Welcome to PatsFans.com

Tax Cut Proposal - don't even know if R or L

Discussion in 'Political Discussion' started by PatsFanInVa, Jan 2, 2010.

  1. PatsFanInVa

    PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

    Joined:
    Mar 19, 2006
    Messages:
    20,525
    Likes Received:
    290
    Ratings:
    +556 / 7 / -9

    From time to time, one politician or another makes halfhearted noises about making credit card interest payments tax-exempt (as mortgage interest is.)

    I think there is something for everyone in exempting a certain amount of credit card interest from federal income tax:

    1) For the right, just for starters, it is a tax cut. Since all tax is bad, all tax cuts can be painted as good. Automatic for the people, as REM said.

    2) For the left, this is a tax cut that evens the playing field somewhat between the homeowner and the non-homeowner. One kind of interest is deductible, and another kind is not, and it just so happens that the kind that is is the province of the homeowner only, but is not available to the non-property-owning middle class, or the working class? The devil you say.

    3) The economic effect could go one of two ways:

    3a) People could be responsible, and use the unexpected windfall to pay off personal consumer debt, thereby "de-leveraging" them to the extent that, on a time delay, they could consume that much more that much faster, thereby eventually helping out the economy, or

    3b) People could be irresponsible, and just consider it "found money" and spend it immediately, thereby helping out the economy.

    Look at the stock market. At the "commanding heights" level, bailouts and stimulus have worked. Shareholders are happy. Wall Street is happy. Now what about Main Street? Well, credit card interest payments are a VERY Main Street phenomenon.

    The only problem, of course, is that said tax cut would have to be limited because of the damage to revenues. You all know how I feel about revenues.

    So how about this:

    - You can write off credit card interest paid up to a certain (significant) amount over the course of the year. Say, $5,000. Using a 20% figure as a very rough "average" tax bracket, that would mean the individual gets up to a $1,000 tax break.

    - sub-point: we all know not everybody has credit card debt. But then again not everybody has mortgage debt and we all love that exemption.

    - The credit card tax exemption would "sunset" much like the tax giveaways to the rich under GW Bush. Since this is a tax cut with stimulus effects in mind, I would advocate it having a 2-year shelf life.

    Who's with me?

    PFnV
  2. Mrs.PatsFanInVa

    Mrs.PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

    Joined:
    Sep 7, 2009
    Messages:
    15,888
    Likes Received:
    327
    Ratings:
    +560 / 9 / -5

    #24 Jersey

    You're just a young'un, Jim-Bob, you probably don't remember the good old days - you know, the ones before Reagan?

    On Oct. 22, 1986, President Ronald Reagan signed into law the Tax
    Reform Act of 1986. Reagan called the 829-page, 33-pound bill 'the most
    sweeping overhaul of the tax code in our nation's history.'

    "The new code gradually phased out all deductions for interest paid on
    car loans, charge-account purchases, vacations and anything else that
    fell under what the law termed 'consumer loans.'



    WikiAnswers - In what years was credit card interest a deduction on income taxes
  3. PatsFanInVa

    PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

    Joined:
    Mar 19, 2006
    Messages:
    20,525
    Likes Received:
    290
    Ratings:
    +556 / 7 / -9

    Shoulda got into debt faster, it appears :D
  4. PatriotsReign

    PatriotsReign On the Roster

    Joined:
    Jan 15, 2007
    Messages:
    26,632
    Likes Received:
    142
    Ratings:
    +377 / 3 / -15

    I have a friend in Atlanta who stated, "If we get a stimulus check, we'll go shopping"

    Those kind of things scare me when what is best for our economy is paying down debt on all levels. The sacrifices we need to make to get to a more stable foundation are well worth it. So I'd never support any proposal that would tempt those with (still) little self-discipline to put them in a position to be irresponsible.

    I know a family member who has "over-draft" protection. When she gets paid, her account goes to slightly over "0". In other words, she negatively spends between each paycheck. She has earned her masters degree and gotten a significant pay increase....yet she continues to live in a negative spending cycle.

    That is insanity defined. But she'll blame life circumstances and never accept the responsibilty for her actions. Can you imagine getting paid only to see your checking account balance go back to zero?

