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To: technologiste who wrote (59513)	3/14/2004 8:38:19 PM
From: Dinesh	Read Replies (1) \| Respond to of 64865

The tax code has two obligations to serve. One is to be "fair", [snip] You have some good points of view here. Yet I still don't get this tax system. How can it be called fair when a family making a $150K in say Detroit is given the same retirement plan incentives as another one making a measly $150K in Palo Alto? The cost of living is wildly different in the two places. Yet, both families are labeled as equally affluent and taxed in the same way, IRA deductions phased out, and so on. Regards Dinesh

To: technologiste who wrote (59513)	3/15/2004 1:17:33 AM
From: Ira Player	Respond to of 64865

"Merely looking at the microeconomic impact for fairness misses the big picture completely." I will claim that it is you that is not looking at the big picture. You next say: "still gets a better overall deal than the two alternatives: with no incentive (and lots of homeless retirees on the streets) or everyone can deduct the contribution (and then he has to pay a higher marginal rate to make up the shortfall)." The true big picture: If not for all of the phase outs and non-linearity crap that is loaded into the tax code, most American taxpayers could complete their own tax forms. The true cost of these phase outs is not nearly recovered by the government in additional revenues. The complications make it necessary to have experts do your taxes (or give you advice prior to making decisions) because the code is full of land mines like phase outs that will undermine your hard made plans. The "Big Picture" is: A simpler, consistent graduated income tax code would require less cost to the taxpayer to understand and comply with and small increases in the marginal tax rates would make the changes revenue neutral. The problem with saying "low income can deduct, but high income cannot" is that there must be a transition from "low" to "high" and the people at that transition get screwed into paying some of the highest marginal rates out there. These phase outs introduce non-linearities that are fundamentally unfair and, in my opinion, do not produce more revenue than they consume. Ira