taxgirl » politics

Tax Trivia Giveaway #3: High Income Taxpayers

Kelly — Wed, 01 Feb 2012 03:08:19 +0000

Our next tax trivia question is:

In 2000, Vice President Cheney and his wife owed federal taxes of $14,295,058 on adjusted gross income of $36,086,635. After taking into account withholding and other payments, how big a check did the Cheneys have to write when they mailed in their taxes? (I’ll take answers within $100,000)

For more about the giveaway, including rules and prizes, check out this post.

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Tax Talk 2012: Buddy Roemer

Kelly — Sun, 29 Jan 2012 16:32:17 +0000

With the Florida primary just days away, the race for the Republican nomination feels like it could be anyone’s game. The state of the economy remains a chief concern among voters. It’s important to understand what it is that each candidate hopes to bring to the table in terms of tax incentives, tax policy and tax proposals. With that in mind, I contacted each of the candidates who has officially declared an intention to run for president. To keep it simple, I asked each of the candidates the same six tax-related questions.

Next in the series is Republican candidate Buddy Roemer. I had the opportunity to speak to Roemer by phone on Friday. He previously served as the 52nd Governor of Louisiana (1988 to 1992) as a member of the United States House of Representatives from 1981 to 1988.

It was a great chat. Here’s what he had to say:

taxgirl: What’s the single most important tax issue facing Americans today?

Roemer: Trust. Taxpayers can’t read the Tax Code and they can’t trust it. It’s written by lobbyists and taxpayers don’t think it’s fair. When a company like GE can make $5.2 billion in revenue and pay no federal tax while the average working taxpayer pays a rate close to 25%, that’s not fair. We need clarification, simplicity and fairness in our Tax Code.

We need a system that is fair, simple, trustworthy and understandable.

taxgirl: If you could only make one “quick fix” in terms of an extra credit, a disallowed deduction or the like, what would it be?

Roemer: A flat rate. Under my plan, there would be a flat rate. There would be a $50,000 exemption for a family of four and there would be a flat tax of 17% on income beyond that. That means that those making less than $50,000 would pay no income tax while those making more than $100,000 would have an effective tax rate of 8.5%.

That leaves money left over to pay their property taxes, sales taxes and expenses. There would be no other federal taxes.

It is clear and simple. There are no deductions or other exemptions.

Companies and individuals would pay the same rate. There would be no double tax, no marriage penalty, no alternative minimum tax.

I would also make it a rule that a 2/3 vote would be required to change the rate. It would take 2/3 vote in the House and 2/3 vote in the Senate. Taxpayers need that consistency. I helped rewrite the Louisiana Constitution and we put that 2/3 rule in there.

It is simple, clear, fair and encourages growth.

taxgirl: The current federal estate tax exemption is $5 million for individuals or $10 million for married couples. Do you recommend lowering the exemption, boosting the exemption, keeping it at its current rate or something else altogether?

Roemer: No double taxes. No estate taxes. Under my system, you would be taxed once, not twice.

taxgirl: It has been suggested that the IRS should be eliminated. Do you believe that this makes sense, and if you do, what would you establish in its place?

Roemer: No, that doesn’t make sense. The IRS needs to be restructured, not eliminated. The IRS does a lousy job but that’s a reflection of the Tax Code.

Under my plan, the IRS would be about 5% of the current size. With a more simple Code, there is no need for a complicated system. They would deal with business expenses, random audits.   We need a light touch, a lot of trust.

taxgirl: Do you think that significant tax cuts are possible considering the current state of the economy, specifically with respect to the issues surrounding the debt ceiling and the federal deficit?

Roemer: Excessive debt shrinks a nation. Under Obama’s current budget, there are deficits for each of the next ten years. The smallest projected deficit is one half trillion dollars. We are a nation in trouble.

We can have fairness and growth out of a flat tax. My plan allows for an explosion of growth. Growth is what we need to get over our debt hurdle.

