Discussion:Has all this fairtax, taxfreeze, tax reform talk have any body else up and worried besides me? lol

The last thing I heard about Obama simplifying the tax system was to have IRS bureaucrats file taxes for low income people (w-2's and interest from up to one bank account). IMHO, that's pretty much a dead segment unless you offer RALS, because you'll lose out to the software and retail stores (which have been eating up our market share for a long time anyway).

As for dealing with it? I'm trying to shift gears to mainly audits, collections and businesses, and am looking into forming a PEO to service my clients. I don't really want to rely on the individual market if I don't have to.

So, if you think taxes will be simplified, you have to believe that Congress will put the well being of the public ahead of their own re-election.

Plus, if "tax freedom day" is somewhere in the spring - I've heard the figure June something - the flat tax rate would have to be 35-40%. I don't think that will float.

We need to think of ourselves as oncologists - we would be thrilled and delighted if the disease was cured, but in the meantime, we'll devote our efforts to managing it.

Remember that Dick Armey tried it and failed. He was trying for a flat tax with a postage card size tax return. It went nowhere.

Obama may control the legislature and the White House, but he will have a tough time trying to change the tax code. The Congress will have to vote on these changes and the tentacles of the lobbyists are long and their pockets deep. No matter how popular Obama thinks he is, he won't be able to maneuver around the lobbyists. It's that simple.

Here's some fun for you. No offense to our EA and other preparer friends out there:

[1]

Tom

If my memory serves, it was some Elephant Party talking heads like Neal Boortz and Sean Hannity that organized the "tea bag" party last week. Of course, Boortz is peddling his book regarding the highly regressive "fair tax"....which the states will revolt over, but I'll leave that for another day.

Any "simplfication" that was suggested by Obama, I understood to be within the existing structure.

Anyway, it would be highly doubtful Congress would be in an "experimental" mode regarding taxes in the middle of a Depression.

[2]

From the article:

Volcker, 81, who heads the president’s Economic Recovery Advisory Board, is being asked to take a look at the laws in an effort to rebalance the tax system.

Orszag said the review, given a deadline of Dec. 4, is being ordered to make recommendations on steps to simplify the code, built over the last 96 years, in ways that would reduce tax evasion and what he called “corporate welfare.”

Reading between the lines, Crow, it seems to me that Obama, is going to propose changes to Congress. But I honestly feel $250K threshold is going to be a joke. I think it's going to be lower. Besides, Fed Officials suggest the worst of the recession is over:

[3]

So why change things now? Leave everything alone and let the economy recover.

Here was a fantastic article written by an author at the Cato Institute, a think-tank in DC I am familiar with as I have friends who worked there. It has nothing to do with taxes, you will still find it a darned good read anyway. It makes a good argument as to why the current administration (or any administration) should do nothing:

[4]

Our tax system is progressive and when I here the news reports blasting companies for paying "no corporate taxes" I think to myself, "Self, what other taxes did they pay?" News reporters never mention payroll taxes, gas taxes, highway taxes, real estate taxes, etc. Most people think they don't pay any taxes whatsoever.

Tin mentions in his post that Obama's proposal about the IRS completing tax returns for low income individuals which I wrote about this last year. I complained then and I complain now that is "Big Brother." It's plain wrong.

Here's another article about Obama's tax plans:

[5]

The problem is we don't need wholesale changes to the tax code to raise taxes at this time. Reagan knew in a recession to lower taxes, give money to the people and businesses in the form of tax cuts and not bailouts, like Bush and Obama have done. Reagan also had Paul Volcker at his side. Obama may have Volcker but Volcker's best days are behind him.

What we really need are better collection efforts.

Tom

Right now, if the Government wants to raise tax revenue, they can do so in any number of 1,000 ways and the average person will never know it. Counties are faced with real problems due to tax revenues right now combined with 10's of thousands of requests for re-valuation of properties because they our homes are worth less than what the County says they are worth. The County response? Even if the valuation of your home comes up less than what we say, we will just raise the millage rate.

The bottom line is that the Average American is so stupid they don't know how much they pay in taxes a year. "I didn't pay any tax, I got a REFUND".

