To date, Governor Romney has yet to publicly discuss what cuts would need to be made to tax expenditures in order to finance his very specific tax cuts.
However, we got a little preview last weekend when he was overheard talking about two possibilities for reducing tax expenditures at a private fundraiser -- cutting the mortgage interest deduction for second homes and the state and local tax deduction.
In part, it depends on the details -- particularly since it is unclear whether the cuts would apply to all taxpayers or higher earners. However, we do have enough information to make some estimates. The former policy, eliminating the mortgage interest deduction on second homes, is certainly a sensible one and one with bipartisan support. The second idea, to eliminate the federal tax deduction for state and local taxes income, real estate, other property, and sales , could raise substantial revenue.
It is unclear from reports whether Governor Romney intends to make this proposal formally, and if so, whether he would cut this deduction for high-income earners only or for all earners. There is, however, a substantial interaction between the deduction and the Alternative Minimum Tax, as well as with the rate cuts set to expire this year and the further rate cuts and AMT elimination proposed by Governor Romney.
The level of tax rates determines the value of the deduction, while the AMT does not allow the deduction, essentially taking away its value for those who are hit by the tax. He also vowed to stand up to teachers unions and warned that unions would funnel dues to Mr. Obama's reelection campaign. Romney said. Romney summarized his general election message as "jobs and kids," saying he would make the argument that he is best-equipped to get the economy going and rein in federal debt, ensuring that the nation is better off for the next generation.
He homed in on the issue of fairness as he offered a retort to Mr. Romney regularly cites Solyndra, a solar panel-manufacturer that received government funds and subsequently went bankrupt, as an example of government manipulation of the private sector. Romney was frank in both his policy prescriptions and his obstacles as he addressed donors.
He said he expected Mr. Obama to use the immigration issue against him as both sides of the aisle pursue Hispanic voters, a key demographic group in Romney said he and other Republicans will have to make the case that they are the party of "opportunity. He said the GOP will have to propose its own initiatives to win support from Hispanic voters, such as a Republican version of the Dream Act.
As offered by Democrats, the act offers a path to permanent residency for those illegal immigrants who entered the U. The candidate said he didn't expect a fair fight in the media, saying he believed many commentators on television were liberals.
Fox News is owned by News Corp. We work hard to make our analysis as useful as possible. Would you consider telling us more about how we can do better? Itemized deductions allow individuals to subtract designated expenses from their taxable income and can be claimed in lieu of the standard deduction. Itemized deductions include those for state and local taxes, charitable contributions, and mortgage interest.
An estimated A sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening , such as including groceries, could keep rates lower.
A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. A property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U. The credit phases out depending on the modified adjusted gross income amounts for single filers or joint filers.
The marginal tax rate is the amount of additional tax paid for every additional dollar earned as income. The average tax rate is the total tax paid divided by total income earned. A 10 percent marginal tax rate means that 10 cents of every next dollar earned would be taken as tax. Taxable income is the amount of income subject to tax, after deductions and exemptions. For both individuals and corporations, taxable income differs from—and is less than—gross income.
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