Note: This is a post I wrote in April, 2011. I had been away from tax work for two years and found that things had changed in the interim.
Tax policy may not be everyone's favorite topic. I'd rather talk merino and Magic Loop and the best way to pill a cat, but right now I am thinking about tax policy, and that is what you get.
I work on tax returns for what are euphemistically called "high net worth individuals", which is another way of saying "rich people". This means I am highly conversant with 1040s and the accompanying forms and schedules that are common among the rich. I can read a broker's year-end summary with aplomb, I know what goes where on a K-1, I have a passing knowledge of at-risk calculations, I rock the foreign tax credit and the haircut on dividend income from foreign mutual funds, and I used to be the recognized expert in our office on making the tax software do kiddie tax right. (We use different software now.) Rich people also tend to invest in a lot of partnerships of one kind or another and to set up trusts or some such for their kids and grandkids.
It is that last item that I want to talk about here.
Tax law has created an ever-growing and astonishisng number of vehicles for avoiding or minimizing taxes. Forget about tex benefits for the middle class. Tax law in the past 10 or 20 years has been all about the rich. A couple of well-established deduction-reducers that applied only to those whose income was north of $150,000 or so went away since 2009, the last year I did taxes. Every time I see a high-income person's itemized deductions and exemptions being subtracted 100% from their income I grit my teeth; they used to be scaled back the higher one's income was. No more.
What I see this year are trusts -- GRATs, GRITS, GSTs, CLUTs. CRTs. The "T" in each one stands for "'trust". There are grantor trusts and grantor retained annuity trusts and on and on ad nauseum.
Of the 37 tax returns I have worked on this year, 25 -- over 70% -- have been trusts.
And every single solitary one of them was created for the sole purpose of avoiding or reducing inheritance taxes.
If the rest of this post makes your eyes glaze over -- and I cannot think of a single reason why it wouldn't if you are not a tax accountant or attorney -- remember that one statistic. Over 70% of the tax returns I did this year were for entities that were created solely for tax avoidance or elimination.
The rich pay their attorneys and accountants thousands -- and tens of thousands -- of dollars rather than pay taxes.
Do the attorneys and accountants create anything? Do they improve the quality of life in America? How is their labor adding to our national (or world-wide) well-being?
They do not. Their work is depleting it, in fact, because the dollars these people do not pay in taxes are therefore not available to fund schools, roads, national parks, the national debt, WIC, Head Start, public broadcasting, or anything else.
Grrrr. Maybe it is just because I am tired, or because Wisconsin is in the midst of an aggressibvel attack on unions and the middle class (Ed. note: remember, this was April, 2011), or because I am a born whiner, but right now I am fully disgusted with America.
Which is not to say I'll give up this job. It pays handsomely (some of those thousands that the rich pay their accountants trickles down to me) and, ethics aside, it is fun. I like to work with numbers and computers.
I just spent two hours dealing with a hacked Visa card. I have nine monthly payments of one kind or another that are automatically charged to that card. That was nine phone trees to navigate to change to a different card.
Plus, the card I wanted to change to was a Target Visa card. But if one doesn't use her Target Visa card on a regular basis, which I do not, The Powers That Be automatically drop the credit limit to $500. This is not enough -- I use my credit card for everything. (I found out about this $500 limit when we were on vacation last summer and I thought I had lost my wallet; I switched to the Target card and had it declined after about 3 purchases. Grrr.)
So I called Target customer service to have the credit line upped. Apparently their customer service reps are in some other country (not India, judging by the accents) and do not have the authority nor any way to adjust credit limits. That can only be done by Real Americans Who Work For Target In The USofA. And it is not done by customer request, only when the card reaches a certain level of activity. Then the RAWWFTITUSofA look at the account, decide what an appropriate line of credit it, change it, and send me a letter. By snail mail.
I told the rep very politely that that was not nearly fast enough to be acceptable. I know by last summer's experience that I would be resorting to still another card, possibly within days. She apologized but was adamant.
So I told her politely that Target cardservices had just lost a lot of business.
And switched everything to a delightful new Discover card I got a few weeks ago.
Wisconsin may have gone back to the 1950s, but Texas Republicans want to take us back to the Dark Ages.
"Texas Republicans also believe 'controversial theories' such evolution and climate change — which aren’tcontroversial at all — 'should be taught as challengeable scientific theories subject to change as new data is produced.' There’s more: the GOP also opposes the teaching of 'critical thinking skills' because they 'focus on behavior modification and have the purpose of challenging the student’s fixed beliefs and undermining parental authority.' ”
My sympathies to anyone female, of color, of non-traditional sexual preference, intelligent, curious, or who engages in critical thinking in Texas. (Yes, I know that sentence makes a hash of parallel construction, but at least I spelled parallel right.)
