scrabbler1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Nov 20, 2009
- Messages
- 6,705
Tax simplification and tax fairness can work in opposite directions. I look at my federal and state income tax returns and see how my state taxes dividends and cap gains like ordinary income while the feds tax them differently. But the feds have that somewhat annoying worksheet I have to complete in order to figure out the taxes due on each portion of my income before adding them up, while everything is added together in one blob on the state return. One is fairer, perhaps, but is hardly simpler, while the other is far simpler but is it fairer?
Another thing I have noticed, specifically about tax rates and tax brackets, is that the 0% tax bracket for qualified dividends and LTCG is not always 0%. A few years ago, I was updating my tax spreadsheet to include some extra QDs and expected my federal taxes due to be unchanged. Instead, they went up slightly, because the higher AGI slightly lowered the medical expense deduction in Schedule A and slightly raised my taxes due. So the 0% tax "bracket" wasn't exactly 0% but slightly greater than 0%. Interesting.....
Another thing I have noticed, specifically about tax rates and tax brackets, is that the 0% tax bracket for qualified dividends and LTCG is not always 0%. A few years ago, I was updating my tax spreadsheet to include some extra QDs and expected my federal taxes due to be unchanged. Instead, they went up slightly, because the higher AGI slightly lowered the medical expense deduction in Schedule A and slightly raised my taxes due. So the 0% tax "bracket" wasn't exactly 0% but slightly greater than 0%. Interesting.....