

    7 – Higher and broader property taxes.

    The overall idea is to shift and broaden taxation towards consumption and net worth and away from labor and employment while preserving progressivity and minimizing externalities and complexity. More speculatively, I would also consider

    8 – Some kind of war tax to remind politicians and voters that we must all share in the sacrifices and expense of war.

    9 – Some kind of financial risk tax to cover the “too big to fail” subsidy, perhaps combined with

    10 – Some kind of fiscal balancing mechanism to increase taxation during booms and decrease it during busts.

    That is how I would address the SHAPE of taxation. As to the overall LEVEL of taxation, it would appear that we need to be revenue positive for now; but after hopefully substantial cuts to the spending side, we can ultimately go revenue negative.

  • Clark

    Greg X. This 2.4 trillion is held offshore so if brought back to U.S. it gets hit with 35% corporate tax. Good for Obama but very bad for stockholders.

  • Gary F

    Limit charitable deductions? You mean donations to MPR? Sharing and Caring Hands? Breast Cancer research? AIDS research? Ronald McDonald House? Salvation Army? Union Gospel Mission? The U of MN? UNICEF? The Nature Conservancy? Dorthy Day? St Paul Chamber Orchestra.

    Youth sports programs? Youth band programs? Local churches. Local schools?

  • Steve the Cynic

    Deductions that I use? Well, since I’m content with having enough and not anxiously pursuing more, more, more, my income is such that it makes no sense for me to itemize. So, I guess I’m not qualified to offer an answer. But that never stops anyone else from offering opinions here.

    I suggest we listen to the academic economists who have been pointing out the perverse incentives resulting from the mortgage interest deduction (more people buying houses who shouldn’t) and the health care exclusion (encourages profligate spending). I also like the idea of adding a financial speculation tax, like what Ralph Nader was advocating in yesterday’s Strib.

  • GregX

    Greg X. This 2.4 trillion is held offshore so if brought back to U.S. it gets hit with 35% corporate tax. —-

    Where… in the fog enshrouded world of finance … it can function as collateral … sorry … not buying the “can’t touch it” theory.

  • BJ

    It funny I’m a pretty informed person and I know that health care costs, part of my mortgage payment, donations to nonprofits and depends are deductions. Beyond that I don’t think I have a clue. I’m OK with a tax rate with no deductions, it would put a lot of tax preparation companies out of business but I could do my taxes without spending money for someone else to figure them out.

  • Jim G

    Let’s cap the mortgage deduction… no mortgage deductions over the regional median market value allowed. Also, according to many corporate apologists, I’m supposedly benefiting from corporate write-offs and deductions so they could go too. I’d be willing to risk it to find out if these protectionist arguments hold any water.

  • James

    Healthcare paid for employees by corporations should not be tax free. It should be taxed like ordinary income. This is a $250 billion exemption annually which (effectively) penalizes self-employed and unemployed people and encourages the inefficiencies associated with all highly subsidized activities.

    Charitable and political contributions should only be deductible up to a reasonable level, perhaps $2,000/year. There are lots of unworthy charities and politicians.

    The mortgage deduction should be capped, but at a very high level, as home building and home ownership remains critical to the economy. Eliminating the deduction quickly will cause home prices to fall immediately and cause a recurrance of 2008.

  • Tom K

    I believe Health Insurance should no longer be tax-exempt. If an employee at company A gets a very comprehensive and high benefit plan but lower pay they pay significantly less tax than than someone at company B who gets a lower-cost plan (pays more out of pocket for health care) and more pay (assuming the net value is the same).

    Second, the employee of company A probably uses (responsibly or not) a disproportionately large amount of health care due to a lack of incentives to better manage their usage. (Somebody else is paying, so why not)

  • Chris

    Get rid of them all-slowly. If the home deduction was eliminated people would buy homes that they can actually afford. Git rid of all corporate deductions and then lower the corporate rate for all businesses (small to large). Raise taxes on the wealthy, estate taxes, capital gains, and dividends. Cut cost on Medicare, SS, and Defense-slowly. This isn’t rocket science.

  • Wally

    I’d like to “deduct” the entire fraudulent Income Tax System and the INFERNAL Revenue DIS-service.

    Get us back to limited government!

    But that ain’t gonna happen, is it?

  • Clark

    Grex X – You are simply not correct in your comments. Many U.S. based companies have increased U.S. based borrowing for stock buybacks or to fund growth rather then repatriate offshore profits due to the 35% tax hit.

    Clearly your lack of understanding of finance is why you must be a clueless democrat.

  • kim

    My situation is similar to Steve the Cynic. I have a mortgage and make charitable contributions. I don’t have insurance, so I pay my own medical bills, when I have them. I’m self employed, so I pay both halves of FICA. I earned under $20,000 last year, but feel like I’m doing ok. (As long as I don’t get sick or hurt, but that’s a separate issue.) I take the standard deduction. I have a mortgage, because the place I live meets my housing needs. I give to MPR and other causes because I believe in them and I can. Would I like to pay less taxes? Sure, but I don’t plan my life around the tax code. How many people really do? (Probably more than I think?)

