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Friday, July 26, 2013

Online Taxes News Links for 7-26-13

Not much is new in the world of taxes. Most of the stories I found were about tax increases and reform. I found one environmental story, and I definitely think you should check it out!

Tax increases divide House Democrats

Democrats' bright line on taxes isn't so bright for some. A sizable bloc of the 16 Democrats on the House Ways and Means Committee is contemplating agreeing to Republican demands that any tax overhaul not include tax increases, bucking their party on ...

Census: State, local government tax collection hits all-time high: Local and state governments are collecting more tax money from individuals and businesses than ever. The U.S. Census Bureau released Wednesday its State and Local Government Finance Summary, examining fiscal 2011 numbers. State and local ...

Dolce & Gabbana Say Tax Woes May Force Them To Close: People walk pass a Dolce & Gabbana shop in downtown Milan on July 19, 2013. Designers Dolce & Gabbana have closed their nine Milan boutiques for three days from Friday out of 'indignation' in a row over their convictions for tax evasion. (Image credit: ...

Thought It's Best Known For NASCAR, North Carolina Takes A Tax Reform ...: What, exactly, does tax reform look like in North Carolina? For starters, it's a 25 percent reduction in the top income tax rate. The new legislation slashes the personal income tax from 7.75 percent to 5.75 percent by 2015. The corporate tax rate will ...

City Leaders Debate Arts Tax Changes: Portland City Council weighed options Wednesday for altering the city's arts tax. Voters last November approved a $35 per household tax supporting arts education and arts organizations. The tax is subject to several legal challenges, but the city's ...

Still plenty of time to seek homestead exemption before property-tax changes: Franklin County residents now have until the end of the year to apply for a homestead tax exemption, before qualifications change under the new state-budget law, the auditor's office said this week. The deadline was extended from June 3 to Dec. 31 to ...

Sales Tax Changes and Taxability Issues Prompt New Industry Tax Gateway on ...: Internet sales tax is a hot topic these days, but unfortunately, sales tax changes and product taxability challenges are not new to most businesses, especially those in industries with particularly complex or rapidly changing sales tax regulations ...

Delinquent tax law interpretation puts Shawnee Co. buyers at risk: Newton resident Heather Wolf purchased a 10-year-old Sea-Doo jet ski from a man in Shawnee County in March 2012. She found out in March of this year that she owes back taxes - in the amount of $635.05 - the previous owner hadn't paid to the county.

Illinois' Hydraulic Fracturing Tax Act: Prior to the Hydraulic Fracturing Tax Act, Illinois was one of the few drilling states not to impose any severance or gross production taxes on the extraction of its minerals. For oil and gas removed on or after July 1, 2013, Illinois imposes a tax ...

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Thursday, July 25, 2013

Online Taxes News Links for 7-25-13

Lots of news in taxes today, if you want your news posted here or you have some tax advice, please send me a message, a comment, or on our twitter account.

Japan Seen Needing $50 Billion to Cushion Sales-Tax Rise: Japanese Prime Minister Shinzo Abe, now sitting on the biggest parliamentary majority in six years, faces the threat of political dissent within months as a planned sales-tax rise threatens to arrest an economic rebound. The world's third-largest ...

Louisiana To Offer 'Fresh Start' Tax Amnesty Program: That's how many of my tax compliance clients feel. They never start out to get behind on their taxes. It usually starts with a little delay ? maybe an illness or a personal issue. And then the delay gets bigger. And bigger. And at some point, the ...

Fraternities Lobby for Tax Break Without Hazing Penalties: Besides pushing the tax bill, FratPAC, as the Fraternity and Sorority Political Action Committee calls itself on its Twitter page, has helped dissuade U.S. Representative Frederica Wilson from filing federal anti-hazing legislation. Wilson, a Democrat ...

