Nevada GOP Gubernatorial Candidate: Scrap the Caps
GOP gubernatorial candidate Mike Montandon is making his views on Nevada property tax reform known– and so far they all seem quite sensible.
As reported by the North Lake Tahoe Bonanza, Montandon thinks:
(1) it’s absurd that Nevada remains the only state that values real property for tax purposes based on depreciated value (which depends primarily on how old your house is) rather than market value;
(2) the “tax caps” enacted a few years ago, which restrict the amount by which a property’s tax liability can increase each year to 3 percent for residential properties, were (and remain) a bad idea;
(3) property needs to be valued in a systematic and professional manner. (Right now, as is becoming increasingly clear, different localities are using different standards of valuation.)
Caveats: I’m paraphrasing, and things #1 and things #3 shouldn’t be that controversial anyway.
But saying thing #1 amounts to repudiating the big property tax cuts Nevada enacted in 1981 to head off a Proposition 13-style tax revolt, and that takes some guts– even if it’s obviously correct.
It’s to be expected, maybe, that a guy coming from a local government background (he was mayor of North Las Vegas) will have a critical stance toward state-imposed constraints on local taxing authority, but still. Bottom line is that Montandon is saying precisely the things that ought to be said about Nevada’s past, and hopeful future, property tax changes.
Obama’s Newest Tax Credit: First Houses and Cars, Now Jobs
To the surprise of nobody, President Obama has proposed new tax subsidies for businesses that hire additional workers by the end of the year. Structured as a payroll tax holiday, the plan would give companies a $5,000 credit against their share of Social Security payroll taxes for each net new hire, plus a “bonus” 6.2 percent credit for real increases in overall wages. Because the subsidy would be capped at $500,000, small business would be the big winner.
Think of this as a jobs version of cash for clunkers or the homebuyers’ credit. The explicit goal is to get employers to accelerate hiring into this year. An optimist would see this as a plan to jumpstart hiring and accelerate the virtuous demand cycle that usually kicks a sluggish economy into gear (the more people who go to work, the more likely they’ll buy stuff, and the more people companies will hire to make the stuff these new consumers want to buy). On the other hand, a cynic might say it is an effort to bail out terrified Democrats by paying companies to hire new workers before the November elections. It might even help Democrats take credit for hiring that was going to happen anyway. A jobs bill, true, but not quite what most of us have in mind.
This proposal would cost between $30 billion and $35 billion for this year alone. The White House won’t say publicly how many new jobs it expects to create, but administration officials expect a minimum of 600,000.
The problem with subsidies such as this is that they are exceedingly sloppy. A lot of money goes to those firms that would have hired anyway. This, in fact, was the experience with the homebuyers’ credit. It set off a flurry of new home sales last fall as buyers rushed to beat the deadline for getting the subsidy (Congress eventually extended it, but that’s another story). Once the tax-generated boomlet ended, the market fell off the table in December.
The timing of today’s credit is very different than last winter when Obama proposed a different jobs tax incentive while the U.S. was in the depths of the recession. I was very skeptical then, in part because it was hard to imagine many firms hiring even with a tax holiday. Now, with the economy recovering (GDP grew by 5.7 percent in the fourth quarter of 2009), it is much more likely companies will take advantage of the credit. That’s the good news. It’s also the bad news, since more will also take the credit for doing what they would have done anyway.
To its, um, credit, the White House seems to have carefully designed this version. It set reasonable anti-abuse rules (one can think of all sorts of ways unscrupulous firms could game this subsidy). On the other hand, it is trying to keep the credit simple, so it doesn’t discourage companies from participating.
Also, the last time Congres tried this in 1977-78, it turned out that relatively few businesses knew about the credit, but it should be much easier for Obama to get the word out. That too will create more both more gross hires and more free money.
CBO recently gave this design a good grade for boosting growth and employment. It concluded that a plan like this would increase GDP by somewhere between 40 cents and $1.30 for every dollar of budgetary cost. That’s not as good as increasing aid to the unemployed, but is comparable to boosting infrastructure spending. Creating new subsidies to jolt the labor market may not be great tax policy. But, if you are a Democratic office holder fixated on the top-line unemployment number, it might be the best option out there for some much desired personal security.
Ask TaxMama Issue 538 - Stop Taxing My Patience
January 29, 2010 by Tax Blog
Filed under Questions & Answers
Dear Family,
Much of my time this month has been spent getting ready to do the radio tour for the Office Depot – H&R Block Stop Taxing My Patience Promotion; and getting the contest set up, so you can ask your most pressing tax question – and 5 random winners will get a box of H&R Block at Home Premium software. We’ve been doing that, and getting the new TaxMama.com site ready for prime time.
