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Redistributing the Tax Burden - and the Wealth

2008-10-24 by

In the course of addressing the concept of people helping each other, and this presidential campaign where the candidates talk of pushing the tax burden on the very rich, the top few % of the population – there’s a great deal of criticism or sarcasm. Marx’s concept of ‘FROM each according to his ability; TO each according to his need’ which was so brilliantly, and scornfully exposed in most of Ayn Rand’s novels doesn’t hold true in today’s economy.

Today, the average ‘taxpayer’ is working more hours than ever on jobs that are paying less than ever before. They are not slacking off. They are not freeloaders. They just aren’t earning what they are worth. The median income level for 116 million American households for 2007 was $50,233
Can you really support a family of four on that in an urban area where just the rent/mortgage is about $14,000 per year?

IRS statistics (2005) show that less than 3% of the population has income over $200,000. (and less than 3 million people with net worth of $1.5 million or more.)

The problem is, among the 1/3 million taxpayers whose net worth is over $5 million are many executives on Wall Street and publicly held corporations who have been paid millions of dollars for doing a sub-standard, or even criminal job – or for selling sub-prime loans, knowing the homeowner would never be able to make the payments when the honeymoon rate ended. These people are not the Randian or Nietzschian superman who perform to top standards or create great works.
Since they won’t have to face legal fees or criminal prosecutions, do you really mind if they pay a little extra tax to cover the cost of unemployment, health care, and housing for those whom they’ve bankrupted?

In an interview with the Libertarian candidate Bob Barr on one of the news shows last weekend, he was asked what he would have done if he were president during this troubled time. Barr said one of the first things he would have done is to instruct the attorney general to start some criminal investigations in the misconduct by Fannie Mae and Freddie Mac. (Why haven’t I heard anyone else say that?) One of his press releases says , “We need an independent investigation of the money spent and tactics used by Freddie Mac and Fannie Mae that enabled them to so abuse the public trust.”

I don’t know very much about this Libertarian fellow who used to be a Republican Representative from Georgia. What he does tell us about himself is – that Bob Barr supports firearms, and is for marriage for everyone. But doesn’t even mention a woman’s right to chose on his list of issues at all. (Don’t you want to know which way he leans?) He is an advocate of less government – in keeping with the Libertarian philosophy.

Let’s face it, we all like the idea of less government – and having the government stay out of our business. In fact, we just saw the results of the government staying out of the mortgage industry. They stopped overseeing the transactions and removed the regulations. Did the market forces take care of things themselves? Heck no! Perhaps the laissez faire concept doesn’t work as well as theorists think it should?

Barr does want to reform the tax system, perhaps replacing income taxes with a consumption tax, like the Fair Tax System. It’s like a national sales tax of 23% (wow!). As a consumption tax, it’s a regressive tax. The burden is higher on the taxpayer who spends the largest percentage of her income on consumables – poor and middle class. Sure, the wealthy may pay more in absolute dollars (think of the tax on a yacht). But as a percentage of their income, the Fair Tax is a small percentage. I’d still rather see a flat tax on taxpayers and businesses – where everyone who earns more than 2x or 3x minimum wage pays a fixed amount of tax. Period. With no fudging or cheating, the overall tax rate can be lower.

Hey, this is neat. The Fair Tax folks compared McCain’s and Obama’s tax plans to the Fair Tax.

By the way, looking at the IRS statistics from 2005 tax returns, have you come to realize that Barack Obama wants to shift the largest part of the tax burden for the entire country onto the shoulders of about 3 or 4 million taxpayers? As angry as we might be at the country’s current economic situation, that’s impractical and ridiculous. We need a president who’s in touch with financial reality.

We’ve already talked about McCain’s proposal to switch health care costs and choices directly to the taxpayer by giving each household $5,000 to cover the cost of over $12,000 worth of premiums for a family of 4. What a clear understanding of family finances that is!

Unfortunately, so far, none of these candidates make me feel secure about our future.

Please, please, someone tell who we can trust to lead our country?

