October 15, 2007

IRS Audits

          will resume this fall with notices on 2006 tax returns.  They will look for unreported income, overstated deductions and tax credits.  Schedules C and F are the main targets.  Kiplinger Tax Letter 6/15/07

Will The Last Person Please Turn Out the Light

          Do you think that New York City’s highest in the Nation level of taxation has no effect?  People are voting with their feet.  Between 1991 and 2006 New York lost one person every 2 minutes and 45 seconds.  IRS data shows between 1996 and 2005 New York lost $38,139,573,000 of nominal income to other states.  More disturbingly, the annual losses have accelerated to $5,266,985,000 in 2005  from  $3,478,584,000  in  2003,  a  51%  increase.  It  is  true that 62% of emigrants have been replaced by immigrants, but the median immigrant’s income is only $8,005, while the median domestic out-migrant is $28,022.

          The top 10 destinations all have significantly lower tax burdens: Florida 30.2% less, New Jersey 22.1%, Pennsylvania 26%, North Carolina 28.6%, Georgia 31.5%, Connecticut 20.6%, Virginia 31.5%, California 23.2%, Maryland 28.5%, and Arizona 27.1%.

          The political lesson is simple, cutting taxes will not only encourage more folks to stay, but it will result in higher future tax collections.  The government cannot tax that which moves away.  New York Sun 8/7/07

Camp

          Did you send your child to math camp this summer?  According to the IRS, the cost does not qualify for the dependent care credit; the same for camps that focus on improving reading, writing or study skills.  All of these programs are treated as education not care.  The IRS says the principal purpose of this camp must be care so the parents can work, not education.

          The cost of other special day camps, such as computer and soccer programs remain eligible for the credit. Kiplinger Tax Letter 8/24/07

Ode to Halloween

          In the words of Jerry Seinfeld, “candy” is what Halloween meant to young children as well as “candy” and more “candy”.  Together with Valentine’s Day and Easter, it is one of the most beloved holidays for M & M Mars, Hershey and most other candy makers.

          As a young Jewish boy growing up in New York I was conflicted about the holiday because it supposedly was an Americanization of a Christian holiday, All Hallow’s Eve, where even today, I know of Jewish parents who will not let their children go trick or treating because of the Christian association of the holiday.  Of course, I was not conflicted enough not to get free “candy, candy, candy”.

          Imagine my surprise when I found that it is not a Christian holiday at all.  The Christians expropriated a pagan holiday from the Druids.  It was the most important of all Celtic Festivals.  It was called Samhain, the first day of the New Year when the spirits of the dead were believed to mingle with the living, and when a new king was enthroned every seven years.  (In fact there is evidence that the observance of this festival and its Spring counterpart, Beltains, was much older that the arrival of the Celtic tribes in Britain by a thousand years.)  Later, the eve of Samhain became Hallowe’en under Christian auspices, in order to get the pagans to accept Christianity; they could keep their holidays, so the celebration of the release of spirits on that night continues to this day.

          I now feel great that I was not observing a Christian holiday.  On the other hand, should I be feeling good that I am observing a pagan holiday?  I will continue to ponder my doubts while eating the Halloween treats that wait to be given to those children ringing the doorbell and saying the perennial-Trick or Treat!!  The Megalithic Odyssey by Christian O’Brien p. 85

         If you have any questions about the foregoing or any other financial matters, please call us. We are always available to see if we can help your family or friends.

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