Where does it stop?
Obama budget to take aim at wealthy IRAs
From the article:
Under the plan, a taxpayerâ€™s tax-preferred retirement account, like an IRA, could not finance more than $205,000 per year of retirement â€“ or right around $3 million this year.
I’ll look more into this later.
I used to do my taxes early. This was back in the days when we might be recipients of a refund. But, the last several years, our taxes have increased and now I find myself putting off calculating them as long as I can.
I HATE FIGURING MY TAXES (but I’m too cheap to pay someone to do them for me).
I guess I’ll do them over the weekend or on Monday.
What about you? Have you done your taxes yet?
From Tony Romo New Highest Paid NFL Player After Taxes:
Over Easter weekend, franchise quarterback Tony Romo signed a 6-year $108 million contract extension to remain with the Dallas Cowboys. While the estimated $18 million per year makes Romo the fifth highest paid player based on salary, he is actually the new highest paid player after taxes in the NFL.
What does this tell us?
Jerry Jones is crazy.
Interesting piece by John Steel Gordon in today’s WSJ:
One of the artifacts of the tax code is that it treats “carried interest”â€”a share of the profits reaped by managers of an investment fundâ€”as a capital gain. To most of us, this is a matter of little or no practical importanceâ€”but it is a big deal indeed for the managers of many private equity funds and some hedge funds.
Managers of these funds are compensated for their services in two ways. One is the annual management fee, usually 1% or 2% of a client’s investment. The other is a share in the net profits of the fund’s long-term investments. That share is often 30% or even more.
The management fee is taxed as ordinary income, but the long-term profits of investment are taxed as a long-term capital gain, for both clients and hedge-fund managers.
There is no doubt that the profits are true capital gains for the clients of these funds. They risk their money and hold the investment over time; if it loses money they experience a capital loss. Not so for the managers of these funds, who share in the gains but not the losses. They do not put their own money at risk; the reality is that the compensation for their services is income and should be taxed as such. (Of course when fund managers invest their own money their profits should be taxed as a capital gain.)
“Carried interest” SHOULD be taxed as ordinary income.
I dream of the day when we can toss out this stupid tax code we currently have and bring in a flat tax. It’ll never happen but I can still dream about it.
One of the local TV Stations posted this question on their facebook page this morning:
Six This Morning Wants To Know : Would You Be Willing To Pay More In Taxes For Additional Security In Public Schools?
The facebook question linked to this article from the Houston Chronicle.
The article doesn’t mention anything about the cost of such a program. To be fair, the proposal doesn’t mention anything about doing this statewide. However, my thoughts went immediately to wondering how much such a program would cost taxpayers.
There are 8,317 public schools in Texas.
If we put one policeman/guard at each school and paid them $40,000 a year, it would cost…
$333.6 million per year.
Can we afford that? Do we need to afford that?
From 13 Tax Increases in 2013:
(Click on the link above for explanations for each of these)
1. Payroll tax
2. Top marginal tax rate
3. Phase out of personal exemptions for adjusted gross income (AGI) over $300,000 ($250,000 for single filers)
4. Phase down of itemized deductions for AGI over $300,000 ($250,000 for single filers)
5. Tax rates on investment
6. Death tax
7. Taxes on business investment
Obamacare tax increases that took effect:
8. Another investment tax increase
9. Another payroll tax hike
10. Medical device tax
11. Reducing the income tax deduction for individualsâ€™ medical expenses.
12. Elimination of the corporate income tax deduction for expenses related to the Medicare Part D subsidy.
13. Limitation of the corporate income tax deduction
Isn’t it fun?
I wish we could move beyond this silliness and just set up a flat tax. Consider this:
“I made $75,000 this year. I contributed 10% to my 401(k). I owe $6,750 in federal income tax.”
“I made $1,500,000 this year. I put 10% away for retirement. I owe $135,000 in federal income tax.”
Interesting piece from IBD: Six Reasons to Keep Capital Gains Tax Rates Low
Two interesting points that I hadn’t really thought about:
Inflation. If an individual buys a stock for $10 and sells it years later for $12, much of the $2 in capital gain may be inflation, not a real return. Inflation â€” and expected inflation â€” reduce real returns and increase uncertainty, which suppresses investment, particularly in growth companies.
One solution is to index capital gains for inflation, but most countries instead roughly compensate for inflation by reducing the statutory rate on gains or providing an exclusion to reduce the effective rate.
Double Taxation. Corporate share values generally equal the present value of expected future earnings. If expected earnings rise, shares will increase in value, creating a capital gain to the individual. But those future earnings will be taxed at the corporate level when they occur; thus hitting individuals now with a capital gains tax is double taxation.
Dividends are also double-taxed, with the result that the U.S. tax system is biased against corporate equity and in favor of debt. This destabilizes companies and the overall economy.
Ernst & Young calculates the current U.S. combined corporate and individual tax rate on capital gains at 50.8% â€” compared to an OECD average of 42.0%.
Our tax burden on dividends is equally out of line. The U.S. disadvantage will get much worse next year with the scheduled tax hikes on capital gains and dividends.
I know I’ve said this many times before but I’m 100% for a low flat tax rate (say 10% to 15%) on capital gains, dividends (not taxed at corporate level), and earned income. Then, we could move on from these discussions. Our government should be able to operate on a 10% to 15% tax.