We’re getting down to the wire and I can’t figure out who is going to the least damage if elected!

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Census Bureau Reports
Income, Poverty, and Health Insurance Coverage in the United States: 2007
IRS Stats
Analysis of 2005 Tax Returns
IRS Stats
Top Wealth Holders of $1.5 million or more 2004
Bob Barr, Libertarian Presidential Candidate
Call to Investigate Fannie Mae and Freddie Mac
Bob Barr, Libertarian Presidential Candidate
About Bob Barr and his policies
The Fair Tax
A National Sales Tax of 23%
The Fair Tax
Comparison of Presidential Tax Plans

Shameless Promotion Month

2008-09-12 by

Happy Shameless Promotion Month

Since this is Shameless Promotion Month, I suppose I’m obligated to promote myself – shamelessly.
So let’s see what’s going on this month, OK.

1) Join me and some extremely interesting speakers at Knotts Berry Farm on September 25-27th at NATP California’s Annual Conference and Meeting. I’ll be teaching two workshops on exciting things like preparer penalties and how to do a terrific client interview so you glean every bit of useful information from your client – to keep their taxes the lowest possible, legally. You’ll learn all about this year’s Tax Court Exam (they only offer it every two years); reporting issues for same-sex marriages; the mortgage relief rules – and all the California and Federal updates.

2) The live class for the EA Exam Review is wrapping up. We’ll be finished by Saturday the 20th. Don’t despair. All the recorded and written lectures are available for Enrolled Agent candidates to use to help you pass this year’s exam on a self-study basis. You can still team up with study buddies around the country – heck, around the world! (I am hearing from students every day about their experiences passing each successive segment of the exam.)

3) I will be recording a video series of tips for small businesses in October for a powerful and fascinating small business site to launch next year. The good news is, once they are placed on a new site launching next year, you’ll have access to them at no charge. In fact, you’ll have access to top of the line information from a dozen business experts on the same terms.
(links to come)

4) I need to finish up the proposal to McGraw-Hill who wants to issue a new edition of Small Business Taxes Made Easy. Next year, you’ll get a book filled with tips to help you build a business properly, and take the best tax advantages.

5) In the meantime, I’ll be updating the ever-evolving e-book, The 100% Home-Based Business Solution
and teaming up with Tom Buck, CPA to package it with his recorded audio lecture series – and a monthly webinar we will present jointly to help small businesses deal with your tax questions.
(links to come)

6) I am recording a one-hour interview with Ed Gandia, of to go with a kit for folks contemplating starting their own business. It will be out this year.

7) This month, I will be recording two video courses for The Learning Annex – one is the “Do-it-Yourself Offer in Compromise”, the other is 10 Businesses you can Start Cheaply – or even for free.

8) You will find TaxMama quoted in dozens of major publications (print newspapers, magazines, trade journals and online) over the next few months, since I speak with at least one journalist a day.

There’s probably more…when I remember, I’ll add it in.

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QuickBooks 2008 - Update - additional Resources

2008-02-29 by


QuickBooks releases useful customization tips compiled from feedback Intuit’s received from experienced QuickBooks customers.

Here are three customization videos on YouTube that you could use as well.


quickbooks2008 review

Ah yes, just what the world needs –
another edition of QuickBooks. Sigh.

You know how I feel about “if it ain’t broke,
don’t fix it”, right?

And last year, I told you, for the first time, QuickBooks 2007 is a must-have.

So, do you think that I’m about to recommend an upgrade two years in a row?

Well, it all depends.

If you’re using some version of QuickBooks now – and you’re happy with it and understand how it works, and can do what you need to do – stay where you are.

For those of you who are using QuickBooks right now, and who find it confusing, or who often have questions about how to use a feature or what to do – YES. Absolutely!

Also, if you’re one of those people in business for yourself, who can’t seem to get your billing together and get invoices sent out until months later – you’re losing money. And YOU need the new edition of QuickBooks.

