Here
elaborations on “stuff” that appeared in earlier posts.
+ The
“Last Word” of a recent BUZZ installment proposed a federal law.
Here is
the idea, slightly adjusted -
Let us
pass a federal law that says
(1) Tax
legislation CANNOT be temporary. Except
for declared natural disasters or an official declaration of war, any
legislation that makes a change to the US Tax Code will automatically be
permanent, unless revised or repealed by specific subsequent legislation.
And
(2) Except
for declared natural disasters or an official declaration of war, any tax
legislation passed after September 30th cannot take effect until January 1st of
the next year.
Written
into the legislation should be a requirement that a 2/3 majority of both houses
of Congress would be needed to repeal or revise this law.
Temporary
tax law is not good tax policy (except perhaps for dealing with declared
natural disasters like KATRINA and SANDY).
In the past the idiots in Congress have consistently extended the temporary
tax breaks that become known as the “extenders”, often waiting until literally
the very last minute, and as a result causing problems and delays with the IRS
printing of forms and instructions and processing of returns, and confusing
taxpayers.
The IRS
had usually “gone to press” with tax forms, schedules and instructions for the
year in October. Putting a September 30th
deadline on making changes to the Tax Code in the current year will allow the
IRS to return to this schedule. It will
also make year-end tax planning much easier for individuals and businesses, as
they will know what will be in effect for the year during the last quarter and
have plenty of time to plan accordingly.
+ Below is
a recent comment on my post WHY WE NEED TAX REFORM by new tax blogger David
Fazio, EA -
“You hit the nail squarely on the head: the
Cash for Clunkers program was a success because it kept the IRS out of the
process. Taxpayers got their government discount (the equivalent of an IRS tax
credit) at the point of sale. They didn't have to wait up to a year to reap the
benefit.
We have become a nation of deduction
junkies. Congress has tweaked the code so much that we start to feel that every
dollar we spend should be deductible. We have special deductions/credits for
teachers, adoption, child care, income earned outside the US, education,
student loan interest and so on.
Does a teacher with out-of-pocket
expenses deserve an above-the-line $250 deduction more than the school
cafeteria worker who doesn't itemize and has $15 deducted out of her paycheck
every week for her uniform? Does the college graduate deserve a special
deduction for his student loan interest when a Hurricane Sandy victim can't
deduct interest on the credit card he's incurring while he's rebuilding his
home and waiting for the insurance check?
Now no one said he tax
code was fair. But too many perks are being handed out via the 1040 that (as
you pointed out) are completely unnecessary.”
Great
minds do think alike!
I have
always been confused by the $250 deduction for “educator expenses”. The tax savings is $60-$70 for most educators. Depending on where you live, this barely
covers the cost of a dinner out. And
why, as David asks, were educators singled out.
Are they more valuable than policemen, firemen, nurses, EMTs, or even
school cafeteria workers, all of whom have “out of pocket” employee expenses?
The
recipient of a special tax break, whatever it is, depends on either how much
the recipient’s lobby pays the idiots in Congress to vote for it, or which special-interest
group the idiots in Congress want to buy the votes of.
David also
talks about the student loan interest deduction, which is part of a group of
tax benefits related to post-secondary education. But, as I have said time and again, this
group should be replaced by direct “point of purchase” student financial aid.
TTFN