    Personally, I’d like to see them raise the standard deduction to the poverty line, or the income level that qualifies you for things like food stamps and fuel assistance. Count those things as income. Don’t tax any income below the line. To me, that seems to put a floor under everyone. Beyond that, seems like income is income. It doesn’t seem right that the people who chose to speculate on “investments” pay a lower tax rate than people who actually do productive work. It seems like people should be making their decisions based on things other than taxes.

  • jockamo

    Yes, it is all George W. Bush’s fault. He did those darn Tax Cuts for the wealthy, way back in ancient history.

    Of course, Barack Hussein Obama extended those exact same Tax Cuts for the wealthy 2 years ago (making them the Obama Tax Cuts for his Wealthy Buddies on Wall Street).

    That would mean that Obama agrees with Bush that Tax Cuts for the wealthy is a good idea.

    Or, that Obama is being controlled by George W. Bush.

    Or, that Obama worships George W. Bush like a god and does whatever George W. Bush wants him to do, like continue the Tax Cuts, and continue the Wars, etc…..

    Whatever the exact reason is, it’s safe to say that George W. Bush is the most powerful Man in the World, as he controls the president of these United States, and makes him do things…..bad things…..things that make the run of the mill ordinary Democrats scratch their little heads and wonder about that Obama fellow. Wonder just exactly who he worships.

    HarHarHar

  • CarlS

    Well I’d be “willing” to give up anything if someone had a big enough incentive or coercive tactic like holding a gun to my head. But the ultra-simplified discussion about taxes and deductions does not come close to addressing who is really paying what. We’re just presented with a big number and then told that we all have to pitch in.

    With the rich and powerful always getting what they want – and getting richer by the day as everyone else stagnates, there’s little mystery as to who will come out ahead. This folksy perspective about all of us regular people having to pay our ‘fair share’ is specious and insulting.

  • david

    I think the mortgage deduction is a joke. It just artificially inflates home prices that much more and only gives the illusion of affordable home ownership. Then instead of paying that money to the government where it could be put to good use, you pay it as inflated interest to some useless financial monkey who contributes absolutely nothing to society.

  • Philip

    My paycheck has not kept pace with the cost of living. Until that happens, I’ll take any deduction I can get.

  • Really?

    All of them, in return for a dramatic reduction and flattening in tax rates.

    I’m sick of the Feds using the tax code to “incentivize” or penalize certain actions vs. others…that is not how a “free” market should work.

  • Shane

    We need to stop worrying about loopholes and deductions and reform the entire way government takes money from us. We should move towards something like a flat tax or national sales tax. Almost anything would be better than what we have now.

  • Mary

    I’d be willing to give up the income cap we get. Toward the end of the ear we get three or four checks that don’t have some of the payroll taxes taken out. We wouldn’t really notice it if the taxes were taken out for the full year. Give that break to the lowest earners instead. They need it, we don’t.

  • Alison

    I’d be willing to give up savings from the health and dependent care reimbursement accounts (HSA, HRCA, DRCA). Trying to get your money out of them is an annoyance. It creates an entire industry of wasted effort to manage it. To make matters worse, the HRCA process forces you to guess at how much health care you’ll need a year in advance. Who comes up with this stuff? I wonder if we could trace this entire program back to campaign contributions from HR benefits outsourcing firms.

  • Alison

    Sorry – should be HCRA and DCRA

  • Jefferson

    It’s very simple, eliminate all deductions and credits. Replace them with a single deduction to protect the poor and to keep the tax system somewhat progressive and to make up for many of the previous deductions. Basically, we just need a single $20,000 deduction and every bit of income after that point should be taxed at a 20% rate. That way we can increase capital gains taxes up to 20% (same as regular income) without doing significant harm to the economy, the tax code will become much more efficient, the poor are still protected and the tax system remains progressive. This simple tax system should make everyone happy since it accomplishes the goals of both Republicans (more efficient) and Democrats (revenue increase).

  • Linda in Plymouth

    as Gary says, ” Limit charitable deductions? You mean donations to MPR? Sharing and Caring Hands? Breast Cancer research? AIDS research? Ronald McDonald House? Salvation Army? etc,…”

    How can Obama’s plan to make all of us more dependent upon bigger far reaching government , and controlled by the hands of a few elites, ever work if the government is not in charge of all charity? Obama has to remove charitable deductions but yet, 10% of Americans work for a charity so does he cause more unemployment as he expands government?

  • Steven DFL

    My wife agrees at last with me. Obama needs to stop holding the country hostage with his My way or the Highway stance on fixing the economy. He has had 4 years and did nothing but made it worse. Unemployment unchanged. No energy policy. More divided country.

    I’d suggest we cut deductions for teacher Union dues. Here is how your tax dollars are being spent through dues to indoctrinate with lies and filth.

    Google this_Calif. Teachers Union Cartoon: Tax the Rich. Rich urinate on poor in union’s video narrated by Ed Asner. Brainwashing school age kids to hate capitalism and embrace Ed Asners Democratic Socialist Party ideals. But wait! There’s more. This is the same stance our president has took_ class warfare lies because lies work with the uninformed…and that is how he won by 2% of the voters.