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WWL>Topics>>2-18-14 1:10pm Angela: on taxes

2-18-14 1:10pm Angela: on taxes

Feb 18, 2014|

Angela talks taxes with CPA Jay Rabalais, tax attorney John Butler, economist Will McBride, and Thomas Fontes, owner of Accounting Services Unlimited.

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Automatically Generated Transcript (may not be 100% accurate)

Well hello everybody and I appreciate you listening we have three I think very interesting -- discussions ahead. The first one is one -- wanted to have since day one and it's concerning our taxes. It is my belief if every time we get a paycheck. We had to -- to check to the federal government for our taxes but check to the state for our taxes a check to Social Security check to Medicare. Then our property tax is pro rated every month. And a general check for sales taxes. We would have a clear understanding every month of the amount of money we give up for taxes. If we sold the checks written monthly you mean we we might go ballistic. Then when you think of the money that is lost in the deep hole of Washington DC. It's horrendous. This is our money we don't steal it in our paychecks. So maybe we don't miss it. If we had to do it monthly. It would be a real. Honest to god revolution. Federal state Social Security Medicare state property sales taxes. For -- it. And how can you have a 20000. Page tax code that increases every year. I want to know who's ever rabbit. But we sort of allow this folly to go long so I -- for a flat tax RU. Well. That's the beginning of the conversation but it's also what we're gonna talk for the next hour or some changes that are happening. Starting with your taxes that are going to be do. This April 15 and then perhaps if we have time some changes for next year. I wanna thank you for letting me -- at this is sort of been out of the in my bonnet for a while. -- joining us for -- talk on taxes and again if you have any questions at all about your taxes or your thoughts on taxes. Please give us -- call 260187. I'd like to introduce Thomas. -- Owner of accounting services unlimited that's perfect. Thank you John Butler who was a tax attorney also with the accounting services on limited. And by phone we have Jay rabble make a CPA with accounting services. Hello everybody and by phone we also have. Will McBride from the Tax Foundation. Which is an independent tax policy research organization. And has been a friend of the station for a long time. Thank you gentlemen all of you for joining us. This was really born out of looking at that reading newspaper recently -- think you know we really do have some changes coming about. And you know are now people are probably sitting down gathering all their info for their taxes so we just kind of like to go over. Some of those changes such as there's a new top rate. Tax rate. Can anybody discuss that. Not -- wants. Archer. It seemed like that act as we pay again. I think a lot of paycheck each and every -- league you don't -- -- the government and perhaps hoping to grab you get your case you don't know any better. They are out and declined to come in -- that are self employed and -- it is and you know I I did deliver the bad news each and every time this year and it's done. You know it's absolutely. Stunning. -- -- -- yet. That it ought not one bomb these are and taxpayers this year taxpayers who earn more than 200000. Single. Trying to get these generic filing jointly will pay an additional point 9% Medicare -- this year. In addition to and in new investment in contact which is three point eight or there -- column order AG. Joseph. And also attacked people that one out on your car and in the bridge luckily. You know most people would actually -- -- -- which went well but for your higher -- line absolutely there there'd be a little bit more squeezed compact. -- -- But there's if there's a phased out of some deductions and exemptions that could mean higher tax bills also for a higher and damned Americans. Yep absolutely taxpayers who earn and they they lowered that rational look at who are under a thousand or more. -- at Merritt Island separately -- get -- that the single rate. -- out now and how old are 300008. New limits on itemized deduction now -- Just on that point. They also -- -- also raised the medical deduction on your schedule on my directions on the seven and a half percent. Income partially now wait -- 10% so it made it even ordered out of pocket expenses. Now I don't even when -- on the obamacare effective when he fourteen that will take effect on the bit to do you know here now that that you know people are gonna use that much harder -- in the medical deduction. For 20/20 -- OK let's let's talk about in this -- IPad this explained to me several times into and I guess I'm just not sharp. But would somebody explain to me about the Alternative Minimum Tax. What is it why isn't and and there are going to be some changes to it but the bottom line is it was set up really so that. Very wealthy people would have to pay something I understand that but it -- down where it was reaching into others. I'll take it spat that