Posts Tagged ‘Jacob Sullum’

Tax Roundup, February 20, 2013: Fire fail and tax reform frenzy!

Wednesday, February 20th, 2013 by Joe Kristan
Flickr Image courtisy Llima under Creative Commons license

Flickr Image courtisy Llima under Creative Commons license

If you are going to say the dog ate your tax records, make sure you have a dog.  A New Jersey man was having a hard time coming up with records supporting his deductions in Tax Court.  He blamed a fire.  The success of the argument can be guessed from the Tax Court’s discussion of “Petitioner’s Alleged Fire”:

The circumstances surrounding petitioner’s purported fire are vague, and he has offered no evidence, apart from his testimony, that a fire occurred and that his 2006 tax records were destroyed in such a fire. Significantly, he failed to introduce insurance documentation or third-party testimony describing the alleged events or the extent of any fire.

The Tax Court said the man couldn’t support his deductions.

The Moral?  Back up your work.  And if you are going to have a fire, something needs to actually burn.  (Cite: Mears, T.C. Memo 2013-54)

 

It looks like the dreaded automatic “sequestration” spending cuts are going to happen, so there is a flurry of proposals to stop this sliver of random spending discipline:

Martin Sullivan, A Proposal to Get Tax Reform Back on Track:

Before earmarking what we will do with the money from limits on chimerical loopholes, our leaders need to clear the path for the painful process of broadening the tax base. President Obama has now poisoned the well by turning Republicans’ tax reform instincts against them. If they were to put any revenue increases on the table, the President would claim the proposals have the Republican seal of approval and incorporate them into his tax hike plans.

At the same time Republicans tax reform strategy is wearing thin. Their extravagant claims about cutting the top individual rates below 30 percent are just hollow speechifying as long as they refuse to put specific revenue-raisers on the table.

Inspiring leadership.

 

Jeremy Scott, Simpson-Bowles Try Again (Tax.com):

Simpson-Bowles is just another deficit reduction plan — and a politically infeasible one at that.  Its authors want to make it seem grander by attaching tax reform to it, just like Obama wanted his own proposals (which simply include ways to raise revenue that Democrats have proposed ad infinitum over the years) to sound better when he mentioned tax reform at least three times during the State of the Union.  But what they are offering isn’t comprehensive enough to qualify as true tax reform.  Deficit reduction has its place, but conflating it with tax reform will stall whatever momentum people like Camp are trying to create for a true tax system overhaul. 

They just aren’t serious yet.

Also:

Howard Gleckman, Bowles-Simpson II: A New Plan to Avoid the Sequester (TaxVox)

Patrick Temple-West, Simpson, Bowles revive deficit plan, and more

Jacob Sullum on Obama’s Misguided Vision of Tax Reform (Reason.com)

 

High taxes are good for us, so infinite taxes will make us perfect.  The high-tax advocacy group Citizens for Budget and Policy Priorities has generated a paper that says that state tax cuts do no good:

This paper argues that state personal income tax cuts won’t help small businesses create jobs, and in fact could harm the ability of the small-business sector to contribute to economic growth.  For all the reasons  stated in this paper, the converse is also true:  personal income tax increases, including those on the highest earners, won’t harm small-business job creation. 

Really?  There is no level of taxation that would discourage economic activity?  There is no level of tax increase that would cause economic activity to be located in a neighboring state with lower taxes?

The paper makes the same mistake as the guy who drowned trying to wade across the river that was only two feet deep, on average.  You can see it on the headings of the paper: “The vast majority of those who would get a personal income tax cut are in no position to create small-business jobs.”  “Most small businesses make too little money for tax cuts to produce enough income to pay new employees.”  “Most small business owners are not significant ‘job creators’ and have no plans to be.”

This is the same logic we heard when we were told that individual tax increases wouldn’t hurt business because most small businesses wouldn’t be affected.  When you define “small business” to include your office Avon Lady and a manufacturer with dozens or hundreds of employees, of course “most” businesses won’t hire more if taxes are lower.  Just the ones that matter.

When you measure by amount of income, the amount of business affected by individual rates is huge:20130220-1

 

Sure, relatively few businesses achieve enough success to hire a lot of employees.  Yet some do, and they do a lot of hiring.  And, contrary to the CBPP paper, their ability to expand does shrink if they have to pay more taxes.  As a tax accountant, it’s part of the world I live in.  Prices matter in making decisions — including the price of living, doing business and paying taxes in a state.  Any argument to the contrary has to overcome the basic rule of economics that incentives matter.

 

Paul Neiffer, 1031 Tax-Deferred Exchange Does Not Always Defer All Taxes!

Jack Townsend, Another Plea Agreement and Sentencing for HSBC and Bank Woori Depositor

Tax Trials,  Petition for Writ of Certiorari Filed in Historic Boardwalk Hall Tax Credit Case

Trish McIntire, FASFA?

