Tax deductions!

What would be the pros and cons of making credit-card interest and unsecured loan interest tax-deductible? Just think of the millions under high interest debt that would be helped. I would appreciate all comments and info.

I would prefer a higher Personal Exemption.
A higher Standard Deduction would be my second choice.
Then we could remove some of the credit lines.

Not everyone qualifies for itemizing their deductions.

The high interest credit begs a question, Is the item purchased on credit needed today?

Didn't it used to be that you could deduct these? I guess I would wonder what was the rationale for removing the benefit then, and does it hold true now?

Didn't it used to be that you could deduct these? I guess I would wonder what was the rationale for removing the benefit then, and does it hold true now?
Yes, personal interest used to be deductible. I believe it was phased out as part of Reagan's tax cuts.

remember what the tax code is USED for.

first and foremost, revenue generation. we all knew that. but there is a point where sufficient revenue is generated (unless our congress spends every dime it can find, beg, borrow or steal).

secondly, you tax things you want to discourage and dont tax things you want to encourage. we encourage home ownership and education and babies! so, we reduce or eliminate taxes on these issues. we discourage smoking and carrying debt ... so they crush you with all the taxes they can (or at least dont give it favorable tax status.)

who would benefit the most? the consumer? who would be hurt? The credit card companies? Maybe by making the interest deductible you would see interest rates drop on credit cards to prime rate levels. Why do some cards charge 18-24.99% anyway? why isn't the interest tied to or at least be comparable to the prime rate? when did they get the permission or the nerve to be 10-15% higher than the prime rate? What if the prime rate was as high as credit card interest? like in the 80s ?. In 1981 the prime rate was 20%!!!! the lowest i've seen was i believe 3% in the 1940s when we had a housing and manufacturing boom. Coupled with high interest rates, it seems the cost of everything is killing the economy. I'm watching Meet the Press listening to John McCain talk about Tax Cuts. Tax Cuts for who? Do they still believe in Bull**** trickle down economics? If I cut the taxes for the wealthy and large corporations they will spend more,hire more and everybody will be happy LOL ! That has never worked and it will never work!

conversely, trickle down economics DOES work. everytime you spend a dollar, it rolls over inside the economy about 7 times. in other words, you tip a waitress a dollar, she spends the dollar for a cup of starbucks, starbucks buys something for 20% (the coffee beans) and pays the utilities (10%) and invests in the company (10%) and profit (10%) and pays its staff 50% and everything starts to roll again and again.

any economist will tell you this happens. it is without controversy.

on the flip side, make no mistake about it. the rich view money QUITE differently than do the non-rich.

Rich: "How do I make MORE money?"
Non-Rich: "How do I protect the money I have?"

so, if you gave a RICH person a million dollars, they are going to spend it ($7 million into the economy) or they are going to (capital) INVEST it to make MORE money.

if you give a non-rich person a million dollars they are going to pay off debt and SAVE (not "capital" INVEST) the bulk, and capital INVEST a small portion.

all of the capital investing will create MORE jobs, HIGHER-PAYING jobs, spur new TECHNOLOGIES.

now remember, a "non-rich" person "thinks" they are investing. but when you invest in a conservative portfolio (to protect your windfall) you are NOT spurring capital development. you are NOT creating new jobs. you are NOT funding technological development.

trickle down economics works well. it works better when people dont tinker with it.

thanks for the info. Now on the flipside of those points After the tax cuts and other measures are in place why is America in so much trouble today? Could you say that those tax cuts which were designed to "trickle" down actually cut the Govt's Revenue stream? and coupled with our massive spending deficit , Place us in a very deep hole. And actually
"trickle" down works both ways The tax cuts reduced Govt revenue which reduced State's revenue that relied on Federal funding and in turn local governments are facing serious shortfalls that effect you and I directly! So as the saying goes **** rolls down hill>

On a side note our city is facing a 10 million dollar deficit due to the loss of tax revenue and I may get laid off. the trickle feels like a trickle of warm ****

Also are you saying don't give the non-rich the money because they they won't invest in the economy let them suffer. Give the tax breaks to the corporations and the wealthy they will know what to do with it. How about bottom up economics? take care of non-rich consumers they will spend more, buy more products. which in turn would help corporations and then they would invest in capital. Bottom up sounds better and would help more "trickle" down is flawed at best.