does -- -- Until the the alternative -- the -- and chi is an old dial. Sort of on tax on the wealthy come from I think 1969. What -- they were targeting about. A few dozen -- which taxpayers that's probably didn't. Paying taxes. That year. And don't -- for a couple of -- occasions and much recently. And for many years it was not adjusted to inflation. So there was this sort of annual charade of going back and change. I don't know it's gonna get we don't adjust the picture -- -- back to square one in the ninety's that threshold. And we hit something like thirty million people. Rather than ordering people -- it. Trial finally last year they dealt with that aspect and -- eight. Raised the threshold you are somewhere around 50000 or actual parlors and shouldn't 5000 -- Joint filers. And beyond which they will be. I don't don't have to do your taxes twice basically did did alternative tax -- really. They don't have a deduction. Honest now and then you're in -- pain. The they tax liability -- it up being the highest stretch early -- turned back -- tax. But get -- -- -- and 5000 net hitting middle to upper middle income households. And your organization believes wealth that they should -- be eliminated. Absolutely it just another complex way you. Hit the wealthy -- tax code. Group and its. Does it by introducing all the other -- coach Eric it has really by getting rid of the NT -- -- Eliminated linked to big chunk of the taxcut. You know will I know your organization has been around a long time since the thirties and it's. It's really analyzing I -- -- tax cut I'm just very curious how it got to be. 20000 pages and about. -- it's actually on average. There's been a tax a change to the tax code. Every -- the last two years. So it is in bits and pieces but in the picture on recently of course apology here. Which is really. Joint tax bill more than anything else -- a lot of health care stuff but. And they're more than twenty different types of tracks has built into it. They're all of arcane and poorly written. Many of them are workable as we're trying to do that Britain should the mandate for attention getting the latest blatantly to meet. Many people it will never. -- that and number the effect because it's just unworkable. -- too much until they undergraduate and -- So -- did you get these other twenty taxes that are -- really a burden compliance curtain. And candor there actually. There's been true investor and mainly. Which has now in the culture course. So but what done it created a tremendous. Mutual tax code. And new and new responsibility for the honor and now -- -- health care agency. So. I have a feel early this could be -- in color it. It could be an entire program just on what you're saying because. We have so many things we have to get to but I would love to talk and another time about exactly how we are paying for Obama Andrew. Yes. John was just Thomas with that accounts services. John was just talking to me this morning about the case that he has. Where a law actually expired and 2012. And is actually. There there is nothing in the legislation that was re written for the 2012 law. John you wanna chime in here and talk about it the case sure I mean one of those one of the problems I -- With the -- criticizing the tax code size is it you know obviously. Given a perfect world we don't want a bigger tax code I mean that's and I think that's a top college yet -- -- agree with that. The problem though as usual is in the details with an argument like that indicates right now where it's a very complicated taxation issue involving a trust -- will. The IRS used to have a very clear set rule for how this would go. On that rules son said he didn't at the end of 2012 and has not been replaced. So the IRS's arguing one thing whereas we're arguing in other and there is literally no guidance as far as what the right answer is. You know I think they know not to necessarily be the voices of for a bigger tax code to what we need is more pages and you know we need about six or pages not not to have filter not to have a lawyer be the guy advocating for more lies here by. You know one thing you do get is is a certain amount of of things being saddled you know it you know one of the traditional arguments against the flat tax for example. Is today it's very unknown you know if you say to me -- pay 70% of your income. Well how do you define income. Well probably. I would say conservatively 13 of the tax code right now he deals with defining. So you know you have to be careful when you when you you know really get you know going on the size of the tax -- today. You know clearly would everybody wants is an elegant system a little paper. But there are these corner cases where you know if I'm sitting in an office trying to figure out how to advise a client. Whether to go one way or the other -- the tax -- is just silent on it which it is now thanks this provision. He makes it a lot harder for citizens to carry on the business of. I have to say now. I'm for a flat tax have been that way for twenty years and I just have to say. If you're saying that a third of the 20000 page tax clues about what is income. That is