It’s Fix the Tax Code Friday!
On many of the taxgirl.com threads about the possibility of a second economic stimulus package, there have been discussions about age – and whether a second package should benefit the young or old more. The undercurrent of age has also rippled through online discussions about child care credits, retirement plan benefits – and even who should pay most as a result of budget cuts in cities like Philadelphia.
This made me wonder: should taxes be age neutral? Or does it make sense to sway towards the young or old when it comes to exemptions and deductions? Some folks cried foul that the child credit for purposes of the rebate only applied to those under the age of 17 – even if those who were older would otherwise qualify as dependents. Others feel that retirees shouldn’t get a break based on age, that income should control your tax burden.
So today’s Fix the Tax Code Friday question is:
Should age matter when it comes to paying – or not paying – taxes?
If you think it shouldn’t, why not? If you think it should, who should get a break: younger taxpayers or older taxpayers? Should there be an age limit on dependents? Sound off!
Absolutely! Every one who is not my age should be paying double what they are paying now. That should fix our deficit pretty quick. 😛
Good answer Oxnate. Every time I see a liberal in favor of higher taxes, it seems like they’re in favor of higher taxes on others, not themselves.
Note that the age-based proposals floated have only mentioned decreasing taxes on seniors, which looks like nothing more than pandering for votes to me. The tax system should not discriminate based on age. Progressiveness in terms of rate and amount of income is plenty, no need to add additional complications to it (though character of income and the various passive, at-risk, and phase-out rules already do so). The dem’s proposals seem to revolve around providing benefits to at least half the population in exchange for votes, to be paid for by some smaller group. Not a good idea in the long term.
I see no reason for an age limit on dependents, but I also don’t think the tax burden of an individual should be determined by the number of children or other dependents they have. In the case of children in particular, those are choices people make, and the rest of the taxpayers shouldn’t have to fund them.
I’d say chuck the age limits. Here’s why. A family that’s still supporting a kid in college, an older disabled child, or a disabled parent needs those resources. While people over a certain age or under a certain age are generally covered by the income based tax calculations. Furthermore, I think that the number of dependents you can claim should be limited. And while we’re at it, let’s reform public assistance so that getting it isn’t contingent on having more kids.
I for one am more that willing to make sacrifices by bearing a larger burden if it means reducing the burden for someone who needs it reduced. But those reductions shouldn’t be carte blanch to procreate without consideration.
Oh and BTW, I’m one of those liberals that supposedly want everyone else’s taxes to go up.
Hey there,
as I have mentioned on previous posts I know very little about Taxes, however I know very much about the hard working American who makes very little money! In my opinion, not that it will be handed over to the president for consideration LOL….Taxes should not ever pertain to age, race, religion….it is simple to me if a dependent is 17, mom and dad have a legal obligation to still take care of them, meaning they are still a financial burden. In reality something I am positive most politicians do not participate in LOL… Any true dependent should be defined as so by meeting a criteria of dependence not on age at all. If I have a child in college still living at home and I am paying for their tuition, gas, food, clothing then by all accounts they are dependent on me regardless of their age, of coarse there should be a cap on that, but it needs to be clearly defined. This same could apply to disabled children, people who will never be capable of normal adult life.
Complexity of the tax laws contributed to the difficult financial times we are in. This group, that group, this industry and that. No wonder the large corporations don’t pay taxes, but the management’s greed roll in bonuses and large compensation.
Other countries have found better ways to operate their governement with other tax methods. Singapore evaporated the personal income tax, and implemented GST.
Ireland manipulated their tax laws to invite the banking industry to Dublin. The global financial crisis put many of those banks in jeopardy of failing. The largest, a German bank, went to the irish government demanding the Irish government to back or guarantee the assets of the bank to keep it solvent. Such a demand was stupid to ask the Irish taxpayers bail out a bank whose assets exceeded the Irish net worth, possibly dragging Ireland into total poverty. All on the greed on the bank’s CEO.
