Posts Tagged ‘Taxes’

Smeal Faculty on the Fiscal Commission Recommendations

Tuesday, November 16th, 2010

The co-chairs of President Obama’s National Commission on Fiscal Responsibility and Reform last week released their preliminary recommendations for increasing tax revenues and reducing federal spending in an attempt to bring the deficit under control. Calling the debt a cancer that will destroy the country if not fixed, co-chairs Erskine Bowles  and Alan Simpson proposed cuts to everything from defense contracting to the White House budget to the federal workforce.

Below, Smeal faculty members Ron Gebhardtsbauer, Austin Jaffe and Anthony Warren weigh in on three of the recommendations.

Ron Gebhardtsbauer, faculty-in-charge of the Actuarial Science Program, on the commission’s Social Security proposals:

In the process of putting our fiscal house in order, the Obama Fiscal Commission also gets Social Security back in financial balance, which is great. The most important fix is indexing the retirement age to our increases in longevity, which makes Social Security sustainable, and encourages people to work longer.  Without indexing, Social Security’s finances go out of balance as we live longer.  And it’s not draconian at all.  They very slowly raise the normal retirement age for full benefits to age 68 in 2050 and around age 69 in 2074.  This won’t affect older workers, and middle age workers won’t be affected much.  Older workers in physically demanding jobs will be able to get disability benefits under an easier disability definition. 

I also like that they are finally making Social Security truly universal by covering the remaining state and local government workers (although that will be tough to get through Congress, as the large states have lots of power). 

There are many other fixes, which I’ll discuss in a later blog. 

Austin Jaffe, chair of the Department of Insurance and Real Estate, on the possibility of eliminating the mortgage interest tax deduction:

Perhaps the “sacred cow” of U.S. housing subsidies has been the mortgage interest tax deduction. Even when consumer interest was disqualified, interest deductibility from a mortgage was preserved. Recent discussion has raised the possibility that subsidizing mortgage interest payments is no longer a worthwhile policy. The Deficit Commission has suggested limits on mortgage interest deductibility: The benefit would only be available for primary homes, no interest would be deductible from home equity lines of credit, and no deductions would be available on mortgages larger than $500,000.

Here are some areas of current debate:

1.  The costs of lost revenue are being raised over and over again these days. The Joint Commission on Taxation estimated that it cost $80 billion in 2009 alone. About one-half of homeowners claimed tax benefits were a “major reason” to buy. Yet many households do not itemize their deductions (including about 50 percent of homeowners).

2.  Poterba and Sinai’s 2010 study found that 2.8 million households with annual income over $250,000 saved about $15 billion, while 19 million households with incomes between $40,000 and $75,000, saved only about $10 billion. The savings to middle- income households amounted to $542, or $1.48 per day. This is hardly sufficient to become a homeowner.

3.  Finally, commentators are now beginning to wonder if the deduction is a destabilizing force in housing markets. Inducing homeowners to borrow for consumption of housing services may add additional volatility to house prices since indebtedness adds financial risk to the system, especially when prices are dropping. This is another example of distortions created by providing incentives via the tax code.

There are other issues including the capitalization of tax benefits into current prices before the purchase takes place, comparisons of housing markets in countries without interest deductions, violation of horizontal equity of renters, and others.

After all of these years, it would truly be amazing if this well-liked tax subsidy would be rescinded even if the benefits are not as great as is typically thought relative to the costs.

Anthony Warren, director of the Farrell Center for Corporate Innovation and Entrepreneurship, on the Bowles-Simpson recommendation to merge the Department of Commerce with the Small Business Administration and cut the new entity’s budget by 10 percent:

For many years the Small Business Administration has been the poor cousin among government agencies with the result that small companies have suffered from inadequate representation in Washington.  Recently for example, the administration has supported larger corporations rather than the lifeblood of the economy, innovative job-creating small firms. Therefore there is a concern that smaller companies will now lose any voice that they may have had for the illusion of ever elusive cost cuts.  It would be better to double the Small Business Administration and half the Department of Commerce.

Tags: Economy, Entrepreneurship, Gebhardtsbauer, Jaffe, Politics, Real Estate, Social Security, Taxes, Warren
Posted in News | 7 Comments

President, New Speaker to Talk Taxes

Wednesday, November 10th, 2010

From the Los Angeles Times: “House Republican leader John Boehner signaled Wednesday that he was unwilling to compromise on a permanent extension of the so-called Bush tax cuts, saying preserving current rates is ‘the most important thing we can do to create jobs.’”