the sad statement today that's 7000 pages. That's true and that's. We are better than it. And or you can be topic you can think its -- and I'll bet -- needed because beer party -- all the way and I. I'd I'd like yeah I'd like to say I mean let's look at the the core problem here to certain -- trying income. Maybe we shouldn't be taxing income. Maybe that's a problem. Our income is tricky. The Chinese it is like defining beauty. I am. Standing it really doses that been settled and you know you you guys now. Thousands of court case and ongoing. Dealing with -- these issues. That the ERS. And attacks or returned figures to figured out they can't figure out. It's a bit since we have to admit defeat here and say taxing income is very problematic. Aside from all the destruction and a -- he production and income. The term economic argument against it it is. -- compliance burden. And it it's administratively. Very difficult to implement. So I think the flat tax a big reason for the going toward our taxes that. You will have winnowed down all these different definitions can come down through something very basic and administratively. Workable and that is I'm basically wage it's -- strictly wages rather than investment income. On that happy note we're gonna take a break but I want everyone to stay with this and to our caller sure they're pleased Joseph chuck stay with this we're gonna get to you right after the break I'm Angela under the anyway. Well we are talking taxes. With Thomas -- just who's the owner of accounting services on limited. With John Butler who was a tax attorney with the law office of John Butler. And by phone. CPA with accounting services. And also will McBride from the Tax Foundation an independent tax policy researcher again I'm honored to have everybody here. We have some callers let's begin with chuck -- Yet project and different things in corporate news sources that it's full. The attacks proposal on the ridge where enacted without. Any opposition it's still can't quote the balance in the budgetary notes. I just wondered cease these -- that are true. And if they are true lies that this for Republicans and Democrats go back and forth. Trying to defend that there's increased taxes other Republicans saying it will -- that would not bring in these things -- -- public. -- -- T shirt so I mean it's basically politics don't try to. Think of politics you know rational process well I mean. There's all Argentine games being played that basically that was the only argument that. That's an out you know the millionaire tax proposals and letters and became. You know the Washington text bigger and yours. -- well -- You know we have looked at the numbers and -- they would not balance the budget you cannot you cannot. Even -- Q apart a 100% actually do millionaires. I'm that would not closed the deficit. The captions we can't read -- So it just did not not millionaires. No that is not -- fiscally responsible thing to do of course. And it's certainly not economically responsible thing to do you destroyed operators and don't intend. But it was not a lightning and stated that the million here. Or any other I. You know which taxpayer. And they typically are businesses actually they are sole proprietors. Or -- corporations partnerships. Or at least part of their income. Is profit from the businesses. So it's not that simple you know we're familiar tax and anti monopoly manners something. And and and it will -- -- the economy is getting -- since. Most business. Most of the profit or text could be individual tax code now. -- and basically chased -- the corporate tax code. And and you would be relatively hospitable individual tax code if you can believe that. And you know those actions that the territory just went up last year. So a bit considered is getting it from both sides and it's really no one of -- you know chronic unemployment problem. Will of the forgive me for them. I guess it's it's where the same -- were where we -- a lot of our clients some times and and then you get frustration from from people that work for companies. They hear that corporations don't pay taxes. Bright. Yet it is the problem with hacking -- businesses directly. I'm I think most voters think you know if it apple page. Oh million dollars of federal taxes which they do every year. They're actually the biggest single taxpayer most likely. And so -- or an apple pays that I'm not paying it. Even though and its owner. Will move -- blacktop. For governor to -- what kind of taxes are they pain. Just to clarify just so people understand. There -- a corporate income tax. Rate is great in about 23. Or 400 billion a year depending on. Profits where they're they're quite volatile. I'm at about 10% of federal tax revenues. And they don't they also pay a lot and enough payroll taxes. That's right they're -- a lot of stuff an addiction big property taxes. Richard you know vary by jurisdiction by. Businesses are seeing a lot lower taxes are actually those other taxes are. Beat this article -- and actually exceed but the -- corporate income taxes so. We've actually done and now -- on of the total of those taxes. And has found that. I