Eight years ago, Congress passed the Economic Growth and Tax Relief Reconciliation Act. Numerous tax laws were changed as a consequence, many significantly. Most of the changes were phased in over time and now, eight years later, most have. But one of the biggest changes is right around the corner. I found that humorous.
Yes, but not in a ha-ha way.
You: I didn’t think there was anything funny in the tax code.
Actually, there is.
Tax Code Humor
At my first job in Detroit back in 1994, I was a personal financial planner at a large accounting firm. One day, I needed to do some tax-related research and needed to refer to the tax code.
You: What actually is the tax code?
Available at your pubic library, it is thousands and thousands of infinitesimal print spelling out every intricacy of our nation’s tax laws.
It’s mid-morning and I’m reading through a certain section of the tax code when I suddenly begin to laugh out loud.
I’ll be honest; laughter doesn’t happen too often at accounting firms (one of the reasons I eventually had to get out). And laughter never happens as a result of reading the tax code. So when Bob, the guy in the cube next to me, hears me laughing, sees what I am doing he is nearly compelled to say, “I know you’re not laughing at anything in that book.”
“Actually, I am,” I responded.
“There’s nothing funny in the tax code,” Bob insisted.
“That’s what I thought! Let me read to you what I just read and you tell me whether or not you think it is funny,” I offered.
Bob said, “You’re on!”
This is what I next read to Bob, directly from the tax code: “During the tax year following the year in which the taxpayer is deceased, for purposes of this section, his or her life expectancy shall be reduced to zero.”
I could barely get through it without cracking up. When I uttered “zero,” Bob joined me in laughter.
First of all, I couldn’t believe that Congress felt the need to formalize that a dead guy’s life expectancy was zero. Furthermore, could you imagine the debate on the topic? I wanted to know: how many senators voted against this provision?
That’s when I first learned there could be humor in the tax code.
Timing the Death Market
The 2001 tax legislation has some pretty funny implications. In 2010, the estate tax is to be completely suspended. But in 2011, it the tax is set to return to levels not seen in nearly a decade. As I said in Beyond Paycheck to Paycheck, I would not want to be very old, very rich, and just a little bit sick in late December 2010.
You: Why would Congress ever pass such silly legislation?
They fully expected that the laws would be subsequently changed well in advance of 2010’s arrival. Nonetheless, it’s now August 2009 and nothing has happened yet on that front. Furthermore, it doesn’t seem to be near the top of Congress’ priorities at the moment. I bet they address the impending estate tax changes very soon so that the opportunity to time the death market doesn’t actually present itself. But I’ll have fun watching them scramble.
Sure – almost as much as reading the tax code.
Where have you found unexpected humor?