A Great Tax Plan (for Accountants)

[Guest guest]

http://www.nytimes.com/2004/09/14/opinion/14weikart.html?th

 

September 14, 2004

OP-ED CONTRIBUTOR

 

A Great Tax Plan (for Accountants)

By JIM WEIKART

 

As a tax guy, I found myself chuckling quietly when President Bush

said in his speech at the Republican National Convention that he would

" lead a bipartisan effort to reform and simplify the federal tax

code. " Before long, I was howling with laughter. Sorry, folks, but

efforts to " simplify " the code always bring clients streaming through

my door. And the president quickly went on to show why: he wasn't able

to offer simplification without adding two levels of complication

within the next two minutes.

 

O.K., the president said, I'm going to lead an effort to simplify. But

I'm also going to " create American opportunity zones " in which " we

will provide tax relief. " Thank you, sir, and please add Form AOZ to

Forms 1116, 2106, 6251 and all the others we now have. Next came a

" tax credit to encourage small businesses and their employees to set

up health savings accounts. " Please add Form TC-HSA.

 

I did get a little nervous, however, when Mr. Bush directed listeners

to his Web site for more details. Would it explain how he planned to

reconcile these new exceptions and credits with his promise of

simplification? I needn't have worried: regarding simplification, it

said only that " President Bush will work to make the tax code simpler

for taxpayers, encourage saving and investment, and improve the

economy's ability to create jobs and raise wages. "

 

As a bonus, the site included some proposals not mentioned in the

speech. One was for an " above-the-line tax deduction that individuals

could claim for long-term-care insurance premiums " (add Form LTC).

Another was an " additional tax exemption for home caregivers of family

members " (add Form TEHCFM).

 

And, trust me, should the president really " simplify " things, an

avalanche of other deductions and exemptions would be sure to follow.

 

Form M: Let's get serious. Somebody making $100,000 a year and

spending half of it on round-the-clock care for a seriously ill spouse

says, " Hey, how come I pay the same tax under simplification as the

guy who makes a $100,000 and doesn't spend anything on medical care? "

Let's make an exception for catastrophic medical problems.

 

Form DTUUC: The United States was founded on a revolt against unfair

taxation. You can't have a guy in New York City paying about $10,000

in state and local taxes on his $100,000 income and also paying

federal taxes on the same income. Shouldn't he at least be able to

deduct the taxes he paid to New York to get closer to a level playing

field with people in no-tax states like Florida, New Hampshire and

Texas? (The DTUUC stands for double taxation unfair under the

Constitution.)

 

Form M (No, make that Form I, we've already used M for medical): A

man's/woman's home is his/her castle. And that castle was built with a

mortgage. Don't pull the rug out from under the indebted baby boomers

just as they reach retirement age and are worrying that Social

Security won't be around (see budget deficits). The mortgage-interest

deduction stays.

 

Form C: For charity, so people can give money to the groups running

those faith-based initiatives that are filling in for the

social-service programs the administration is so intent on cutting.

 

Form E: For the expenses of the self-employed and others who, unlike

salaried workers, need to spend a lot of money to make their money.

 

Of course, it's not that simple. We would need to put some limits on

the exceptions. For example, catastrophic medical deductions could be

limited to expenses over 7.5 percent of income; mortgage interest

could be limited to two personal properties and to the first $1

million of mortgage debt plus $100,000 home equity debt; gifts to

certain charities could be no more than 50 percent of income, while

others would have 30 percent or 20 percent limitations. Looking

forward to that paperwork?

 

Well, the president has one thing right: doing away with the old forms

and having a lot of new ones would at least give the appearance of

change. So if he wins in November, you can make your appointment with

my office at any time. Thanks to his plan to " simplify, " you're going

to need the help.

 

Jim Weikart is a partner in a tax preparation firm and the author of

" Harry's Last Tax Cut, " a novel.

 

Copyright 2004 The New York Times Company |