Tax Attic

The Tax Attic – July 9, 2009

July 9, 2009 // 0 Comments

Cash for Clunkers Our Congress is at it again. Passing laws and printing money seem to be their specialty these days. This particular program only has a one billion price tag, so it’s kind of small potatoes, but it’s still one BILLION dollars. I’m talking about the bill recently passed by both the House and the Senate, and is now awaiting President Obama’s signature:  HR 2346. It is officially titled as the “Consumer Assistance to Recycle and Save Act of 2009.” Unofficially, HR 2346 is known as the “Cash for Clunkers” program. Basically, taxpayers can trade in a clunker on a new vehicle and get a credit from the federal government for a part of the purchase. The credit will only apply to purchases or qualifying leases that occur between July 1, 2009 and November 1, 2009, and Congress has only authorized up to one billion dollars worth of credits. It’s a first-come, first-served type of program. In order to qualify for the credit, the vehicle traded in must meet four qualifications: 1.     The clunker must be in drivable condition. 2.    The clunker must have been registered and insured by the owner for at least one year immediately prior to the trade- in-         no going out and buying a $100 clunker on Monday and trading it in on Tuesday. 3.    The clunker must have been manufactured less than 25 years before the date of the trade-in-no trading in that 1980                Ford Maverick that has been sitting in the back field for the last 18 years. 4.   For automobiles, the clunker must get 18 miles per gallon or less of fuel economy. Once the clunker rules have been met, there are three qualifications the new vehicle must meet: 1.   The new vehicle must have a title that has not been transferred to any person previously, and the purchaser must be the         ultimate purchaser. In other words, it must be new and right off the assembly line. 2.   The new vehicle must have a manufacturer’s suggested retail price of $45,000 or less. 3.   The new vehicle must meet certain miles-per-gallon (mpg) requirements-22 mpg for passenger […]

Tax Attic — June 25, 2009

June 25, 2009 // 0 Comments

How are Social Security benefits calculated? The catching of fish in Canada was not quite as good this year as other years. The black flies and mosquitoes were not a problem, though. I guess they don’t like 50 degree and rainy weather either. However, the fishing was as good as ever. As those of us who fish know, catching fish is only a small part of the whole story. I go to Canada fishing for walleye almost every year. I go with fellows whom I have been friends with for more than 30 years now. Around the campfire, along with a beer or two, we get to laugh about the stories of the trips we took over those 30-plus years. Some of those stories are actually true and not embellished too much, like the time we almost ran over a moose between White River and Wawa. Scary, but I swerved right around him and we kept on going. Another time, we hit a rock in the river and I flew out of the boat so fast I didn’t have time to even say “Ro……” before I hit the water. I lost my sunglasses but held onto my coffee cup and hat. They were good sunglasses too. I saw that rock quite clearly. Yet another time, we were driving down the two-track to the boat launch and looked over to see a big black bear nonchalantly walking back toward our camp on the two-track going in the opposite direction. I don’t know, but I think he knew we weren’t going to be there to defend our property. One time we bet one of the guys that he couldn’t leave the campfire, jump into the boat, go out into the lake, catch a fish and get back to his seat at the campfire within five minutes. He won the bet, too, with a nice pike. It’s just as impressive to me today as I write this as it was seeing him do it. Another time, a mink figured out how to open the latch on our minnow buckets and eat all of our minnows. Smart-aleck little fellow, but it was probably quite a feast for him. He ate probably $20 worth of minnows before we got smart enough […]

The Tax Attic – June 18, 2009

June 18, 2009 // 0 Comments

Social Security to go bankrupt It has been an eventful and good last few months for the Coon household. Stephanie, our oldest daughter, has been a student at Rush Medical University in Chicago for the last four years. At the end of April, she completed her studies at Rush. Prior to that time, she found out that she would be serving her three years of residency in Grand Rapids at Spectrum. To say that her mother and I were excited to have Stephanie coming home was an understatement. Since Stephanie also earned her undergraduate degree in Chicago at North Park University, she has really been in Chicago for the past eight years. It will be nice to have her home for the next three years. Having a daughter become a doctor is an event all by itself, but there is more to the story. It has been a whirlwind few months. Stephanie has been engaged to Devon Cunningham, a transplanted Californian, since last year. The Coons gained a son-in-law on the Saturday of Memorial Day weekend. Congratulations to Stephanie and Devon. On Wednesday of the week of the wedding, Devon and Stephanie bought a house near Spectrum. Since they will be employed for the next three or four years, many incoming medical residents choose to buy houses instead of renting. Once Stephanie and Devon found out she was coming to Spectrum, the plan was to move all of their belongings directly from Chicago up to a house in Grand Rapids. As so often happens, however, things don’t work out quite like the plan. Delay after delay resulted in the house-closing not occurring until the week of the wedding. That meant they and all of their belongings lived at our house until after the wedding. It’s just Deb and me in our home, anyway, so there is plenty of room. But I am sure Stephanie and Devon would have preferred to not have to move everything twice. Then, on June 13, Stephanie and 120 of her classmates received their degrees and became doctors of medicine. All of them will be completing their residencies throughout the U.S. and specializing in many different areas. Stephanie is going to specialize in emergency room medicine. This was not only a […]