Dell Considered Novel Tax Strategy in Buyout: Joshua Lott/ReutersDell rejected a structure that would have deemed the company a partnership for United States tax purposes. In the proposed buyout of Dell by its founder, the company considered but rejected as too risky a novel strategy that tweaks ...


IRS pursuing 'stateless income' tax enforcement: official: ... Internal Revenue Service is pursuing tax enforcement cases against companies over the issue of "stateless income," a senior agency official said on Wednesday in a reference to corporate profits that are not taxed by any country. Erik Corwin, an IRS ...

Internal Revenue Service scandal ties to Obama appointee: Internal Revenue Service scandal ties to Obama appointee. Posted: July 23, 2013 - 4:15pm. Advertisement. Does anyone recall when the Internal Revenue Service (IRS) scandal broke? Fingers were pointed at some rebel agents in the Cincinnati office.

US court blocks Internal Revenue Service's bid to help Indian IT: MUMBAI: The US Internal Revenue Service's (IRS) efforts to help Indian tax authorities uncover fincancial information of a US resident, alleged to have evaded tax in India, have hit a road block. A US district court has recently quashed summons issued ...

Courtney Love In the Hole With the IRS, Owes $260K in Back Taxes: The Hole singer reportedly owes the Internal Revenue Service more than $260,000 in unpaid back taxes. According to TMZ, the IRS filed a tax lien against Love on July 11, claiming that America's Sweetheart needs to settle outstanding debts from 2009 and ...


5 from Passaic charged in $2.5M tax refund scam: Perpetrators of such refund scams typically use Social Security numbers and other personal identifying information obtained from unwitting residents of Puerto Rico because they are not required to pay income tax unless they work for U.S.-based ...

IRS, States Call on IBM, LexisNexis, SAS to Fight Tax Fraud: A Miami law-office employee admitted in February he had accessed his firm's LexisNexis account and stolen thousands of Social Security numbers of prison inmates?prime targets for tax-fraud identity theft because they are unlikely to file returns?and ...

Florida's 'First Lady' of tax refund fraud gets 21 years in prison after ...: Those involved in the tax fraud operation used stolen Social Security numbers to file returns, according to the Global Dispatch. The scam meant that ordinary taxpayers had to wait for up to a year to receive their refunds. Rashia Wilson. Sentenced ...

IRS to Biz Owners: Beware of Payroll Tax Scammers: IRS to Biz Owners: Beware of Payroll Tax Scammers The Internal Revenue Service wants owners of small businesses ? and just about any sized business ? to watch out for unscrupulous third-party providers who are entrusted with collecting and timely ...

Sales Tax Changes and Taxability Issues Prompt New Industry Tax Gateway on ...: Internet sales tax is a hot topic these days, but unfortunately, sales tax changes and product taxability challenges are not new to most businesses, especially those in industries with particularly complex or rapidly changing sales tax regulations ...

Still plenty of time to seek homestead exemption before property-tax changes: Franklin County residents now have until the end of the year to apply for a homestead tax exemption, before qualifications change under the new state-budget law, the auditor's office said this week. The deadline was extended from June 3 to Dec. 31 to ...

City Leaders Debate Arts Tax Changes: Portland City Council weighed options Wednesday for altering the city's arts tax. Voters last November approved a $35 per household tax supporting arts education and arts organizations. The tax is subject to several legal challenges, but the city's ...

Pennsylvania Enacts "Delaware Loophole" Closer And Other Significant Tax ...: The new law reduces the tax rate from 1.25% to 0.89% and changes the tax base by including only bank equity capital, not total equity capital as under present law. Further, three-factor apportionment based on a bank's payroll, receipts, and deposits is ...

McCrory signs new tax law: Gov. Pat McCrory, flanked by members of the N.C. General Assembly including Speaker of the House Thom Tillis, right, jokes before he signs the HB 998 for Tax Reform in the ballroom at the Executive Mansion in Raleigh, N.C. on Tuesday, July 23, 2013.

