Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Archive for September, 2014

ObamaCare Has Increased Taxes

Posted by taxguru on September 23, 2014

From a Client:

Subject: Kerry, do you happen to know…

Kerry, at a recent Round Table one of our Members made the assertion that “the ACA is lowering the cost of care.”  To which I retorted, “yes, but at the taxpayers’ expense.” To which he responded “the tax rates haven’t increased since 2008.”

It’s hard for me to believe that millions of Americans are getting basically a “free lunch – or heavily subsidized health plan (or even expanded Medicaid)” without more tax dollars going toward it.  Figured you know these things.  Is there something you can point me to that broadly covers how the tax structure (for those who are paying taxes) has changed since 2008 in general, and particularly since 2010, when the ACA went into effect.  Many thanks in advance,


My reply:

Your gut feeling was correct and the member was wrong.

The actual increase in taxes for ObamaCare is spread out over a number of ways.

As you can see on this handy recap of Federal tax rate brackets, there was a new 39.6% bracket added to individual income tax rates for 2013. From 2003 through 2012, the top rate was 35%.

On top of that, there was also a new 3.8% tax starting in 2013 on net investment income that was directly from the ObamaCare legislation. That tax, on Form 8960, actually cost you $5,806 for 2013.

Additionally, the maximum tax rate on long term capital gains has increased from 15% (2008-2012) to 20% (2013 & after).  While some may look at that as just a five percent increase, it actually represents a 33.3% increase from the previous top rate.

There is an interesting article on states having to pay additional costs for ObamaCare:

Who’s paying the new Obamacare tax? You

Overall, the percentage of taxes being paid by the top earners in this country continues to increase every year.  There are lots of articles on this, such as this one:

The rich do not pay the most taxes, they pay ALL the taxes

One aspect that is swept under the rug is the fact that a lot of the increased spending by the Federal government isn’t really being paid directly by anyone right now because it is being borrowed from the Chinese government. The fact that those loans, plus interest, will need to be repaid someday, is something our rulers in DC refuse to acknowledge as they keep adding trillions of dollars to the debt.

I hope this info is useful for you.

Kerry

 

Follow-Up:

This is great! Thank you very much….now I just need to break it to him!

 

 

Posted in ObamaCare, TaxHikes | Comments Off on ObamaCare Has Increased Taxes

IRS Criminal Actions Will Continue

Posted by taxguru on September 22, 2014

Exclusive: Lois Lerner breaks silence – She obviously knows that she won’t be punished for any of her crimes; so they will continue at the IRS by her accomplices. 

 

Lois Lerner Compares Herself To Jeffrey Dahmer – A vivid analogy. 

 

Koskinen: ‘Hard Drive Crashes Continue As We Speak’

 

IRS Commissioner: We Follow the Law ‘Wherever We Can’ – What a weasly phrase. Try using this explanation during an IRS audit and see how far that gets you.

 

 

Posted in Crooks, IRS | Comments Off on IRS Criminal Actions Will Continue

2014 Calif Tax Rates

Posted by taxguru on September 18, 2014

Spidell has a handy two page pdf of the new inflation adjusted tax rate schedules for California income taxes. 

 

 

Posted in Calif | Comments Off on 2014 Calif Tax Rates

Pushing back against the IRS PTIN Fees

Posted by taxguru on September 10, 2014

Interesting article and comments regarding the IRS’s recently enacted policy of charging us preparers for the annual use of a PTIN, which used to be free.  It’s great to see other tax practitioners who are not afraid to publicly disagree with IRS practices. 

 CPAs Sue IRS over PTIN Fees

The main concern isn’t the amount of money IRS is charging for the PTIN, which is actually a small fraction of what we already pay to maintain our CPA licenses; but the increasing control IRS is trying to exercise over our relationship with our clients in regard to helping them legally reduce their tax burdens. 

 

Posted in IRS, preparers | Comments Off on Pushing back against the IRS PTIN Fees

Our rulers continue to destroy founding principles

Posted by taxguru on September 9, 2014

It used to be a fundamental principle of this country that people can’t be prosecuted based on retroactive changes in laws.  That is the same as changing the rules of a game after it has started, or after it has been finished. 

Another example of the unfairness of retroactive law changes.  It’s as if the speed limit on a road were reduced by 20 MPH from what it had  long been; say from 55 down to 35.  Then, all drivers who had previously gone between 35 and 55 on that road in past years are sent tickets by the local policing agency, fining them for having exceeded the retroactively established 35 MPH limit.  It violates any sense of fairness.  

This stomach turning headline from CCH shows that fairness is a concept we just have to learn to live without in our current Bizarro world, aka the New Normal.. 

Lew Urges Congress to Pass Retroactive Ban on Inversions

What Treasury Secretary Jack Lew is advocating is, allowing taxpayers to set up legal methods of reducing their taxes under current laws, and then changing those laws retroactively to make those tax savings steps illegal.  I can’t be the only one with a deep visceral reaction to this kind of blatant over-reach by our Imperial Masters in DC. 

Any CongressPerson who does vote for such a retroactive change will obviously be violating the Constitution, but that is SOP for our rulers from both Parties in DC, where the Constitution is no longer considered to be a sacred governing document.

 

Posted in TaxPlanning | Comments Off on Our rulers continue to destroy founding principles

Singing about the IRS scandal…

Posted by taxguru on September 6, 2014

A live version of Remy’s “What are the Chances (An IRS Love Song).”

 

 

 

Posted in IRS, Music | Comments Off on Singing about the IRS scandal…

IRS Obstruction of Justice Continues Unabated…

Posted by taxguru on September 6, 2014

Even after being caught red-handed lying about the status of Lois Lerner’s emails, IRS employees continue to stonewall any attempts to dig into the crimes committed by her and her accomplices all the way up the chain of command in the bHo Regime.  With no fear of prosecution for the original crimes or the obvious cover-ups and perjury, they have no incentive to cooperate with GOP investigators.  

 

IRS says it has lost emails from 5 more employees –  Before long, they will just say that no records of any emails exist any more.

 

GOP lawmaker accuses DOJ of hiding former employee linked to IRS scandal –  It’s quite an uphill battle to investigate IRS crimes when the perpetrators are being assisted in their perjury and cover-ups by Eric Holder and his DOJ, as well as by the MSM who continue to pretend that IRS has never done anything wrong in regard to Tea Party groups.

 

Missing Person Alert! Where is IRS Scandal Figure Andrew Strelka?

 

GOP lawmaker says hundreds of server drives could still contain missing IRS emails

 

 

Posted in Crooks, IRS | Comments Off on IRS Obstruction of Justice Continues Unabated…