    In my opinion, there should be self-regulation by the banking industry that would limit over-draft protection of individuals. Especially chronically irresponsible individuals.
  5. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

    Joined:
    Sep 13, 2004
    Messages:
    18,060
    Likes Received:
    187
    Ratings:
    +262 / 10 / -11

    To some degree, it's a life style choice. A lot of people prefer to live in the present, and as long as they keep their head in that frame, they're having a good time, spending to the max. Others, myself included, have enough awareness of the future to make some sacrifices now. I have uncle who lived from day to day, often gambling, owning big houses, and being extravagant. Today, in his mid 70s, he's retired in a Florida condo association where he owns a $20,000 apartment, does handyman work to make a living, and, now divorced, seems to have a new girlfriend every few months! (He voted for McCain, btw). I don't think one way of thinking is necessarily better than another, as long as the behavior is not reckless. I'd be worried if your friend wanted to go on a shopping spree when their was no stimulus check coming down the pike, but in this case it sounds like she maybe wanted a healthy break from stress.
    Last edited: Jan 2, 2010
  6. PatsFanInVa

    PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

    Joined:
    Mar 19, 2006
    Messages:
    20,525
    Likes Received:
    290
    Ratings:
    +556 / 7 / -9

    Yeah but the thing is, that's what a stimulus is supposed to be -- something that gets people shopping, basically. Not something that gets people to be responsible and put every penny toward paying down debt. Consumers are doing that now. That's part of why we're in a recession... RIGHT NOW.

    You're right, though, that ultimately borrowing is a nasty habit that makes the poor poorer and the marginally middle-class poor.

    Broadly agree, narrowly disagree, based on the exemption we give preferentially to those with (for example) mortgages to pay. Why don't we eliminate that writeoff? "OH NO, the housing market would collapse!"

    Now I will be the first to say that encouraging home ownership may be preferable, but in the course of doing so we preferentially favor property owners over the paycheck-to-paycheck people.

    Such as people who shouldn't buy a home without the government supporting their mortgage-interest-exemption habit?

    Or maybe people who shouldn't own poorly producing family farms without the red-state farmer welfare tax credits?

    How about the irresponsible companies who LEND the money in the first place, who hedged all their bets with overleveraged chopped up financial debt instruments? We surely shouldn't lend anything to ohhhhh let's say CitiBank... unless we wanted them to lend it to consumers and businesses.

    Oh don't be a wuss, just make overdraft protection illegal if you feel that way.

    Think about it: Once many moons ago, there was no overdraft protection. Then banks realized they could charge a fee whenever your overdraft was "protected," plus a fee for the pleasure of incurring the fee. The whole point is to avoid an even higher fee for a bounced check, so they said to themselves, "HEY! We can make some money on making them feel medium bad instead of horrible, and they'll keep doing it instead of considering it aberrant behavior!!! AND WE STILL MAKE MONEY -- more in fact!"

    So why would they voluntarily eliminate this financial service that makes them money? If they would voluntarily eliminate it, they would have done it already. Hell they wouldn't have offered the service in the first place.

    As to the stimulus effect of an exemption for credit card interest, well, that would be good if people spent it. It would also be good if they paid down their cards.

    What I hear is that any tax cut is a good tax cut, so why not one that average Americans need, not corporate fat cats and rich people only?

    PFnV
  7. PatsFanInVa

    PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

    Joined:
    Mar 19, 2006
    Messages:
    20,525
    Likes Received:
    290
    Ratings:
    +556 / 7 / -9

    Your uncle's my hero. Well, I'd try to have some cash around. And I wouldn't want to do the handyman stuff. But the new girlfriend every month part sounds aces.

    Can you just tell me they're all in their 30s as a sweetener? Come on, it won't cost ya nothin...
  8. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

    Joined:
    Sep 13, 2004
    Messages:
    18,060
    Likes Received:
    187
    Ratings:
    +262 / 10 / -11

    'fraid not. They're of his vintage, at least the ones I know about.
  9. BelichickFan

    BelichickFan B.O. = Fugazi PatsFans.com Supporter

    Joined:
    Sep 13, 2004
    Messages:
    31,625
    Likes Received:
    215
    Ratings:
    +508 / 13 / -11

    #24 Jersey

    Enough of the targeted tax cuts. Just eliminate all these stupid deductions, lower the income tax rate and let us live our lives how we wish. Mortgages, credit cards, charities, none of it should be tax deductable.
  10. Mrs.PatsFanInVa

    Mrs.PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

    Joined:
    Sep 7, 2009
    Messages:
    15,888
    Likes Received:
    327
    Ratings:
    +560 / 9 / -5

    #24 Jersey

    You would do well to bear in mind that girls, given the choice, will choose a handy-man over an unhandy-man any time.

    Men like women who are young - women like men who can fix the sink.
  11. PatsFanInVa

    PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

    Joined:
    Mar 19, 2006
    Messages:
    20,525
    Likes Received:
    290
    Ratings:
    +556 / 7 / -9

    Or can pay somebody else to.
  12. alvinnf

    alvinnf Rookie

    Joined:
    Mar 13, 2008
    Messages:
    3,302
    Likes Received:
    1
    Ratings:
    +2 / 1 / -0

    I am trying to understand this? So people would recieve a tax cut or credit for carrying a credit card balance? The rates associated with credit cards only come into play when someone fails to pay their monthly bill on time?
  13. PatsFanInVa

    PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

    Joined:
    Mar 19, 2006
    Messages:
    20,525
    Likes Received:
    290
    Ratings:
    +556 / 7 / -9

    No, that's a late fee, unless you are talking about people who do not ever carry a balance. Since they would never pay interest, obviously, their interest payments could not be tax-exempt. But they would be if they did.

