Here is word for word a copy of an email sent to my inbox recently.  Beware of all the swearing in case you may be offended. These are the types of emails I receive.

“My home and native land has officially gone to hell… And in this case, I mean it literally.

Canada just passed a new budget act upping the exclusion rate for capital gains to 66.6%

“By increasing the capital gains inclusion rate, we will tackle one of the most regressive elements in Canada’s tax system,” the government said in the budget document. The current 50% inclusion rate on capital gains disproportionately benefits the wealthy, who earn relatively more income from capital gains compared to the middle class, the government said.

It’s incredible they think that a “50% tax” is the wealthy getting off easy, and that they needed to fix the situation by raising it to 66.6%.

My inbox has exploded with private client work over this, and of my 8 consulting calls yesterday, 7 of them discussed this (even my American clients are looking to protect themselves if something like this comes to the US.)

Quickly, I want to say that if you are sitting on large capital gains in Canada, you should consider realizing those capital gains before June 25th, 2024; basically before this goes into effect.

And while you’re at it, I would tell these Satan worshippers to go fu8k themselves and move your money offshore.”

What do you think?

California has proposed a new digital advertising tax (AB 2829) that has been met with mixed reactions from businesses and consumers alike. If passed, the tax would be levied on large-scale California businesses that generate over $100,000,000.00 in annual global revenue from digital advertising services and would take effect on January 1, 2025.

Some have hailed the proposal as a way to generate much-needed revenue for the state’s budget, which was hit hard by the COVID-19 pandemic and has not yet fully recovered. Supporters of the tax also argue that it would help level the playing field between brick-and-mortar businesses and digital retailers, which have avoided many of the taxes and regulations that traditional companies face.

Opponents of the tax disagree and argue that the new tax would be harmful to both businesses and consumers alike. Opponents argue that it would make it more difficult for businesses to compete in an already challenging economic environment and that the tax would be difficult to enforce as it raises constitutional concerns surrounding the Due Process and Commerce Clauses. Opponents also argue that although there is an anti-passthrough provision disallowing the tax from being charged to the consumer as a separate fee, surcharge, or line item, businesses would instead pass the cost along to consumers under the guise of higher prices.

This recent California proposal has generated significant debate and controversy, with solid arguments on both sides. What are your thoughts?

You can reach Dan Thompson at Dan@thompsontax.com or call 916.333.2404

Part 1: Tax Relief for Working Families

Calculation of Refundable Credit on a Per-Child Basis. —Under current law, the maximum refundable child tax credit for a taxpayer is computed by multiplying that taxpayer’s earned income (in excess of $2,500) by 15 percent. This provision modifies the calculation of the maximum refundable credit amount by providing that taxpayers first multiply their earned income (in excess of $2,500) by 15 percent, and then multiply that amount by the number of qualifying children. This policy would be effective for tax years 2023, 2024, and 2025. Modification in Overall Limit on Refundable Child Tax Credit. —Under current law, the maximum refundable child tax credit is limited to $1,600 per child for 2023, even if the earned income limitation described above is in excess of this amount. This provision increases the maximum refundable amount per child to $1,800 in tax year 2023, $1,900 in tax year 2024, and $2,000 in tax year 2025, along with the inflation adjustment described below.
Adjustment of Child Tax Credit for Inflation. —This provision would adjust the $2,000 value of the child tax credit for inflation in tax years 2024 and 2025, rounded down to the nearest $100. Rule for Determination of Earned Income. —For tax years 2024 and 2025, taxpayers may, at their election, use their earned income from the prior taxable year in calculating their maximum child tax credit if the taxpayer’s earned income in the current taxable year was less than the taxpayer’s earned income in the prior taxable year.

READ THE NINE PAGE PROPOSAL

The Day After April 15th: How To Find A Tax Job When Your Firm Downsizes

With wars spreading throughout the world, tax and accounting professionals must build a backup business plan to protect their tax careers from unwanted interruptions. Unless you are not paying attention, (doubtful since tax professionals are highly educated), world events are quickly unfolding that will affect the tax and accounting profession, too. Previous wars are a good indicator of future actions, with generations having lived their lives through the Vietnam War(1969-1973); Persian Gulf War(1993); Afghanistan War( 2001-2014); Iraq War( 2003-2011, we know wars create a fast track to downsizing firms. While the government is funding wars in Ukraine, Russia, Israel with Iran; U.S. taxpayers are increasingly taxed to the max. We know from years of experience that large firms downsize to reduce overhead costs after April 15^th . They now call downsizings, a rightsizing which is an oxymoron. A firm rightsizing is the process of restructuring an organization by cutting costs, reducing employees, or reforming upper management. For tax and accounting professionals caught in these rightsizings, it is devastating. However, this time it is different, as we built a safety net to protect tax professionals.

