Saturday, June 30, 2012

Tax Primer

Ok, I've had it with reading all the Obamacare "mandate" discussions over whether it is effectively a tax or not.  People seem to want it both ways.  Conservatives first screaming it was a tax when enacted then lambasting Chief Justice Roberts for calling it one while they want it to be called an individual "mandate" to make it unconstitutional under the Commerce clause.  Liberals claiming it's not a tax, but reveling in the SCOTUS decision.  Well, you can't have it both ways, choosing whatever to fit your want.

First of all, they (the government) already can and do tax everything, to include non-activity. Think about this Obamacare “mandate” as you would in terms of a mortgage “deduction”. The mortgage interest deduction can also be called a "mandate".  What they are telling you is you must buy a dwelling ~and~ you must take out a mortgage to get a “deduction”.   Simply renting one or buying your house for cash and not being in debt isn’t good enough.   You must have a mortgage or you will pay a "penalty" by being taxed more, plain and simple. And the bigger the mortgage and the more debt it puts you into forcing you to pay more interest (that translates into more profits for the banks which is also taxed) the better will be your reduction in the tax “penalty” for not having a mortgage.  It's win-win for the banks which sell more mortgages and the government which collects more taxes (they only get 15% on your income, but 35% of corporate profits) and a huge loss for you being forced to go into debt to buy something you may not need.  All in all, it's simply designed to take more money from you.  I won't go into how corporations lower their tax exposure today, but be assured that it is a pyrrhic victory for the consumer who must pay the corporate tax, regardless.

So, do you think the banks helped create the mortgage interest deduction, just as the insurance industry helped create Obamacare?