Wednesday, January 2, 2013
SURPRISE! SURPRISE! SURPRISE!
To my great surprise, and the surprise of most other tax bloggers and tax professionals, the House approved the Senate tax bill by a vote of 257-167 late last night. The American Taxpayer Relief Act of 2012 now goes to BO for signature.
Once I have had time to “digest” all of its provisions I will post a detailed analysis of how the Act will affect 2012 and 2013 (and beyond) 1040s, with appropriate commentary.
While I am glad that at least something has been done - we now know how to properly prepare 2012 tax returns, and the correct 2013 withholding tables can now be published – I am somewhat saddened by the final result.
It looks to me that this Act, which makes most of the “Bush” tax cuts permanent, permanently extends the AMT “patch” retroactive to January 1, 2012, and extends the refundable credits through 2017, kills any hopes for a serious and substantive overhaul of the mucking fess that is the US Tax Code in 2013.
It appears that now that this tax bill has been passed the idiots in Congress are now finished with taxes for 2013. This includes the Republicans -
“Now the focus turns to spending,” Republican House Speaker John Boehner said, promising that his party would “hold the president accountable for the balanced approach he promised, meaning significant spending cuts and reforms to the entitlement programs that are driving our country deeper and deeper into debt.”
Yes, there needs to be a focus on cutting spending. But it should not be limited to reducing “entitlement programs”. There is so much waste and pork in any government budget – and this needs to be seriously addressed. And there should also still be a focus on tax reform.
The Tax Reform Act of 1986 was passed because of Ronald Reagan’s commitment and leadership. BO and the Democrats are not committed to legitimate tax reform, and will not provide leadership.
While reviewing the results of a Google search of Fiscal Cliff news I came across the post “'I Will Ask For More Tax Increases on the Rich Later,' Obama Promises” by Robert Lenzner at FORBES.COM.
“On the eve of the pathetically rotten ‘fiscal cliff’ deal, President Obama has promised to reform the tax code ‘so that wealthy individuals, the largest corporations, can’t take advantage of loopholes and deductions that aren’t available to the rest of America’.”
So it appears BO equates “tax reform” with “taxing the wealthy”.
Actually, due to AGI phase-outs, wealthy individuals can’t take advantage of some deductions and credits that are available to the rest of America.
BO and the Democrats want to continue to complicate the convoluted Tax Code with the bad tax policy of distributing social welfare and other benefits through the Tax Code, instead of having these benefits distributed through “normal” channels via the budgets of the appropriate cabinet departments.
There is no tax reform in the compromise tax bill, other than BO-style reform (taxing the wealthy). And it adds more complexity to the Code with the reinstatement of PEP and Pease AGI-based reductions of itemized deductions and the personal exemption for the “wealthy”.
I will continue to speak out for a serious and substantive rewriting of the Tax Code, and hope that others will as well. But I am not hopeful that anything of value will be done to fix the broken Code in 2013.