Posts Tagged ‘Chuck Grassley’

Tax Roundup, September 17, 2012: non-1040 extension deadline day! Also: Iowa bluffed?

Monday, September 17th, 2012 by Joe Kristan

20080410-1ibiz.jpgToday is the extended due date for 2011 calendar year 1041, 1065, 1120 and 1120-S returns.

For pass-throughs, the penalty for late filing is $195 per K-1, per day.  E-file if you can; otherwise go with Certified Mail, Return Receipt Requested or an approved private delivery service.

 

 

Was Iowa bidding against itself for fertilizer plant?  From the Quad City Times:

When Iowa Gov. Terry Branstad pulled the trigger on the biggest incentive package in state history, he said he did so, in part, because of competition from neighboring Illinois.

But economic development officials with Illinois Gov. Pat Quinn’s administration say they wanted no part of the project after they got wind of Iowa’s “excessive” bid for the $1.4 billion fertilizer plant for which the Branstad administration offered up to $240 million in state and local tax breaks.

“To be clear — the state never put an offer on the table. We recognized early on that Iowa’s bid was excessive, and we were not going to engage in a bidding war,” Marcelyn Love, communications manager for the Illinois Department of Commerce and Economic Opportunity, wrote in an email.

True, the word of Illinois politicians isn’t the most reliable thing in the world.  Then again, neither is the word of people telling you why you should give them money:

Tina Hoffman, spokeswoman for the Iowa Economic Development Authority, said the authority relied on the word of Orascom corporate officials and news reports to determine that Illinois was making a play for the fertilizer plant.

“Company officials indicated the tax savings would be in excess of $130 million. That information was validated when an Illinois senator was quoted in several news outlets about the bill he was sponsoring to assist a project like the one Orascom was proposing,” she wrote in an email.

All right, then!   If you say so, here’s your $107 million!

Subsidizing the fertilizer plant would be unwise even if there were a bidding war  with Illinois.  It’s never wise to take money from your taxpayers to lure and subsidize people.  As I’ve pointed out, it’s like taking your wife’s purse to the bar to buy drinks for the girls.  It’s neither effective or impressive.   But apparently there was no real bidding war, and Orascom was going to come to Iowa anyway;  if so, they just bluffed Iowa into helping pay for it — and maybe also into indirectly helping finance their purchase of The Weitz Company, Iowa’s oldest and largest construction contractor.   Not exactly a shining moment for Iowa tax policy.

 

Holman Jenkins of the Wall Street Journal rips wealthy whistleblower Birkenfeld, Grassley:

[Birkenfeld] told Bloomberg: “I’m the most famous whistleblower in the history of the world. It’s a question of doing the right thing, and that’s what I did.”

What would have been right was not participating in tax evasion in the first place.

The author of the whistleblower law that so benefited Mr. Birkenfeld was none other than prairie populist Sen. Charles Grassley, who issued a statement this week: “An award of $104 million is obviously a great deal of money, but billions of dollars in taxes owed will be collected that otherwise would not have been paid.”

This is the same Mr. Grassley last heard calling for AIG workers “to resign or commit suicide” during the 2009 retention bonus furor, which also saw the New York Attorney General implicitly threatening to publish the names of innocent AIG employees who didn’t “voluntarily” relinquish money they were legally entitled to.

This is the same Mr. Grassley whom Wikipedia baldly states “repeatedly introduced measures that increase the level of double taxation on American citizens living abroad, including retroactive tax hikes.”

Need we add that Mr. Grassley’s longtime aide, who actually drafted the whistleblower law, now represents Mr. Birkenfeld and stands to collect an interesting percentage of the award Mr. Grassley so obligingly applauds?

Senator Grassley has been a major play in tax policy for nearly three decades.   The state of the tax law today isn’t exactly a tribute to the senator.

 

I’m Barack Obama, and I approve this press release.  From a Department of Justice Press Release:

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.

OK, if it’s President Obama’s task force, it’s also President Obama’s IRS that is letting $5 billion annually go out the door to identity  thieves.  It’s President Obama’s IRS that is tormenting innocent Americans for paperwork foot-faults so that President Obama’s Justice Department can slap internationa tax criminals on the wrist.  Glad that’s cleared up.


