Prof. Maule has been lamenting the unwisdom shown in the making of tax law. He notes that aspiring presidents don't grasp the basics either:
In another link sent by Mary, Obama tried to explain his mortgage credit proposal , but he slipped up describing current law. When he claimed that homeowners who itemize "get a mortgage deduction, up to $1 million," he made a mistake so classic that I usually find a way to work it into the exam or a semester exercise in the basic tax course. The $1 million limitation is on the amount of the acquisition mortgage, the interest on which is deductible. So if the interest rate on the mortage is 6%, the deduction is limited to $60,000.
Senator McCain isn't flawless on this score, either, as his referring to a proposed $7,000 dependent exemption as a "credit" shows.
I have the answer to this problem, of course -- require that all Congresscritters do their returns in public themselves via a live webcast. They can use Turbotax or the software of their choice, as long as all input screens and output are broadcast live on the web, with a sidebar for running viewer commentary. Or, perhaps, selected tax pros could do the kibitzing - think "Mystery Science Theater 3000," tax geek version. Naturally, the whole comedy should also be available for playback on YouTube. I think this would have two useful results: Congresscritters would have a stake in tax simplification, and they would learn the difference between a deduction and a credit.
The items included in the Tax Update Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation.
Joe Kristan writes the Tax Update items, and any opinions expressed or implied are not necessarily shared by anyone else at Roth & Company, P.C. Address questions or comments on Tax Updates to