10. The Roth Rollover. Allowing people to turn their tax-deferred retirement savings into fully tax-free investments starting on Jan. 1 will be a long-term fiscal catastrophe. In the short run, the up-front taxes people must pay to roll into a Roth could depress the stock market and damage the shaky recovery. What’s not to like?
Additionally — do we really trust people to voluntarily pay taxes? Really? Over a two year period? Even if they have a wedding to plan for or a medical emergency comes up? I kinda sorta built up an entire law practice around helping people cope with tax bills they can't afford to pay.
9. The Bo-Tax and the Tanning Bed Tariff. This is what happens when you need money and won't talk seriously about revenues. And as an added bonus, it really won't raise much money. But it gives people who don't use botox or tanning beds a feeling of a heightened sense of morality — thus, it is a political winner.
8. Obama’s Middle-Class. This is a rerun from last year, but it is too good to leave out. The President thinks we will somehow reduce the deficit and fix the tax code without raising taxes by a dime for those poor souls making a quarter million dollars-a-year or less. Unfortunately, that's 95 percent of us. Can’t wait to see how he does it.
7. Taxing the Rich. Why not let a handful of wealthy taxpayers finance all your new ideas? So let’s drive the top rate north of 45 percent, even though no one will really pay it. On the other hand, except for Barbra Streisand and those other Hollywood types, they are mostly Republicans anyway.
As I said before, no matter how much you soak the rich or give them evil tax cuts, the effective tax rate is between 20-21%. Moral posturing agains the evil rich, so again, a political winner.
6. The Estate Tax. Now you see it. Now you don’t. So what if nobody has any idea how to do estate planning anymore? On the other hand, Congress has had only eight years to fix this mess.
Is 2011 still the best year to die to avoid paying the death tax? Or will 2010? The fact that such questions exist makes me question why this laptop that I type upon hasn't gagged on questions I demanded it posed.
5. Tax-free health insurance. If Congress is serious about controlling medical costs, taxing expensive employer-sponsored insurance is a good way to start. But the unions have made this a litmus test issue, and neither Obama nor congressional Democrats want to take them on.
In all honesty, health insurance has been the dumbest thing around since WWII when big business got in bed with big government to propose this idea of employer-funded health care. Much to the detriment for those of us who don't work for big businesses. And much to the advantage of big business. To quote my great-grandfather Leonardo Parente "If you want to get rid of the crap, don't change the litter box, get rid of the cat."
4. California. It claims to be the fifth largest economy in the world but can’t pass a serious budget, and can’t govern itself. It is the poster child for dysfunctional state governments and fiscal crises everywhere.
3. The homebuyer credit. Congress started the year by giving away $8,000 in subsidies to "first-time" homebuyers, as many as 74,000 of whom, it turned out, never quite got around to buying a house. Then, it extended the boondoggle to current owners who buy up.
Bottom line: People who were already going to buy will get billions of dollars in government subsides. But you gotta make those real estate agents happy. Not only that, there is no way for the IRS to verify someone is entitled to the credit without an audit. Wow! Can you say massive fraud?
2. The Obama Tax Reform Panel. Not only will it fail to propose an improved tax code, it missed its own deadline. Nothing beats being both disappointing and late. “After the holidays,” the Obama people say. Does anybody care?
The entire problem with the tax code is that it is all used to promote or dissuade a certain behavior — collecting revenue is becoming more of an afterthought. No one has come around and said "hey, you know what? Why the hell are we penalizing people for things they want to do? Maybe we should stop micromanaging every aspect of everyone's life and let people find their own path. " For every tax credit there is an implicit tax penalty…this a reality that this reform board will not address.
1. And the winner is, of course, the HAPPY Act. We've got a $1.5 trillion deficit and a Republican congressman named Thaddeus McCotter wants a $3,500 deduction for the cost of caring for our pets. Why? Because we love them.
I disagree with this this selection as the worst idea. Sure it is funny. But it isn't really all the harmful relative to the other disasters…and pets are a lot cuter than the horrible tax code.
