StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between

Income Tax

Posted by Clint Stretch

Whatever Congress and the White House do in the next couple of weeks will reinforce the case for tax reform.  The seeming sanctification of low tax rates that occurred with the Tax Reform Act of 1986 has not meant keeping top tax rates low; it has meant only the death of honesty in talking about rates.  The result is a patch work of hidden rates and additional wage taxes that is likely to continue.

Posted by Clint Stretch

On Tuesday, the electorate will get to the end of a very long political process, during which they have been promised a better tax system without any real discussion about the sacrifices such a system would demand.

Regardless of the winner of the presidential election, the expectations of the typical voter are pretty much the same. Here’s what I think the voters have heard on taxes and, therefore, what they think will happen in the next Congress:

Posted by Clint Stretch
Like Governor Romney, I have raised a number of kids.  One of the things I learned to do with them was to listen to the silence.  When it got too quiet upstairs, when a good friend’s name vanished from conversation, or when the cheery reports about a wonderful teacher stopped, I knew something important had happened, and it was time to tune in. 
My liberal friends are frustrated that Governor Romney will not identify the tax benefits he plans to repeal in order to lower individual tax rates by 20 percent.  I am not frustrated.  In the debate, Governor Romney gave us some solid guideposts to understanding what details are in the silence.  The specifics necessary to create an economic model might be missing, but the principles and vision he outlined give us substantial clues – fuel enough to feed the exercise of common sense.

Posted by Clint Stretch

 When our kids were in high school, a very wise principal told us: “Any sentence with the word ‘nobody’ or the word ‘everybody’ is wrong. “  Since then, I have been startled at how many times I hear such sentences rationalizing a failure to pay taxes – “Nobody pay tax unless they have to.” “Everyone knows the tax code is unfair.” “Everyone fudges on their deductions.” “Nobody’s hurt when I pay a little less.”

In August, the IRS issued yet another Tax Gap report.  The IRS estimates that in 2006 alone, the Treasury missed out on $385 billion in revenue due under the current tax law from a combination of underreporting of income, overstatement of deductions or other benefits, or non-payment of taxes owed.  To put that in perspective,  increased revenue of $385 billion annually likely would be enough to make the Bush tax cuts permanent and to permanently patch the Alternative Minimum Tax. 

Posted by Clint Stretch
At my house, when we are getting ready to take a hike, you can tell lot about the seriousness of the undertaking by the preparation.  If boots are waxed, maps repeatedly checked, and backpacks filled with food, water and first aid kits, then something pretty substantial is planned. 
When Congress holds tax reform hearings, we all will get a look at their seriousness, or lack thereof, for preparation for future legislation.  Thursday, the House Ways & Means and Senate Finance Committees will hold a joint hearing on “Tax Reform and the Tax Treatment of Capital Gains.”  Here are five questions I will be asking to assess how serious the committees are about tax reform.

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