Monday, December 5, 2011

The Most Endangered Federal Tax Deductions

CNBC has put together a list of tax deductions that may be eliminated as the deficit swells. It's not certain where cuts in deductions will come, but the below list provides a good guide as to deduction eliminations that are being proposed by various individuals. Read it and weep:
1. A higher capital gains tax is a possibility. While current rates expire at the end of 2012, the Obama administration would like to raise capital gains rates.

2. Both the administration and Congress have proposed raising the R&D tax credit as well as the related alternative simplified credit or ASC, a simpler way for businesses to calculate the credit.

3. Congress extended the IRA charitable donation provision through 2011, but it will lapse in 2012 if lawmakers don’t act. Donors older than 70 ½ may contribute up to $100,000 of IRA assets directly to one or more qualified charities. While there’s no deduction, the gift is excluded from income.

4. Under the current tax exemption for employer-sponsored health insurance, your employer’s portion of your health premium is tax exempt. If, however, the subsidy was axed and your employer instead gave you a raise to cover those health costs, you’d have a higher taxable income or higher tax bill.

5.A deduction of up to $4,000 for qualified education expenses expires at the end of 2011.

6. Interest paid on a mortgage is tax deductible if itemized. Roughly a quarter of all tax filers claim the popular tax deduction. There is much talk about eliminating this deduction.

7.The state sales tax deduction is scheduled to expire at the end of 2011.

45 comments:

  1. Prosperity's corpse is hardly cold, but they can't get her buried fast enough.

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  2. It'll be interesting to see what happens to the housing market if they eliminate the mortgage interest rate deduction.

    I wonder how many punches to the face underwater homeowners will take before walking away.

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  3. Raise taxes on the rich and corporations! They need to pay their fair share! Theyve been living off the backs of middle class americans long enough and stealing all of our jobs and money, its time we take it back. Look at how great the 50's were with a 90% tax, we need to go back to that. Free markets only work for the rich.

    History proves 90% taxes on the rich creates jobs and prosperity.

    Tax the rich their fair share.

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    1. Great sarcasm, you almost sound believable. The irony is there are actually whole segments in our society convinced this is true. Fortunately they cannot read.

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  4. Let me get this straight - I am forced to pretend to be a savvy investor and speculate in equities because I can't get a decent rate for my savings and THEN if I happen to be lucky enough to pick some good stocks they suck that up too? But oh wait, I have to pay my "fair share" so we can have more regulations and pay more SEC workers to look at porn.

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  5. Better start looking at another country to live in.

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  6. There are 15,000 government programs. Cut them in half.

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  7. Tax the rich their fair share....?

    History proves 90% taxes on the rich creates jobs and prosperity...?

    -To whomever this idiot is-

    YOU ARE THE PROBLEM!

    I own a private company with 102 full time employees. We do roughly 35Million$ in revenue. We profit 40%. (but lets just round that to 10million$ for the sake of the argument)
    The US GOV takes 35% of our profit right off the top, or 3.5mil$, after paying our awesome employees a hefty sum (for them and their families to enjoy) I get a check for roughly 1million$, but wait, 50% of that is immediately taken for income tax. (this is not counting sales tax, property tax, CG, or any others that we pay)

    How much more should i pay..?

    How much do you pay..?

    I've been living off the backs of the middle class..?

    GOD HELP THE US of A!!! And people who think like YOU...

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  8. Let me get this straight: According to one brilliant anonymous above, "the rich need to pay their fair share!" Not personally being in the rich category allows me to credibly say this is not sustainable thinking for the country. Why is it not fair for ALL U.S. citizens to pay exactly the same % in taxes? Why do 50%+ of the citizens pay NOTHING in taxes or in many cases simply live on the dole? How about we all stop complaining and everyone pays more taxes?

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  9. This gov.is out of control.Did you notice they never mention cutting gov. jobs to equal what the public has lost or even a slight pay cut. It's not America the land of oppertunity, it's support the undeserving public gov. The ultimate ponzi scheme

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  10. Can you believe, the Roman empire will have lasted longer than Amerika !!!

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  11. simplification in the face of commplexity. A flat tax would be simple. I'd favor that for corporate and individual taxes. Investment ownership in income producing assets should recieve preferential treatement. Speculation, should be hammered in the short term and rewarded the same way as investment over time. I'd love to see more tax based on holding period and withheld at the point of sale just like payroll taxes.

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  12. I have to ditto what Anonymous says about the idiot who is talking 90% tax on rich. He must have gotten educated in our public school system that has corrupted our students with this bull.

