“An economy breathes through its tax loopholes”

-Barry Bracewell-Milnes

Business exodus from PRC looms – People will only put up with so much abuse from their rulers before they reach their breaking point and look for a friendlier environment; as we did ten years ago, when we made the exodus from the Left Coast to the Ozarks.  The Forbes article mentioned on the best places in the country to work and run a business is here.  Coincidentally, their third best location is Fayetteville, Arkansas, which is very close to us here.

This is unfortunately too close to how the mind-set is in this country. Anything that helps the evil rich is by definition a bad thing; even if it also helps everyone else.

House Is Pushed to Accept Senate’s Tax Cut

The new hot issue for Democrats: Tax-cut rollbacks

Do the math – Critics of tax cuts: Analyze fiscal policies honestly

Bush to Fight to Make Dividend Tax Cuts Permanent

We’re Going To Get a Tax Cut

Tax Cut Victory

Bush hails passage of Senate tax cut

Avoiding Sales Taxes – Whenever the issue of replacing the Federal income tax with a national sales tax comes up, people wonder what we tax practitioners will do for a living.  I always have to remind them that there will still be plenty of business for us helping people use the rules and loopholes to avoid or reduce the sales taxes they pay, just as as is currently happening in the PRC, where there are services that exploit certain twists in the law to avoid having to pay sales taxes on some vehicles and boats.  To think that those kinds of services won’t be needed to help people cope with a national sales tax is just naivety. 

$350 billion tax bill approved by Senate (Wash Times)

Senate Adopts a Tax Cut Plan of $350 Billion  (NY Times)

Senate Narrowly Passes $350 Billion Tax Cut (Fox News)

Senators OK $350b in tax cuts (Boston Globe)

Senate passes tax-cut package (MSNBC)

Senate Approves Tax Cut Proposal (Wash Post)

Senate Passes $350-Billion Tax Cut Bill (L.A. Times)

The Politics of Tax Cuts

Firms Cautious on Prospect of Dividend Tax Change 
 

While we will definitely be very happy to have dividends tax free, and will almost certainly start paying them out after the new law takes effect, people do need to remember that this upcoming change is currently for Federal income tax purposes only.  Whether or not the same tax break will apply to State income taxes will have to be seen.  Many States have their income tax calculations based on the Federal number, so Federal changes would automatically affect those states, unless their rulers pass special legislation specifically denying those changes at their State level. Other states, such as here in Arkansas, have independent tax calculations and have to themselves pass special legislation to conform with any new Federal rules.  That often taxes a few years to happen, making it trickier than normal to calculate taxes until the State and Federal rules are back in synch with each other.  With the current financial and budget crises faced by most State governments, there will definitely be some hesitation at enacting anything that they think may reduce their revenue.  Hopefully, State rulers will look at the long term perspective and realize that, if they don’t allow their residents the same tax breaks as the Feds do, people will move to States that do.  Money is a big motivator of behavior, and sooner or later, the additional costs of living in a certain State become too high to tolerate in comparison to other less expensive States.   

Democrats wary of plan to cut 1 percent of budget fat – For the Dims, it’s absolute heresy for the size or cost of government to ever decrease.  Their one main purpose in life is to continue the growth of government involvement in every aspect of our lives. Less money means less power; something they will never sit still for.