Expiring tax provisions

[AuditorTurnedGood]

All,
To those of you with the ability, check out the Tax Authority Update that was posted today on expiring tax provisions. Be afraid. Be very afraid. Here's hoping congress is able to get some of these extended - we're hemeraging(sp?) cash anyway, why not a little more.....


ATG

[Nashville]

Absolutely!

ATG I couldn't agree more. If we have energy enough to hurl politics at one another, we should channel this same energy into NATP and NAEA and other orgs in order to get something done.

Over the last half-dozen years or so, I have held my nose and watched the politicians fiddle while Rome burns, and then wait until the last moment before Christmas recess to revive expiring provisions. All the time this is occurring, tax preparers like myself are waiting on edge, with clients ringing the phone off wanting to know what to do before year-end. Sometimes not everything gets recessitated - witness the death of the Residential Energy Credit in 2008 and rebirth in 2009. How do you tell clients to "tax plan" around something this bizarre?

And it seems nowadays no new major legislation of ANY KIND is complete without a tax provision or two thrown into the mix.

And THIS year -- let us not forget the burial of the estate tax in 2010 and schedule resurrection in 2011.

[Snaggletoof]

Bush Tax Cuts

It has long been an agenda by leading Democrats to deliver this country by reversing the so-called "horrible Bush Tax Cuts." I refer to those passed early in the first Bush term, circa 2001, 02. They now have the numbers to do so, if they are not so enamoured with the prospect of even more prodigious tax legislation.

In order to sell the tax cuts way back then, the provision was added that these cuts were temporary. This was drawn up such that these cuts would expire unless extended by legislative action. This has led to a smorgasboard of tax items that carry the Congressional session down to the 11th hour every year.

Among the major "Bush Tax Cuts" that are in the mix are: the 15% ceiling on dividends/capital gains, elimination of itemized deduction phase-outs at higher incomes, and direct tax rate reductions. The bizarre estate tax debacle of 2010 & 2011 was part of the same legislation, and it was felt at the time that "surely before then, someone will do something." It is now August of 2009, and "nobody ain't done nothing."

Just how "horrible" were these tax cuts? In my career I have survived two attempts by the Tax Code to rid the economy of preferential rates for capital gains. The result of these attempts were devastating to the real estate and construction industry and in both cases, legislation came back to restore capital gains preferences. What about the getting rid of the 15% ceiling on dividends? For those of you who want to lose another half of your retirement plan, go for it!!

Above ironic comments considered, this is not a veiled attempt to begin another political cowpie hurling contest -- it is indeed a relevant discussion to the subject as begun. Please don't turn it into one. Whether we like it or not, we cannot entirely separate taxation from the political process or from the economy, and we must acknowledge a modicum of obeisance to these elements without letting them take center stage.

There's not a lot we can do as tax preparers to untie ourselves from the train track while the End-of-year Express rumbles our way. We don't have huge lobbying money in our industry to influence legislators or make them see the damage done by this trend in recent years. But as preparers, we DO have first-hand statistical knowledge (albeit uncompiled) that is rare, relevant, and accurate. This having been said, an educational campaign is about the best we can hope for.

[Matt Sova]

Tax cuts

Obama has stated over and over that he will not raise taxes on the lower and middle class. I think what he means is he will not directly raise those taxes. He will simply wait until the Bush tax cuts expire and he can point his finger and, through a teleprompter, tell us it was the republicans fault. You are right, hard not to be political when taxes come into play.

[AuditorTurnedGood]

All we can do, liberal and conservative alike, is try to get our professional organizations (AICPA, NAEA, NATP, etc) motivated to start lobbying these issues now. At the end of the day, I don't care who raised taxes, just that they're going up.

ATG