Whew! We made it in time. Your response has been glorious. Feedback we are getting on the new site is enthusiastic.
And my enthusiasm is boundless. I have been wanting to build this for you for 10 years. Each time I’d get started with a web designer, they’d agree to do it, then they’d go and build something completely contrary to what I requested – and totally useless to me – or to you. Finally, after over 10 years, I am able to give you what I’ve always dreamed of – a tax information site you can actually USE!
The new site is much more useful for you. Once you log in, along the left side, you will find categories and topics, with answers to questions gathered all in one place. You can use the forums to ask questions and get answers from TaxMama and the Tax Pros (sounds like a good name for a rock band?). Resources are being added, including e-books, articles, links to tools, calculators and forms. And lots, lots more. This is going to be the only place you need to go, as a starting point to get all the tax information you need.
TaxMama was on Jim Blasingame’s Small Business Radio show this morning (which is why I am running a bit late today). Jim is now on featured on Forbes.com – you can see who’s been on his show each day – and link directly to the clips from the show. Today, we talked about the new licensing program for tax professionals, deductions for business, and extra standard deductions you can take, even if yu’re not itmizing. Listen now
http://www.forbes.com/entrepreneurs
As you know, Wednesday was spent virtually traveling to visit radio shows around the country on behalf of Office Depot, H&R Block – and TaxMama. I love doing radio. It’s so much fun. You can read all about it here.
Please keep me company on Sunday, as I join Jeff Levy, the Digital Doctor on KABC at 2:30 pm. You are invited to call in with your questions. You’ll love Jeff. He knows everything about computers and laptops and the Internet and…You can listen to the show live, even if you are not in California.
http://kabc.com/showdj.asp?DJID=52884
Do you want to win some money for your business? Or help your favorite business win money? Read about Intuit’s Love A Local Business competition. And please, feel free to vote for us, too.
http://wefoundasolution.com/do-you-love-a-business/
Please add another helpful tip to WeFoundASolution.com this week.
http://wefoundasolution.com/
This week TaxMama’s TaxWatch tells you how to get your tax return done for free. And meet a delightful and passionate volunteer tax preparer.
http://www.marketwatch.com/taxes
In today’s Money Funny you learn how to save money on paper towels – and get some really terrific ideas.
http://taxmama.com/category/asktaxmama/money-funnies/
This week’s IRS News we learn how to take your deductions to Haiti recoveries on your 2009 tax return, we also learn if you have to file a tax return.
http://taxmama.com/category/asktaxmama/irs-news/
In TaxQuips this week we learn about earthquake and disaster insurance coverage decisions, whether you can use two $10,000 penalty exclusions when you pull money from an IRA to buy a home, how to stop IRS from sending employment tax forms after you no longer have an employee, and how to fix the problem of tips not being reported to the boss.
http://taxmama.com/content/
As always, we love your feedback, opinions and ideas.
You are what makes all this fun – and interesting!
Please use the Comments link online here, or use the forums.
http://taxmama.com/forum/
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Shop at www.taxnerd.net or http://www.zazzle.com/taxmama*
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Eva Rosenberg, EA
Your TaxMama® is watching…out for you.
- Ask TaxMama :: Where taxes are fun and answers are free
- www.TaxQuips.com :: The number ONE free tax podcast online
- Money Funnies at TaxMama.com :: How to save money on paper towels
- IRS News :: Do you have to file a tax return; Deducting Haiti donations in 2009
- TaxMama's TaxWatch column :: How to file your tax return for free
- WeFoundASolution.com :: How to win money for your favorite business
- The Jeff Levy Show - the Digital Doctor :: Join TaxMama on KABC with Jeff this Sunday at 2:30 pm
Do I have to File a Tax Return?
January 29, 2010 by Tax Blog
Filed under Questions & Answers
[TaxMama note: ALWAYS file tax return, whether you need to or not. Once you file, you start the clock ticking on the 3 year statute of limitations for audit. If you never file, IRS or the state can come back and ask for a tax return for that year, forever.]
You must file a tax return if your income is above a certain level. The amount varies depending on filing status, age and the type of income you receive.
Check the Individuals section of IRS.gov or consult the instructions for Form 1040, 1040A, or 1040EZ for specific details that may affect your need to file a tax return with the IRS this year.
Even if you don’t have to file, here are eight reasons why you may want to file:
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- Federal Income Tax Withheld If you are not required to file, you should file to get money back if Federal Income Tax was withheld from your pay, you made estimated tax payments, or had a prior year overpayment applied to this year’s tax.
