President Obama is quite a speaker and I enjoyed his State of the Union Address. There are several topics that he discussed that sparked my interest and should be expounded upon. First, he discussed the Tax Code and made and appeal for reform. Second, he discussed Student Loans and what should be done about the expected increase of interest rates. Third, he discussed the creation of jobs in the United States. Lastly, he made an appeal to reform the various branches of government.
Reformation of the US Tax Code
Many Americans if not all, believes that our Tax Codes are outdated, and are far too complex to even be comprehended. This notion is not far from the truth. The Tax Codes entails various loopholes and credits that seem to benefit one class over the other, and this was addressed by President Obama by using the example of Warren Buffet who pays less taxes than his secretary. His comments about taxing the rich has often been regarded as "class warfare," however, asking everyone to pay their fair share of taxes is not a "class warfare," it is "fair." In implementing the tax bracket system, our government was designed so that those who earned more, would pay more in taxes. It is not a system developed with a goal to prevent wealth, but a system that recognizes the principle of "to whom much is given, much is required," or in this case, to he who earns more, more will be required. As a Tax Attorney, I see the need to reform the Tax Codes, starting with eliminating the loopholes, and simplifying the system so that everyone pays taxes according to his earnings. Using Christianity as an example, God made it mandatory that everyone pays ten percent of his first fruits, or earnings. For the poor, ten percent will be less than that of the rich. In the end, they all pay their fair share based on their earnings. It is not class warfare to ask everyone to do this.
The issues that I see with reforming the Tax Codes is in the application of those codes. In negotiating with the Internal Revenue Service ("IRS") on behalf of my clients, I have discovered that there is a lack of uniformity in how the codes are applied, and the in the application of the Internal Revenue Manual ("IRM") which guides the operations of Revenue Officers and IRS personnel. I find that I spend a lot of time having to debate what the IRM says, and how it should be applied. Sometimes, even in showing individuals what the IRM says, I am informed that internally, their manager does not apply the law that way, or does things differently. If Revenue Officers lack uniformity in their application of the Tax Codes, we cannot expect that reforming these codes would make things easier. Not only would the Tax Codes require reformation, but the individuals charged with enforcing those codes would all need to be trained to apply the law universally throughout the various locations. The system of checks and balances within the IRS needs to be reformed.
Student Loans
The President discussed that the interest rates on student loans were expected to increase. If increased to a higher interest rate, we can expect that there will be less Americans going to college, and more default in payments. The government should seek ways to minimize the debt of Americans seeking to earn a college degree in order to obtain better paying jobs, and in order to obtain those jobs that he claims are on demand. I was impressed by the idea that companies would pay for the education of Americans for an area of study that is on demand within the company, so that the position can be filled by an American. This idea has merit. However, we cannot expect private companies to all do this, when there are foreigners competing for these positions who already possess the degree and skills required for those positions. The problem is that obtaining a degree in engineering or various science degrees are often the most expensive here in the United States. If Americans are expected to compete with foreigners for these positions, both the federal and state government needs to find ways to make education less costly for Americans. I would like to see a statute of limitations on the number of years the Federal Government has to collect student loan debt once the individual graduates from college, similar to the IRS Collection Statute Expiration Date of ten years, where if the debt is not collected, it is extinguished. This would help a lot of students who are currently in debt with the hopes of finding gainful employment that they either do not qualify for, or just does not exist.
Creation of Jobs in the United States
The President presented a valid point that we should not allow tax breaks for companies who take the jobs overseas. That this is even a possibility is absurd. This should be a wake up call to the government that its payroll taxes are so extreme that even American Companies refuse to hire Americans. I am sure that they would love to keep the jobs within this country, however, the high payroll taxes makes it an unfavorable option. Not only do employers have to comply with Federal payroll taxes, but some states also require payroll taxes. This is double taxation, and it needs to be revised, otherwise, we cannot expect to see an increase in job availability. We would expect to see continuity in companies relocating overseas. It is time the government start looking at China and figure out what it is that they are offering to companies in that country that we are not offering. Then maybe we can begin to reform our system in such a way that it attracts foreign companies to transfer to our country.
Reformation of the Branches of Government
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