    It certainly is scary knowing there are people out there who really think like that and believe that garbage. Evidently they have no aspirations of ever getting ahead. Losers all.

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  13. Cut government spending. Stop bailing out banks, car companies and every entity that makes big political contributions. Tell small business what kind of a tax burden they will be able to expect for the next few years, so they can make plans and invest in job growth. Refund the money borrowed (stolen) from Social Security so it can be solvent again. Stop making laws and taxes that encourage businesses to move operations overseas. Stop making decisions that undermine the country and waste taxpayer dollars, and things will improve immediately.

    The more money government has, the more it spends. The less money it has, the more money it prints. When that stops working, government talks of raising taxes. What is wrong with this picture? Hummmm.....

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  14. The moochers will never give these up - neither will their elected politicians. What's left? print, Print, PRINT!

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  15. Whoever thinks 90% tax on rich works doesn't understand history. The old 90% tax rate had many, many loopholes. The rich could afford tax lawyers to reduce net taxes so that they paid almost none. The major players have Congress rig the tax code to surpress competition. Until you understand that the government is a willing participant in the game, you will continue to be a pawn in their finger-pointing blame game.

    It is a simple truism, if you want more of something subsidize it, if you want less, tax it. This country was founded on, and became great becaus of, the idea of freedom and not guaranteed cradle to grave caretaking. Being dependent on the government is a form of slavery. People who give up freedom for security deserve neither (and will eventually end up with neither.) Taxation and subsidies distort the market, which limits personal freedom.

    Tax the wealthy and take away 90% of their earnings and you will be succesful in eliminating the wealthy, but to what end? Who will pay for everyone else. (The top 10% of earners pay close to 50% of all taxes and almost half of the population pays none. If that is someon'e idea of fairness, I don't understand it.) Socialism is a failed system of shared misery based on envy.

    Do we want to become the next Greece? That is where we are headed with this line of thinking.

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  16. Mid sized businesses are sort of like middle americans,we don't have fancy warren buffet deductions. very rich people,don't always run businesses sometimes they just invest. flat tax that is the fair way for everyone forget deductions nobody can be smarter and get out of them with fancy lawyers other cannot afford!

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  17. So now we get to pay tax on State Income Tax. Another tax on a tax. And, don't be late on any of your tax payments or it's out of pocket expense that's taxed again. The taxpayers again get pummeled so there's more for the lackeys who don't pay tax. The governments have to get it from somewhere. The only thing that keeps this country going is work ethic of a few. When they give up it's over!

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  18. We had a 'tax the rich' scheme here in Maryland a few years back. Our misguided legislators (all Democrats) decided to levy a 'luxury tax' on boats....this in a state with a huge amount of shoreline and many avid boaters and the businesses that cater to them.

    Of course boat sales plummeted, marinas went idle, waterside restaurants lost sales and the only boat manufacturer in the state with 250 employees shut down. Once they came to their senses and repealed this stupid legislation, it still took three years for businesses to recover. The boat manufacturer wisely departed for SC, never to return and it another 3 years passed before another tenent moved into their location, with govt. loss of property tax revenues all that time.

    Guess our political ruling class never learned you don't kill the goose that lays the golden egg, or that envy is a vice.

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  19. I would not mind paying a bit more if it did not go to be used for more deficit creating programs. We can cut $1,000,000,000,000 in the next 3 years, but our leaders can't come up with this over the next 10!! Throw them all out!

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  20. The US Government has grown to be a massive albatross around the necks of its citizens. While we continue to rack up an insurmountable national debt, the agencies we fund mainly get in the way of business and can't even do the job they are meant to do - ie the SEC couldn't catch the blatant fraud that Madoff and his crew committed! Look to Canada, they reduced the size of their government (which was another bloated, socialistic mess) and their economy has performed extremely well since.

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  21. My understanding of Congressional thinking on tax policy from the 70's on is simply that if you want less of something -- tax it. If you want more of something cut taxes on it.
    So, if you want less home building, tax mortgages more by repealing the mortgage interest deduction.
    If you want fewer jobs, tax employers more.
    If you want fewer boats clogging your waterways, tax the boat builders more than any other employer/business in the state!
    Etc, Etc, Etc
    Taxes take time, but they always seems to work according to this fairly simple rule!

