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Mitt Romney & Ron Paul: Historic Overview of Their Views on Taxes

David Mitchell — Wed, 25 Jan 2012 13:30:15 +0000

Because taxes can significantly impact the economy by changing the cash flow available to both individuals and businesses, a presidential candidate’s view on taxes has become an increasingly hot topic during the past several election seasons.

Each presidential candidate’s view on tax policy is different. Some candidates weigh heavily on the standpoint that tax money should be used to stimulate the economy, while others believe that taxes should be severely cut in order to stimulate the economy. Taking a look at the history of how the candidates voted on taxes – as well as the stances that they have taken – can give us a good idea as to how they’ll handle taxes if elected into office.

Like all politicians, both Mitt Romney and Ron Paul have each taken their own unique positions on taxes. Here is a historic overview of what these two presidential hopefuls have said and done on the topic of U.S. taxes over the years:

Mitt Romney’s History on Taxes:

November 1994 – Promised not to raise taxes.

March 2002 – Promised not to freeze the tax rollback.

May 2007 – Said that he wanted an end to taxes on capital gains, dividends and interests. That same month, he raised Massachusetts fees, but not Massachusetts taxes, and pledged no new taxes for 2007. He had refused such a pledge in 2002.

August 2007 – Said that the death tax doesn’t make sense.

September 2007 – Signed a no-tax pledge. At the same time, the Democrats pledged to raise taxes.

December 2007 – Stated his intention to reduce taxes for middle-income families.

January 2008 – Said that he never supported the Bush cuts of 2003, but that he also never opposed them. That month, he said that lowering taxes, such as the Bush tax cuts, would grow the economy. He also came out in support of a capital tax rate of zero for those with incomes as high as $200,000. Additionally, in that very same month, Romney raised Massachusetts fees of $240 million, covering only the cost of services. Highway ads were raised from $200 to $2,000. He said that recession could be avoided with tax cuts for middle-income earners, and that he supported the Bush tax cuts.

March 2010 – Supported eliminating taxes on interest and dividends but not with the FairTax.

August 2011 – Said that as Massachusetts governor, he cut taxes 19 times.

September 2011 – Said that the FairTax was not structured well for the middle class.

October 2011 – Said that the middle class needs help.

November 2011 – Said that he didn’t want to raise taxes during a recession.

Ron Paul’s History on Taxes:

December 1981 – Said that inflation was a type of tax for the poor and middle class.

December 1987 – Said that the 1986 tax simplification has actually made the code harder to understand.

December 2000 – Said income tax needed to be overhauled and the inheritance and capital gains taxes should be ended.

March 2000 – Voted yes on small business tax cuts that totaled $46 billion.

April 2002 – Voted to keep the Bush tax cuts permanently.

April 2004 – Voted yes on eliminating the marriage tax penalty permanently.

May 2004 – Voted to make the Child Tax Credit increase permanent.

2004 Campaign Year – His campaign slogan was The Taxpayers’ Best Friend.

May 2007 – Supported working immediately to phase out the IRS.

December 2007 – Said that the most sinister tax is inflation.

January 2008 – Said that spending money would not stimulate the economy but that reducing taxes would.

February 2008 – Expressed his support for repealing the 16th Amendment in order to get rid of income tax.

September 2009 – Said that a disastrous tax code contributes to an underground economy.

September 2011 – Said that governments don’t pay for tax cuts, and that they instead simply give people back their money.

November 2011 – Said that spending is the real problem and that the tax code is merely a symptom.

Planning for Increases in 2011 Tax Brackets

Manny Davis — Fri, 05 Nov 2010 13:50:31 +0000

Taxes are on the rise, and for taxpayers who think that taxes are high now, there is only more to come. Both individual taxpayers and small businesses will be hit by higher tax rates as attempts to simplify the tax code are made to reduce the national deficit.

There are several tax cuts that the President Bush administration passed that are set to expire at the end of 2010. The expiration of these cuts will have an impact around the nation. The current Obama administration has stated the intention to extend some of the cuts but not all are likely to be extended.

