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2012-12-19 Home Front: Politix
The Most Absurd 'Loophole' in the Tax Code
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Posted by tipper 2012-12-19 05:58|| E-Mail|| Front Page|| [590 views ]  Top

#1 Great! I get a tax deduction for expenses, such as interest, depreciation, property taxes, repairs, utilities, escort services?

But I already deduct interest and property taxes on my (underwater) Owner-Occupied Housing. So is the reporter mis-informed? Or the Federal Government stoopid? I'm betting on both.

Is the loss in value when the housing bubble collapsed considered "depreciation", I wonder? I mean, for tax purposes.
Posted by Bobby 2012-12-19 06:31||   2012-12-19 06:31|| Front Page Top

#2 No. When the actions of government cause the fair market value of a property to drop, that is a "regulatory taking." A type of eminent domain under the 5th amendment, for which the government is required to pay just compensation.

But that assumes the government repects the rule of law, and is not a communist money-printing thugocracy.
Posted by RandomJD 2012-12-19 07:35||   2012-12-19 07:35|| Front Page Top

#3  If you own your home out-right and don't have a mortgage at all, you would be "earning" $2,000 a month which the IRS thinks should be added to your taxable income.

While you have been paying Social Security for 49 years, you could have waited until age 70 to begin drawing Social Security. You however, elected to begin drawing your Social Security entitlement at age 62. Therefore, your entitlement is reduced approximately 40%.
Posted by Besoeker 2012-12-19 09:38||   2012-12-19 09:38|| Front Page Top

#4 Are they going to assess as implied income the difference between buying a new car, and the cost of keeping my current cheapass five-year-old Aveo on the road? Is my noninclination to buy dress clothes for work, and instead shop at Walmart, also a taxable implied event? How about my failure to buy cable TV? Eating in on cheap food instead of eating at a restaurant every night?
Posted by Mitch H.  2012-12-19 10:00||   2012-12-19 10:00|| Front Page Top

#5 The "Implied imcome" tax code language impacts only 50%, 49%, 48%, 47%.... a small number of taxpayers people.
Posted by Besoeker 2012-12-19 10:10||   2012-12-19 10:10|| Front Page Top

#6 Taxing the implied income of a home is actually Adam Smith capitalism.

You may not like it but it is.

Ground-rents are a still more proper subject of taxation than the rent of houses. A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground. More or less can be got for it according as the competitors happen to be richer or poorer, or can afford to gratify their fancy for a particular spot of ground at a greater or smaller expense. In every country the greatest number of rich competitors is in the capital, and it is there accordingly that the highest ground-rents are always to be found. As the wealth of those competitors would in no respect be increased by a tax upon ground-rents, they would not probably be disposed to pay more for the use of the ground. Whether the tax was to be advanced by the inhabitant, or by the owner of the ground, would be of little importance. The more the inhabitant was obliged to pay for the tax, the less he would incline to pay for the ground; so that the final payment of the tax would fall altogether upon the owner of the ground-rent.

— Adam Smith , The Wealth of Nations, Book V, Chapter 2, Article I: Taxes upon the Rent of Houses
Posted by Bright Pebbles 2012-12-19 10:17||   2012-12-19 10:17|| Front Page Top

#7 Bullshi*! Businesses DON'T pay taxes, CONSUMERS pay taxes, AND they pay taxes on the same item purchased over, and over, and over again!

Business profit margins DO NOT and simply CANNOT ignore overhead costs (which also include what Uncle Sam may levy).
Posted by Besoeker 2012-12-19 10:28||   2012-12-19 10:28|| Front Page Top

#8 Bright Pebbles, I'm pretty sure that passage was about different ways of taxing property, and in particular, real estate property tax. Specifically, an endorsement of the land value or site valuation tax - a levy on the unimproved value of land. It's intended to encourage improvements by setting the cost of letting it lie fallow high.

But still and all, Smith and Henry George argued for an explicitly simple direct property tax scheme, not a involuted tax-expenditure accounting honeytrap built around income tax code.

I live in Pennsylvania, which already has a species of land value tax on the books. I probably pay *more* in mortgage, maintenance, and property taxes than I would to rent the same square footage in the same market as the townhouse I own. But the opportunity costs tied up in documenting that particular hypothesis to the satisfaction of some humorless IRS drone would not come cheap, relative to my modest income. And that sort of bureaucratic hoop-jumping crap is definitely not what the Georges and Smith intended.
Posted by Mitch H.  2012-12-19 10:38||   2012-12-19 10:38|| Front Page Top

#9 "Meet the new loophole, same as the old loophole."

Peter Townshend
Posted by Perfesser 2012-12-19 13:35||   2012-12-19 13:35|| Front Page Top

23:12 tipper
23:10 USN,Ret.
23:06 USN,Ret.
23:02 USN,Ret.
22:58 Tom Sawyer
22:07 Mullah Richard
22:01 Mullah Richard
21:53 JosephMendiola
21:46 Alaska Paul
21:41 Frank G
20:56 SteveS
20:22 Glenmore
20:16 Mullah Richard
20:02 JosephMendiola
19:57 Barbara
19:55 Barbara
19:53 Raider
19:50 JosephMendiola
19:41 SteveS
19:39 Hillary Rodham Clinton
19:32 Pappy
19:26 SteveS
19:17 dan
19:07 SteveS

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