Weigh in on state tax law: Sen. Galen Hadley, the chairman of the Tax Modernization Committee, announced on Tuesday that several public meetings will be held around the state to discuss the possibility. Those meetings include a Sept. 24 date at North Platte Community College ...

CJEU: Danish Exit Taxation Is Contrary To EU Law: In its judgment of 18 July 2013 the Court of Justice of the European Union (CJEU) held that the Danish rules on exit taxation of cross-border transfers of assets within a company are contrary to EU law. New Danish legislation must be expected ...

Debate: How should tax law change?: Baucus says any tax break that survives his initial cut has to help grow the economy, make the tax code fairer, or effectively promote an important policy objective. Although the last of these might be too broad, Baucus' approach is the best, and ...

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Friday, March 15, 2013

Tax changes affect retirement planning

By Constantine von Hoffman / MoneyWatch/ March 15, 2013, 6:49 AM

Source: http://www.cbsnews.com/8301-505144_162-57574374/tax-changes-affect-retirement-planning/

(MoneyWatch) Tax strategies play a huge role when it comes to planning for retirement. Recent changes in the law, as well as the likelihood of taxes going up in the future, mean it may be time to re-examine your tax planning.

For a long time, the basic tenet of planning for taxes in retirement was that you should count on making less money and being in a lower tax bracket. But this may no longer be true. For one thing, the American Tax Payer Relief Act of 2012 has already introduced new, higher taxes for many people.

Under the law, single taxpayers with adjusted gross income over $400,000 and married taxpayers filing jointly with taxable income over $450,000 are now in a 39.6 percent tax bracket. For people in that bracket, capital gains and qualified dividends might be taxed at 20 percent instead of the 15 percent rate in 2012. Single workers with taxable income of more than $250,000 and married couples with an income of more than $300,000 also can no longer itemize their deductions.

Rande Spiegelman, vice president of financial planning at Charles Schwab, said that retirees are often surprised to find themselves paying higher taxes than they expected. The combination of Social Security income, pensions, taxable portfolio income and retirement account distributions add up to keep them in the same or even a higher tax bracket.

"One of the big mistakes is to assume you will be in a lower tax bracket," he said. "Tax rates may be heading higher, so people should plan around the idea that they will be in the same bracket they are now."

Although it is impossible to predict how the current budget impasse in Washington will be resolved, marginal tax rates likely will go up. Just this week, staunch conservative Rep. Paul Ryan, R-Wis., said he would accept a tax increase under certain conditions. There is also the fact that current personal tax rates are at relatively low historical levels.

So the prudent thing is to assume on being in at least the same tax bracket when you retire. This is a no-lose strategy, because if your tax bill does turn out to be lower, all that will happen is you will have more money than you had anticipated.

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Monday, March 11, 2013

8 States Making Tax Changes: Some Painful, Some Pleasant

by Dan Caplinger, Mar 10th 2013 11:00PM

Source: http://www.dailyfinance.com/2013/03/10/state-tax-changes-2013/

As you prepare your tax returns for 2012, be warned: A number of states have made or are considering big changes to their state income taxes. With some of those changes already having taken effect, you need to know whether you're in the line of fire -- or in line for a tax break.

1. California

Last November, California voters approved Proposition 30, a measure that imposes two separate tax increases. A quarter-percentage-point increase in the sales tax will affect everyone who shops within the state, but the measure also included an income-tax increase for single filers earning more than $250,000 and joint filers with $500,000 or more in income. Proposition 30 will add 1 to 3 percentage points to the existing top tax bracket through 2018, sending the maximum tax rate up to 12.3 percent. And the tax hike was retroactive, so filers will have to pay higher income taxes on the returns they're filing now.

2. Kansas

Gov. Sam Brownback hasn't made a secret of the fact that he doesn't like the state's income tax. Last year, Kansas passed a law that took effect this year, reducing the top tax bracket from 6.45 percent to 4.9 percent. It also eliminated income taxes on small business income for hundreds of thousands of businesses. Now, Gov. Brownback is looking to send rates down even further, with the eventual goal of getting rid of income taxes entirely.