Mike Ralston,  Iowa View: Time to stop a tax hike on all Americans’ dividends:

The current federal tax rates on investment income — dividends and long-term capital gains — expire at the end of this year. Today, the top tax rates for both dividends and capital gains are capped at 15 percent. But if Congress and the president don’t act to extend them, the top tax rate on capital gains will rise to 20 percent and the top tax rate on dividends will rise to 39.6 percent.

It’s worse than that.   With the Obamacare tax hikes set to kick in, the actual top rate for dividends will hit 43.4% — nearly tripling the old top rate of 15%.

 

Kay Bell,  Sequestration’s blunt and indiscriminate budget cuts.  Also, tiny.  From Veronique de Rugy:

 

Jim Maule,  When Tax Ignorance Meets Political Ignorance.  Yet while the good professor (rightly) bemoans voter ignorance, he insists that it is wise to put more decisions in the hands of the polticians elected by the same ignorant voters.

Paul Neiffer,  Mistakes to Avoid in Lifetime Giving – Part 2

Jack Townsend,  Whistleblowers for Swiss Banks Appear to be Live and Well

Jason Dinesen,  RTRPs, CPAs, Attorneys and Grandfathering

True:   1099s From Insurance Companies – Don’t Ignore But Don’t Take At Face Value Either (Peter Reilly)

Patrick Temple-West,  Financially troubled parts of Europe consider taxing church properties, and more

TaxGrrrl,  Are Federal Taxes Driving Smokers to Stop Lighting Up?

Will Freeland,  NYC Ban on Large Sodas Plagued by Same Problems as Soda Excise Taxes (Tax Policy Blog)

Howard Gleckman,  What Mitt Romney Didn’t Learn from Ronald Reagan (TaxVox)

Anthony Nitti: For A Rich Guy Who’s Only Been Divorced Once, R Kelly Certainly Doesn’t Seem to Have A Lot of Cash

Good question:  WHAT TO DO?  (Robert D. Flach)

News you can use:  If You Get a Tax Refund That’s Someone Else’s, Don’t Spend the Money  (Russ Fox)

 

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Low-income housing tax credits: the federal subsidy for well-connected developers

Monday, June 7th, 2010 by Joe Kristan

20100607-2.jpgRoxanne Conlin is likely to roll to an easy win tomorrow in her bid to be crushed by Chuck Grassley in November’s U.S. Senate race. On the way to her victory, though, she has had to deal with pesky questions about her husband’s tax credit-financed real estate development business. The Des Moines Register reports:

The Des Moines Register reported Friday that Conlin, who has campaigned against tax breaks that benefit wealthy Americans, is a part-owner of 27 low-income apartment complexes that were financed through the sale of millions of dollars in federal tax credits.
The rental developments, all located in the Des Moines metropolitan area, were built in the past 19 years using $64.2 million from federal low-income housing tax credits, the Register reported after a review of state and federal records.
Conlin, a Des Moines lawyer, told the Mason City audience: “I know people might think just from reading the headline that I took $65 million from the federal government, and nothing could be further from the truth.”

Of course she didn’t take $65 million from the federal government. Her husband just distributed it, for a fee.
Low-income housing tax credits are supposed to be a way for the government to supply low-income housing to the poor. In real life they are a way for well-connected developers to obtain and distribute tax credits for investors needing some tax shelter — typically banks, insurance companies and wealthy individuals. Each state gets an allocation of credits from the U.S. Treasury, and the states pass the allocation to developers. The process favors insiders with connections who know how to pull the levers of the allocation bureaucracy: people like the Conlins and Senator Jack Hatch. There’s nothing illegal about this. They are playing the credit allocation system the way it is designed. But does this system make sense? Not surprisingly, Ms. Conlin is a fan:
“I’m very proud of what my husband and my family have done to house people and create jobs,” she said.
Since 1991 those projects have created about 2,400 jobs, mostly in construction, she said. The result was “very nice places where people can live safely and with dignity,” she said.

The center-left Tax Policy Institute is less enthused. They find that running subsidies through developers is less effective than providing direct vouchers to the needy:
If the supply of low-income housing is very elastic in the long run, then production of limited amounts of subsidized housing will simply replace other housing that would otherwise have been provided. Housing supplied or subsidized by the government might increase the average quality of housing available to low-income tenants, but it would have little lasting effect on the quantity or price of housing available to poor people. (See Weicher and Thibodeau 1988 for a discussion of the effects of subsidized housing on the housing market as a whole.) Moreover, because new and substantially rehabilitated housing is expensive to produce, it is likely to be worth far less to tenants than an equal cash supplement, such as housing vouchers. Furthermore, DiPasquale, Fricke, and Garcia-Diaz (2003) estimate that the average cost of producing a tax credit unit exceeds the cost of the average voucher unit by 19 percent.

