Tax Reform Thread

[Balloon guy 158]

The exempt purposes set forth in section 501©(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals. The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.

Like this?

[DJ Vu 176]

Like this?

Hmm, I was about to make a sizable donation to "Food for the Hungry," but I think now I'll give it to your croquet club instead.

[mrdannyg 274]

We just had a meeting of the club, where the CPA explained tax laws...but you are right, he must be wrong.And we all know that your church is all churches.Of course it wouldn't be Christians against atheist, that would be like people who like logic against the tiny number of people who think squares are round.But it is funny how you think the republicans would trick people into voting in a way that reflects how they live their lives every day. half of whom are democrats.

Appears you got lucky on this one, unless it was your intention to state several additional irrelevant facts, and not the one material aspect of your argument. And...really? You had a CPA come in to explain tax laws? If ever there was an argument that these tax deductions are being well used in excess of their intended purpose, I'd say having a CPA speak to tax laws for a croquet club would be about as poignant as you can get.Great point on the churches. "My" church is not all churches of course. And yet, somehow, "your" churches, that do good things, in fact represent all churches. I'm so happy to be arguing against someone reasonable.I have no idea what your last two sentences mean.

To get a tax deduction for your contribution, it must be to an organization that is tax exempt.

As Bob says, sounds like there may be a difference in Canada and the US. I'm no taxguy, but pretty sure you need to be a registered Charity to be tax deductible here, whereas things like non-profit social clubs can get tax exempt status that prevents them from paying taxes if in any given year receipts are higher than revenues (basically, the same definition as BG's helpful tax code link"), but contributions are not tax deductible. Otherwise, you know, you might have a bunch of rich people "contribute" 5-6 figures annually to things like golf courses and croquet clubs which would be a completely ridiculous thing to deduct from their taxes.

[FCP Bob 1,312]

This is the biggest benefit -- politicians would no longer be able to deepen economic downturns with discredited Keynesian dogma.

IT'S OFFICIAL: Keynes Was Right

[DJ Vu 176]

I think the whole your church/my church issue could be solved by just removing any mention of religion in the definition for exempt purposes."The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency."If your church does one or more of these things, then they can qualify. If all they do is "worship services," then they don't qualify.

[Balloon guy 158]

I think the whole your church/my church issue could be solved by just removing any mention of religion in the definition for exempt purposes."The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency."If your church does one or more of these things, then they can qualify. If all they do is "worship services," then they don't qualify.

Well I have actually gone to church, and in fact helped with things where they do charitable things. ( not sure what because I was busy at the potluck helping lighten the load for the ladies who had to carry their casserole dishes back ) But I'm sure it was very charitable, what with the crying and thank you all speeches and what not.Luckily the youth minister had a TV set up in the high schoolers room and we could check the scores of the game during the presentation thingy.Anyway that extremely large check for $600 to the place clearly places my church in the " We don't got to pay no taxes " camp.And that's America.

[Balloon guy 158]

Appears you got lucky on this one, unless it was your intention to state several additional irrelevant facts, and not the one material aspect of your argument. And...really? You had a CPA come in to explain tax laws? If ever there was an argument that these tax deductions are being well used in excess of their intended purpose, I'd say having a CPA speak to tax laws for a croquet club would be about as poignant as you can get.

Because we all know extremely wealthy CPAs do not join country clubs and play croquet...and then, during a regular meeting...voice their knowledge...

Great point on the churches. "My" church is not all churches of course. And yet, somehow, "your" churches, that do good things, in fact represent all churches. I'm so happy to be arguing against someone reasonable.

So the fact that churches across time have in fact helped the poor and needy is to be discounted because you know from an outside perspective what a church in the general vicinity of your home does with all its money, but my having been active in many churches for decades is not...Are you sure you want to use the word reasonable there?

I have no idea what your last two sentences mean.