With my plan, there would be a flat rate. It is fair, simple, trustworthy and understandable. No tax on dividends, no depreciation schedules: you would expense what you spend. We need to encourage growth, encourage modern technology.

You cannot restore wealth by raising taxes. A flat tax is more fair, more simple and everybody pays.

taxgirl: And just for fun, if Uncle Sam handed you a huge refund check right now, what would you do with it?

Roemer: Save it or pay down my debt. That goes for me as well as for the country.

I’m an investor and a banker, with a background from Harvard Business School. I come from a business background: money is what I deal with.

We are a consumer society. We’re takers, not makers. That used to not be the case. “Made in America” used to mean something. It needs to be important again. And it can be.

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You can read more about other candidates in the series here:

Tax Talk 2012: Vern Wuensche
Tax Talk 2012: Lee Wrights
Tax Talk 2012: Tom Miller

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Taxes and the State of the Union

Kelly — Wed, 25 Jan 2012 19:12:56 +0000

Last night was the State of the Union speech as delivered by President Obama. Traditionally, the State of the Union speech is delivered once a year to both houses of Congress. For the last hundred years or so, the speech has been delivered in January of each year and is the President’s opportunity to address Congress and the nation about how we’re doing as a country and what his particular agenda will be for the coming year.

Let’s start with the fun stuff:

The State of the Union speech, including the salutation, weighed in at 6,998 words (by contrast, the Declaration of Independence – not counting the signatures – is 1,337 words in length).
During the course of the speech, Obama mentioned the word “tax” in some context 34 times.
The phrase “tax rate” or “tax rates” appears 3 times.
The word “reform” only got a mention 9 times.

You can probably tell from those numbers that the key elements of the speech did not involve taxes or tax reform. My guess is that’s because neither party has a whole lot to offer this year in terms of reform. So, Obama went for the obvious: payroll tax cut extensions and the Bush tax cuts.

Obama made the case for payroll tax cuts in his speech, saying:

Right now, our most immediate priority is stopping a tax hike on 160 million working Americans while the recovery is still fragile. People cannot afford losing $40 out of each paycheck this year. There are plenty of ways to get this done. So let’s agree right here, right now: No side issues. No drama. Pass the payroll tax cut without delay.

You already know where I stand on this: I think the payroll tax holiday is wasteful and confusing. Congress can’t stand the idea of not having some kind of tax break for somebody so we’re in a revolving door of temporary tax breaks. The payroll tax holiday was meant to last only one year and take the place of the Making Work Pay Credit. Of course, now that taxpayers are used to having some extra dollars in their pockets, Congress practically has to pass the payroll tax cuts or actually engage in real tax reform efforts. So payroll tax cuts it is.

Only, the “drama” that President Obama references has to do with this silly two month nonsense. As you may recall, the payroll tax cuts were extended – but only for two months. The extension runs out at the end of February. Here it is, the end of January, and we are… where, exactly?

And speaking of temporary cuts, President Obama also addressed the matter of the so-called Bush tax cuts. He said:

When it comes to the deficit, we’ve already agreed to more than $2 trillion in cuts and savings. But we need to do more, and that means making choices. Right now, we’re poised to spend nearly $1 trillion more on what was supposed to be a temporary tax break for the wealthiest 2 percent of Americans. Right now, because of loopholes and shelters in the tax code, a quarter of all millionaires pay lower tax rates than millions of middle-class households. Right now, [entity display="Warren Buffett" type="person" active="true" key="warren-buffett"]Warren Buffett[/entity] pays a lower tax rate than his secretary.

Admit it… You, like me, half expected the President to slip in Romney’s name. To his credit, he didn’t. Instead, he referenced the Buffett rule, saying:

But in return, we need to change our tax code so that people like me, and an awful lot of Members of Congress, pay our fair share of taxes. Tax reform should follow the Buffett rule: If you make more than $1 million a year, you should not pay less than 30 percent in taxes. And my Republican friend Tom Coburn is right: Washington should stop subsidizing millionaires. In fact, if you’re earning a million dollars a year, you shouldn’t get special tax subsidies or deductions. On the other hand, if you make under $250,000 a year, like 98 percent of American families, your taxes shouldn’t go up. You’re the ones struggling with rising costs and stagnant wages. You’re the ones who need relief.

