Duvall & Associates, Inc.
BUSINESS ADVISOR NEWSLETTER
 

'The mother of all tax bills' will likely mean changes

- by Alan Duvall 

Published in Dayton Daily News  September 30, 2007 

“Wait’ll they get a load of me.”  –Joker

Emboldened by his ascension to the chairmanship of the House Ways & Means Committee, Charles Rangel has boldly announced his primary fiscal goal for the coming election year – “The mother of all tax bills.” 

His proposed bill will focus upon repeal of the accursed Alternative Minimum Tax and endowments of middle-class tax relief.  Although politically populist, it is projected these amendments will cost the Federal government an estimated $1 trillion in revenues. 

To balance the budget, Rangel asserts revenue raisers will include the closure of corporate tax loopholes such as carried interest measures.  But realistically, elimination of such perceived loopholes will generate offsetting revenues far short of the $1 trillion deficit.  

Where else to rummage for tax bullion?   

By necessity, the “wealthy” will endure the brunt of increased marginal tax rates in the range of at least 3-5 percent.  Appeals for escalation of capital gains rates from the current 15% are also echoing through government chambers.   

More politically palatable is the option of simply allowing certain tax breaks to expire of their own accord, thus avoiding personal tax-monger barbs from voters. 

Since many recent Bush-era tax breaks are time-sensitive, the array of expiring provisions is quite extensive.  IRA-funded charitable contributions, higher education and educator expenses, itemized sales taxes and designated energy-saving credits are all time-tabled to expire after this year. 

Future death sentences are currently mandated for additional tax-saving measures such as expansive first-year business depreciation, capital gains and estate taxes.  

Individual and business taxpayers must be aware of expiration dates and strategize timing schemes to maximize future tax savings.  Good or bad – massive tax reform is roaring our way and higher rates are on the horizon. 

“Timing is everything – you’ve got to get it right.”  -Chris DeBurgh 

Alan Duvall is a certified public accountant in Dayton.  Contact him at Alan@Duvallcpa.com.  Previous articles archived at www.duvallcpa.com.