NOTE: It’s Spring Break week for us so I’ll be away from the computer much of this week.
I wanted to share this list of the top ten tax breaks according to the Joint Committee on Taxation that I found in yesterday’s WSJ. I think it’s funny that they consider them expenditures. It’s the PEOPLE’S money, not the governments. Anyway, here is the list:
• Deduction of mortgage interest on owner-occupied homes.
• Exclusion of employer contributions for health insurance.
• Exclusion of retirement contributions and earnings.
• Reduced rate of taxes on dividends and capital gains.
• Exclusion of Medicare benefits.
• Earned income credit.
• Deduction of state and local taxes.
• Deduction for charitable contributions.
• Child tax credit.
• Exclusion of capital gains at death.
I’m not sure why “Exclusion of retirement contributions and earnings” is in that list since the government will get taxes on this money at retirement.
I would consider giving up all deductions EXCEPT for retirement contributions for say a 10% – 15% flat tax.
Taking away these deductions without adjusting tax brackets would probably increase my wife’s and my taxes by 25% or more. We don’t have a lot of mortgage interest but we do tithe, which is a significant amount of money. Losing that deduction combined with our other deductions are more than twice the piddly $11,400 standard deduction. Add the employer’s contributions to the 401(k) and health insurance (along with our portion) and we’re talking some serious pain.
What would happen to your taxes if these deductions were to vanish? Discuss amoung yourselves while I go do my annual tradition of working in the yard over Spring Break.