Thursday, July 14, 2011

THE NEW TAX CODE - THE FINAL ITEMS

So what it left to re-write in the new simple, fair, and consistent Tax Code?

Contributions? I would not change the current rules for deducting contributions to church and charity – except to make the standard deduction for charitable miles equal to the standard deduction for all other miles (the amount currently used for medical and moving mileage) and have it indexed for inflation annually. This deduction would be determined annually by the IRS and not the idiots in Congress, who have not increased the amount in years.

Casualty and Theft Losses? I think I would limit this deduction, without any AGI exclusion, to “out of pocket” casualty losses from Presidentially-declared natural disaster areas and “theft” losses from Madoff-like Ponzi schemes.

Moving Expenses? I would keep the current rules, but make it an “employee business expense” deductible on Schedule A.

Medical Expenses? This is the only area where I have considered maintaining a % of AGI exclusion. I would want to limit the deduction to “excessive” medical expenses. As an alternative to the AGI-based exclusion I have thought about allowing a deduction for expenses in excess of a flat exclusion amount of $5000 for a single taxpayer or $10,000 for a married couple. What do you think about this?

I would once again make taxpayers age 65 or older eligible for an additional personal exemption, and not an additional standard deduction amount. And I would do away with the special tax treatment for legally blind taxpayers. I see no reason why blind taxpayers should be treated differently than any other disabled or handicapped taxpayer.

I have decided that I would not have a “dependent credit” - but instead double the personal exemption for dependent children under age 19.

Before I begin to put my proposals for the new Tax Code into summary format – is there anything I forgot?

TTFN

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