Smeal’s resident tax expert Charles Enis agrees that extending the tax cuts may boost economic growth, but there’s also that pesky deficit that needs some attention:

If we allow the tax cuts to expire and the tax rates go up, this could mean trouble for the economic recovery. Right now, you have some policy-makers declaring the recession is over, but try telling that to someone who’s out of work. That’s the problem—jobs. You can say the recession is over but that doesn’t help all those people who are out of work. Will higher tax rates hinder these people from getting back into the workforce? Possibly.

On the other hand, there are those who want to let the tax rates increase. We have a huge budget deficit. We need the tax dollars to pay down the deficit. There are a lot of people arguing that the Bush tax cuts favor the wealthy and that it’s really not a fair distribution of the tax burden.

By making the tax cuts expire, you may create a perception that the tax code is fair and may get additional revenues to pay down the deficit. On the other hand, by keeping the tax cuts, you may be able to have a quicker economic growth and be able to get people back to work.

Regardless of whether the tax cuts are extended or not, Enis says lawmakers should take the opportunity to simplify the tax code:

Congress has a good opportunity here to improve the transparency of the tax codes. For example, if they let the tax cuts expire for the upper income categories, the maximum statutory rate will rise from 35 percent to 39.6 percent. I would say let that happen, but to counter that, fix permanently or get rid of the alternative minimum tax (AMT).

Additionally, part of the Bush tax cuts was to repeal Section 68 of the code, in which high-income taxpayers lose a certain portion of their itemized deductions. This is, in effect, a tax. When you take away deductions, it detracts from the transparency of the code. It was repealed gradually and done away with finally in 2010, but the phase out of itemized deductions and exemption allowances comes back full force in 2011 if the Bush tax cuts are not extended.

The phasing out of itemized deductions and exemption allowances let that go away. They should extend the repeal advantage. In other words, you’re going to have a higher marginal tax rate, but you’re going to do away with a lot of these unobtrusive hidden-type taxes, which I think would be a great opportunity.

If you’re going to go and say to the wealthy people, we’re going to let your tax rates go up as high as 39.6 percent, then I think you should also tell these people that they no longer have to worry about their itemized deductions, exemption allowances, and the AMT.

There’s more from Enis on Smeal’s Research with Impact website.

Tags: Accounting, Economy, Enis, Politics, Taxes
Posted in News | 3 Comments

Expiring Tax Cuts! What About the AMT?

Monday, July 26th, 2010

A recent article in the Wall Street Journal discusses the current back-and-forth between Democrats and Republicans on whether or not to extend the Bush-era tax cuts.

Smeal’s Charles Enis takes it one step further to address the alternative minimum tax (AMT), which has already expired. He warns that, whether the Bush tax cuts stay or go, taxpayers will see a huge increase in rates.

From Enis:

To express my knee-jerk reaction to the confusion and uncertainty over tax provisions that are set to go away in about five months; I must borrow from the style of Coach Mora. Expiring tax cuts! Expiring tax cuts! Don’t talk about expiring tax cuts! The Alternative Minimum Tax (AMT) is the 800 lb. yeti. True, a non-act of Congress will usher in one of the greatest tax increases in history. Gone will be lower tax rates on wages, capital gains and dividends, enhanced tax credits, as well as marriage penalty relief, repeal of deduction phase-outs and estate taxes. However, these tax breaks vanish at the end of 2010.  AMT relief expired seven months ago. If the annual AMT patch is a victim of Congressional inertia, AMT exemptions revert to year 2000 amounts, a decline from $74,600 to $45,000 for joint return filers, and from $46,700 to $33,750 for unmarried individuals.

As an example to illustrate this problem I use joint filers with salaries of $200,000, two dependents, and $20,000 in itemized deductions ($16,000 of which are disallowed for the AMT). Assume AMT exemptions are increased for 2010 but not for 2011. Their tax from 2010 to 2011 will increase from $34,556 to $42,250 (an increase of $7,684, or 22.24 percent), regardless of whether the Bush tax cuts are left intact or completely expire. This occurs because taxpayers pay the greater of the regular tax or the tentative minimum tax. The latter will exceed the former whether the tax cuts expire or not. However, if the AMT is fixed for 2010 and 2011, and all of the tax cuts expire, their tax will increase to $39,562 (an increase of $5,006, or 14.49 percent). In short, whether the Bush tax cuts are extended partially or in full, temporarily, or permanently, will not matter to the many taxpayers that will be caught in the AMT net unless it is fixed.