Obama also took a swipe at efforts to qualify tax reform in terms of class warfare, stating:

Now, you can call this class warfare all you want. But asking a billionaire to pay at least as much as his secretary in taxes? Most Americans would call that common sense.

Maybe. But realistically, pushing rates down or eliminating favorable tax treatment for investments will neither fix our economy nor – and this is the most important bit – win the day in Congress. Yes, I’m as confident as you are that if Congress put their minds to it, they could negotiate some kind of band-aid deal with the President. But we don’t need band-aid deals. We’ve endured them for years and we’ve seen… what, exactly?

That said, it was an effective speech. It was one of those feel good moments and I happen to think that, as a country, we need more of those. And President Obama made the points he wanted to make, knowing full well that Congress isn’t going to run with them. If I had to guess, we will see some kind of temporary compromise next month wherein the payroll tax cuts are extended through the end of the year – but no further – in exchange for some version of an extension of the Bush tax cuts.

Sigh. But if that’s the State of our Union, we’ve got some work to do.

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Romney’s Tax Returns are Remarkably… Unremarkable

Kelly — Tue, 24 Jan 2012 15:29:03 +0000

I know, I know. You, like me, woke up this morning and your first thought was: what’s on those darn Romney tax returns?

Okay, maybe you didn’t. But I did (true story, ask my husband). And not because I really care in a this-will-dramatically-change-my-life kind of way but rather I was interested in what the release would mean to the campaign and to the primary. And. YAWN. Now that it’s happened, I don’t think it means a thing.

Of course, that’s what Romney was banking on. He’s clearly anxious to move beyond the tax return issue, going so far as to hire former Commissioner of the Internal Revenue Service Fred Goldberg to review the returns. After his review, Goldberg released the following statement:

I have reviewed Governor and Mrs. Romney’s joint tax return for 2010, including returns for the Ann and Mitt Romney Family Trust, the Ann D. Romney Blind Trust, and the W. Mitt Romney Blind Trust. I have also reviewed the return in process for 2011. These returns reflect the complexity of our tax laws and the types of investment activity that I would anticipate for persons in their circumstances. There is no indication or suggestion of any tax-motivated or aggressive tax planning activities. In my judgment, they have fully satisfied their responsibilities as taxpayers. They have done so by relying on a highly reputable return preparer and other advisors, who have in turn relied primarily on information provided by third parties to them and to the IRS. The end result of that process has been returns that include a multitude of schedules, IRS forms and accompanying statements that provide appropriate transparency and the proper payment of taxes that Governor and Mrs. Romney owe under current law.

Meh. Take that with a grain of salt. That’s like me saying it. Okay, a little more impressive than me. But it’s still the mere opinion of a tax professional. It’s not the same as a tax clearance.

But if had been an honest to goodness tax clearance, would it matter?

I don’t think anyone really believes that Romney is cheating on his taxes. That’s never been what this has been about, despite Gingrich’s statements that he wanted Romney to release the returns to ensure that there’s nothing on them that will come back to hurt the GOP. Let’s call a spade a spade. This whole exercise has been about making Romney unlikeable. Here’s what some politicians want you to know:

Romney is not just rich, he’s über rich.
Romney invests offshore.
Romney pays a 14-15% tax rate, lower than many taxpayers.
Romney gives lots of money to the Mormon Church.

Check ‘em all off. They’re all true. And you can’t possibly have thought differently before those returns came out.

With that in mind, I breezed through the 2010 federal income tax returns for the Romneys this morning (all 203 pages of them) and found them rather unremarkable, all things considered (though I did enjoy poking through them in a tax geeky kind of way).

