Can I pitch K) simplify and overhaul tax code?
by ravenium (2024-02-16 20:14:39)
Edited on 2024-02-16 20:16:15

In reply to: PBR Poll on Possible Federal Revenue Enhancements....  posted by Raoul


I think most of the things you discuss are at least debatable and not outside the Overton Window of tax policy, for what it's worth. Some may make us hotter than others, but they are least worthy of a discussion, even if the conclusion is "no". Of course with our political system I have zero faith in anyone's ability to accomplish this. End Rant.

Back to my K option, I'd like a Canadian or someone in a country that has a more or less "automatic" tax return weigh in here, but I think we can be smart enough in 2024 to not have TurboTax be a thing. Taxes are what they are, they are deemed "reasonable" (or as close to something we can agree on), and that's what they are. No crazy loopholes, just "this is what you made on this system, it is subject to this taxation rate, that's it."

Let's say I have a W-2, a 1099-INT, and and 1099-DIV. If I made x on each, I get marginally taxed at a,b,c at different tiers, and that's it. No Buts.

I realize this is perhaps incredibly naive too, but it seems like it's better than the system of "it depends how good your accountant is" and the sheer number of loopholes we have. It would possibly cut down on charitable donations, but who knows? It would destroy Turbotax, but...well, I don't care.

As far as the others:

A) Universities would hate this, naturally, but I think you wouldn't get a gripe out of most people. I'm not sure if it would move the tax needle, though (I don't have any data). What if we eliminated tax exemption for religious institutions? You might never get a vote again, but sometimes I'm tempted.

B) I don't know if it would make a dent in 401ks (even at 23k/year, you're going to have to really spring to put 5M in over your career) but I guess with the other accounts it's possible. For my ignorant ass, what is the point of RMD in general letting people keep it there? My dad is annoyed by this because he doesn't always need the RMD.

C) People will hate this, but it's probably the only way Social Security will survive. I'm guessing my retirement return doesn't scale with it, though.

D) This is a third rail issue with so many people tilting at cap gains not being "honest work", or people who never have invested overly caring about it. I'd be curious what the estimates would be in increased tax revenue.

E) Ugh. As the resident of a state that wants to be California without the services of California, I think 100k is a very low cutoff. Again, I'd like to see what the take would be.

F) This is one of those issues that is meaningless to most humans at the federal level, but can be painful depending on state as (I don't think, at least) states have a minimum.

G) We probably should have one, but it would be political suicide and seen as regressive (which is ironic compared to Europe, but Europe also doesn't have the same wealth disparity)

H) We're still far more business friendly than Europe - are corporations really going to flee if we "revert"?

I) This belies a major issue with increased EV adoption - paying for roads et al when people don't use gas in their car. We need a taxation solution that isn't intrusive but also fairly calculates a car's impact (and Gas just so happens to do so)

J) It's tempting to implement this but I don't happen to like either side of the argument on this.