posted on December 16, 2000 05:13:10 PM new
Just a clarifying comment regarding a post made by DrBeetle re: pre-tax deduction of medical insurance.
Many employers now make it possible (even mandatory) for your medical/dental insurance deductions to be taken on a "pre-tax" basis...for example, if you make $1,000 per week, and your medical/dental insurance premiums for the company's group insurance benefit plans are $20 per week, then you are taxed on income of $980 per week (the $20 deduction reduces that pay period's taxable income before federal, state, local income taxes and social security/medicare deductions are applied). It's a good thing, which, along with other allowable "pre-tax" deductions, like contributions to a 401k plan, can be nicely used to reduce the tax bite from week to week. However, when the books close on the year, this (exemplar) employee will receive a W-2 which shows gross taxable income for the year of $52,000 ($1,000 per week X 52). The $1,040 which the employee paid for medical/dental insurance can then be put into the "non-reimbursed medical expenses" pot, along with all (met) deductibles and all out of pocket medical expenses to try to reach that magic 7.5% threshold to allow those same non-reimbursed medical expenses to "count" as a deduction. Quite frankly, when one has non-reimbursed medical expenses exceeding 7.5% of one's annual income, one has had a medically catastrophic year, and an itemizable medical tax deduction is the very damn least of your worries.
And no, it wasn't always like that....in the medical deduction category or otherwise. Not many years ago, all non-reimbursed medical expenses were deductible; all interest (including on credit cards and car/boat loans or other consumer credit debt) was deductible; all sales taxes paid (my folks used to save every damn sales receipt in a special "tax" drawer, and it was my job at "tax time" to put them in chronological order and total it up); etc., etc.
Sure, I got a lower overall tax "rate" under the republicans...and I ended up paying more in taxes on the same relative income because we got royally screwed on the determinations of allowable itemized deductions to reduce the adjusted gross income. And frankly, the democratic administrations of the last 8 years haven't done much (anything) to change that.
posted on December 16, 2000 05:47:10 PM new
Beth - Because the last Democratic Administrations didn't have a majority in Congress to work with. And to be quite frank and honest on the facts. A large part of the current surplus actually come from increased revenue via the changes in tax code and deductions. Those changes produced more revenue. When coupled with reduced spending in certain areas, and then more Americans in the work force to pay the increased taxes is what brought us our surplus.
So IMHO Bush can keep his tax cut and instead he should be working to keep unemployment below 6%. If a tax cut gives the green light to corporate America to then seek even greater profits via reduced HR spending then the extra money the government is enjoying will not be there. The welfare prorgams that we have cut will have to be replaced and whole lot of other things that have served as a catalyst to prosperity will change. None of us want that so I still can't see why the American people voted to change. But I have my thoughts on that.
posted on December 16, 2000 06:36:15 PM newNetworker67, "Because the last Democratic Administrations didn't have a majority in Congress to work with."
Quite right!!! Let me clear any misunderstanding regarding my own political leanings...I am a Libertarian who voted for Al Gore, who I felt was the most palatable (viable) candidate, and frankly, for personal gain (I live in Gore country, TN and having Gore as president would be a boost for the local, already excellent, economy--you know, all those tourists coming in to see how "quaint" Al's hometown is, a la Americus, GA when Carter was Prez).
But it is the Congress that holds the key to a presidential candidate's delivery on his/her campaign promises, or any other 'call to action' in the form of proposed legislation and/or programs. And even with a slim majority in the House, and the "hinky" majority of Cheney in the Senate, I think it could be tough going for Dubya in the next four years. Darn.