Because AMT relief must be enacted yearly, taxpayers are uncertain as to the extent a Congressional fix is forthcoming. For example, the AMT exemptions for 2007 were not passed until December 26, 2007. Forcing Americans to wait so long for Congress to act to temporarily delay a looming tax disaster cries out for a permanent resolution to the AMT issue. Solving the AMT problem should be a major topic included in debates about extending the tax cuts.

Tags: Accounting, Enis, Taxes
Posted in News | 22 Comments

Mortgage Tax Deduction Myths

Tuesday, May 18th, 2010

Recently on Just Listed, the news website of the Pennsylvania Association of REALTORS, Smeal’s Austin Jaffe outlined eight myths about the mortgage interest tax deduction. They are:

1. The deductibility of mortgage interest is relatively recent in origin.
2. The current system treats all borrowers the same.
3. The current system, by providing tax deductions for borrowers, makes housing a good investment.
4. The current system helps young homeowners via the mortgage deduction.
5. The deduction of mortgage interest is a worldwide phenomenon.
6. Deducting mortgage interest is a stabilizing force in housing markets.
7. The mortgage interest deduction is the largest tax break available to households.
8. New proposals in Congress will limit or eliminate the mortgage deduction.

Read more about these myths in Jaffe’s post on Just Listed.

Tags: Jaffe, Real Estate, Taxes
Posted in News | 24 Comments

Sugar: The Next Tobacco?

Monday, April 12th, 2010

“A number of scientific studies have found that the amount of sugar we consume is a major factor in how big Americans have become. In the last half-century, consumption of sugars by the average American has increased by more than 24 pounds a year, expanding waistlines and crowding out more nutritious foods,” The New York Times reports. “To improve the health of its residents and its coffers, New York State, among others, is considering an excise tax of about one penny per ounce on high-calorie sweetened beverages.”

Smeal’s resident tax expert, Charles Enis, supports this new tax to help the state’s bottom line while improving the health of its citizens.

From Enis:

Tony the Tiger says, “Sugar Frosted Flakes are grrreat!” Baby boomers will recognize from their youth this slogan that encouraged consumption of overly sweetened breakfast cereals. Boomers are also painfully aware of the devastating effects of Type 2 diabetes and morbid obesity on the health of friends and family members. The former can quickly lead to impaired vision, neuropathy, amputations, and organ failures described as falling dominos. Such health issues should not be passed along with massive deficits to subsequent generations. Thus, I applaud the New York proposal of an excise tax on high-calorie sweetened beverages.

The thought of a new tax makes many bristle. However, state governments are facing serious fiscal crises, and they do not have that magical printing press found only in Washington. If taxes must inevitably be raised, the sugar tax appears as an excellent alternative. To begin with, it is an avoidable tax. Individuals only have to substitute non-sweetened beverages for the sugary kind to dodge the tax. The tax would be relatively painless as it would be paid only when sugar consumers have the wherewithal to make such purchases, and the tax would be paid in small increments at points of purchase.

The tax should reduce sugar consumption if the tax is added to the price of sweetened drinks. One cannot rule out competitive pressures restricting the extent to which marketers can increase prices. Fierce competition could result in the incidence of the tax falling on shareholders and employees.  However, price increases can be avoided if producers reduce the sugar added to their products. Adding sugar to natural orange juice converts an otherwise healthy drink into a potentially deadly elixir for a diabetic, or one struggling with a weight problem.

An issue with the sugar tax is that it is local. New Yorkers could stock up on sweetened beverages when they happen to be in a state that does not have a sugar tax. This could shift income and tax revenues out of New York. 

The sugar tax may not go far enough if other sweetened products are substituted for sugary beverages. Perhaps the tax could be extended to donuts, breakfast cereals, or anywhere added sugar can be reduced. If taxing sugar catches on, this commodity tax will join the group of “sin” taxes that apply to heavily taxed tobacco and alcohol, the latter of which is metabolized as sugar.

