Archive | October, 2012

A Semi-Political Rant

5 Oct

I watched the presidential debates last night.  The news media all seem to agree that Romney won.  Actually, I thought President Obama very effectively argued against the positions that Mr. Romney had last week, but Mitt had changed his positions for this debate so the arguments were not so effective.

Actually, what I thought I would talk about was something that both candidates touched on—closing tax loopholes.  Mr. Romney was going to find a lot of savings by closing those loopholes.

I don’t like paying taxes myself.  In fact, I don’t particularly like talking about taxes, but somebody must pay them, and the way taxes are calculated makes a big difference.

I heard of a case in western Iowa just recently.  The rates of property taxes are usually decided by how valuable the land is.  So this land is hilly, and has a lot of old trees on it.  The soil itself is highly erodible and not much good for row crops.  The people who collect taxes changed the way they value the land.  All land now is evaluated on its ability to grow corn.  That increased the value of the land by about a factor of ten, and therefore the property taxes were also increased by a factor of ten.  The farmer had lightly grazed the land, but now feels that he can no longer afford to do that with property taxes so high—he must plow it up and grow corn.  Great ecological damage is done by a simple property tax policy change.

Now what about income taxes?  Usually, income taxes are considered “progressive”, meaning that people who make more annual income pay a higher percentage of their income in taxes.  Is this fair?  Probably—people with more ability to pay are required to pay more.  I am probably in one of the higher income brackets myself.  I pay a higher rate than some people.  The people who complain the loudest seem to be the wealthiest.  I think the United States has a huge number of whiney rich people.  Poor people generally share what they have, while the wealthy complain that the government takes too much.

I think when Mr. Romney is talking about loopholes, he may be talking about deductions.  You can currently deduct the interest on your house.  That policy helped people invest in their own homes.  You can deduct some educational expenses.  If you have very high medical expenses you can deduct part of that.

Here are the two biggest tax loopholes that I think should be shut down:  Capital gains and inheritance taxes should be taxed as income, and not with separate lower rates.

If you are employed, you put in a certain amount of time or effort in order to earn your wages or salary.  You are taxed at a rate proportional to your earnings.  Why should someone be able to inherit a fortune from a relative and pay no taxes on it?  Should someone who works for the same amount of money pay while someone who does not work for it pay none?  Don’t use that ridiculous argument that you are taxing the money twice—you are taxing the individual once.

“Capital gains” is money that is “earned” from an investment. It is taxed at a lower rate than “income.” Again, why should someone who does not do any work, but only invests money, pay at a lower rate than someone who works to earn the money?

Income is income.  Those who work to earn it should not be taxed at a higher rate than those who don’t.

Republican positions favor lower “capital gains” rates and elimination of inheritance taxes, which they call “death taxes.”  Therefore, they favor those who do not need to work over those who do.