Jake Tapper is the Senior White House Correspondent for ABC News.
He did a great job yesterday breaking down the Administration’s $ 3.8 Trillion budget proposal.
Tapper knocks off 8 zeros so the “family” budget looks like this:
Spending $38,000
Income $29,000
New Debt $ 9,000
Add the new debt to the family’s outstanding credit card debt of $153,000.
Yikes.
You can watch Tapper’s straight forward explanation at http://abcnews.go.com/blogs/politics/2012/02/what-if-obamas-budget-were-your-familys/
The Congressional Budget Office projects a $1.1 trillion federal budget deficit for fiscal year 2012 if current laws remain unchanged. And the national debt stands at $15.3 trillion and counting.
Most everyone agrees our country has a debt and deficit problem. And reasonable people have differing views on how to address the problem.
President Obama sent his 2013 budget plan to Congress today. The House passed their 2012 budget plan last April, and they’ll be doing the same for 2013 sometime this spring.
The Senate hasn’t passed a budget plan in over a 1,000 days and counting.
All of the plans have one thing in common – they only slow the increase in spending. It’s based on the concept of “baseline budgeting.”
Yesterday I heard a commentator explain the problem in a way that most of us can understand.
Say you went on a diet and your plan was to only gain 15 pounds over the next 12 months. If you only gained 10 pounds, you actually reduced your weight by 5 pounds.
That’s how baseline budgeting works.
To learn more about baseline budgeting check out http://en.wikipedia.org/wiki/Baseline_(budgeting)
The CIA’s World FactBook is one of my favorite online resources. We’ve written about it before in an article on global investing.
Thinking about a vacation to Belize and want to learn more about the country? You’ll find lots of useful information on topics ranging from climate and transportation to people and society, just to name a few.
Wonder what the CIA’s take is on the economy and debt crisis in Greece? You can find that as well.
And back to global investing.
Right now a 10-year Italian bond is yielding 5 ½ %, while a 10-year Spanish bond yields about 5 %.
A 5-year Portuguese bond is yielding almost 17 %, but read the World FactBook and you know why:
“Investors, however, continue to express concern about the government’s ability to achieve future budget deficit targets and obtain foreign financing to cover its sovereign debt obligations when the EU-IMF financing program expires in 2013”
You can find the CIA’s World Factbook at: https://www.cia.gov/library/publications/the-world-factbook/ .
Just select a country and you’ll find useful economic, political, geographic and other information.
And there’s the Kid’s Page at https://www.cia.gov/kids-page/index.html , where you can play games, solve puzzles and learn all about the CIA.
Illinois Congressman Aaron Schock made news last year when he was featured in a Men’s Health Magazine article. The fitness fanatic is known for his daily 5-mile run, strenuous work-outs and 6 pack abs.
Schock made news this week as he, along with Congressman Bobby Schilling, introduced a bill in Congress to exempt small business from the onerous 1099-K reporting requirements.
The bill targets a new requirement for merchant card and third-party network payers to report the proceeds of payment card and third-party network transactions, such as credit and debit card transactions.
The Housing and Economic Recovery Act of 2008 requires the IRS to collect a 1099-K from third-party payment entities, such as credit card companies. The 1099-K will show all credit transactions within a merchant’s business for the year.
However, according to Schock and Schilling, the IRS is using the 1099-K to add extra burdens on small business by requiring them to reconcile this third party report with the business’s own internal numbers, which was not the original goal of the law.
Since many small businesses don’t have the resources to cross-reference and reconcile their own internal numbers with third-party numbers, the reconciliation requirement increases the accounting workload and costs for small businesses.
You can find out more about the “1099K Overreach Prevention Act “at http://schock.house.gov/News/DocumentSingle.aspx?DocumentID=277530
And to find out more about Schock’s fitness routine, check out http://www.menshealth.com/fitness/aaron-schock-fitness#axzz1lov6wwvx
Right now there’s not much happening on the legislative front, other than preliminary discussions on a likely payroll tax cut extension.
But the regulators are busy as ever, especially those working at the EPA and the Department of Health and Human Services.
At this writing, the EPA has 31 regulatory actions currently under review while HHS comes in second at 26.( http://www.reginfo.gov/public/jsp/Utilities/index.jsp ).
The Office of Management and Budget has a website where we can all track what the regulators are up to.
We keep tabs on tax regulations, so I’ve been checking out what the folks at the Department of Treasury are working on. Many of the projects are ones you’d expect to find, like regulations relating to the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Some other projects?
“Team Treasury” is working on “Proposed Revisions to the Beer Regulations.” The project is designed to ”revise brewery regulations to reduce the regulatory burden and streamline regulatory requirements.”
Sounds good to me.
And then there’s “Determination of Tax and Recordkeeping on Large Cigars.” Treasury says the priority on this project is ”Substantive, Nonsignificant.”
I’m not quite sure what that means.
Have a favorite agency or regulatory project that you want to check out? Just go to http://www.reginfo.gov/public/do/eAgendaMain. Select the agency at the bottom of the page and click the “Submit’ tab.