 

Kay Bell, Tax Carnival #113: Presidents Day 2013 or maybe you, too, can one day be Acting President of the United States

Breaking news from 1147: Tax Havens: The Second Crusade (Robert Goulder, Tax.com)

Going Concern, The IRS Is Wasting Millions on Unused Blackberrys and Aircards Because Of Course It Is.  Meanwhile they prepare to lay off their useful employees when sequestration hits.

 

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Tax Roundup, October 22, 2012: can houses have cowl lamps? And why Iowa tax reform will be hard.

Monday, October 22nd, 2012 by Joe Kristan

20110119-1.jpgIt’s the housing version of “cowl lamp violations.”  A few years ago an Iowa county prosecutor ended up in hot water over the practice of rewriting serious traffic offenses, like drunk driving, down to “cowl lamp” violations, sometimes in exchange for contributions to charities or government agencies.  Cowl lamps are something your great-grandpa’s car might have had.

That may have given the Iowa Civil Rights Commission an idea.  From Reason.com:

The Des Moines Register reports that for five years ending in February 2011, the Iowa Civil Rights Commission shook down landlords for “voluntary contributions” in exchange for dropping discrimination complaints. The Register obtained copies of 27 settlement agreements involving about $20,000 in contributions. Unlike money from fines, which end up in the state’s general fund, the donations went directly to the commission, creating “the impression that justice is for sale,” as state court administrator David Boyd puts it. The commission ended the practice after Winterset attorney Mark Smith questioned its propriety.

Creates the “impression?”  Creates the fact.   Instapundit explains:

I think that all revenue collected by all agencies should go to the general fund.  Otherwise, it doesn’t just give the impression of corruption, it’s corrupting. 

 

Why Iowa tax reform will be hard.  The politicians will no longer get articles like this from Radio Iowa:

State economic development officials approved financial help for six companies Friday. The Iowa Economic Development Authority awarded tax benefits to Alfagomma America to move its stainless steel tube production from its plant in Italy to its only U.S. plant in Burlington.

The company is investing 1.3 million dollars and is expected to create 14 new jobs.

With a non-corrupt system where everybody is treated the same, there would be no more press releases.  The state economy would be much stronger, but the politicians wouldn’t get to cut any ribbons.

In a more just world, the economic development bureaucrats would have to call a press conference any time a business closed or fled as a result of Iowa’s whimsical, byzantine and sometimes punishing state tax system.

 

Crime doesn’t pay, but turning state’s evidence might.  The ex-wife of a Minnesota real estate magnate gets three months after cooperating in the case against him.  He got 4 1/2 years.

 

That won’t stop them for a minute?  “Do education tax benefits produce more educated Americans? Congress has no idea.”  (Marie Spirie, Tax Analysts – subscriber link)

 

Andrew Mitchel,  Repatriate Now? (Before the Bush Tax Cuts Expire).  “There may never be another opportunity for individuals to pull cash out of foreign corporations at such a low U.S. tax cost.”

Roberton Williams,   Understanding TPC’s Analysis of Limiting Deductions (TaxVox)

Anthony Nitti,  Tax Court: Spec Home That Was Never Built Was Not A Trade Or Business

Jim Maule,  The Expensing Deduction is an Expensive and Broken Idea

Peter Reilly,  Beware Of Partnership Status Sneaking Up On Your Business Venture

Alisa Martin,  Things That You Can Do To Get Ready For Tax Season (Guest post at the Missouri Tax Guy)

TaxGrrrl,  Gun and Ammo Tax Proposal Draws Fire.  Yes, that will put Chicago’s violent criminals out of business…

The weekend Buzz from Robert D. Flach.  This part is very true: “In my 40+ years in ‘the business’ I have found that IRS notices are more often than not incorrect (and state notices even more so).”

And I’m eight feet tall!   Maryland Governor O’Malley Says State Has Third Lowest Taxes in the Country! (Joseph Henchman,Tax Policy Blog).

Going Concern,  Arthur Andersen’s Bones Still Have Some Meat on Them.  Not very tasty by now.

Fortunately, the election will be over in about two weeks.  Smelly, destructive bug entering Iowa (TheBeanwalker.com)

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Tax Roundup, 10/18/2012: Iowa tax reform battle shapes up. Also: shaming the shameless.

Thursday, October 18th, 2012 by Joe Kristan

Battle lines begin to form on Iowa tax reform.  Iowa Governor Branstad appears to be preparing to take advantage of state budget surpluses to push a rate-cutting tax reform.  A story in today’s State Tax Notes ($link) foreshadows how the battle lines are likely to play out:

However, Iowa Policy Project Research Director Peter Fisher countered that to stimulate the economy the state should restore funding to post-secondary education to offset the cuts made during the recent fiscal crisis.

     Fisher also said that lawmakers should consider tax reform proposals that reduce the tax burden on lower-income families that often pay more in state taxes than federal taxes.

     “I think there is an equity issue there that should be addressed,” Fisher said.

Where Governor Branstad will focus on cutting rates, the opposition is likely to focus on spending (“restoring funding”) and on once again pushing for an increase in Iowa’s earned income credit, in spite of its built-in tendency to lock people into low incomes through hidden high tax brackets on the poor.

