Oct 02

Less than 90 Days to the 2013 tax hikes

With today being Tuesday, October 2, we are exactly 13 weeks away from January 1, 2013. As detailed in previous articles here (and countless others on the internet), on January 1, 2013 there will be the most significant tax changes resulting from changes within the tax code (rather than complete overhauls).

These will be increases in the Payroll Tax (FICA) of 2% on all earned wages; increases in the marginal income tax rates; increases in the capital gain rate (from maximum 15% to 20%); increases on taxation of qualified dividends (from max 15% to up to 39.6%); decreases in the amount deductible for new business purchases, decreased in exemptions for wealth transfers (gift and estate taxes); increases in the wealth transfer tax rates (from max 35% to up to 55%); and others.

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As always, I offer a free consultation to review your estate and business planning. I serve all of southwestern Oklahoma and office out of Altus. Call me at 580-318-8829 to set up an appointment.

Oct 01

Republican controlled house passes own Buffett Rule

Legislation was passed by the House of Representatives this past week that allows anyone who believes he/she is not paying his/her fair share in taxes to voluntarily contribute more in tax revenue to the Department of the Treasury. There has been a law similar to this in the Internal Revenue Code for a long time, but the common name of this bill is “the Buffett Rule Act of 2012″ after Warren Buffett, the President’s ultrawealthy proponent for higher taxes.

Although this new law passed by majority in the House, it is unlikely to be brought for a vote in the Senate, and even if passed there, would not be signed by the President. This law has been pure politics by the House, but, understandably, was used to combat the politics of the ultrawealthy who want to increase tax burdens for everyone, when only a select few say they can afford more in taxes.
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My belief in all of this is that taxes are always going to be an issue. You, as a taxpayer in southwestern Oklahoma, or anywhere in the United States, are not required to pay any more than the law requires. The use of allowable deductions, special rates, and exemptions is perfectly valid. If the “loopholes” are viewed by Congress as not as intended, then Congress needs to change the law rather than pander to the loudest complainers.

Sep 29

A book I look forward to reading

TaxProf Blog has a link to a book that seems to show that redistributive policies destroy jobs. The link at Tax Prof Blog goes to the New York Times and is for Casey B. Mulligan’s new book The Redistribution Recession.

A graph from the book is below. It shows that as the social safety net has become more generous during the past two presidential administrations, the hours worked by various income earners has decreased. Some of the loss of hours came from the recession, but the book seems to point that as the amount you get to keep for yourself (rather than paying in taxes) the less incentive there is to continue to work more hours.

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Incentive to accumulate weath or earn an extra dollar

Work hours change from 2007 - 2010

I will look forward to reading this book and recommend it to my readers who want to see how tax policy will affect their lives. The various policies implemented in Washington not only directly affect take home pay, but will also affect an estate plan through the wealth transfer taxes (estate and gift taxation).

Sep 28

Seminar tentatively scheduled for Hollis

I have been in talks with the Hollis Civic Center and a local financial planner to have an Estate Planning seminar in Hollis, OK. I have two tenative dates for the citizens of Harmon County to come learn about wills, trusts, powers of attorney and other estate planning issues. We will also have a brief discussion of estate taxes and how the coming changes will affect farmers, mineral owners, and every resident of southwestern Oklahoma.

Right now, I am looking at Thursday, October 25th or Tuesday, October 30th. I am planning on two seminars on estate planning with a special presentation on investing in these volatile times. Please feel free to send me feedback on if one of these days will work better for you.
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I look forward to expanding my practice in Hollis and Harmon County. I also look forward to seeing you all there.

Sep 27

Chart on where the “47%” live

Americans that pay no income tax or receive refundable rebates
This chart shows the state by state comparison of filers who pay no income tax

As you can see from this chart, all states have income tax “filers” who pay no income tax. This chart shows that most states have between 22% and 45% of filers that do not pay income tax.

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Rather than disprove what candidate Romney said that the number of Americans not paying taxes (47%), in my opinion, this gives credence to his claim.
Although no state has 47% in this chart, it is important to note that it is based on people who actually file a tax return. Most low or no income households will not even file, so the percentages will actually be much higher when the sample is Americans versus filers.