If the US went to the fair tax, Americans would know exactly how much they pay in taxes. If Obama wanted to raise the fair tax from 23% on sales to 28% it would be completely transparent. It would also take away the back door lobbying nonsense that permeates our Congress. Politicians receive too many votes for small entries into the tax code they enjoy right now.

Never will happen. Few things do I state without reservation, this is one.

Michael

"The Missouri House of Representatives has passed a joint resolution proposing a constitutional amendment that would, subject to voter approval, replace the state individual and corporate income taxes, bank franchise tax, withholding tax, and state sales and use tax with a "fair sales tax" of 5.11% on retail sales of new tangible personal property and taxable services beginning January 1, 2012."

Is this the beginning? I wonder if it will become law in Missouri? Other states might follow and or the federal government, IF THIS WORKS!!!

Now think of this fact.....what is the difference between an individual mortgagee who is 3 months behind on their mortgage and the US Federal Government? I would venture a guess that the delinquent mortgageee is in much better financial shape than the Federal Government at this point. When that mortgagee got behind, I hope they went out and found a way to make more money or picked up a part-time job and cut their spending--they did not go buy three more houses.

What has been our government's response to cure its woes? Print more money and spend our great grandkid's generation's tax revenue. There is quickly becoming a realization that at some point the US Government will not be able to honor its debts. The Federal budget is outpacing GDP and even in this "worst economic times in the history of man" our government's response has been to spend at record levels.

When the wheels come off the bus, it is going to be anarchy I am afraid--let people think for one week that their gumberment paycheck in whatever form it is will not be coming and watch out.

Michael

Well guess what. Not only are we now seeing REAL socialism in the form of government ownership of major corporations, it is coming about as the result of the exact anti-regulation, anti-ordinary citizen regime we've seen over the last four Administrations, Democratic and Republican, starting with Reagan. Socializing risk whilst privatizing profit, which is where economic libertarianism has finally led us, has so angered the public that it won't be permitted again in my lifetime.

Frankly, I don't like it but I also know that what I like doesn't matter.

some of these arguements you guys make, ive always said the same thing to myself "theyd never change this system, they use it too much, they need it too much, etc etc".....1/2 of me believes it and wants it to be true...the other 1/2 of me is scared to death and wondering what i should be doing to position myself and business for the upcoming year.

i think just the media onslaught the last couple days, the teabaggers and the local shows and then obama on natl news....its just got me running scared. .......unless it all does go up in flames in which case, i told you so!!!!!!! lol

Well put NMexEA, the Elephants essentially defeated themselves with their own game. Though frankly, it's true that they got a lot of Democrat help: and that shows you how low the Dems. have sunk.

However, I disagree that this is classic "socialism" in any sense. No planned takeovers here. The only reason the government may take a common stock position in these banks is because the banks can't pay back a note or a bond. So, it's socialism by irony I guess you could say.

Tom mentioned lobbying above: it's at the core of our problem. We need a Constitutional Amendment to ban corporate lobbying. Will it happen? Will I win the lottery?

My personal favorite would to become "Skippy" - the name, in my childhood, of the guy driving around the ice cream truck, ringing bells, selling ice cream bars. - "Here comes SKIPPY!!!!!"

But, CrowJD, do you think that term limits might also help?

Why am I even calling her a philosopher? Let's say to recognize her for the 3rd rate political scientist that she was: prophetess of greed. I only mention her because I noticed that several of the "tea baggers" on TV had taken her tripe to heart, or they said they had for the sake of the camera.

SKIPPY is pretty funny. My idea has always been to have a hotdog stand. Hey, people gotta eat.

When the US Government--at the implied threat of gunpoint--marches the heads of our banks into a room and tells them, "You will sign this before you leave" and force them to take the TARP money....that's the beginning of the push into socialism. When the same US Government is beginnig to force private company management to resign...that's the beginning of socialism. When the US Government controls the pay scale of the heads of companies receiving TARP money, that's socialism. When Barnie Rubble (I mean Frank) tells the press that the US Government is planning to extend the pay limits to ALL employees of companies receiving TARP money, that's DEFINITELY socialism. The same US Government refuses to let banks give back the TARP money--conceivably because it limits the US Government's ability to control the leadership and make the changes it desires, that's socialism.

