Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

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Archive for April 7th, 2002

Posted by taxguru on April 7, 2002

Can’t Afford to Be Fair

There are literally dozens of issues in the US tax system that are completely indefensible when viewed through the prism of fairness. The Marriage Penalty is one of the worst. Following closely behind is the Alternative Minimum Tax (AMT). As always when our rulers tinker with the tax system, they end up hurting people other than their intended targets.

Whenever they are asked about fixing monstrosities such as this, or at least modifying them to more closely resemble fairness, they fall back on the logic that “they wish they could, but the Federal government just can’t afford it.” Money for Washington is more important than anything, especially the antiquated concept of fairness.

Here’s a short summary of the current AMT fiasco from Fox News. What they forgot to mention was the most active organization that I am aware of fighting to correct this totally screwed up tax, ReformAMT. While you may a have false sense of security that this a tax on “other people,” that is a very short-sighted attitude. The AMT is designed so ineptly, such as with no inflation adjustment, that millions more innocent people become subject to it each year. Soon it may be eating up your life savings and forcing you into bankruptcy if you don’t start exerting some pressure on our rulers in DC to fix it.

KMK

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Posted by taxguru on April 7, 2002

Don’t Count Your Chickens Before They Hatch

As I have always warned, it is extremely dangerous to make any plans based on tax laws that take effect years down the road. Our rulers in DC are notorious for changing or repealing tax breaks before they can even kick in. They rationalize it by claiming that nobody will miss something that wasn’t’ even real.

Last year’s “big” tax cut that takes ten years to be fully phased in was as large an invitation to tinkering by our rulers as any I can ever recall. The discussion of repealing those tax breaks has begun. What a surprise – not.

KMK

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Posted by taxguru on April 7, 2002

Retiring To Save Taxes

Would people actually select where to live in their retirement years based on the tax burden in different locations? Of course the would. Iowa isn’t very happy that it’s taxing seniors out of its borders.

KMK

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Posted by taxguru on April 7, 2002

Helping Seniors

Supposedly, the GOP is trying to think of ways to make itself more popular with senior citizens. I have had the answer to that problem for a very long time.

One giant step forward for the GOP would be to honor the original agreement with Social Security participants. It was originally set up that all benefits would be free of income tax. This was supposed to balance out the fact that payments in to the SS system are not deductible, resulting in a double taxation.

Currently, because our masters in DC have no qualms about breaking promises, many people have to pay taxes on 85% of their benefits if they are considered to be “evil rich.” For this issue, evil rich has been defined as AGI over $25,000 for a single person or $32,000 for a married couple. This was an outright fraudulent violation of the public trust and we have long been waiting for someone in DC to have the guts to repeal the tax on SS benefits.

KMK

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Posted by taxguru on April 7, 2002

More IRS Propaganda

It is well known that the New York Times is nothing more than the propaganda arm of the JackAss Party and a very strong advocate of bigger government, which requires more money. This means that the IRS needs more power to squeeze more dollars out of the public. In their classic tactic of exploiting envy and class warfare, the Times has this article claiming that IRS only audits the working poor and doesn’t ever check up on the evil rich in our society. As someone who has been intimately involved with these very issues for over 26 years, I can state that this is an outright lie. The examples that the Times gives of things that IRS is incapable of checking, such as partnership K-1s and rental activity, are absolutely false. IRS checks those things all the time.

This is nothing more than an attempt to rally the “little guys” to push our rulers in DC to expand the IRS to go after those evil tax evaders. It’s nothing but donkey crap.

Another mention of the antidote for the NY Times seems appropriate here. SmarterTimes.com devotes its efforts to debunking the lies promulgated by what many people refer to as the New York Slimes. Needless to say, they never run out of material.

KMK

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Posted by taxguru on April 7, 2002

Losing An Hour

Besides being a nuisance to have to switch our clocks back & forth every six months, I especially resent having to lose one hour during the time of year in which time is the most precious commodity; in the last few days before April 15.

I have long been a fan of the idea of just leaving the clocks alone. Ideally, I would prefer leaving everything in Daylight Saving Time mode year-round would be best, as we did a few decades ago during one of our energy crises. However, if we wouldn’t have to ever change our clocks again, I would be almost as happy with leaving everything at Standard Time.

I’m glad to see more people taking up this cause. Here is a group that explains how the old rationale for the entire concept of clock-switching is now irrelevant and is trying to petition our rulers in DC to stick with one time system year round. They also have an interesting idea to merge the USA’s four time zones into two. Instead of changing by one hour in each zone, there would be a two hour change when crossing what is now the dividing line between Central and Mountain time.

KMK

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Posted by taxguru on April 7, 2002

Leaving Everything To Your Pets

It seems that there are a large number of people in the same positions as Sherry & I are, with only non-human dependents. Estate planning for such heirs is a little trickier than the standard “leave everything to the kids” scenario that parents of human offspring have available. According to this informative article from the Wall Street Journal on how to structure things for the benefit of pets who outlive their owners, there are already 17 states that have laws that specifically allow people to create trusts for their pets. You can always tell a growing trend by the areas in which attorneys specialize. More of them are concentrating on pet estate planning, for $200 to $300 per hour.

KMK

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