Some of the changes that are not likely to occur include:

10% tax bracket will likely not be eliminated.the standard deduction for married couples who file jointly will not be reduced
the top end of the 15% tax bracket for couples married, filing jointly will not be reduced
the middle tax brackets at 25% and 28% will not rise to the projected 28% and 31%
dividend will not revert back to being taxed as ordinary income

Some of the changes are that are set to happen include:

the top tax bracket at 35% will go back to 39.6%
the second from the top tax bracket at 33% will go back up to 36%
long-term capital gains will revert back to being taxes at a rate of 20% instead of 15%

Handling the Change

Taxpayers can do some preparation in light of the coming changes to protect themselves from tax increases including:

Plan to Sell Any Taxable Holdings?

If you have any holdings in a taxable account that have gone up in value, you may want to plan to sell before the year is out.

Anticipating More Income?

If you believe you will be in a higher tax bracket next year, you may want to try to up your income as much as possible in 2010 rather than the following year. You may also want to delay taking some of your tax deductions and apply them to 2011. You may also want to find investment accounts that are tax-fee like bond funds and money market funds instead of the taxable alternatives.

Mandatory Health Care Insurance; Is it a Tax?

Manny Davis — Tue, 02 Nov 2010 13:42:31 +0000

Has President Obama’s new heath care bill morphed from a mandate to a tax on middle class Americans? During his electoral campaign President Obama promised that his government would not impose any tax increases on already burdened middle class citizens. During the debates that have led up to the presentation of the infamous health care reform legislation in question President Obama and his Democrats have argued fervently for the distinction between a mandate and a tax to be preserved.

The argument put forward for the justification of the penalty is reasonable enough. The health care reform proposes to inflict a penalty on persons who refuse to pay for heath insurance, even after they have been proven to qualify and have been awarded with tax credits to make the health care premiums more affordable. These people have essentially decided to take their chances and opted not to pay for health insurance despite the Government’s attempts to make health care universally affordable.

The Democratic stance on the matter is that those who under these circumstances still refuse to buy health insurance will then be hit with a fine. It is this fine that has formed a major bone of contention with the Republican camp. The Republicans maintain that the Government should not be allowed to use its power to determine how a citizen should spend private income, which this mandate essentially does.

The definition of this fine as either a penalty or a tax has come under scrutiny because of an argument used by the Obama camp in defense of its right to implement the fine. The Democrats quote the State’s power to levy and collect taxes to garner legal support from lawmakers who are going through the process of writing the details into legislation. This has raised a hornet’s nest from detractors because it has cast a shadow over the integrity of all those involved.

The President has been continuously quoted stating that the mandate was a penalty and not a tax and therefore he has refused to accept any notion that he has misled the public on the intent of the bill.

The Department of Justice has also said that this mandate is tantamount to a tax and no fiddling with definitions or explanations can really change that fact. Simply put, the “penalty” is expected to raise close to $4 billion in revenue by the year 2017 and this revenue will be monitored and collected by the IRS. The penalty must also be noted on income tax forms as an increase in liability so it basically fits the definition of a tax.

To be fair, although the penalty does fit the definition of a tax one can hardly argue with the logic that supports this fine. It is a well documented fact that those who refuse to pay for health insurance increase the burden on the public health care system and essentially affect the level of service meted out to everyone. They are a cost to be carried.

The question here is simply “does the end justify the means?”

Ever Hear of the Inflation Tax – Your Taxes Could be Raised Indirectly

Debra Dragon — Tue, 26 Oct 2010 13:43:57 +0000

There is little doubt that we are a country in trouble, despite the fact that the government may try to convince us otherwise. American consumers are finally waking up and realizing that we must pay closer attention to what is happening in our country. After seeing retirement and savings accounts almost wiped out in recent years and witnessing the continuing struggle of low and middle class Americans, it is time to for this consumer driven nation to understand more of what is happening behind the scenes.

