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Financial Reform Commentary & Ramblings by Adam Sommers

Thank Dodd for taxes.  And Frank—Barney Frank—the infamous former Chair of the House Financial Services Committee, who so badly wanted every American to own a home that I feel he bears much of the responsibility for the recent housing crisis.  In 2003, he said about Fannie Mae and Freddie Mac, now under the stewardship of the government and being fed billions of taxpayer dollars every quarter, "These two entities are not facing any kind of financial crisis.” Frank also stated "I do not want the same kind of focus on safety and soundness [in the regulation of Fannie Mae and Freddie Mac] that we have in the Office of Thrift Supervision. I want to roll the dice a little bit more in this situation towards subsidized housing." In July 2008, Frank said in an CNBC interview, "I think this is a case where Fannie and Freddie are fundamentally sound, that they are not in danger of going under.”

Hindsight is 20/20.  Now that I’ve had a chance to wade through preparing a 2011 tax return, I see in hindsight that the Dodd-Frank Act—passed in a rush when both houses of congress and the White House were controlled by the same party—created even more misery for investors.  At least both Dodd and Frank resigned their offices subsequent to passing this behemoth.  Thanks to these two well-meaning bureaucrats, what was formerly a one page Form 1040, Schedule D to report capital gains and losses now turns into a five page Schedule D.  Five pages?!?!?!!!  As you might imagine, Schedule D is one of five common schedules, along with Schedules A, B, and C, and E.  These schedules are attached to Form 1040, which is two pages in itself.  So now, a typical client must fill out 13 pages, which include circular calculations that are difficult to interpret without CPAs and/or computer software.  

How is it that lawmakers feel it’s necessary—or even okay—to burden an average middle-class taxpayer with 13 pages for a tax return?  TurboTax generated more than a 100-page income tax return for little old me.  I remember giggling at Rick Perry during a few of the debates, but when he flashed that postcard in one hand and said that’s all that would be required to file an income tax return if he were elected, I stopped laughing.  A guy can dream, can’t he?  

Our two most likely candidates for President of our grand United States in 2012 don’t decry the need for an overhaul of the tax code—but sadly spout about more special tax breaks for this industry or that behavior, and lower rates for “us”, and of course higher rates for “them”.  Sheesh.  The tax-code is already over 72,000 pages.  

While I liked Herman Cain’s 9-9-9 idea, it seems like a flat tax, with per-head exemptions would be best.  Something like 20% on all income above $10,000 per head in your household.  Even a 3-tier progressive tax might work, 10%-20%-30%.  Heck, anything to simplify and reduce the time we have to spend enduring the process of calculating how many of our hard-earned dollars will be spent at the whim of politicians and their “friends” in D.C. would be a positive change.  One can only hope.  Oh, and by the way, I become eligible to run for President this year.  Sommers in 2016, anyone?