Where's the "Relief"?

Why do they call it the “Taxpayer Relief Act of 2012” when it increases everybody’s income taxes and it was passed and signed into law in 2013?

In mimicking the Wendy’s ad of decades ago, “Where’s the beef?” our friends in Washington DC have decided to label a tax increase bill as relief.  OK, where’s the relief?  Surely, they jest.

This past week I sat in several hours of live presentations on federal income and estate taxes.  There was some good news on the federal estate tax side in that changes in the law were labeled “permanent” unlike previous changes that were subject to sunset provisions and therefore requiring frequent visits to attorneys by lots of taxpayers.

Well, guess what?  Looks like many of you will have to go back to your attorney and change your trusts again (or even create them) or at least make sure your old living trusts (may be called revocable) don’t need changing.   It’s all a matter of A, B and C, our speaker stated.   Sounded more to me like a continuation of the estate planning attorney full employment act.

Oh, by the way, the greatest laugh was from the audience when the speaker said the estate law changes were permanent, as permanent as any law that can be changed by a subsequent congress.  As a note, the President has already presented a budget that proposes to lower the limit of tax-free assets passing to other than a spouse.  Permanent, my foot.

Now to income taxes.  More Alternative Minimum Tax for the upper middle class is what I heard in the lecture I attended.  The congress took away more deductions and exemptions that you think you’re getting under the regular tax code and added a “permanent” fix to inflation creep that was frequently labeled a “patch” to protect middle class taxpayers. 

That creep began decades ago when 150 very rrhigh-income people didn’t pay any income tax.  Now AMT affect 5 million taxpayers.  Thanks congress.

So here’s my takeaway from meetings this week on income taxes.  The congress gives tax breaks in the regular tax code and takes them away in AMT.  You should see the chart I now have to look at to try and figure out how much clients might owe. 

Oh, by the way, we just ordered a thousand dollars worth of software to deal with “Relief”.  Bye, bye Turbo Tax.  What a relief.