Posts Tagged ‘dan shaviro’

Tax Roundup, 8/23/2012: Can tax breaks go to the poor when only the rich are taxed? Plus IRS agent as video game hero!

Thursday, August 23rd, 2012 by Joe Kristan

William McBride has sound thoughts on tax policy with Stuck in Neutral on Tax Reform (Tax Policy Blog):

But more importantly, it makes little sense to pursue distributional neutrality when we have the most progressive income tax system in the industrialized world.  The top 20 percent of households pay 94 percent of federal income taxes.  The bottom 40 percent have a negative income tax rate, and the middle quintile pays close to zero.  Negative tax rates are the result of refundable tax credits, such as the earned income tax credit and the child credit, which have grown 10 fold since 1990, from $12 billion in 1990 to $120 billion in 2010 (see chart below).

Constantly pursuing distributional neutrality, we have achieved record high levels of progressivity.  And there are reasons to think it has constrained economic growth.  It is time to aim for something more tangible: a competitive tax system with low rates and a broad tax base.

For this to happen, politicians have to stop giving away tax credits to buy votes (wind energy, anyone?) like they were Tootsie Rolls.  In Iowa, it would look something like The Quick and Dirty Iowa Tax Reform Plan.


Russ Fox questions the fiscal wisdom of a proposed mandatory state-run pension system for private employers: Sheer Stupidity in the Bronze State

TaxGrrrl, You’ve Got Mail: E-Bills for Taxes Could Be Headed Your Way

Kay Bell, Writing off home refinancing points

Brian Strahle, The State and Local Tax Burden of Inc. 500 Companies

Farm Tax Blogger Paul Neiffer hits Iowa on his corn and bean sightseeing: The International Flavor of the Crop Tour

Dan Shaviro, Did Romney engage in abusive foreign tax credit-generating transactions?  I don’t know.  Did Harry Reid?

What time is it? It’s Time to Get Your EFIN (Trish McIntire)

Anthony Nitti provides Six Reasons My Kid is Better Than Your Kid.  Oh, yeah?


Screen shot from “Alligators on a Bridge”

The first video game where nobody has even tried to reach the second level.  Via Going Concern comes news of a video game where the player tries to get an IRS agent safely through peril:

It’s April 15th and Tim the IRS Agent is nearly finished checking the tax forms he’s been assigned. Tim has had to deal with reading multiple languages (such as Spanish, French, and American), terrible hand writing, and paper cuts, in addition to a missing a tax form (which he has to venture deep within the Vermont Jungle to retrieve). As if his day couldn’t be worse, while crossing a log bridge in the Vermont Jungle Tim looks down to see an army of zombies, green starfish, and self aware Vermontese Alligators advancing towards him. Now Tim has to defeat the waves of enemies so that he can continue his journey to collect the missing tax form. And guess what, all that he has to stop them is rocks!

What, no permanent injunctions?  No accuracy-related penalties to smite the taxpaying trolls?  No identity theives to subsidize?  Lame.



Wednesday, October 12th, 2011 by Joe Kristan

Herman Cain has emerged as a leading candidate for the Republican Presidential nomination, at least this week, so his “9-9-9” plan for tax reform is getting more attention. It is designed to lead to enactment of the “Fair tax” national retail sales tax, which strikes me as a terrible idea, but the interim 9-9-9 plan, which includes something that looks something like a VAT, has some promise. TaxGrrrl and Daniel Shaviro take a closer look.


AIG: An Insane Government

Monday, March 23rd, 2009 by Joe Kristan

After last weeks AIG bonus frenzy, more sensible voices are emerging to point out some of the unintended consequences of the foolish TARP Bonus confiscation measure passed in the House last week.
The Tax Prof has a post (Urist: The AIG Tax Is Sexist) pointing out how the tax will clobber second earners in households when one taxpayer receives a TARP bonus. A similar fact pattern is illustrated here:

Say you’re a teller at a Wells Fargo branch in Minnesota and you’re married to a lawyer who makes $250,000 this year. You get a $10,000 bonus for your good work during 2008. The government steals it all (90 percent federal plus 8.5 percent state plus, unless it’s included in the 90 percent, 3 percent Medicare). That is simply insane.

NYU Law Prof. Daniel Shaviro says that Congress shouldn’t be so sure such a bonus isn’t an unconstitutional “bill of attainder”:

The 90% tax may conceivably face a serious constitutional challenge notwithstanding Larry Tribe’s assurances to the contrary. Not a surprise, perhaps, as Tribe can be a bit political in his bottom line constitutional judgments. One source of possible trouble could be a NY state case from a few years back, Pataki v. Con Ed, in which a provision denying rate adjustments to the Con Ed shareholders for the blunders that had led to the Indian Point nuclear power plant problems was struck down as a bill of attainder. Obviously, the 90% tax is being drafted with an eye to avoiding the same fate, by causing it to apply more generally. But in the Con Ed case, the court cited legislative history showing that the legislators were specifically angry at Con Ed for its bad deeds and wanted to inflict punishment (hardly unreasonably, but that’s not the point when the question of law is bill of attainder). Needless to say, the record of enactment for the 90% tax (if it goes through) is hardly lacking in evidence that the legislators were specifically interested in nailing AIG.