What action should you take now to support and protect your tax career?

A tax career is smart choice, if you manage it properly, and this means taking personal responsibility for marketing yourself. Every firm’s marketing budget focus is on the firms’ name and brand, not your name. What most tax staff do not realize is that the Tax Partners who are knocking it out of the ballpark for their firms are privately investing their own money in marketing themselves. You need not wait to make Tax Partner to realize what really happens. Years ago, a Tax Partner privately confided in me, they would rather get a root canal than go in and ask management at the firm for money to market themselves. They told me the answer would be a hard no! The firm’s marketing budget is spent on a firm’s name, not individual names. This makes good business sense since the turnover rate is 25%-30% in the Big Four. Most do not realize that the Tax Partners who are doing well in large firms invest in marketing themselves out of their own pocket. Once you learn this lesson, you learn to start early in taking personal responsibility to market your tax expertise.

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The research on Presidential candidates and where they stand is a must read provided by the Tax Foundation. TaxConnections highly recommends you take the time to read the research provided by this non profit comprised of researchers and the best of the  tax profession. According to the Tax Foundation, Tax policy has become a significant focus of the U.S. 2024 presidential election. The Tax Foundation has created this tool to keep track of the tax policies proposed by presidential candidates during their campaigns. It is smart to pay attention to the Tax Foundation site.

Joe Biden, under his proposed budget for fiscal year 2024, would increase tax rates on corporate, individual, and capital gains income; expand tax credits for workers and families; and expand tax bases to include more types of income. 

Business Taxes: 

• Increase the corporate income tax rate to 28 percent. Read more
• Increase the global intangible low-taxed income (GILTI) tax rate from 10.5 percent to 21 percent and repeal the reduced tax rate on foreign-derived intangible income (FDII). Read more
• Repeal the base erosion and anti-abuse tax (BEAT) and replace it with an undertaxed profits rule (UTPR) consistent with the OECD/G20 global minimum tax model rules. Read more
• Expand the net investment income tax to non-passive business income. Read more
• Raise taxes on the fossil fuel industry. Read more

Capital Gains and Dividend Taxes: 

• Tax long-term capital gains and qualified dividends at ordinary income tax rates for taxable income above $1 million and tax unrealized capital gains at death above a $5 million exemption ($10 million for joint filers). Read more
• Tax carried interest as ordinary income. Read more
• Impose a minimum effective tax rate of 20 percent on an expanded measure of income including unrealized capital gains for households with net wealth above $100 million. Read more

Credits, Deductions, and Exemptions: 

• Make the Child Tax Credit fully refundable on a permanent basis. Read more
• Increase the Child Tax Credit to $3,600 for young children and $3,000 for older children, make it fully refundable, and make other changes, on a temporary basis. Read more
• Increase the Earned Income Tax Credit for workers without qualifying children on a permanent basis. Read more
• Expand premium tax credits on a permanent basis. Read more

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At hearing with Treasury Secretary Yellen, Crapo highlights contrast between pro-growth tax policy and proposals that would stifle economic growth

Washington, D.C.–At a U.S. Senate Finance Committee hearing on President Biden’s Fiscal Year 2025 budget, Ranking Member Mike Crapo (R-Idaho) highlighted the nearly $5 trillion in new and increased taxes included in the President’s budget proposal—tax proposals that would slow the economy and be felt by virtually all Americans.  Ranking Member Crapo highlighted the contrast between the President’s tax proposals versus Republicans’ Tax Cuts and Jobs Act (TCJA), which led to one of the strongest economies in generations.  Senator Crapo secured commitments from U.S. Department of the Treasury Secretary Janet Yellen to support extending Republicans’ pro-growth tax proposals.

Click HERE to watch Senator Crapo’s opening statement.