Income taxes

I spotted this article about federal income taxes. "Unpaid taxes taxes are almost as large as the entire federal budget deficit." Wow!

Staff reductions and old computer software have significantly stifled collection and enforcement efforts. "The audit rate for households with income over $1 million has fallen by 40 percent since 2010."

If President Trump wants to lower the federal deficit, stronger collection and enforcement efforts look like "low hanging fruit."

During the campaign Trump called for reforming the treatment of "carried interest." I'm with him on that. Most management fees for mutual funds are taxed as ordinary income. However, performance-based fees at hedge funds get capital gains treatment. Manager X getting capital gains treatment on X's own assets in the fund, but why do fees X collects from a client Y based on Y's capital gains on Y's assets warrant capital gains treatment for X's fees? It seems very inconsistent to me. I can only say, "that's politics". Some hedge fund managers donate a lot of money to politicians. Prime examples are Tom Steyer and Donald Sussman, 100% (rounded) of it going to Democrats and liberals according to OpenSecrets.org. Steyer was Hillary Clinton's biggest individual donor. Isn't it ironic that it is mostly Democrats and liberals who complain about money or the rich corrupting politics?

I do not presume that taxing such performance-based fees as ordinary income would raise tax revenues a lot. The number of hedge fund managers or assets isn't huge. It is a matter of logic and equity.

Incidentally, whether or not Mnuchin becomes Treasury Secretary is an open question. Congressional Democrats are strongly resisting his confirmation. They voiced several concerns about him: He initially misstated his personal wealth on a financial disclosure form, and he misstated under oath how OneWest Bank, a bank he led as chairman and chief executive officer, scrutinized mortgage documents. The bank allegedly "robo-signed" foreclosure documents contrary to law.

Tax season accelerates around now. The official start was January 23, when the IRS began accepting returns.  But the deadline for W-2s and some other source-reporting forms is January 31. So the number of people going to tax preparers jumps around today.  I will be an AARP Tax Aide volunteer again starting February 6.