Where Michele Bachmann Stands on Taxes

Rep. Michele Bachmann (R-MN), has added a tax-cutting provision to her presidential platform. Rep. Bachmann called for elimination of capital gains and estate taxes, cuts in corporate tax rates and amnesty for repatriation of dollars earned (and "stranded") overseas. The Treasury disagrees with her holiday/amnesty repatriation argument, saying that past experience suggests that businesses would be more likely to pay higher dividends or pursue mergers and acquisitions as opposed to creating jobs with the additional repatriated cash.

The readers can come to their own conclusions on Ms. Bachmann's plan and plans of her Republican rivals (plus the President and any Democratic primary opposition which Pres. Obama would run into). The strengths of her proposals are getting something somewhat concrete out early and international competitiveness (corporate reduction). Potential shortcomings include impact on debt/deficit and somewhat tenuous tie between say capital gains/estate tax reductions and job creation.

With National Unemployment Rate Over 9%, Tennessee Needs New Accountants AND Accounting Teachers

The Nashville Tennesseean reports that the faltering economy has in no way stunted the demand for accountants in the Middle Tennessee area. The article claims that accounting is growing at a rate in excess of 20%, that 90% of Middle Tennessee CPA firms will hire at the same or greater pace than next year and that Middle Tennessee University is having trouble keeping accounting faculty because of a nationwide shortage of Ph. Ds in the field. A 100% placement rate in Vanderbilt's Master's program indicates a trend towards getting master's degrees in Accountancy.

Selfishly, I would like for the Tennessean to have interviewed more universities, including Austin Peay. Selfishness aside, it is encouraging to be in a field where job opportunities abound without going through a North Dakota or Alaskan winter.

Newly Proposed Treasury Regs for Obamacare Premiums

The Treasury Department announced Friday proposed regulations for tax credits for employees who purchased health insurance through Affordable Insurance Exchanges. The regs also assign $185 million in grants to 13 states plus D.C. to establish the exchanges. The exchanges would supplement employer-provided and government-provided health insurance programs and would generally support families earning 100% to 400% (generally about $22,500 to $90,000) of poverty-level income. Estimated benefits to employees/cost to taxpayers would be an average of $5000 per employee for 20 million Americans (NOTE: since the 20 million seems to include dependent children and stay-at-home spouses; the amount would be less than the apparent $100 billion.) It appears that this credit would be fully refundable, thus similar to the Earned Income Credit. Employee payments will be phased up as income increases. Additional regulations for employers regarding minimum required insurance value are forthcoming.

A lot of the reaction to this will be based on one's opinion of Obamacare. The comparatively least political reaction that I can come up with is: while the act adds 17-20 million people to the healthcare system; I see no indication that ANY new healthcare personnel will be added. Therefore, it looks to me like healthcare ACCESS may become a problem (or more accurately, larger problem--it is already difficult to find a physican willing to spend more than about 10-15 minutes per patient per visit) with the new law.

Nowadays, You Don't Have to Live in the U.S. to be a U.S. CPA

An English-based U.S. CPA exam was given in the Eastern Hemisphere on August 1 for the first time ever in Japan and four small Middle Eastern countries (Bahrain, Kuwait, Lebanon and the United Arab Emirates). Over 1000 candidates took one or more sections of the exam. The AICPA cited increased demand from other countries (notably Japan) and claimed that over 3000 Japanese travelled to the U. S. last year to take the CPA exam.

I am sure that Canadians and probably accountants from Mexico and the island nations in the Gulf of Mexico and the Caribbean have been taking the U. S. CPA exam for some while, but this is significant new development. I see one advantage and one potentially significant danger; the advantage is that some American CPAs on long-term audits no longer have to make their way back to the U.S. for the exam. The danger--having seen outsourcing of numerous other jobs; one wonders if the exam will be expanded to countries such as China, India and Russia; and if so, whether large American CPA firms will supplant American CPAs for less costly overseas employees with the American CPA credential.

Revisiting My February Social Security Proposal in View of the Debt Ceiling Deal

Social Security Death Benefit

February Social Security proposal

For better or for worse, the President and leaders of Senate and House have agreed to a tentative deal on the debt ceiling. It looks likely that the Senate will pass the proposed compromise; prospects in the House are significantly murkier based on a combination of liberal Democrats and Tea Party Republicans opposing the agreement for different reasons. Additionally, Moody's has suggested that a credit rating downgrade is still possible even with the debt deal because of insufficient firm budget cuts.

Back in February, I proposed a five-step solution to stabilizing Social Security--a combination of raising the base of income which is subject to the present 6.2% rate; a gradual increasing of age to qualify to 70 (for babies born after 2020) for full benefits and a phase-in (for those born between 1981 and 2024) to age 63 for limited benefits. Finally, I proposed elimination of the $255 death benefit which I believe has an excessive administrative cost for the actual benefit received and limiting minimum/floor benefits to those with at least 80 covered quarters (20 working years).

I still believe in this proposal but would make the following adjustments on the base and minimum benefits parts: for the income base provision--because of the shaky economy, I would phase-in the base increase to $140,000 in 2013, $175,000 in 2015 and $200,000 in 2017 with indexing of the base starting in 2019. Additionally, I would reduce the rate to 6.0% in 2015--this should provide some limited economic stimulus. On the minimum benefit side, I would also phase this in as follows: 48 quarters starting with those retiring in 2013, 56 quarters in 2015, 64 quarters in 2017, 72 quarters in 2019 and 80 quarters in 2021. This would give potential recipients who are 45 and older a longer time to plan and work toward getting the necessary number of covered quarters. Admittedly, these adjustments also reduce the level of stabilization accomplished by this plan; nevertheless, even this revised plan should significantly improve the long-term stability of Social Security over the present state.

New Apps for the Wired Accountant

Brett Owens of the WebCPA/Accounting Tomorrow website cites two reasons that many software developers are starting to emphasize software on the Web vs. PC-specific software: ease of design and ability to access the app even when not at your laptop or desktop. Three new products which Owens feels have particularly impressive potential are Evernote, a web-based combination of post-it notes and the old Rolodex; Xero, a cloud-based future competitor for QuickBooks and Peachtree and Outright, a cloud-based alternative to bookkeeping which provides access to Web banking sites, credit cards sites and Paypal.

While I certainly cannot match Brian Tankersley, Gregory LaFollette and others in the accounting technology area, I do point out Mr. Owens article for those who wish to check out new trends in Web-based accounting products.