Newsmax TV & Webwww.newsmax.comFREE - In Google Play
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
Tags: democrats | tax | proposals | professionals

Dems' Tax Proposals Should Thrill Tax Professionals

income tax form and a calculator on american flag.
(Maria Dryfhout/Dreamstime)

Denis Kleinfeld By Monday, 04 February 2019 09:28 AM Current | Bio | Archive

President John Kennedy knew that high tax rates were a drag on the economy and reduced the top rate from 90% to 70%.

Those with high incomes subject to still nearly confiscatory rate managed to live with it by engaging clever tax professionals who manipulated available tax credits and deductions.

Effectively they reduced the amount of tax payable to amounts which, when added to the professional tax planning fees, were less than the risk of tax evasion.

The late 1960s and into the 1970s, tax professionals enjoyed a lucrative practice by prodigiously creating synthetic structures which transmuted high income to low tax payable.

Before You File Your Taxes, You Must Read This

There were stills complaints about the onerous and oppressive impact of taxes on those who were living paycheck to paycheck.

Admitting that the federal income tax system essentially kept the masses in servitude to the government was just not something that Congress ever wanted to own up to.

Instead, Congress created a grand diversion by promoting the idea that the rich were using tax shelters to gain an unfair advantage over all the other voters.

It wasn’t much of a political stretch.

As Frank Chodorov noted in his book "The Income Tax: Root of All Evil," ever since the federal income tax came into existence in 1913, the fundamental attitude of the government is that it is not the taxpayer’s money but the governments.

“The government says to the citizen: ‘Your earnings are not exclusively your own; we have a claim on them, and our claim precedes yours; we allow you to keep some of it, because we recognize your need, not your right; but whatever we grant you for yourself is for us to decide.’"

“The amount of your earnings that you may retain for yourself is determined by the needs of the government, and you have nothing to say about it. The right of decision as to the disposition of your property rests in the government by virtue of the Sixteenth Amendment of the Constitution…”

The 1970s brought the Tax Reform Act of 1976, followed up in 1978 to eliminate high-income earners using legitimate tax deductions and credits to protect against the government robbing them of the fruit of their labors or from taking investment risks.

Professional tax advisors did not take this lying down. Even in the face of adverse tax legislation, tax pros continue to use creative means to keep the government at bay for their clients.

President Ronald Reagan took a different tack by lowering the top tax rate from 70% to 50% (and capital gains to 28%) but eliminated many of the provisions that provide the means that tax pros used to lower the effective burden of the tax.

The economy boomed.

Congress responded with tax legislation in 1981, '82, '84, '86, '87, '88 and so on and on and on, right up to last year. Massive amounts of regulations soon followed each tax act.

The result is a current income tax system that is so draconianly complex and convoluted that it defies even the best of the tax pros to assure taxpayers of compliance. And the government has lost its ability to administer it.

But it’s a boon to lobbyists and reliably drives in huge amounts of campaign contributions for those in Congress.

In the meantime, tax revenues are at record levels.

For the tax planning industry, these have been lean years except for compliance planning.

Tax shelters of the 1970s type and even offshore tax planning are nearly useless except for those few still foolhardy enough to take on a serious confrontation with the IRS.

Consequently, the once lucrative fees generated by tax pros has gone from, so to speak, a raging torrent to a modest trickle.

But the Democrats bring a ray of hope to the professional tax planning industry.

Senator Elizabeth Warren proposes to bring in a wealth tax. That will impact millionaire taxpayers who can best afford high priced tax planning talent.

Senator Kamala Harris proposes to increase the rates of tax on the rich to redistribute the cash to masses of lower income earners in what is effectively a vote-buying scheme.

Representative Alexandria-Ocasio-Cortez wants to raise rates to 70%. Others are looking for 90%.

With tax rates raised to confiscatory levels, it isn’t much of a stretch to predict that an awful lot of high-income taxpayers will be attuned to once again pay extravagant fees to the tax professional industry conjuring new ways to avoid tax.

What would the likely response of the professional tax planning industry?

As the Roman emperors would exclaim at the beginning of the gladiator spectacles: Let the games begin.

Trump’s April 15 Deadline: Tax Loophole Saves Thousands

Denis Kleinfeld is known as a strategic tax and wealth protection lawyer, widely published author and creative teacher.

© 2021 Newsmax Finance. All rights reserved.

With tax rates raised to confiscatory levels, it isn’t much of a stretch to predict that an awful lot of high-income taxpayers will be attuned to once again pay extravagant fees to the tax professional industry conjuring new ways to avoid tax.
democrats, tax, proposals, professionals
Monday, 04 February 2019 09:28 AM
Newsmax Media, Inc.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved
© Newsmax Media, Inc.
All Rights Reserved