ON THE SUBJECT OF FREE SPEECH, AND GOVERNMENT POWER, HERE’S AN ILLUMINATING COMMENT BY THE MAYOR OF NEW YORK
Actually, his comment isn’t about the First Amendment at all, but about taxation and government power. He cay say it, because of the First Amendment, but that doesn’t mean it’s right. Here it is:
“[T]here’s plenty of money in the world. There’s plenty of money in this city. It’s just in the wrong hands,” said de Blasio.
His vision of government is to take money from disfavored constituencies and have the government, in its benevolence, apply that money (ostensibly) for the benefit of favored constituencies. He thinks that the “wrong” people have an unlimited supply of money, and that taking it from them won’t have any effect on the forces that produced that money (or if does have an effect, that effect is desirable).
This is another example of a bad idea that it may be a mistake to give more attention, but…. You’re gonna make Pay Pal do income tax withholding to solve the problem of there being no employers to do it in the gig economy?
I have explained before how income tax withholding hides the true effect of the federal income tax. This bad idea will spread that effect, making it far more pervasive and more impossible to remedy.
I have been writing a lot about income tax here recently. It’s usually on my mind in January.
My January Tax Law Special Report delivers timely and useful information about filing your 2018 federal income tax return, including the major changes to Form 1040. It also revisits the perennial question of how long you should keep copies of your tax returns.
Check out my Report in the publications section of deconcinimcdonald.com. If you want me to add you to my list of snail mail recipients (yes, I still mail a paper newsletter to valued friends and clients every month), you can send me an email via the link on my home page.
NO, THE PARTIAL SHUT-DOWN OF THE FEDERAL GOVERNMENT DOES NOT MEAN THAT YOU WILL GET A REPRIEVE ON FILING YOUR 2018 TAX RETURN
I doubt that the partial shut-down of the federal government is going to materially affect tax season because I can't believe that it won’t be resolved before April rolls around, but in case you were wondering, the IRS has issued a statement on how the federal appropriations lapse is impacting IRS operations. Here’s the key sentence of that statement:
During this period, the IRS reminds taxpayers that the underlying tax laws remain in effect, and all taxpayers should continue to meet their tax obligations as normal. Individuals and businesses should keep filing their tax returns and making payments and deposits with the IRS, as they are required to do by law.
You can use IRS Free File to file your 2018 federal income tax return if your adjusted gross income in 2018 was $66,000 or less. According to the IRS, 70% of individual taxpayers are eligible.
The IRS says that its Free File service “provides free, brand-name tax software and fee electronic filing” to taxpayers who qualify.
If preparing a federal income tax return wasn’t so complicated, this service wouldn’t be necessary. But tax complexity isn’t the IRS’ fault. They have to work with what Congress gives them.
You can get more information at (where else?) irs.gov, which is also where you have to go to get the service.
HOW LONG SHOULD I KEEP COPIES OF MY TAX RETURNS, AND WHAT DO I DO IF I DIDN’T KEEP A COPY AND NOW I NEED ONE
On the subject of tax returns, the IRS recently released a “Tax Tip” (IRS Tax Tip 2018-90, June 12, 2018) that says the IRS “recommends that taxpayers keep a copy of tax returns for at least three years.” It also provides useful information on how to get a transcript of a tax return if you need one (for some purposes you can actually be required to provide a transcript rather than a copy of the return), and how to get a copy of your return if you don’t have one.
Beware, however: the IRS says keep those old returns for at least three years. There are situations where you may need copies of your returns, and other records, going back as long as seven years, or more.
JUST BECAUSE HIGH MARGINAL INCOME TAX RATES EXISTED SIXTY YEARS AGO DOESN’T MEAN THEY ARE A GOOD IDEA TODAY
A discussion at the Cato blog of the effect of higher marginal income tax rates, now being proposed by some in Congress, highlights an aspect of that discussion that has occurred to me before. The proponents of dramatically higher tax rates cite the fact that such rates existed in the past, without any apparent harm to the economy. That assumes, however, that the national, and indeed the world, economy, are essentially no different than they were in the 1930s, or even the 1950s.
In reality, of course, the national and world economies are dramatically different today than they were even in the 1970s, let alone the ‘50s or ‘30s, as the author of that Cato blog post points out.
And why do the proponents of higher income tax rates always seem to overlook the demonstrated fact that lowering the top marginal rate has historically resulted in higher, not lower, tax revenue?
Eliminating cash will not only allow taxation of your savings through negative interest rates, as I noted recently. It will also allow the government to keep track of every single thing you buy. You think that sounds paranoid? I suggest you think about it not in the context of what you do, but in the context of what others do that is legal, but not favored in polite society. Just how much power do you want to give banks and their regulators to control what you can and can’t do with your money? There’s a thoughtful post on the subject that I recommend if you are interested, at the Simple Justice blog.
Brian Larson, CPA, reminded me today that income tax time will bring some significant changes. For starters, Form 1040 for 2018 has changed dramatically. It looks very different compared to the way it has looked for decades.
What’s more, Form 1040A and Form 1040EZ will no longer be used. You have to file 1040. The good news is that 1040 is much shorter. The bad news is that if you couldn’t use 1040A or EZ in the past, the shorter 1040 isn’t going to be much help, because all the stuff they took off of 1040 is now on one of the six (!) schedules that go with it.
The new schedules are numbered, 1 through 6. I guess Schedules A, B, C, and D, which have also been around for as long as I can remember, are gone.
If you want to find out more, there’s a page on the IRS web site with a condensed explanation of the new 1040 and schedules, with links to the forms.
A BIG REASON WHY ELIMINATING CASH IS A BAD IDEA IS ACTUALLY A REASON WHY PROPONENTS THINK IT IS A GOOD IDEA
A few choice quotes from the Cato Institute report that I linked to last week:
“Proponents maintain that future macroeconomic stability requires that central banks have the ability to impose negative interest rates, not only on bank reserves, but on the public’s money holdings as well, and this can be accomplished only by preventing the public from hoarding cash.”
“[N]egative interest rates… would essentially entail a comprehensive tax on money holdings.”
“Negative interest rates in a cashless economy end up giving an unelected regulatory body discretionary power to tax money.”
I’m sold, aren’t you? The Cato Institute, fortunately, is not.
The contents of this blog, this web site, and any writings by me that are linked here, are all my personal commentary. None of it is intended to be legal advice for your situation.