Here’s what you probably already knew:

He files as married filing jointly.
He had more in capital gains last year than most people will ever see in a lifetime (about $12 million).
He itemizes his deductions on his returns.
He is subject to the AMT.
He is the beneficiary of a few trusts (including a blind trust a la Kerry, Bush and Cheney).
He makes a lot of money from speaking (even though he doesn’t think it’s a lot, per his statements on the campaign trail).
He has Swiss bank accounts and interests in tax havens like the Cayman Islands, Bermuda and Ireland.
He donates a lot of money to the Mormon Church.
He has a few household employees.

Here’s what you maybe didn’t know:

Less than 1% of the interest earned by Romney was tax exempt. Far less.
He claims foreign tax credits and has for years.
Most of his income is passive, largely from investments and trusts.
He filed his 2010 return on extension. As in really on extension (signed on 10/15/2011, the last day you can file if granted an automatic extension).
He makes significant charitable donations to the Tyler Charitable Foundation, a private foundation in Boston.
He made a few section 83(b) elections last year with respect to restricted stock.
He gets a fairly good rate on health insurance (he’s self insured).

And here’s what Romney probably wishes you didn’t know:

His first name is Willard.

You can see the returns here (downloads as a pdf and warning: they’re loooong).

I haven’t yet sorted through the trust returns or the 2011 estimates. I plan on doing that later today. If I find something worth reporting, I will. But I wouldn’t hold your breath that I’ll find anything astonishing.

The returns are – as predicted – remarkably unremarkable. Are we okay with moving on now?

(Editor’s note: Earlier today, I reported that Romney made donations to the Tyler Foundation which serves families whose children are undergoing treatment for epilepsy at Children’s Hospital Boston and UMass Memorial Children’s Medical Center. That was my mistake: the folks at Tyler Foundation responded to my request for more information by noting that Romney is not a donor to their organization. It is a different Tyler Foundation, which appears to be a private foundation. I regret the error.)

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Tax Talk 2012: Tom Miller

Kelly — Mon, 23 Jan 2012 14:54:19 +0000

With South Carolina behind us and Florida looming, we’re firmly in the throes of primary season. I feel strongly that it’s important to understand what it is that each candidate hopes to bring to the table in terms of tax incentives, tax policy and tax proposals. With that in mind, I contacted each of the candidates who has officially declared an intention to run for president. To keep it simple, I asked each of the candidates the same six tax-related questions.

Next in the series is Republican candidate Tom Miller. Here’s what Miller had to say:

taxgirl: What’s the single most important tax issue facing Americans today?

Miller: The current tax system simply doesn’t work. It is incredibly complex, ever changing, and seemingly punitive. Between five and ten times the size of the Bible (no one seems to agree on the exact size of the tax code), even IRS employs are unable to accurately explain basic tax code questions. A Government Accountability study in 2008 concluded that the IRS gave erroneous answers to tax payer questions in millions of cases. But this certainly isn’t a new problem, for decades the American people have been over charged and falsely penalized tens of millions of dollars simply because neither tax payer or IRS employee was able to decipher the tax code.

Of course the tax code is also used as a political weapon. A perfect example is the so called “green credits.” These credits promote consumer “behavior modification” by rewarding those who buy electric cars, add solar panels, etc. and reward companies who contribute financially to the politician. People who are financially unable or unwilling to adopt the “green” mantra are penalized through loss of credits and in some cases higher tax rates such as those levied on “gas guzzler” cars.

The current tax code must be scraped and replaced with a simple, non political, transparent flat tax system.

taxgirl: If you could only make one “quick fix” in terms of an extra credit, a disallowed deduction or the like, what would it be?

Miller: While I think that the only effective “quick fix” is to adopt the flat tax system, if I had to make one change to the current tax code, it would be to eliminate deductions. Deductions reward one group over another which is counter to the basic American concept of equality. Rent is typically much higher than the monthly mortgage payment would be for the same property. We reward those who have the financial ability to purchase a home with mortgage deductions while those who can not afford to do so are penalized with both higher costs and no deduction. This scenario of rewarding one group over another with tax deductions or penalties is replayed throughout our tax system. Taxes shouldn’t be about popular choices or preferential treatment. A flat tax puts control back into the hands of tax payers and doesn’t penalize success or lack there of.

