They Know Not What They Do

They Know Not What They Do

Our Congress people do not have a clue about taxes, and we hired them and pay their salaries, so what does that make us?

Last week Congress enacted a compromise budget bill that included the so-called tax extenders that revived expired tax breaks. I don’t want to get involved in the politics surrounding this bill but want to address the ineptitude of the handing the tax breaks.

I believe the purpose of some of the reinstated laws is to encourage spending and job creating investments by conveying a tax benefit as an enticement. How was it possible for this law to cause spending actions during the year if the law was passed during the closing days of the year? The retroactive nature confers the benefit for those that did these things either anyway or guessing that the law would be changed, but because of its tardiness it likely did not have as many people taking advantage of it as it could have. A retroactive benefit is good and shouldn’t be overlooked, but it does not accomplish its supposed goals because of the dubious nature caused by the delay.

If this bill was enacted at the beginning of the year, it would have had a reasonable chance of meeting its goals. For now and the future many of the provisions were made permanent so there will now be certainty with these benefits.

Here are some examples to illustrate my point. These all expired at the end of 2014 and were made permanent on December 18, 2015 and retroactive to January 2015:

• Business research and development tax credits for small businesses
• Accelerated depreciation for new equipment purchases by small businesses
• Deductions for state and local sales taxes for individuals
• Special deductions permitted for school teachers
• Certain energy efficient encouragement provisions
• Being able to transfer up to $100,000 of a required minimum distribution from a retirement account to a charity

Note that the stated purpose of each item was is to encourage investment in equipment, keep our businesses competitive, create jobs, give a benefit to certain groups to encourage spending or to facilitate certain charity giving. Question: How is this purpose accomplished when the bill is enacted after 11 ½ months have passed? Businesses need more than a bet and a prayer to plan and invest for their future growth.

Our leaders do not know or understand fully what they do and it seems that none of them cares for the small businesses and taxpayers that look for these types of breaks to expand their businesses or reduce their income taxes. Our Congress people acted irresponsibly and neglectful with respect to these tax provisions and part of every paycheck they receive can be viewed as a theft of our tax dollars.