3. Louisiana

Gov. Bobby Jindal recently proposed a tax swap, offering to get rid of the state's income and corporate taxes in exchange for raising sales taxes. Critics argue that the shift could put too much burden on lower-income residents who can least afford it, but some policymakers argue that sales taxes promote savings and investment over consumption. One benefit from a higher sales tax: Louisiana's tourism industry would have visitors to the state paying a higher share of the overall burden.

4. Maryland

Last year, the state legislature passed a law raising tax rates on high-income residents. Effective for the 2012 tax year, the new rates apply to single filers making more than $100,000 and joint filers above $150,000 in income. Rates in various brackets rose between one-quarter and three-quarters of a percentage point, with a new top rate of 5.75 percent.

5. Massachusetts

Gov. Deval Patrick has proposed a plan that's the reverse of the Louisiana plan, offering to swap a one-percentage-point increase in the income tax rate to 6.25 percent, but lower sales taxes from their current 6.25-percent level to 4.5 percent. The move would bring Massachusetts more in line with other states within the region, with the governor saying that the net increase in tax revenue would help boost spending on education.

6. Minnesota

Along the same lines as Massachusetts, Minnesota Gov. Mark Dayton is trying to raise the state income tax rate to lower sales and property taxes. His proposal would reduce the sales tax rate from 6.875 percent to 5.5 percent and pay a $500 property tax rebate, but would add a new higher income tax bracket that would send the top rate up 2 percentage points to 9.85 percent. Recently, though, a lack of political support has raised the possibility that Gov. Dayton will drop at least part of his tax reform plans.

7. Nebraska

Like neighboring Kansas, Nebraska is considering getting rid of its income tax entirely. Gov. Dave Heineman has been promoting his tax-elimination plan, arguing that it's necessary in order to compete with border-states South Dakota and Wyoming, both of which have no income tax. Gov. Heineman would scale back on sales-tax exemptions in order to finance the income-tax reduction.

8. North Carolina

Legislators in the North Carolina Senate are also calling for tax reform, including the possible elimination of the state's income tax, where rates range as high as 7.75 percent. With nearby Florida having no income tax, North Carolina hopes that it can be more competitive both to individuals and businesses looking to relocate to the state.

Keep Your Eyes Peeled

Although many of these proposals are still in early stages of deliberation, you still need to keep watch on events as they develop. Otherwise, you could be in for a nasty surprise come tax time.

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Thursday, February 21, 2013

Many Investors Unaware of How Tax Changes Could Hurt Them

By Michael S. Fischer

Affluent investors’ understanding of tax-advantaged investments, like annuities, life insurance and 401(k)'s, varies among demographic groups, according to a new poll.

Nationwide Financial reported Tuesday that the results of its recent online survey of 751 mass affluent investors, conducted by Harris Interactive, pointed to an opportunity for advisors to educate clients on the implications of new taxes.

“Our survey suggests that, while some may be very receptive to considering portfolio adjustments, others may need a little more proactive education from their advisor,” Eric Henderson, senior vice president of life insurance and annuities for Nationwide Financial, said in a statement.

The survey showed that women were less likely than men to expect a significant decrease in household income or asset value as a result of tax code changes. Only one in 20 women had met with a financial advisor to talk about how new taxes could affect their portfolio.

Fifty-two percent of female survey respondents said they were somewhat or very concerned that changes to the tax code would negatively affect their portfolio compared with 69% of male respondents who felt that way.

Women expressed less confidence than men that they completely understood the tax advantages of annuities, life insurance or 401(k) plans.

“Time will tell if the comparative optimism of female survey respondents is warranted,” Henderson said. “In the meantime, it’s critical for female investors and their advisors to discuss new taxes.”

He noted that for most married couples, the wife was likelier to outlive her income, making it is important for both spouses to be active in managing their portfolio.