Miller: Part of the problem with our current tax system is the ebb and flow of ever evolving exemptions, deductions, and credits. I do not support exemptions of any kind. Instead, I support a flat tax of 14% for all income earned, levied against ALL Americans and businesses, without exception or exemption. This creates stability and insures that the costs of running this country are shared equally, without favoritism, political rewards, or confusion.

taxgirl: It has been suggested that the IRS should be eliminated. Do you believe that this makes sense, and if you do, what would you establish in its place?

Miller: Employing over 100,000 people and costing tax payers in excess of $11billion dollars annually, the IRS has become a behemoth. When you add the fact that nearly 16,000 lobbyists in Washington use their time, energy, and money to make the tax code MORE complex through lobbying for special tax breaks, loop holes, crack downs on their competition, etc. It becomes clear that a simple “fix” is impossible.

I support the immediate elimination of the IRS and the Federal Reserve. A simple, streamlined system that includes a flat 14% income tax without exception or exemption, managed by the US Treasury would, in my opinion be most effective.

Miller: Tax cuts, as the term is used today, are an illusion. Almost half of the population doesn’t pay income tax at all. This means that the tax paying members of society shoulder a larger portion of the burden. In a country that prides itself on equality, the inequality under our current tax system is shocking. Giving a token tax cut to people who are already grossly over taxed because they are subsidizing non-tax paying members of society and political pet projects, is an appeasement designed to keep tax payers in line.

By adopting a flat income tax system, which taxes ALL without favoritism, or exception, we could remove all of the politics and much of the administration costs associated with taxation. This would not only increase tax revenue, it would reduce the incredible costs of tax collection and administration. This of course helps reduce the deficit and pulls us back from the debt ceiling.

taxgirl: And just for fun, if Uncle Sam handed you a huge refund check right now, what would you do with it?

Miller: Despite the complexity, like many Americans, I try to manage my Federal withholdings in an effort prevent the overpayment/refund or underpayment/owe problem.

But if I happened to come into a windfall, I would take a couple weeks off with some buddies to explore the Boundary Waters wilderness area of Superior National Forest.

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You can read more about other candidates in the series here:

Tax Talk 2012: Vern Wuensche
Tax Talk 2012: Lee Wrights

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After Loss, Romney to Release Tax Returns

Kelly — Mon, 23 Jan 2012 03:13:50 +0000

So, show of hands: who really thought that former Massachusetts Governor and current GOP presidential hopeful Mitt Romney would win South Carolina?

My hand will stay firmly by my side. I expected Romney to lose South Carolina. I also still fully expect him to get the nod from the party at the GOP Convention despite noting earlier that no Republican candidate for President has ever failed to win South Carolina and gone on to secure the nomination. I think he’s the exception. (No, this isn’t an endorsement, it’s an educated guess.)

I know South Carolina pretty well. I grew up in North Carolina (much of my family still remains) and spent many a summer in Greenville; I’ve been to family reunions in Georgetown; been porch sitting in Rock Hill and wandered around the naval base in Charleston with my brother. And yes, I once bought a Fiat in Pumpkintown. With my background, I feel confident that I easily could rattle off ten reasons why Romney lost South Carolina.

Not releasing his tax returns isn’t one of them.

Despite that fact, which I’m sure his handlers already know, Romney is still getting grief about not releasing his returns. This week, apparently still reeling after the primary loss to former House Speaker Newt Gingrich, Romney is going to do something he’s never done before: make his tax returns public. He plans to release his 2010 returns and offer an estimate of what he’ll pay in 2011 (someone get that tax preparer a redeye quick).

I don’t think it will make much difference in the race at this point – which is exactly why Romney is releasing the returns. This is his Obama birth certificate moment. I think Romney realizes that voters are going to talk about those returns until he makes them public. The more that voters focus on the lack of returns, the worse he’s going to look. Romney’s supporters want to move the discussion along.

