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From: dgh@sun.uucp (David Hough)
Newsgroups: net.legal,net.taxes
Subject: Re: Abuse of social contracts. (tax system)
Message-ID: <2002@sun.uucp>
Date: Wed, 20-Feb-85 22:42:29 EST
Article-I.D.: sun.2002
Posted: Wed Feb 20 22:42:29 1985
Date-Received: Thu, 21-Feb-85 08:50:36 EST
References: <2748@dartvax.UUCP> <445@ahuta.UUCP> <399@lsuc.UUCP> <110@styx.UUCP> <687@amdcad.UUCP> <1998@sun.uucp> <701@amdcad.UUCP>
Reply-To: dgh@sun.UUCP (David Hough)
Organization: Sun Microsystems, Inc.
Lines: 64
Xref: utcs net.legal:1428 net.taxes:633
Summary: 

In article <701@amdcad.UUCP> phil@amdcad.UUCP (Phil Ngai) writes:
>
>I file the long form every year and don't believe that people who
>don't pay income taxes are getting away with something. I'm sure
>they got in that position by taking a real loss of some kind.
>It may be no money from their pocket to the IRS but it's money
>out of their pocket. Come on, it's easy not to pay income tax.
>Just don't have any income. Big deal.
>

Do you have any rental real estate?  If so you get to "depreciate" it against
other income even when the real estate is increasing in value.  
This means (in case anyone not familiar with this is reading) that
you get to pretend to have a loss, which you use to reduce your taxable
income, without sustaining any real economic loss.

If you sell the rental real estate, you do have to pay tax on the income
you depreciated, but it will likely be at the long term capital gain rate
(20%) instead of the ordinary income rate (50%).

What's the moral justification for this?  I claim there's none.
There is no real loss of any kind.

>> 	To conclude, a very simple flat tax with no deductions, no credits,
>> and only a simple per capita exemption would be correctly perceived
>> by everyone.  Graduated rates would be acceptable too (to me at least)
>> as long as the simplicity were retained.
>> 
>> David Hough	
>
>You obviously don't own a house. The mortgage interest deduction is
>probably even more of a sacred cow than Social Security. (well,
>it is to me!) And I claim there are benefits to society in
>encouraging home ownership. Real property (land) owners are less
>likely to want to mess up the system. Indeed, they are the system.
>Surely you've seen what renters can do to their apartments.
>

When I was a student I was a renter and I though the tax code was a ripoff.
I now own three houses and I STILL think the tax code is a ripoff.
I don't know of any religion with a holy book that proclaims that
landowners are better than tenants.  So the breaks in the tax code for
real estate ownership serve no moral purpose, although silly justifications
are available from any realtor.  The breaks in the tax code for real estate
ownership are simply the Establishment looking out for itself; almost all
Congressmen own real estate and have since the beginning, so they don't
even need to be convinced.

>I'd be interested in your opinion of all this after you become a
>home owner with a wife and 2.3 kids. You might find your opinion changed.

> Phil Ngai (408) 749-5720

If anything, now that I have accumulated a family and some assets, 
I am much more aware
of how the tax code is structured to keep the tax burden on the middle class
while allowing the rich to pay taxes only if they want to.  I don't object
to taxing the middle class; the middle class ALWAYS pays the taxes.  
(Again, for those who are new, the poor don't have much to pay in taxes and the
rich never pay taxes unless they choose to.)
What annoys me is the pious facade of progressive taxation.  So I advocate a
system in which it is clear on whose shoulders lies the burden.

David Hough