For an overnight transition to complete socialism, that would take a military effort. This is an astounding socialist push that amazed me in its speed---all it took was a purposefully orchestrated financial crisis and it amazed me how much freedom the average American was willing to concede without as much as a fight.

Michael

Yet, of course, to collect an unemployment check or the like all sorts of conditions are set.

For twenty years we've had socialization of credit and no one objected as long as money was made.

Here's the difference: Back in 1929, some extraordinarly rich and influential people were allowed to go flat broke.

Now, fast forward. The banks are saved so all the bondholders are saved; most, but not all, bond "coupon clippers" are rich...and influential. And, I bet that before this is over, the Government might even make the Madoff victims whole. Now, I do feel sorry for them, but after all, they were going after those fantastic gains advertisted by Madoff. One might call them unbelievable gains. One might call them "too good to be true".

I agree that enlightened economic theory says we should not let the banks go bust, but it grates me that these people play a game where losing is not an option.

http://online.wsj.com/article/SB123923554488403239.html

When I began working in center city Philadelphia in 1982, the street stands were mostly owned by Greek immigrants. My favorite was owned by Gus, who it turned out also owned several rental properties near me! Then the Vietnamese came with their 'melon' stands, selling melon salads to those needing healthy food. Blacks dominated the carrot cake and sweet potato pie tables. Jewelry and sun glasses were open to anyone. Our office had a gay manager who erroneously bought far too many typewriter ribbons. I suggested to him that he set up a table on 15th Street, and perhaps the Gays could dominate office supplies.

It's a neat object lesson to consider ..... all this activity was going on while Paul Volcker oversaw interest rates rising to 15-18% on money while Ronald Reagan was dropping the top rate to 50% [financing it by taxing Social Security and all unemployment benefits, among other things....back then 32K for a married retired couple was a lot of money so few cared].

The cast of street vendors was fluid; some like Gus made it, others failed but it was a cash economy....they had licenses from the City and probably paid some business tax, but perhaps they were like the freelance funeral director who came to get his taxes done by me....or rather his city taxes. Turned out he never filed Federal taxes!

Enjoy!

http://thehill.com/dick-morris/obamas-leap-to-socialism-2009-04-21.html

Obama is seeking to convert the Preferred shares in the TARP banks to Common stock shares. Thank GOD the American people are too dumb to know what is happening to our Country.

This has nothing to do with the economy. This is about control of the banks and the financial system at large.

Michael

Where was his cash control? Where was the bond that's supposed to cover ALL employees who handle currency? How is it that he had access both to the books and the cash? How do contributions balance his books?

ARRRRGHHHH!

Anyway. Obama is not making a covert attempt to take over. He's forced to take over whether he wants to or not. Even GWB of less-than-blessed memory figured that out before he left office. Even Congress is doing what they think must be done in the face of their constitutants' boiling fury.

Now, who do you suppose kept Freddie Mac's money?

I don't personally care one bit about what happens to the bankers out there, especially those that helped cause this mess.

But first, let's put the blame where it belongs....every freaking politician in the US. However, documents do NOT lie and it was under Clinton's prodding that Barnie Frank and his minions relaxed the standards at Freddie/Fannie to give people who should be renters or sleeping on a relative's couch somewhere homes. There was some objection from the repuspendicrats but in the end, they didn't give a darn enough to really explain to the taxpayers why this was a bad idea.

If the bankers are to be tarred and feathered and ran out of town on a rail, so be it. But that's for the shareholders of their bank to determine, not the US Government...Obama, Raum, and Barnie rubble.

