Ugh. OK, I'll concede that point insofar as we're discussing the low end of the consumer economy. Walmart, etc will probably do better in that case, but in terms of the overall economy that is not correct. Poor people, as you state, will tend to spend that money more so than rich people. Because rich people will invest it. Something that actually expands the economy long term.
Except that rich people don't invest where they don't see profit. Crazy low interest rates indicate an economy where there's plenty of capital floating around to invest, it's just that it can't find much to invest in.
If demand isn't there, it is most likely because prices are too high. Giving people more money isn't anywhere near as economically efficient as changing the environment that is causing those prices to be so high. It's more likely that punitive (or protective if you're already the big dog in the yard) regulations are the culprit for the lack of investment than supply being saturated. With less barriers to entry new participants in the marketplace will enter and be able to make use of those investment dollars looking for a place to go.
I'm not going to object to that, I'll just point out that there are multiple ways to manipulate the economy. Keeping regulations manageable is always a concern, but relatively speaking, that's scalpel work, while tax rates are a hammer. Sometimes the hammer is simply the better tool for the situation.
Most the time people itemizing are mostly barely over the Standard Deduction amounts. Maybe $2,000-$3,000 at the most. Doubling the standard deduction would give most people a huge tax cut.
Which is it? Most people are doubling the standard deduction, or are mostly barely over? That said, I agree with you except for one thing: The elimination of the personal exemption. Which is $4k per person, vs the $6.3k deduction.(All figures for single people) Doubling the deduction and eliminating the exemption only puts people(Under $262k at least), ahead $2.3k in reducing taxable income. That's assuming they don't currently itemize. If they currently itemize more than $10.3k of deductions but less than $16.6k, then their taxable income is going up!
As for the home mortgage exemption, that's why I said having home mortgages be deductible is a giveaway to the rich, because it's the rich who have big enough mortgages to
drastically pop the standard deduction, as in it's more than doubled right then and there. While there are plenty of middle class people taking the mortgage deduction, as you note, most of the time they barely get over the standard deduction, so doubling it would cause many of them to go to the standard deduction, at which point they lose all advantage from the mortgage deduction. I get close each year, but don't manage to bust the standard deduction, so while I have a mortgage, I don't benefit.
I'd rather do something like eliminate the mortgage deduction, and increase the personal exemption to something like $6k, call it "housing and food allowance". $500/month per person should cover the "mandatory minimum" cost of living stuff for people not living alone.
Some of us bunch our deductions in alternate years in order to get more deductions. Real estate taxes for one, but I am considering starting a Donor Advised Fund so I can bunch my charitable contributions as well (it's like an HSA for giving).
You can do that? I only pay ~$3k in interest, and ~2.2k in property taxes. I only got to itemize like my first 2 years of owning the house. 3.25% interest and under $100k left. I mean, I should probably get a home equity loan and just invest if I can get 3.25% interest because it's deductible and I'm clearing 10% on my investments, but I want my place paid off!
Charby - You say that the proposed law gets rid of the personal exemption, which I have seen as well, then you say "they aren't talking about the personal exemption going away"?
Sumpnz - I agree with you. I don't think breaking up holding companies is the answer. I think encouraging more competition is. Making it easier to enter the market by relaxing regulation would be step one. Starting with internet service providers is one I'm personally interested in, as a computer programmer the internet is a big deal, and I see the current crop doing things like making cooperative startups
illegal rather than addressing that it's their utterly horrible service that is causing residents to rise up and try to make competition.