As for the US, the flat tax still appeals as a fair tax. Everybody pays, corporations and individuals. Chances of it being implemented may be at hand. While the government is trying to fix the financial, it seems a perfect time to review the tax laws of this country. All the exemptions and special priviledges for corporations, and individuals, yell for disparity of those who pay and elude their responsibilities.
My basis for corporations paying taxes is they benefit in a free country, able to operate their companies under a free enterprise system, as good citizens in their communities and the country. They should contribute to the country’s defense, as does individuals, defending their way of life and property, using the infrastructive of roads, services, and supporting the education of their employees and families.
Even NC and the counties are going to face a certain reality very shortly, just like across the country. An increase in taxes on their citizens to pay for for bonds they sold under variable rates. Same principle as home mortages, variable rates fine print kicks in, and the bond companies, and all the associated “created” businesses, want cash now. State and county governments will have no choice but to raise taxes to meet their obligations.
It’s a mess.
Wayne Phillips
By the way, I am in the age group that least can afford, taxes at any level, federal, state, or county. Even an increase in sales tax, supposedly that applies to folks who purchase products, hurts folks with limited incomes. So giving a break to those who can least afford it, such as the elderly, seems appropriate. Higher property taxes force many folks from their homes. With their real estate values evaporated, that former nest egg is gone, but not the taxes.
There are millions of seniors who subsist on eager funds. Age should not play into tax breaks, no more than an excessive number of children. But income, a reasonable amount to subsist above poverty should be exempt for those have contributed to this country’s prosperity. What a way to “thank” the seniors who made this country better in their own individual way.
Wayne Phillips
The only fix is to scrap the whole thing. We bring in plenty of money through the hundreds of other taxes. They could just raise the gas tax a few points and then we’d get plenty of revenue to the Treasury. Oil is the engine of the economy. Oil alternatives are very expensive.
Wayne, where are these corporations you speak of that don’t pay tax? I can assure you they pay plenty – and further, if they paid more taxes, prices to consumers would go up. One way or another, individual consumers ultimately pay all taxes.
RE your suggestion that the seniors deserve a tax break, I completely disagree – what we need is tax law applied equally to all. It’s pandering to special interests that have given us the messy code we have currently. Seniors and AARP have already succeeded in passing the buck to the younger generations on social security, no need to make it even worse with age based tax cut.
When my daughter turned 17, I was shocked to find out that I could not get a credit for her. The cost for her education and other things were even more than when she was younger! Now that she is in college, the cost are through the roof. I wonder why they made it under 17? Anyone know?
Another Tax Geek CPA
I call B.S.
If you say that taxes should be the same for all then an 80 year old who has worked their whole life will be taxed the same as a twenty year old who just started a career and also the same as a one year old who obviously can’t work. The eighty year old has paid in 20% plus for the last 60 years!!!! Now they cn’t work draw from the Social Security pool and you want them to be taxed the same? Pull 10% income from someone making 500,000 a year and it may mean some adjustments, but, pull 10% from someone making 5,000 a year and you just handed out a death sentance to the very people that handed you the right to speak your mind in the first place! I also have to say, that the future of this country would be in great perill should the government try such a thing. Plus, those that are making 50 million a year are not going to just hand over 10% when they can spend 3% on the lawmakers that will allow them to hide their money offshore and save the other 7% And if you want lists of the corporate tax dodgers, I suggest you do some DD on line. In two separate articles I have read, corporate taxes have dried up to the tune of some 80% decrease. The top 400 (yes just 400) people in the U.S. have increased their wealth by just over 700 billion dollars in the last eight years. (recognize that number?) Do you really think any of that made it to taxes? Hahahahahahaha right. Wise up. Imagine when you retire and you have all your ducks in a row and all of the sudden the game changes. Your nest egg… gone! Your house…Gone! Electricity for your small one bedroom just hit $1200 dollars a month! The gas bill is over $2000 and not only will you never catch up, you can only go down from here because things are not going to get any cheaper. You may think this is crazy, but do the research. Remember getting a dozen eggs for a dime? What was an average electric bill just 60 years ago? How about a loaf of bread? Saving ten bucks was huge! Post WW2 this country pledged to the seniors of today that they would not have to worry like their fathers before them. Well, they still have a voice… for now.