“The lack of knowledge professed by women respondents may be attributed to what appears to be an underutilization of the financial advisor relationship,” Henderson said. “However, our survey data suggests that women may be more receptive than men to learning more about tax-advantaged products.”

Survey respondents in the 35-to-54 age range were less likely than those older to say they completely or somewhat understood the tax advantages of annuities, but were twice as likely to consider purchasing another tax-deferred product.

These respondents were more likely than those 55 or older to want more education on annuities, life insurance or 401(k) plans. They were less resistant to making portfolio adjustments, with only about a third saying they would not make any portfolio adjustments as a result of new taxes compared with nearly half of respondents 55 or older.

Respondents with $150,000 to $249,000 in income appeared more optimistic and receptive to making portfolio adjustments, according to the survey. Fifty-two percent believed changes could be made to prepare their portfolio for tax code changes, compared with 36% of all survey respondents.

Half of respondents in this upper income range said they wanted more education on annuities, compared with 41% of the total survey population.

“According to our survey data, men and women ages 35–64 with income of $150,000–249,000 may represent the ripest sales opportunities for advisors,” Henderson said.

Still, although most mass affluent investors will be affected by the new tax environment, 60% of survey respondents expressed either unwillingness or uncertainty whether they would meet with a financial advisor to discuss taxes.

“It’s up to advisors to provide proactive counsel to help all their clients understand potential opportunities—even if certain clients may not currently acknowledge a need to have this conversation.”

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Wednesday, February 6, 2013

President Obama Warns That More Tax Increases Could Be On The Horizon

After five weeks and approximately 4,000 webinars, Americans are finally getting up to speed on the tax changes emerging from the year-end fiscal cliff deal. But if the President has his way, we may find soon be back at the drawing board, trying to make sense of a new batch of tax increases.

While the late-December negotiations accomplished the necessary task of addressing the expiring Bush tax cuts, the other half of the fiscal cliff – the scheduled cuts in spending that were slated to take effect on January 1, 2013 – were merely postponed, with the sequester now scheduled for March 1^st.

On that date, approximately $85 billion in spending cuts will kick in, and if nothing changes, $110 billion in annual cuts will take effect on October 1^st and continue for the next eight years. These cuts would hit defense spending hard as well as other domestic programs, such as education, housing, and Medicare.

Just as we saw with the fiscal cliff deal, however, neither political party wants the sequester to take effect as scheduled, as the indiscriminate cuts would deal a harsh blow to the still-recovering economy.

In a statement issued earlier today, President Obama proposed delaying sequestration in the near term in the hopes that Congress could use the additional time to compose a viable budget. The President would buy some time with a mix of alternative spending cuts and yes…you guessed it…additional tax revenue.

Specifically, the President stated that he would be willing to cut spending on social programs so long as they are done “hand-in-hand with a process of tax reform so that the wealthiest individuals and corporations can’t take advantage of loopholes and deductions that aren’t available to most Americans.”

The President offered no additional details, leaving those who follow this sort of thing to wonder exactly what type of loopholes might be on the chopping block. But if you look to the President’s previous but as-of-yet-unfulfilled tax proposals, and further consider that the stated goal of the current administration is to trim an additional $1.5 trillion from our deficit over the next decade in order to stabilize our debt, some big tax changes may be afoot. Changes like these: Read the full article to see the changes.

These posts are for informational use only to educate people about their online income taxes and the financial world around them. If you found this helpful, share the original article or this one, and help spread the word! With tax season rapidly approaching let us get you the best income tax return you can possibly have by e-filing! Leave us a comment if you want to share your opinion.

