Posts by damon

• NFL Playoffs: Blue States Versus Red

  Posted on 01/09/2018 in Taxes

  NFL playoffs have begun, and Wild Card Week featured some real competition. On Saturday, the red-state Tennessee Titans barbecued the red-state Kansas City Chiefs, 22-21, and the red-state Atlanta Falcons defeated the blue-state Los Angeles Rams, 26-13. On Sunday, the purple-state Jacksonville Jaguars pounced on the blue-state Buffalo Bills, 10-7, and the red-state New Orleans Saints marched past the purple-state Carolina Panthers, 31-26. Now, if you’re like most people, you’re wondering why we’re polluting your NFL news with red state and blue state political references. You wouldn’t think politics matter on the gridiron! Unfortunately they do, now even more than before, thanks to the Tax Cuts and Jobs Act of 2017. Huh? Here’s the deal. Blue states, as a group, tend to have higher income and property taxes than red states. (That’s not always true — Washington, for example, has no state income tax at all — but it’s a fair rule of thumb.) Those higher taxes make blue states slightly less attractive for athletes who play home games subject to income tax there. If you’re a first-round draft pick wide receiver, would you rather pay a 13.3% top tax rate to catch passes in Los Angeles, or a 0%…

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• He’s Mister Tax Miser

  Posted on 01/03/2018 in Taxes

  Welcome to 2018! New Years’ always brings changes to taxes. Key numbers, like tax brackets, standard deductions, personal exemptions, and qualified plan contribution limits, all roll over on January 1. But this year brings more change than any year since 1987. Washington has just passed a sweeping overhaul of the entire tax code, from working individuals all the way to multinational corporations. Tax planners across the country are scrambling to ferret out the opportunities hiding in its 503 pages of typically dense, impenetrable text. (There’s a reason tax lawyers drive Jaguars.) This year’s tax bill avoids one particularly awkward tax transition we faced in 2010 — one that became, for some families, literally a matter of life or death. Remember the old children’s Christmas special, Year Without a Santa Claus, with the dueling Heat Miser and Snow Miser? Those guys had nothing on 2010 . . . the Year Without an Estate Tax! Estate taxes date back as far as 700 B.C. in ancient Egypt. (Of course, the Egyptians also buried their pharaohs with food, clothing, and jewelry for the afterlife.) Here in the United States, they began with the Revenue Act of 1862, which included gift and estate taxes…

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• We Now Interrupt This Broadcast . . .

  Posted on 12/27/2017 in Taxes

  On Sunday, October 30, 1938, Mercury Radio Theatre fans, who were listening to Ramon Racquello and His Orchestra, were interrupted by a news broadcast reporting an odd explosion on the planet Mars. Soon after, they learned that a cylindrical object had fallen on a farm in Grovers Mills, New Jersey. The radio audience listened in horror as a pulsating Martian emerged from the cylinder and obliterated the crowd with heat rays. Soon, an entire army of Martians had invaded New York, and very real panic had spread across the country. Last week, something a bit similar happened in the tax world. (Well, except for the Martians, heat rays, and destruction of Gotham.) After just six weeks of consideration, the House and Senate passed the Tax Cuts and Jobs Act of 2017, the biggest restructuring of the tax code in 31 years. We don’t usually use these emails to discuss “hard news” like the new tax bill. It’s much more fun to walk through the “Twelve days of Taxmas,” or how celebrities use offshore tax havens, or harken back to taxes in the 1980s as we enjoy Season Two of Netflix’s Stranger Things. But this new tax bill is simply too…

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• The Twelve Days of Taxmas

  Posted on 12/19/2017 in Taxes

  Every year, PNC Bank publishes their “Christmas Price Index” to track the cost of the Twelve Days of Christmas. For 2017, it’s a hefty $157,558. (And you thought your holiday spending was out of control!) The index may not be completely accurate — for example, the ten lords-a-leaping are valued using the cost of male ballet dancers, rather than actual lords, and the eight maids-a-milking don’t include eight actual cows. But still, it got us wondering . . . what sort of taxes are we looking at on the whole affair? Twelve drummers drumming and eleven pipers piping make quite a racket every holiday season. Hiring all that help will stir up a cacophony of payroll taxes! Ten lords may look perfectly happy while they’re leaping. But surely they must pay a king’s ransom in income taxes — after all, they are lords! Nine ladies dancing make a lovely sight at Christmas time — especially if they’re Rockettes. They also pay a cabaret tax for the privilege of displaying their talent. Eight maids-a-milking help make sure we have plenty of tasty eggnog to drink. Good thing so many states offer dairy tax credits to spur the cows on to higher…

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• A Different Kind of Holiday Party

  Posted on 12/12/2017 in Taxes

  Your kids have finally finished eating their Halloween candy, which means that the real holidays are right around the corner. But before you sit down to open presents, December 16th marks the 244th anniversary of an important holiday in tax history — a pop-up costume ball in Boston Harbor called the Boston Tea Party. From 1698 through 1767, Britain’s Parliament passed a series of laws giving the East India Company a monopoly on the British tea trade, forcing the colonies to buy their tea from British wholesalers, and slapping hefty taxes on it all. But Dutch traders, who paid no tax, could sell their tea for less, costing the East India Company a fortune. (If you remember Miami Vice in the 1980s, try picturing a colonial-era Crockett and Tubbs, dressed in fly white buckskins, chasing Dutch bootleggers in a sleek Italian brigantine.) In 1767, Parliament passed the Indemnity Act to lower the tax on tea to compete with the Dutch. (Earl Gray was just three years old, so he didn’t vote.) But they needed a “payfor” to make up the lost revenue, so they brewed up the Townshend Acts taxing colonial imports, including tea. (Hmmmm . . . sounds like…

