Fighting Off New Taxes

Just to the East of us, the lying Governor of Tennessee and his partners in crime have been trying to sneak in a new income tax. Luckily, the message was spread by some talk radio hosts, such as Steve Gill in Nashville and it was defeated, for now.

Congrats go out to the foes of the tax, along with the hope that they never let down their guard. Tax & spend politicians are very patient and very sneaky in pursuit of their goal, to take as much money as possible from their subjects.

KMK

Tax Simplification

A few days ago, IRS announced that they have raised the threshhold for needing to attach Schedule B to 1040 forms. For as long as I can remember, if you had interest or dividend income of more than $400 during the year, you have been required to list the payers on Sch. B. With totals less than $400, you could just enter them directly on your 1040 without any requirement to show the details.

I assure you, I’m not just looking for excuses to disagree with IRS. I have no shortage of those. However, while I applaud their efforts to simplify things for taxpayers, I can’t endorse this new plan, for basically the same reason I don’t advocate electronic filing of tax returns.

IRS has become very efficient at matching up information documents received from payers, such as W-2s and 1099s, with income tax returns, and automatically kicking out notices when too little income is being reported. If too much income is reported, IRS isn’t about to alert you to that.

While it is impossible to completely avoid discrepancies with IRS figures, I have found that a good way to minimize that happening is to attach a lot of details to tax returns, especially when you have something a little out of the ordinary. For example, I frequently attach Sch. B when the total interest or dividends is less than $400 because I want IRS to see how we arrived at our total. This is very important for jointly owned accounts, where we need to back out a portion of interest that is being reported by someone other than the person whose name & SSN are on the 1099. It is also important for nominal accounts, such as minor children, where a parent’s SSN is on the account, but we are backing out the interest on Sch. B.

While some tax preparers do charge a certain amount per schedule or form, my computer program does all of that work; so I have always charged purely based on my time, regardless of how many different pages we have. By including the details of interest & dividend income, even when they are lower than the required amount (now $1,500), there is a very good chance that IRS will be able to match everything up at the Service Center and not need to send you or your client a discrepancy letter and bill.

Again, I have found that there are some tax preparers around the country who have a shortage of work after April 15; so they intentionally avoid attaching too much explanatory documentation to tax returns just to generate some off-season work responding to IRS notices and handling the audits that this causes.

KMK

Breaking Promises

One of the main areas in which I differ from my fellow Libertarians is the issue of term limits. They make the point that we do have terms limits in the form of the ballot box. That would be true if there were anything close to an even playing field in elections. It has long been a job for life once a politician has made it into office. The power of incumbency is next to impossible to beat, which is why 99% of them win each time they run for re-election.

Over the past decade, there have been some politicians who have actually had the nerve to take a voluntary term limit vow. They swear that they will only serve two or three terms and then they will retire. When it comes time to actually honor that pledge, guess what. With very few exceptions, they decide that their vow is no longer relevant, such as this joker in Colorado, Tom Tancredo. Having tasted the awesome power of the throne, there is no way they are going to go back to the real world in which we peasants are forced to reside. They know that, with the vast powers of incumbency, they can easily overpower any resentment over the broken promise.

I sincerely believe that if our founding fathers had known how our elected rulers would refuse to leave, they would have included formal limits to prevent this kind of royalty. That is what the Revolutionary War was all about, being governed by average real world people instead of lifetime royal rulers.

We now have 280 million people in this country. It is such extreme arrogance to believe that there aren’t enough talented people among them to allow a constant supply of fresh faces in the Capitol. To say that the 535 rulers we have in DC are the absolute only ones capable of doing the job of ruling us peasants is no different from any other society governed by an elite few. I have much more faith in the people than do the worshippers of professional lifetime politicians. In fact, I would prefer a lottery to draw names for people to serve a two year term and then move back to the real world than continue being subjects of the career politicians.

A voluntary term limit pledge is as legitimate as a promise by a Clinton (Bill or Hill) not to run for President. What we need is a Constitutional amendment to limit the time any person can sit on the throne.

