Broker Check

October 29, 1998


If you don’t think your vote counts, think again.
In 1645, ONE VOTE gave Oliver Cromwell control of England.
In 1649, ONE VOTE caused Charles I of England to be executed.
In 1776, ONE VOTE gave America the English language instead of German.
In 1839, ONE VOTE elected Marcus Morton Governor of Massachusetts.
In 1845, ONE VOTE brought Texas into the Union.
In 1868, ONE VOTE saved President Andrew Johnson from impeachment.
In 1876, ONE VOTE gave Rutherford B. Hayes the Presidency of the United States.
In 1876, ONE VOTE changed France from a Monarchy to a Republic.
In 1923, ONE VOTE gave Adolf Hitler leadership of the Nazi Party.
In1960, ONE VOTE changed in each precinct in Illinois would have defeated John F. Kennedy.

          Needless to say, this election day is very important to our area. If New York’s Governor Pataki wins big he might be the Veep in 2000 on Governor George Bush’s ticket. Then again, there are the issues surrounding the congressional races and the ultimate vote for impeachment in the House. Not to be forgotten is the New York Senatorial race which involves a potential juror if the House does vote for impeachment. Whatever your position, you are not entitled to voice it in debate unless you take the time to exercise your franchise on Election Day.

Taxes Cause the Decline and Fall of the Roman Empire

          Diocletian has a bad reputation but he faced a problem that Augustus did not have to, inflation. To solve it, he abandoned money and created a new tax system based on goods. This gave rise to a monstrous bureaucracy. Tax agents outnumbered taxpayers. Yet the system was much simpler than ours.

          Diocletian created the first estimated tax. The amount based on estimates of the needs of the state, was announced just before the harvest. The main tool of the enforcement (for both collectors and payers) was the death penalty. Many Christian victims of the Diocletian “persecution” may have died for tax reasons. He called this a “reform”, setting an example for modern governments. No farmer knew in advance what the tax would be. But a tax on land and crops makes torture and fines unnecessary. The government can simply seize the delinquent’s land. Jail was first used by the emperor Constantine to enforce an income tax.

          The immediate cause of Rome’s fall to the Vandals was rampant tax evasion, the inevitable result of unjust taxation and a monstrous bureaucracy. Rome could not raise an army because the tax evaders had all the money. The wealth of corrupt senators was based on their ability to abuse the tax system.

The Alternative Minimum Tax Bite

          Remember the tax that was supposed to only cause “rich people” to pay taxes, or rather, the tax that was supposed to prevent “rich people” from not paying any taxes. Well, that tax, called the alternative minimum tax (AMT) is affecting more individuals than “rich people”. It hits middle income people with miscellaneous itemized deductions, real estate taxes and state and local income tax deductions. Today, 600,000 people will be affected by the tax. By 2006 more than 6,000,000 people will be affected by the tax. This means that a family of four with an income of $58,300 in 1996 dollars will be subject to the tax. This means that more people must pay attention to the AMT, how to figure it and how to plan around it so they do not have to pay the AMT accidentally.

          The AMT is paid when it is higher than the regular income tax. You compute your tax the same way, on the Form 1040 and related forms, however, you add back several itemized deductions, all state and local taxes, home equity interest, medical deductions and miscellaneous itemized deductions. Personal exemptions are lost when figuring the AMT. Some tax exempt interest is taxed under AMT. Tax rates begin at 26% on the first $175,000, 28% above that.

          If you are subject to the tax and want to plan around it, call for an appointment.

Attention Internet Shoppers-No New Taxes!

          The Internet Tax Freedom Act was passed by bipartisan support in the House and Senate. President Clinton is expected to sign the bill. Senator Joseph Lieberman said it best, “Let it grow out of its infancy before we let the tax man put his teeth into various parts of its anatomy.” But Senator Dale Bumpers complained, “ I’m for computers, I’m for technology, but I’m not for allowing them to erode the tax base of this country.” The bill seeks to treat sales of merchandise on the Internet in the same way that phone or mail order transactions are treated. This means that sales taxes should be collected by companies who sell over the Internet and send them to the jurisdiction the purchaser lives in if the selling company has a store or other substantial presence in the purchaser’s state. If there is no presence, then a use tax is supposed to be collected by the purchaser’s jurisdiction.

          Apart from merchandise, the bill tries to block taxes on information. “Bit taxes”, fees on electronic commerce based on the volume of digital information transmitted, would be barred.

          Eight states, including Senator Lieberman’s Connecticut, already tax Internet access and their taxes would be grandfathered in if the states affirmed within a year that they intend to tax Internet access.

          If you have any questions about these or any other financial matters, please call me.