NT Small minded

[Terry O]

I do not want to get into a political debate - - but DARN - - -13% overall effective tax rate???

Oh yeah - -and apparently - -I am now "SMALL MINDED"

hmmmmmmmmmmmmmmmmmmm

[BulldogTom]

Yeah - Why the hell didn't Harry Reid make the laws so that everybody pays the same. What a Jerk Harry is, because it is his fault (as president of the Senate) that we don't have a flat tax so everyone can pay the same rate.

It is also Harry Reid's fault (since he is in charge of making the laws right now) that we don't have a law requiring those running for public office to display for all to see 20 years worth of Tax Returns.

And it is Harry Reid's fault that we don't have a law requiring all candidates for public office prove they are eligible by doing things like...I don't know.... showing their birth certificate maybe.... proving their age and citizenship... things like that, before they can be put on the ballot.

If we didn't have that damn Harry Reid screwing things up, this would be a much better world.

OH - sorry, this was not supposed to be political.

Tom

Hollister, CA

[OldJack]

In todays world if you are not "political" you are ignoring what is happening and should not be allowed to vote in elections. In years gone bye citizens could mostly go about minding their own business and not be affected by what happens in government. Today, if you want a job, want to keep a job, or want a future for your children, you best pay attention to what is going on!

I am so damn old that nothing is going to change for me by whatever happens, but younger folks are fools, or don't have any common sense, if they don't take a serious look at our current federal government and its policies.

[jainen]

>>overall effective tax rate<<

I have many awkward moments with clients concerning this calculation. In my software it means Line 61 total tax divided by Line 22 total income. That does not include non-taxable or deferred income, nor non-deductible or deferred expenses. Using AGI instead of Line 22 can bump it up. Allocating amounts to separate spouses is really confusing, and year-to-year comparisons are almost meaningless when bunching income and expenses. How do depreciation with recapture, AMT with credit, carryovers, and Lines 64-71 credits treated as payments change the "effective rate"? Not to mention shifting income or expenses to another entity.

On a national scale, the IRS can assemble some useful statistics with these numbers. In my opinion, there are too many variables to be of much value in individual tax planning. Most of my clients, however, disagree.

[OldJack]

Well... ATX software calculates "Average Tax Rate" by using "Taxable Income" line 43 to "Total Tax" line 61. I think this is fair as everyone should be allowed adjustments, deductions, and credits under the law. I expect that many complaining about 13% are paying 0% tax, $0 paid in, but with a tax refund. We have a crazy tax system any way you look at it.

[jainen]

>>everyone should be allowed adjustments, deductions, and credits under the law<<

All things being equal, that formula will show that self-employed pay higher tax than investors. But the entrepreneur can deduct work expenses and health insurance premiums and even losses in ways the investor can't. And both can shift income and/or expenses to family members or other entities. So one taxpayer might reduce taxable income in a way not appropriate or even available to another taxpayer. It's under the law, to be sure. Just mighty hard to evaluate person-to-person, at least for me.

[BulldogTom]

But the question really is - How come Harry Reid, who has been in the Senate since Noah's Flood, has not changed the laws so that Mr. Romney could not take advantage of the tax laws and only pay a 13% rate?

Sorry for the Rant, but the speech he gave on the Senate floor accusing Romney of not paying taxes without providing proof is Un-American. We don't allow government to accuse with no evidence and then make the accused prove that they did not do it. How would Mr. Reid feel if I accused him of being a sexual deviant and then told him to prove he wasn't?

It is a very "small minded" issue when looked at in perspective. Gas prices are soaring again, Unemployment hasn't been south of 8% in 4 years, and congress can't even work to save the post office. How much a candidate "legally" paid in taxes under the current law is a very small issue. How many years of returns he provided (when he complied with the legal requirement) is a small issue too. He provided what the law says he has to.

I want to see Obama and Biden show me where they paid more than the law said they had to on their tax returns.....

Rant over..... and I don't even like Romney.

Tom

Hollister, CA

[Jack from Ohio]

Well... ATX software calculates "Average Tax Rate" by using "Taxable Income" line 43 to "Total Tax" line 61. I think this is fair as everyone should be allowed adjustments, deductions, and credits under the law. I expect that many complaining about 13% are paying 0% tax, $0 paid in, but with a tax refund. We have a crazy tax system any way you look at it.

