The Michiana Blawg

Relief Coming?

2010-07-19T12:15:32Z

Blanche Lincoln (D, Ark) and Jon Kyl (R, Ariz) have introduced legislation to add a “35 and 5″ estate tax extension to a small business bill the Senate is debating. The “35 and 5″ means: 35% tax rate and $5 million unified credit (i.e., you can die with $5 million without paying estate taxes–roughly speaking). The Senate had already agreed to the “35 and 5″ in a prior non-binding budget resolution. The question now is whether it can get through the House. Pelosi is expected to oppose it.

New Texting Ban

2010-07-07T17:35:08Z

Two Michigan prosecutors mull over the new law:

The statute that took effect last week (PA 2010 No. 60; MCL 257.602b) has been widely reputed to ban only texting in a moving vehicle. It appears to me, however, that the language could be interpreted more broadly than that.

Under the statute, “a person shall not read, manually type, or send a text message on a wireless 2-way communications device that is located in a person’s hand or in the person’s lap, including a wireless telephone used in cellular telephone service or personal communication service” while operating a moving motor vehicle.

Couldn’t that language be interpreted to ban dialing (typing) a number to place a cell-phone call, or reading email, in addition to texting?

and

I was quite surprised at how narrow the statute is. My first thought was no texting, but apparently people can update their Facebook pages while driving.

Estate Tax Update

2010-06-10T22:49:41Z

Dispatches from our internal office memoranda:

1. I can authoritatively report, from a couple of different sources, that the “tax reforms” that are now going through Congress attached to some other legislation have nothing to do with estate or gift tax. They’re essentially about some Bush-Tax-Cut related benefits for business that expired 1-1-10, and the legislation would revive them and make them permanent, along with as couple of similar things related to individual income tax.

2. The bill that passed the House late in 2009 got first and second readings in the Senate and was assigned to committee, where it has since died. The problem is, that bill did two things. It not only made the 2009 levels permanent, but it also repealed the repeal (if you will) of the estate tax for 2010 and applied the 2009 scenario to 2010. As time has gone by, there is less and less political will to do the latter, so the question going forward would be whether it would be easier to strip that part from the House bill, or simply start over.

3. So anyway, while it appears that the 2010 “repeal” is probably cast in stone. the issue of whether we’ll have pre-Bush rules or 2009 rules for 2011 and after is still open, and as of mid-May at least, Congress had yet to consider that. There’s some thought that they may extend the 2009 regime, at least for a few years, before they adjourn for the midterm elections, but some sources say there’s bipartisan support in the Senate to go to a $5 million unified credit and a 35% rate, so we may be back to the same old problem that derailed us last year, i.e., there’s nothing that can get 60 votes.

4. Obama originally supported making the 2009 scheme permanent, but according to one source, he’s now waffling a little bit because of the deficit, and saying maybe we ought to soak the rich a tad in order to help finance the middle class tax relief he still wants to do. You may recall that he appointed a blue ribbon deficit reduction commission, and now he’s saying he isn’t going to take any position on tax reform until after they’ve reported, which isn’t due until December 1. That will give Congress another reason to do nothing.

Feeding Frenzy

2010-04-08T20:33:21Z

One of the lesser-known elements of the new health care bill: mandatory breaks for breast-feeding mothers (apparently, there’s no corresponding breaks for fathers). It applies to all employers with 50 or more employees. It doesn’t give much guidance, though. For instance, it doesn’t say how many breaks must be provided or how long the breaks must be. After watching my wife feed many babies, I realize each baby is different when it comes to feeding times. Something tells me most of the babies that are fed under this exemption will be very slow and frequent feeders.

The statute:

(1) An employer shall provide—

(A) a reasonable break time for an employee to express breast milk for her nursing child for 1 year after the child’s birth; and

(B) a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public, which may be used by an employee to express breast milk.

(2) An employer shall not be required to compensate an employee receiving reasonable break time under paragraph (1) for any work time spent for such purpose.

(3) An employer that employs less than 50 employees shall not be subject to the requirements of this subsection, if such requirements would impose an undue hardship by causing the employer significant difficulty or expense when considered in relation to the size, financial resources, nature, or structure of the employer’s business.

