Quote:
Originally Posted by OrangeBlossomBaby
If high income people were only allowed to take the same standard deduction that lower income people had to take, then that'd be fair, right? No more itemizing, no more tax breaks, no more write-offs. Standard deduction for everyone. And you pay the same tax rate on the net income after that deduction.
Problem is, that means the ultra-high income folks would actually have to pay taxes. Right now they can itemize enough that they pay no income tax at all.
The ultra-low income also pay no income tax, or they end up with a full refund on what they've paid.
Everyone else pays to cover the ultra-low income AND the ultra-high income, both of whom pay no income tax. The ultra-low can't afford to pay it. The ultra-high income can afford it, but prefer to place the burden on everyone in the middle, including low (but not ultra-low) income people.
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Here's the reality on rich people's "itemized deductions".
Itemized deductions for the most are taxes, mortgage interest, medical and charity.
Most "rich" people have paid off their mortgage - so no interest.
Sales & real estate taxes are capped at $10,000.
Medical expenses are reduced by 7.5% of income so usually no deduction there.
Which leaves charity - some "rich" don't give charity - the result is they use the standard deduction.
So if charity really is the only mechanism which pushes taxpayers into itemized deductions and you take away that - how will that effect charitable giving? Many good minded will not change their habits but the others may stop giving. Do we want that?