HEAR HEAR!!!

[jainen]

>>We don't allow government to accuse with no evidence and then make the accused prove that they did not do it.<<

Get a grip, Tom! I feel your passion, but we are talking TAXES here.

[Catherine]

>>We don't allow government to accuse with no evidence and then make the accused prove that they did not do it.<<

Get a grip, Tom! I feel your passion, but we are talking TAXES here.

The principle remains the same, and it is disgusting that the tax code allows this extremely basic travesty to exist. Shame on us (AND our forebears!) for not tossing out of office any and all congresscritters who allowed this "prove you are innocent" standard to creep into the tax regulations.

[kcjenkins]

And Reid makes a mockery of the Senate when he uses his position in the Senate to make a speech that, if he made it anywhere else, he could be considered to be committing slander.

The fact is, like most wealthy people, Romney most likely simply gives his documents to his accountants, who then do the best job they can to make sure that he neither under nor over pays his taxes. If it's now a sin to take advantage of the tax laws written by our Congress, I don't want to live here any more..

Plus given the way our government wastes our money right an left, I really feel like it would have been wrong for him to give them a penny more than the law required him to do. Better that he gives to charities that he believes in, in my not at all humble opinion! But Reid has no basis for his slander, either. He claims he was told this by "someone who was an investor with Bain Capital". Please tell me how just investing money with a company would give you access to the personal tax records of an owner of the company?

http://newsbusters.org/node/8287

http://hotair.com/archives/2012/08/07/wapo-fact-checker-gives-4-pinocchios-to-harry-reid/

[joanmcq]

However, I believe the laws that allow the carried interest exception to be taxed as capital gains should be a part of any tax reform.

I don't agree that Mitt's return is totally above ground; the horse partnership is a good example. We all know that using a partnership for something that would cause great scrutiny on a Sch. C as a hobby can be an aggressive way of bypassing the hobby loss rules. We know the partnership is just as subject to the rules, but is not going to raise the audit flags a Sch. C would.

If this was one of our clients, we would say it doesn't pass the smell test for business purpose, profit motive, etc. And as the horse in question is a mare, even future income from stud fees aren't an option.

How many other things on his return are just as 'aggressive'?

[OldJack]

>>I don't agree that Mitt's return is totally above ground; the horse partnership is a good example.<<

I don't know about this horse partnership and I have not seen Mitt's tax return.

However, I have had clients with horse partnerships and there are real purposes for such partnerships other than taxes. I have defended such horse partnerships on IRS audit and never lost the client tax status. These partnerships are usually well documented business operations with horses that are thoroughbreds costing large sums of money and expensive to maintain. Such horses commonly produce revenue, produce valuable offspring, and are seldom ridden by their owners. It's common for some tax preparers and IRS agents to jump to conclusion (with a smell test) that it is only a hobby or tax write-off. Know all the details before you draw a conclusion.

[joanmcq]

I went over every page of Mitt's return. And Obama's and every other presidential & vice presidential candidate's returns as they were released for at least the last 10 years (yay internet!).

And no, I haven't seen the partnership return, but the losses were substantial. And that is one issue; he has so many partnerships, LLCs, etc. from which he derives his income, and none of them are available for review. Just a line item on the Sch. E pg 2. It's not like Clinton's Sch. C for speaking and book royalties which was easy to review. So even when you review his return, there is so much that can't be analyzed.

Prizes in dressage are not like a champion thoroughbred racer. And most racers make the bulk of their money through stud fees, or at least there is the chance of that. Ann Romney does ride the horse in question, and in the media the Romney's responses as to the horse and her participation in dressage read as hobby or at best medical expenses.

And I have seen many, many audits lost on horse businesses (and read tax court cases), so I do know of which I speak.

[Lion EA]

There are three trusts and a foundation return, as well as the personal returns, of the Romneys on their website. Well, all as filed for 2010 and pro forma individual only for 2011. I don't know how you'd compell a partnership or other entitiy that includes non-Romneys to release their tax returns.

