Subject: Tax Reform Panel Comment: As I sit here looking at the tax brackets and remember all the time that the middle class since the US was founded, has always shared the undue burden of financing the government and its spending I have been provided with the opportunity to voice my opinion. In itself that is one thing that makes the US the Nation it is. I am all for the people who are in the low income bracket receiving benefits of a low tax rate, child care credit, and other items that help them survive and attempt to move forward. It does seems though that when you look are various data that when the largest part of the people living and paying tax in the US have less money to use as disposable income and the ability to save than those people who make large money. The HUD median income here in NJ is about $62,500 annually. That in itself means that about a family of 4 in NJ will end up with about $3,600 a month in a net paycheck after taxes, FICA and their share of the costs for benefits. This does not leave much for people to actually save when you consider the costs of providing shelter, food, clothing, and work expenses for anyone. Simply put between the price of purchasing a home and the property taxes associated with it NJ middle class people do not get that much bang for their buck nor are they able to save for the future. If you look at the current tax bracket one can see how unfair it is for the middle class. Current Income Tax Income Range Rate 0 to 34,550 15% 34,551 to 89,150 28% 89,151 to 144,400 31% 144,401 to 283,150 36% Over $283,150 39.6% Why not implement a tax bracket in which the middle class will have the ability to have a little bit more disposable income and/or money to save based upon what is considered “average income”. I would propose a table like so: MARRIED Proposed Income Tax Income Range Rate 0 to 40,000 15% 40,001 to 62,500 21% 62,501 to 90,000 28% 90,001 to 150,000 31% 150,001 to 250,000 36% Over $250,000 39.6% SINGLE Proposed Income Tax Income Range Rate 0 to 36,000 15% 36,001 to 53,125 21% 53,126 to 76,500 28% 76,501 to 127,500 31% 127,501 to 212,500 36% Over $212,501 39.6% Within this tax schedule I would phase out the 15% tax rate once the income hits the 31% bracket. I would then phase out the 21% bracket once the income reaches the 36% bracket. For these income levels the additional tax burden would be less of an impact since their income level is so high. They can afford to miss a few hundred dollars a month more than the income levels that are considered low. Tax rates like these, especially when you consider most people today under the age of 42 will be paying more than the historical share of FICA and Medicare taxes going forward would provide them with an opportunity to prepare for their lives 20 years from now. I would also take a serious look at those people who are not legally here in the US working. There are so many special programs for them in which their rights are protected, but they are not paying any income tax on their earnings. They do help our economy but they do not pay their fare share of taxes in doing so. Finally, I would take a serious look at tax returns in which the itemized deductions, especially those that are for home mortgage interest, real estate taxes, and charitable contributions dramatically exceed the income levels. Those people who are paying more than say 40% of there total income in home mortgage interest and real estate taxes are obviously getting support from others in either non taxable transactions and/or illegal activities. Most of the time this support is from family, parental, and/or community/ religious support. When it is from individuals accurate records need to be kept to insure that the tax free portion of their estates are adjusted to reflect this. I am all for helping our children obtain a better life, but this is not fairly and equally being done across the board. Plus, why should someone get a tax benefit when they don’t even work! One idea would be to force the individual to have imputed income on the home mortgage interest deduction and real estate taxes above 40% of their income. This way they get to keep their home or even purchase one but also pay their fare share of income taxes for the assets they are accumulating. |