"Mid-sized Midwestern state with long history of progressive politics, bipartisan cooperation, and civil discourse. State considered key to sitting President's re-election strategy. No ethics required. Full benefit package, including fully funded legal defense fund. Ideal candidate will have photogenic face, willingness to abandon all integrity and kowtow to Big Money, including Wisconsin Manufacturers & Commerce and the Koch Brothers; membership in ALEC a plus. Apply at www. wisconsin.gov*."
This was me at the rally yesterday. We librarians* stand with the teachers whose vocation was disparaged and attacked and made to seem the enemy by the incumbent.
* Even former part-time librarians currently employed as tax accountants.
* * * * *
From Amanda Palmer's latest email update on her fantastically successful Kickstarter-funded album:
... to review the people-who've called list:
rolling stone called, the new york times called, time magazine called, the new yorker called, the wall street journal called, billboard called, and the economist called.
they want their media back.
i might give it to them to borrow, but first i want a picture of 24,883** people holding my naked body aloft on the cover of LIFE.
then we'll talk.
I LOLed at that, and it was too good not to share.
** The number of people who donated to the Kickstarter project.
* * * * *
What I did on the Saturday of Memorial Day weekend:
Yes, that's right, I hung out with my new BFF, Brenda Dayne. She is on a teaching / knitting / family visit / whatever tour of North America and taught several classes at The Yarnery*** in St. Paul. I took her class on how to design and construct a top-down raglan ("Basic Top-Down Daglan (With a Difference)").
And before you ask, no, I did not knit that gray alpaca lace shawl myself. I won it and blogged about it here (scroll down).
*** If you follow the link to The Yarnery, do watch the slide show of drool-worthy yarns on their front page.
Today I shook the hand of ::fingers and toes crossed, hoping:: the next governor of Wisconsin. He is Tom Barrett, mayor of Milwaukee, the tall white-haired gentleman in the blue plaid shirt in the photos above. The last photo is of Senator Herb Kohl, senior senator from Wisconsin, who accompanied him on his swing through northwest Wisconsin today. I also shook Mrs. Barrett's hand -- that's her in the fourth photo.
Three days to go, and the Barrett campaign's internal polling shows the two candidates are within half a percentage point of each other. The incumbent being recalled has raised over $30 million (MILLION!), 80% of it from out-of-state; the challenger has raised $3 million. The incumbent is the only governor in the country with a legal defense fund and absolutely refuses to reveal who is funding it.
Word in the crowd was that the incumbent will be indicted on Monday.
In fourth quarter 2011, MNCPA [Minnesota Society of CPAs] surveyed members to identifythe most creative tax deductions proposed by clients. Survey results are being shared with the media as part of the MNCPA's tax campaign promoting hiring a CPA for tax preparation. Following is the MNCPA list of strange deductions for 2011. It's a good bet that many of these deductions would have triggered a letter from the IRS had a CPA not intervened and encouraged the tax filers to not include them on their returns.
1. Questionable dependents. One woman wanted to include the months she was pregnant, even though she relinquished rights upon the child's birth; another taxpayer wanted to claim his elected official because he "pays his salary;" and one taxpayer wanted to claim a former spouse.
2. Charitable donations? The market value of whole blood that the taxpayer donated; a $100,000 deduction for burning down an old cabin; gambling losses; private school tuition; and raffle tickets.
3. "Fido" as a business expense. Pets proved popular with taxpayers wanting to deduct everything from pet food to vet bills.
4. Inflated mileage calculations. A handyman proposed taking a $25,000 mileage deduction, even though he had only $10,000 in revenue. He justified it by saying he drove 50,000 business miles in one year.
5. Creative medical expenses. A rental house in Arizona; an in-ground swimming pool without a doctor's order; a spouse's drug habit; breast implants and tummy tucks.
6. Investment or not? An attorney's fees for a divorce, considered an "investment" by the former spouse.
7. Business travel and entertainment deductions. A personal luxury car; three country club memberships; a motor home; and the full cost of a wedding.
The saddest part? I didn't even find these funny. They all just sounded like part of a normal day's work...
"All my adult life, I’ve been pretty sure I’m a sentient, even semi-competent human being. I have a job and an apartment; I know how to read and vote; I make regular, mostly autonomous decisions about what to eat for lunch and which cat videos I will watch whilst eating my lunch. But in the past couple of months, certain powerful figures in media and politics have cracked open that certitude.