American taxpayers are very familiar with some standard taxes that have grudgingly been accepted as a necessary evil in our lives. Many of these taxes are automatically withheld from our earned wages while others are tacked onto products that we purchase each day. And still others may be wrapped up in loans and paid automatically as is the case with real estate taxes. In reality most taxpayers although aware of taxation do not fully realize just how much the government is really costing them. This is due to the fact that little thought is given to an indirect tax that results from government spending.

Inflation represents this indirect tax that American consumers pay each day, most of whom do not make the connection between inflation and taxes. It is believed that the very people who can least afford additional expenses, the lower and middle class groups are hit the hardest by the inflation tax. To understand how this works you must first understand what inflation is and how it impacts your personal finances.

When the government does not collect enough money through regular taxation, programs may be funded by borrowed money. Morever, the Federal Reserve has recently announced another round of “monetary easing” or printing. As a result the value of existing dollar drops while the cost of living rises. For example if the government inflates the value of the money supply by 5 percent which results in higher prices for the products and services American’s use every day, the taxpayer is indirectly paying a 5% tax on all goods and services.

When the cost of living rises as a result of inflation, the lower and middle classes suffer more due to the lack of financial resources to level out the rising costs. Ironically many of the people who are hit hardest by inflation fail to make the connection between government spending and their own financial hardship. Unfortunately any government spending will eventually result in some type of taxation. The government simply cannot tax, borrow and inflate its way to wealth as a nation, however these actions may result in wealth for individuals. This practice can only be maintained for so long before the economy hits rock bottom which will of course hit the lower and middle class citizens the hardest.

It is important for American taxpayers to get involved and educated on the topics of government spending, taxation and inflation. Many argue that we have very little inflation now. While that may be true according to the government CPI, one thing is for sure, the dollar index is falling, and Gold, Silver, and other commodities are at all time highs. If you define inflation by an increase in the money supply, then we have it now. If you define it as an increase in prices, well than all I can say is they are coming.

2010 is the Year to Die: Understanding Changes to the Estate Tax

Manny Davis — Thu, 19 Aug 2010 14:00:34 +0000

If you got a lot of cash, this may be your year to kick the bucket. 2010 is a year in which Congress has permitted the estate tax to slip which means heirs to a fortune will be receiving their inheritance without having to pay the government. This is the first time in nearly 100 years that the estate tax has lapsed.

When owner of the New York Yankees died in recent weeks, it shed light on the fact that Steinbrenner’s heirs would not be required to pay taxes on the roughly $500 million fortune. One US Senator pointed out that out of the 400 total billionaires in the United States four have died in 2010 which means the government has lost out on the estate taxes on estates worth billions of dollars.

Why the Lapse?

The estate tax lapse is a idiosyncrasy of politics and tax laws. In 2001 under the leadership of President George W. Bush, the estate tax rate was lowered to 45% from 55%. Also, the amount an individual can pass on to heirs without incurring the estate tax increased from $1 million to $3.5 million. The new tax schedule was then set to expire at the end of 2009. A new higher rate was set to begin again in 2011. This left 2010 open with no regulation and when lawmakers came to an impasse, nothing else was ever decided.

Political Sides

As Democrats have been pushing to extend the benefits for the unemployed, Republicans have been pushing for inheritance tax breaks. But as time goes on some Democrats are jumping on board the estate tax train. Republicans believe that a tax cut, especially a cut on the ‘death tax’ as estate taxes are sometimes called, is a way to stimulate the economy. They say that without the breaks, small and family-run business will continue to suffer without the break.

Several Republicans have proposed a measure to ease up on the estate tax by offsetting the lost revenue with other resources. The drawback is that no new idea for offsetting lost revenue has been conceived. Last year, the income brought by estate taxes totals $14 billion. It may be some time until an idea is born.

Taxes like the estate tax have been in America since the early days and were used to finance wars, including the Civil War. In 1916, a permanent version of the tax was established. When the 2001 reduction of the estate tax was presented, the US was not yet in a full-fledged war with Iraq or Afghanistan and there were budget surpluses in the government.