Because they mocked your other poorly thought out efforts to support an argument that makes no sense to begin with.But just in case there is hope:You implied that republicans will be tricking people of faith with phony words to get them to support legislation that would help their churches...And I pointed out that nobody needs to be tricked to support something they already support.It was tricky there, because I was asking you to think for just a second.

As Bob says, sounds like there may be a difference in Canada and the US. I'm no taxguy, but pretty sure you need to be a registered Charity to be tax deductible here, whereas things like non-profit social clubs can get tax exempt status that prevents them from paying taxes if in any given year receipts are higher than revenues (basically, the same definition as BG's helpful tax code link"), but contributions are not tax deductible. Otherwise, you know, you might have a bunch of rich people "contribute" 5-6 figures annually to things like golf courses and croquet clubs which would be a completely ridiculous thing to deduct from their taxes.

Oops, another croquet player here is from Brockville, Ont ( I may be visiting him this summer ) and he in fact is involved with many tax exempt charities in his small community. He explained to me that he is going to go home and get the government to actually pay for a croquet court to be built there so he can practice since I can whip him like yesterday's butter all day long. Want a side bet about it's tax status when he finishes the project?

[mrdannyg 274]

Because we all know extremely wealthy CPAs do not join country clubs and play croquet...and then, during a regular meeting...voice their knowledge...So the fact that churches across time have in fact helped the poor and needy is to be discounted because you know from an outside perspective what a church in the general vicinity of your home does with all its money, but my having been active in many churches for decades is not...Are you sure you want to use the word reasonable there?Because they mocked your other poorly thought out efforts to support an argument that makes no sense to begin with.But just in case there is hope:You implied that republicans will be tricking people of faith with phony words to get them to support legislation that would help their churches...And I pointed out that nobody needs to be tricked to support something they already support.It was tricky there, because I was asking you to think for just a second.Oops, another croquet player here is from Brockville, Ont ( I may be visiting him this summer ) and he in fact is involved with many tax exempt charities in his small community. He explained to me that he is going to go home and get the government to actually pay for a croquet court to be built there so he can practice since I can whip him like yesterday's butter all day long. Want a side bet about it's tax status when he finishes the project?

I guess I shouldn't be surprised that someone who is incapable of forming reasonable, coherent and logical opinions based on the words of others would be able to put his own jumbled mush into sentences meeting the same critieria. Here's a hint: words like "the" and "a" have different meanings, and using one instead of the other changes the meaning of a sentence.Remember when you are talking about churches, it isn't good enough that "some" or "your" or even "most" churches are doing good things. All of them have to be doing good things (excepting some level of fraud, which is true for any type of organization), and encouraging religious beliefs or worship isn't included in this, and that only money put towards the benefit of the non-worship parts should be deductible.Our government is (almost) as crooked as yours, so I won't be at all surprised if your friend builds a croquet court within a few miles of a church or food bank and thusly is able to have it be tax exempt as well. Though just as a reminder, in Canada, there may well be difference between the actual enterprise being tax exempt, and contributions to it being tax deductible.

[brvheart 1,752]

IT'S OFFICIAL: Keynes Was Right

"once business-people saw that governments were serious about debt reduction, they'd get confident and start spending again.That hasn't worked."Is this article actually trying to make the claim that Europe's spending is under control, and so now we have proof that "x" doesn't work? Really? Like, that's the entire premise of his article?Some of these countries have 80% tax brackets and give away money like it's candy at a parade, and he's basing his whole article on the fact that Europe has gotten serious about debt reduction?hahaha"Now, I'm not an economist,"no shit.

[Balloon guy 158]

I guess I shouldn't be surprised that someone who is incapable of forming reasonable, coherent and logical opinions based on the words of others would be able to put his own jumbled mush into sentences meeting the same critieria. Here's a hint: words like "the" and "a" have different meanings, and using one instead of the other changes the meaning of a sentence.Remember when you are talking about churches, it isn't good enough that "some" or "your" or even "most" churches are doing good things. All of them have to be doing good things (excepting some level of fraud, which is true for any type of organization), and encouraging religious beliefs or worship isn't included in this, and that only money put towards the benefit of the non-worship parts should be deductible.

