Obama Tax Plan Proposal

Once again my friend, Diane Kennedy, renowned Tax Strategist, has the news hot-off the presses. Read what she has to say about this new tax proposal. It may not pertain to you personally, but it will affect you ultimately, as all tax bills do.

Watch Out For This Pet Project of Obama Tax Plan

Posted November 12th, 2008 by Diane Kennedy

Pres-Elect Obama has a pet project. Well, he probably has quite a few, but this one could really impact taxpayers, especially business owners and investors. It’s called the Levin-Coleman-Obama Stop Tax Haven Abuse Act. On the surface, that sounds good. But read on if you EVER plan to live or buy or otherwise do business outside of the US.

This Act starts off by stating that there will now be a presumption of GUILT if any American owns part of or sends money to any company within one of the 34 so-called Tax Haven countries. If hope you noticed that sends money to because just wait until you read who the countries are.

Some you’d expect like the Bahamas and the Caymans. But look at the rest on the list: Anguilla, Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Cayman Islands, Cook Islands, Costa Rica, Cyprus, Dominica, Gibraltar, Grenada, Guernsey/Sark/ Alderney, Hong Kong, Isle of Man, Jersey, Latvia, Lichtenstein, Luxembourg, Malta, Nauru, Netherlands Antilles, Panama, Samoa ,St. Kitts and Nevis, St. Lucia St. Vincent and the Grenadines, Singapore ,Switzerland, Turks and Caicos, and Vanuatu.

If you make any transfer it will be presumed that the amount transferred is unreported income and you will be taxed, penalized and possibly even found guilty of fraud. It’ll be up to you prove they are wrong. (This is a very tough standard.) Banks and other financial institutes will be required to report any suspicious activity to the IRS.

Failure to follow these rules could mean 150% penalty and up to $1 million per incident in fines.

You can read the details of this Act at http://levin.senate.gov/newsroom/release.cfm?id=269479

Our Tax System Explained: Bar Stool Economics

A great election day "pass along" for you!

Our Tax System Explained: Bar Stool Economics

David R. Kamerschen, Ph.D. Professor of Economics University of Georgia

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing. The fifth would pay $1. The sixth would pay $3. The seventh would pay $7. The eighth would pay $12. The ninth would pay $18. The tenth man (the richest) would pay $59.

So, that’s what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. ‘Since you are all such good customers,’ he said, ‘I’m going to reduce the cost of your daily beer by $20.’ Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free.

But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his ‘fair share?’

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so: The fifth man, like the first four, now paid nothing (100% savings). The sixth now paid $2 instead of $3 (33%savings). The seventh now pay $5 instead of $7 (28%savings). The eighth now paid $9 instead of $12 (25% savings). The ninth now paid $14 instead of $18 (22% savings). The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

‘I only got a dollar out of the $20,’declared the sixth man. He pointed to the tenth man,’ but he got $10!’

‘Yeah, that’s right,’ exclaimed the fifth man. ‘I only saved a dollar, too. It’s unfair that he got ten times more than I got’ ‘That’s true!!’ shouted the seventh man. ‘Why should he get $10 back when I got only two? The wealthy get all the breaks!’

‘Wait a minute,’ yelled the first four men in unison. ‘We didn’t get anything at all. The system exploits the poor!’

The nine men surrounded the tenth and beat him up. The next night the tenth man didn’t show up for drinks so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.