Posts Tagged ‘Donald Boudreaux’

Tax Roundup, 10/4/2013: Anniversary. And… the Chromaro!

Friday, October 4th, 2013 by Joe Kristan

Wilson___________ Anniversary.  The worst president of the 20th century signed the income tax into law 100 years ago yesterday.  The TaxProf notes that New York Law School Hosts Symposium Today on The 100th Anniversary of the Income Tax.  Sounds like a rockin’ time.

Related: 

Is Today – the Anniversary of the Income Tax – the Worst Day in American History? (Daniel Mitchell)

Don Boudreaux, Don’t Toast This Centenary

William Perez,  100th Anniversary of the Revenue Act of 1913

Kay Bell, Happy official 100th birthday federal income tax.  Happy?

 

 

William Perez, Deducting Home Office Expenses. “New for 2013, the IRS allows for a simplified method of calculating home office expenses at a rate of $5 per square feet up to 300 square feet of office space.”

Paul Neiffer, Is 2013 The Last Year to Deduct Sales Tax

 

Jack Townsend,  Court of Federal Claims Holds that Unlimited Civil Statute of Limitations Requires Taxpayer’s Fraud 

 

Russ Fox,  Some Things Still Work; Others Don’t (IRS Shutdown) ”A piece of bad news:

Wikipedia image courtesy Tallent Show under Creative Commons license

Wikipedia image courtesy Tallent Show under Creative Commons license

Automated Underreporting (AUR) Notices will continue. They’re automated, so there’s no stopping them.”

Tax Justice Blog, Understanding the Government Shutdown and Debt Ceiling Debates

Andrew Lundeen, Obamacare Exchanges Are Open But Sign-up Numbers Are Low (Tax Policy Blog):

The White House says some applicants have signed up, but didn’t say how many. Rumors in the insurance industry hover in the single digits; several health plans say they are unaware of anyone signing up for their plan. BlueCross BlueShield of North Carolina says it has enrolled one person.”

But more than one person will be paying for it.

Donald Marron, Actually, the United States Has Defaulted (TaxVox): “The United States defaulted on some Treasury bills in 1979 (ht: Jason Zweig). And it paid a steep price for stiffing bondholders.”

 

 

They work for picking motorists pockets.  IDOT to Sioux City: Show us proof traffic cameras work.  (via The Beanwalker)

 

TaxProf, The IRS Scandal, Day 148

Hans A. von Spakovsky, Protecting the First Amendment from the IRS

Robert D. Flach has your Friday Buzz!

 

TaxGrrrl performs a valuable bit of journalism by posting a photo of the chrome-plated Camaro (Chromaro?) famously bought by Maurice Larry, the business partner and not-boyfriend of Rashia Wilson, the self-proclaimed “Queen of IRS tax Fraud.”  Here it is:

chromaro

20130717-1

 

TaxGrrrl gives us the specs:

The car featured a red leather interior, 48 speakers, five flat screen TVs and 32-inch Forgiato wheels (the kind sported on the likes of Chris Brown’s BMW, Akon’s Lamborghini, Steve Novak’s Mercedes, and Will.I.Am’s Bentley). It was made to attract attention – and it certainly did.

Mr. Larry denies that he was the Queen’s consort, but with her platinum locks, she’d have been fabulous in this ride.  Sadly, after she serves out her 21-year prison sentence, she may be more silver than platinum.

 

 

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Tax Roundup, 8/7/2013: Tax credits! That’s the ticket! And: would low-income workers be better off without the earned income credit?

Wednesday, August 7th, 2013 by Joe Kristan
Tax Credits! - The Ultimate Swiss Army Knife of public policy.  Flickr Image courtesy redjar under Creative Commons license.

Tax Credits! – The Ultimate Swiss Army Knife of public policy. Flickr Image courtesy redjar under Creative Commons license.

Whatever the question, some folks answer “tax credits!”   From The Des Moines Register:

A former state lawmaker says he will try to rally school, city and county associations to support legislation that would provide tax credits to those who buy empty or abandoned public buildings and create jobs.

