Mortgage Deduction and the Child Tax Credit

[dr wogz]

move to Canada..

 

[ThirstyBarbarian]

Thirsty, I understand your point. I just dont agree with the term "spending in the tax code". The tax code doesn't spend. Not raising revenue is not spending. That term is a political rhetoric and it doesn't work. If you don't get a gig does your spouse consider that "spending"? "Dear stop spending so much, get a job"

Whether you call it spending in the tax code, or not collecting revenue, both ways of describing tax deductions and credits are just different ways of framing exactly the same thing for different political rhetorical purposes. Your political framing of describing these things as simply not collecting revenue or allowing people to keep more of what they earn explains perfectly the complicated tax code that @mh9162013 was talking about earlier, and provides a perfect example supporting my reply to him about why it’s that way. Politically, it’s easier to sell tax cuts than it is to sell spending increases, even when they amount to the same thing.That’s why it all ends up in the tax code.

Special deductions, credits, accounting rules, etc. get added to the tax code to subsidize things that benefit certain people, and they use your rhetorical framing—it’s just letting people keep more of what they earn, it’s just collecting less, it’s not spending. That’s why the tax code is full of these things, and that’s why it’s complicated. If you repealed all these tax deductions and credits, and then tried to pass a law that required the government to write out checks to citizens to subsidize their mortgage interest payments, health care accounts, retirement accounts, etc., it would never pass. People would say there’s no reason for the government to tax everyone the same and then give money to certain people just because they have mortgages, health savings accounts, and retirement accounts. But if you want to pass tax deductions or credits to accomplish the same thing, that’s easier.

The fact is, if you set up a tax rate at say $100 per person, and then decided people with say a mortgage payment should get $20 worth of help to pay their mortgage, there’s zero difference between setting it up so you collect $100 from everyone except those with mortgages, who you only collect $80 from, or you collect $100 from everyone, and then send a $20 check to everyone with a mortgage. It’s exactly the same thing.

 

[ksaves2]

I put tax-looking papers in the gallon Ziploc. Around February it goes to the tax person. Later I sign some stuff.

It's what I do and sign a 120 page return. I was granted a small partnership in a family business that makes the return complex. I never filled out a tax return in my life. My dad sent it off to the accountants when I was a kid and had to get my own accountant when I became of age. Kurt

 

[Johnly]

Here's some data to consider:

Table 1. Summary of Federal Income Tax Data, Tax Year 2020

	Top 1%	Top 5%	Top 10%	Top 25%	Top 50%	Bottom 50%	All Taxpayers
Number of Returns	1,574,942	7,874,712	15,749,424	39,373,561	78,747,121	78,747,121	157,494,242
Average Tax Rate	26.0%	22.4%	20.3%	17.1%	14.8%	3.1%	13.6%
Average Income Taxes Paid	$458,894	$136,091	$79,897	$38,396	$21,187	$504	$10,845
Adjusted Gross Income ($ millions)	$2,780,754	$4,775,995	$6,198,022	$8,862,578	$11,257,092	$1,276,009	$12,533,102
Share of Total Adjusted Gross Income	22.2%	38.1%	49.5%	70.7%	89.8%	10.2%	100.0%
Income Taxes Paid ($ millions)	$722,732	$1,071,681	$1,258,335	$1,511,786	$1,668,410	$39,671	$1,708,081
Share of Total Income Taxes Paid	42.3%	62.7%	73.7%	88.5%	97.7%	2.3%	100.0%
Income Split Point	$548,336	$220,521	$152,321	$85,853	$42,184	$42,184
Source: IRS, Statistics of Income, ”Individual Income Rates and Tax Shares.”

The US 2020 Budget was $6.5T, with a planned revenue of $3.4T and a deficit of $3.1T

 

[Dotini]

Apparently there are 9 trillion dollars in uninsured bank deposits in the US. In view of the several regional banks now dropping like flies, the government may be more motivated to act.

 

[jderimig]

Apparently there are 9 trillion dollars in uninsured bank deposits in the US. In view of the several regional banks now dropping like flies, the government may be more motivated to act.

God help us, the government needs to stop acting.

 

[Dotini]

God help us, the government needs to stop acting.

Fortunately, everybody's sitting on their hands waiting for the Fed to speak in about two hours. After that, Katie bar the door.

 

[boatgeek]

God help us, the government needs to stop acting.

So we're going to let banks fail just like we did in 1929? Because that worked out so well.

 

[jderimig]

So we're going to let banks fail just like we did in 1929? Because that worked out so well.

Some should.

 

[jderimig]

So we're going to let banks fail just like we did in 1929? Because that worked out so well.

In 1929 we didn't have FDIC insurance. Today we do. If you put more than $250K in a bank knowing that's not insured and you don't buy your own insurance that's on you.

