Deficit panel leaders' plan curbs Social Security and Other Sacred Cows

[chinaco]

For Defense spending... we should present Korea along with a few other countries!

I am for pulling out of most of the foreign bases we occupy.

Let Japan and Europe pay their own defense costs.

We have a big enough Naval fleet, long range aircraft, and missiles to take care of our business.

 

[REWahoo]

Please check out this link: http://www.early-retirement.org/forums/f52/poll-will-the-us-cut-spending-53116.html

 

[Texas Proud]

We have a decent income (6 figures+) and a proportional mortgage which is about 20k of mortgage interest and 30-40k on schedule A each tax return.

My point was without that extra $600, our house would become about 40-50% of net pay, which is too tight IMO- we would be better off (quality of life) by walking away and renting that reducing savings or some other savings technique if the tax break was removed. That tax cut would make whatever mortgage crisis we have now 10X worse.

This will sound like an attack on you... but I am not trying to... or trying to be mean...

But, it sounds like you bought more house than you can afford... and if you are putting down $40K in deductions.. that means you are not being taxed on say $30K... at 28% that is an $8,400 tax savings you have... or another way to look at it is that you not paying your share of taxes by $8,400...

I did not hear anything on why your home purchase or kids should be 'subsidized' by the gvmt.... (subsidy being lower taxes paid)...

 

[Independent]

I'm fairly certain that the way to shrink government is to require it to be paid for...

+1

 

[Independent]

+1

I read an article on yahoo a few nights ago about this- if this is enacted, it needs to INCREASE my income by $600/mo because that is what the mortgage deduction is worth to me (the article I read discussed taking away the mortgage interest deduction)- and this does not even factor in property taxes, state taxes or kids (deductions and credits).

If they take away the deduction for mortgage interest, but do not offset my income another way, we would walk away from our house (probably) and deal with the consequences.

When you calculated the impact on your taxes, did you include the lower rates? The 10% and 15% brackets go to 9%, the 25% and 28% go to 15%.

I'd guess that you would still pay more with this proposal because it looks like you're a big user of itemized deductions, but it's worth looking at the whole picture.

 

[kyounge1956]

+1

I read an article on yahoo a few nights ago about this- if this is enacted, it needs to INCREASE my income by $600/mo because that is what the mortgage deduction is worth to me (the article I read discussed taking away the mortgage interest deduction)- and this does not even factor in property taxes, state taxes or kids (deductions and credits).

If they take away the deduction for mortgage interest, but do not offset my income another way, we would walk away from our house (probably) and deal with the consequences.

We have a decent income (6 figures+) and a proportional mortgage which is about 20k of mortgage interest and 30-40k on schedule A each tax return.(snip)

When you calculated the impact on your taxes, did you include the lower rates? The 10% and 15% brackets go to 9%, the 25% and 28% go to 15%.

I'd guess that you would still pay more with this proposal because it looks like you're a big user of itemized deductions, but it's worth looking at the whole picture.

jIMOh,
I am not sure you would lose your mortgage interest deduction under this proposal. Page 26 of the slide show gives the details of "Option 2" of the possible tax changes—it removes the mortgage interest deduction only for second homes, equity loans and mortgages over $500K. I'm not sure how to interpret this latter. It could mean you lose the entire mortgage interest deduction on any mortgage over $500K, or it could mean you can deduct the interest on the first $500K of a mortgage on a first home, but no more than that. If the mortgage is on a first home and under $500K I think you could still deduct that $20K/year.

In addition to the lower rate pointed out by Independent, when looking at the proposal's effects, did you include the increase in the standard deduction which is also part of Option 2? That would offset at least some of the loss of itemized deductions.

 

[clifp]

The Commission came out with a couple of different options, so we don't know exactly what the plan is. But "Option 1" cuts the top marginal rate to 23%, treats dividend and cap gains as ordinary income, and gets rid of a bunch of deductions.

Compared with current law where the top rate goes to 39.6%, dividends are treated as ordinary income and cap gains are taxed at 20%, that sounds like a really, really good deal for high income people.

Most of the itemized deductions also get phased out already, so the folks who get stung by the repeal of those are the people making six figures rather than the guys making seven, eight and nine.

"Option 2" sounds like it would be better for lower income folks, with higher rates and a much larger standard deduction.

You are right there are several different options. Option 1 in turn has several different proposals, the zero option which nobody including the co-chairs expect to have any traction. The more realistic proposals have a top tax rate at 27-28% and include Child credits and ETC which specifically help poor people. Option 2 which is my personal choice, (although that is primarily because there aren't details in Option 1) has a some distinct advantages primarily that represent real legislation with bi-partisan sponsors.

