Perplexed about why Bernie Sanders and Donald Trump are so popular?
It’s all about April 15 and the tax code.
If that sounds far-fetched consider this: Both candidates have plugged into economic issues. They run the gamut from income inequality, corporate greed, and illegal immigration supposedly undermining employment opportunities, to America bankrolling wars of others with both American money and lives.
And no collection of documents plays to all those frustrations better than the tax code that is in reality more about social engineering and central planning than anything else.
If taxes were based on equality and basis, they would be straight forward and simple.
There would be four lines: One would list how much income you received in a year from all sources. The second would be your tax liability based on that gross income. The third would be withholding payments. The fourth would be the balance — a negative is what you are due in a refund while a positive is what you owe.
No dependents. No deductions. No tax credits. No earned income tax credit. No need to have anyone else do your taxes.
The tax liability tables would be based on the number of people 18 and under in your household. The threshold would be high enough for taxes to kick in so you don’t subject a person who is paying income tax to have to secure food stamps and other government assistance for basic necessities.
The tax liability tables also would be indexed based on the federal Consumer Price Index of where one resides. The cost of living is obviously higher in San Francisco than Biloxi, Mississippi. To tax a single person making $20,000 in San Francisco the same as someone making $20,000 in Biloxi is insane especially when California is a donor state when it comes to federal income taxes and Mississippi is a receiver state.
Why should anyone get a mortgage deduction? Right now, for example, it costs almost the same to buy a three bedroom, two bathroom home on a per month cost basis in Manteca as it does to rent it.
Why should someone making $50,000 a year be penalized on their taxes simply because they rent while another person making $50,000 gets a break because they’re buying a home? The renter and homeowner both get the same degree of protection from the American military and such. As for the contention that the renter doesn’t pay as much in taxes for services, it’s time to stop defending that lie. Whoever owns the dwelling they are renting pays taxes and passes the cost on to them. Renters also pay the same taxes as homeowners on everything from clothes to cars. They also pay fees for water, sewer, and garbage. So why should a homeowner get a tax break? Could it be because Congress thinks homeowners make better citizens therefore it is OK to discriminate against renters using the tax code to encourage people to buy homes?
If there was no mortgage deduction, the odds are it would have little if any impact on home ownership rates. Canada doesn’t have a mortgage deduction and their home ownership rate is higher than ours.
That said, there would be no tax credits or tax deductions for anyone or any company.
If someone wants a solar panel system or to buy an electric car so they can save money on energy, they won’t get a tax credit.
The same goes for corporations that want to invest in infrastructure so they can save energy or make more money by expanding their means of production. They will not get a tax credit.
It’s pretty tough to rail against corporate giants getting federal tax credits to invest in equipment to make more money and in turn wipe out tax liability on $4.85 billion in profits if the same tax code can be used by someone to knock off $10,000 of the cost of buying a $70,000 Tesla. It says a lot about the state of America when a corporation like PG&E pays no federal taxes while a struggling family holding down four jobs pays federal taxes.
PG&E with a guaranteed return of 11.5 percent assured by the State of California regardless of how bad the economy is has the means to invest in infrastructure.
And someone that has an income high enough to afford a $70,000 Tesla doesn’t need any help buying it.
People and corporations should buy and invest based on what they can afford.
And they certainly shouldn’t be given an advantage on the back of other taxpayers. April 15 as it stands now should be called what it really is — The Day of Big Winners and Big Losers — and not simply be known as the day income taxes are due.
Every time a firm like PG&E gets off Scott-free without paying a penny in taxes the burden of running the federal government is shifted to others that help make PG&E profitable such as small businesses that aren’t getting tax credits from Congress.
And every time a well-heeled buyer drives off the car lot with a Tesla the struggling family in a mini-van is picking up a larger portion of the federal tax liability.
And people wonder why there are a lot of angry voters.
This column is the opinion of executive editor, Dennis Wyatt, and does not necessarily represent the opinion of The Bulletin or Morris Newspaper Corp. of CA. He can be contacted at email@example.com or 209.249.3519.