Poor Entrepreneurs, Lucky Heirs

While estates may be exempt from federal taxes, some states will still impose taxes on an estate. Small business owners and entrepreneurs will hurt the most due to the lack of action on the part of Congress. Health care reform became the hot topic of debate and the estate tax seems to have fallen by the wayside.

Any inheritance awarded in 2010 will be without obligation to the government for estate taxes but come 2011 the estate tax will be reinstated and heirs to estates will be required to pay a higher rate than in 2009. The exemption level will go back to the original $1 million like it was in 2001.

Healthcare Bill Disaster: Send 1099s to Everyone

Manny Davis — Thu, 15 Jul 2010 14:00:51 +0000

The IRS 1099-Misc form has always been used to track payments made from one company to either an individual or another company that are not salary-based. If you hire someone to design a website, it’s a one time payment. If that payment is more than $600, then you issue that person a 1099-Misc form, and send one to the IRS, so that they can accurately claim the income on their income taxes. These forms have been used for independent contractors, but not for businesses or corporations in the past.

Starting with tax year 2012, that is all about to change. Hidden in the Healthcare reform bill are changes to how 1099-Misc forms are used. You will need to report any and all transactions totaling more than $600 for the fiscal year, whether it is to independent contractors, businesses, or even retailers!

If you go to the store to buy a computer for your business that costs more than $600, you will need to issue them a 1099- Misc form! You’ll need the store’s federal ID number to issue it. If you pay more than $600 a year to your cable internet or phone companies, they will also need 1099-Misc forms. Landlords, health insurance, accountants… the list goes on and on. However, if you purchase goods and services over $600 from a vendor with a credit or debit card, you do not have to issue them a 1099. If you pay with check, cash, or cash equivalents, you will have to issue them a 1099.

The new law for 1099-Misc extends extension 6041 of the Internal Revenue Code, which is the section that requires business owners to report income paid (non-salary) over $600 in a year, and changes it from having to send 1099-Misc forms to individuals, to any business or individual:

“Section 6041 of the Internal Revenue Code provides that all persons engaged in a trade or business who make a payment in the course of such trade or business to another person of rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable gains, profits, and income of $600 or more in any taxable year shall render a true and accurate return setting forth the amount of such gains, profits, and income, and the name and address of the recipient of such payment.Section 1.6041-1(a)(1)(i) of the Income Tax Regulations provides that the payments required to be reported under section 6041 include the following: (1) salaries, wages, commissions, fees, and other forms of compensation for services rendered aggregating $600 or more; and (2) interest, rents, royalties, annuities, pensions, and other gains, profits, and income aggregating $600 or more. The return of information required by section 1.6041-1(a)(1)(i) must be made on Form 1099. See section 1.6041-1(a)(2).”

If you thought filing your business taxes was a nightmare before, just wait until you deal with this nightmare of paperwork! For small businesses without accounting departments, this is going to be a time consuming task. While the changes are being initiated to increase tax revenues for the government, there’s a good chance that it won’t have much effect. If you consider the increased need for professional tax services that a change like this will cause; and the fact that tax services are eligible business expenses and are deducted at tax time – it seems that the change will result in more paperwork but not much more in tax revenues for the government.

Having Trouble Paying Your Installment Agreement with the IRS?

Manny Davis — Fri, 09 Jul 2010 14:00:03 +0000

So, you’ve entered into an installment agreement with the IRS and now realize that you are unable to pay, what do you do? First off, don’t panic or become discouraged- the economy is extremely volatile and tough economic situations are understandable- even to the IRS. Take a moment to consider your situation, and how you arrived at your current state. Your wages may have recently been cut, or maybe you have been unemployed. Perhaps you have been negatively affected by an economic cycle, or you have taken ill. Whatever the case may be, it’s important to formulate and focus on your next actions rather than dwell on the past.

