U.S. Gasoline Tax Hike Unlikely, Key Senator Says

From Reuters:

The new Congress probably will not approve legislation to raise the federal tax on gasoline, the chairman of the Senate Energy Committee said on Monday.

Democratic Sen. Jeff Bingaman said he was aware of arguments that a "variable tax" should be put on U.S. gasoline to prevent falling pump prices from encouraging Americans to drive more while making alternative fuels less attractive.

Such a tax hike "would be very tough to pass," Bingaman said at the Center for Strategic and International Studies. "I don't think something like that has much prospect of being enacted in my honest opinion."

Americans pay an 18.4-cent federal tax on each gallon of gasoline they buy, plus an extra 29 cents on average in combined state and local taxes.

As the cost of gasoline has declined to half its record $4.11 a gallon set in July, some energy experts have said the United States should levy a tax. These experts point to Europe, where the gasoline tax is much higher, to reduce reliance on imported petroleum. The European tax formula keeps gasoline costs high even when crude oil prices fall.

The average cost of gasoline has dropped below $2 a gallon in 17 U.S. states, raising concerns among some that many Americans will return to driving gas-guzzling sport utility vehicles, hindering efforts to reduce reliance on oil imports.

AIG Seeks IRS Refund for $329 Million

Weeks after getting billions of dollars in federal bailouts, American International Group Inc. (AIG) is seeking over $300 million from the Internal Revenue Service (IRS).

According to the Wall Street Journal, “the clash dates from before the bailout,” and that “the company disclosed in a securities filing this week that it filed a ‘claim for refund’ with the IRS” for $329 million.

However, AIG’s timing of the announcement comes shortly after the company received an estimated $150 billion in multiple bailouts from the Federal government. Additionally, the company also made headlines for lavish weekend conferences costing hundreds of thousands of dollars. WJS.com claims that AIG is in “the peculiar position of effectively using government funding to fight the U.S. government.”

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NYC Pushing Again for Commuter Tax

From News Daily:

Mayor Michael Bloomberg's budget director told a City Council finance hearing Monday that he and the mayor are eager to lobby again for the tax in Albany, particularly in tough economic times for both the state and city.

Republican state lawmakers recently said they oppose any attempt to revive the tax, but a newly Democratic-controlled state Senate might mean the proposal gets another chance in January.

Commuters who live outside New York City had the tax on their city earnings for 33 years.

It generated as much as $360 million a year for the city before it was eliminated in 1999.

Obama's Most Ostentatious Tax Promises

The election is now over and Sen. Barack Obama has assumed the role of the President Elect. The country is now waiting to see how many of his promises he keeps. Both candidates made a lot of ridiculous and—dare I say--ostentatious proposals throughout the election, but it is our job as American citizens to both critique and monitor how our elected officials follow through with said proposals. As such I have put together the following list of Obama’s most ostentatious tax promises that are most unlikely to become reality.

1. To limit tax increases to only those making over $250,000 a year.

Reality: When Obama states no tax increases, he is not including his plans to let the Bush tax cuts expire. Although letting a tax increase continue is not necessarily a "tax increase" it makes no difference to taxpayers expecting a cut. By saying he promises to only increase taxes for those making a quarter million, Obama seemed to be trying to gain votes with misleading information; another red flag of a campaign promise with the potential to flop.

2. Not to raise taxes on 95% of working Americans.

Reality: In addition to selectively expiring the Bush tax cuts, Obama has proposed to increase the cap on income payroll taxes. These tax increases could be huge for those making between $97,000 and $250,000, and the perfect candidate for this bracket is the small business owner. Therefore Obama is likely to raise taxes on much more than 5% of Americans.

3. To increase the capital gains tax rate from 15% to high 20%.

Reality: We all appreciate Obama’s efforts to make taxes fairer, but raising capital gains is not the way to do it. While 1 percent or less of Americans make over $250,000, nearly half of all Americans hold stock one way or another. Remember, the stocks in IRAs and 401(k)’s have capital gains taxes and many Americans use these to plan for retirement. That being said, raising the capital gains tax rate clearly does not target only the "fat cats" of our country.

4. To raise taxes on businesses and oil companies.

Reality: When corporate taxes go up, so do prices. This goes for oil, groceries, and motor vehicles alike. By drastically raising business taxes all Obama would be doing is passing our taxes through another outlet and right back to us. In addition, Obama has had some curious views on what constitutes as “big business” and what constitutes as “small business”, making small business owners weary of his tax policies.

