And the statute of limitations now closes for extended 2010 1040s. That’s all water under the bridge now.
Accounting Today visitors, the corporate tax rate piece you seek from the newsletter is here.
Brutal Assault on Reason Watch.* As the political campaigns plunge into their dreary final frenzy, we can look forward to silly tax proposals intended to buy a few votes from the gullible. Proposals like this from an Iowa candidate for Governor: Hatch proposes tax exemption for public pensions:
Democratic gubernatorial candidate Jack Hatch on Tuesday proposed to exempt public pensions from state income taxation.
In a speech to the Iowa State Police Association in Ames, Hatch said his Tax-Exempt Public Service Pensions Act would cover Iowa Public Employees Retirement System benefits, police and fire retirement benefits, judicial pensions and other smaller state, county and city pension system recipients.
Why just public pensions?
“I understand the nature of public employee bargaining,” Hatch said. “I know the contracts you negotiate include retirement as part of the bargain. You have foregone wage increases and other benefits to guarantee a strong pension, and I will honor that bargain.
“I know most of you are like a lot of public servants in that you could make a lot more money doing something else,” he added. “I want to make sure we place the proper value on your decision to serve and that we honor the contracts you have made for the long term.”
So somebody who gets a six-figure income as a local school district superintendent would get a tax-free pension, while somebody who took a much smaller salary to run a local private school would have a taxable pension. Because public service.
There are many bad assumptions underlying this proposal. While there are many hard-working public employees, a government job implies no special moral credit. Public employees have defined benefit plans, which are nearly extinct in the private sector, and they already artificially increase public sector compensation. In general, public sector workers make more than their private sector counterparts. And the idea that people who work for the government are doing it for the public good, instead of for selfish motives, is difficult to credit.
For tax policy purposes, such carve-outs are awful. They necessarily increase the taxes on those not eligible for the benefit. That increases their motivation to carve out their own special deals, causing higher rates, causing more special deals. You end up with a completely dysfunctional system — one that looks a lot like what Iowa has now, as a matter of fact. Unfortunately, Jack Hatch’s opponent, Governor Branstad, also seems quite comfortable with the system we have.
Donnie Johnson, Liz Malm, Same-Sex Couples Gain More Clarity Regarding Their State Taxes (Tax Policy Blog).
William Perez, State Tax Amnesties in 2014
Tim Todd, Affiliated Group Can Use Graduated Tax Rates Even If Personal Service Corp. Is a Member. Mr. Todd is a law professor who runs the Tax Litigation Survey, which he has recently brought to my attention. I look forward to following it for its regular coverage of Tax Court cases and other tax litigation.
Diana Leyden, Not Being in Filing Compliance Can Trip Your Client Up at the CDP Level (Procedurally Taxing). Just one of many problems that arise when you get into the non-filing habit.
Jack Townsend, An Example of the Difference Between Pleading and Not Pleading:
Over 95% of federal criminal cases are resolved by plea agreement. One of the reasons is that, in the Sentencing Guidelines calculations, defendants who plead will usually qualify by the plea for the acceptance of responsibility two or three level decrease in the Guidelines calculation. Moreover, by pleading, the defendant may make himself or herself more attractive for a Booker downward variance from the reduced Guidelines range already reduced for acceptance of responsibility. Conversely, by going to trial, a defendant generally forgoes any realistic hope of an acceptance of responsibility adjustment or any favorable Booker downward adjustment and may behave at trial in a way that will not endear the sentencing judge to the defendant.
He covers a case where a defendant ended up with a 405-month sentence, where a co-defendant was limited to 180 months (15 years) by plea deal. So plea deals are good if you are really guilty, while pressuring the innocent to confess on the threat of spending life in prison.
Annette Nellen, States without an income tax – good idea?
TaxProf, The IRS Scandal, Day 525
News from the Profession. PwC’s Bob Moritz Thinks Millennials Ask Way Too Many Questions (Adrienne Gonzalez, Going Concern)