That being said, make sure to act quickly in informing the IRS of your situation and inability to pay. The worst thing that one can do when unable to taxes would be to do nothing, and unfortunately this seems to be the case time and time again. While it may be easier to ignore the problem and withhold payments for the time being, just one missed payment can begin a slew of unpleasant events with the IRS. It’s likely that the IRS will immediately detect the defaulted agreement and take action much quicker than you expect. And, once they begin, garnished wages, tax levies, and other forced collections, all become likely scenarios- causing you to owe even more money.

Sound appealing? We didn’t think so, either. And, even though contacting the IRS to let them know that you cannot make your payments on your tax installment agreement may not be the most enjoyable thing to do, it’ll sure save you a lot of unnecessary stress and trouble. Be sure to explain your situation carefully, capitalizing on any details you deem important. Also, prepare for the call before hand with proper dates and documents to back up your assertion. If your case appears valid, the IRS will likely understand- they are human, too. In most cases they’ll work with you to adjust the installment agreement- either reducing the payments or even deferring them for a later time.

However, the IRS may not be so understanding if they investigate and consider your monetary actions and inability to pay unwarranted. Be advised that the IRS will study each situation carefully; even requesting income and expense documents, in order to make sure that an individual is truly unable to pay because of ill circumstances rather than unwise monetary actions- like gambling in Vegas or making extravagant purchases. But, even if this is this case, contact the IRS anyway, because defaulting on a tax installment agreement with no explanation can yield far worse consequences, as previously discussed.

Why the State Corporate Income Tax Should be Eliminated

Debra Dragon — Tue, 06 Jul 2010 14:00:33 +0000

Ronald Reagan once proposed eliminating the federal corporate income tax. That was in 1983 and the same issue has been brought back to the table; however it doesn’t seem like too many people are taking notice.

What is the Deal With the Corporate Tax?

Under the current tax regulations, corporate earnings are being taxed twice. The first time they are taxed is when the corporation earns money. They are taxed a second time when the money is dispersed to the individual shareholders. The corporate income tax is considered to be a growth preventing measure that, if eliminated, would help cut wasteful tax distortions and allow growth in the short and long-term. It would also help to increase America’s competitiveness across the globe and raise wages in the future. Currently, the US has the second-highest ranking corporate income tax. Other chief competitors of the US have already reduced their corporate income tax rate, leaving America to be less competitive in business.

State corporate taxes are descendants of the federal income tax and as such, have flaws. Businesses are being double taxed at the agency and individual levels and essentially penalized as a corporation. There is also issue with the fact that business span across different states and the rules differ for corporate income in each state. Many believe that local government will use the corporate income tax as their own economic development account when they are used to offer tax incentives and credits to bring new business into the state. Overall, state corporate income tax does not bring in a lot of revenue. Some businesses skirt the system by establishing holding companies in states like Delaware to avoid the higher tax costs.

What Are States Doing?

Some states have already begun fundamental tax reform. For instance, California has proposed a BNRT, or business net receipts tax, which is based on a Value Added Tax that replaces the corporate income tax and reduces personal income and sales taxes. Ohio has done away with several business taxes. This includes the corporate income tax. They have replaced the eliminated taxes with gross receipts or the CAT (corporate activity tax).

Where Is the Solution?

Some have suggested dropping state corporate income tax across the board and requiring reporting of all business income. This will prevent companies from shifting monies to states with lowered or no taxes. Regardless of the many opinions on the tax issue, it doesn’t seem likely that elimination will happen. It is too easy for states to go along with the federal income tax legislation and regulations. While tax reform issues are still on President Obama’s agenda, it doesn’t appear it is a main focal point for change at this time, leaving America struggling for the competitive edge and job security.

How the FTC Wants To Tax and Subsidize Journalism

Debra Dragon — Thu, 01 Jul 2010 14:00:25 +0000

Journalism is not what it used to be and the Federal Trade Commission is exploring ways to reinvent the craft. The FTC proposed that the US government should be the hub of a media overhaul but some are worried it is not the right course of action.