- Making Work Pay Credit You may be able to take this credit if you have earned income from work. The maximum credit for a married couple filing a joint return is $800 and $400 for other taxpayers.
- Government Retiree Credit You may be eligible for this credit if you received a government pension or annuity payment in 2009. However, the amount of this credit reduces any making work pay credit you receive.
- Earned Income Tax Credit You may qualify for EITC if you worked, but did not earn a lot of money. EITC is a refundable tax credit; which means you could qualify for a tax refund.
- Additional Child Tax Credit This credit may be available to you if you have at least one qualifying child and you did not get the full amount of the Child Tax Credit.
- Refundable American Opportunity Credit This education tax credit is available for 2009 and 2010. The maximum credit per student is $2,500 and the first four years of postsecondary education qualify.
- First-Time Homebuyer Credit The credit is a maximum of $8,000 or $4,000 if your filing status is married filing separately. The credit applies to homes bought anytime in 2009 and on or before April 30, 2010. However, you have until on or before June 30, 2010, if you entered into a written binding contract before May 1, 2010. If you bought a home after November 6, 2009, you may be able to qualify and claim the credit even if you already owned a home. In this case, the maximum credit for long-time residents is $6,500, or $3,250 if your filing status is married filing separately.
- Health Coverage Tax Credit Certain individuals, who are receiving Trade Adjustment Assistance, Reemployment Trade Adjustment Assistance, or pension benefit payments from the Pension Benefit Guaranty Corporation, may be eligible for a Health Coverage Tax Credit worth 80 percent of monthly health insurance premiums when you file your 2009 tax return.
For more information about filing requirements and your eligibility to receive tax credits, visit IRS.gov.
Links:
- Forms and Publications
- Earned Income Tax Credit
- First-Time Homebuyer Credit Information Center
- Health Coverage Tax Credit
- 1040 Central
- Ask TaxMama :: Where taxes are fun and answers are free
- www.TaxQuips.com :: The number ONE free tax podcast online
Saving You Money
January 29, 2010 by Tax Blog
Filed under Questions & Answers
Better than paper towels and a lot less expensive
Coffee filters …. Who knew! And you can buy 1,000 at the local discount store for almost nothing even the large ones.
1. Cover bowls or dishes when cooking in the microwave. Coffee filters make excellent covers.
2. Clean windows, mirrors, and chrome… Coffee filters are lint-free so they’ll leave windows sparkling.
3. Protect China by separating your good dishes with a coffee filter between each dish.
4. Filter broken cork from wine. If you break the cork when opening a wine bottle, filter the wine through a coffee filter.
5. Protect a cast-iron skillet. Place a coffee filter in the skillet to absorb moisture and prevent rust.
6. Apply shoe polish. Ball up a lint-free coffee filter.
7. Recycle frying oil. After frying, strain oil through a sieve lined with a coffee filter.
8. Weigh chopped foods. Place chopped ingredients in a coffee filter on a kitchen scale.
9. Hold tacos. Coffee filters make convenient wrappers for messy foods.
10. Stop the soil from leaking out of a plant pot. Line a plant pot with a coffee filter to prevent the soil from going through the drainage holes.
11. Prevent a Popsicle from dripping. Poke one or two holes as needed in a coffee filter.
12. Do you think we used expensive strips to wax eyebrows? Use strips of coffee filters..
13. Put a few in a plate and put your fried bacon, French fries, chicken fingers, etc on them. It soaks out all the grease.
14. Keep in the bathroom. They make great “razor nick fixers.”
15. As a sewing backing. Use a filter as an easy-to-tear backing for embroidering or appliqueing soft fabrics.
16. Put baking soda into a coffee filter and insert into shoes or a closet to absorb or prevent odors.
17. Use them to strain soup stock and to tie fresh herbs in to put in soups and stews.
18. Use a coffee filter to prevent spilling when you add fluids to your car.
19. Use them as a spoon rest while cooking and clean up small counter spills.
20. Can use to hold dry ingredients when baking or when cutting a piece of fruit or veggies.. Saves on having extra bowls to wash.
21. Use them to wrap Christmas ornaments for storage.
22. Use them to remove fingernail polish when out of cotton balls.
23. Use them to sprout seeds.. Simply dampen the coffee filter, place seeds inside, fold it and place it into a plastic baggie until they sprout.
24. Use coffee filters as blotting paper for pressed flowers. Place the flowers between two coffee filters and put the coffee filters in phone book..
25. Use as a disposable “snack bowl” for popcorn, chips, etc.
Courtesy of Blakely Sandford, EA in San Diego
Please remember to send us your humor.
Clean jokes preferred.