The Tax Attic – June 11, 2009

June 11, 2009 // 0 Comments

Options for Social Security problem Social Security-it’s an entitlement program that we have gotten used to participating in. Those of us lucky enough to be still working participate by paying in Social Security tax. Most of us age 62 or older and those taxpayers who are disabled participate by receiving benefits. The problem that has been developing since the late 1970s is that more people are going to participate by receiving benefits than participate by paying into the system. In 1983, Ronald Reagan convinced Congress to gradually increase the age at which taxpayers can receive full benefits as well as reduce the benefits that taxpayers will receive if they opt to begin receiving early benefits at the age of 62. Since 1983, the only changes made have been to increase the amount of earnings upon which Social Security tax will be paid. That maximum amount for 2009 is $106,800. In 1983, the maximum was $35,700, so that has been a huge change. Unfortunately, that is not enough change. Social Security is slated to be completely bankrupt by 2037 unless more changes are made. If nothing is done, what exactly will happen in 2037? What will the federal government do? Apparently, they will have three options. Option one is the federal government quits paying benefits, but it also quits collecting the tax. It’s not realistic to presume the federal government would voluntarily stop collecting any tax, let alone Social Security tax. “Fat chance” might say it all. Option one of not paying benefits and not collecting tax won’t happen. Option two is benefits would be decreased to equal the level of revenue. In other words, the dollar amount of benefits would be adjusted down or up, based on the amount of Social Security tax collected. The downward adjustment could be anywhere from 30 to 60 percent. Taxpayers receiving a $1,000 benefit would have their benefit reduced down to $300 or $600. Can you say the word “rebellion”? Option three is the federal government continues to pay the same benefits while just printing money. As we are seeing, they are proving to be very good at printing money. Going in the hole by a trillion or two doesn’t bother the present administration, but we will have to […]

The Tax Attic – June 4, 2009

June 4, 2009 // 0 Comments

Why is Social Security going bankrupt? As I have written in previous articles, I enjoy going to sprint car races, particularly the winged sprint car shows put on by the World of Outlaws. It’s a traveling circus that comes to Michigan usually once a year. Sometimes they come when I’m out of state, up in Canada fishing or on vacation-darn. Sometimes they come and the show gets rained out-double darn. However, once in a while, all of the stars line up and I get to make the short drive down to Clarksville’s I-96 Speedway and see the greatest dirt show on Earth. The Indianapolis 500 lays claim to being the “greatest spectacle in racing.” That may be, but in my opinion, the World of Outlaws has no equal when it comes to racing on the short dirt tracks. The drivers are fearless, the racing is spectacular, and where else in the world of sports can you go visit with the big stars after a night’s work? All fans can go to the pits after the races and talk with many of the drivers. They are very accessible. Try that after a Tigers game, a Red Wings game, a Lions game or the Indianapolis 500-good luck. As noted in last week’s Grand Rapids Press, the World of Outlaws announcer, Johnny Gibson, has a trademark saying as the cars line up four-wide to take a parade lap before the start of the feature event. It goes like this: “You wanted the best, you got ’em, four abreast, often imitated, never duplicated, the greatest show on dirt, the World of Outlaws!” He’s not kidding either. It truly is the greatest show on dirt! There is another subject that I would like to discuss that also isn’t anything to kid about. It’s Social Security. According to a recent report by the Social Security Administration (SSA), the SSA will be totally out of money in 2037. I will be 85 in 2037 and my wife, Deb, will be less than 85. For my own well-being, I won’t get any more specific than that. To say, however, that I am interested in seeing how and if President Obama and our Congress is going to deal with this issue is an understatement. […]

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