That yellow ball in the sky this morning threw me for a loop. They say it’s called the sun. At any rate, I was thrilled to see it. I grabbed a cup of coffee and cozied up to the computer for another edition of “Sunday Mailbag.” Here’s a couple of “nontax” ask the taxgirl questions that I’ve recently received – enjoy!
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Taxpayer asks:
Can you recommend tax software for me? I am single, a homeowner and have a few other deductions. Nothing too complicated.
taxgirl says:
I think most tax software programs are fairly similar. I don’t know that you can pick a “bad” package especially with a situation like yours that sounds largely simple. But when it comes to what I use, I don’t mind saying that we use TurboTax, largely because it works well with Mac (no paid endorsement, folks, just the truth).
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Taxpayer asks:
A lot of tax stuff is very political. I was wondering which president you think was the best for taxes?
taxgirl says:
Hmm, the best, you say? That’s a tricky question.
I’m going to disregard all presidents prior to Eisenhower – not because there were not significant tax events during those times but because it’s difficult to compare tax policies under those systems to those of today. And, after whittling off nearly a couple hundred years, it makes my answer much easier.
I don’t know that I can point to a president who was the “best” for taxes but in terms of a real change in terms of our modern tax policy, I’d say Reagan. Whether you embrace Reaganomics or not, it was a huge shift in terms of how we viewed taxes in America. Marginal rates in the early 1980s were quite high with the top rate hitting 70% on unearned income and 50% on wages – those rates were reduced dramatically. The so called “marriage penalty” was relaxed to reflect a changing demographic. And the increase in the home mortgage deduction is probably the most utilized of Reagan’s tax changes to this day for most Americans.
Perhaps most significant in terms of tax policy, Reagan did something that our recent partisan presidents would never do: he switched course when things weren’t working as hoped. It wasn’t called flip-flopping. His party didn’t abandon him. In fact, he received wide support when he tweaked his 1981 cuts in 1982, 1984 and 1986. Reagan, either through public opinion or his advisors, realized that the 1981 plan was a bit overly ambitious considering the economic climate of the country and rolled back.
The changes under Reagan were so dramatic that the Tax Code was renamed the Internal Revenue Code of 1986 – the first such retitling since Eisenhower. You’ll still see it written that way today.
While I don’t necessarily agree with each and every one of Reagan’s tax decisions, I just think if you had to choose a president who served during some of the most notable changes in modern tax history happen, I don’t see how you couldn’t choose him.
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Taxpayer asks:
I’m a tax lawyer, too, and also a mother. I have one child which I had before I started working (I was a nontraditional law student) and am considering having another. You mention your children in your blog from time to time. I was wondering how many children you have and whether you think that having children has been a hindrance in your career.
taxgirl says:
Ooh, here’s where I say things that manage to tick off everyone at the same time…
Um, I’ll start with the easy question. I have three fabulous kiddos. They are all aged 7 and under. I know, it is insanity.
I absolutely believe that being a mother in the legal profession is a hindrance. Law is predominately a male profession, even now. According to law.com, while women start out in approximately equal numbers to men as law school grads, women account for only about 20% of partners at big firms. I think it’s because the expectation is that women will become mothers and be less effective lawyers.
I got my first taste of that bias when, as I mentioned on #22twts, on one of my first job interviews for a law job, I was asked whether I intended to get married and have kids. Yes, now that I’m older and wiser, I realize that the interviewer wasn’t allowed to ask that question but as a soon to be law school grad, I just wanted a job. And I answered the question. I said yes (PS – it happened twice and I was offered the job in spite of the question on one occasion).
At any rate, fair or not, having a child is often viewed as an intrusion upon your availability as a lawyer. It is one of the reasons that I’ve chosen to be my own boss (although I didn’t have children until after I started my own firm). I work long, long hours because you have to in this profession. I’m typically up around 5am and I go to sleep close to midnight. I do this deliberately because I try to schedule my work around my family and not the other way around. That isn’t to pass judgment on anyone who does it differently, it’s just how I’ve chosen to manage my career.
But your career is really what you make it. There can be roadblocks – and, yes, honestly, pregnancy is one of them in the legal profession. How you handle it is up to you. Sandra Day O’Connor has three children. Ruth Bader Ginsberg has two. Clearly, having kids doesn’t end your legal career.