5. To reform the IRS and make the way American’s file their tax returns easier.

Reality: Very early in Obama’s campaign he announced a desire to drastically simplify the way Americans file their tax returns. He even claimed that under his simplified tax code would allow anyone to complete his or her taxes in minutes as long as they take the standard deduction and have a bank account. Part of his plan includes using pre-filled out tax forms. Although his plan is more realistic then completely eliminating the IRS, it still has tribulations. In a perfect world, people could easily file their returns, as the IRS would send pre-filled tax returns. However, we do not live in a perfect world. Implementing a plan to simplify tax returns could create large problems for the IRS. Additionally, this program would open the floodgates for large-scale identity theft problems. Information contained in a taxpayers return is highly sensitive and we all know standard mail is not the most secure way to send something.

6. To eliminate income taxes on low-income senior citizens.

Reality: Although many claimed it was only an attempt to get the attention of the “senior voters” and the AARP, Obama promised massive amounts of tax relief to millions of seniors struggling to make ends meet. He planned to completely eliminate federal taxes on seniors making less then $50,000.00 per year, which would generate about $7 million dollars in total relief for seniors. However, I find it very unlikely that the country would get behind a tax break aimed specifically at one age group.

California's Car Tax may be on the Road Again

From LA Times.com:

Gov. Arnold Schwarzenegger has shown he's capable of learning. Not every governor who rode into office on a no-new-taxes pledge would propose a sales-tax increase of 1.5%. He's right to insist that every solution to the state's fiscal crisis be on the table, so we're happy to pitch in with a suggestion -- bring back the car tax.

There, we said it. Again. California's leaders took a wrong turn in 1999 when they slashed the vehicle license fee, or car tax. The move frittered away a rare revenue surplus that should have been used instead to fix the state's structural deficit. The plan supposedly called for the rate to go back up during fiscal crises to the same level it had been since 1948 – 2% of vehicle value. But when then-Gov. Gray Davis tried to do just that, Schwarzenegger fanned voter anger and booted Davis from office.

It's not out of a sense of mischief that we now call on Schwarzenegger to bring the tax back to its historical level. Not solely, anyway. The car tax is a smarter choice than a sales tax for digging out of the current budget hole. Asking Californians to pitch in through their vehicle registration fees rather than at the cash register would have fewer negative effects on sales, which we can expect to be diminished too much already in the coming months.

Banks to Receive Billions in Tax Breaks

According to the Associated Press, the big banks in this country are about to receive pretty huge tax breaks in addition to the money they will receive from the Federal government’s $700 billion bailout program. Specifically, the tax breaks will go to companies that acquire struggling financial intuitions that are struggling to get by. However, interestingly some experts claim that the tax breaks they get could exceed the cost of acquiring the struggling banks.

“The change could cost the Treasury as much as $140 billion by enabling firms that acquire struggling banks to use more losses incurred by those banks to offset their own taxable profits.

Wells Fargo & Co., which made a bid to acquire Wachovia Corp., just days after the notice was issued, stands to reap about $20 billion in additional tax savings because of the change, according to the analyses. Wells Fargo paid $14.8 billion in a stock deal to buy Wachovia.

The notice was issued Sept. 30 as Congress debated the $700 billion bailout plan. Some members of Congress are upset that such a sweeping tax change was issued with no public hearings or congressional input.

‘I am concerned that the notice, which was never debated by Congress, could end up costing taxpayers tens of billions of more dollars on top of the hundreds of billions of dollars already approved by Congress in the financial rescue plan,’ Sen. Charles Schumer, D-N.Y., said in a letter last week to Treasury Secretary Henry Paulson.

Treasury Department spokesman Andrew DeSouza said the notice was issued to provide tax guidance to firms involved in bank takeovers at a time when numerous financial institutions are struggling and their value can be difficult to determine. He said it wasn't aimed at any one specific taxpayer or transaction.”

The 50 Women to Watch 2008

From the Wall Street Journal:

In her concession speech in June, Hillary Clinton lamented that she wasn't able to "shatter that highest, hardest glass ceiling," but she said it now has "about 18 million cracks in it."

Indeed, women played a defining role in this year's historic election, whether as candidates, spouses or comedians.

But in the corporate world, the notion of "18 million cracks" remains something of a pipe dream. While women have made great strides professionally in the past two decades, their numbers in the upper echelons of corporate America have stagnated in the past few years.