Tags: Economy, Enis, Politics, Taxes
Posted in News | 15 Comments

Bank Tax Hat Tip

Wednesday, January 20th, 2010

President Obama last week unveiled his plan to recoup federal bailout funds with a new tax on the nation’s biggest banks. According to Smeal’s Brian Davis, the tax is little more than an acknowledgement of the populist anger directed toward big banks:

When looking at President Obama’s bank tax, it’s important to consider the following four statistics:

1) Unemployment Rate: 10%. (Bureau of Labor Statistics)

2) Lending and Credit: As of Dec. 23, the latest date for which data are available from the Federal Reserve, bank lending, at nearly $6.7 trillion, was down $100 billion from the month before. In the past year, the volume of loans outstanding by banks in the United States has fallen by more than $500 billion. (Time.com)

3) Wall Street Bonus Pay: The top 38 U.S. banks and securities firms are on pace to pay their people a record total sum of $145 billion for 2009. (The Wall Street Journal)

4) Obama Approval Rate: 50% vs. 62% in the prior year. (CBS News)

Clearly, the tension has been building. “I did not run for office to be helping out a bunch of fat-cat bankers,” President Obama assured Main Street voters again and again in speeches defending the Troubled Asset Relief Program (TARP). Repeatedly, administration officials warned bankers about exorbitant compensation packages and anemic lending volume.  Jaw-boning was clearly not working.

The new fee applies to institution with assets of more than $50 billion. Each will pay 0.15 percent of its eligible liabilities, measured as total assets minus capital and deposits. Investment banks with few deposits, such as Goldman Sachs and Morgan Stanley, will be hit much harder than commercial banks, so the fee is being sold as a tax on the riskier asset positions of the trading and hedging activities of larger investment banks. (These are also the institutions paying out the largest compensation packages.)

The fee will last a minimum of ten years—longer if it is necessary to recoup the full cost of TARP. The Treasury expects the fee to raise $90 billion over that period; however, conservative estimates peg TARP losses at $120 billion—perhaps pushing the application of the fee past 2013. 

In examining the effects of this new tax, it seems little more than a populist “tip of the cap” to Main Street voters seething over Wall Street bailouts.  First, relative to total bank earnings, the fee is minuscule.  Upon the fee announcement, bank stocks did not react, as investors seemingly shrugged off the effect of such a tax on bank earnings. Second, it is fairly certain that banks will be able to recoup any negative tax incidence by passing higher fees onto consumers—resulting in unintended consequences. Third, if the intention of the fee is to force banks to internalize the costs of risk-taking behavior, again, other bank regulation initiatives involving the Federal Reserve and the FDIC seem more effective and appropriate.

Tags: Banking, Davis, Economic Crisis, Finance, Politics, Taxes
Posted in News | 42 Comments

Pulling a VAT Out of a Hat

Tuesday, December 15th, 2009

The combination of a skyrocketing federal deficit, a slow economy, and Washington’s penchant for unrestrained spending is causing economists and legislators to look for new and creative ways to get their hands on more taxpayer dollars. One option that is gaining momentum is the value-added tax, a national sales tax of sorts that is assessed on goods and services at every step in the supply chain.

Below, Smeal’s resident tax expert, Charles Enis, lays out the political and economic challenges facing the value-added tax as well as some of its benefits over other forms of taxation:

Equity and efficiency are conflicting policy goals in taxation. In short, how fair is the tax and how well does it work. An income tax is imposed on production, while a value-added tax (VAT) is imposed on consumption. The former tends to embrace equity while the latter is noted for efficiency. Because all production is ultimately consumed, theoretically the major difference is timing.

A VAT is efficient because it has a broad base, is relatively simple, and is a good revenue raiser that minimally distorts economic decisions. A VAT is a multilevel sales tax on all parties in the supply chain with upstream taxpayers collecting taxes from their customers while receiving credits for taxes paid by downstream businesses. A VAT must be kept on the table when considering ways to alleviate the federal fiscal crisis.

A VAT is politically challenged on the equity dimension in that it is regressive. The rich spend less of their incomes relative to the poor. Wealthy people have surplus income that can be diverted from consumption to investment thereby escaping consumption taxes. To overcome equity deficiencies, a pure VAT must be tweaked. Such modifications include integrating the VAT into a more progressive version of our income tax system, exempting food and other necessities from the VAT, and allowing for higher tax rates on luxury goods.

Designing a politically acceptable VAT is the charge of Congress, the same institution that gave us the Internal Revenue Code, one of the most massively complex documents in human history. Instead of having just an uncompressible income tax, we will also likely have an incomprehensible VAT. 

