Tag: Tax Reform

This Tax Reform Stuff Can Wait

[I]f we are going to make real progress, we can’t fixate on every overhyped, half-baked tax slogan that comes along. Sooner or later we must get back to basics. Here’s the main question: Should taxes be cut, raised, or reformed without changing overall revenue? The answer is that taxes should be cut in the short term, raised after we are clearly out of our cyclical downturn, and then reformed only after we have settled on the magnitude of tax increases needed for deficit reduction. [Martin Sullivan]

Who’s Afraid of Tax Reform?

The last time I saw the family dentist while I was in college, he asked me what I was studying. When I told him I was studying tax accounting, he got a strange, smug look on his face and asked, “what are you going to do when there is a flat tax?”

It’s been almost 30 years since I saw that dentist, and so far I’ve dodged the flat tax bullet. There has been one big tax reform since I started public accounting, and next to getting fired by good old Price Waterhouse, The Tax Reform of 1986 has been the best thing that happened to my career.


The 1986 Tax Reform Act’s 25th anniversary is tomorrow. With talk of radical tax reform in the air, from Herman Cain’s 9-9-9 plan to Rick Perry’s embrace of an old-fashioned flat tax, young tax nerds may lose sleep worrying that this time tax careers really will be legislated out of existence.

Go back to bed. For young tax nerds, radical change can be a huge career boost.

The 1986 tax reforms were enacted during my third year out of school. The local office of my national firm was going to put on a big client seminar, and I was put in charge of organizing the presentation. In the pre-Internet days, we got one paperback copy of the legislation, which I tore apart at the bindings so the presenters could have their part of the law. I proofread the slides, sent them to the photographer, and then manually arranged the presentation in the slide carousel (there was no PowerPoint, kids).

The seminar came off well (I did passive losses), which helped keep me (and the evil manager who didn’t like me) from getting me fired again. But in the following weeks the real benefit began to dawn on me — thanks to tax reform, I suddenly knew more about most of the tax law than everybody in the office who outranked me — including the evil manager. It got me promoted quickly, and it gave me much-needed credibility a few years later when a bunch of us went over the wall to start a new firm.

If there is radical tax reform, it will trash a lot of accumulated tax trivia knowledge that experienced tax nerds trade on. But it will also create huge opportunities for young, smart nerds who are willing to learn the new rules. It will be a great leveller in the profession, and a huge advantage to the young and strong.

But it will probably make it almost impossible for me to sell my collection of 1986 Tax Act books for a good price on e-Bay.

John Boehner Asking Supercomittee for a Small Favor

House Speaker John Boehner (R-Ohio) will call on the deficit-reduction supercommittee to lay the foundation for an overhaul of the tax code in a speech to the Economic Club of Washington on Thursday. In an address timed as a response to President Obama’s jobs plan, Boehner plans to restate his opposition to tax increases either to pay for job-creation measures or to reduce the deficit, according to a preview circulated by his office. Yet the Speaker is expected to voice support for closing loopholes as part of broader tax reform, which could include eliminating tax breaks for oil companies and other industries. [OTM/The Hill]

Somewhere in Mitt Romney’s 59-point Economic Plan, There’s Something About Tax Reform

That’s right boys and girls. Our economy is such a jumbled clusterfuck that Presidential Ken Doll Mitt Romney and his team had to lay out 59 specific proposals to get this thing turned around. In a USA Today op-ed, Mittens laid out a little preview of this plan and it includes – YEP! – cutting taxes and ultimately overhauling the tax code:

Marginal income tax rates and tax rates on savings and investment must be kept low. Further, taxes on interest, dividends and capital gains for middle-income taxpayers should be eliminated. Our corporate tax rate is among the world’s highest. It leaves U.S. firms at a competitive disadvantage and induces them to park their profits abroad, benefiting the rest of the world at our expense. I will fix these problems with permanent solutions. Ultimately, I will press for a total overhaul of our overly complex and inefficient system of taxation.

Romney seems to be following Jon Huntsman’s lead but for fortunately for Mittens, Huntmsan’s plan wasn’t bulleted and no one heard the speech.

