Tomorrow is Election Day. Good Riddance. Tomorrow ends the current Festival of Democracy. Because I share Arnold Kling’s view of election seasons as “brutal assaults on reason,” I look forward to it ending.
However unreasoning, elections do affect policy. Some of the tax policy issues in play this year:
Is it better to give that to receive? Iowa’s incumbent Governor Branstad is an avid distributor of corporate welfare tax credits. His challenger is an avid recipient. If the polls are to be believed, it is truly better to give than to receive.
What about the extenders? We practitioners just want to have a tax law for Christmas, or sooner, so a tax season that we already expect to be bad won’t be just godawful. It’s not clear whether a Republican takeover of the Senate will affect the timing of the extender bill, but it is possible that it might spur the incumbent Democratic leadership into action to pass bills more to their liking than they would see from their successors.
What about federal tax reform? The 1986 tax reforms were passed by a Congress led by one party and signed by a president of the other party. The possibility of this happening if the Senate goes Republican seems absurdly small.
What about Iowa Tax Reform? Iowa once again is in the bottom 10 in having a bad business tax climate. A Republican takeover of the Iowa Senate would make serious tax reform efforts possible. It wouldn’t make it likely, though, given the Governor’s affinity for giving away tax credits.
Whatever the results, I predict that politicians will continue to give away tax credits to businesses that will proceed to do what they were going to do anyway; the politicians will then claim credit for the jobs they “create.” Other politicians will say that there is nothing wrong with spending money that taking more from “the rich” won’t cure.
So vote away, if you are so inclined. But don’t count on any big changes as a result.
Jack Townsend, IRS and FinCEN Form 8300 and Geographic Targeting Order: “Recently, FinCEN issued a Geographic Targeting Order, here, imposing additional reporting and recordkeeping requirements on a relatively small (but apparently financially active) area of Los Angeles, California.”
Very strange, to me. The order imposes special rules on accepting cash for a wide variety of businesses in part of L.A. I didn’t know there was such a rule. I wonder how they are letting all of these stores — including “lingerie stores” — know they suddenly have a new reporting obligation if somebody spends $3,000 in cash there. And I wonder who spends $3,000 on lingerie.
The Des Moines Register adds to the coverage of the seizure of cash from an Arnolds Park, Iowa restaurant owner.
Robert D. Flach, TO EXTEND, OR NOT TO EXTEND. THAT IS THE QUESTION. “If a tax benefit is appropriate it should be permanent – except in response to serious natural disasters, the idiots in Congress should never enact temporary tax measures.”
Amen, Brother Robert.
Paul Neiffer, IRS Announces Various Inflation Adjusted Items:
Last night I rode in the combine in Northeastern Iowa from about 7 pm to about 2:30 am. We cut about 10,000 bushels of corn with a John Deere S680 and I must admit there is something therapeutic about seeing corn come into the combine and then get dumped into the grain cart.
Take 10,000 bushels and call me in the morning.
Annette Nellen, Damages: Deductible?
It’s a fact of life that businesses get sued. Even if they win, there are legal and related fees. What if they lose and have to pay compensatory and perhaps also punitive damages? Perhaps also some fines to the government? What is deductible for tax purposes? A recent case from the First Circuit Court dealt with an action involving the False Claims Act with total damages of just over $486 million!
I don’t think generally one sort of damages should be more tax-beneficial than another. The income tax should base should measure capacity to pay taxes, not moral fiber or good citizenship.
Jana Luttenegger, More 2015 Tax Numbers Released, Including Tax Brackets (Davis Brown Tax Law Blog)
Keith Fogg, Promoting, Not Discouraging, Tax Compliance (Procedurally Taxing). “Don’t we want to introduce our young citizens into a tax system that is rational and just? The current model does precisely the opposite.”
Kay Bell’s “Don’t Mess with Taxes” is sporting a new look. Go read Best states for business tend to have no or low taxes and check it out.
TaxProf, The IRS Scandal, Day 543
Her book, The Prosperity Principles: Secrets to Developing and Maintaining Generational Wealth, notes that business should be run, “…where everything you can do can be deducted from your reportable income as a business expense.”
That’s just another way of saying that there is a Tax Fairy. There is no Tax Fairy.