KMK

Equality

You can be sure that, when you start hearing stories about the income & wealth gap, or the rich getting richer & the poor getting poorer, there will be some push to make everyone equal. This is accomplished in the ideal minds of Communists by redistributing the wealth from the haves to the have-nots. This entire logic is flawed on so many levels as to make me sick.

Equality in a free capitalist society means the equal opportunity for each person to avail him/herself of what the free market offers. It in no way means that everyone’s results will be equal. The people who bemoan the big disparity in wealth conveniently ignore that there are some very good reasons for that inequality. In most cases, it is based on the choices people have made. The best example is with people begrudging the money some doctors earn. The truth is that very few of those envious people have the persistence or strength of character to do what it takes to make it through medical school to become a doctor. Those are sacrifices that most people just wouldn’t do.

Why then is it wrong to reward the ones who do make those sacrifices well for their efforts? Why does some high school drop-out, who sits on his butt all day smoking cigarettes and watching Jerry Springer feel entitled to the same financial rewards as someone who went into hock up to his eye-balls and spent a decade in school? Worse still, why do our rulers feel justified in confiscating what the hard worker has and giving it to the lazy bum?

For an interesting take on making everyone equal, P.J. O’Rourke covered it well in this speech from 1997.

KMK

Poor IRS

Joseph Farah echoes the points I made last week about the idiocy of newspaper editorials feeling sorry for the IRS as being victims of an unwarranted witch hunt. Since my last piece on this issue, I have been asked about the comments in some of the editorials that the claims of IRS abuse have been discredited as false. This is just not true. The horror stories that came out during the congressional hearings were true, but were only the tip of the iceberg of IRS abuses.

As I have mentioned several times before, the IRS is still filled with Clinton followers and they are still harassing people and organizations that criticize the Clintons and their Fellow Travelers. Congress has refused to do a serious investigation of this for a number of reasons. First, just as with the huge amounts of evidence against Bill Clinton during his impeachment, most Congress-critters just plain refuse to even look at the evidence. It is also true that many of our rulers are themselves afraid of IRS retribution, as well as the classified information about them that was in the FBI files that the Clintons copied for their own blackmail use. Mr. Farah knows this all too well, because he and his organization have been the victims of the Clintons use of the IRS to punish him for daring to criticize.

As with anything such as this, it has to make you wonder about the overall reliability and truthfulness of any newspaper or media organization that would tell outright lies in support of more power for the IRS.

KMK

Missing The Point

There are some things that adapt well to the power of the Internet, and some that don’t. I have always believed that real estate sales are a perfect match, especially for long distance searches. I wish the web were as well developed as it is now ten years ago, when we were shopping for property in the Ozarks from 2,000 miles away in the San Francisco Bay Area. It would have made the process so much more efficient for us as buyers, as well as for the several Realtors we worked with who had to waste a lot of time ferrying us to properties that were not suitable for our needs. I preached the benefits of using the ‘net in all of the seminars I gave to Realtors around Arkansas, Missouri & Oklahoma.

It seemed like the real estate profession had been slowly but surely adopting the web. That’s why I was disappointed to read this article that claims the National Association of Realtors is backing away from its policy of making more information available to the public. In a move that can only be described as paranoia, it sounds like they feel threatened by this openness and are retrenching and trying to prevent the public from having free access to too much information without having to work through licensed Realtors.

Any profession that is so paranoid as to try to force clients to get information through them, including some in the tax practitioner community, is doing a disservice to its clients. I agree with David Coursey that the web is too pervasive to allow such a monopoly to succeed. Forward looking Realtors will set up their own sites and leverage it to their advantage without the NAR.

KMK

When It Rains…

As if things haven’t gone badly enough for Arthur Andersen – convicted of obstruction of justice, losing all of their auditing clients, facing years of investor lawsuits – they now have the IRS on their butts for their overly aggressive tax shelters. The security of a Big 8 (what it was when I was in college) CPA firm doesn’t seem as attractive right now.

KMK