On Wall Street -- possibly the toughest ceiling to crack -- two of the most high-profile women made an exit in the past year: Citigroup's Sallie Krawcheck and Morgan Stanley's Zoe Cruz.

But out of the ashes of the economic meltdown, some new stars have emerged -- most notably Sheila Bair, No. 1 on this year's Women to Watch list, who has been thrust into the spotlight in her bank-rescue role as a hard-charging regulator at the Federal Deposit Insurance Corp.

Barbara Desoer, No. 3 on this year's list, has risen to a pivotal role at Bank of America as president of mortgage, home equity and insurance services.

IRS Increases Deductions & Exemptions Due to Inflation

According to their newest press release, the IRS is making adjustments to more then tree dozen tax benefits for the tax 2009 tax year. Due to inflation adjustments personal exemptions and standard deductions will change and are likely to affect virtually every single taxpayer. According to the release, “key changes affecting 2009 returns, filed by most taxpayers in early 2010, include the following:

• The value of each personal and dependency exemption, available to most taxpayers, is $3,650, up $150 from 2008.
• The new standard deduction is $11,400 for married couples filing a joint return (up $500), $5,700 for singles and married individuals filing separately (up $250) and $8,350 for heads of household (up $350). Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes.
• Tax-bracket thresholds increase for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $67,900, up from $65,100 in 2008.
• The maximum earned income tax credit for low and moderate income workers and working families with two or more children is $5,028, up from $4,824. The income limit for the credit for joint return filers with two or more children is $43,415, up from $41,646.
• The annual gift exclusion rises to $13,000, up from $12,000 in 2008.”

Top 10 Places to Visit in Hawaii

Over the past few weeks leading up to the election, I have been extremely busy doing media appearances about the candidate’s tax policies. Combined with the October filing extension, and a busy franchise-selling season, it has made for a very hectic few months. Fortunately, things should be slowing down over the next few weeks and I should be able to visit one of my favorite places in the world – Hawaii. As much as I love to go to the islands, I really love talking about them and telling those who are just about to make the trek on where they must go. So, below, please find my list of the top 10 places to visit in Hawaii.

1. Lanikai Beach

Translated into English Lanikai means "heavenly sea," which is exactly what it is. Locals and visitors alike marvel at the picture perfect white sandy beaches and clear turquoise waters. The beach is perfect for photography, swimming, canoeing, kayaking, sailing, or just relaxing and enjoying the magnificent view.

2. Hilo

Hilo is a coastal Hawaiian town with something for everyone. This town features multiple museums, a beautiful historic theatre, and downtown area filled with shops and attractions. The area also has dazzling waterfalls, and the only United States zoo situated within an actual rainforest (the Pana'ewa Rainforest Zoo).

3. Hawaii Volcanoes National Park

The Hawaii Volcanoes National Park, situated on Big Island, is one of the most visited spot in the entire state of Hawaii. It has trails for hiking, beautiful sights to photograph, and two record holding volcanoes. Kilauea is the world’s most active volcano and Mauna Loa is the world’s largest volcano.

4. Kilauea National Wildlife Refuge

In a comfortable 203 acres of land on the North shore of Kilauea, the Kilauea National wildlife refuge is the place to go when you want to see and learn about Hawaii's exotic wildlife. You might see Hawaii’s state bird (the nene), or even catch a glimpse of a humpback whale off the shore.

5. Molokini

The Molokini island is widely known for having the clearest waters in Hawaii, and offers from 80 to 200 feet of crystal clear waters. This also makes Molokini the location for Hawaii's best and most beautiful snorkeling. You can either rent a boat to take you further out, or you can just snorkel off the coast. Either way you are likely to witness a beautiful display of sea life.

6. Waimea Canyon

Mark Twain once called this beautiful canyon in Koke's State Park the "Grand Canyon of the Pacific". Over 3,600 feet depth, a mile wide, and 10 miles long, this canyon is both inspiring and stunning in its mass and beauty. Besides the obvious size, the canyon also has brilliantly colored inner walls that play in the sunlight creating a truly spectacular view.

7. Waikiki

With beautiful beaches, waterfalls, and trails, Waikiki offers all the grander of nature that other Hawaiian islands boast. It also has great shopping opportunities including fine art, custom jewelry, designer clothing, and local music. Waikiki is the perfect place to find souvenirs for your friends back home, or to purchase beautiful Hawaiian décor for yourself.