- Ask TaxMama :: Where taxes are fun and answers are free
- www.TaxQuips.com :: The number ONE free tax podcast online
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Desperately Seeking Revenue
In August 2009, the Congressional Budget Office (CBO, 2009) projected that the federal budget deficit would total $7.1 trillion over the 2010-2019 decade-under current law. That outcome would require the 2001 and 2003 tax cuts to sunset as scheduled in 2011 and Congress to stop “patching” the alternative minimum tax (AMT) to minimize its bite. If neither of those things happens, CBO says the cumulative deficit over the decade would jump to $11.1 trillion, more than doubling the national debt. CBO characterizes that situation as being unsustainable and it is hard to find anyone who would disagree.
An Analysis of Potential Tax Incentives to Increase Charitable Giving in Puerto Rico : In Brief
This policy brief summarizes the findings of a larger report on potential tax incentives to increase charitable giving in Puerto Rico. Improved incentives for private charitable giving would strengthen nonprofit organizations in Puerto Rico. Taxpayers may choose between a 100 percent deduction for contributions over 3 percent of adjusted gross income (AGI) or a 33 percent deduction for contributions with no floor. Deductions may not exceed 15 percent of AGI. Removing the 15 percent ceiling would be a relatively cost effective way of encouraging more giving.
An Analysis of Potential Tax Incentives to Increase Charitable Giving in Puerto Rico : Final Report
Improved incentives for private charitable giving would strengthen nonprofit organizations in Puerto Rico. Puerto Rico’s income tax allows itemizers to deduct charitable contributions, but with limits. Taxpayers may choose between a 100 percent deduction for contributions over 3 percent of adjusted gross income (AGI) or a 33 percent deduction for contributions with no floor. Deductions may not exceed 15 percent of AGI. Removing the 15 percent ceiling would be a relatively cost effective way of encouraging more giving. Reducing the 3 percent floor, though generating less additional giving per dollar of revenue loss, would encourage broader participation.
Obama After a Year: Reality Bites
The delivery was quintessential Barack Obama, which is to say brilliant, but the words could have been Bill Clinton’s.
The lofty principles remain, but the agenda has become pedestrian—constrained by a $1.4 trillion budget deficit and partisan trench warfare where progress is measured in inches and not miles.
A state of the union address that was supposed to herald passage of a massive health reform bill as the centerpiece of the president’s first year in office instead looked back at far more modest achievements: “We cut taxes for first-time homebuyers…We cut taxes for 8 million Americans paying for college.” And, he added, “We stabilized the financial system.”
Economic historians may conclude that saving the banks in the midst of both a massive financial panic and a political transition was the signature event of the past year. But Obama the politician knows that in the meantime, he’s getting no shout-outs for his trouble. Not from the banks he saved—whose arrogance and sense of entitlement in this episode reek. And not from voters. As Obama said last night about the bank bailout: “I hated it.You hated it. It was about as popular as a root canal.”
Looking forward, Obama could only display his scaled-back ambitions: Trade agreements with Panama and Colombia, a national competition to improve schools, and tackling childhood obesity are all important, but they are a far piece from the president’s clarion cry of “change you can believe in.”
Similarly, the president’s vision for health reform is far narrower than a year ago. He said little about controlling long-term health costs or delivering care more efficiently. Instead, he focused on modest insurance reform, and cried out for “better ideas” from Republicans.
And what of tax policy? Not a word about reform, or the need to restructure a crumbling revenue code. Instead, he offered only what appear to be a clutch of highly targeted business tax breaks: a tax credit for small businesses who “hire new workers or raise wages,” eliminating capital gains taxes for small firms, and new tax incentive for all companies to invest in capital equipment.
Much of this reflects the Democrats’ focus—one might even say obsession—with bringing down the unemployment rate before the November elections. I’ve been skeptical about these tax subsidies, but, who knows, they may help a bit in the short run.
What they do not do is add up to what Obama described when he spoke to Congress last February. Then, he portrayed his initiatives as “a vision for America…a blueprint for our future.” I didn’t hear any of that last evening.
Dying In California Without A Will Or Heirs
A recent article published in the Los Angeles Times addresses “Selling What the Dead Leave Behind”.
If you die in Los Angeles County without a will or heirs, your belongings will probably end up in a warehouse in the City of Industry. There, the walls are stacked with hundreds of wooden crates. County employees and private auctioneers divide the contents into lots and sell them at daylong auctions held on the second Saturday of the month, typically 10 times a year. Proceeds go back into the estate and often are used to cover burial expenses and other costs. Whatever is left goes to the state of California.
To avoid this from happening to you and your property, prepare a Will. Better yet, consult with an estate planning attorney about your options. Call Mitchell A. Port at (310) 559-5259.