On the next screen, click on the “RIN” on the far right side to find out the details and who to contact if you have questions or comments.
General Business, Tax Planning
We’ve talked about “tax extenders” many times before. Those are the tax credits, deductions and exclusions that expire each year – but always get extended for another year.
The Infernal Revenue Code includes over 60 tax provisions that expired last year, including over 50 annual extenders.
Senate Finance Committee Chairman Max Baucus says it’s time to come up with a long term plan to address the continuing uncertainty caused by the tax extenders.
Baucus says “the lack of certainty about these tax extenders is bad for American families, bad for businesses looking to create jobs and bad for our economy.”
He also notes that “each day businesses do not know whether tax extenders will be in place means less American manufacturing, less production and fewer jobs.”
We couldn’t agree more.
Baucus also wants to address the extenders now – as part of the payroll tax extension debate. He doesn’t want to wait until after the election.
You can read more at http://finance.senate.gov/newsroom/chairman/release/?id=a12ea58b-4a3e-49a9-8025-820307b82a1d
Google “hidden taxes” and you get “about 63,300,000 results (in 0.17 seconds).”
Dictionary.com defines hidden taxes as “any tax paid by a manufacturer, supplier, or seller that is added on to the price the consumer pays.” Others define it more broadly to include things like inflation and the costs of regulatory compliance.
Last week the U.S. Department of Transportation issued new regulations that require airlines to include all mandatory taxes and fees in the advertised ticket price. Proponents say the new rules help consumers make better choices because of clearer pricing.
Opponents, including Spirit Airlines, say the new rules are intended to hide high federal taxes. Three carriers, including Spirit, Southwest and Allegiant, have filed a federal lawsuit to stop the new rules.
If you’d like to see the taxes separately stated, check out http://keepmyfareslow.org/ You’ll find out more about the new rules, and how you can contact your representative.
If you’re in favor of the new rules, just look for the best deals and enjoy your flight!
We report. You decide.
Illinois Governor Pat Quinn gives his State of the State Address on Wednesday and Illinois legislators return to Springfield next week.
Illinois officially has the worst funded pension system in the nation, with the State only funding 51% of its liabilities, according to the Pew Center. And Moody’s has downgraded Illinois debt to the lowest rating of any state.
Illinois Comptroller Judy Barr Topinka reports that the state has $8.5 billion in unpaid bills. The legislature will also need to put $6.9 billion into the pension systems in the next budget in order to meet its statutory requirement.
Not surprising, Illinois has dropped from 16th to 28th in the latest Tax Foundation “State Business Tax Climate Index”.
Looks like our legislators have their work cut out for them when they return next week.
You can find the Pew Center report at http://www.pewcenteronthestates.org/initiatives_detail.aspx?initiativeID=85899358839 .
The Tax Foundation Index is available at http://taxfoundation.org/research/show/22658.html
General Business, Tax Planning
Yesterday the Chicago Tribune had a good editorial about capital gain taxes that’s worth a read.
The Tribune makes some excellent points:
1) The main goal of low capital gains tax rates is to encourage investment.
2) Higher capital gains rates increase the cost of capital that businesses need to grow — and grow jobs.
3) The lower capital gains rates apply to everyone – not just the wealthy.
On that last point, check out our Blog on Tax Planning for Middle America at http://blogs.duganlopatka.com/general/2011/10/05/tax-planning-for-middle-america/
By the way, you can find our just released 2012 Handy Tax Guide in PDF format at http://www.duganlopatka.com/images/PDF/dl-handy-tax-guide-2012.pdf
And you can read the full Tribune editorial at http://www.chicagotribune.com/news/opinion/editorials/ct-edit-romney-20120130,0,486473.story
General Business, Tax Planning
On the political front, the Republican Presidential debates continue and President Obama delivers his State of The Union Address tonight.
On the budget side, the Administration has asked Congress to raise the nation’s debt ceiling by $1.2 trillion. And the national debt stands at over $15.2 Trillion and counting.
How about taxes? Actually, there’s not much going on right now, and that’s a problem for everyone.
More than 60 tax provisions expired at the end of last year, according to the Joint Committee on Taxation. We covered a few of them in a recent blog, which you can find at http://blogs.duganlopatka.com/general/2012/01/09/2012-tax-changes/ .
And there’s the 2 month extension of the payroll tax cut that expires at the end of February.
Most commentators feel that Congress and the Administration will find some way to extend the payroll tax cut through the end of the year. We’ll see.
On the other hand, many fear that the legislative process will effectively shut down for the duration of the 2012 campaign. If that happens, all of those expired tax provisions won’t be addressed until after the elections.
You can check the latest on the national debt at http://www.usdebtclock.org/ .
And the Joint Committee on Taxation has a complete list of expiring tax provisions from 2011-2022, which you can find in PDF format at http://www.jct.gov/publications.html?func=startdown&id=4380
Dugan & Lopatka, CPAs, PC 104 E. Roosevelt Rd., Wheaton, Illinois 60187 Phone: (630) 665-4440 Fax: (630) 665-5030