8. Gardens of Kauai

The island of Kauai, known as the garden island, will leave you breathless from the moment you set eyes on it. Hundreds of flowers, trees, streams and water falls will all catch your attention simultaneously, making the visit a true experience of the beauty and spirit of Hawaii.

9. Haleakala

Haleakala is not only one of the largest mountains in the world, but it is also a massive dormant volcano. Seen from miles away, Haleakala is hard to miss, and even harder to look away from. Many locals suggest taking a sunset bike ride, or power walk, down the mountain for a healthy and stunning evening activity.

10. Polynesian Cultural Center

It should be no surprise that the Polynesian Cultural Center makes the list. Every visitor of Hawaii should visit this culture-rich center to not only learn about the island and local inhabitants, but the center also hosts one of most authentic luaus in Hawaii.

The Thom Hartmann Program

I am happy to announce that I will once again be featured as a guest on The Thom Hartmann Program on Tuesday November 11^th, at 10 am PST. From what I have heard, Thom would like to discuss taxes and investments during the interview. So be sure to tune in and listen to my advice!

Jobless Rate Bolts to 14-year High of 6.5 Percent

From Yahoo Business News:

The nation's unemployment rate bolted to a 14-year high of 6.5 percent in October as another 240,000 jobs were cut, far worse than economists expected and stark proof the economy is deteriorating at an alarmingly rapid pace.

The new snapshot, released Friday by the Labor Department, showed the crucial jobs market quickly eroding. The jobless rate zoomed to 6.5 percent in October from 6.1 percent in September, matching the rate in March 1994.

Unemployment has now surpassed the high seen after the last recession in 2001. The jobless rate peaked at 6.3 percent in June 2003.

October's decline marked the 10th straight month of payroll reductions, and government revisions showed that job losses in August and September turned out to be much deeper. Employers cut 127,000 positions in August, compared with 73,000 previously reported. A whopping 284,000 jobs were axed in September, compared with the 159,000 jobs first reported.

So far this year, a staggering 1.2 million jobs have disappeared. Over half of the decrease occurred in the past three months alone.

Although the unemployment report was worse than expected, and Ford Motor Co. reported dismal third-quarter results and announced plans to cut more than 2,000 additional white-collar jobs, Wall Street investors appeared to take it all in stride. The Dow Jones industrial average was up more than 190 points in morning trading.

About 10.1 million people were unemployed in October, an increase of 2.8 million over the past year. A year ago, the unemployment rate stood at 4.8 percent.

President Bush said the dismal employment figures reflect "the difficult challenges confronting the economy" and urged the country to have patience, saying a flurry of unprecedented government measures -- including a $700 billion financial bailout package -- will take time to work.

"I understand that Americans deeply concerned about the challenges facing our economy, but our economy has overcome great challenges before, and we can be confident that it will do so again," Bush said.

More California Budget Problems

Just weeks after the California legislature passed a budget for this year, Governor Arnold Schwarzenegger is calling out for tax increases, and drastic spending cuts, to help keep the state out of bankruptcy.

According to the San Francisco Business Times, “California Gov. Arnold Schwarzenegger proposed $4.7 billion in new taxes -- including a three-year increase in the state sales tax -- and $4.5 billion in new cuts Thursday to prevent a cash crisis brought on by a projected $11.2 billion hole in the current state budget.

Proposed new taxes include an immediate, three-year increase in the sales tax by 1.5 cents on the dollar; broadening sales and use taxes to items such as car repair, golf and veterinary services; a tax on oil extraction in the state; and an increase in alcohol taxes. The temporary increase would push the state portion of the sales tax to 8.75 percent, before any local sales taxes were considered.”

However, his plans are drawing a lot of criticism, with many claiming that a sales tax increase is not the best option. According to Mercury News, the Governor has plenty of better options to increase revenue.

“Eliminating tax credits for families with children, taxing attorneys' fees and raising business property taxes—these are some of the options Gov. Arnold Schwarzenegger could have proposed before settling on a 1.5 percent temporary sales tax increase.

None are easy choices in a struggling economy.

In laying out a proposal to increase sales tax for three years, the governor stressed an urgent need to raise revenue to maintain police protection and uphold California's education system.

‘We feel very comfortable that this is the best tax to use,’ the governor said Thursday while revealing a $11.2 billion hole in this year's budget. ‘This is the best way to go and we have to not delay it. I think now is the time for action.’

Economists recognize that the best form of taxation is the broadest one at the lowest rate. But California's budget fluctuates because it depends on a narrow segment of high-income earners whose fortunes ride with the stock market. About 50 percent of the state's personal income tax revenue comes from the top one percent of wage earners.

