YOU WANT SOME EXAMPLES OF WHAT A STUPID IDEA IT IS TO IMPOSE ANNUAL “MARK-TO-MARKET” TAXATION ON CAPITAL GAINS ?
An opinion column in the Knox News goes over just a few of the most obvious reasons why taxing capital gains annually based on the market value of capital assets would create tremendous problems. The columnist dismisses the idea as a class warfare scheme that will go nowhere. I hope the columnist is right.
I note that the announcement has received little attention since it was made earlier this month (just in time for tax day). I predict that the promised explanation of how the idea would actually work will not be forthcoming, or if it is provided, will be ignored.
I could give you example after example of how taxation of unrealized capital gains would be (a) ineffective in accomplishing the stated objective of its proponent to "ensure wealthy pay their fair share," and (b) harmful to the economic well-being of millions of ordinary (non-wealthy) Americans. I'll come back to it if this proposal goes anywhere, which it should not, and probably will not.
MORE BRILLIANT IDEAS FROM THE GENIUSES IN DC - THEY WANT TO DICTATE THE TERMS OF CORPORATE SHARE REPURCHASES
I wasn’t aware that some federal lawmakers have decided companies should be prohibited from buying back shares until the companies compensate all of their employees at the level that lawmakers deem appropriate. What a great idea! Now, why don’t those geniuses also just dictate what products companies can produce and set prices for which they can sell those products? At least one of them seems to think that these would in fact be appropriate exercises of our central government’s authority.
As an aside, the linked item suggests that a Republican senator has “criticized buybacks.” Here’s what that senator actually said:
At present, Wall Street rewards companies for engaging in stock buybacks, temporarily increasing their stock prices at the expense of productive investment. While companies should be free to buy their own stock, there should be no tax advantage for stock buybacks over other forms of capital allocation, as the deferral of capital-gains taxes currently allows.
One can agree with that statement without supporting the idea that the federal government should dictate when a company can repurchase its shares.
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.
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.