would start down that today the bear tax bill including property payroll everything else. And corporate exceeds what they have left over. After tax profits. They're paying more -- governments and they are true dear shareholders in Beijing. That is a major statement that we're gonna take a quick break -- we have to go to our newsroom please stay with us. Dave -- with the news. Again we're talking about taxes on so pleased that John Butler. Who was a tax attorney is teared -- Thomas went font this owner of accounting services on limited. As well as CPA with accounting services train rumbling and will McBride from the Tax Foundation. We have a collar -- you had a question. Yes tell -- hello. I was it's scary it's I mean they just. And and yeah I've got us on them and on debt and started colleges their expected college an -- He only makes seventy the end underage person not upper again it. Out of the money. Not sure -- -- GA tour or is college rather than humans you'd want loans and it'd. Pushed me into that tax brackets were not could not. Did you mean. Armed tuition experience from -- on which I thought that was kinda strange. He -- this is right. -- sure sure yeah. Unfortunately we and you pull money out of it it set up as a traditional. Law a higher rate are any type of content in vehicles for a one K. Other and these specific or arm and -- diapers and education. Culture in tears spilled. Can't that. Typically Irish. Have to report that. And it income in the year or did you get it repaired neck between 99 all our. Com on forcing most of these brokerages do not withhold and Compaq is now being reported here 840. And don't -- is taken out he needed to deal with it now because of your income that you stated unfortunately it probably -- chew up. Hide out to where there's certain credit which the education that line on the earned income -- another -- packer credit that any -- credit for small children. All these credit get squeezed and lead injuring come into. Again and that that it -- the government we're making sure you pay your fair share and don't give -- to their advantage that they expect. I'm so important sound like you been subject to the additional 10% penalty which is. -- the common it -- taxpayers would withdraw or are part. However it sound like just. A queue up to that bracket where it is we betting on credit and -- but that. It's been a marked effect I think if you look Utah attorney may have gotten on the probably Norton here which you are entitled to otherwise. It is too -- to try to put some money and and I take sound and movement and -- pray. For her. On you know on the well well it is your child in college now on they're probably -- way. I know financial advisor and maybe will can tell you can elaborate their their vehicle that let me be capable of and more up your Alley right now but. -- I just know that you pulled it from a traditional 41 K you know the government gonna have their -- so and that transaction. -- I have to say sir that our show in the next hour or in two hours from now is going to be those who are really overburdened with them. Student loans so that your pain is is phenomenal because these kids have got you know 506070000. Dollars worth -- loans. And are almost getting nowhere with -- -- I admire what you're trying to do to help. That's not making feeling better -- the taxes but it just on my mind while we're talking about that I understand that for this is the last year. That time that. 4000 dollar deduction for tuition and required fees. For higher education so this is the last -- that you couldn't adopt. In my saying that correctly. I'm I'm not I'm not clear when. Newt and I know there there basic. I'll report mentioned -- the limitations. On itemized deductions all sorts of options all that made it your whole. Lot -- such other and not strictly. Or adoption expenses -- start for for tuition expenses so that news. Will this -- -- this is for. -- -- -- -- For 2014. So wouldn't affect this tax year. Parents will no longer be able to take a maximum 4000 dollar deduction for tuition and required fees to attend institution of higher education. I -- that's significant. Yeah you know reduction. I don't know that he did recent changes they'd be unique in its credit and -- call up and interrupts and com. Up specifically on the the American opportunity tax credit which is note note beer gear apparently being that has. Children and I'll enter Herbert familiar back and that has been expanded through 27 and sort I don't know I know -- like I'm more credit. Which are typically more you know about four year and be on her for college graduate. Ultra banditry in and get a little bit more than it is can go in the American opportunity credit. Now that 108. You know that the American -- tax credit. A child tax credit and also been can't -- and earned income tax credit all were. -- between seventeen actually. Okay. It just gets more and more confusing to -- oh the earned income tax credits to talk to me about the. Outscored 888. Responsible. Tax credit which is important -- after it. Which all that and minimize your you're. Like building. And and there are certain tax credits