To complicate matters, the state's manufacturing-based sales tax has been shrinking proportionately because it hasn't been modified in decades to reflect service sector growth.

And a higher sales tax at a time when overall consumption is down may not do much to grow revenues.”

Use of Refundable Tax Credits Has Grown in Recent Years

From Wall Street Journal.com:

Republican presidential candidate John McCain has taken to calling Democratic rival Barack Obama's tax plan "socialist," because it would give tax cuts to people who currently pay no income taxes.

But such proposals -- known in tax parlance as "refundable tax credits" -- have become increasingly common in recent years, supported by both parties. Sen. McCain himself uses them as the cornerstone of his health-care plan.

"Traditional welfare is frowned upon by the public, and government spending is similarly frowned upon," said Scott Hodge, president of the Tax Foundation, a nonpartisan research group in Washington. "So politicians are looking at new ways to deliver targeted benefits ... and by delivering it through the IRS, it sounds far more palatable to the public."

Refundable tax credits have become increasingly popular over the past two decades, as a series of tax breaks have allowed more households to eliminate their income-tax liability altogether. President Bill Clinton's welfare overhaul relied on expanding the earned-income tax credit, which is for low-income working individuals and families and is designed to provide an incentive to work. President George W. Bush's 2001 tax cuts increased an existing child tax credit, and made it refundable so households that didn't pay taxes could receive it.

Currently, 62% of households pay income taxes, down from 82% in 1984. Some 57 million tax filers don't pay any federal income taxes, according to the Tax Policy Center, a nonpartisan Washington think tank.

Sen. Obama, who says he wants to give 95% of all households tax relief, makes his case by saying that he is offering most Americans tax relief. His plan counts on raising taxes on individuals earning more than $200,000 a year and families who make more than $250,000 a year.

Tax Policy in the Obama Administration

As I am sure you are all aware, Tuesday night, Americans made history when they elected Sen. Barack Obama as the next president of the United States. We have a few weeks before President-Elect Obama takes office, but millions of people are already wondering what tax policy will be like under President Obama. Fortunately, one of my favorite blogs Tax Prof has collected a dozen or so blogs that have already written up answers to that question. Below are a few snippets, but you can see the full list of articles at Tax Prof Blog.

Tax policy under President Obama will be pragmatic and progressive, and gutsy. President Obama was the only candidate willing to go beyond the usual talking points of rates and base to the important question of how people pay taxes. He proposed a federal version of California’s Ready Return as early as the primary; he refused to pander by calling for a gas tax holiday and he was willing to tell voters a hard and unpopular truth: people at the top of the income distribution should pay more taxes than they are paying now. Although I don’t love his reliance on Clintonesque tax credits to achieve spending objectives, it is pragmatic. President Obama’s tax policy will not be a tax scholar’s dream, but his commitment to taxation based on ability to pay will change the tenor of tax policy debates in significant, and salutary, ways.

Why the Wealthy Voted for Obama

From the Wall Street Journal:

Exit polls show Sen. Obama did best among two main wealth brackets–the bottom and the top. (The middle was split about evenly). According to the polls, Sen. Obama won 60% of the votes of those with family income of less than $50,000.

He also won 52% of the votes of those earning $200,000 or more. That compares with Sen. John McCain’s 46% showing for the same group. Sen. Obama’s showing among the affluent is about 15% better than Sen. Kerry’s did with wealthy voters four years ago.

(Sen. McCain won among voters in 3 of the 4 middle categories of income–or those earning $50,000 to $200,000).

That Sen. Obama did well among the well heeled and well educated is no surprise. Claims that Sen. Obama is an elitist popular with the elite have long been part of the GOP playbook.

But given Sen. Obama’s proposals–which are still just proposals–to raise tax rates on those earning $250,000 or more, it is striking that the affluent came out so strongly in Sen. Obama’s favor. An earlier wealth survey by the Harrison Group showed that voters with incomes of $250,000 or more were leaning strongly toward Sen. McCain, 48% to Sen. Obama’s 29%.

So what gives?

There are several explanations. First, the wealthy, like many voters, may have placed a higher emphasis on the state of the nation than the state of their wallets. Even though their taxes may be going up, their greater priority may be Sen. Obama’s promises to fix the economy, education, health care, the wars in Iraq and Afghanistan and overseas relations.