The thing I find interesting is that the Romneys are stating their effective tax rate. My clients usually talk about their marginal tax rates. "I'm in the 25 percent rate, right?" "I'm no longer in the 25 percent rate after my last raise." So, they think 13% sounds pretty low. I have to remind them that their effective rates are 6.9% or 11% or even 0%.

[OldJack]

Seems to me that citizens should be looking for "solutions" to our countries problems and therefore decide who is best for the job of president. Problem is, many citizens refuse to look past their government benefits. I don't think the presidential candidate's personal tax returns or tax rate will be any indicator of how problems will get solved in this country.

[BulldogTom]

Seems to me that citizens should be looking for "solutions" to our countries problems and therefore decide who is best for the job of president. Problem is, many citizens refuse to look past their government benefits. I don't think the presidential candidate's personal tax returns or tax rate will be any indicator of how problems will get solved in this country.

EXACTLY!

Tom

Hollister, CA

[Jack from Ohio]

Seems to me that citizens should be looking for "solutions" to our countries problems and therefore decide who is best for the job of president. Problem is, many citizens refuse to look past their government benefits. I don't think the presidential candidate's personal tax returns or tax rate will be any indicator of how problems will get solved in this country.

HEAR! HEAR!!

[jainen]

>>I don't think the presidential candidate's personal tax returns or tax rate will be any indicator of how problems will get solved in this country<<

What else would you prefer? Campaign promises come and go, never with any personal commitment. Even a voting record is a poor guide because of the compromises implicit in the process. But a tax return is a factual declaration under penalty of perjury, showing the candidate's personal approach to economic theory. Of course there are other sources available for various viewpoints, but tax returns are real solid evidence.

And note that Romney is himself using information directly from his own tax returns (e.g., the 13% brag). Obviously even HE agrees his tax returns tell something voters should know. And I guess some things he doesn't want voters to know.

[kcjenkins]

I do agree with you, Jainen, about the campaign promises, And somewhat about the voting record, although I do think that the record, over time, does show me a lot about where he will compromise, and where he will stand his ground.

As for the tax returns, there are only a few things I get from them. While it is interesting to see where the income comes from, and may give some insight into why he votes the way he does on some things, I don't think it tells me much more than that. National pols are going to use professionals to do their returns, and often to manage their investments as well, so I don't pay much attention to that. The Sch A I find interesting because of the personal lifestyle information it shows.

Personally, I doubt that any successful individual pays that much attention to the DETAILS of their tax returns. they leave that to the professionals. And given the way our government wastes money, if they try as hard as possible to legally reduce how much they pay, I respect that decision.

[OldJack]

>>I don't think the presidential candidate's personal tax returns or tax rate will be any indicator of how problems will get solved in this country<<

What else would you prefer? Campaign promises come and go, never with any personal commitment.

I would prefer to hear, and see, the candidates ideas and proposals for solutions. I could then better judge if their solution makes sense and weigh the possibilities of it becoming a reality. Many citizens have trouble "listening" as it isn't taught in school or by parents anymore.

[jainen]

>>if they try as hard as possible to legally reduce how much they pay, I respect that decision<<

Solid agreement on that point, kc. It's the core of our profession.

But nobody expects to find that Romney cheated. We want to know about his character, what you call lifestyle on Schedule A. Investment patterns in the face of economic downturn can also reveal a lot. One rumor (supposedly based on actual SEC filings) suggests tax returns would show that a large part of Romney's personal wealth came from abortion services. Or maybe refute the rumor--in any case financial analysis is a standard way of investigating anybody. With so much at stake, in my opinion, voters deserve some pretty comprehensive disclosure.

[OldJack]

With so much at stake, in my opinion, voters deserve some pretty comprehensive disclosure.

Yes it would be nice to have some disclosure from BOTH candidates. But the fact is some things are personal and should remain personal. If we can't get all that personal information maybe we should look at the mans public record and achievements.

[Gail in Virginia]

Personally, I would like more disclosure about what each candidate believes and plans to do for (or to!) this country, and a lot less disclosure about what they "believe" their opponent is going to do.

[kcjenkins]

One rumor (supposedly based on actual SEC filings) suggests tax returns would show that a large part of Romney's personal wealth came from abortion services.

No way do I believe that RUMOR, Jainen. It does not in any way fit with what we do already know about him. Nor is there a shred of proof provided.