Fox News

I was quite honored to have this blog selected as this week’s featured guest blog for the Fox News website. The comments it has generated have been very interesting. The last time I checked, it’s no longer showing up on the opening page, so here’s a direct link to it.

KMK

Half Right

This piece by Pete Du Pont has it half right. Lowering tax rates does stimulate the economy and increase overall tax revenues for the government. In fact, one of my biggest pet peeves with the politicians in DC, of both parties, is their unwillingness to tell the truth about the Reagan tax cuts of the early 1980s. Whenever I hear anyone say that lower tax rates caused the deficit, I automatically know that that person is a liar and cannot be trusted for anything. Revenues to the Feds doubled because of the lower tax rates; but the deficit grew because the level of spending tripled.

Back to the incorrect part of Mr. Du Pont’s article; that a flat tax would simplify the hassles we have to go through this time of year. It is a widely held misconception that a flat tax rate will simplify the tax return process. That’s not even close to being accurate. There is still a need to calculate the taxable income, which is where all the fun & games are. What kinds of income are subject to tax. What kinds of things are deductible. If anyone thinks Congress can refrain from complicating these issues, you should let Bill Clinton babysit your teenage daughter.

I agree that the income tax system is beyond repair, and I make a very good living working with it. Only something radically different, such as a sales tax, will simplify anything.

KMK

Are You Filthy Rich?

As I have explained on numerous occasions, the tax code is rife with secret taxes on those people who our rulers in DC consider to be undeserving by phasing out or eliminating tax breaks for people over certain income levels. I sarcastically refer to these people as the evil rich. In this article from Fox News, Radley Balko finds that he is among the filthy rich because his income is so high that he loses the deduction for interest on student loans.

The way in which our rulers in DC define who is too wealthy to receive tax breaks is just another example of their twisted logic. A similar one is their definition of what constitutes a luxury car for tax purposes. Any vehicle that costs more than $15,300 is a luxury auto and deductions for vehicles weighing less than 6,000 pounds are limited based on that amount, which anyone who has priced new vehicles knows, bears little resemblance to reality. That’s as valid as calling retired couples earning over $32,000 a year filthy rich.

KMK