We already have a system that discriminates against youth. It is called social security. It is a massive transfer of wealth from the poor to the rich. My parents and grandparents own their homes, they have raised their children, and they have paid off their debts. All they have is flush bank accounts, utilities, and a car payment. They have saved all of their lives and are either retired or soon to retire. The ones retired are receiving social security from the younger generation who haven’t paid off their mortgage, are raising kids, and have very little savings.
This system has been tolerated by the youth but the system is fatally flawed and will severely hurt the youth over the coming decades.
Flaw 1: Social security was intended to be a welfare program to protect seniors from poverty when they could no longer physically work but has been turned into a retirement program.
Flaw 2: there was never any requirement to invest the monies into any sort of plan that would provide future returns. Government collected money from everyone and what it did not pay out to seniors, it spent on general budget items.
Flaw 3: The age to qualify for social security has not risen enough with life expectancies. The original plan allowed you to collect social security at the average age of death of Americans at the time it was implemented. It has changed very little over the years but the life expectancy of the average American has changed significantly.
Some would say that the system is fair because they paid all their lives and it is their turn to receive their benefit. The problem is that they are going to benefit far more than they have contributed which translates into a severe burden for the youth in this country. When all the Boomers retire, there will be 1/3 of the population retired. That means there will be 2 people of working age to support 1 person retired on SS as opposed to 10 workers for every retiree when the boomers were born. If you consider the monthly SS and medicare costs of one retiree and divide by 2, you will easily see how each working individual will be forking out a tremendous amount of their earnings so that people who had all their life to prepare and save for retirement can live even better on the backs of the youth. Add in an every increasing medicare tab and the numbers get so big that the youth may decide not to work to support their elders who have left them trillions in debt.
Oh good grief. The answer is really, really simple. The Fair Tax. You pay a tax when you spend your money. That’s it. No more, no less. The ones that don’t have a bunch won’t be paying a bunch and those that do have a bunch will be paying a bunch PLUS they might see the incentive to save. Pick up and read “The Fair Tax” –
Skip McQuaid
Sure there should be tax breaks for the elderly. The young are capable of getting jobs and can even move up to better jobs if they have the motivation. Most do not want to work. The elderly are usually living on very meger fixed incomes. They are not likely to be able to get jobs and many are not able to work anyway. Too many young people are living on handouts now.
Polwot – in an income tax system, corps don’t pay taxes when they don’t make money. Guess what, lots of them are losing $ right now. Further, just as states will change their tax structures relative to their competitors in order to attract business and jobs, so do other countries, leading multi-nationals to locate business in the most favorable climate.
As far as the elderly, I said tax law should be equally applied without regard to age. That doesn’t equate to seniors on a fixed income having the same increase in tax given to someone making $500K, it equates to a change applying to someone in X tax bracket applying to EVERYONE in that bracket, regardless of age. To be clear – age based discrimination has no place in ANY tax code, whether it be consumption taxes, property taxes, or income taxes.
If you organize your thoughts better and use some punctuation, I might respond to the rest of your post, but as written it’s too much work to read.
I think that if God allows you to live 75 years and over He has a purpose for you. Therefore, I think if you live to be 75 or over, you have most likely more than paid your dues in taxes, and should be allowed to pay less or no taxes beyond 75 and over. One should not have to pay until they die, or die still trying to pay taxes. However, less or no taxes should be based on income. It seems we are living in the Biblical Days of Cesar.
Seniors 75 and over should pay less or no taxes. However, this should be based on income