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{"id":925,"date":"2013-07-25T08:01:00","date_gmt":"2013-07-25T08:01:00","guid":{"rendered":"http:\/\/admin.patheos.com\/blogs\/janetheactuary\/2013\/07\/tax-reform-one-small-proposal.html"},"modified":"2013-07-25T08:01:00","modified_gmt":"2013-07-25T08:01:00","slug":"tax-reform-one-small-proposal","status":"publish","type":"post","link":"https:\/\/www.patheos.com\/blogs\/janetheactuary\/2013\/07\/tax-reform-one-small-proposal.html","title":{"rendered":"Tax reform: one small proposal"},"content":{"rendered":"\n<\/head>

So it seems that Congress is considering tax reform<\/a> again.\u00a0 The last time this was in the news, I pulled out my old copy of Jeffrey Birnbaum\u2019s Showdown At Gucci Gulch,<\/i><\/a>\u00a0which seems to have taken place in a different era entirely.<\/p>\n

What deductions\/credits would I dump?\u00a0 Ideally, I\u2019d remove the idea of tax credits entirely, and replace it with an alternate schedule, \u201csubsidies and benefits delivered through the tax filing system,\u201d in which one receives child benefits, winterizing benefits, and any other such benefits that we collectively choose to pay out to people.<\/p>\n

Deductions?\u00a0 Of course, the home mortgage tax deduction doesn\u2019t benefit anyone because, in the long run, it just serves to increase the cost of housing.\u00a0 (My pet peeve:\u00a0 when the cost of any other commodity rises, we call it \u201cinflation\u201d and try to avoid it; when the cost of a home rises, we deem this a good thing, even when politicians then have to simultaneously celebrate rising real estate values and bemoan declining housing affordability.)<\/p>\n

Healh care?\u00a0 If it were eliminated in a tax-neutral sort of way, then yes, intellectually, dumping tax-free benefits for employer-paid health insurance is the right way to go.\u00a0 (But it\u2019s probably still permissible to pay for on-site or employer-owned\/sponsored clinics, health clubs, etc.)<\/p>\n

Day care (e.g, in spending accounts)?\u00a0 Well, that\u2019s essentially a cost-of-employment deduction, like buying work tools.\u00a0 Keep.<\/p>\n

Tax-deferred retirement savings?\u00a0 Well, it\u2019s tax-deferred<\/em>, not tax deductible, so a different animal.<\/p>\n

The big one:\u00a0 charity.\u00a0 At a minimum \u2014 and this is something I haven\u2019t seen elsewhere \u2014\u00a0get rid of in-kind gifts or heavily restrict them.\u00a0 Car donations allow taxpayers to deduct sums far in excess of the amount of money the charity actually receives for the donation, because of the tremendous administrative cost of selling the car, usually through a third party with high fees.\u00a0 This is \u201clost money\u201d and there is a lot of money lost this way.\u00a0 (I belive this has tightened up and, in certain circumstances, the taxpayer can deduct only the amount the car actually sells for at auction, not the \u201cblue book value\u201d \u2014 but this still doesn\u2019t take into account that the charity actually receives only a fraction of this amount, with the remainder going to the auction company and the fundraising\/marketing company.)\u00a0 Even other sorts of donations:\u00a0 donated clothing should be valued at the amount of money one could receive selling in through e-bay after paying a fee to a\u00a0\u201cdrop-shop\u201d not the amount that a thrift shop sells it for.\u00a0 (Consider the Savers business model, a for-profit thrift store chain which pays a portion of their proceeds to local charities \u2014 the value of one\u2019s donation is, ultimately, the amount of money that Savers pays the charity in response to your donation, not the amount they price the merchandise for.)\u00a0 <\/p>\n

Am I willing to take the leap and say that charitable donations shouldn\u2019t be deductible at all?\u00a0 Well, that is<\/em> a big leap.\u00a0 Maybe in another blog post!<\/p>\n<\/body><\/html>\n","protected":false},"excerpt":{"rendered":"