* Let me lead off the return of the BUZZ with what Donald Marron of TAXVOX, the blog of the TAX POLICY CENTER, thinks is “The Biggest Tax Policy Mistake of the Year” (and I agree) -
“With little time left on the legislative clock, policymakers will be hard-pressed to top the tax policy blunders they’ve already made this year. Most notable is their failure to decide what this year’s tax law should be. While politicians, analysts and the media endlessly debate how expiring tax cuts might affect taxpayers in 2011, the real disgrace is that we still don’t know what the tax law is in 2010.”
Donald was “right on” when he observes -
"Such retroactive policymaking is an embarrassment. In a well-functioning democracy, policymakers should establish the laws of the land in advance so that families and businesses can knowledgeably plan their activities. Surprises may sometimes necessitate mid-course corrections. An economic downturn may justify mid-year tax cuts, or a sudden crisis may require mid-year tax increases. But persistent retroactive lawmaking undermines the core idea that ours is a nation of law."
As Donald pointed out, the inexcusable action, of inaction, of the cafones in Congress “undermines the IRS’s ability to implement the tax system. In 2007, for example, Congress fiddled until just before Christmas before deciding to enact that year’s AMT patch. Because of that delay, affected taxpayers couldn’t begin filing their returns until February 15, when IRS computers finally reflected the new law.”
* Mary BUD BFFALOES IN YOUR TAX CODE O’Keefe considers how the folly of Congress will affect her VITA volunteer preparers in “VITA Volunteers Will Be Waiting on Tenterhooks Again”.
* Over at CNN.MONEY Chris Isidore brought up a “stimulus” proposal that I have been touting for years – the “payroll tax holiday” – in “A Tax Cut Both Parties Should Love -- But Don't”.
Chris told us that –
“The nonpartisan Congressional Budget Office estimated earlier this year that eliminating payroll taxes was roughly two to four times more effective in spurring economic activity than a reduction in income taxes, the policy option that's getting most of the attention in Congress.”
“Many economists say the employer portion of the payroll tax discourages hiring by making it expensive. So dropping the tax might free up cash that employers could use to add workers -- an idea that Republicans could likely sink their teeth into.”
I do believe that a payroll tax holiday was proposed by then Senator Jon Corzine years ago, before he lost both brains and backbone (or should I say "balls") during his tenure as NJ governor.
And BO’s Making Work Pay credit was slightly based on the concept – in that the tax reduction was calculated as 6.2% of the first $6,451 ($12,903 for a married couple) of wages – but his mistake was in making it a reduction of income tax and totally FU-ing the federal income tax withholding tables to implement it (which ultimately caused more problems than it was worth).
* William Perez reported that “California to Delay Tax Refunds, Again” over at WILLIAMS’S TAX PLANNING BLOG.
“The state of California will be delaying tax refunds along with other payments, effective for California tax returns that are processed by the state on or after October 7, 2010.”
Apparently, to quote the California State Controller's Office, “There is not enough money in the treasury to meet all of the State's current payment obligations".
* Trish McIntire of OUR TAXING TIMES weighed in on one aspect of the tax preparer registration debate by talking about the AICPA’s recent focus on student interns/employees and how this will be a big issue for the students and with the suggestion to “Expand the Signature Section”.
As for student interns/employees she says –
“Since these are the future accountants and CPAs, I think they would welcome being licensing as an advantage in the job market. I can't see why they should be excluded because who hired them.”
While I do not think I would support a whole page added to the process, I do think that the names of the individuals who actually worked on and prepared the return should be on the return – and not just the name of the “CPA of record” – who probably spent the least amount of time of all involved in the actual preparation of the return. It would also show the taxpayer/client who actually prepared the return.
* Joe Arsenault of CAFÉ TAX and ROTH IRA FACT has prepared “A Guide To Roth Conversions” worth reading if you are considering making a conversion before year end.
* TWTP fan Susan Kilroy, from CRIMINAL JUSTICE DEGREES GUIDE, thought my readers who attend law school would be interested in the article “10 Blogs to Help You Through Law School”.
* Bruce, the MISSOURI TAX GUY, provided great BUZZ withdrawal relief with his weekly Sunday BUZZ-LIKE “Week In Perspective”, which, as usual, includes interesting entries from personal finance blogs that I do not regularly visit in my “wanderings”.
* Professor Annette Nellen hoped to initiate a conversation on “Trends and the Tax System - The Home Mortgage Interest Deduction” at 21st CENTURY TAXATION.
Personally I would hate to see the deduction for acquisition indebtedness go away – many of my clients benefit greatly from this deduction. As Riles mentioned in his comment – “The home mortgage interest deduction is something of a sacred cow”.
However, I would not be against doing away with the “home equity” component of the deduction – making only true home-related mortgage deductible. But to do this properly would require placing more detailed reporting by banks and other mortgage providers.
I have missed original tax-related posts from Stacie Clifford Kitts and Monica Lawver. Hopefully now that October 15th is gone they will provide us with some good and thoughtful reading.