Thursday, April 14, 2011

A Tale of Two Tax Codes

This year, Tax Day, usually April 15, is three days later on Monday, April 18 because federal and municipal offices in Washington DC close on Friday to observe Emancipation Day. The observance of that holiday is usually April 16 but this year it falls on a Saturday and is celebrated one day earlier. The holiday commemorates the 1862 signing of the Compensated Emancipation Act (read the document at the Library of Congress' Century of Lawmaking site) which freed the enslaved people in Washington, DC nine months before President Abraham Lincoln issued the Emancipation Proclamation. The Internal Revenue Code (26 USC §7503) states that when the last day for “performing any act” falls on a Saturday, Sunday, or legal holiday, the performance of that act is considered timely if it is performed on the next succeeding day which does not fall on a weekend or legal holiday. “Legal holiday” includes those observed in Washington, DC. As a result, tax payers get an extra three days to file their returns this year.

Yesterday's Remarks by the President on Fiscal Policy (read transcript) laid out a budget plan that differs sharply from one offered by the opposing party. See chart comparing the two plans at the NY Times website which shows major differences in tax policy particulary concerning the tax rates for high income earners: the Republican plan calls for lowering the top tax rate to 25%; the President's plan calls for the expiration of the Bush tax cuts and restoring the top tax rate to 39.6%. The President stated "In the last decade, the average income of the bottom 90 percent of all working Americans actually declined. Meanwhile, the top 1 percent saw their income rise by an average of more than a quarter of a million dollars each." His call for Congress "to reform our individual tax code so that it is fair and simple -- so that the amount of taxes you pay isn’t determined by what kind of accountant you can afford" is likely to meet strong opposition.

The Tax Prof Blog has two blog posts that make clear how far apart views are on the issue of higher taxes for the wealthy. The first cites a Wall Street Journal opinion piece called Obama's Soak-the-Rich Tax Hikes Won't Work by Alan Reynolds. The Brooklyn Law School Library has in its collection an item written by Reynolds entitled The Microsoft Antitrust Appeal: Judge Jackson's "Findings of Fact" Revisited (Call #KF228.U5 R48 2001).

The other post cites 9 Things The Rich Don't Want You To Know About Taxes by David Cay Johnston. The BLS Library contains a book by Johnston called Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich--and Cheat Everybody Else (Call #HJ2362 .J64 2003).

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