Clarence Hoffman, a Denison Republican who served in the Iowa House from 1998 to 2008, said a Des Moines Register Reader’s Watchdog column that raised the question of what to do with abandoned schools across Iowa was the catalyst for his renewed interest in seeking the legislation.

Tax credits!  Problem solved!  Except for the new ones, like:

- Once more the tax law is more complicated, and tax enforcement resources have to be spread even thinner to keep this new credit from being a fraud magnet, like so many others.

- The price of neighboring buildings owned by private owners will be depressed by subsidies offered for the competing public property.  The credit will “solve” the problem of hard-to sell public property by taking money out of the pockets of other property owners.  Maybe Mr. Hoffman can offer still another tax credit to solve that problem.

 

Would low income taxpayers be better off with no earned income tax credit and lower tax rates?  That intriguing possibility is raised in a new Tax Foundation study of the economic effects of repealing the fraud-ridden EITCRichard Morrison discusses the study in the Tax Policy Blog (my emphasis):

The credit does help workers with very low incomes. For workers with higher earnings, the credit continues to raise incomes until it is fully phased out. The phase-out, however, does discourage workers from accepting more hours worked by reducing the amount of additional pay they would otherwise receive. As a result, our research suggests that the negative impact of the phase-out depresses the labor supply by more than the phase-in bolsters it. 

The EITC serves as a poverty trap by imposing a high hidden marginal tax rate because of the way increasing income reduces the credit.  Iowa makes the problem worse by pairing its EITC with the federal credit, leading to marginal tax rates as high as those of the highest income earners:

The EITC as a poverty trap: phaseouts of the benefit impose stiff marginal tax rates on the working poor.

 

More from Mr. Morrison:

It is possible that tax reformers in Congress could alter the Earned Income Tax Credit in any number of ways rather than eliminating it, but in the spirit of our Economics of the Blank Slate analysis series, we modeled a scenario in which it was dropped from the code entirely. It’s important to remember, though, that our analysis also found that pairing an EITC repeal with an across-the-board tax cut would increase GDP by $125 billion per year and add 783,000 full-time jobs. Those additional opportunities would also be good for low-income workers.

But what about the poor grifters who siphon off 25% or so of the EITC?  How can we help them?

 

Jason Dinesen,  Iowa Tuition and Textbook Credit and Back-to-School Shopping

William Perez, Anspach on the Benefits of Roth IRA Conversions

Missouri Tax Guy,  Tax Planning for Freelancers: Are You Prepared?  “One of the most common mistakes that freelancers make is that they don’t properly budget for taxes.”

Peter Reilly,  Internet Password Protocol Not A Charitable Activity

 

Quotable:

With the possible exception of Uncle Sam’s continual – and often horrendous – misuse of its military prowess, no government policy in America is as uncivilized – as offensive to common decency – as destructive of property rights – as arbitrary in its justification and in its applicationas incompatible with freedom – as conducive to corruption – as downright sickening and maddening as is civil forfeiture.

-Donald Beaudreax

 

TaxProf, The IRS Scandal, Day 90.

David Brunori, Lotteries are Winners, Except for the People (Tax Analysts Blog):

You see the lottery system is a big fat scam. It takes money from poor people. Am I the only person who finds it bizarre that the government would raise money from a regressive lottery and then celebrate by giving the money back to the poor and dispossessed in the form of scholarships?

It’s like so many government “benefits” — they take your money, and then they tell you how wonderful it is when they give some of it back.  That’s just as true for “economic development” tax credits.

 

Howard Gleckman, A Summer Update on Tax Reform (TaxVox)

Anthony Nitti, The Problem With Corporate-Only Tax Reform

TaxGrrrl, NC Lawmakers Reckon With The Three Rs: Reading, Writing & (Tax) Reform

Tax Justice Blog,  State News Quick Hits: Irresponsible Tax Promises in Gubernatorial Campaigns – and More

 

Is it really wise to smoke them?  Treating Twinkies Like Crack (Joseph Thorndike, Tax Analysts Blog)

The Critical Question:  NORTH CAROLINA TAX REFORM:  GOOD OR BAD??  (Brian Strahle)

Kay Bell, ‘Racist’ tanning tax assailed by GOP Representative. Racist?  How about plain old stupid?