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  22. The world economy, led by the U.S., is self-destructing. Picture the world trade center. The top is the federal government, overcome by massivee debt. It collapses into the state governments which are also irretrievably sunk into the debt hole, which then collapses into local government, but now there is no place to go, so local governments default on their debt and start fresh with a subsistence economy and the middle class reduced to serfdom. It's happened twice before ca. 1200 B.C. and 400 A.D. History goes in 1500 - 1700-year cycles.

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  23. A lot of complaining here about taxes, which were much higher during the 50's to 70's which also happened to be a time of prosperity and near full employment.
    There was a lot of screaming about the $250,000 level for higher taxes when it was proposed as a significant number. And yet reality is that very few small business owners NET more than that amount.
    Now, I'm all for helping small business, and the best way I can think of helping would be to have single payer healthcare with some limits on just how much health care one could receive. If it weren't enough for you fat cats, you could purchase additional supplemental insurance. Americans and America would be a lot better off were this the case.

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  24. To anon who poste on December 6, 2011 at 2:25pm.

    Sure! A single payer healthcare system! Please come down to the province of Qu├ębec where I live, wait in the hospital for 6-8 hours to see a doctor and have government decide what treatment you can receive or not.

    Also, who will decide on the limit of how much healthcare one can receive? You're obviously not proposing the patient who knows best is health condition. You have to be talking about a bureaucrat who "knows best" what's best for each and every one of us citizens... The USSR also had a single payer universal healthcare system and Cuba currently has one to.

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  25. My wife owns her own business that grosses about $160,000+ a year. After expenses, insurance and pay role she brings home less then $500 a week for 70+ hours of work. Then that gets taxed. But the government wants more out of her because they feel she makes a lot of money? The small business owner is the life blood of this great nation we live in and gets kicked in the throat through the entitlement mentality projected from the liberal mindset. Charitable donations are down across the board because of the lack of money people don't have to give. Not because we want to but because we have to. We as Americans have never watched our fellow man "die" in front of us before the government had it's hostile take over. I have often said "just give me all of my HARD EARNED MONEY and I will take care of myself and my neighbor. This would show the "do nothings" how much they really suck out of the system and take from the working Joe. "Billy should not get a trophy just for participating". This creates a nation of wimps that think they deserve. Political correctness my foot! The ruination of work ethic I say. Go out and work for a living and pay your own way! I don't care if it is not what you want to do. Life is not fair for everybody. It is hard. Has been this way from the beginning of time and always will be.

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  26. I have installed an automatic "OFF" switch that activates whenever I hear/read the phrase "FAIR SHARE". Until users of the term will attach a number or percentage to the phrase so we will know what they consider "FAIR", my "OFF" switch will continue to operate. A special subroutine assignes the term "SOCIALIST TOOL" to the user of the term "FAIR SHARE".

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  27. Single payer systems are what drive up prices and obliterate the poor and working class. Middle income people used to be able to afford health care, education, housing, before government began subsidizing them. Once government money gets involved, prices began moving up much faster than inflation and the poor get priced out. Then we have to pay more and more for all of those things, until prices get sooo out of whack that prices collaps, as in the housing bust of 2007/2008. The best way to keep prices down, and allow competition to work is to let people decide on and pay for their own consumption, whether it be education, housing, medicine, or even the most essential things, food and water. Once someone else picks up the tab, most self-discipline goes out the window. Why restrain consumption if someone else is paying? this is always a recipe for disaster.

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  28. Higher taxes in the 50's to 70's were also accompanied by many more, and much bigger, loopholes. The 1% paid very little in taxes under that system since they were well connected and able to get the tax breaks they wanted and could also afford the tax lawyers to minimize their personal taxes. A better system is to have a fair tax scheme where almost everyone pays something so that everyone believes they have an ownership interest in this country. If one does not contribute to a system of government, it reduces that person to a mere consumer of the system, not a full-fledged owner/citizen of the system. Reagan flattened taxes and did away with many loopholes, but could not do away with all of them. The fairest thing to do is to not give tax breaks to the well connected, which stifles competition and creates a ubber-class, but to flatten taxes to a reasonable level and do away with loopholes to the politically connected.

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  29. How can they say that the "rich" don't pay their fair share when the top 1% earn 16% of the income but pay 38% of the total tax burden. If that isn't their fair share, what is???