But while vouchers help the poor, they do nothing for the fixer class. That’s where the tax credits come in:
Conlin said she opposes income tax cuts that benefit the top 1 percent of the wealthiest earners. In contrast, she supports tax credits that help small businesses, manufacturers and housing programs create jobs.

In other words, wants small business taxpayers to pay higher rates to subsidize her. Because that $75 million legal fee she won in the Microsoft litigation won’t last forever, you know. When she loses to Senator Grassley in November, as seems probable, she at least will have the consolation of losing to someone else who favors taking money from you and me and giving it to the well connected.
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Not controversial? You haven’t asked your small town professionals, Senator Grassley

Tuesday, June 1st, 2010 by Joe Kristan

Senator Grassley can hardly wait to pass the “extenders” bill, H.R. 4213, because it renews the subsidy for biodiesel, according to this press release from his office

“These jobs have fallen victim to a tactic used by the Democratic leadership to hold this popular and noncontroversial tax provision hostage to out-of-control deficit spending by Washington,” Grassley said on the Senate floor. “So I am here again to try to put thousands of Americans back to work producing clean, renewable fuel.”

The small professional practices that will be slapped with a tax increase under the extender bill — a tax increase that will not affect their larger competitors — may disagree about the “noncontroversial” tag. So will anybody who has studied the dubious energy economics of the biodiesel subsidy.
But even if you accept that biodiesel makes sense, it’s coming at a high cost for S corporations. According the the Congressional Joint Committee on Taxation, extending the biodiesel subsidy for only two years will cost $851 million. The S corporation tax will be permanent, costing small professional businesses over $11 billion over the next ten years. Some of us find that controversial.
The biodiesel subsidy is only one of about 70 pork-barrel provisions in the bill that reaches into the pockets of small S corporation professional practices. Other provisions include a break for the nation’s critical NASCAR infrastructure and a subsidy for New York originally drafted to respond to the 9/11 attacks and still in place nine years later.
If you want to clue Iowa’s senators in on the controversy that they haven’t noticed, call Senator Grassley at (202) 224-3744 and Senator Harkin at (202) 224-3254.
UPDATE: From The TaxProf: Tax Extenders Bill Includes Small Business Tax Increase

Joe Kristan was the first to flag a particularly odious aspect of H.R. 4213, the American Jobs and Closing Tax Loopholes Act of 2010 currently making its way through Congress: small businesses would be hit with a 2.9% medicare tax increase which would not apply to larger competitors…

Prior Coverage:
The S corporation medicare tax grab: what is to be done?
Reputation and skill (explaining how badly designed and discriminatory the S corporation tax is)

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Senate votes 98-0 to extend homebuyer credit

Thursday, November 5th, 2009 by Joe Kristan

So the $8,000 first-time homebuyer credit is riddled with fraud and costs taxpayers $43,000 to $80,000 for each home bought sooner as a result of the credit. The sensible legislative response would be to immediately repeal the credit, apologize abjectly, and have at least one Senator commit ritual Chuck Grassley atonement.
Of course, that’s not what is happening. Instead the Senate yesterday voted 98-0 to extend the credit and make it apply to more people. WebCPA reports:

The refundable credit, which was included in the financial stimulus package in February, was set to expire at the end of November. But the real estate, mortgage and construction industries had pushed for an extension of the credit beyond the deadline. The new legislation extends the maximum $8,000 tax credit for first-time homeowners to April 30, 2010. It also includes a maximum $6,500 tax credit for existing homeowners who want to purchase a new abode. However, they need to have lived in their current home for five consecutive years within the past eight years.
The level of qualifying income has also been expanded, allowing individual taxpayers who make up to $125,000 and joint filers earning up to $225,000 to qualify. The earlier credit had been limited to individuals earning up to $75,000 and couples earning up to $150,000.

The credit phases out over a $20,000 income range, which creates a hidden tax bracket for single filers of 68% – the 28% regular tax plus the 40% additional tax caused by each dollar of income in the phase-out range.
Tax Analysts reports that the House may pass the bill, H.R. 3548, as early as today, and that the President is expected to sign (UPDATE, 11/6/09: The President signed the bill today).
Kay Bell has more.
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