which are responsible which means you're getting a refund their dollar for dollar and a -- -- earned income tax credit. It -- it again on double tax credits for low to moderate income working individuals and couples particularly those children are between. Under the age I think it's seventy. That use a call and so they're basically depending on -- on where you report. Your income their start and I'm independent you have children there are certain windows -- where your income fault and that opened that window. You get angry on it in the calculation of course. There is a refundable tax credit that you did back. Above and beyond that refund you're all gonna get. And or attribute to your act like don't be hopefully the point to where you can get some money back com will probably be to get -- they know. These big politics as to why it came about and and why congress has been kept in place at the country where you be the nut ball out how awkward. Well I'm again I'm so sorry but we're gonna have taken the break but when we come -- -- answer to that animals to go to Tommy. And I would like to know from everybody online here and in this room. What are we missing that we should be using as a deduction right -- -- -- this -- has -- quickly again one thing John Butler and Thomas pontiff's -- probably in Wilmington bride with the Tax Foundation not over yet. But I'm just so pleased that you all could join us and I've learned a lot already -- Tommy from applauses -- coming. -- our our -- -- mr. radio show and it taxes so our kind of big -- to me. -- (%expletive) I want to chop down a little bit. A little bit in line. And this coming year olds chat he gets used cluster and when I got to start movement. For seats around and figure out Axl. And I hit all the comment that you heard. About complaints. Are about how -- -- manipulate you they -- certain way to make it look quite simply get something straight herbal. That is such -- her law. In an income based access. A tax system is also being -- In worse so easily. And what manipulated -- By the tax code or how we're gonna spend money. As a business owner. And that I'm trying to make my mom who look like anything other than call. It's so frustrating. We deal with such as it. -- manipulator. You know upcoming. I'm sorry you missed the very beginning because one of our wonderful panelists here is will. McBride from the Tax Foundation night and on top of the words in your mouth will but I think you were sort of echoing -- That's right if there is a fundamental problem we have for a hundred years and taxing income in the US. And I think it is really feel the beer and the reason we have realized it and you know the majority realized it's a failure. It is. And it is it's so complicated people you know he can get their -- around. We've made ever more complicated every year. So it is. Now it is sort of saying that politicians like to complain about never do anything about. So I think we really need ultimately scrapped the idea of taxing income. It's not working its turn in the federal government and big redistribution machine. And that's really -- economic growth in this country where worst slowly sliding into a European style. Dismally. And the tax code in the big part of the problem. It is I can agree with what will I agree. And we. Couldn't just sit through to get to a Apple's offer straight -- -- it to be honest I'm. I -- believe that an -- attacks on him that I became -- district director. And I haven't talked to people it frustrates you know we have that they have no clue how to act how the tax system works and what capacity. And that lack of knowledge. It would create. These people -- not he just accept -- and don't understand. It when you look to correct yes I'll call my stats that you off. -- that the top. That is being reported conducted the largest economy. In the world -- I haven't come access. Valid before it into action. If I could jump in real quick you know one thing I -- -- and and you know my sort of job as an attorney is litigating in arguing back tax -- so I'm not so much on. You know what Ohio this year but you know I've been filed taxes and eight years helped me that's more what -- idea of and you know I think we got to be really careful here in talking -- in attacking. In attacking the you know the tax system. These -- got to ask what is he going to replace or what's going to replace it I've got a two week trial starting tomorrow morning. On a huge sales tax dispute. Our sales tax code is 700 pages going to off income tax -- to fix the problem the problem is -- 300 million people and we need to administer a government. And it's not an easy thing to do. This conversation will continue stay with this well have learned a lot and I've learned that we needed about five more hours to discuss this I wanna thank will McBride from the Tax Foundation. John Butler our local attorney with John Butler on law office. And certainly Thomas -- to us and with -- serves is on limited it just says to me we need to continue the discussion thank you gentlemen so very much now let's go to the newsroom. -- -- --

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