A founding fathers had the reason for supporting churches. As do all countries that aren't complete wastes of space. And only parasites think they can remove that symbiotic relationship.But 'fixing the things that work is all you guys got, so you might as well keep at it.

Our government is (almost) as crooked as yours, so I won't be at all surprised if your friend builds a croquet court within a few miles of a church or food bank and thusly is able to have it be tax exempt as well. Though just as a reminder, in Canada, there may well be difference between the actual enterprise being tax exempt, and contributions to it being tax deductible.

Which means nothing, but apparently you feel adds something to a discussion.

[FCP Bob 1,312]

"once business-people saw that governments were serious about debt reduction, they'd get confident and start spending again.That hasn't worked."Is this article actually trying to make the claim that Europe's spending is under control, and so now we have proof that "x" doesn't work? Really? Like, that's the entire premise of his article?Some of these countries have 80% tax brackets and give away money like it's candy at a parade, and he's basing his whole article on the fact that Europe has gotten serious about debt reduction?hahaha"Now, I'm not an economist,"no shit.

Please read up on what is happening in Europe and then maybe you'll understand.Maybe reading publications like The Economist and The Financial Times will help you.Europe is trying Austerity right now and it's plunging economies back into recession just as standard economic theory predicts. See Great Britain as the perfect example.U.K. Slips Into Double-Dip Recession

LONDON — Britain has fallen into its first double-dip recession since the 1970s, according to official figures released Wednesday, a development that raised further questions about whether government belt-tightening in Europe has gone too far. The report of an unexpected 0.2 percent decline in economic output during the first quarter of 2012 provoked an outcry in Britain, and came on the same day that Mario Draghi, the president of the European Central Bank, shifted his rhetoric on the debt crisis to put more emphasis on growth. Mr. Draghi called for a “growth compact” and a re-examination of where the euro is headed. ARTICLE CONTINUED AT LINK ABOVE

[BaseJester 1]

We have had this system for quite some time. Changing it now would have a catastrophic affect on property values. Many people would not be able to afford the homes they are in if this was changed. Myself being one of them.

It's good for you; therefore, it's good policy. Really?

This is such short term thinking. It would be good for them they day they bought it, would it still be good for them 2 years later if it kept falling? How about 5?Think of the people who didn't get bad loans, bought what they could afford and now for reasons other than losing their house they need to move. New job, bigger family, parent moving in with them, etc. Those people can't sell their homes. When you have prices where they were 15-25 years ago on homes, that isn't good.

This makes no sense. If the whole house market falls, then they can take their equity and trade it for another house.

Your posts read from someone who wants to buy a home but are waiting for prices to drop.

No, I own my house.

I'm not sure what point you are trying to make except apparently some places in the mid west have really cheap homes, and you think cheap housing is good so more people can buy homes. Did you let Barney Frank and Maxine Waters borrow your account.

The point I'm making is that the tax deduction for mortgage interest benefits a particular segment of the population but has no benefit for the United States as a whole. Therefore, the deduction should be eliminated.

[DJ Vu 176]

This makes no sense. If the whole house market falls, then they can take their equity and trade it for another house.

I'm not sure I understand what you're trying to say here.

[The Ocho 970]

It's good for you; therefore, it's good policy. Really?

No it's a good policy for the 75 Million households +/- who own their own homes.

This makes no sense. If the whole house market falls, then they can take their equity and trade it for another house.

What? If the housing market falls, they will not have any equity.

No, I own my house.

OK

The point I'm making is that the tax deduction for mortgage interest benefits a particular segment of the population but has no benefit for the United States as a whole. Therefore, the deduction should be eliminated.

