Our retirement income fluctuates depending on our investments, but with all our itemized deductions and personal exemptions we paid about 10% in federal income tax this year. I'm not complaining, mind you, 10% is a reasonable rate considering all our other expenses. We have two monthly mortgage payments, a car payment, monthly health, home and life insurances, utility bills, and don't get me started on the increase cost of food and gas.
Professional tax preparers have caused us to pay so much in additional taxes and fines over the years that I decided to try it myself this year. It was ugly - It took me two full days to understand and complete all the various forms and worksheets. I've come to the conclusion that I would prefer eliminating all tax deductions, personal exemptions, and loopholes than go through that again.
Why not institute a graduated flat rate tax? These rates are suggestions and would need to be adjusted so that tax totals collected would not decrease, although I wouldn't be surprised to see more money coming in than less.
People earning less than $25,000 a year would pay zero federal income taxes, but would still pay FICA and Medicare as they already do. They would only need to fill out a postcard and send that in along with their W-2 form from their employer.
People earning $25,000 to $250,000 would pay 10% tax, devoid of any exemptions or deductions.
People earning $250,000 to $500,000 would pay a flat tax of 15%.
People earning $500,000 to $1,000,000 - 20% flat tax.
$1,000,000 plus wage earners would pay 25% flat tax.
Capital gains tax rates would be scaled the same as wages, with no exemptions, deductions or loopholes:
1. Those making $20,000 to $250,000 in capital gains would pay 10% in taxes,
2. $250,000 to $500,000 in capital gains would pay 15%,
3. $500,000 to $1,000,000 - 20%,
4. $1,000,000 and above - 25%.
Those earning less than $25,000 in capital gains would pay no tax. This would help provide younger and senior lower income earners with an opportunity to build investments and wealth for the future or to offset future medical expenses.
Saturday, June 18, 2011
AARP Open to Future Social Security Cuts
AARP wakes up to reality, kinda. Their new stance is:
1. Cuts should be minimal and affect "future" recipients only,
2. Cuts should be offset by a tax increase, and
3. SS Trust Fund should not be raided to pay down the deficit.
The thing that gets me is that the SS Trust Fund has been raided by Dems and the GOP for every hair-brained spending program you can imagine, but it's hands off the surplus to help pay off our national debt. Sounds a bit cockeyed to me.
How about eliminating the FICA (payroll tax) ceiling and using the SS surplus to help pay off our debt until it is needed by new retirees in about twenty years and not touching the Fund for any spending programs? This won't affect any working stiff earning less than than $106,800 a year. Even the Medicare payroll tax has no wage limit. I wouldn't even mind if Congress waived this increase for themselves (as they do for everything else) if that's what's holding things up.
1. Cuts should be minimal and affect "future" recipients only,
2. Cuts should be offset by a tax increase, and
3. SS Trust Fund should not be raided to pay down the deficit.
The thing that gets me is that the SS Trust Fund has been raided by Dems and the GOP for every hair-brained spending program you can imagine, but it's hands off the surplus to help pay off our national debt. Sounds a bit cockeyed to me.
How about eliminating the FICA (payroll tax) ceiling and using the SS surplus to help pay off our debt until it is needed by new retirees in about twenty years and not touching the Fund for any spending programs? This won't affect any working stiff earning less than than $106,800 a year. Even the Medicare payroll tax has no wage limit. I wouldn't even mind if Congress waived this increase for themselves (as they do for everything else) if that's what's holding things up.
Subscribe to:
Posts (Atom)