 

[ThirstyBarbarian]

Here's some data to consider:

Table 1. Summary of Federal Income Tax Data, Tax Year 2020

	Top 1%	Top 5%	Top 10%	Top 25%	Top 50%	Bottom 50%	All Taxpayers
Number of Returns	1,574,942	7,874,712	15,749,424	39,373,561	78,747,121	78,747,121	157,494,242
Average Tax Rate	26.0%	22.4%	20.3%	17.1%	14.8%	3.1%	13.6%
Average Income Taxes Paid	$458,894	$136,091	$79,897	$38,396	$21,187	$504	$10,845
Adjusted Gross Income ($ millions)	$2,780,754	$4,775,995	$6,198,022	$8,862,578	$11,257,092	$1,276,009	$12,533,102
Share of Total Adjusted Gross Income	22.2%	38.1%	49.5%	70.7%	89.8%	10.2%	100.0%
Income Taxes Paid ($ millions)	$722,732	$1,071,681	$1,258,335	$1,511,786	$1,668,410	$39,671	$1,708,081
Share of Total Income Taxes Paid	42.3%	62.7%	73.7%	88.5%	97.7%	2.3%	100.0%
Income Split Point	$548,336	$220,521	$152,321	$85,853	$42,184	$42,184
Source: IRS, Statistics of Income, ”Individual Income Rates and Tax Shares.”

The US 2020 Budget was $6.5T, with a planned revenue of $3.4T and a deficit of $3.1T

I think maybe the year of the global pandemic might not necessarily be the most representative year, especially with regards to the final line about the budget, revenue, and deficit. The budget figure doesn’t reflect an actual budget in the way we think usually think about it as planned expenditures, because it includes trillions of dollars of emergency spending to prop up the economy, stabilize businesses and individuals, and provide other aid. And the revenue side is also most likely abnormal too. The deficit is WAY off. 2020 is not a good year for drawing any kinds of conclusions, and neither is 2021. 2019 and 2022 are probably better.

 

[ThirstyBarbarian]

Is this the banking thread now? The Federal reserve thread? Or is it still about taxes?

 

[Dotini]

Is this the banking thread now? The Federal reserve thread? Or is it still about taxes?

Going by the OP, is was about unfunded entitlements.

 

[ThirstyBarbarian]

Going by the OP, is was about unfunded entitlements.

Looks to me like original post was started because someone wanted to talk about the mortgage interest deduction and the child tax credit — tax issues — in a thread where they weren’t relevant. If you want to call that unfunded entitlements, whatever, but thanks for confirming it has nothing to do with banks or the Federal Reserve. Maybe do like the original post and start a thread on the unrelated topics.

 

[Dotini]

News Flash!!

The Fed has raised interest rates again.

Given the speed of communications and our herd mentality, there could be a run on the banks.

 

[ThirstyBarbarian]

News Flash!!

The Fed has raised interest rates again.

Given the speed of communications and our herd mentality, there could be a run on the banks.

This is off-topic. Here, I made a thread for you:

https://www.rocketryforum.com/threads/federal-reserve-and-banking-thread.179739/

 

[Ez2cDave]

If you put more than $250K in a bank knowing that's not insured and you don't buy your own insurance that's on you.

So, if you have that much "lettuce", simply open a $250,000 account in many different banks . . . Each bank will cover the $250K, via FDIC .

https://www.nerdwallet.com/article/banking/fdic-insurance

 

[CalebJ]

So, if you have that much "lettuce", simply open a $250,000 account in many different banks . . . Each bank will cover the $250K, via FDIC .

https://www.nerdwallet.com/article/banking/fdic-insurance

I think you meant to post over here:
https://www.rocketryforum.com/threads/federal-reserve-and-banking-thread.179739/#post-2428293

 

[shockie]

You are correct. To be fiscally responsible, they either have to spend less or tax more, real simple.

I vote for spend less.

 

[Dotini]

I vote for spend less.

Your vote doesn't count. The Congress votes on federal spending matters, and they are mostly determined to spend more and tax more. The burning question is whether the US will default on its debt come June 1.

 

[ThirstyBarbarian]

Your vote doesn't count. The Congress votes on federal spending matters, and they are mostly determined to spend more and tax more. The burning question is whether the US will default on its debt come June 1.

Another off-topic post. Start a thread on it.

 

[jderimig]

Your vote doesn't count. The Congress votes on federal spending matters, and they are mostly determined to spend more and tax more. The burning question is whether the US will default on its debt come June 1.

More like mid-may

 

[John Kemker]

I have long contended that if folks had to consciously stroke a check ever month for their local, state, and federal taxes like they do for anything else instead of "Automatic Withholdings" making it effectively invisible, there would have been an armed tax revolt long, long, long ago!

Me, I'd be happy to see some of that 56% that doesn't pay any taxes move out of government dependency and get their damn hands out of my wallet! But hey, I get it, it buys votes and damn the consequences!

Withholding was instituted during WWII as a war-time measure that was supposed to go away after the war. The gubmint enjoyed it so much they "forgot" their promise to make it go away.