So what will those tax returns reveal? My guess is nothing we haven’t heard already. We know that he’s rich. Crazy rich. We know that he has offshore accounts. And we know that he pays “about 15%” in taxes.

What else is there to see? I’m sure there’s something there to pick on. But I don’t think we’re going to see any game changing information in those returns. But it sure makes good fodder for Gingrich, who told NBC’s David Gregory:

If there are things in there that can be used against him, we better know it before the nomination. The last thing Republicans want to do is nominate somebody that collapses in September.

You know, like an old ethics violation related to federal tax laws.

Good thing Gingrich is just looking out for the party.

All that said, when the returns are released later this week, I think we’re going to see a flurry of activity that turns out to be pretty much a non-event. I think, by midweek, we’ll all be saying, “There’s nothing to see here, folks, let’s move along.”

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Quelle Horreur! Mitt Romney Pays ‘About 15% Tax Rate’

Kelly — Wed, 18 Jan 2012 16:11:25 +0000

Under growing pressure from other GOP candidates, GOP presidential hopeful and frontrunner Mitt Romney has released some limited information about his finances this week. It turns out *gasp* that Romney has done pretty well for himself over the years. But, really, we already knew that . While we don’t know the specifics, Romney’s net worth is estimated to be northwards of $250 million. He is thought to earn close to $10 million in income per year with some speculation that the number is closer to $40 million (it’s hard to tell exactly since Romney has not released income information even while serving as Governor).

As I predicted, Romney benefits from having a number of tax favorable long term investments. I suggested that would put him roughly in the same category as Warren Buffet with respect to tax rates with Romney paying an effective tax rate close to Buffet’s 11%. This week, Romney confirmed that his effective tax rate is “about 15%.”

Let the skewering begin.

Or maybe not.

The fact is that Romney is doing exactly the same thing that you and I do: he’s taking advantage of existing Tax Code. You wouldn’t expect him to volunteer to pay at a higher rate “just because” anymore than you would volunteer to give up your own mortgage interest deduction or offer to drop a personal exemption. There is absolutely nothing in the Tax Code that requires you to legally pay more taxes than you have to.

The thing is, I want my President – no matter who it is – to either know enough about fiscal and tax policy to make smart decisions or to surround himself (or herself) with people who can make those smart decisions. Having someone who consistently makes poor decisions about their own taxes directing tax policy seems like, I don’t know, asking Newt Gingrich for relationship advice.

So if there’s anger to be had, let’s make sure it’s pointed in the right direction. It isn’t that we should be angry at Romney for taking advantage of the Tax Code as written. We should be angry at Congress for letting it to happen. Tax reform should be the clamor, not torching the wealthy.

And let’s face it: historically, we’ve tended to elect wealthy presidents from Jefferson to Kennedy to Bush. And many of those attempting to throw stones right now (yes, I’m talking to you, other GOP candidates who are clearly in the 1%) are doing so in an attempt to paint success as elitist, as if that’s something terrible. It’s very reminiscent of the 2008 presidential nomination race when the Democrats did the same thing, causing Jon Stewart to remark: Not only do I want an elite president, I want someone who’s embarrassingly superior to me.

Agreed. There’s a reason that we tend to vote in the Clintons and the Bushes of the world and not the equivalent of Larry the Cable Guy. Being smart and successful isn’t a bad thing.

All of that said, I’m not going to give Romney a free pass altogether. As a GOP presidential candidate, Romney, like many others favors tax policies that would benefit taxpayers like him. If there’s a criticism to be had here, it shouldn’t be that he’s benefited from the existing system but that he’s not suggesting meaningful reform. And that’s where this discussion should really be focused, isn’t it?

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As South Carolina Goes, So Does the Nation?

