The Herald Bulletin

Afternoon Update

Columns

May 18, 2013

Big Joe Clark column: Competing with tax policy difficult in a changing world

Years ago, I received valuable insight into the eyes of the Internal Revenue Service.

A client was being audited, and I saw the writing on the wall of the financial impact if the fines were truly assessed.

My argument was the client was being taxed too heavily to ever stay in business or even survive as an individual. The agent told me that in financial fairness of capitalism that he had to impose the fines or it would be unfair to other businesses that paid their taxes on time.

That was an interesting perspective for certain and backed with logic. We should have a fair application of the tax code across the business world, and people and businesses alike should comply fairly.

The climate of taxation has really changed the past couple of years. According to the Taxpayer Advocate Service’s (TAS) annual report, there have been more than 4,600 changes to the tax code since 2001. TAS also reported that in 2012 taxpayers spent 6.1 billion hours filling out tax forms to meet IRS requirements.

As revenues have fallen, different taxing authorities have taken different routes to navigate the climate. The decision from Washington is to increase taxation on the nation’s higher-income earners and investors.

States that have huge debt issues — namely Illinois and California — continue to raise rates. Other states are finding this is the time ripe with opportunity to bring in high-income earners by making tax policies more attractive. Their strategy is to reduce taxes of all types, betting they will attract new residents.

With 45 states imposing a sales tax, many have reduced their rates in recent years. Some have reduced their state income tax or even removed it all together. Our home state of Indiana has recently eliminated the inheritance taxes. Many will argue that this should never happen unless all previous debt is paid off, but states have a different take on the perspective.

The logic is just as a business may go into debt to build a building or develop a new product line, where they would employ leverage states that can are making a bet on the future. The evidence shows the practice is working.

Professional golfer Phil Mickelson aired his issues about California’s tax practices in public and eventually apologized, but it’s not the celebrity leaving that will crush states with aggressive taxation. It’s the investor and high-income earner around the corner who feels compelled to make a change.

The future landscape is different than it was and will most certainly change again. We are in a currency battle with our trading partners, especially Japan and China. We are in tax competition with other countries and work to try to find ways to bring dollars held overseas back to our shores.

Now we have added states and even local communities in battle with one another for new business and new residents. The game is on and far from done! We live in a fluid investment world with ever-changing tax policy and social implications galore. Stay tuned, but most importantly stay alert.

Joseph “Big Joe” Clark, whose column is published Sundays, is a certified financial planner. He can be reached at bigjoe@yourlifeafterwork.com or 640-1524.

 

1
Text Only
Columns
  • OPN - Mootry column mug [Duplicate] [Duplicate] Primus Mootry: There is a poet in each of us April is National Poetry Month. Throughout the country, colleges and universities, elementary and secondary schools, libraries and various publications have hosted poetry readings or featured unpublished poets.

    April 23, 2014 1 Photo

  • underwood mug [Duplicate] Scott Underwood: Nightmares from high school proms past I wore a salmon-colored tuxedo with a cummerbund and tails to my senior prom. I was 6-foot-6 and 175 pounds. A beanpole.

    April 21, 2014 1 Photo

  • Hayden, Maureen mug Maureen Hayden: Judge in gay marriage decision no activist

    When U.S. District Judge Richard Young recently ruled in favor of a lesbian couple seeking recognition of their out-of-state marriage, opponents of same-sex unions called him an activist judge who was unilaterally trampling the law. The label didn’t resonate with those who know Young well.

    April 20, 2014 1 Photo

  • Charo Boyd mug [Duplicate] Charo Boyd: Social Security goes green on Earth Day and every day For years, Social Security has been at the forefront of offering convenient, easy-to-use, and secure online services. We, along with those we serve, have saved a lot of paper, shipping costs, and fuel — and cut back on a lot of carbon exhaust and pollution — by going online instead of doing things the old-fashioned, less efficient way.

    April 20, 2014 1 Photo

  • Tim Kean: Can we have a 'A New State of Mind?' I have recently read some great articles about people coming together to make a difference in the lives of children facing food insecurity. The collective effort of a group can provide some much-needed food to kids who may not have a meal when they return home from school or during the weekend.

    April 19, 2014

  • SPL - PT041014 - Ken de la Bastide column - Ken sig Ken de la Bastide: County may eliminate Data Processing Board

    Action two weeks ago by the Madison County commissioners to close Data Processing Board meetings to the public might run afoul of the Indiana Open Door law, and a local resident is considering filing a complaint with the Public Access Counselor’s office for a determination.

    April 19, 2014 1 Photo

  • Timmons, Theresa mug Theresa Timmons: Dinosaurs run amok at mamaw's house I love my new job as a grandparent. It includes playing imaginary tennis with imaginary tennis rackets, making elaborate tents in the living room, and hair-pulling.

    April 19, 2014 1 Photo

  • Stringer, Maleah mug Maleah Stringer: Volunteers needed to spend time with shelter animals Shelters can be extremely stressful places for many animals, particularly those who have been in a loving home. This is why we want people to come into the shelter and spend time with our animals — to help keep them adoptable so that when the right person comes along they are ready.

    April 19, 2014 1 Photo

  • Bailey, Jim mug Jim Bailey: Wages were much less back then, but so were prices If you have any questions about what economists mean by inflation, just look at yesterday’s buying power. Those old western movies talked about wages of $1 a day. That wouldn’t even buy a burger at a fast food joint today by the time sales tax is added in.

    April 19, 2014 1 Photo

  • Clark, Big Joe mug [Duplicate] 'Big Joe' Clark: Understanding the risks within fixed income investments Many retirees associate the concept of taking “risk” with the equity markets. However, as 2013 demonstrated, there is also principal risk in the fixed income arena if an untimely liquidation requires you to sell bonds and generate income.

    April 18, 2014 1 Photo

Featured Ads
More Resources from The Herald Bulletin
AP Video
U.S. Paratroopers in Poland, Amid Ukraine Crisis US Reviews Clemency for Certain Inmates Raw: Violence Erupts in Rio Near Olympic Venue Raw: Deadly Bombing in Egypt Raw: What's Inside a Commercial Jet Wheel Well Raw: Obama Arrives in Japan for State Visit Raw: Anti-Obama Activists Fight Manila Police Motels Near Disney Fighting Homeless Problem Michigan Man Sees Thanks to 'bionic Eye' Obama to Oso: We'll Be Here As Long As It Takes Bon Jovi Helps Open Low-income Housing in Philly S.C. Man Apologizes for Naked Walk in Wal-Mart New Country Music Hall of Fame Inductees Named 'Piles' of Bodies in South Sudan Slaughter SCOTUS Hears Tv-over-Internet Case Chief Mate: Crew Told to Escape After Passengers
Parade
Magazine

Click HERE to read all your Parade favorites including Hollywood Wire, Celebrity interviews and photo galleries, Food recipes and cooking tips, Games and lots more.
Hyperlocal Search
Premier Guide
Find a business

Walking Fingers
Maps, Menus, Store hours, Coupons, and more...
Premier Guide
Helium debate
Helium
Front page
Poll

Do you plan to attend any of the local Little 500 Festival events in May?

Yes
No
What events?
     View Results