Estate Tax Legislative Update

2010-04-01T19:05:17Z

Dispatches from our internal memoranda:

1. The Supreme Court has held several times in the past that there’s no constitutional problem with a retroactive tax increase, but having said that, almost all the speakers agreed (as do I) that the more time that goes by, the less is the possibility of a retroactive tax increase for 2010 only. Those who die in 2010 will probably have no tax to pay.

2. A related, but separate, issue, is what the tax rate will be for 2011 and thereafter.The current law says that if Congress does nothing before year end 2010, then it’s just as if the Bush tax cuts never ever happened, and we’re back to the pre-Bush $1,000,000 unified credit, and the old rate schedule (and ALSO stepped up basis would be resurrected, just as if it never went away). One of the speakers shared my fear that in the current atmosphere in Washington, it’ll be impossible to get a consensus on anything, so we’ll be back to the old law by default. We’ll just have to wait to see what happens. I’m not optimistic.

3. As you may know, Sandor Levin took over from Charlie Rangel as Chairman of House Ways and Means, and he has said the the Committee will take a look at this in April. Why they have to do that is not clear to me. as I thought that the extension of the 2009 rules that the House has already passed was still valid, and we were only waiting on the Senate, but what do I know.

4. As I had suspected, while we know basically what information we’re going to have to supply on carryover basis, we don’t have the forms yet. In any event, that particular part of it wouldn’t be due to be filed until April 15, 2011.

Golf Cart

2010-02-22T16:48:25Z

There’s a tax credit for plug-in electric vehicles. The credit is in the $4,000-$6,000 range.

This is potentially huge for people in those big retirement communities where everyone revs up their golf cart hogs to get around Condo Phases 1, 2, 3, and 4.

Unfortunately, the IRS has recently ruled that, in order to qualify for the credit, the golf carts must be street legal, which knocks out the vast majority of such carts. I wouldn’t be surprised if an enterprising cart manufacturer comes up with a low-priced version that qualifies for street use, but don’t hold your breath: the carts would have to meet federal safety standards, the IRS says.

Cap It

2010-02-17T12:44:04Z

You pay 7.65 cents in Social Security taxes for every dollar you earn . . . until your wages hit $106,800. At that point, the SS tax ceases. It’s call the Social Security “wage base.” The amount is indexed for inflation, but it didn’t go up in 2010 and it’s not expected to go up in 2011. The reason? Social Security recipients didn’t get a cost-of-living hike in 2010 or 2011. By law, the wage base can’t go up if benefits don’t rise.

Of course, Congress could just change that law, but such two-facedness would be rare, even for the Beltway (”You old guys don’t get an inflation adjustment, but you younger guys pay more like there was an inflation adjustment”).

The wage base, incidentally, is projected to start climbing again after 2011: to $111,3000 in 2012 and $115,200 for 2013.

Surfin’ SEC

2010-02-03T12:55:38Z

I say “let ‘em surf.” It’s probably the most-useful thing they do all day: “The work computer of one regional supervisor for the U.S. Securities and Exchange Commission showed more than 1,800 attempts to look up pornography in a 17-day span: ‘It was kind of distraction per se,’ he later told investigators. But he wasn’t alone. More than two dozen SEC employees and contractors over roughly the past two years have faced internal investigations after they were caught viewing pornography on their government computers. . . “. Link.

Repealed!

2010-01-11T22:03:36Z

It’s not as sweet as the repeal of Prohibition, but the Estate Tax has been repealed . . . for now . . . and only temporarily. Under convoluted earlier legislation, the Estate Tax was scheduled to go away as of 1/1/2010, but then scheduled to come back on 1/1/2011 with a mere $1 million exemption (in 2009, the exemption was $3.5 million). The 2009 Congress meant to act on it but failed, so right now, the Estate Tax is repealed for 2010 and will come back on 1/1/2011.

Important note: Many members of Congress, especially Democrats, want to bring back the Estate Tax during the next legislative section and make it retroactive to 1/1/2010. Such retroactivity, though, has constitutional hurdles.

We’ll see.

New Mileage Rate

2010-01-05T22:03:42Z

The 2010 standard mileage rate is now 50 cents per mile, which is a reduction from 2009’s 55 cents. The reason: lower fuel costs.

But are they really that much lower?