* An online op-ed piece from the Wall Street journal reports what I had already concluded - “The Tax Rebate Was a Flop. Obama's Stimulus Plan Won't Work Either.”
The article points out (highlight is mine) - “The evidence is now in and that optimism was unwarranted. Recent government statistics show that only between 10% and 20% of the rebate dollars were spent. The rebates added nearly $80 billion to the permanent national debt but less than $20 billion to consumer spending. This experience confirms earlier studies showing that one-time tax rebates are not a cost-effective way to increase economic activity.”
* Several sources have reported on the new IRS Publication 1828, Tax Guide for Churches and Religious Organizations. According to Professor Linda Beale of A TAXING MATTER, “The publication covers a full range of issues relevant to the tax exemption of churches and other religious organizations, but a substantial section is devoted to expanded guidance on the question of political activities. It includes a number of examples from the recent Revenue Ruling 2007-41, designed to illustrate the line between acceptable and unacceptable activities.”
* Joe Kristan of the ROTH AND COMPANY TAX UPDATE BLOG discusses “secret factors that tell the IRS there really is no profit objective” in “You Know You Really Have a Hobby Loss Problem When…”, and a unique business deduction that wasn’t allowed in “But What Was the Business Purpose?”. I expect that this particular deduction has been taken on many a return over the years. Perhaps the business reason is “entertaining clients”?
* The Tax Foundation has published a new Fiscal Tax Fact report on the effects of the 2001 and 2003 tax rate reductions appropriately titled "The 2001 and 2003 Tax Relief: The Benefit of Lower Tax Rates."
According to the report (highlight is mine) – “Recent research on President Bush's tax relief in 2001 and 2003 has found that the lower tax rates induced taxpayers to report more taxable income. In particular, the reduction in the top two tax rates induced taxpayers to report more taxable income—an increase in the size of the tax base—to such an extent that this positive behavioral response likely offset roughly 25 percent to 40 percent of the static revenue loss of lowering the top two tax rates.”
* Professor Jim Maule continues the discussion of the weird “additional standard deduction” for real estate taxes in his post “When Those Who Make Tax Law Don't Understand Tax Law”.
NJ politicians Corzine, Menendez and Holt recently conducted a presentation to tout this new tax complication that provided false information concerning the deduction – they said that the deduction could “put $500 or $1,000 in property taxpayers' pockets", when in truth the additional deduction, and not the actual tax savings, is limited to $500 if Single and $1,000 if Married.
And, on a different but related topic, Barack Obama has said that homeowners who itemize "get a mortgage deduction, up to $1 million," which is also false - the $1 Million in the Tax Code refers to the principal of the mortgage, not the interest deduction.
Jim draws the following excellent conclusion (the highlight is mine) - “The fact that politicians are having a tough time giving accurate descriptions of the tax law should teach everyone, including them, a lesson. The tax law is too complicated. All four of the politicians who goofed are in, or have served in, the Congress. If they don't understand the law for which they have voted, how can they expect everyone else to understand it? Rather than layering on more complexity each time a group arrives hat in hand, or check in hand, seeking special relief, Congress needs to overhaul the system before it collapses.”
Joe Kristan comments on Jim’s post over at the ROTH AND COMPANY TAX UPDATE BLOG in “What Do You Expect? They Only Want to Be President.” According to Joe, “I have the answer to this problem, of course -- require that all Congresscritters do their returns in public themselves via a live webcast.”
* The TV SQUAD blog reports on “What to Expect in Season Four of Bones”, the tv show about the forensic anthropologist teamed with an FBI agent to solve crimes based on the writings of novelist Kathy Reichs (it is one of my favorites).
According to the post, in one of the cases the crew will handle in the upcoming season “the host of a popular reality show will be found dead in an outhouse.” First comment – poetic justice (since reality tv = steaming piles of excrement). Second comment – what is the crime? Third comment – I hope it is Donald Trump!
Beware - the post contains lots of “spoilers”. BONES returns on September 3rd.
* Roni Deutch gives us the word on Joe Biden’s record on tax related issues in “Biden Has A Pro-Tax Career” at her TAX LADY BLOG.
* What would I like for my upcoming November birthday? Click here and here to find out at Paul Caron’s TAX PROF BLOG! You can email me for the address to have the gifts sent. Click here for the Tax Foundation’s TAX POLICY BLOG comments on the second item.
* From these political cartoons that appeared at the TAX GURU-KER$TETTER LETTER blog I assume that Kerry is a Republican.
* Kay Bell of DON’T MESS WITH TAXES continues to keep us up-to-date on the state sales tax holiday issue in her post “North Carolina Adds Energy Tax Holiday”. The post includes a chart of fall state sales tax holidays.
Speaking of state sales tax, while the cafones in Congress are still dragging their feet on the issue (too busy campaigning), the IRS speakers at the Nationwide Tax Forum I attended in NYC last Tuesday seem to feel that the option to deduct state and local sales tax instead of state and local income tax, as well as the various other expired individual and business tax breaks and the AMT patch, will eventually be extended for 2008.
* Paul Caron reports on the “Tax Planks in Democratic Party Platform” at the TAX PROF BLOG. The Tax Foundation’s TAX POLICY BLOG had previously discussed the draft Democratic Party platform on taxes in “Democratic Draft Platform Details More Tax Complexity Despite Call for Simplification”
The excerpt from the plank included in Paul’s post begins “We must reform our tax code. It’s thousands of pages long, a monstrosity that high-priced lobbyists have rigged with page after page of special interest loopholes and tax shelters.” Yet, as the Tax Foundation points out, “the platform actually proposes to create new special interest deductions and credits, worsening the complexity.”
Obviously the Democrats have absolutely no intention of reforming or simplifying the Tax Code – it just makes a nice “sound bite”.
* As further proof of my contention that bloggers are fixated on lists, Roni Deutch gives us “The 10 Most Famous Celebrity Tax Evaders of All Time” at her TAX HELP BLOG. Dan Meyer adds a name to the list in “Ruben Studdard's Taxes Go Off-Key” at TICK MARKS.
Roni continues with lists at her TAX LADY BLOG where she discusses “The 10 Best Places in the World for Surfing” (this has nothing whatsoever to do with taxes).
Speaking of lists I am currently in the process of compiling a “Book of Tax Lists” which I will be offering soon.
* Pete Pappas of THE TAX LAWYER’S BLOG takes up the fight to end the dreaded Alternative Minimum Tax in his post “Tempo di Dire Arrivederci to the AMT”. As I have posted here at TWTP many times in the past, like Frankenstein in the old Hammer film - The AMT Must Be Destroyed!
* Bruce THE TAX GUY provides an introduction to the history of the federal income tax in “Some IRS History. . .”, and makes some interesting comparisons between the first Form 1040 and the current one –
1. Taxes were only paid on income above $3,000, equivalent to $61,000 in today’s dollars, at the initial rate of only 1%.
2. The highest marginal tax rate in 1913 was 6%, which applied to income above $500,000, equivalent in today’s dollars to a little over $10 million.
3. The entire 1040 tax form in 1913, including all forms and instructions, and was only 4 pages. All instructions in 1913 were contained on a single page, compared to the 2007 1040 Instructions, which held 92 pages long, (without any forms).
FYI I have a section on TAX HISTORY on my website.