tag:blogger.com,1999:blog-1291208782912518401.post4135782310843901066..comments2009-10-07T08:16:12.937-07:00Comments on A Closer Look: A Fair $200 Billion Stimulus/Tax Cut and Emancipation ProclamationWallace Kaufmanhttp://www.blogger.com/profile/01122483903916231676noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-1291208782912518401.post-32346993274526793972009-03-08T11:29:00.000-07:002009-03-08T11:29:00.000-07:00While I decline the invitation to write a new tax ...While I decline the invitation to write a new tax code in a blog, I grant your point that nothing in life is simple or perfect (and maybe less so in government and economics). The flat tax comes as close to simplicity as a political system can get. Various versions of it exist in several countries. <BR/><BR/>The basic principle is simple and fair--set the rate wherever need be to replace the present system with the same initial revenue stream. Exampt from all tax a reasonable family income.<BR/><BR/>One grand simplification in any system would be to eliminate all tax on business income and tax only the money paid in salaries, wages, dividends, bonuses, etc. Your rental properties would be treated as a business.<BR/><BR/>Forget depreciation. Everything depreciates, including the value of stocks, the cars we use to go to work, and even you and I. What you spend to cure depreciation in real estate is not paid in profits.<BR/><BR/>What you pay for in repairs becomes someone else's income. Unless you do the repairs yourself--sweat equity. Under the present code it's not deductible, though any profit it generates is taxable. Ah well, your disincentive is Joe the Plumber's incentive.Wallace Kaufmanhttps://www.blogger.com/profile/01122483903916231676noreply@blogger.comtag:blogger.com,1999:blog-1291208782912518401.post-22675369243674498702009-03-08T07:48:00.000-07:002009-03-08T07:48:00.000-07:00So, a 17% tax on earnings, huh? Do you think we o...So, a 17% tax on earnings, huh? Do you think we ought to be able to deduct expenses from those earnings? Or should we create an incentive that biases economic activity against those that require investment? If we can deduct expenses, which expenses? To take just one example, could I deduct depreciation on my rental properties? That is as real a cost as employees. If I can deduct depreciation, at what rate? And, all improvements on my properties? What about repairs? All repairs or only durable repairs? Perhaps a flat tax is not as 'simple' as you would like to think. What it does accomplish is having the same marginal rate for everyone. Big deal. The part of the tax code laying out the marginal rates is only half a paragraph. No saving of complexity there.jakehttps://www.blogger.com/profile/06424044990059609927noreply@blogger.com