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

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 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 16^th to 28^th 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

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

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

Here are some of the key tax provisions that expired at the end of last year.

• The research and development tax credit.
• The 100 percent bonus depreciation deduction – which means the lower 50% bonus depreciation deduction applies for qualified property acquired and placed in service this year.
•  The AMT “Patch” – which means some 34 million taxpayers will incur the tax this year, accordingly to the Congressional Research Service. 
• A reduced Section 179 expensing limit.  For tax years beginning in 2012, the expensing election is reduced to $139,000 from $500,000 last year. And the investment ceiling amount is reduced to $560,000 down from $2 million last year. For tax years beginning after 2012, the limit is further reduced to $25,000 with a $200,000 ceiling.

We’ll see what happens with the tax extenders when Congress comes back to town. Stay tuned.

Here are some of the other tax provisions contained in the bills:

•             The R & D credit has been extended for an additional 5 years—through tax years ending before January 1, 2016.  The change allows for a full 5 year carry forward of earned credit.

•             The net operating loss deduction is reinstated for tax years ending 12/31/12 through 12/31/14, but is capped at $100,000 per year.  The life of the carry forward period is extended by a year for each year the loss carry forward is either suspended or limited by the cap.  

•             The estate tax exemption is increased to $3.5 million for 2012 and to $4 million for 2013 and thereafter.

•             The Replacement Tax income tax investment credit is extended for another 5 years.  It was scheduled to expire 12/31/13 and will now remain in place through 12/31/18.

•             The personal income tax standard deduction will be indexed beginning next year. The standard deduction for 2012 will increase from $2000 to $2050. For 2013 and thereafter, the $2050 standard deduction will automatically be increased based on increases in the consumer price index.

The 2012 standard mileage rate remains unchanged at 55.5 cents per mile for business use of a vehicle, including cars, vans, pick-ups and panel trucks. 

The rate is reduced to 23 cents per mile for medical and moving uses, and remains at 14 cents per mile for charitable uses.

The updated rates are effective for deductible transportation expenses paid or incurred on or after January 1, 2012, and for mileage allowances or reimbursements paid to, or transportation expenses paid or incurred by, an employee or a charitable volunteer on or after January 1, 2012.

You can find more information from the IRS at http://www.irs.gov/newsroom/article/0,,id=250882,00.html

ADP reports that nonfarm private business sector jobs increased by 110,000 from September to October on a seasonally adjusted basis.

Employment in the service sector rose 114,000 in October. Employment in the goods-producing sector declined 4,000 in October, while manufacturing employment declined by 8,000.

You can find the full ADP National Employment Report at http://www.adpemploymentreport.com/pdf/FINAL_Report_October_11.pdf

Today the Labor Department released its October jobs report.

Non-farm jobs increased by 80,000 – with most of the increase coming from the service sector. Manufacturing jobs increased by 5,000.

Why the difference in reported jobs?

For the most part, it’s caused by differences in the methodologies used. ADP also bases its report on representative companies that ADP tracks.

You can read the full Labor Department report at http://www.bls.gov/news.release/pdf/empsit.pdf

By the way, no blogs the week of the 7th – I’ll be in Death Valley with no computer access.

If you need to reach me, try the ranch at Furnace Creek.

Ask for Charlie, tell him you know Slim and you want to leave a message for Cole.

Jake can find me.

You can find the COLA information at http://www.irs.gov/retirement/article/0,,id=96461,00.html