Romney: My plan to turn around the U.S. economy [UST]

Jon Huntsman Has a Plan for Tax Reform

Unheard-of GOP Presidential candidate Jon Huntsman isn’t doing so well in the race for his party’s nomination. This is probably due to the fact that he seems like a fairly pragmatic fellow and pragmatism isn’t really something that fits in the GOP agenda. I mean, COME ON, the man believes in evolution and trusts scientists on climate change. Clearly he’s going nowhere with those kinds of policy positions.

So, in what will likely amount to another failed attempt to bring some sense to the GOP narrative, Huntsman will give a speech on tax reform and various other issues in New Hampshire.

Huntsman will lay out his plans for tax and regulatory reform, energy independence and free trade in a New Hampshire speech that’s being billed as perhaps the last best chance for Huntsman, who stands far behind the GOP frontrunners in polls, to establish himself as a serious contender for the Republican presidential nomination. “Meeting our challenges will require serious solutions, but above all, it will require serious leadership – a quality in high demand in our nation’s capital, and among my opponents on the campaign trail,” Huntsman will say, according to excerpts released by his campaign. The centerpiece of the plan is a proposal to reform tax rates. The Huntsman plan would eliminate all loopholes, deductions and tax exemptions in exchange for establishing three individual income brackets, taxed at eight, 14 and 23 percent. The Huntsman plan would also eliminate capital gains and dividend taxes, do away with the Alternative Minimum Tax (AMT) and reduce the corporate tax rate to 25 percent.

Now all he has to do is mention God’s role in all of this and he’ll be the frontrunner.

Huntsman to unveil sweeping tax reform [The Hill]

This Year’s AICPA Council Issues Are (Mostly) All About Taxes

Let’s all keep in mind here that the repeal of burdensome 1099 rules buried in the Affordable Care Act of 2010 (or “Obamacare” for my fellow right-wing nutjobs out there) can be directly traced to efforts by the AICPA and its members, including a few angry letters sent by the AICPA to Congress. It’s a perfect example of legislative action at work, for those of you out there with little faith in the process.

Here are this year’s key issues:

Tax Strategy Patents S 139 The Equal Access of 2011
The bill would stop the granting of patents for tax strategies. Which basically means your next door cube-dweller won’t be able to patent his favorite spreadsheet.

Tax Due Dates S 845 Tax Return Due Date Simplification and Modernization Act of 2011
This bill would amend the Internal Revenue Code of 1986 to provide for the logical flow of return information between partnerships, corporations, trusts, estates, and individuals to better enable each party to submit timely, accurate returns and reduce the need for extended and amended returns, to provide for modified due dates by regulation, and to conform the automatic corporate extension period to longstanding regulatory rule. The short version: it seeks to change the dates on which tax returns are due to a more sensible pattern.

Simplification of the tax code
The AICPA has a long history of advocating sound tax policy; this year, it’s all about simplifying the tax code, starting with the repeal of AMT and consolidating education provisions.

Workforce Mobility HR 1864 Mobile Workforce State Income Tax Simplification Act of 2011
Unlike previous mobility initiatives, this one would limit the authority of states to tax certain income of employees in other states. Thanks to the Internet, many companies are able to staff employees around the country, some of which only do a few hours of work a month. That means the company must register and withhold state taxes for these employees in each state.

“Our tax laws are a vital component of the economic health of our nation as evidenced by the discussion in Washington about tax reform,” Barry Melancon, president and CEO of the AICPA, said. “We think it’s important for members of Congress to talk taxes with CPAs as they consider changes to the law. CPAs can provide objective advice, based on real-world experience.”

The goal of Congressional visits is to exchange information with our Congressional members on legislative issues of concern to CPAs (and, directly related to CPAs’ concerns, those of their clients) and to garner support for the profession’s position on these issues, as well as to position CPAs as resources and thought leaders. To call it lobbying would be a misnomer as lobbying would imply a one-way relationship, beneficial only to the special interest doing the lobbying. So don’t even go there; we’re talking about providing professional analysis, opinion and expertise in exchange for a voice in legislation that could potentially impact hundreds of thousands of CPAs and CPA firms around the country.

For the CPAs on the Hill yesterday, they not only presented their issues but offered themselves as experts in areas many Congressional offices are unfamiliar with. Tweaking the tax code is a delicate issue, and one that shouldn’t be approached without expert analysis of any proposed legislation. This is where the two-way street comes in, and another reason why these visits are important for all involved parties.

