Taxing Rain

As I have described before, state and local governments have recently shown the highest level of creativity in coming up with new ways to squeeze money out of the little people. They are even amazing grizzled old veterans like me.

This is the first time I have heard of a property owner being taxed on the amount of rainwater that s/he doesn’t hold onto and allows to run off into the sewer system. Jonathan Adler of NRO has a good analysis of the pros & cons of this. He comes to the proper conclusion; that the main purpose of this new tax is for the money; not to encourage people to capture rain water.

This is in Winona, Minnesota. I can’t wait to see how they top this in the PRC (People’s Republic of California). How about a tax on earthquakes? It could be based on the Richter Scale reading.

KMK

Accounting Rock Stars

I like Edwin J. Feulner’s analogy of the corporate accounting scandals being similar to a typical episode of VH-1’s Behind the Music show about drugged out rock stars.

He again reminds us that no corporate accounting scandal comes anywhere close to the corrupt accounting being done by our rulers in DC. Rather than stopping their hi-jinks, as most corporate crooks have, our rulers will continue, with ever more money.

KMK

All Money Belongs To Our Rulers

Larry Elder has a good summary of the mindset of our rulers in DC, as enunciated by that pathetically whiney Senator from Connecticut, Joseph Lieberman. He and his Fellow Travelers actually consider any reduction in tax rates to be government spending. This is a not very subtle way of stating that all income generated by everyone in this country automatically belongs to our rulers and they will decide how much of it we are allowed to keep for ourselves. The similarity between this thinking and how they handle things in Communist countries is frightening.

KMK

Stay In The Real World

This time of year, leading up to a big election, always causes a lot of confusion for people who fail to distinguish between the real world of actual tax laws and the fantasy world with scads of changes promised by our rulers and wannabe rulers.

Case in point: there is a lot of discussion about tax breaks for investors, such as making some dividend income tax free and increasing the capital loss deduction from the insanely low maximum of $3,000 per year to a higher amount, such as $20,000. Nobody is even mentioning the possibility of eliminating the ceiling on the deduction in order to make it consistent with the unlimited amount of capital gains that are taxable per year. That would be just too fair for our rulers to ever consider.

While these would all be great improvements in the tax system, it would be completely idiotic to modify your investment strategies based on these promises. There is very little chance of most of these changes making it through the liberal controlled Congress, who will portray them as just more tax breaks for the evil rich. Their Fellow Travelers in the media will echo those lies, as they always do.

Any changes that do survive and become real will most likely be watered down quite a bit. There is also the issue of the effective date of any change. Will it be retroactive to January 1, 2002 or will it only apply to sales after the law is enacted? There is no way to know because our rulers have never been consistent in regard to effective dates.

KMK

Out of Sight, Out of Mind

While it’s a great idea, there is no chance that our rulers will agree with this idea of eliminating tax withholdings and requiring people to actually write checks for their taxes. That would let too many people understand exactly how much they are paying and possibly cause them to rebel against higher taxes. This scam has been extremely effective in confusing most people as to their actual tax burden. As long as they receive a refund when they file their 1040s, they think they are coming out ahead.

My prediction is that, instead of reducing or eliminating withholdings, we will be seeing more types of transactions subject to it, such as sales of stocks and real estate (which are already required for some sellers).

KMK

Sneak Peek

This is the time of year when IRS works on revising its multitude of forms & schedules. If you’re interested in previewing what to expect, you can download the new forms from the IRS’s website here.

KMK

Value of MBA

It has long been debatable whether or not an MBA degree is worth the investment it requires. I don’t have a definitive answer to this because there are so many examples of where it pays off and plenty of others where it doesn’t. I have always believed that the school of real world business experience is worth a lot more than theoretical book knowledge. It’s really hard to counter the example of Bill Gates, who dropped out of college and became the richest person in the world by building a real world company.

I must admit that I went back to school five years after earning my BS to get an MBA in order to distinguish myself more in the financial world. Since I was in the corporate world at the time I started, just having a CPA wasn’t as attractive as having a CPA and an MBA. Ironically, I left the corporate world and went into full time self employment half-way through my MBA courses. I finished it up; but have to honestly say that having an MBA in the CPA profession hasn’t really impressed anyone.

I think it is good to have the debate over the value of an MBA, as in this article. As can be expected, the colleges that offer MBA programs don’t take kindly to this skepticism and consider it sheer blasphemy to question the conventional wisdom that an outrageously expensive MBA is always a quick path to riches.

KMK