"You see, like most women, I was born with the chromosome abnormality known as 'XX,' a deviation of the normative 'XY' pattern. Symptoms of XX, which affects slightly more than half of the American population, include breasts, ovaries, a uterus, a menstrual cycle, and the potential to bear and nurse children. Now, many would argue even today that the lack of a Y chromosome should not affect my ability to make informed choices about what health care options and lunchtime cat videos are right for me. But others have posited, with increasing volume and intensity, that XX is a disability, even a roadblock on the evolutionary highway. This debate has reached critical mass, and leaves me uncertain of my legal and moral status. Am I a person? An object? A ward of the state? A 'prostitute'? (And if I’m the last of these, where do I drop off my W-2?)"
Anyway, what sort of a company would choose right now as the best time to start buying ad time from Rush Limbaugh? What sort of company would think that Rush Limbaugh's listeners are a good market for what they sell? Ashleymadison.com, the dating site for married people who wanna cheat on their spouses, that's who. Since this all started with Limbaugh slut shaming, I think that's kinda priceless. Now Limbaugh refused to run their ads, but they responded by saying,
"We are in the business of selling affairs...And our audience is absolutely his audience."
Senator Glenn Grothman (R-Wisconsin) apparently introduced Senate Bill 507, which would declare single parenting child abuse.
Grothman also proposes strict cuts in programs that assist single parents with caring for their children, including childcare. He recommended that children spend no more than 40 hours per week in a childcare setting.
According to an audio video on Fox Radio, he targets mothers, wanting to educate them about “abuse and single parenting”, encouraging them not to leave their abusive husbands and go on welfare, telling them they would risk abusing their children to do so. He states that children in two parent households are at lower risk of abuse and believes women know when they are getting into an abusive situation. He believes women purposely have children out of wedlock and abuse their children. He also believes his bill will become law in two years, due to single mothers abusing their children and having children out of wedlock. He even stated that this is not a good reason for birth control for women and believes all women have access to birth control. He also believes women do not become pregnant byaccident. He blames women for the change since the 60s and we should educate women that leaving abusive men and becoming single parents is a mistake.
Thank FSM he is not my senator. Well, maybe not; if he were I could have the unmitigated pleasure of voting against him.
The bill to repeal Wisconsin's equal-pay-for-equal-work law was introduced in the state Senate last September by Sen. Glenn Grothman (R) of West Bend, a small city northeast of Milwaukee. (The link takes you to his web page, which includes his email address, his snail mail address, his telephone and fax numbers, plus his office address in Madison. Just in case, ya know, you wanted to let him know your feelings on the matter.) It was passed in the Senate with the vote coming down -- predictably -- along party lines; the same thing happened in the state Assembly last month.
Of course, there are still federal laws on discrimination and equal pay, etc., but this bill makes it impossible to file a wage discrimination suit in state court. A petitioner will now have to file in (an overburdened) federal court. Says State Senator Tammy Baldwin here,
"It is much easier for somebody who's been unfairly compensated to gain access to a state court than a federal court...It is something that if you want these laws to have meaning, they have to be enforceable. So I'm very disappointed with the Wisconsin state legislature. Yet another big step back for women. This is becoming a real pattern."
As far as I can tell, there are exactly two (2!) federal courts in the state of Wisconsin, one in Milwaukee (a seven hour drive from where I live) and one in Madison (a six-hour drive). There are 69 state courts in Wisconsin, one in all but three counties: the one in my county is exactly 6.7 (highway) miles away. That tells you how easy or difficult it is to file a wage discrimination suit this month vs. last month.
Hmmmph. If these people want to live in a Third World country*, why don't they MOVE to a Third World county... instead of trying to remake my state into one.
*I was going to suggest Mississippi, but that would have been unfair to Mississippi.
Edited to add: The federal law, The Equal Pay Act of 1963 (1963! I bet a number of you were not even born yet in 1963!), says this:
"No employer having employees subject to any provisions of this section shall discriminate, within any establishment in which such employees are employed, between employees on the basis of sex by paying wages to employees in such establishment at a rate less than the rate at which he pays wages to employees of the opposite sex in such establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions..."
"On February 21st, in a stunning move, Assembly Republicans voted to repeal Wisconsin’s Equal Pay Act... Assembly Republicans repealed the law that ensured that women cannot get paid less than a man for doing the same job. Women in Wisconsin still only make 77 cents on the dollar compared to men."
-From a newsletter put out by the state assemblyman from the Racine area.
I could not believe this when I read it. But it is true. Welcome to 1952, or maybe 1902.
If you are a woman or are married to one or have daughters and were thinking of moving to Wisconsin, you may want to think again.
Remember Google's original motto, "Don't be evil"?
Apparently that is true for only certain Google-defined values of evil.
* * * * *
In the interest of calming everyone the f*** down, here is a Lifehacker post showing one way to keep your Google browsing history to yourself. There are several good ideas in that article; many and more thanks to Chris for including it in her regular Friday linkety post.