Concern now is that the Internet has changed the way things are being done. The Web has been providing consumers information in a way never before done and is essentially strong-arming the media companies to follow suit. News organizations now must work to adapt to the changing market through experimentation. Reports show there is doubt the market will survive on its current course and thus the government needs to step in and save the day.

Varieties of ideas are being thrown into the mix to help save the industry but most are not to the consumer’s benefit. Some proposals include taxation on news websites that can be collected and divided up between newspapers. The tax would also affect sites like Digg and Reddit. These sites gather news links from around the world and give readers a forum to discuss news issues hence their popularity.

In addition to the taxing of news websites, proposals also offer the possibility of tax exemptions to news organizations. Thoughts about establishing a national fund for news organizations have also been discussed. Those funds would be created from monies coming from the new taxes. There has even been talk of an extra tax being placed on electronic devices people use to read the news, like the Apple iPad or Amazon Kindle. Even laptops and desktop PCs may see the added tax.

Should the government step in, the conflict of interest that would be created is apparent. Government contributions to the salaries of reporters and news workers would hardly create unbiased results. There would be no incentives for telling a story like it is. Consumers would suffer the most if it is decided that the government is the only saving grace. It would become only more difficult for them to read about or share various viewpoints on newsworthy subjects.

Some of the proposed taxes include:

Broadcast taxes – since commercial radio and television broadcasters are given rights to a profitable spectrum for free, it is essentially a public subsidy. When taxed at a rate o 7%, a fund of up to $6 billion dollars could be collected. In return, commercial broadcasters would not be obligated to provide public-interest programming estimated to cost broadcasters $10 billion each year.

Electronic device tax –If a 5% tax is added to consumer electronics, the amount collected is estimated to be around $4 billion each year.

Taxes on advertising – a 2% tax on commercial advertising would bring in about $6 billion a year. If the tax write-off on ad costs for businesses where changed from a write-off every year to one covering a 5-year period, another $2 billion could be collected.

Cell phone taxes – if consumers were to pay a small tax on their cell phone bills for the content they access digitally, $6 billion could be collected each year of taxed at 3% of the monthly fees.

Mandatory Health Care Insurance; Is it a Tax?

Increasing Rate of IRS Threats Spurred by Plane Crash?

Manny Davis — Wed, 24 Mar 2010 01:36:22 +0000

Last year threats on the IRS have increased and in the past few weeks the IRS has been receiving threats at an increasing rate. The National Treasury Employees Union seems to believe that the threats are increasing because of the actions taken by Joseph Stack, the man who flew his plane into the IRS building last month which killed himself and one other IRS employee. Was it the plane crash that caused an increase in threats or is it the fact that the IRS is getting more complex and difficult to deal with each year?

The IRS is investigating 70+ possibly threats/inappropriate comments made to various IRS workers since the attack on the IRS building. The Wall Street Journal says that threats on the IRS have seen about a 11% increase over 2008. In 2008, about 900 threats were made against the IRS and about 1,000 threats in 2009. Threats seem to be a common part of IRS dealings each year and they have been on the steady incline for years.

It makes you wonder if the National Treasury Employees Union is trying to use the plane crash as a way of justifying the increase in IRS threats. It is a fact that each year that goes by the IRS does get more complex and makes the lives of individuals harder and harder. Joe Stack’s suicide attack on the IRS quite possibly could have raised awareness to people that the IRS is difficult and they are not alone with their tax problems. There are also many other factors that could cause for the increase in threat, such as the fact that it is tax time now, the tax code did get more complex over the last year, and many people are running into problems with paying the IRS at an increasing rate because of the poor economy.

In a democratic nation like our own, the public chooses the individuals in charge of creating a tax system. These elected officials try their best to try to create a type of community that the public wants by changing tax policy. Are IRS threats increasing because the US people are not getting the type of community that they want? Has the IRS gotten too complex? Taxes are constantly debated and tax laws are changed to try to be fair to everyone. There is no doubt that taxes are an essential part of any strong country. This just may be one of those issues that will always be ongoing because it is not possible to please everyone and also some individuals will never understand how essential taxes are for the country.

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