    We're talking about the payments you make against interest on any credit card balance. You would be able to exempt that amount of money from your income.

    So if you would otherwise have a tax obligation based on 25K of income, but you paid 200 bucks a month to one or more credit card's interest charges, that would be $2,400 you could exempt. So your tax obligation would then be on $22,600.

    Currently anybody who pays mortgage interest enjoys this very arrangement, at least up to a certain amount of interest you pay in a year.

    Since it allows people to keep more money that they made from the ravening beast of government -- i.e., since it is a tax cut -- I would imagine NOBODY on the right is against it. Certainly nobody who was in favor of Bush's much larger targeted tax breaks for the rich. Right, Belichickfan?

    PFnV
  14. Real World

    Real World Moderator Staff Member

    Joined:
    Aug 15, 2006
    Messages:
    27,107
    Likes Received:
    217
    Ratings:
    +514 / 6 / -2

    Why encourage, or reward, foolish behavior?
  15. alvinnf

    alvinnf Rookie

    Joined:
    Mar 13, 2008
    Messages:
    3,302
    Likes Received:
    1
    Ratings:
    +2 / 1 / -0



    It does'nt seem like a bad idea, but a little bit of a slippery slope. We shouldn't motivate people to carry a balance. I guess that is the norm nowadays though. The other problem is most people don't even pay taxes it's more a matter of how much they get back. Maybe people would get a little more back but it seem like a bit of a perpetual hole .
  16. BelichickFan

    BelichickFan B.O. = Fugazi PatsFans.com Supporter

    Joined:
    Sep 13, 2004
    Messages:
    31,625
    Likes Received:
    215
    Ratings:
    +508 / 13 / -11

    #24 Jersey

    Yeah, incentivising getting into credit card debt seems to be near the top of stupid ideas.
  17. PatsFanInVa

    PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

    Joined:
    Mar 19, 2006
    Messages:
    20,525
    Likes Received:
    290
    Ratings:
    +556 / 7 / -9

    So, RW and BFan, I take it you are in favor of higher taxes, whereas I would favor a tax cut. What's more, you are in favor of higher taxes, in the middle of a recession, to achieve a socioeconomic agenda.
  18. Patsfanin Philly

    Patsfanin Philly Rookie

    Joined:
    Jan 16, 2005
    Messages:
    6,757
    Likes Received:
    26
    Ratings:
    +69 / 0 / -0

    #95 Jersey

    Nah, they just want a guy who see enough to drive at night. FWIW before Rostenkowski and Reagan's tax reform, you could deduct interest paid on student loans.
  19. PatsFanInVa

    PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

    Joined:
    Mar 19, 2006
    Messages:
    20,525
    Likes Received:
    290
    Ratings:
    +556 / 7 / -9

    Actually I agree with this. Just as we gave away taxpayer money to wall street, or loaned it at little or no interest, with the expectation that they will lend, this would basically be a tax-holiday on the expectation that those on main street who benefit would spend it.

    The beauty is it has an upside even if it does not get spent as stimulus.

    But in deference to what you are saying here, and in deference to the basic fact of our national obligations, I would recommend that this provision sunset in a relatively brief timeframe, say two years.

    I would recommend other forms of stimulus to the middle classes, not the upper middle or rich, because paycheck-to-paycheck people will immediately spend that money on goods and services. Wall street is fine now. To the extent that we tweak the economy using the tax code, we need money in the hands of the middle class and the working class.

    What better way than to let them keep more of their money? I mean, unless you're like BFan and Real World, and never met a tax you didn't like... ON THE POOR OR THE MIDDLE CLASS?

    PFnV
  20. PatsFanInVa

    PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

    Joined:
    Mar 19, 2006
    Messages:
    20,525
    Likes Received:
    290
    Ratings:
    +556 / 7 / -9

    Now that one is damn hard to argue against, incentivizing student loans. I mean, on the credit card interest one, everybody has "deadly sins" to accuse the beneficiary of, such as greed or gluttony.

    The goal of greater knowledge would be pretty hard to argue against, in the abstract. Of course, in the specific application, the Tea Baggers would have a special event attacking specific grad students' papers and claiming they were paid for with taxpayer money :eek:

    PFnV

Share This Page

unset ($sidebar_block_show); ?>