FRIVILOUS TAX PROPOSALS

There have been several tax proposals put forth by the Presidential candidates, mostly from Trump, that are bad and illogical tax and economic policy (though tax law often seems to be devoid of logic) and are just gimmicks to “buy” votes made without any real thought or research.  For example – no tax on tips, no tax on overtime, no tax on Social Security, taxing unrealized capital gains.

Tips and overtime pay are compensation – earned income.  There is no logic or reason to arbitrarily make some forms of compensation non-taxable.  It is like saying “no tax on the W-2 income of accordion players”.  If these types of compensation are totally tax-exempt it would hurt applicable employees in the short and long term by reducing or eliminating any Earned Income Credit and reducing potential Social Security benefits at retirement.  Recent studies have indicated that making tips tax-exempt would only benefit a very small number of individuals.

The biggest winners if these types of compensation are totally tax-exempt would-be employers in industries where employees earn most of their income from tips (like the Trump organization) or pay a lot of overtime, because it would substantially reduce the employers’ payroll tax cost (i.e. FICA match).

I would not necessarily oppose making Social Security tax-exempt.  Before the Reagan presidency Social Security was not taxed by “Sam”.  I would, however, prefer that Social Security be taxed like other retirement plan distributions.  The current method of taxing Social Security is unfair and just plain bad.

Also before the Reagan presidency, unemployment benefits were not taxed by “Sam”, although it appears nobody has proposed making unemployment tax-exempt.  I would support making unemployment benefits tax-exempt again.  This would have very little, if any, adverse “side-effects” – it is not subject to payroll tax and is not used in calculating the Earned Income Credit. 

Taxing “unrealized” capital gains (paper gains) is just plain bad economic and tax policy and should never become law.

Voters should ignore these tax proposals.  The only real issue in the 2024 election is defending and protecting American freedom, democracy, and values by voting against EVERY Republican candidate in EVERY election at EVERY level.  If Trump and today’s Republicans win America truly loses.

TTFN