Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Archive for February, 2004

Posted by taxguru on February 29, 2004

Navigating the Gift and Estate Tax Maze

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Risky Retirement Plan

Posted by taxguru on February 29, 2004

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Posted by taxguru on February 28, 2004

IRS Says This Year’s Average Tax Refunds up Almost $100 – This is something the DemonRats don’t want people to connect to the Bush tax cuts, because those supposedly only benefited the evil super rich.

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Posted by taxguru on February 27, 2004

Kiss your taxless Net goodbye

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From MSN Money

Posted by taxguru on February 27, 2004

10 big tax breaks for the rest of us

How the tax code rewards the soldier

Tax records you can toss

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More Basic Economics

Posted by taxguru on February 27, 2004

This is a good explanation of how damaging to the economy high tax rates are. Contrary to the static view of the economy espoused by so many people, tax rate changes do have very real and profound effects on economic behavior. Real life is a more dynamic situation with high tax rates acting as a direct disincentive to making money and low rates as a very powerful inducement for people to earn as much taxable income as possible.

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Economics Lesson

Posted by taxguru on February 27, 2004

The never ending diatribe by the DemonRats and their Fellow Traveler RINOs condemning tax cuts as irresponsible windfalls for the evil rich warrant another look at this restaurant example to illustrate the basic fact that tax rate cuts must, by definition, save those who pay the most taxes in the first place the largest amount of money.

Unfortunately, there is such a shortage of common sense, as well as economic literacy in this country that the Left’s lies are so readily accepted as truth. It’s no coincidence that the media’s leftist leanings, and unbridled hatred of Bush, aid in making this misinformation campaign so successful in influencing so many people. Their not subtle insinuations that every dime of tax saved by an evil rich person is taken straight out of the pockets of poor blue collar workers is insulting to the max for those of us who understand what a load of donkey droppings that is.

(Thanks to Andrew Roth at MoveRight.org for the link to this new rendition.)

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Posted by taxguru on February 26, 2004

Call for Benefit Cuts Spurs Political Frenzy – The deadly “Third Rail” of politics has been grabbed hold of. While I doubt if anything substantial will be done to remedy the SS problems, it’s at least a good move to put the issue out there for debate and discussion. Continuing to keep our collective heads in the sand and hoping the problems will fix themselves can no longer be enough.

Net Phone Calls Eyed for Taxation – With any new technology, the tax vultures are certain to be hovering around.

Tax Distribution Tables don’t Account for Income Mobility – Just as the definition of who is rich is subjective and changes over time, the inhabitants of the various tax brackets change quite often. I have seen plenty of people move from the very top bracket to the lowest and all around. To claim that everyone is always in the same bracket for their entire lives, as many of our rulers and wannabe rulers would have us believe as part of their class warfare rhetoric, is ludicrous.

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Posted by taxguru on February 25, 2004

AMT Relief in the FY2005 Budget: A Bandaid for a Hemorrhage

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Changing Social Security

Posted by taxguru on February 25, 2004

For my entire career, one of the biggest issues I have been addressing has been how to help people avoid becoming victims of the dishonest and financially unsound Social Security system. It has always been inevitable that the system would be changed to deny people all of the benefits they have been promised. This has already been done through taxation of benefits for many recipients (contrary to the original promise) and raising the age of eligibility for full benefits so that more people will die off before even recovering what they have paid in.

As I have always said, any free market company that offered a retirement plan similar to SS would be charged with fraud and run out of business. It’s different when our rulers in DC pass laws forcing people to participate in what is no more than a government run Ponzi scheme.

My long running prediction that SS benefits will be denied to people who are considered to be wealthy (earning more than $25,000 per year), and thus not needing any assistance, still stands and is even becoming more open, as in this call by Alan Greenspan to reduce benefits. He doesn’t mention anything about reducing the huge amounts of taxes required to be paid into the SS system. Everyone is expected to pay in more and more in current taxes for fewer and fewer potential benefits.

I’m not a big fan of plans such as this, to allow people to set aside a tiny portion of their SS tax for privately controlled investments, but still send the full 12.4% to our rulers in DC. What most people fail to realize is that, while the current SS tax rate of 12.4% doesn’t seem like a lot when compared to the 15%, 25% and 28% income tax brackets most people fall in, that is very misleading. The 12.4% SS tax is assessed on the gross pay, while the income tax is charged against taxable income, after deductions and exemptions. This makes the effective tax rate, and the actual dollars charged, much higher for SS tax for most people than they are for income taxes.

As I’ve described over the years, there are several ways in which one’s business and financial affairs can be structured to minimize the amount required to be paid into the SS system. While it is usually more of a hassle than not doing those things, people who are holding their breath waiting for Bush or any of our rulers in DC to magically fix the entire mess are literally flushing thousands of dollars down the crapper each year they wait to take those steps on their own.

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