The most difficult problems in implementing a VAT will be transitional issues. For example, baby boomers headed for retirement have paid income taxes all their lives, now they will be taxed again as they consume their savings. Sales taxes are important revenue sources for state and local governments, how will they react to the federal government getting into the sales tax business. How will consumers react in anticipation of a VAT? Will they rush to stores to load up on merchandise to beat the tax increase and incur more debt? Will there be a sharp decline in consumer demand following the VAT?

Because a VAT is imposed on consumption and not investments, income attributed to the financial sector—i.e., interest, dividends, and capital gains—will be relatively unscathed by a VAT. It would be ironic that the financial sector, a major culprit in the economic crisis winds up paying little of the tax that is needed to fix the fiscal damage.

A VAT may be prescribed to restore federal revenues once the great recession is over. A VAT will be a tough sale to the public. One suggestion would be to promote it as a permanent replacement for the dreaded Alternative Minimum Tax. Nevertheless, a well designed VAT may require Congressional acts of legislation and magic.  

Tags: Economic Crisis, Economy, Enis, Politics, Taxes
Posted in News | 16 Comments

A Great Moment in Nuisance Taxes

Wednesday, December 2nd, 2009

“Facing big unfunded pension liabilities for city workers, Pittsburgh is proposing what appears to be a one-of-a-kind 1 percent tuition tax on local university and college students, who claim the tax is illegal and unfair,” The Wall Street Journal reports. “The tuition tax, which would raise an estimated $16 million, threatens to drive a wedge between the city and its universities, which have been credited with fueling much of Pittsburgh’s economic transformation from an industrial city to an education and medical-services center.”

Smeal’s Charles Enis argues that this is an unfair nuisance tax specifically designed to take advantage of students, who are typically underrepresented in government:

When I first moved to Pennsylvania, I was amazed at the proliferation of nuisance taxes such as the gross receipts tax imposed on businesses here in State College. However, the 1 percent tuition tax proposed by Pittsburgh is the epitome of such taxes.

Nuisance taxes are small excise taxes on various commodities that are imposed on consumers. Many local governments, such as Pittsburgh, are cash constrained and are seeking creative ways of raising revenues. Unlike the federal government, local governments must maintain balanced budgets. Pittsburgh has proposed to single out college students to bail out their financial problems. Why this group? Could it be that those who will pay the tax are not likely to be eligible to vote against the elected officials supporting the tax? Also, the amount of the tuition tax is small enough that the transactions cost necessary to avoid the tax (i.e., transferring to a college outside of Pittsburgh) are prohibitive, hence the term “nuisance tax.”

A rationale offered by the city to justify the “Post-Secondary Education Privilege Tax” is that students consume public services. This is the same rationale that supports highway user taxes on fuel and vehicle weights. These taxes reflect the “cost occasioned” by the users of highways. I find it difficult to fathom that those students who are attending expensive schools like Carnegie Mellon, and who will pay about 12 times the taxes paid by students attending other schools, consume such a disproportional share of public services. Also, why should students paying out-of-state tuition be taxed more than in-state students attending the same institution? Other issues include the effect of the tuition tax on students receiving scholarships (e.g., R. O. T. C.), graduate assistants receiving remission of fees, and distance learners taking courses online.

Looking at the proposal, I wonder who is next? Will other communities follow Pittsburgh’s example?  Also, education is a service. Will this tax open the door for the taxation of services such as haircuts? Tax increases are unpopular, especially during  recessions. In my opinion, local governments in dire economic straits should evaluate increasing existing taxes to spread the burden over many taxpayers rather than to expect a single constituency to carry the weight. Furthermore, new taxes opposed to existing taxes require governments to occur greater administrative cost. 

Tags: Economy, Enis, Politics, Taxes
Posted in News | 28 Comments

Tax Credits for Hire

Monday, October 12th, 2009

An editorial in today’s Wall Street Journal takes aim at proposals floating in Washington to offer tax credits to firms that hire new empoyees. “One plan would grant a $3,000 tax credit to employers for each new hire in 2010,” according to the editorial. ”Under another, two-year plan, employers would receive a credit in the first year equal to 15.3 percent of the cost of adding a new worker, an amount that would be reduced to 10.2 percent in the second year and then phased out entirely.”