Peter Fisher is likely to provide the think-tank ammunition for the Governor’s opponents; as we have noted, Mr. Fisher thinks Iowa’s business tax climate is just fine, because it’s ineffective:

Fisher argued that the Tax Foundation’s rankings (State Business Tax Climate Index) misrepresent the state’s tax climate. He said that business tax collections as a share of the economy are actually below the national average.

The State Tax Notes piece has the likely response to Fisher-type arguments:

     Tax Foundation economist Scott Drenkard responded that while Iowa’s business tax burden may fall in the middle of the pack nationally, it has the highest top corporate tax rate in the country at 12 percent.

     The study’s rankings favor tax systems with a broad base and lower rate, Drenkard said. He added that a higher rate with a narrower base creates economic distortions.

Distortions like clobbering in-state suppliers to large manufacturers and in-state C corporations, for example.  Or corrupt boondoggles like the now-defunct film credits.

Related: The Tax Update’s Quick and Dirty Iowa Tax Teform Plan,

 

Howard Gleckman,  What the Joint Tax Committee Really Said About Tax Reform

The JCT plan is very different from other tax reform proposals. For instance, Alan Simpson and Erskine Bowles, the chairs of President Obama’s fiscal commission, designed a reform that could get rates as low as 28 percent, but did it by eliminating nearly all tax preferences (not just deductions) and scaling back the few that survived.

So, it turns out, JCT doesn’t contradict groups like the Rivlin-Domenci Commission or Simpson-Bowles, it  merely uses different assumptions.

Related: Peter Reilly,  Eliminating Tax Expenditures To Cut Rates – Early Results Are Underwhelming

 

Brutal Assault on Reason Watch: 

Roberton Williams,  How Much Revenue Would a Cap on Itemized Deductions Raise?  “Eliminating all itemized deductions would yield about $2 trillion of additional revenue over ten years if we cut all rates” by 20 percent and eliminate the AMT.”

William McBride, Second Debate Marred by Protectionist Rhetoric

Anthony Nitti,  Tax Aspects Of The Obama – Romney Debate, Round 2

Kay Bell, Taxes discussed, sort of, in the second presidential debate

 Jacob Sullum,   Romney Makes His Tax Promises Even Harder to Keep  (Reason.com)

Alan Reynolds, Obama’s ‘Trillion Dollar’ Tax-Cut Fraud  (National Review)

Jonathan Easley,  Sen. Kerry: Romney trying to ‘perpetrate a fraud’ with tax plan (The Hill)

Linda Beale,  Romney’s Tax (Mis)Calculations: if your two and two don’t add to four, pretend the laffer curve gives you more

 

TaxProf,   TIGTA: IRS Unjustifiably Withholds $181 Million in Relief from Tax Penalties from 1.5 Million Taxpayers.

Anthony Nitti,  S Corporation Shareholders: Is it Time to Consider Accelerating Income Into 2012?

Kay Bell,  It’s workplace benefits — including spending accounts — enrollment time

Robert D. Flach is having an OCTOBER HALF PRICE SALE on his worksheet packages.

News you can use: The 10 Most Corrupt Tax Loopholes (Village Voice, via the TaxProf)

Going Concern, PwC Employee Embraces the Cheapskate CPA Stereotype Like No Other.  When I worked for predecessor Price Waterhouse, I was cheap for lack of alternatives.


20090827-2.jpgWill “naming and shaming” intimidate Steven Seagal?  California has posted its list of “Top 500 Delinquent Taxpayers.”  While somebody better at celebrities could surely find more, I spotted a few familiar names:

Dionne Warwick,$2,598,968.65

Joseph Francis, $819,804.11.

Steven Seagal, $347,849.67

Joe Francis has had his share of tax issues, but can you really “shame” a porn magnate?

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Tax Roundup, 3/29/12

Thursday, March 29th, 2012 by Joe Kristan

Jacob Sullum at Reason reminds us that even if Obamacare survives the Supreme Court, the penalty for not buying insurance will be a collection nightmare for the IRS.

Instant Tax Service, the nations “fourth largest” tax preparer, should be shut down, according to a Department of Justice lawsuit.  Trish McIntire has some useful background, including an attempt by Instant Tax Service to intimidate her into pulling a post mentioning ITS problems.

William Gale at TaxVox says Ryan Would Shift the Fiscal Burden to Low and Middle-Income Households.  News flash, William: the Rich Guy isn’t buying.

20080701-1.JPGRamona Cunningham, serving time in federal prison for looting an obscure Iowa “jobs training” agency, continues to hustle the taxpayer.  She has collected over $150,000 in state pension payments while paying only $1,100 in restitution

The   ”Field of Dreams” tax hustle, which could allow an athletic complex proposed at the site where the Kevin Costner movie was filmed to keep sales taxes it collects for itself, advanced from the Iowa Senate Ways and Means Committee yesterday.   Our legislators are slow to catch on.

The Ukraine dictatorship presses more tax charges against former president Yulia Tymoshenko, reminding us that presidential humor about using the IRS as a weapon isn’t funny.

 

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