I am looking at the following:
It is sponsored by Laura Friedman, a U.S.
Representative from southern California. You can probably guess which party.
This proposed bill would create the following:
(a) A new excise tax of 23.8%
(b) On “covered” loans
(c) To the extent all covered loans exceed $1
million.
I presume the 23.8% comes from the maximum capital
gains rate (20%) plus the Obamacare net investment tax (3.8%).
Not sure about the $1 million. It does appear to
shield the average person, but, then again, I remember when principal residence
mortgage interest was deductible without limit; then limited to debt of $1
million; and now limited to debt of $750 grand. No grand point here - just
saying that it is difficult to go through life without knowing history.
A “covered” loan would exclude:
(1) Home acquisition loans
(2) Home equity loans under $3 million
(3) Vehicle loans under $100 grand
(4) Certain education loans
(5) Trade or business loans
(6) Certain margin loans
I am not immediately feeling a home equity loan of $3
million.
Same comment on spending $100 grand for a car.
Not my clowns, not my circus, but let’s continue.
In the contemporary spirit of reporting any economic pulse
to the fisc, there would of course be Form 1099 reporting.
Lines of credit would be rudely treated, as the 23.8%
tax would be due on the maximum allowable borrowing limit, not the amount you
actually borrow. You may want to sleep on that before you sign up.
There is some relief to avoid taxing the same loan
twice. For example, if you sell a car (with a loan) and buy a car (with a
loan), you would be permitted to deduct tax paid (on the loan) on the car sold.
Unfortunately, the deduction would be a capital loss, meaning a possible deduction
limit of $3,000 per year because Congress has failed to adjust this limit for
inflation since 1977. To put that into context, the average price of a new home
in 1977 was under $60 grand.
I assume the proposed bill is pointed at wealth and
its distribution in society. I also assume that wealth is defined as
anyone-having-more-than-Laura-Friedman-or-her-House-staffers, as that seems to
be the repetitive refrain to such economically subliterate bleating. It gets -
frankly – irritating to be scolded by people we would not introduce to our
friends.
Many if not most of us understand the need to deossify
wealth concentration and maintain lanes for economic mobility. That is, for example,
why we have gift and estate taxes. In isolation, they are a minimal addition to
annual tax revenues, and one could credibly debate whether they are worth the
complexity lobbed into the tax Code. They are however an evergreen font of professional
fees for tax lawyers and CPAs - me included.
Likewise, many if not most of us recognize an accelerating
negative Flynn effect in society. A critic might point to Congress as a vivid example.
If we keep regressing, these people will have to rediscover fire.
I miss when southern California contributed desirable
things to the country, such as movies we actually wanted to watch.
