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View Diary: Can someone explain to me why no one is asking this question? (29 comments)

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  •  Really, not much. (0+ / 0-)

    There is an argument that by reducing marginal rates--the rate that a person would pay on additional income above what they actually earned, if they earned it-- people are encouraged to actually earn that extra money.  The idea has some merit, but its effects have been widely exaggerated.  

    And really, the more important thing is your effective marginal rate, not the stated rate.  For example, if you use that extra income to qualify to buy a larger house with a larger mortgage, under existing law your marginal tax rate is higher, but you are taking a bigger deduction for your mortgage every year.  If those offset, there is no incentive.

    For some, their effective marginal rate could be lower under the current system than under the Romney "plan", because they would spend the extra money on things that allow them to take deductions that more than offset the lower rates.

    Anyway, that is really the only argument for their plan, as they have stated it.  (Of course, their plan is impossible, and would by necessity raise taxes on the middle class and cut taxes on the ultra wealthy.)  If they were actually eliminating deductions, they could at least argue that doing your taxes would be simpler.  But they can't even argue that, since their latest "plan" they've floated is to keep all the deductions, just cap them.

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