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  30. It never ceases to amaze me that adults in this country can have no clue about corporations and taxation. Corporations do not pay taxes, they collect them. There is a really big difference. And to prove my point I will offer the following challenge to anyone who supports corporat tax increases. You and I will run two different companies with the same product line and the same expense requirements. You collect taxes and pay your "fair share" to the government and I do not collect/pay taxes. Who do you think will still be in business in 2 years? I will because I will sell my product for less and take your market. Wake up. Politicians love corporate taxes because the American people are too stupid to understand how they are paid and corporations are willing collect taxes because they get "gifts" from government in exchange for their compliance. They just pass the cost on to their customers. The only people that really pay taxes in this country are the citizens; the only difference is the path between our pockets and the government.

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  31. may GOD and ron paul help us all,its just a political agenda,we need a flat tax.thats period!

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  32. The people bitching about the 50% who don't pay taxes....is because they do not make enough money to pay taxes...Same old song...making the poor guys the blame, like they all stand in line for that great 'dictated poverty' check in the sky...which all goes to Walmart, the food stores and a bunch of slumlords...just to have a warm place to sleep...So many are so bad off, you have not a clue! Ron Paul has it right about the 'role' of government. If you want less poverty you need 'livable' wages guys!

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  33. Re: The concept of "flat" taxes and/or "fair" taxes:

    These are nothing more than fairy tales for gullible, naive adults and would no more solve what ails society than striking a match in Tacoma would illuminate Tucson.

    How can any thinking person say with a straight face that they believe an entity with a territorial monopoly on the use of violence that thrives on fomenting the basest of the base of man's desires would institute, in practice, not just theory, a system of "fair" and/or "flat" taxes for all people?

    Furthermore, when people state that "we" need to institute such a thing, aren't they really saying this is what THEY want, those of us who dissent be damned?

    To the true believers in that nonsense, believe me, I will find a way to circumvent it should it ever become law, just as I find ways to do it now..... 8)

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  34. The country is screwed, blued and tatooed. Get out while you can. As my father who saw hell in WWII said, "the blood will run in the streets" before this is over. I belive it has already started with the pepper spray incident on innocent students.

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  35. Free people are in charge of their hard earned money. Tax money in government coffers invite abuse and neglect. The more money the government has, the more reckless unaccountable spending we are going to see. Government staff it is paid 20% more for comparable jobs in the private sector. Government projects cost multiples of private projects. Loss of efficiency, competitiveness and productivity are traits that are invading and perverting our american culture from the top down. More taxes? What for...?

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  36. The "Fair Tax" is a Federal sales tax, collected by the states with their sales tax.
    No more IRS, No more 30 volume TAX CODE, No more tax breaks for anyone,no more lobbyiest trying to get those tax breakes for their clients, No more fancie junkets or "gifts" for congressmen, no more free rides for anyone(everybody will have meat in the game), NO more corporate taxes(they can bring home trill. of $ from overseas and invest in new plants in the USA.)thus no more jobs going overseas. no more free rides for the illeagals(dope pushers, prostitutes, thiefs, black marketers, gamblers, aliens, & gangsters) foriegners who purchase will help pay for the roads, ports & airports they use. Illegal aliens will be encouraged to go home because they won't get the monthly rebate($200-$300) that all US citizens will get.(They would be paying more taxes than us--WOW)

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  37. The only "fair tax" is no tax. Please go elsewhere to sell your snake oil.

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  38. The FAIR TAX would render all this moot!

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  39. It doesn't surprise me that the government wants to do away with the biggest tax break for the middle class, the mortgage deduction. The rich, which run the country, buy their homes with cash.

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  40. If we want to raise tax revenue to what our elected officials can spend then we need to implement a foreign labor added tax. A new labor adjustment tax on products sold here but produced with cheap foreign labor. Businesses worldwide that sell here need to be encouraged to make it here.

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  41. True about the cash buying ability of the "wealthy" to some degree. But it takes money to make money, and those same folks then over-leveraged themselves with loans that have either exploded, and/or property values that dropped huge. So the top 2% of earners in the country that pay 50% of the U.S. taxes have taken huge losses just like everyone else. Stop thinking that these "wealthy" are going to bail out the country with anything, they are trying to salvage their own losses. Less gov't subsidy programs would help....it might actually motivate somebody to try and do something for themselves. (How many Billions of dollars would that be? I'll let the next commenter hit on that)

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  42. Much simpler tax code, tax cuts for the middle class offset to a degree by those who can afford it, while the super rich still get a huge cut on their biggest source of income.

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  43. If that guy thinks the wealthy paid 90% taxes he is very much mistaken. They had so many loopholes then that if they paid 10% in taxes it could be classified as a miracle. Why do you think Kennedy and Reagan lowered the tax rates? To bring in more revenue. Where did they find this idiot?

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