Wednesday, December 6, 2017
HERE'S A THOUGHT
While we are all thinking about tax reform - I have published my thoughts on what a new Tax Code should look like in THE TAX CODE MUST BE DESTROYED, but here is an alternative thought.
We have always had the option to deduct either a Standard Deduction or Itemized Deductions. But what about both?
* We would begin with a base Standard Deduction amount, maybe $5,000 or $6,000 per taxpayer/spouse.
* A taxpayer could also deduct a “homestead” amount - either the total amount of real estate taxes and mortgage interest (on limited principle) paid on one primary principal residence if a homeowner, or the actual amount of rent paid up to a maximum of $12,000, or a standard amount of $10,000, per household and not per taxpayer, if this is more than the actual homeowner or renter expenses.
* And a taxpayer could deduct actual contributions to charity (but not to churches or religious organizations for religious activity – see my above referenced publication), up to the current 50% of income limitation (with the excess carried forward).
In addition, there would be the normal “adjustments to income” for self-employed health insurance, half the self-employment tax, and contributions to retirement accounts, and early withdrawal penalties on CDs.
There would no longer be a Schedule A for Itemized Deductions. However, there probably would be a need for a Schedule CC to itemize charitable contributions.
Just a thought.
So, what do you think?