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What Do Losing Presidential Candidates Have to Say About Income Taxes?

Sep 30th 2019
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Tax tidbits
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I’ve devoted previous columns (ten so far and more in the pipeline) to “tax tidbits.” The columns explain what tidbits are and how I use them.

What kinds of tidbits make it into those columns? For the most part, I discuss court decisions, IRS rulings and other agency announcements, and wide-ranging overhauls of our Byzantine Internal Revenue Code, such as the Tax Cuts and Jobs Act that Congress passed and President Trump signed close to the end of 2017.

Add to the mix my answers to questions from accountants, attorneys and other tax professionals who read my columns (more than 300 and counting) for AccountingWeb.

I also include amusing or perceptive comments about America’s tax laws—whether negative (almost invariably) or positive (seldom)—by politicians, judges, entertainers and authors. Their comments bring to vibrant life a dry subject that has been the source of fierce political contention for more than a century.

Some tidbits, such as the humorous comments are short; usually, they’re under 50 words. I use them to enliven conversations with clients about torpid topics like proposed law changes, taking care not to tell them more than they would ever want to know about those revisions. 

Others are lengthier. They explain easy-to implement, completely kosher tactics that enable individuals to trim their taxes for this year and even provide them with a head start for next year. I use them to, among other things, convert prospective clients into new clients.

How do those folks happen to hear the tidbits? Usually, because they go to one of my talks for groups like home sellers, business owners, investors and retirees. Or because they attend one of the adult education courses that I teach at places like high schools and community colleges.

At those events, my tidbits help to show attendees how to nimbly  sidestep pitfalls while capitalizing on opportunities to diminish, delay, or deep-six payments of sizable amounts that would otherwise swell IRS coffers.  Fortunately for me, my explanations prompt some attendees to become clients.

A final thought, Dear Reader, about how my columns help other readers to increase their client roster. What a steadily growing number of them do is to insert my tidbits into their talks. Want to do the same? If yes, read the previous tidbits. Then read below for the latest ones.

An audit reminder for filers who receive refunds: They shouldn’t forget about audits. When tax time rolls around, most filers receive refunds. Suppose you received one for the previous year’s 1040 form. Does that mean it passed muster and won’t be examined? No. It just means that the Internal Revenue Service’s computers checked arithmetic and other basic items.

Heed what happened to Robert G. Wells. Robert thought his refund meant the IRS wouldn’t require him to substantiate, among other things, his deductions for car expenses. So he threw out his records—a step that came back to haunt him when the IRS audited his return, disallowed those expenses, demanded the refund back, and assessed nondeductible interest charges and penalties. Undeterred, Robert decided to have the dispute decided by the Tax Court, a step that got him exactly nowhere, as he was unable to persuade the court that it should allow the expenses.

As Plato foresaw in The Republic nearly 2,500 years ago, "When there is an income tax, the just man will pay more and the unjust less on the same amount of income."

Losing presidential candidates on income taxes. Super-wealthy H. Ross Perot twice ran unsuccessfully for president as a third-party candidate. During his first run for the office, he revealed on the filing deadline for Form 1040 that “I'm delighted to pay big taxes. Big taxes mean big income.”

William Jennings Bryan campaigned unsuccessfully three times as the Democratic presidential candidate. During his famous acceptance speech at the party’s National Convention in Chicago, on July 8, 1896, he declared that “The income tax is just. It simply intends to put the burdens of government justly upon the backs of the people. I am in favor of an income tax. When I find a man who is not willing to bear his share of the burdens of the government which protects him, I find a man who is unworthy to enjoy the blessings of a government like ours.”

Look for more tidbits in subsequent columns.

Additional articles. A reminder for accountants who would welcome advice on how to alert clients to tactics that trim taxes for this year and even give a head start for next year: Delve into the archive of my articles (more than 300 and counting). 

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