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• Area Actress to Wed Ex-Soldier

  Posted on 12/05/2017 in Taxes

  Two hundred and forty one years ago, we declared our independence from Mother England — over taxes, of course. But here on our side of the pond, we’ve never completely lost our affection for all things British. We applauded as the Queen celebrated her 70th wedding anniversary. Netflix fans who just finished binge-watching Stranger Things are eagerly awaiting Season Two of The Crown. And now we’ve learned that Prince Harry and his longtime girlfriend, actress Meghan Markle, are getting married in May. Now, Harry may be just fifth in line for the throne, and about to be bumped down to sixth when Princess Kate gives birth to her third child next spring. But a royal wedding is still a Very Big Deal. There’s going to be lots of work to keep the couple knackered out for months to come. That includes a guest list, a gown, and flowers. And of course there will tax questions, too. Here’s the issue: Markle isn’t a Brit. She’s a Yank. Buckingham Palace has already announced that Markle will become a British citizen, which involves passing a test with questions like “What did the Statute of Rhuddlan in 1284 lay the basis for?” and, “Who…

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• Good Guys Share $175 Million Refund

  Posted on 11/28/2017 in Taxes

  April 15 hasn’t always been the national exercise in self-flagellation that it is today. Up until the 1940s, you could just waltz into your local IRS office and they would do your taxes for you. But those days have long since passed. You’re still welcome to do it yourself, if you need more stress in your life. But how will you know if you’re paying too much? Even software like TurboTax can’t guarantee you’ll get it right. If you don’t know how to use it, the program just helps you make the same expensive mistakes faster than when you made them with paper and pencils. If you’re like most Americans, you just throw up your hands and call a pro. That begs a new question: who to call? Certified Public Accountants and Enrolled Agents have traditionally dominated the field. But up until 2010, anyone with a pencil could call himself a tax preparer. (Most of them use computers now — but, surprisingly, not all. Hey, some people still carry flip phones, too.) That seems like an obvious vacuum in today’s regulatory environment, considering that in most places, you need a license just to catch a fish. And we all know…

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• Ivy League Tax Problems

  Posted on 11/21/2017 in Taxes

  They say that “what goes up must come down.” But that’s not true when it comes to college costs. U.S. News reports the average private college tuition stood at $16,233 back in 1997-98 — roughly $24,973 in 2017 dollars. But the same tuition today costs $41,727. And that’s before pricing in luxuries like, you know, meals, and a place to sleep. In-state college costs are rising even faster as legislatures cut budgets for higher education. That means colleges are increasingly turning to alternate funding sources, including their endowments. In academia, though, as in so many other parts of our “winner take all” society, there’s the 1%, and there’s everyone else. America’s richest 800 colleges and universities hold over $500 billion in endowments, which sounds like there should be plenty to help supplement tuition and fees. But the top 1% of schools hold over $10 billion each, and 11% of schools hog 74% of those assets. That leaves the Faber Colleges of the world essentially fighting over scraps. (“Knowledge is good.”) Now, the Phi Beta Kappas who write our tax code have turned their green eyeshades towards those mammoth pools of tax-free wealth. Both the House and Senate tax bills working…

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• The Rock Star, The Nude Estates, and the Lithuanian Shopping Mall

  Posted on 11/16/2017 in Taxes

  We’ve all got an image in our minds of who uses “offshore tax havens” to host their business. Let’s say you’re a junior-varsity Russian oligarch. You’ve spent a lifetime looting your country’s resources like an all-you-can-steal buffet, and now it’s time to take some of your chipskis off the table. You buy a flat in London’s posh Mayfair, or maybe a condo overlooking New York’s Central Park. Then you stash the rest of your rubles in some sunny flyspeck of an island like Bermuda or the Caymans, where Putin’s goons can’t steal them back. But most people who do business offshore aren’t crooked billionaires. They’re perfectly legitimate multinational corporations, business owners, and investors just like us. If you’ve worn shoes from Nike, made calls on an iPhone, or downloaded music from Sheryl Crow, you’ve even done business with them! Last month, the investigative journalists who brought us 2016’s Panama Papers dropped Season Two of their effort to expose how the global 1% use international entities to structure their wealth. The “Paradise Papers” include 13.4 million electronic documents, mostly gleaned through a “data security incident” from the Bermuda-based law firm of Appleby Spurling Hunter. And one of the names that those…

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• Stranger Taxes

  Posted on 11/07/2017 in Uncategorized

  The streaming video service Netflix has earned a reputation for providing quality content like Narcos, Orange is the New Black, and The Queen. But Netflix has also upended how millions of people consume television. How have they done that? By dropping an entire season’s worth of a series all at once, letting you “Netflix and chill” with a single episode or binge for an entire weekend. (What kind of savage network would make viewers wait an entire week between episodes of their favorite show? HBO, that’s who.) Netflix’s latest hit, which dropped its second season last month, is Stranger Things, a love letter to the classic horror, sci-fi, and fantasy films of the 1980s. The show features a pack of bike-riding preteen friends from sleepy Hawkins, Indiana, who team up with the local sheriff and a mysterious paranormal girl named Eleven. Together, the motley crew fights to save the world from a parallel universe that connects through the super-secret “Hawkins National Laboratory.” Most Stranger Things viewers love the show’s music and movie references. Naturally, it makes us nostalgic for 1980s taxes. (Have we told you we need to get out more often?) So, for all you “Upside Down” fans, let’s…

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