Sorry NMexEA, we will have to agree to disagree. I suggest you might want to read a little about barnie rubble (I mean frank's) comments about salary caps on all workers...not just the executives....at these banks and financial institutions. I would also suggest you read his comments that after those salary caps he said he wanted to extend those salary caps to ALL US Financial Institutions and ultimately to ALL companies in the US. If that isn't Socialism or at least the first very important steps to the government determining how much average workers make, I don't know what is. Remember this is all fun and games hating on these executives (I agree the failed company executives deserve it all) until the US Government comes and tells me that I make more than their allowable salary for a software analyst so I have to take a 20% pay cut. From that point on, my salary and earning potential becomes a political pawn rather than a function of my talents, abilities, and experience. If you don't think that's Socialism, I don't know what to tell you. Also remember that you or other self-employed tax preparers/Accountants may say "what do I care if the Government controls corporate salaries?" just keep in mind that with the stroke of a pen the Government could mandate how much you can charge for a tax return in order to quell rising anger over the difficulty of the tax system...think about that my friend. I can see a democrap pontificating in the Senate "The cost of compliance with the US tax code is so expensive that taxpayers are facing undue cost burdens for having their taxes prepared so I introduced the Tax Compliance Cost Recovery Act which dictates no preparer may charge more than $100 for a tax return". Far fetched? I thought so too until I heard barnie rubble stating they were going to mandate every US worker's salary (those that work for companies anyway). Be afraid, be very afraid.

Oh and converting the preferred shares to common shares does NOTHING to enhance the financial position of the taxpayer owner of these banks. Sorry, it just doesn't. It just gives Obafrankraum the ability to force more CEO's and Executives to resign (something the private sector hasn't done just yet) and will allow them to start dictating how these banks and financial institutions run. If you disagree, make your case. They sold us on Preferred stock because it didn't nationalize the bank and gave the taxpayer first dibbs on the spoils of the bank recoveries. Then they tell us they want to exchange the first dibbs preferred stock for common. Come on, we are all adults here...why would they do that? Control.

Think all of this is just rantings of a paranoid individual? Go read a few on-line newspapers from France....that's where we are headed.

Michael

In the context of the OP's question, I would see the current administration throwing CPA's, EA's, and other tax preparers under the bus by limiting your fees as an accommodation to the angry taxpayers than they would ever going to a flat tax or fair tax.

The current tax system just hide welfare programs and it hides the shady/dirty dealings of the body of the US Congress. Vote buying via the US tax code is at an all time high.

Michael

Clinton's biggest mistake was listening to the pseudo-conservatives and going along with the repeal of Glass-Steagall, which let the fox into the henhouse. Taken in context, the broadening of credit was a response to the S&L Crisis of the early 90s when the government first rode to the rescue and the question was 'how would that debt ever be paid off, and with good or bad money.' How we loved good ole Charley Keating and his buddies in Congress! Anyone remember Lincoln Savings and Loan?

The second question in that equation was forgotten in the rush to keep the country prosperous.

While you keep tarring Barney, how about a few kind words for Andrea Mitchell's husband? If he weren't so old, he'd have a place on the tumbril. Ah, but that man is a saint!

Which administration changed the lending standards to allow questionable renters to have mortgages all backed by the Federal Government? That's all I am saying.

Downstream it was one big orgy over these bundled loans as it always has been. Everyone was to blame there, regardless of party.

Michael

I don't think I'm disagreeing with you. I call it Socialism with a capital "S" and I definitely blame both parties, not just the bankers.

My personal take is that every banker should be ran out of town on a rail--but by the shareholders of the affected companies. I don't PERSONALLY believe that any executive in these companies should receive any bonuses and I believe the shareholders should cut their salaries to that of a janitor until they produce results worthy of those salaries. I do not, however, believe that anyone middle management down should have their bonuses cut because as a practical point many companies have taken to shifting larger and larger portions of employee's compensation to bonus schedules...why? So that in lean times, they can cut salaries easier. If the CEO runs the company down, cut bonuses. Employees are much more likely to accept a loss of a bonus (subconsciously perceived to be a temporary loss of something that wasn't really theirs to begin with) than they are to accept a 10% cut in pay. That's wrong.

My company is making billions a year and they still cut our bonuses this year. That's wrong. My salary barely pays the bills and the bonus is what I use for a short vacation, retirement savings, and college funding. Each year I am hit with no bonus, I really suffer. I don't consider any bonus I get as goodwill from my company nor anything I should say a special thank you for because larger portions of my salary are being paid as bonus. Check that, larger portions of my salary are being shifted to bonus schedules and NOT paid. BTW, I am not talking about wall street $100K bonuses...I am talking about sub $5,000 bonuses that really affect the lives of the people not paid.