Another possibility is that the wealthy don’t believe Sen. Obama will go through with his tax increase–at least not right away. With the economy sliding fast into recession, some affluent voters may be betting that any tax increases will be delayed or watered down–and Sen. Obama did signal this possibility on the campaign trail. It is harder to vote against an increase in the capital-gains tax if you don’t expect any capital gains for the next year.

Finally (and perhaps least likely), the wealthy may be responding to Sen. Joe Biden’s argument that paying higher taxes is patriotic. Like Warren Buffett, some of the wealthy may feel it is time to raise their own taxes for the betterment of the country. There may be some voters–more likely those in Upper Richistan rather than those in the $200,000-plus group–who think a shared sacrifice among the rich is necessary to get the American wealth-creation machine moving again. (Among the Upper Richistani’s supporting Sen. Obama, tax policies ranked last in one earlier survey, with only 16% citing them as important. “Social issues” ranked first, with “policies dealing with wars” ranking second, at 67%, and Supreme Court nominations and health-care issues ranking next.)

Last night I was able to participate in FOX Business News’ coverage of the presidential election. Throughout the night I answered questions about the tax policies of the presidential candidates, then I was again featured on the channel’s Money for Breakfast program this morning. In the segment this morning I spoke with hostess Alexis Glick on Obama’s tax plan and the future of this country. Embedded below are two videos from my appearance this morning, enjoy!

Tax Fantasy and Today’s Election Season Rhetoric

From Community Times:

Remember how Sen. John McCain made Joe “the plumber” Wurzelbacher of Holland, Ohio, into a working-class hero for questioning Sen. Barack Obama’s tax plans? A Nashville-based publicist, Jim Della Croce, said Joe’s hired him to help deal with the media attention.

There’s talk of a book, recordings and ... who knows? Maybe a radio talk show, which has become the last refuge of the famously outraged.

Quite a few readers have criticized me and other media folks for picking on Joe. When he turned out to have had a tax lien on his house, for example, it seemed to me as though he should be nicknamed Joe the Tax Dodger.

But, no problem. Joe appears to be having the time of his life. At this rate, he might even make enough money to qualify for Obama’s proposed tax increase.

Tax policy is worth a serious debate. It’s too bad that we didn’t hear it.

Instead, McCain, Alaska Gov. Sara Palin, and some of their most prominent supporters touted Joe, hoping voters were too dense to know the difference between a three-point rise in the top marginal tax rate and the threat of a Marxist takeover.

Politics often is called “show business for ugly people” because both blur the lines between facts and fantasy. Enter Joe the Plumber, who presents the image of a man who is burdened by government, even when he isn’t.

Wurzelbacher asked Obama why he should have to pay more taxes if he buys the business he hopes to buy. Obama’s plan called for families that earn more than $250,000 a year to pay higher taxes. That’s about 5 percent of the population and way above what most plumbers make.

“My attitude is that if the economy’s good for folks from the bottom up, it’s gonna be good for everybody,” Obama explained. “I think when you spread the wealth around, it’s good for everybody.”

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MA Rejects Elimination of State Income Tax

From the Boston Herald:

Massachusetts’s voters rejected a call to eliminate the state’s income tax after critics said it would have wreaked fiscal havoc at a time when the state is already grappling with a financial downturn.

The measure would have cut the 5.3 percent tax rate in half in January, and then killed it completely in January 2010.

Supporters, led by the Committee for Small Government, had argued the best way to cut government waste and overspending was to eliminate the tax, which would have reduced annual state revenues by 40 percent or about $12.5 billion.

Backers also said the question would have saved the average taxpayer about $3,700.

Committee Chairwoman Carla Howell blamed the defeat on the massive advertising campaign by opponents of the measure, saying both sides were initially in a dead heat in the polls and that voters were ultimately swayed by "scare tactics." Opponents spent more than $5 million while supporters raised only about $500,000.

"We knew this was a David vs. Goliath battle," Howell said. "All we needed was a bigger stone."

McCain, Obama economic policies appear to be politics as usual

From LA Times.com:

As Americans head to the polls, they carry their deep fears about the economy coupled with the weight of dire warnings about the potential economic fallout of an Obama or McCain presidency.

Democrat Sen. Barack Obama is accused of having a "socialist agenda," and Republican Sen. John McCain allegedly wants to further enrich "millionaires and billionaires." To listen to the campaigns, the risks for ordinary Americans are extraordinary.