But if Congress is serious about this banana republican legislation, it’s only fair that they apply the tax to income earned by congressional spouse-lobbyists and kids working for government contractors. Because we’re public spirited around here, we even have drafted the necessary language for the TARP bonus tax bill.


Rangel’s plan to upset the tax planning applecart

Monday, November 17th, 2008 by Joe Kristan

Ways and Means Committee Chairman Rangel is moving ahead with a proposal to reduce the top corporate tax rate to 28%. NYU Lawprof Daniel Shaviro comments:

A few points to keep in mind here: First, cutting the corporate rate and broadening the base is generally an unambiguously good idea (keeping in mind, however, that for outbound investment this depends on whether a worldwide tax is optimal, as seems unlikely given its resting on the weak reed of corporate residence).
Second, a fully financed domestic corporate rate cut (i.e., not necessarily financed by corporate base-broadening) is also highly likely to be a good idea in the setting of worldwide tax competition.
Third, even if the effective tax rate paid by U.S. companies on domestic investment is low, a high marginal rate is still a problem – not just for the general reasons why base-broadening plus rate-cutting is desirable, but also because in various cases it will be the marginal rate, not the effective rate, that drives particular decisions in the realm of worldwide tax competition.

Sometimes I wonder whether Dr. Shaviro is so shrill in his anti-Republican politics because it gives him cover to say sensible things about tax policy in Manhattan.
A reduced corporate rate makes sense for a host of reasons. In an ideal world it would be accompanied by an individual tax rate cut and base-broadening. When you have a corporate rate much lower than the individual top rate, you build in all sorts of incentives to play games with income allocations. That’s great for those of us who charge for tax advice, but it creates a lot of wasted effort and time-wasting tax arbitrage.
Speaking of charging for tax help, Rep. Rangel has engaged forensic accountants to help him repair his tax returns for recent decades. It can’t be cheap. It sure wouldn’t be if I were quoting the work.
There’s more on the Rangel plan at the Tax Lawyer’s Blog.


Bank Section 382 Ruckus

Tuesday, November 11th, 2008 by Joe Kristan

Back in October we noted that the Treasury had waived the “built-in loss” limitation for bad debts of newly-acquired banks. At the time there were already questions on whether the Treasury had exceeded its authority:

Guest-posting at Marc Ward’s LLC blog, Christine Holbrook points out that the IRS has ruled that built-in loss limits won’t apply to bad debt deductions taken by newly acquired banks (Notice 2008-83). That means if Wells Fargo buys Wachovia and has to write off humongous bad debts, they won’t have to apply the Sec. 382 limits to the bad debt deduction. While the post questions the IRS authority to do this, really, who is going to stop them? But while the IRS is clearly doing this to help smooth the way to sorting out the banking mess, it may prove an awkward precedent for them when times get better.

Now, thanks to a story in the Washington Post, Notice 2008-83 has generated a full-fledged kerfuffle.
Linda Beale:

Furthermore, the Notice is striking for more than just an usurpation of authority. It is extraordinarily costly (perhaps as much as $140 billion of foregone revenue) and selectively favorable to “healthy” banks that acquire banks with losses, a measure that Paulson had said he wants to encourage through the use of bailout funds but which has not been vetted by Congress and was not intended to be a result of the bailout funds.

Kay Bell:

Buy now, say some lawyers: Some banking lawyers are advising their clients to hurry up and deal since there’s no telling how long the rule might be in effect, according to an article last month in American Banker.

Daniel Shaviro:

Today’s Washington Post reveals a truly audacious stunt that the Treasury Department pulled in late September, essentially repealing on its own motion Code section 382 as applied to banks. The ruling through which it did this is available here, and it appears to be aptly described as flat-out repeal of the provision so far as banks are concerned.

The controversial notice allows acquiring banks to deduct bad debts of acquired banks without subjecting such “built-in” losses to the “Section 382” rules. These rules limit the amount of losses they can use from acquired companies to a fraction of the value of the company – currently 4.94%. If you acquire a worthless company, the deduction is 4.94% of nothing.



Tuesday, June 3rd, 2008 by Joe Kristan

What do you do if you despise Republican policy in general, but your intellectual honesty compels you to a conclusion that is Republican-friendly?
You might write something like this.



Tuesday, April 22nd, 2008 by Joe Kristan

The dramatic life of the Murphy case came to a quiet end yesterday when the U.S. Supreme Court declined to take the case.
The U.S. Appeals Court for the D.C. Circuit shocked the tax world with its initial Murphy decision, in which it ruled that damages awarded a whistleblower were not taxabe under the Constitution. The initial D.C. Circuit decision implied that any item not considered “income” in 1913 could not be subject to an income tax today.
Most tax students criticized the Murphy decision, and the three-judge panel quietly withdrew its decision and issued a more conventional ruling holding that the whistleblower damages were taxable.
A whistleblower advocacy group issued a press release that blames “pressure from the Bush administration” for the D.C. Circuit’s reconsideration of its own decision. That’s a strange way to describe near-universal criticism by the tax bar, unless Karl Rove’s tentacles extend further than I would have ever guessed.
The TaxProf rounds things up.
Link: Complete Tax Update coverage of Murphy.