Subject: Tax Reform Thoughts for Immediate Review Comment: A few thoughts on tax reform for immediate consideration: 1) Loss of Value on a Home Sale - I was not pleased to find out that when selling a homestead at a loss a taxpayer cannot deduct the amount of the loss as a hit to income. This past year I switched jobs which had me move 1500 miles from a soft real estate market to a hot one. I lost $70K off my original cost basis of my homestead in the move after trying to sell my home for one year. In looking at the tax law in detail those that purchase vacation homes (and rent these homes) or purchase real estate for investment purposes can deduct the loss on the sale of that home yet I cannot deduct the loss on my homestead? I find this needs immediate review and the law changed to allow for a deduction of a loss when selling a homestead since you will be taxed on the gains you would have on selling said homestead and because the law allows for deduction of a loss on investment properties. The way this law is written to give a break to the individual that can purchase investment properties is unfair to those that have a single homestead and lose their shirt selling their home. In closing I would recommend this law be changed to allow the deduction of a loss on the sale of a primary (homestead) residence and this be retroactive to the beginning of the 2005 tax year. 2) Deduction of Moving Expenses - I feel the deduction of moving expenses should be expanded to include the following items: a) Realtor fee expenses selling current residence b) Utility switching costs (if applicable) c) New State Vehicle Registration (if applicable) d) Increase in mileage deduction allowed (currently 14 cents per mile) - should match 37.5 per mile used for business expenses. I made a move this year for a new job and found the deductions for a move very limiting and frustrating. Often moving expenses are incurred by taxpayers landing a new job - either because that individual lost their job or because they are looking to better their horizons. In either case the tax law should encourage said individuals by providing relief in the costs to move. This can be especially important in the scenario where a company provides the taxpayer an amount of cash for their move (for example $15K for moving expenses) where the taxpayer may then be pushed into another tax bracket and taxed further on that income. 3) Alternative Minimum Tax Reform - PLEASE REVIEW AND UPDATE THIS TAX LAW! This law hurts the upper middle class wage earner with multiple children living in a high income tax state. This law needs serious updating to impact just those in the $500K or more salary ranges if it should exist at all. 4) Sales Tax Deduction - I have recently read about the addition of this deduction and I think it is ridiculous. I can't see how this helps the average taxpayer, but can certainly help those that make large purchases which are most likely high income individuals. Get rid of it...and add the aforementioned deductions in items #1 and #2. Thanks for listening. I would be very pleased to see these changes made for Tax Year 2005! Best Regards, Joe Mrak |