Guest post by Lurena Lewis:
Please hold your outrage until the end of this post, but yes, I said it! It is time to raise Taxes. Before you start to worry that any member of Congress will be reading this post and getting ideas, fear not, because even Warren Buffet’s plea to raise taxes on the mega-rich has fallen on deaf ears. (See Buffet’s article in the New York Times Op Ed – Stop Coddling the Super Rich). With that being said, spending cuts alone will not solve our current economic crisis. The hard reality is that we will never get rid of the current debt we have without increasing revenue.
How do we increase revenue and where is it going to come from? From you (super rich person reading this blog and yelling at your computer screen)!
The following three major tax code revisions would help raise revenue, which could be earmarked to pay down the debt, thereby helping to solve our current economic crisis.
1. The first place to start is by revising the tax rates. I would revise the current tax rates by adding a top bracket of 39%, with 39% being taxed on individual income earned over $400,000. By increasing the revenue demand on those making $400,000 and more, the majority of Americans will not be affected, while high income earners can add a little more into the pot without breaking the bank. Let’s be honest, in the grand scheme of things, 39% is not that much more in tax than what the current rates call for.
2. Once the rates are revised, I would amend certain deductions. The biggest deduction that I would change would be the mortgage interest deduction. Everyone loves to deduct mortgage interest but is there any reason it should be unlimited? I would revise the Code so that mortgage interest could be deducted only for your primary residence and only for those who earn $5 million or less. If you earn more than $5 million dollars a year, do you really need a mortgage interest deduction? Also, for those of you who have retired and spend equal amounts of time in, for example, New York and Florida, then there would be no harm in splitting the mortgage interest for each property between the number of day you spend in each state per year (i.e. ½ of the available deduction for property A in State I and ½ the available deduction for property B in State II, assuming you spend 50% of your time between the two properties.)
3. The biggest Code revision would be to change the carried interest rules to prevent Hedge Fund Managers from only paying capital gains rates on their “income”. Just this change alone could raise billions of dollars in revenue. This tax loophole is already unpopular among the general public so Congress should take the opportunity now while it can to amend these rules.
So with just a couple of simple and easy changes to the code, we can increase revenue and start chipping away at our national debt!
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L. Lewis lives in Philadelphia with her husband and 2 cats. She enjoys long walks on the beach and reading tax blogs…
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This guest post was submitted in response to my query about how the best way to deal with the current economic situation. This post does not necessarily reflect my thoughts and feelings.
Your comments and reactions are, of course, appreciated. Just play nice. I have standards. And I don’t want to have to delete you.
