Monday, April 16, 2012

The Buffet rule - dark comedy.

By now, all the large accounting firms have confidential memos out to their rich clients on how to avoid the tax implications of the Buffet rule. It is simple. Here is how you do it.
The Buffet rule applies to a tax on "earned income." Earned income does not include interest earned from tax free municipal bonds. Tax exempt interest from municipal bonds is not included in Adjusted Gross Income, AGI, as it is known.

In other words, if you receive $1,000,000 per year in tax free municipal bonds, the Buffet rule, as currently constructed, will not apply to you.

The whole Obama Buffet rule is a dark comedy played on the unsuspecting. At best the Buffet rule, if applied and collected, would raise an estimated $5 billion per year.  The Feds could do better than that just by collecting the AIG debt from the $750 Billion of TARP money the Feds gave them.

The devil is in the headlines, but the truth is in the details. Doubt me? Google the house bill.

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1 comment:

  1. AnonymousApril 17, 2012 at 11:27 AM

    How would someone transfer money from "earned income" to tax free municipal bonds? Is that an easy thing to do? You make it sound like it is and only the suckers who make millions a year and are not aware of this loophole will be qualify for the Buffet rule.

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