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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (16256)	11/18/2004 4:52:12 PM
From: GraceZ	Respond to of 116555

Any thoughts on that Bush Tax Bill plan I posted earlier today? First, I'd expect that the business deduction for the health insurance will be heavily fought. Most employees are completely unaware of how much they overpay for their health benefits when they are included in their compensation package. Changing the deductibility will push more high income tax payers into high deductible/medical savings plans as an alternative, something I see as a long term beneficial move since the only way for people to ration their own use of medical benefits is to have them be made more aware of the cost rather than continually laboring under the illusion that they are "free". It would hit me hard because I count on that self-employed health insurance deduction to help pay a sharply rising premium. But it would in effect give me a shove into a medical savings plan which is where I'm leaning anyway. If my current provider doesn't offer a roll over to a high deductible/savings plan as an option I can guarantee they will soon or face losing all the healthy 50 year olds like myself. Second, the loss of the deduction of state and local taxes will have little or no effect on the poor simply because the poor tend to use the standard deduction which exceeds the tax they pay to the state-if any. Of course for this to be true they'd have to keep the standard deduction constant and that's a big "if". I'd gladly give up my state tax deduction to get tax free cap gains. I expect the states to scream bloody murder. Removing taxation on long term capital gains will have an enormously beneficial effect on the economy. There is nothing worse than paying cap gains on what frequently amounts to the effect of monetary inflation on an investment vehicle.