 

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Tax Roundup, 6/3/2013: Annals of Crime and Redemption Edition.

Monday, June 3rd, 2013 by Joe Kristan

20130603-1How to make Zumba popular with men.  From The Guardian Express:

Zumba instructor and prostitute Alexis Wright has been convicted in an Alfred, Maine courtroom of prostitution, conspiracy, tax evasion, and theft by deception.

Wright used her Zumba training facility as a front to run a prostitution  ring.  She has been sentenced to ten months in jail.  She will also have to repay $57,280 for accepting welfare funds of more than $40,000.  It is believed that she netted more than $150,000 from prostitution.

The story has gotten some extra mileage because it happened in Kennebunkport, a picturesque and posh seaside town where George Bush the Elder maintained a place.  She also videotaped her private exercise sessions and had a client list including “prominent members of the seaside community.”

According to the story, the Zumba entrepreneuress has turned over a new leaf:

Now that her life of prostitution, conspiracy, and tax evasion has ended, Wright promised a change in her life after her release.

“It’s my intention to stand up for what is right. When I’m out, I’m going to pursue helping people fight through situations that are similar to mine. I’m optimistic that something good will come out of this,” Wright said Friday, according to the AP.

An inspiration to us all.  To pay our taxes, at least.

 

Speaking of misplaced inspiration, a Tennessee man who claimed the power to “decode” the tax law apparently misplaced his decoder ring.  Knoxnews.com reports:

 U.S. District Judge Thomas Phillips sentenced David Miner, 61, to an 18-month prison term for plotting a campaign to impede and harass IRS agents in a bid to help his paying clientele to avoid paying taxes and failing to file his own tax returns.

For $1,200, Miner sold a program to “decode” via an IRS manual a client’s Individual Master File, or IMF, which uses computer codes to document a person’s tax history, point out errors and write letters demanding the IRS fix those problems.

Assistant U.S. Attorney Frank Dale argued for a harsh sentence:

“Miner has written a book and other documentary materials, operated an Internet website, and spoken at various meetings, presumably on subjects related to defying the tax system,” Dale continued.

Not just a website, but an internet website!  Which is still up, oddly enough.  It’s full of tax protester nonsense, but I can’t argue with this assertion there:

We can’t help you convince your family and friends that you are not crazy or Satanic or destined for jail.

I’ve been trying for a long time, but my family and friends are convinced that some or all of these things are true about me.

How did the defendant justify himself?

Miner insisted that he believed his IRx-Solutions Inc. firm was not selling a scam. He said he was inspired by Joe Nelson Sweet, a Florida man currently serving a 10-year prison term for a similar venture.

The moral: when seeking inspiration, don’t look to folks serving ten-year sentences.

 

Debit cards don’t confer tax exempt status either.  A North Carolina man has pleaded guilty to tax crime charges:

William Robert Hupman Jr., pleaded guilty today to corruptly endeavoring to obstruct or impede the due administration of the internal revenue laws, the Justice Department and the Internal Revenue Service (IRS) announced today.

According to court documents, Hupman managed and controlled Security Concepts LLC.  a security alarm company based in Mebane, N.C.  Instead of receiving a salary from Security Concepts, Hupman received income by using a Security Concepts debit card to pay his expenses.

That sort of brazen skimming is likely to get caught eventually in any case, but the man may have done a little extra to attract IRS attention:

Despite the fact that employment taxes were withheld from the wages of Security Concepts employees, Security Concepts has not paid employment taxes and filed the required tax form since the third quarter of 2009.

The IRS notices that sort of thing pretty quickly.

 

Andrew Mitchel, U.S. Government Continues to Pursue Taxpayers Committing Tax Fraud, a roundup of recent tax crime news.

Jack Townsend,  Reminder on FBAR Filing for 2012 Year – Must be Received by June 28, 2012

 

Paul Neiffer,  The Advantages of Commodity Contributions

Brian Strahle, “SUBJECT TO CHANGE”:

If something bad has happened in life, or with your company’s state tax position, the good news it is probably temporary.  There is most likely a practical and effective way to mitigate the risk, exposure or liability. 