Kelly — Sun, 15 Jan 2012 22:51:00 +0000

This week, the eyes of the nation turn to South Carolina. No, not for the 37th Annual South Carolina Square and Round Dance Convention (though who among us doesn’t enjoy a good line dance?). They’ll be watching the South Carolina Republican primary, to be held on January 19, 2012. I know what you’re thinking: why does South Carolina matter? Aren’t the big guns Iowa and New Hampshire? Not necessarily. No Republican candidate for President has ever failed to win South Carolina and gone on to secure the nomination.

Apparently, as South Carolina goes, so goes the nation.

That’s why it was interesting to see the budget as proposed by Gov. Nikki Haley (R) this week. South Carolina voters are being issued a challenge this year as the legislature works to get spending under control without raising taxes, a challenge familiar to voters on the national scene.

Under Haley’s budget proposal, corporate income taxes would be phased out over four years. Individual taxpayers would receive a break, too, worth about $84 per taxpayer. Tax brackets would also be streamlined, reducing the number from six brackets to three.

Lower tax revenues, however, also mean fewer dollars to spend. As a result, Haley suggests cutting funding for public schools (and boosting charters, a notion popular among conservative voters) and pushing the responsibility for maintaining roads to counties. Her most controversial cuts include freezing wages for state employees, though the budget also includes increases for funding and employee health care. Haley acknowledged that this would be a bitter pill for state employees to swallow, saying:

You can’t give everything you want to give. Do I want state employees to have more? Yes. Was this year the year to do it? No, I think they deserve it. We have some of the hardest-working state employees out there.

I’m guessing that’s not going to be enough for state employees.

Pay freezes for government employees are a pretty popular budget cutting maneuver these days. The House of Representatives passed a similar bill that would affect federal employees but the final version didn’t make it through the Senate. Republicans generally supported the freeze while Democrats, including President Obama, have opposed the freeze.

But… why aren’t pay freezes on the table in lean times? It is in private enterprise. Why not in government? And yes, when I say government, I’m including Congress and their aides.

I don’t understand how we’ve gotten to the point where raises are automatic simply based on the passage of time. It used to be that raises were about achievement. Now, it’s simply for hanging around without getting fired. Isn’t that a bit like handing out a diploma merely because you showed up for school? Don’t misunderstand: I’m not begrudging anyone a raise. But when we start looking at how to save money, why should government employees get a pass?

I’m not so sure that those in the South Carolina legislature will share that sentiment. It will be interesting to see how the pay freezes and other parts of the budget will be embraced. It’s significant on a number of levels, including the fact the although Haley is in her second year as Governor, this represents her first official budget proposal. She’s touting pieces of it as important tax reform, a key platform issue. Tax reform and cost cutting… As South Carolina goes, so does the nation?

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Tax Talk 2012: Lee Wrights

Kelly — Sun, 15 Jan 2012 03:29:48 +0000

As I noted before, in terms of what affects voters the most, I feel strongly that it’s important to understand what it is that each candidate hopes to bring to the table in terms of tax incentives, tax policy and tax proposals. With that in mind, I contacted each of the candidates who has officially declared an intention to run for president. To keep it simple, I asked each of the candidates the same six tax-related questions.

Next in the series is Libertarian candidate Lee Wrights. Here’s what Wrights had to say:

taxgirl: What’s the single most important tax issue facing Americans today?

Wrights: [entity display="Taxes" type="section" active="true" key="/taxes"]Taxes[/entity] are too many and too high.

taxgirl: If you could only make one “quick fix” in terms of an extra credit, a disallowed deduction or the like, what would it be?

Wrights: Abolish the federal income tax.

Wrights: Abolish the federal income tax, so no “exemptions” would be needed.

taxgirl: It has been suggested that the IRS should be eliminated. Do you believe that this makes sense, and if you do, what would you establish in its place?

Wrights: Absolutely. I would abolish the income tax and replace it with … nothing.

Wrights: Yes. Federal spending is totally out of control. We must stop the spending, beginning with all programs that are not specifically enumerated in the Constitution, and by stopping all wars and bringing all the troops home from overseas.

taxgirl: And just for fun, if Uncle Sam handed you a huge refund check right now, what would you do with it?

