Instapundit notes idiocy in Connecticut:
IN SEPTEMBER OF 2010, I WROTE “They’ll be going after ‘hoarders and wreckers’ next.”
And now this: In Connecticut, a “Hoarder’s Tax.” “Rep. Betsy Ritter, a Waterford Democrat, not only has sponsored a “combined reporting” bill, but she has also proposed a hoarder’s tax. This would place a levy on liquid assets — companies with a lot of money in the bank — and dedicate the proceeds to job creation programs.”
Gee, I wonder why businesses are fleeing the northeast?
The accumulated earnings tax imposed by section 531 shall apply to every corporation (other than those described in subsection (b)) formed or availed of for the purpose of avoiding the income tax with respect to its shareholders or the shareholders of any other corporation, by permitting earnings and profits to accumulate instead of being divided or distributed.
Needless to say, taxpayers don’t self-assess this. It’s generally imposed only when the IRS asserts it on audit. I have only seen the IRS assert the tax once, and I have been in tax practice since 1984.
The tax, little-known outside of tax geek circles, and not well-known among us, goes all the way back to the earliest days of the income tax in 1913. Political conditions may be coming together to wave this relic around again. Consider this from influential left-side economist Paul Krugman:
So corporations are taking a much bigger slice of total income — and are showing little inclination either to redistribute that slice back to investors or to invest it in new equipment, software, etc.. Instead, they’re accumulating piles of cash.
So don’t be too surprised if the incoming Treasury Secretary and IRS Commissioner step up enforcement of this penalty tax. Or, as Instapundit might say, “all is proceeding as I have foreseen.”*