The heated rhetoric is tapping into more than politics as usual. The election is occurring at a time of serious long- and short-term problems in the U.S. economy.

Ever since the late 1960s, incomes have been growing more unequal, leaving middle-class wage earners with a smaller share of the American pie while vast fortunes have been accumulated by a tiny few at the top.

The nation has just ended a long era of economic growth that left the median incomes of Americans lower in 2007 than in 1999, according to Census Bureau data. The impact was particularly hard at the lower end of the income scale.

Election Night on FOX Business News

I am excited to announce that I will once again be a guest on FOX Business News tonight night for a live segment during their election coverage, which will air from 9:00 PM – 12:00 AM EST live. Throughout the segment, I will be interviewed on the next President’s tax proposals and their implications on individual taxpayers, small business owners, and corporations. I am looking forward to this great opportunity, and cannot wait to answer questions from both Alexis Glick and viewers of the program. Be sure to tune in on tonight to watch the coverage!

In Bleak Times, the I.R.S. Looks Good

From NYTimes.com:

Benjamin Franklin said that nothing in this world is certain except death and taxes. When death is not an option and the world is maximizing the uncertainty, taxes look like an intriguing career alternative.

Or, more precisely, what the Internal Revenue Service calls tax administration.

The I.R.S. dangled the possibilities when it held an open house at the federal office building at 290 Broadway in Lower Manhattan on Tuesday. An hour before the fair was scheduled to begin, the crowd began lining up — recently laid-off Wall Street types in charcoal-gray pinstripe suits and trench coats; less formally dressed people; a woman with a new accounting degree on her résumé and a 14-month-old baby in a stroller.

Before their face-to-face encounters with I.R.S. employees, before they got a chance to hear about the agency’s “work-life balance” and its portable retirement plan, they had to do some waiting. The line for the career fair stretched along Broadway, turned the corner, ran down Reade Street and turned the corner again at Elk Street.

Once the job seekers reached the lobby, they had to shed their umbrellas and rain gear. Following security guards’ instructions, they also had to remove shoes, belts and watches, and step through a metal detector.

Hope was an elevator ride away, on the 30th floor, where tables had been set up with handouts describing the particulars of different I.R.S. units. Employees of the agency were waiting to talk about their own careers but were not there to offer jobs on the spot. Most prospective applicants said they were told to go home and search a Web site — www.jobs.irs.gov — for positions they might be qualified for, and to apply online.

IRS Announces New Members and a Chairman for ETAAC

According to their newest press release, the IRS has announced the selection of five new members and the new chairperson for the Electronic Tax Administration Advisory Committee (ETAAC).

“IRS is pleased by the continued support it receives from ETAAC,” said David R. Williams, director of IRS Electronic Tax Administration and Refundable Credits. “ETAAC helps the IRS work toward achieving its modernization goals and helps enhance tax administration on behalf of all taxpayers.”

“The 14-member ETAAC serves as a public forum for discussion of electronic tax administration issues and supports the goal of increasing electronic interactions between tax professionals and the IRS. ETAAC, which was created in 1998, submits an annual report to Congress on the progress of the IRS’ electronic tax initiatives.

Chris Beach of Sacramento, Calif., has been selected to serve as the Chairman of ETAAC for the 2008-2009 term. Beach, who joined ETAAC in 2006, is the Director of Filing Methods for the California Franchise Tax Board where he oversees business operations and product development for the state’s e-file and electronic services programs.

The new members, who will replace the outgoing members whose terms expired, will each serve three-year terms beginning October 2008 and ending October 2011.

The new members are:

Jean-Philippe Choudhry of Agoura Hills, Calif., is the Chief Process Officer for 1099 Pro Inc. where he is responsible for developing and defining processes to meet federal and state requirements for filing information returns. The company’s reporting methods include Web-based solutions and desktop software. 1099 Pro’s clients e-file hundreds of millions of information returns annually with the IRS FIRE (Filing Information Returns Electronically) system.

Paul Colombo of Colchester, Vt., is the former State Coordinator for the American Association of Retired Persons (AARP) Tax-Aide program. His accomplishments include achieving an 80 percent e-file rate, with the help of 120 volunteers, at three dozen sites serving 12,000 clients each year. He has extensive experience with web design, creation, and programming.

Phillip Poirier of San Diego, Calif., is Vice President of the Government and Consumer Tax Division at Intuit. He is responsible for government initiatives relating to Intuit’s consumer businesses (TurboTax and Quicken). Poirier has extensive experience in business development, with privacy/security matters in connection with electronic commerce initiatives and with providing legal and regulatory compliance counsel.