In any case the current tax rate for dividends and capital gains is 15% (not 20%) and unless the tax discussion completely stall the rate is likely to remain at 15% for the next few years. Therefore the increase from 15% for rich people income (i.e. capital gains) to 27-35% is quite large.

Finally, I noted that there is no phase out for mortgage interest on primary home and refi for people including 10 Million+/year actors and athletes were very popular prior to the crisis.

 

[Gone4Good]

Finally, I noted that there is no phase out for mortgage interest on primary home and refi for people including 10 Million+/year actors and athletes were very popular prior to the crisis.

No phase out but the deduction is limited to mortgages of $1MM or less. Those are the kinds of homes people with good six figure incomes buy, but are likely too quaint for the eight figure set.

 

[keegs]

Can we the original poster's perjoritive title to:

"Should we allow supply siders to acheive victory in their seventy years war against the middle class?"

 

[ERD50]

Can we the original poster's perjoritive title to:

"Should we allow supply siders to acheive victory in their seventy years war against the middle class?"

Pot calling the kettle black? More like a whole kitchen full of pots calling one little kettle black.




Holy (Sacred) Cow! - if you think your suggestion is less 'loaded' than the OP Title, I think my impression of you from earlier posts has been confirmed.

At least the OP was serious enough to spell the title words correctly.

pejorative pe·jo·ra·tive –adjective

1. having a disparaging, derogatory, or belittling effect or force:

What did you hope to achieve with that post? (please don't answer - that is a rhetorical question).


-ERD50

 

[keegs]

Pot calling the kettle black? More like a whole kitchen full of pots calling one little kettle black.




Holy (Sacred) Cow! - if you think your suggestion is less 'loaded' than the OP Title, I think my impression of you from earlier posts has been confirmed.

At least the OP was serious enough to spell the title words correctly.



What did you hope to achieve with that post? (please don't answer - that is a rhetorical question).


-ERD50

Don't MAKE.... me take the letter "T" out on you ..... ERD

 

[keegs]

Charlie Rose - David Walker & Martin Feldstein on the Deficit

 

[jIMOh]

jIMOh,
I am not sure you would lose your mortgage interest deduction under this proposal. Page 26 of the slide show gives the details of "Option 2" of the possible tax changes—it removes the mortgage interest deduction only for second homes, equity loans and mortgages over $500K. I'm not sure how to interpret this latter. It could mean you lose the entire mortgage interest deduction on any mortgage over $500K, or it could mean you can deduct the interest on the first $500K of a mortgage on a first home, but no more than that. If the mortgage is on a first home and under $500K I think you could still deduct that $20K/year.

In addition to the lower rate pointed out by Independent, when looking at the proposal's effects, did you include the increase in the standard deduction which is also part of Option 2? That would offset at least some of the loss of itemized deductions.

I read a yahoo article prior to seeing this thread- it made no mention of a 500k limit/floor on where the tax cuts were.

If the posters to this thread are correct, then my modest 6 figure income and 350k mortgage would be under the limits, I think.

 

[Nords]

You would know the details better than I, but wasn't New London originally on the Round 2 list for closure but then got taken off due to extensive lobbying by the Connecticut folks?
I don't mean that example to negate the wisdom of using a BRAC-like approach; I think it worked very well.

Sorry, missed this one the first time through.

I was on COMSUBPAC when BRAC'93 revved up, and that accounted for a majority of our no-notice crisis-inspired point papers to save the Pearl Harbor Shipyard and the attempts to save other California submarine facilities. It was amazing how much lobbying came from the military's rank & file for strategic reserves. I wonder how much of New London's salvation came from having Electric Boat/General Dynamics right down the street.

New London could've been saved by the political lobbying, but I bet it was pretty darn hard to find another place to replicate their training & maintenance facilities. Norfolk is already too crowded, Charleston is/was long gone, and Portsmouth lacks the space. King's Bay would be the only other alternative.

Then there'd be the expense of replication. It's amazing how much money goes into building a submarine schoolhouse, especially the firefighting and damage-control trainers. Nuclear maintenance facilities aren't cheap either, and their capacity can't easily be ramped up.

I think the submarine force is already at rock-bottom levels, so to speak, but if for some reason we shrank to the size of the Japanese submarine force then New London could be consolidated into King's Bay. For a price...

 

[FinanceDude]

We really only have two choices. We can do it willingly now, and in a way that spreads the pain over a number of years and decades. Or we can wait and have it unwillingly forced upon us all at once. I'll choose the former. I hope most other Americans will too.

Sounds like you helped write the Healthcare bill.........

 

[keegs]

http://www.nytimes.com/2010/11/15/opinion/15orszag.html?hp