The majority of people own homes. No benefit is going to be equally good for everyone. So the majority of people get this benefit. This is also not taking into consideration all the people that own homes, and then rent them out, that get this benefit as well.I really don't think you know what you are saying.

[SuitedAces21 2,722]

I'm not sure I understand what you're trying to say here.

clearly you know nothing about taxes.

[DJ Vu 176]

clearly you know nothing about taxes.

If that was about taxes, then I'm even more confused.

[FCP Bob 1,312]

The majority of people own homes. No benefit is going to be equally good for everyone. So the majority of people get this benefit. This is also not taking into consideration all the people that own homes, and then rent them out, that get this benefit as well.

If you rent your home you would be able to write off the interest against your rental income anyway even if you got rid of mortgage interest as a tax deduction on your residence.

[SuitedAces21 2,722]

If that was about taxes, then I'm even more confused.

i don't have anywhere to go with this joke. so yeah, base jester is out on a limb here.

[BaseJester 1]

I'm not sure I understand what you're trying to say here.

If the whole housing market goes down, they have to borrow less money to buy the new house. They have less dollars worth of house, but a person can still trade a house for a house.There are the people who lost so much equity that they have nothing now. I don't have a lot of sympathy for those people, because they weren't sending me or the government checks when over-leveraging was making them a lot of money.

[BaseJester 1]

No it's a good policy for the 75 Million households +/- who own their own homes.

How about if you own a home, the government just sends you $50,000 a year. Is that a good policy? Why not?

What? If the housing market falls, they will not have any equity.

You also need to recalibrate to the reality that some people don't take out huge loans and are conservative with their finances. The housing market can fall without the owner losing all of his equity.

The majority of people own homes. No benefit is going to be equally good for everyone. So the majority of people get this benefit.

Really? You don't see a problem with this line of thinking?The majority of the people are white; therefore, people should get a tax deduction for being white. And no, the majority of people don't have home loans that make the interest deduction a significant tax break. Most people rent or have loans that make itemizing marginally or not at all better than the standard deduction. The mortgage interest deduction is a deduction for richer people.

[InternetExplorer 2,609]

the article's citations are crap, but I'll go ahead and make the argument guapo seems to be missing: ownership society. people care more about what happens to their neighborhood, state, country, et al if they are anchored to an asset whose value can fluctuate wildly based on how well the area around it is governed.but, you know what, I'm with jester 100%. bush's ownership society philosophy had us sprinting into the housing bubble. there's merit to the idea, but housing prices are still artificially high with tons of inventory. all for the benefit of the exclusive club of existing owners.it's the government picking winners. IMO.

[InternetExplorer 2,609]

labor force mobility, another argument against the government going long housing. no doubt, the recession was worsened by the fact that so many people in shitty loans couldn't go seek employment elsewhere. employers get worse fills on job listings, and on and on. housing is a LOT like higher education in my mind. they're mechanisms that work well with government subsidy for a time, then break horribly as market forces drive costs up and benefits down.

[mrdannyg 274]

A founding fathers had the reason for supporting churches. As do all countries that aren't complete wastes of space. And only parasites think they can remove that symbiotic relationship.

Well, if some old white separatists thought something a few hundred years ago, I guess I'm ridiculous for suggesting it might not be relevant any more.edit:I'm genuinely sorry for getting into this (any) discussion with you, again. We're both worse off for it - I am not familiar enough with the arguments to say anything you can't find anywhere else, and you have no interest in doing anything but spraying illogical rhetoric. Sorry for wasting everyone's time.

[The Ocho 970]

How about if you own a home, the government just sends you $50,000 a year. Is that a good policy? Why not?

Are you confusing tax deduction with tax credit?

You also need to recalibrate to the reality that some people don't take out huge loans and are conservative with their finances. The housing market can fall without the owner losing all of his equity.