Andrew Sidamon-Eristoff of New York is a former Commissioner of the New York State Department of Taxation and Finance and the New York City Department of Finance. Sidamon-Eristoff has been a leader in conceiving, implementing and promoting e-filing and electronic taxpayer services at the state and local government levels. He is currently a private investor and international consultant in tax administration.

Princess Vlandamir of Dallas is a Tax Strategist and Project Manager for Ernst & Young, supporting the Tax Practice. She co-leads e-filing initiatives, assists in solving return reject problems and manages the filing- season readiness program. Vlandamir also works on tax software applications and eStorage.”

Top 10 Tax Related Lies from the Candidates

Election Day is just a few hours away, and although most people have already decided which candidate they are voting for, there are still many people who are undecided. To help the readers of my blog who are trying to sort through all of the lies that the candidates have been spreading I have put together the following list of the top 10 tax related lies this election season.

1. McCain’s claim that Obama’s plan will increase taxes on 50% of small business revenue.
Facts: The candidates have both been trying hard to win the hearts of small business owners waiting too see which candidates plan better benefits their business. McCain’s statement however, was simply false. Studies have found Obama’s plan will not raise taxes for the large majority of small business owners and McCain’s numbers were very inflated.

2. Obama’s claim that for every dollar that he has proposed in new spending, he has also proposed an additional cut so it matches.
Facts: The Tax Policy Center (TPC) debunked Obama’s plan (as well as McCain’s) saying Obama’s plan would “substantially increase the national debt over the next ten years”. The only way Obama’s statement could possibly become a reality would be the introduction of some huge government spending cuts he has not yet mentioned.

3. McCain’s claim “Joe the Plumber” would face much higher taxes under Obama’s tax plan.
Facts: Obama’s tax plan does give higher taxes to some business owners, but only ones making over $200,000 a year. “Joe the Plumber” would actually be exempt from Obama’s tax increase, as well as the health coverage fine because of his business’ size.

4. Obama’s claim that “independent studies have looked at their respective plans and concluded that his tax plan provides three times the amount of tax relief to middle-class families than McCain’s.”
Facts: The study that Obama is referring to, done by the TPC, did indeed cite this information. However, the TPC failed to include the candidates individual health care tax plans. When you factor in the health care plans, McCain actually gives more tax breaks to middle-class families, and the “three times as much tax relief” no longer works.

5. McCain’s claim that earmarks have tripled in the last five years.
Facts: McCain has used earmarks repetitively throughout the campaign as one of his main points. He has spoken out profusely against them and stated he does not himself partake on requesting them. However, he made the mistake of publicly stating earmarks have tripled, when in fact they have dramatically declined in the past 5 years.

6. Obama’s claim that McCain’s health care tax plan is a loss for the average family.
Facts: Obama makes a point of saying the average plan costs $12,000 and McCain’s $5,000 tax credit will not cover that. However, Obama is basing these figures on two assumptions; the employer will drop the workers insurance, and the workers wages will not increase to offset the loss. A lot of times employers will drop insurance benefits but raise wages to make up most of the difference. In this case, a $5,000 tax credit would more than offset the difference.

7. McCain’s claim that Obama will tax home heating oil.
Facts: In reality, Obama has not proposed a single plan to raise taxes on electricity or home heating oil. In fact, he proposed a $1,000 per family rebate for increased heating oil costs.

8. Obama’s claim that McCain’s tax plan, gives CEOs of Fortune 500 companies an average of $700,000 in reduced taxes, while leaving 100 million Americans out.
Facts: When Obama says that McCain’s plan will give CEOs reduced taxes he is being somewhat misleading. He is referring to the Bush tax cuts, which do in fact benefit a majority of wealthy Americans. However, McCain wants to extend the breaks which are due to expire in 2011, therefore he is not creating new tax cuts but rather extending existing breaks.

9. McCain’s claim that he wants to “double the dividend from $3,500 to $7,000 for every dependent child in America.”
Facts: Although McCain used the term “dividend” incorrectly (he meant exemption), that is not the point. He says he wants to double the exemption, but studies find his plan will actually only increase the exemption by 50% or so.

10. Obama’s claim that under my tax plan, 95% of Americans will get a tax cut.
Facts: Although Obama’s plan does give a high percentage of Americans a tax cut, the actual amount is actually 81.3%. The number, while still high, is not 95%.