TaxGrrrl, June A Busy Month At IRS For Taxpayers and Tax Pros.   FBARs, second quarter estimates, and more.

 

Kyle Pomerleau,  Another Study Confirms: U.S. Has One of the Highest Effective Corporate Tax Rates in the World

Trish McIntire,  Fiscal Cliff-Kansas Style

Peter Reilly,  NFL As Tax Exempt Less Than Meets The Eye ?

Tony Nitti, Raising Capital Gains Rates In the Name Of Tax Reform

 

TaxPro, The IRS Scandal, Day 24

Getting ahead of the game. IRS issues preemptive apology for tax conference excesses(Kay Bell) But boy, they can dance!

Megan McArdle, IRS White House Visits: Less Than Meets the Eye

Russ Fox, The Answer Is in Washington

 

Robert D. Flach,  AND YOU WONDER WHY I DO NOT USE TAX PREPARATION SOFTWARE.  Robert passes on a tax software horror story, which we all have.  Yet for all of its flaws, there is a reason most practitioners use tax software.  It saves an enormous amount of duplicative work, avoids the vast majority of math errors, and enables you to get much more done.  But you don’t want to cheap out on your software — you get what you pay for.

Robert is welcome to his hand-crafted returns, but I’d quit rather than do a 20-state 1065 by hand.

 

Not strictly tax-related, but when people get nostalgic for how wonderful things were back in the day, remember that back then TV makers actually competed on how easy it was to fix them when they broke.

 

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Tax Roundup, 5/29/2013: Why Did Shulman spend so much time at the White House? He has no idea.

Wednesday, May 29th, 2013 by Joe Kristan
The tax law - The Ultimate Swiss Army Knife of public policy.  Flickr Image courtesy redjar under Creative Commons license.

The tax law – The Ultimate Swiss Army Knife of public policy. Flickr Image courtesy redjar under Creative Commons license.

If you or I went to the White House, we’d remember it always.  I have been inside the Treasury once, and the IRS building once, and I definitely remember it.  But when you are a real mover and shaker like Doug Shulman, it all starts to blur, apparently.

From WashingtonExaminer.com:

Former Internal Revenue Service Commissioner Doug Shulman visited the White House 118 times between 2010 and 2011. Acting Director Steven Miller, who took over at the IRS in November, also made numerous visits to the White House, though variations in the spelling of his name in White House visitor logs makes it difficult to determine exactly how many times.

The frequent trips to the White House under Obama far outnumbered the times other administrations felt the need to meet with the IRS, according to Mark Everson, who led the IRS under former President George W. Bush. Everson said he remembers making only one trip to the White House between 2003 and 2007 and said he felt like he’d “moved to Siberia” because of the isolation.

Funny, I thought the IRS was an “independent agency.”

Shulman said he couldn’t remember why he went to the White House so frequently, though some of the visits were probably about the IRS’ role in implementing Obama’s health care reforms, he told a congressional committee. Logs show Shulman met with two West Wing officials working on health care.

“The IRS has a major role in the money flow,” Shulman explained to Congress.

But while the health care-related visits were explained in the logs, many others included no explanation.

I doubt Shulman met with the President or his aides to plot audits of presidential enemies — though you’d think he’d be able to figure out why he spent so much time there.  Do they still have a bowling alley?

It’s likely that his visits reflect the way the IRS has become a cross-functional super-agency, with bigger responsibilties than most cabinet departments.  That is at least as disturbing as the outrageous Tea Party harassment.

 

Don Boudreaux, Count on It: Power Will Be Abused:

The fundamental question raised by the IRS scandal isn’t whether Obama ordered, or even knew of, the apparent misuse of the taxing power to punish political opponents. Rather, the fundamental question asks about the wisdom of creating in the first place government agencies that can so easily abuse their power in order to play political favorites.

The question answers itself.

 

Linda Beale thinks it’s just fine to harass the Tea Party:

This so-called “scandal” is just another instance of right-wing obstructionism that is willing to sacrifice good government for maintaining or increasing political power.

