Wednesday, September 05, 2012

NAEA: Bring AMT and Taxes on Social Security Received into the 21st Century

  • Enrolled Agents Seek Update on Two Tax Law Provisions

  • Kay Bell's Tax Carnival 106: Labor Day

  • NOTE: Though I did not have any posts in this month's Carnival of Taxes; I still thought that many readers would like to see the fine posts referenced in the Carnival.

    The National Association of Enrolled Agents announced that their present focus in advocacy was the updating of tax code provisions.  Two particular provisions which got their attention.  One was the Alternative Minimum Tax, which they asserted would be devastating to the middle class save only for annual tax patch legislation--thus NAEA would want either elimination of the AMT or a major rewrite.  Second for now is taxation of social security benefits--the lack of indexing of income levels for the 50% and 85% provisions means now that even LOWER middle class retirees have half or more of their Social Security benefits subject to tax.

    Obviously, given the horrendous level of debt and deficit acquired over the last four years--and make no mistake, these last four years should unquestionably prove that heavy levels of government spending no longer can buy lower rates of unemployment or poverty--ANY adjustment reducing tax revenues has to be looked at with some skepticism.  That said, the NAEA has found two excellent provisions to reconsider.  The annual tax extender "dance" has become somewhat of a joke among tax types and, if anything, I would go farther than the NAEA on social security benefits--not only increasing the 50% taxable income levels to $45,000 single; $65,000 MFJ and $30,000 MFS AND indexing these levels, but also eliminating the 85% taxability layer--which adds complexity on top of being overly punitive to social security recipients of middle income levels.


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