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.

The campaign by the BHO Regime and its MSM allies to shame companies into avoiding tax savings strategies, such as shifting income to lower tax countries, seems to be working.  Walgreens just announced it will keep its corp HQ in the USA rather than move it to an overseas country with much lower tax rates.  According to this news story, the potential negative publicity over this tax savings strategy was a key factor in the decision.

Walgreen Co. reveals details on new ‘Walgreens Boots Alliance’

We can expect more of this kind of pressure to be exerted on companies and persons who use legal tax savings techniques.  They will be labeled as “evil” and “unpatriotic” for having the gall to want to hold onto more of their hard earned income.  

By no means am I advising against using tax savings strategies.  However it would also be wise to not broadcast it to the world.  Those who can’t or won’t use those ideas themselves will just resent you and possibly influence their elected representatives to reduce or eliminate them.  That is how we lost the deduction for 50% of business meals and the depreciation on expensive cars.  People who were taking those deductions bragged so much about them that the resentment worked its way to DC.  If you are using great tax savings tactics, keep it between yourself, the IRS and your professional tax advisor.

According to some people, especially those who believe all money rightfully belongs to government, it is wrong to take steps to reduce one’s tax burden.  Those of us who believe in the capitalist free market system understand that legally arranging things to preserve as much of our hard earned income is the fiscally responsible thing to do.

A reminder of the quotes that have always summarized my tax planning philosophy, from Judge Learned Hand in 1934 and 1947.

Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.

Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.

 

Our rulers in DC, including some RINOs, need to be reminded of this, as they try to embarrass some large American companies for just doing what they should be in order to continue succeeding.

Google insider exposes ‘immoral’ tax scam –  Whether something is a “scam” or just smart business management is in the mind of the beholder.

Apple is also under the gun for being too successful and not kicking enough money up to the organized crime bosses in DC:

Panel: Apple uses firms outside US to avoid taxes  

High-Tech Lynching: Senate Attempts to Crucify Apple

Apple Avoided Taxes on Overseas Billions, Senate Panel Finds 

Apple’s Cook to face Senate questions on taxes 

Apple CEO makes no apology for company’s tax strategy – Good for him.

ACAT has posted some handy year-end tax planning client letters that they adapted from CCH sources. 

For Businesses (4 page DOC)

For Individuals (4 page DOC)

Expiration of Bush Tax Cuts: How Will It Affect You?

Estate tax may become another nail-biter when lawmakers return