QuickBooks Pro and QuickBooks Premier Edition 2008 is all about help.

Help – There’s a permanent Help tool that you can keep open in the right-hand column. Whatever you’re working on, it will give you tips. Intuit has learned more about context-sensitive functions. So, whatever field you’re in, in whatever form or screen, the Help tool will display links to explanations specifically about that. Another new feature – you’ll be able to click a link that takes you directly into the QuickBooks Community Site. The link will take you directly to right discussion page. Oh, I nearly forgot. There’s a video tutorial you can watch to walk you through a variety of tasks.

quickbooks2008 help

Road Map – In fact, when you open your company’s QuickBooks 2008 file, you’ll see a string of icons highlighted, to walk you through the ‘what do I do next?’ maze. Just mouse-over any icon to see the whole workflow.

quickbooks2008 road map and guidance

Set-up – When you set up a new business now, the QuickBooks development team has cut the steps down from about 100 to about 30. They’ve come to the realization that you can make some decisions as you go along, once you have a better grasp of your company’s needs.

Invoicing – (available in Premier only) There’s a vastly improved time tracking function. When you finish a job or project, or week, or day, or whatever your billing increment is – you’ll be able to press a key and produce all your invoices, ready for your review. Once you’ve made your adjustments for time or expenses you don’t want to bill; or for things/functions that have special prices (higher or lower) – just click that key and it will e-mail all your invoices to your clients. In fact, using QuickBooks new Online Time Tracker (sold separately) you can integrate it directly with your Outlook appointment/time tracking software. So you’ll only need to enter time and related out of pocket expenses once.

quickbooks2008  outlook time tracking

Mileage – Incidentally, did you know that they added a mileage tracker 3 years ago, that integrates into the billing system?

Outlook Integration – QuickBooks 2008 integrates client data, e-mails and other from Microsoft Outlook and Outlook Express – so you can enter all the data into one place and save a lot of time and keypunch errors.

Unit of Measure – It’s always been a pain to enter something as an “Item” being sold in certain quantities, like one unit, or a box, or a pound – then end up selling it as a pair, or a case or a carton or a package deal. You’ll easily be able to set up instant conversions.

Reports – You’ll be able to generate pretty reports with graphs and charts to get a visual feel for how your business is doing. You’ll also be able to see key account balances at a glance, right on the screen.

Business Plan – (available in Premier only) – You can create a business plan, projecting income and expenses for up to 3 years. Of course, it’s exportable to Excel for any further tweaking and prettifying. And you can create a PDF version so you can lock the data in and share it with managers, investors, bankers, etc.

Multi-User – There’s a 3-user version which can be expanded up to 5-users with a Local Area Network (LAN) and additional upgrades.

Visiting Folks – Before you go to see a client, vendor, employee, or other office, simply pull up their record in QuickBooks 2008. It will link you to a map, with driving directions, which you can print out, complete with the address. In fact, if your travels take you to several people – just change your “from” address to the previous stop’s location – and you can print out directions for each stop of your day.

quickbooks2008 maps and directions

Internet Visibility – Last year, Intuit introduced their partnership with Google Ads. You got:

  • 1) Integrated Google AdWords – new users would get a $50 in AdWords credits
  • 2) Integrated Google Maps – users could easily create a Web presence by listing their businesses on Google Maps
  • 3) QuickBooks Product Listing service – which would allow businesses to list their products on Google Base so they’d show up on Froogle, etc

This year, with their new WebListings, that’s been expanded to include Google Maps, Yahoo! Local, and And all the business has to do is enter their data once, and it populates all those local listings

quickbooks2008 yahoo google and weblistings

Accountants – The Accountants version is also backward compatible with 2007 and perhaps a couple of other years. Like 2007, your clients can keep working and making entries while you make your adjustments – no matter how long it takes. BIG IMPROVEMENT – your clients can create an accountant copy with a press of key AND e-mail it directly to you, with ENCRYPTION.