We’ll update later with specifics on the day we spent meeting Maryland Congressional members with the MACPA Council and Executive Committee, including former MACPA Chair and amazing storyteller Larry Kamanitz, who made 60 cents an hour when he first got into public. Stay tuned!

Tim Geithner: We’ll ‘Take a Run’ at Tax Reform Before the Election

Eraserhead doppelgänger Tim Geithner has said that tax reform is coming but you shouldn’t really expect things to get started before Labor Day. If we’re lucky For starters, this tax stuff is complicated and secondly, this debt ceiling discussion is all the rage right now:

Geithner said the Obama administration hopes to take up the issue of tax simplification before the presidential election in 2012 but he signaled the issue is on hold for now. “I think realistically this fiscal debate we’re having is going to dominate our preoccupation for the next couple of months,” Geithner said in response to a question after remarks to the Harvard Club in New York.

But don’t worry, since the GOP has made it abundantly clear that raising taxes are off the table, the administration will definitely call attention to their uncooperative attitude well before the election:

Geithner said the administration would like “to take a run at doing this ahead of the election. That means we’ve got to start but we also need to get this fiscal stuff on a better trajectory.”

Geithner says overhaul of tax code must wait [Reuters]

Is Everyone Aware That There Is a Chicken Sh*t Tax Credit?

Tax wonk Len Burman wrote a letter-cum-blog post to Jon Stewart today over at TaxVox explaining how there really is spending in the tax code through tax credits. You see, Stewart gave President Obama a hard time last month about “reducing spending in the tax code” which JS wrongly interpreted as Newspeak. Burman then goes on to give an shitty perfect example of just how ridiculous tax credits have gotten (in case you weren’t aware already):

You don’t believe there’s spending in the tax code??? Here’s a real life example: the chicken-s**t tax credit. Really, section 45 of the Internal Revenue Code. You can look it up. The late Senator Roth of Delaware (home of lots of chickens and “poultry manure,” as it’s euphemistically called) put this little goody into our tax laws. Here’s the backstory: the EPA said that enormous chicken farms could no longer put their poultry waste in pools or bury it because it poisoned the ground water. One of the best options to meet the new requirement was to dry the vile effluent and burn it to make electricity, but that was still costly. Roth didn’t want chicken farmer profits to plummet or chicken and egg prices to rise just because farmers couldn’t use the earth as a giant toilet, so he pushed through the chicken s**t tax credit to create a profitable market for that (as well as all sorts of other crap).

Burman not only explains to Stewart that using tax credits to keep chicken feces out of the water isn’t a good thing but by mocking the President, he also may have inadvertently helped tax executioner Grover Norquist:

Arch-conservative Oklahoma Senator Tom Coburn, leader of the bipartisan “gang of six,” has said that he’d support tax increases so long as they didn’t include rate increases. That is, he wants to rein in subsidy programs run by the IRS.

This is important. Coburn was willing to take on Grover Norquist, who has very effectively prevented any sensible compromise on the budget by insisting that cutting tax subsidies would violate the taxpayer protection pledge that he strong-armed most Republicans to sign. Now Grover can use your laugh line to reinforce Republican intransigence and doom any chance of bipartisan cooperation.

And to indirectly (or perhaps directly) support taxpayer funding of chicken-shitless water.

Jon Stewart’s Fake News on Tax Expenditures [TaxVox]

Paul Ryan Is No Ronald Reagan

Charles Krauthammer […] writes that the “most scurrilous” criticism of House Budget Committee Chairman Paul Ryan’s fiscal plan is that it would cut taxes for the rich. This would, he says, be akin to making the same claim against the Ronald Reagan-Bill Bradley 1986 tax reform. Krauthammer goes on to assert that Ryan’s plan is “classic tax reform” that … broadens the base by eliminating loopholes. The facts are otherwise. The Ryan plan, at least what we know of it, would inarguably cut taxes for the rich. It in no way resembles the 1980s tax reforms of either President Reagan or Senator Bill Bradley and Representative Dick Gephardt. And it most assuredly fails to eliminate loopholes. [TaxVox, WaPo]