I do think there are certain areas of the law that are easier for moms and tax would be one of them. It requires little in the way of court appearances (if you play your cards right) and generally speaking, your busy times are expected. Summer tends to be the quietest, which works out well when the kids are home or for purposes of planning a vacation. My busiest times are early spring and the end of the year. That kind of stinks because it coincides with the holidays but again, not unexpected so that I can plan.
A little longer answer than I originally planned. It’s a tricky question that really can’t be fully developed in a couple of paragraphs. So let me leave you with this: Could I have been a partner at a big firm if I wanted? Yes (I’ve been headhunted plenty). Could I make a lot more money doing things differently? Yes. Do I get a little envious when I see my single peers climbing up the career ladder? Yes. Would I give up my current life for any of that? Not for a second.
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Taxpayer asks:
I imagine that you’re pretty excited about the Phillies, huh?
taxgirl says:
You have no idea! Go Phils!
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As always, thanks for writing in!
Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.
Glad to see your kiddos so we can put faces to the various meltdowns, breaking into song, and “excited utterances.” Beautiful photo, taxgirl.
Thanks! I take terrible pictures but my hubby took this one. He tends to keep the heads in his pictures…
Love the picture! And really love your discussion on having children and a career. It’s a hard question with different answers for different people obviously, but you can certainly make it work if you try hard. My three kiddos are similar ages to yours I think (all under 8) and it was super hard working a full-time legal assistant position with my kids, and I know the lawyers in our office found it hard, as there was often travel involved. Being my own boss has made it easier, at least most of the time!
I was in D.C., working for a Congressman who was on Ways & Means, when the 1986 code changes were made. I’ve always thought, based on the talk back then, that the official name was “The Historic Tax Act of 1986.” 😉
I agree that the 1986 tax reforms were overall good ones–they simplified the tax code quite a bit, and the broadening of the base allowed tax rates to come down a lot.
However, I’m puzzled by your statement above about the “increase in the home mortgage interest deduction” under Reagan. I don’t remember any increases in the mortgage interest deduction under Reagan. In fact, I believe the Reagan tax laws limited the mortgage interest deduction.
I’m old enough to remember filing tax returns in which ALL interest was deductible, whether mortgage, credit card , auto loan, you name it. Even the interest people paid on late tax payments was deductible back then! And there was no limit on the mortgage interest deduction in the old days. Before the Reagan tax reforms, you could deduct all your mortgage interest, regardless of how many mortgaged houses you owned, regardless of the size of the principal that generated the interest, etc.
Sorry, Mary, it was poor word choice on my part. Reagan was in favor of eliminating a lot of deductions to make the Tax Code more *fair* (sound familiar?). He later gave his famous speech before the NAR where he promised to “preserve the part of the American dream which the home-mortgage-interest deduction symbolizes.” He, of course, did and the MID is now one of the most popular deductions for itemizers. What I meant to say is that Reagan’s public endorsement of the MID solidified the deduction as an entitlement and in that regard, it wasn’t going anywhere.
One more really important tax reform under Reagan: indexing the tax code for inflation! We had double-digit inflation in the early 1980s, and people were getting pushed into higher and higher brackets, even when their income was barely keeping up with inflation—until finally the tax code got indexed!
Thanks for the clarification, Kelly. There was absolutely no way President Reagan and Congress could have totally and abruptly eliminated the mortgage interest deduction in 1986.
A sudden and total end to the mortgage interest deduction would have been a disaster for many families who had recently bought homes in the early 1980s, because interest rates were so high back then, thanks to inflation. I still remember the first time my husband and I considered buying a house, in 1981. I called a few local banks to inquire about mortgage rates. Fixed rate mortgages were running as high as 18%. Shortly afterwards, there was an explosion of teaser one-year adjustables, but even they were in the low to mid teens. I never thought I’d lived to see the day when fixed rate mortgages would fall back to the levels we’ve seen in recent years!
Politically, especially given the strength and power of the real estate/construction industry, I do not think Reagan could have accomplished as much as he did without agreeing to preserve the tax breaks for homeowners. It’s timely to reflect on that industry’s power and influence as we look at the current debate over the extension of the temporary tax credit for home purchases.