Um, no.  Even President Obama says that what the IRS did was a bad thing.  It’s a little late to try to pretend that it was just the IRS doing its job.  Unless, of course, you think its job is to obstruct political opposition and coddle organizations congenial to Linda Beale.

 

Patrick Temple-West, Groups test political tax rules, and more (Tax Break)

Martin Sullivan, TIGTA Report Implies a Lot, Proves Little, About Bias at the IRS (Tax Analysts Blog)

TaxProf,  The IRS Scandal, Day 20

 

Jack Townsend covers a developing U.S. – Swiss tax enforcement agreement in Swiss Settlement May Be Near and More Developments on Swiss Agreement with U.S.: “With this development, I am sure that the IRS will be sending a lot of John Doe treaty requests.”

 

Paul Neiffer, More States to Raise Taxes?

Scott Drenkard, Wisconsin Plan Cuts Rates, Broadens Bases, Improves State Business Tax Climate Ranking (Tax Policy Blog).  Iowa should try that sometime.  The Quick and Dirty Iowa Tax Reform Plan is ready to go!

 

Peter Reilly, Tax Reform – Should Partnerships And S Corporations Follow The Same Rules ?

Howard Gleckman, The Challenge of Cutting Deductions to Lower Tax Rates (TaxVox)

TaxGrrrl, Internet Sensation Charles Ramsey Gets Free Food From McDonald’s: Do You Want Taxes To Go With That?  If he takes them up on it, the medical deductions may offset any taxable income.

 

Joseph Thorndike, Krugman Berates a Bush — Unfairly (Tax Analysts Blog)

Jim Maule, Reader Weighs In on Weighing the Code

 

Of course he does.  Nicolas Cage Urges Nevada to Subsidize the Film Industry (Joseph Henchman, Tax Policy Blog)

Let us praise our dedicated civil servants.  IRS employee charged with going on a years-long buying spree with Uncle Sam’s credit card (Kay Bell)

A disgrace to his profession. Las Vegas pimp faces prison after pleading guilty to tax-evasion charge

It’s good to be king.  Princess, maybe not so much. Princess Cristina to be investigated for tax fraud

 

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Tax Roundup, 2/22/2013: Why California refugees might not choose Iowa. And: to C or not to C?

Friday, February 22nd, 2013 by Joe Kristan

 

Enjoying a short Des Moines winter commute.

Enjoying a short winter commute in bicycle-friendly Des Moines.

We aren’t scaring them.  Governor Branstad is making a trip to California to poach some businesses from the failing Golden State.  He’s not scaring one Californian:

Iowa’s top state personal income tax rate is 8.98 percent, compared to 13.3 percent in California. Probably not enough of an improvement to lure millionaires from Pacific Palisades to Dubuque. By contrast, Texas offers zero percent.

The top state corporate income tax rate is 12.5 percent in Iowa, 8.84 percent in California and zero percent in Texas.

Earlier this year, Branstad said he would no longer pursue getting rid of Iowa’s corporate and personal income taxes. Instead, he’s going to focus on cutting property taxes.

Well, California’s property taxes already are fairly low thanks to Proposition 13. Although property prices here are triple those in Iowa and most other states because of our severe restrictions on building.

Bottom line: Iowa doesn’t offer enough incentives to attract many businesses and people to leave California. The Hawkeye State is the Golden State with bad weather.

Ouch.  Well, Iowa’s solvent, too, unlike California, which is a fiscal disaster.  We also have short commutes.  Still, he makes a valid point: it’s not enough to compete with a basket case like California.  Golden State refugees have plenty of places to choose from, many of which have better taxes, better weather, or both.  I have no thoughts on fixing the weather, but The Quick and Dirty Iowa Tax Reform Plan would take care of the tax problems.  With no corporate tax and a 4% individual rate, combined with good employees, education and quality of life, we’d see some Californians.