Are you delusional. Have you seen what has happened in the last 5 years? I bought a home for 450K, it went up to 700K, it's now worth less than 200K. In 1987 when it was originally built, it sold for 189K. I also remodeled and fixed it up. So unless I put 250K down on the house or more there is no chance I would have equity. When I bought my home I bought the 3rd cheapest home in my town. The entire town. And this was 9 years ago, way way before the housing peak.The home I bought a couple years ago sold (to me) for over half of what was owed on it.

Really? You don't see a problem with this line of thinking?The majority of the people are white; therefore, people should get a tax deduction for being white.

You were the one that said the deduction should benefit the majority of the people, not me.

And no, the majority of people don't have home loans that make the interest deduction a significant tax break. Most people rent or have loans that make itemizing marginally or not at all better than the standard deduction. The mortgage interest deduction is a deduction for richer people.

Are people taking out $50,000 firsts? What world do you live in that someone with a mortgage doesn't itemize. Especially in the first 15 years of the loan. Once you add in property tax, PMI, and other things you can itemize almost anyone who buys a home can itemize. Lets take a moderate example $250,000 home. Couple puts down 20%. Loan for $200,000 @ 5%. (I'm going to round here) 10,000 in interest. average property tax at 1.2% = $3,000Lets add another 2,000 for miscellaneous Sch A write offs, charity, medical, tax prep, job exp, points, PMI etc.You come to $15,000 and the standard deduction is 11,900, so these people get to write off and additional 3,100 on their taxable income. So how is that only for rich people? What is your definition of rich? What do you think a house cost? By what you have been saying, I would guess you favor a flat tax, is that a correct assumption?

[BaseJester 1]

Are you confusing tax deduction with tax credit?

No, I'm not. It's a hypothetical situation, designed to illustrate that just because a policy gives some people money, it's not necessarily a good policy. It's supposed to be obvious that this would be a bad policy. It's a bad policy for the same reasons that the mortgage tax deduction is a bad policy, only more extreme and obvious.

Are you delusional. Have you seen what has happened in the last 5 years? I bought a home for 450K, it went up to 700K, it's now worth less than 200K. In 1987 when it was originally built, it sold for 189K. I also remodeled and fixed it up. So unless I put 250K down on the house or more there is no chance I would have equity.

Yeah, you're going to be upside down in that condition.I think it's interesting that you're portraying this as buying a house, but you're treating the actual principal payments as negligible.

You were the one that said the deduction should benefit the majority of the people, not me.

I don't think I did. I think I said that it should benefit the country as a whole. As in, we're going to make this behavior tax-advantaged because we want more of it because it's good for the country.

Are people taking out $50,000 firsts? What world do you live in that someone with a mortgage doesn't itemize.

:-)The Midwest.

Especially in the first 15 years of the loan. Once you add in property tax, PMI, and other things you can itemize almost anyone who buys a home can itemize. Lets take a moderate example $250,000 home. Couple puts down 20%. Loan for $200,000 @ 5%. (I'm going to round here) 10,000 in interest. average property tax at 1.2% = $3,000Lets add another 2,000 for miscellaneous Sch A write offs, charity, medical, tax prep, job exp, points, PMI etc.You come to $15,000 and the standard deduction is 11,900, so these people get to write off and additional 3,100 on their taxable income. So how is that only for rich people? What is your definition of rich? What do you think a house cost?

You just made my case. This person gets a benefit of $3,100 multiplied by his marginal tax rate, say $1000? You're getting about 10 times as much benefit as this person. And this is the first year of a loan for an above-average home price.

By what you have been saying, I would guess you favor a flat tax, is that a correct assumption?

There seems to be a lot of variance in what people mean by flat tax, so I don't really know if I'm for a flat tax.My ideal tax policy would tax consumption and not income, because investment is a behavior that the United States has a compelling interest in. The mortgage interest deduction is the exact opposite of this ideal, because it causes people to pay less tax if they consume more.