Here's a thought. Those blowhards on Capital hill are sqwaking about executive pay and that the CEO's should cut their salaries because this mess happened.....why hasn't anyone suggested Congress cut their salaries? This mess couldn't have come about if it weren't for the US Congress (all parties involved).

Michael

I find it ironic that post war America was the wealthiest nation on earth but with tax rates that would bring tea parties every day today. Somehow they did it, or like AEM says, the cream rose to the top.

Last check I had both UBS and Goldman were both basking in taxpayer funded bailout money after their portfolios crashed. Congratulate your clients on their 'success'. Tell them I would appreciate it if they could each cut me a $500 check from their bonuses this year because their companies' scandalous behavior cost me mine! 8-)

Michael

Look, a bank or automaker is either bound by its legal contracts or it is in bankruptcy. There is no middle ground. What the current Administration seems to want, at least in the banksters' case, is to avoid contracts without forcing the banks into title 11. This can't be done in any transparent, straightforward way.

Far better from the beginning to allow the zombies to collapse of their own weight. No bailouts for anyone. No guarantees for anyone beyond existing FDIC and equivalents. Let Wall Street fill with tumbleweeds for all I care.

If the country needs credit to function, which we certainly DO, establish a 100% federal government run loan window. You could use the existing commercial banking system as lending agents for a fixed fee and watch them like hungry vultures watch a lame calf.

A TRILLION DOLLARS of lending assets would be made available to honest businesses and citizens to borrow on terms that are transparant and simple and loans would be made using only the most conservative criteria for security and ability to repay.

And not one thin cupro-nickel dime to be lent to any financial institution. For anything. Ever.

Alas! It's too late for that now!

We should have let GM and Chrysler along with the non-viable banks and financial institutions slip into managed bankruptcy. Why you ask?

Very simply, I would rather have a bankruptcy judge managing these bankruptcies than a bunch of political panderers. I dare say that a bankruptcy judge would have put forth any of the earmark spending that got added to the bailout bills. It was just nothing but a great big spending orgy for social programs that wouldn't have passed Congress. We could have saved BILLIONS.

Michael

The United States is the modern Rome. We will fall. And when we do, we will fall hard.

We certainly are going the way of the Romans Genskitty....much could be learned from History. Too bad our commander in chief is either too dumb to read it or doesn't care. We live in a bad world and it seems to me that much of what our president has embarked on with respect to the foreign policy of the US has been aimed at weakening us in every manner....sometimes you have to just scratch your head and ask "which side is he on?". He may be principled--I honestly doubt it--in that he believes torture is wrong (I personally don't, put terrorists in wood chippers if it prevents their bloody war from succeeding and makes my family safer) but you deal with it going forward. Do you think that Al Qaeda is debating Nick Berg's beheading right now? You can't change the past by prosecuting the people who went before you. You gotta ask yourself, "why air our dirty laundry? Why not just make sure it never happens again if you are so against it?". I think therein lies your answer.

Michael

I believe the link I posted above from the CATO Institute said it best: if the government left everything alone, this economy would have sorted itself out. Now the current administration is beginning to take credit for its "economic recovery plan" and the bailout that Bush started. Give me a break. The American people are more resilient than that overall and I believe we have more faith in ourselves than the government does. As Alan Reynolds, the economist wrote in his article, recessions only last no more than a year or so and it wasn't a catastrophe, it was a recession. It wasn't as bad as the recession of the late mid to late 1970's and 1980, which many of us, including myself, remember very well.

But we will further sink this economy with tax increases. That's a huge mistake. I don't care in what form they come in and we need restraint right now not a bull-in-the-china-shop mentality and talk about "investment" in our country. As I said, we need restraint from our politicians and they are not doing it.

I can't wait for 2010.

Tom

Don't underestimate the idiocy of the American people....I too hope for 2010 but don't have high hopes the mass awakening of the population. Combine that with a bunch of republican choices and.... well.

Michael