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Assinine Tax Laws
 "To
tax and to please, no more than to love and to be wise, is not given to
men." - Edmund Burke.
"Anybody has
a right to evade taxes if he can get away with it. No citizen has a moral
obligation to assist in maintaining the government. If Congress insists on
making stupid mistakes and passing foolish tax laws, millionaires should not
be condemned if they take advantage of them." - J. Pierpont Morgan.
"The wisdom of man never yet contrived a system of taxation that would
operate with perfect equality." - Andrew Jackson.
"The art of taxation consists in so plucking the goose as to obtain the
largest amount of feathers with the least possible amount of hissing." -
Jean-Baptiste Colbert.
"Don't tax you, don't tax me, tax that fellow behind the tree."
[Author unknown.]
It has been said that tax laws are like sausages - it's best
that you don't see how they are made. Unlike fine sausages, many tax laws
should have been left on the cutting floor. Often prepared by special
interests, tax laws tend to be based more on emotion and greed than upon
vision and intellect. Many tax bills are amended at the last minute, often
dramatically so, and then require what are known as "technical
corrections." The tax blunderbuss often kills the camel along
with the targeted gnat on its back. And let's not even mention the fact
that so-called "tax policy" is all too easily associated with
political corruption. (Ok, so we did.)
Over the years there have been a number of truly asinine tax laws. What
are your "pet peeves"? Let
us know. Here are just a few of ours:
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Hope and Lifetime
Learning Credits (Section 25A). A "poor man's tax
break." Ridiculous! Tax sausage? Pure,
unadulterated political baloney. The poor man shouldn't
shoulder any tax - so that poor man shouldn't need any
tax breaks. That any poor person should be paying taxes at
all is a travesty. Rather than see to it that the poor are
tax-exempt, we get this complicated abomination. What it
does do is permit politicians to brag about what they've done
for us taxpayers and how they've helped children with their
educations. They've even gone so far as to make two
separate credits out of this silliness, thereby effectively
doubling their bragging rights, and to top it all off they've
created yet a third "tax-shelter for the poor," the education
IRA (Section 530). (These education IRA's have some redeeming
qualities, even if they are a bit skimpy. They encourage
saving and are available for folks with middle-class incomes and
real tax troubles.) An "election year
grandstand" is what these overly-complex provisions are all
about. Funny, many of these same politicians who enacted
the Hope and Lifetime
Learning Credits are strongly opposed to school vouchers. Go
figure....
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Alternative Minimum Tax (Section 55, et, seq.)
Glory be! The taxman giveth with one hand and taketh away
with the other. The alternative minimum tax (fondly
referred to as the "AMT") is a bald-faced
acknowledgement that Congress really didn't mean it when they
provided the tax benefits which are subject to . Rather
than "bite the bullet" and reduce or repeal the
offending deduction or credit, our spineless Congress layered
this twisted tax trap on top of the already overweight code.
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Passive Activity Loss Limitations (Section 469).
Talk about overkill! The "tax shelter" industry
of two decades ago spawned an entire series of tax
"fixes," any one of which would likely have been the
death knell to the industry. We get another message here
as well. It is alright to be passive so long as in doing
so you make money - then you might qualify for such benefits as
capital gain treatment (but don't be too quick about it or
you'll lose that benefit). Passively lose money and you
will need to wait (ditto capital losses).
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Generation Skipping Transfer Tax (Section 2601, et. seq.)
Once upon a time back in merry old England the King was angry
because his subjects would put their property in trusts to avoid
the inevitable tribute that became due upon death. To
"fix" that tax problem, the King invented the Rule
Against Perpetuities. That rule is still with us in most
of the 50 states. The California supreme court once found
the Rule Against Perpetuities to be so difficult to understand
that a lawyer couldn't be held responsible for his (or her)
negligence in failing to come within its terms. Well, the
Generation Skipping Transfer Tax ("GSTT") makes the
Rule Against Perpetuities seem simple by comparison. The
first GSTT was so complex, in fact, that after 10 years it was
repealed before it ever became effective. The current GSTT
is barely better. Like the regulations for
"substantial economic effect" in partnership
allocations (the infamous "704(b) regs"), the GSTT
causes documents that take heed of its effects to be nearly
incomprehensible.
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