Ireland and Taxes

Eric Scheske took his parents to lunch to celebrate Father's Day. His parents had just returned from Ireland, where his father attended a Certified Public Accountants convention (exciting stuff). Here are two unrelated things they brought back:

1. A great anecdote about President Bill Clinton: Their tour guide in Killarney told them that Bill Clinton visited during his presidency. Shortly before coming to one town, his handlers noticed a beauty salon named, "Monica's Hair and Blow Dry." They told the proprietor that she needed to remove her sign before the President arrived. She harshly (and properly) told them she wouldn't. They were firm with her, but she refused. They eventually negotiated and paid her a sum of money to take it down.

2. Potentially scary news: A national consumption tax (i.e., "sales tax") is coming. The expert at the CPA convention say that the Alternative Minimum Tax (which was introduced to hit only the rich) is hitting more people in the middle class, and it's not popular. They want to repeal or revamp it, but the federal government would lose too much income. It looks like the plan is for the feds to enact a bunch of different forms of income tax relief and simplication (including AMT relief), but enact the consumption tax to capture the lost income tax revenue.

We say this is potentially scary news because we're not opposed to a consumption tax. Depending on how it's set up, it may be voluntary (or at least semi-voluntary), and it taxes spending rather than earning. It is also supposed to be low (2 or 3%).

If the consumption tax isn't accompanied by income tax reductions, then it's outright scary news. We're also nervous about the possibility of Congress raising the percentage amounts, but that risk exists with any tax.