 

To C or not to C?  The Wall Street Journal reports that taxpayers are revisiting whether to operate businesses as C corporations or pass-through entities.  C corporations face a top rate of 35%, where individuals have top rates over 42% as a result of the ill-concieved fiscal cliff and Obamacare tax increases.  From the article:

“Even though on the surface you’re looking at 35% versus 39.6%, it’s a deceptive comparison,” says Robert W. Wood, a tax lawyer with Wood LLP in San Francisco. “There may be a slight short-term advantage in C-Corporations, but there are a number of negative long-term implications that would outweigh short-term benefit.”

For example, C-Corporation profits can be double-taxed. In addition to the corporate tax on profits, owners also would owe personal taxes on any money they take out of the company as dividends. The double tax kicks in when a business is sold, too.

Another potential problem is that a firm that switches from an S-Corporation generally has to remain a C-Corporation for at least five years. 

At current rates, a switch to C corporation format is probably still unwise, if tempting, because of the double tax issue.  You might have lower tax up front, but getting the money out involves either paying a second tax on the dividends or expensive tax gymnastics, often involving renting to a corporation or potentially “excessive” compensation.  C corporations are the Roach Motels of the tax world: they’re a lot easier to check into than check out of.  But if there is a significant reduction in corporation rates, the current tax savings will be enough to tip the balance for many taxpayers to C corporation status, double tax or no.

Hat tip: TaxProf Blog.

 

When Will Tax Complexity Cause a Collapse? (Jason Dinesen). 

The tax code, as most everyone knows and acknowledges, is ridiculously complex and getting more complex all the time.

When will the complexity cause the system to collapse? And what, exactly, will collapse?

I think it would require a combination of things to “collapse” the tax law.  If the perception becomes widespread that it is impossible to comply with the tax law without unreasonable effort, or the rates get intolerably high, and technical advances allow for cash transfers and banking that the government can’t trace, then the game is over.

Tax Analysts is having a conference today on whether, after 100 years, the income tax has run its race.

Elizabeth Malm, Holy Smokes! Washington Loses $376 Million to Cigarette Tax Evasion in 2012.  Many states have raised tobacco taxes to a point where smuggling becomes attractive.

 

Howard Gleckman, Congress May Not Rewrite the Tax Code in 2013, But It Could Make It Simpler (TaxVox).  If you can’t do everything, you might still do something.

Kay Bell, Education tax credit form, already pushed into February, now causing filer confusion and more delays in processing

Peter Reilly,  Bill Romanowski’s Tax Court Loss Not A Typical Horse Case.  We covered it here yesterday.

TaxGrrrl, About Those Leaked Wal-Mart Emails… Is IRS To Blame For Sluggish Sales?  Are tax refund delays stopping consumer spending?

Teaching by bad example, Nebraska-style.  I examine the tax troubles of a prairie-town lawyer.

 

Jim Maule, How Tax Falsehoods Get Fertilized.  That “70,000-page tax code” really bugs him.

Want to raise the minimum wage?  Then apply it to your interns, Congresscritters. (Donald Boudreaux).

Don’t bug Robert D. Flach with requests for free tax help.

 

It’s probably how he meets girls too.  Berlusconi & The Lure of Tax Refunds (Robert Goulder, Tax.com).

CPA exam tip: Calm Down, This CPA Exam Practice Question Isn’t as Dirty as You Think (Going Concern)

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It’s been cold this spring. Darn those thermometers.

Friday, May 27th, 2011 by Joe Kristan

Asking the wrong question at The Des Moines Register:
Gas in Iowa costs $1 more per gallon than last year: Who’s to blame?
The article identifies a villian:

The never-ending gas price morality play has produced a new villain, the Wall Street speculator, who is succeeding Texas oilmen and OPEC ministers as the bad guy at the gas pump.

Oil is a publicly-traded commodity. Commodity traders can make money betting either on rising or falling prices. If the price is trading “too high,” a sharp speculator will immediately place a bet on falling prices. As any student of markets learns quickly, traders help measure value, rather than changing it. Constantly trying to gain an edge and make a buck, their never-ending battle against each other helps identify the value of oil, much as a thermometer identifies the temperature.
Economist Donald Boudreaux described the role of “speculators” back when prices were falling a few years ago:

(more…)

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