Reply #9: I don't think they did it, but it is possible to increase progessiveness [View All]

by lowering the rates and removing the loopholes. It does not seem that they have actually firmed up the rates for the categories. The AP story says; "The plan would simplify the tax code by reducing the number of tax brackets from six to three, lowering the top rate from 35 percent to somewhere between 23 percent and 29 percent." There is a HUGE difference between 23 and 29 percent.

It will also take a lot of analysis with people simulating what last years taxes would have been for various profiles to really understand the impact. The fact is that NOW the wealthier you are, the more likely you have various strategies to reduce taxes. I am sure that the average effective tax rate now looks NOTHING like the simplistic estimates from just applying the marginal rates.

If this really does eliminate - and keep eliminated - the bulk of the special exemptions, you could actually have a MORE progressive tax structure - when you look at the average effective tax rate for various before taxes incomes.

In your case, if your taxes are zero AND you are not chopping out lots of income with loopholes, nothing here suggests your rate has to increase. Even your mortgage deduction should not change - as I assume, if you are not paying taxes, your mortgage is not over $500,000. (I concede - in advance - that there are not enough details that anyone could really determine the impact on them.)

I think taxes would be far fairer if tax breaks - not the basic deductions - were for the most part eliminated.