Tax Rates on the Way Down?
Don’t hold your breath, but we like what we’re hearing from House Ways and Means Chairman Dave Camp (R – Mich), who recently proclaimed that he wants to cut the top individual rate to a paltry 25% (down from the present 35%)!
The bad news is that Camp would also erase from the law a whole bunch of deductions. But doggone it – you just can’t have everything.
“America needs a tax code that promotes, not prevents, job creation,” Camp recently told the Wall Street Journal. “Today’s code is simply too complex, too costly and too burdensome for families and employers of all sizes to comply with….We need to set ambitious goals and work toward those, because if we don’t try that will be the biggest failure of all.”
Needless to say, the Dems aren’t wild about Camp’s idea. Michael Ettlinger, vice president for economic policy at the Center for American Progress thinks the plan would produce unacceptably high deficits because of the lack of political will (on the part of both parties) to sufficiently cut spending. He notes that “There is no way we can provide anywhere near the services that the public demands at those levels of taxes.”
But don’t tell that to House Budget Committee Chairman Paul Ryan (R – Wisc), who thinks rate cuts are indeed possible. “That’s one thing I think we have a shot at bipartisanship, only because the White House talks about it constantly.”
And a recent private letter ruling (PLR) issued by the Revenooers sanctions the long standing notion that payments of certain investment advisory fees with non-IRA funds do not constitute a “deemed contribution” to the IRA, allowing the payments to therefore qualify as deductible expenses by the payor.
In the facts set forth in the PLR, an investment advisor provides a variety of financial services to its clients (including the rendering of investment advice, performance monitoring and review, trade execution, money management and custodial services). And those services, of course, require payment of a quarterly fee based on the percentage of the assets under management – a fairly typical situation. The fee, unrelated to the number of trades executed in any account, is called a “wrap fee.”
IRS concludes that such fees are recurring administrative or overhead expenses, rather than “deemed contributions” to the IRA in question.
CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters. You should consult your CPA regarding the implications to your own particular situation. Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He can be reached at 775-831-7288, welcomes comments below at firstname.lastname@example.org, and invites readers to view his other commentaries at www.taxlawtips.com.