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Tuesday, November 01, 2005

I can't see any savings

Several weeks ago I played with a budget simulator and cut deductions and marginal rates. Now, the tax panel appointed by Dubya Bush has recommended we do just that. Also,

"The advisory group's plans to cut deductions for mortgage interest, state and local taxes, and health care costs have already drawn criticism from lawmakers of both political parties and trade associations."

Cutting deductions for state income tax will end subsidies that encourage states like California to spend like drunken sailors*.

To be fair, the states that benefit the most from the subsidy tend to pay more than their fair share of federal taxes anyway. However, these are also the same states responsible for pushing ludicrously high federal taxes, so i have no pity for them. Moreover, multiple subsidies and credits that cancel out create inefficiency and market distortion. It is better to eliminate them all and have a level playing field.

[UPDATE:Also, let me add that I like the Alternative Minimum Tax, which is affecting more and more households every year. At this rate, the expansion of the AMT will result in simplified, flatter tax system by default within a decade or so.]

*Of course, drunken sailors spend THEIR OWN money.
**If there are a lot of typ0s, it's because my eyes are really bad today.


Anonymous Blue Cross of California said...

Great blog I hope we can work to build a better health care system. Health insurance is a major aspect to many.

6:06 PM  

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