President Obama is calling on Congress to raise taxes on the wealthy in a speech today, and he's using a clever example to describe it. Calling it the "Buffett Rule," he's calling for tax law changes to ensure the Warren Buffetts of the world don't pay a lower tax rate (due to their investment income) than their secretaries.
Tax fairness is a top priority for the National Association for the Self-Employed, but we're much more interested in tax laws that impact the 22 million self-employed Americans who aren't household names but who create a whole lot more jobs than Mr. Buffett. In honor of the millions of Americans who are struggling this week to figure out the home office deduction and other baffling tax laws, we're calling on Congress and the president to change all tax laws that are so baffling that taxpayers don't take advantage of them. Let's call it the "Baffle Rule."
The tax deduction for the use of a home office is one of the biggest headaches for taxpayers. It is probably the most notoriously complex and confusing broad-based tax credit offered by the federal government. An estimated 9 million Americans work out of their homes, but there are perhaps millions of these entrepreneurs each year who don't claim this tax credit, simply because they don't understand it.
This is especially true for self-employed taxpayers, who usually prepare their own taxes. Unlike Mr. Buffett, they don't have a platoon of tax lawyers on speed dial, so in many cases they just give up on the deduction out of frustration or fear of an audit from an incorrectly filed return.
The NASE is asking Congress to simplify this deduction, by allowing home-based businesses to take a standard $1,500 deduction for home office expenses. By making the tax rule less confusing, more self-employed taxpayers will take advantage of it, thus providing more resources for these small businesses to grow and create jobs.
Tax credits don't work to encourage behavior if Americans can't understand them, so let's get Congress and the president to enact the "Baffle Rule" this year, so that our taxes for next year are friendlier and less baffling to the self-employed and small businesses.
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just kidding.....
last year a spent 150k on a machine that was built in ca because i could deduct it 100% the first year, this year a spent 102k on a machine that was built in tx......that money goes to us workers.
Specifically, we the American People gave you a pass on $150k of your earnings so that you could buy something. It's the Federal government spending money on you, and it's the same thing as them spending money on anything else.
One man's tax deduction is another man's welfare.