Incidentally, there are 5 free webcasts you can attend to learn more about how to use QuickBooks 2008 – and get CPE. You can get 1-2 hours of CPE, depending on the workshop. Click here.

Get your copy of QuickBooks 2008 here.

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2008-02-22 by

By Sally A. Dalton, EA in Orgeon, Ohio

Mom & dad getting older? It’s not easy to discuss your parents’ wishes for the future, but it may be one of the most important talks you’ll ever have.

1.Who are your doctors? In the event of a medical crisis, you should know who their doctors, therapists, dentist, and pharmacists are. Also, you should have a list of the medications that they are taking and the results of the latest tests.

2.What medications are you taking? Get a list of prescription drugs, vitamins, supplements and over the counter drugs as well as any allergies. Keep an annual
update of this list.

3.What do you want me to do when you can’t make your own decisions about your health? Your parent should have a living will-a legal document that spells out their end-of-live wishes-is a must. Also, a durable power of Attorney for health purposes is also a must. This enables a person of their choice to make medical decisions when your parent is not competent to do so. Give copies of these forms to your parents’ doctors and close family members.

4.Where do you keep your financial papers? Reassure your parents that you don’t need to know their assets, just where they keep the important information. Social Security and Medicare info, pensions, investments, interest. Bank account numbers, credit card numbers, insurance policies, location of any safety deposit box and any debts should be kept in one file.

5.Where do you think you want to live? There are many options-home health care aides, assisted living, retirement communities and nursing homes. Knowing
what you parents want and can afford helps in making the decision when that time comes. Your parents have visited friends in alternative living situations and have some sort of opinion about where they would like to live. It may surprise you, but most parents do not want to live with their children.

6.What is your goal in life right now? How do your parents want to spend their golden years. Do they want to live long enough to see their grandchildren married and to meet their great-grand children? Do they just want to be around if they can tend to their garden? Do they want to travel? Is golfing necessary for their happiness? Find out what your parents can’t live without and then you’ll have an insight into what decisions to make on the tough life or death issue.

7.What type of final arrangements would you like? This is a tough topic to discuss with your parents. But knowing if they have pre-planned or pre-paid their
funeral expenses and what funeral home, is a topic for parents and children to discuss. What cemetery, do you have a plot, do you want to be buried or cremated? If you know the answers to these questions then you will be less vulnerable to the sales pitch of a funeral home owner. This is a discussion for the entire family, so that everyone understands your parents’ wishes.

8.How do you want your possessions distributed? The object here is to honor your parents’ wishes and to also keep peace in the family. In a perfect world, there would be a will instructing how all possessions should be distributed. Without a will, family members can get into very heated arguments over who gets what. Remember, if there is no will, the government will get their share and some judge may decide how the estate will be divided. This leads to family fights and
Permanent severed relationships. At least, discuss their most sentimental items and who they want to inherit them.

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Emergency Tips

2008-01-07 by

Looks like we’re having really bad weather all over the country. I am hearing from many people about bad storms and power outages.

If you’re in an area where storms are about to hit this winter, please do whichever of these things is approporiate to your situation:

Cut tree limbs – if there’s anything near your home, porch, garage, etc. – cut them off now, before the next storm hits.

Look at your tree trunks to see if there are any cracks. In high winds, large branches or entire sections of trees will come crashing into your home.

If your area normally floods, or if you’ve had fires or erosion near you – pick up sand bags NOW and start filling them and placing them to protect your home. You can’t place them properly during a storm – the ground where you should have place them is too unstable.

Does your area have tornadoes, hurricanes, etc.? If you don’t have storm windows, it’s time to get them and install them. Same with areas that haven’t had high winds like that, but have started to have them.

Get a generator, candles and lots of batteries. Make sure your generator is fully fueled – and that it works.

Get extra batteries for your laptop, just in case you can’t plug it in for a few days. It may help you communicate with the outside world – and perhaps even keep working, if your power goes out.

Oh, yes, get a decent transistor radio, or portable radio – with batteries, so you can tune into emergency broadcasts.

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