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Monday, January 14, 2013

Tax Changes Heat Up Missouri-Kansas Border War

Source: http://www.stltoday.com/business/columns/david-nicklaus/tax-changes-heat-up-missouri-kansas-border-war/article_8d35c294-a275-5b74-9fd6-bc2c5744d0dd.html

96th Missouri Legislature opens in Jefferson City

96th Missouri Legislature opens in Jefferson City

Robert Cohen

Legislators and lobbyists watch from the third floor as a Tea Party rally was held in the rotunda of the Missouri Capitol builiding prior to the opening of the 96th General Assembly in Jefferson City Wednesday January 4, 2012. Photo by Robert Cohen, rcohen@post-dispatch.com

If you’ve been thinking about painting your house, nothing accelerates your plans like seeing a neighbor do it first.

Using a similar logic, advocates of a Missouri income tax cut say a neighbor’s actions have made their campaign more urgent this year.

That neighbor, Kansas, decided last year to exempt certain small-business income from the state income tax, and it cut the top tax bracket for everyone to 4.9 percent from 6.45 percent.

The two states were already engaged in a long-running border war over jobs, with Kansas City area employers being offered incentives to move a few miles across State Line Road. Now, some people are worried that the tax cut will cause a mass exodus of small businesses moving west.

“I think a lot of S corporations and LLCs (limited liability companies) will start leaving Missouri, especially the profitable ones.” says Rex Sinquefield, the retired investment executive whose campaign contributions have made him a major force in Missouri politics. “Missouri will hemorrhage jobs unless Missouri responds quickly.”

Taxes are not a new issue for Sinquefield. In 2011, he backed a petition drive calling for Missouri’s income tax to be phased out over 10 years and replaced with a higher sales tax. He eventually withdrew the effort, but has said he might try again if the Legislature does not act.

Now, Sinquefield is not sure the gradual approach will work. “I don’t think we have 10 years any more,” he said. “We’ll have lost too many of our businesses and a large part of our state revenue will be gone.”

At least two bills in this year’s Legislature are advertised as responses to the Kansas challenge. One, sponsored by Sen. Eric Schmitt, R-Glendale, would halve taxes on business income. Another, sponsored by Sen. John Lamping, R-Ladue, would cut Missouri’s top individual tax rate to 4 percent from 6 percent, while raising cigarette and sales taxes.

Sinquefield would still prefer to eliminate the corporate and individual income taxes, but says he’s encouraged by legislators’ proposals. Of Schmitt’s bill, he says, “That’s not enough, but it’s a very good start.”

The problem with trying to keep up with the neighbors, though, is you don’t see their credit-card bill when you’re looking at the gleaming new paint job. In Kansas’ case, the tax cuts blew an $800 million hole in next year’s budget, and lawmakers haven’t figured out how to fill it.

Jack Strauss, a professor of economics at St. Louis University, is skeptical of the tax-cutting fervor.
“Everybody wants their taxes cut,” he says. “However, on the state level, you have to realize, there’s not a lot of fat in the budget.”

If tax cuts lead to cuts in basic services like education, Missouri would be hurting itself economically. Taxes are important, Strauss says, but “the number one reason businesses move to a region is because of the labor force. You have to educate that labor force.”

Missouri needs to fight this border war in a sophisticated way, not a simplistic one. Legislators also must be careful not to exaggerate Kansas’ advantage on the tax issue. Last year, the conservative-leaning Tax Foundation ranked Missouri 16th for its business tax climate, well ahead of Kansas in 26th place.

Missouri legislators may find room to cut tax rates, particularly if they succeed in reining in the state’s multiplicity of tax-credit programs. But they should do so with an eye on the state’s long-term economic health, not as a knee-jerk response to a neighbor.

David Nicklaus is business columnist at the St. Louis Post-Dispatch. Subscribe to his Facebook page or follow him on Twitter @dnickbiz.

These posts are for informational use only to educate people about their online income taxes and the financial world around them. If you found this helpful, share the original article or this one, and help spread the word! With tax season rapidly approaching let us get you the best income tax return you can possibly have by e-filing! Leave us a comment if you want to give your opinion.

