Tag: taxes

Today’s irony in taxation

This just in via the Los Angeles Times: the second largest tax preparer in the U.S., Jackson Hewitt, has filed for Chapter 11 bankruptcy protection. A tax preparer having trouble? Will they blame their problems on Turbo Tax (like the Secretary of the Treasury did)?

Meanwhile, in completely unrelated news, the General Accounting Office reports that more than $24 billion in stimulus funds (the distribution point for being the U.S. Treasury) went to recipients that owe the government $757 million in…back taxes.

MG signing off (to ponder the irony)

Except, the wealthy don’t use savings accounts

It’s all in the argument – the more obfuscated the better. From Bloomberg:

Give the wealthiest Americans a tax cut and history suggests they will save the money rather than spend it.

Tax cuts in 2001 and 2003 under President George W. Bush were followed by increases in the saving rate among the rich, according to data from Moody’s Analytics Inc. When taxes were raised under Bill Clinton, the saving rate fell.

The findings may weaken arguments by Republicans and some Democrats in Congress who say allowing the Bush-era tax cuts for the wealthiest Americans to lapse will prompt them to reduce their spending, harming the economy.

The problem with this argument is that while wealthy people are not conditioned to dump their next paycheck on a new wide-screen television, they don’t sock their money under the mattress either.

They invest it. Not in savings accounts, but in the equity markets, in real estate, and in small businesses.

It’s counterintuitive to suggest that the wealthy can only help jumpstart the economy via consumer goods purchases, unless the purpose of your argument is to consolidate control over the stock market, housing prices, and the entrepreneur.

Unfortunately, stimulus directed into union coffers while the average person’s IRA sits in the toilet, toying with FHA/Fannie/Freddie and other “affordable lending” purse strings while foreclosures sit empty on every street, and burdening the independent businessperson with 1099s for every check they write, is all about that.

Control.

Stuff I’ve been paying attention to even though spring was very fishy

It’s been a very fishy spring, particularly with the whole FIBFest bit, but that doesn’t mean work has gone unattended. Well at least paying attention (which reminds me that I used to get sent to the dean’s office a lot for disrupting class)….

Technology

  • WordPress 3.0: The 5 Most Important New Features [Mashable] – More great stuff afoot. Why anyone would PAY for content management system software with WordPress around is beyond me.
  • Still Don’t Know What Cyberwar Is… But The US Has A Cyberwar General Now [Techdirt] – It’s probably best you don’t know either. No need to worry about some enemy types crashing the electrical grid…or better yet, launching weapons.
  • Gmail Ditched By Major University [Information Week] – Others followed suit, and I suspect it was a knee-jerk reaction. But to what?

Finance

  • What Business is Wall Street In ? [Blog Maverick] – The analogy that traders are like hackers is spot on. Problem is, a select few hackers are spoiling the show for individual investors, and therefore businesses looking for capital.
  • Tax Hikes and the 2011 Economic Collapse [Wall Street Journal] – A flurry of tax breaks come to an end soon. That “Curve Guy” postulates that all hell will break loose soon thereafter.

Fly Fishing

    Haven’t you had enough already? Seriously?

  • Book Review – The Flycaster Who Tried To Make Peace With The World [A Bad Backcast…And Other Inane Musings] – Rob Dee says Randy Kadish’s philosophical journey take you along with. The book is available for the Kindle now too!
  • Report: Most Anglers Don’t Use Social Media [MidCurrent] – No surprise there, because the interwebs are all about telling the truth!
  • Casting for Recovery Selected for Federal Campaign Charity Listing [Angling Trade] – “The Combined Federal Campaign is the only authorized workplace charitable giving drive for employees in the federal employment.” Included are civilian, postal and military sectors.

Adieu.

Get ready for a shakedown

Forbes’s Janet Novack says “Forget the promises. The government will grab lots more of your money.

One of the suggested solutions…a value-added tax. Hard to say whether or not a VAT would cripple an economy driven primarily by consumer spending, but that is certainly what folks start screaming whenever a VAT is mentioned. And, you don’t see significant personal savings in countries that employ VATs (or at least I don’t, so please enlighten me on success stories if there are any).

On a related note, Jerry Bowyer asks “What if Steve Forbes Had Won the Election?” (h/t Glenn Reynolds). Not sure I agree with Mr. Bowyer’s steadfast conclusions, but it would be interesting to see some well thought out pro-formas, looking back, under a flat tax.

Why LLCs?

From bizblawg..

The 2nd Circuit Court of Appeals in McNamee v. IRS, No. 05-6151 just affirmed a federal trial court’s determination that the owner of an LLC (limited liability company) can be held personally liable for unpaid payroll taxes. This is a significant decision, which may well be appealed to the Supreme Court.   Meanwhile, let’s look at its significance. People form LLCs and corporations to avoid personal liability for the debts of the company.  Payroll taxes present a slightly different situation because an officer (but not director or shareholder) of a corporation or LLC who is responsible for payroll can be held personally liable for not forwarding the part of payroll taxes that’s withheld from an employee’s paycheck. That’s called the “trust fund amount.”  But that’s not what we’re talking about here.  Here we’re talking about the whole payroll tax amount, both the trust fund amount AND the part the employer pays, which normally is a corporate or LLC debt and the owners (shareholder or members) of the corporation or LLC is generally not liable for that.

C-corps and LLCs have limited liability. The difference is…C-corps have a solid track record in the court system, while LLCs are still growing. My notion is that people form LLCs after being sold on the pass-through tax benefits, not the limited liability aspects of the entity type. They funnel expenses through, never realizing that legitimate business costs are already personally deductible. And if they actually do get serious about their business and it winds up an acquisition target, they’ve got a big mess to clean up before that sale.

Not to mention the little messes like becoming case law.