Wrights: I would not accept it, because it is money extorted from other people.

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You can read more about other candidates in the series here:

Tax Talk 2012: Vern Wuensche

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Tax Talk 2012: Vern Wuensche

Kelly — Wed, 11 Jan 2012 23:51:00 +0000

We’re coming down to the wire for presidential nominations. Election coverage is heating up and it seems like there’s a debate on television nearly every night. Despite all of the press, there are still a number of questions about where candidates stand on the issues.

In terms of what affects voters the most, I feel strongly that it’s important to understand what it is that each candidate hopes to bring to the table in terms of tax incentives, tax policy and tax proposals. With that in mind, I contacted each of the candidates who has officially declared an intention to run for president. To keep it simple, I asked each of the candidates the same six tax-related questions.

First up is Republican candidate Vern Wuensche. Here’s what Wuensche had to say:

taxgirl: What’s the single most important tax issue facing Americans today?

Wuensche: The fact that all rates are too high and that rates, deductions, and exemptions are used by those in public office to manipulate others so as to continue in office at the expense of taxpaying citizens. A particular damaging tax to all Americans is the high corporate income tax which makes us uncompetitive in world markets.

taxgirl: If you could only make one “quick fix” in terms of an extra credit, a disallowed deduction or the like, what would it be?

Wuensche: I can think of no quick fix in the form of a minor manipulation of the tax code. It must be eliminated entirely.

Wuensche: The federal estate tax should be eliminated entirely. It is unfair to the deceased who had used after tax income throughout his working life to accumulate assets and now is taxed heavily at his death. It is unfair in that to pay the estate tax the taxpayer is often forced to sell assets in an untimely manner when their value may be at their lowest point. It is unfair to all Americans in that businesses which often have taken many generations to achieve an efficient production process are forced to be broken up to pay taxes and thereby lose this efficiency. It is unfair to all Americans in that our culture is harmed with the disruption caused by family farms requiring to be sold to pay the estate tax.

taxgirl: It has been suggested that the IRS should be eliminated. Do you believe that this makes sense, and if you do, what would you establish in its place?

Wuensche: The IRS should be eliminated entirely and replaced with a national sales tax. This would eliminate taxation of an activity that is REQUIRED to survive — an individual’s production of income — with taxation of an activity that is entirely VOLITIONAL — purchasing products. The Sixteen Amendment to the U. S. Constitution should be simultaneously repealed. The benefits would be numerous. Individual Americans would have more control of their lives. No longer would the production of income be penalized more and more as one became more and more efficient at producing it. One could accumulate capital more easily by simply foregoing purchases. Capital would be allocated more directly towards national economic benefit rather than to obtain tax benefits which may or may not be for the economic good as people would vote with their dollars on what is worthwhile rather than what the IRS dictated through the tax code. Capital would be more mobile and flexible as there would not be a penalty in moving it from one investment to another.

Wuensche: Tax cuts are always possible and taxes should be reduced dramatically. Those who oppose them always use static analysis which assumes that a reduction in taxes will reduce revenue in an exact mathematical amount caused by the rate reduction. They make no allowance for the change in a taxpayer’s behavior as a result of the rate change. If taxes are reduced to zero with an eliminated IRS an individual would rise earlier and work harder and longer the same as any individual who is paid on a piece work basis where he is paid more for each piece. And the opposite will also be true: If one individual is taxed at a rate of 20% he will get up in the morning and go to work as he always has; if the same individual is taxed at 50% he likely often will not go to work at all; and if he is taxed at 100% he will ALWAYS stay in bed and never go to work. No tax revenue would result from the latter. The level of taxation changes a person’s behavior.

taxgirl: And just for fun, if Uncle Sam handed you a huge refund check right now, what would you do with it?

Wuesnche: Invest it in my campaign to spread the word that small business owners who have been in business ten years or so are the best PROVEN decision makers as in their case ONE major decision error at an earlier time would generally have put them out of business. They are required to be better decision makers because they are forced to and as such always make the best public officials.

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