I’m no accountant, but I know that the IRS code is filthy with loopholes to enable the uber-rich to evade their fair share of taxes. What I did not know is that they are the ones who benefit most from tax relief that is ostensibly for the poor and middle classes. That stinks!
IF YOU WERE spending $400 billion a year on social programs, would you give half of that to the wealthiest 5 percent of Americans? We didn’t think so. But that is the perverse result of the stealthy spending conducted through the federal tax code. The code is salted with "tax expenditures" — programs, many worthy, designed to promote policies from homeownership to education to retirement savings. There are two problems with this approach.
First, it lacks transparency and accountability. While direct spending programs are subjected to continual review, the spending that takes place through the tax system operates on silent autopilot. Once embedded in the code, the preference tends to be in place until dislodged.
Second, accomplishing social policy through tax expenditures tends to award the most help to those who need it least. As a new report by the Corporation for Enterprise Development and the Annie E. Casey Foundation [PDF] demonstrates, the $400 billion federal asset-building budget — subsidies to buy homes, save for education or plan for retirement — is upside down. Rather than ameliorate rising income inequality, it reinforces it. Low-income households who do not earn enough to itemize deductions don’t get the benefit. A middle-class household earning $50,000 a year "receives less than $500 in benefits" from tax breaks for mortgages, property taxes and investment income, the report found. "By contrast, taxpayers bringing in more than $1 million enjoy $95,820 in annual support through mortgage and property tax deductions and investment tax breaks," it said.
Something is wrong with this picture… [emphasis added]
Inserted from <Washington Post>
Fixing such problems would not be that difficult. Simply rewrite the code with income caps, above which the deductions do not apply or set a maximum deduction. Surely republicans will fight tooth and nail to protect their only true constituents. Let them. Is putting Republicans on Front Street for representing Easy Street and screwing Main Street a bad thing?
8 Responses to “Fix the Broken IRS Code”
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And while we are at that lets not forget to remove the cap on Social Security taxes on all income, including corporate income seeing as they are now as entities; people.
Amen to that. Let’s make all corporations retire at 65. 😉
Sew up the loopholes including the one that allows corporations to establish offshore tax havens! They will still do business in the U.S., there’s too much money to be made not to!
That one too, Nikolai.
Nickolai and TWM are both correct on that. I do taxes for several people and the more you make the more you save. The itemization is a big savings – especially home interest. Years ago, they let you write off your credit card interest – bringing that back would substantially help middle and lower income people.
Lisa, ideally that would not help at all, because people paying credit card interest are either not thinking or desperate. Before I won my SSDI appeal, I was desperate. I used my credit card to keep taking the meds I need, and paid over $150 a month in interest. I used my SSDI settlement to pay off the balance and have not paid a penny in interest since.
What has been said above is true along a continuous erosion of the middle class as it was then …
One last nail is the stoppage of increases to social security recipients.
Welcome MS. 🙂
While social security recipients still get COLA increases in theory, the method of calculating the cost of living is flawed. 2011 will be the second year without a COLA increase. Between 2009 and 2011 my rent, internet, groceries, and medicare supplement costs will have increased substantially. I’m currently researching an article on this.