OMG! It's the Fiscal Cliff!

Lamplighter · 11-26-2012, 11:48 AM

OK, I have not thought this through, so maybe someone else can improve on my question...

Elsewhere I posted about a few Republicans changing their attitude
towards Grover Norquist's pledge to never raise taxes.
Those Republicans, and a few others, are saying that they are not willing to raise the tax rates,
but instead want to "raise revenues" by closing loopholes and "capping the deductibles".
One of them said that capping deductions at (maybe) $30K - $40K
might be acceptable, but only if the Democrats would cut entitlements.

So, my question is this:
Why are Republicans pushing the idea of capping deductions ?

My distrustful mind wanders through ideas like these...
If tax rates are generally around 28% on upper levels of taxable income,
a cap at $35K seems as though it would be equivalent to such a deduction on (only) $125K.

Why is that OK with Republicans ?
Is it because it is applied to "earned income",
as opposed not to income from "interest", "capital gains", "return of capital", etc.
Or, are the wealthy looking to remove all foreign income from their taxes completely.

I like xoB's current signature: "Everything is interesting... look closer"

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11-26-2012, 11:48 AM	#11
Lamplighter Person who doesn't update the user title Join Date: Jun 2010 Location: Bottom lands of the Missoula floods Posts: 6,402	OK, I have not thought this through, so maybe someone else can improve on my question... Elsewhere I posted about a few Republicans changing their attitude towards Grover Norquist's pledge to never raise taxes. Those Republicans, and a few others, are saying that they are not willing to raise the tax rates, but instead want to "raise revenues" by closing loopholes and "capping the deductibles". One of them said that capping deductions at (maybe) $30K - $40K might be acceptable, but only if the Democrats would cut entitlements. So, my question is this: Why are Republicans pushing the idea of capping deductions ? My distrustful mind wanders through ideas like these... If tax rates are generally around 28% on upper levels of taxable income, a cap at $35K seems as though it would be equivalent to such a deduction on (only) $125K. Why is that OK with Republicans ? Is it because it is applied to "earned income", as opposed not to income from "interest", "capital gains", "return of capital", etc. Or, are the wealthy looking to remove all foreign income from their taxes completely. I like xoB's current signature: "Everything is interesting... look closer"

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