Smeal’s Charles Enis argues that these tax incentives, which were tried once in the late 1970s resulting in mixed reviews, are unfair to firms who resisted layoffs during the recession, essentially punishing them for keeping their employees working. By making the tax code even more complicated, however, the tax credits will likely succeed in creating some jobs—in tax accounting.

More from Enis:

Imagine buying a car and learning that you could have made the purchase a week later and received a generous rebate. Firms that resisted layoffs may have a similar sentiment if one of the proposed credits is enacted. These credits reward firms that increase the size of their workforce or add significant hours of work. Firms that laid off many workers will likely increase their hiring when the economy improves and thus benefit from the credit. What about firms that absorbed the cost of keeping excess people? What do they get?

The income tax regime is one of many policy tools available to combat economic difficulties. However, the tax code has been summoned to remedy virtually all of our problems (e.g., pollution, health care, energy, etc.). These well intentioned provisions have contributed to the complexity of a tax system described as “a national disgrace” as far back as President Carter.

The tax system as a policy tool raises cost-benefit dilemmas. Straightforward provisions result in benefits to unintended taxpayers at substantial costs to the Treasury relative to the economic goals achieved. Provisions targeted toward intended taxpayers must be laden with many complex features (e.g., phase-outs, caps, restrictions, uncertainties regarding extensions, etc.). Such features frustrate small businesses, which are important job creators. The jobs credit that was enacted for 1977-1978 had a mathematical specification too complex to explain in this short blog post. The former credit was tied to the federal unemployment tax regime, while the proposed credit is tied to the Social Security tax regime, and is likely to be even more complex after it is “tweaked” by political compromises.   

Whether the ’77-‘78 jobs credit was successful depends more on one’s political perspective then on evidence from rigorous economic analyses. The complexity and poor promotion of the ’77-’78 credit rendered the findings of traditional analyses tenuous and mixed. Economists believe that the new hires from the ’77-’78 credit were largely lower-skilled workers, which is not a bad thing. However, the tax code already contains the Work Opportunity Tax Credit, a provision aimed at encouraging businesses to hire individuals who are disadvantaged in the labor market. Is another credit really necessary or can the existing credit be updated?

The enactment of the proposed jobs credit will significantly increase the hours of work for tax practitioners, IRS personnel, tax form printers, HR departments, software writers, and hopefully many otherwise unemployed Americans.

Tags: Economic Crisis, Economy, Enis, Politics, Taxes, Unemployment
Posted in News | 42 Comments

The Tax Code Review

Wednesday, April 1st, 2009

President Obama last week appointed former Fed chair Paul Volcker to oversee a review of the federal tax code aimed at finding ways to make it simpler, fairer, and more efficient, while also closing loopholes and increasing revenues. According to Smeal’s Charles Enis, we’ve seen this before:

In the words of Yogi Berra, “It’s like déjà-vu, all over again.” The belief that our income tax regime was unfair, inefficient, and too complex prompted President Reagan in his 1984 State of the Union address to announce that he would commission the Treasury Department to propose a comprehensive tax reform for fairness, simplicity, and economic growth. Despite these efforts, these flaws have persisted over the last 25 years.

Two of Obama’s goals are to find ways to simplify the tax code and protect progressivity. These goals often conflict. For example, many tax breaks are targeted at lower and/or middle income groups to make them progressive. This targeting requires the benefits to be phased out based on income. Phase-outs and the alternative minimum tax contribute to the tax law’s complexity and poor transparency. One’s additional income may not only be subject to tax, but can also result in lost tax benefits that are subject to phase-outs. Such benefits include the child tax credit, earned income tax credit, IRA deduction, tax-free Social Security benefits, exemption allowances, etc. Thus, marginal tax rates in effect tend to be greater than those specified in the tax code. Phase-outs affect all income levels, as there are more than 25 such provisions in the code.

President Obama has proposed restricting certain deductions for high-bracketed taxpayers to keep taxes at 28 cents on the dollar. This idea would increase progressivity. However, having different tax rates for deductions and those that apply to income does not increase simplicity.

Significant items in the code expire at the end of 2010, including many of those recently enacted as part of the stimulus package. Predicting what our tax regime will be in 2011 at this point would be pure speculation given the president’s ambitious agenda, and the many compromises necessary to get a major tax reform through the legislative process. Nevertheless, I am confident that the code will not be simpler. In short, the income tax will turn into a pumpkin—a type of squash.

Tags: Accounting, Enis, Politics, Taxes
Posted in News | 35 Comments