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Drastic tax changes only way to save middle class

Source: http://www.marketwatch.com/story/drastic-tax-changes-only-way-to-save-middle-class-2013-01-14

By Marcus D. Pohlmann

MEMPHIS, Tenn. (MarketWatch) — The midnight hour deal struck in Washington raised taxes for the wealthiest Americans, amid conservative protests that it would discourage the wealthy from investments that could add badly needed jobs to the sagging American economy. The squabble ignores a much larger economic problem, however, and that problem is the steady demise of the American middle class over the past several decades.

The U.S. had a large and vibrant middle class as recently as the 1950s and 1960s, at a time when organized labor was at its strongest and there existed one of the most progressive tax structures in the nation’s history.

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Middle-class households typically had a breadwinner with reliable full-time work that provided opportunities for skill development and advancement. The breadwinner’s job also provided enough income to own a home, support a family of four, put two children through college, and have roughly six months worth of income in savings in case of an emergency. Both a health care and retirement plan were provided, as was a two-week paid vacation.

Since that time, however, labor unions have declined significantly in membership and the 1980s ushered in major tax reform. Today, only the top quintile of Americans appears to meet or exceed such a package of wages, benefits and opportunities. They also hold 90% of the nation’s wealth and account for virtually all recent income growth.

Meanwhile, the bottom 80% of the working population increasingly have lesser-skilled jobs in places such as restaurants, retail stores, and hospitals. These jobs often pay little more than minimum wage; entail few, if any, benefits; involve little to no skill development or opportunities for significant advancement; and are often only part-time.

Marcus Pohlmann

This trend is not sustainable unless we are willing to see the United States gradually transformed into the equivalent of a “banana republic” where a wealthy elite lives behind iron gates in cloistered suburbs while the rest of the population scrambles just to make ends meet. Missing in that scenario is a large and secure middle class whose level of affluence gives them a personal stake in the survival of existing political and economic orders.

Without such a large and faithful center, class warfare is likely to become more prevalent and that can destabilize a nation.

Tax reform proposals that raise the top bracket from 35% to 39% will do virtually nothing to revive the American middle class. Instead of dawdling over incremental changes in the existing tax code, we should be doing something quite different.

Instead of increasing top tax rates from 35% to 39%, we should return to the pre-Reagan tax rates that went up to 90% on the highest earners. One would then get tax breaks only for investments that clearly increase the likelihood of middle-class development here in the United States. Tax breaks could be retained for such things as child care, education, charitable giving, out-of-pocket health-care expenses and a limited mortgage-interest deduction for one home.

All of these help sustain the middle class and assist those in lower income brackets to work their way toward middle-class status.

Tax breaks for capital gains income, on the other hand, would change considerably. They would apply only for investment in companies that provide American citizens with the kind of middle-class wages, benefits and opportunities discussed above. All other income would be taxed at a steeply progressive rate that could rise as high as 90%. This would encourage wealthier Americans to invest in ways that help America as a whole. The alternative for them would be having much of their income taxed away so that government could then provide the assistance.

We should change the way the tax code treats capital gains because capital investment in today’s globalized economy no longer guarantees an increase in American jobs, let alone American middle-class jobs.

If a corporation is not employing Americans, then it is not advancing the cause of increasing the size and strength of the American middle class. This kind of corporate income should be taxed like any other income.

The current debate over marginally raising the tax rates of the wealthiest Americans is little more than a diversion from this far more serious economic issue. Moreover, utilizing the federal tax code in this manner might accomplish much of what unions have been able to gain without the disruption or impediments to change that have at times accompanied union activity.

Marcus D. Pohlmann is professor of political science at Rhodes College in Memphis and has written extensively on race and poverty in the United States.

These posts are for informational use only to educate people about their online income taxes and the financial world around them. If you found this helpful, share the original article or this one, and help spread the word! With tax season rapidly approaching let us get you the best income tax return you can possibly have by e-filing! Leave us a comment if you want to give your opinion.

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