Posts Tagged ‘TaxVox’

Tax Roundup, 8/24/2012: taking a bite out of crime, for herself. And dust off that cavalry sword!

Friday, August 24th, 2012 by Joe Kristan

She probably didn’t walk McGruff either: Former Dallas officer who ran — and stole from — Crime Stoppers pleads guilty to wire fraud, income tax evasion (DallasNews.com).  More from an FBI press release:

Theodora Ross, 52, of Rowlett, Texas, and a former senior corporal with the Dallas Police Department, pleaded guilty this morning, before U.S. Magistrate Judge Irma C. Ramirez, to one count of conspiracy to commit wire fraud stemming from her role as head of Dallas Crime Stoppers office and one count of willfully attempting to evade assessment of income taxes, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

According to plea documents filed in the case, beginning in February 2005 and continuing to May 2010, Ross and Delley conspired together to defraud the NTCC. Ross determined which tips would be presented to the NTCC for cash reward approval and prepared the list of Crime Stoppers cash rewards that were to be paid each month and sent the lists to JP Morgan Chase Bank. These lists contained both bogus tips that Ross had created as part of the scheme and legitimate cash reward tip numbers and code words. Ross provided the bogus tip information to Delley, who then presented that information to the bank and collected cash rewards. Afterwards, Delley, per Ross’ instructions, divided the cash with Ross.

That’s one way to make crime pay…

New York Local Income Tax for Transit Ruled Unconstitutional (Tax Policy Blog)

TaxProf:  Confidential Bain Financial Documents Released on Romney Family Trust Investments.

Going Concern:  Let’s Take a Peek at Some of Mitt Romney’s Investments

Dan Shaviro, The Bain document drop

Kay Bell,  Republicans drop support for mortgage interest deduction from party platform.  A good deed sure to be punished.   Robert D. Flach gets the punishment started.

Peter Pappas,  More Lies about Tax Lies

News you can use:  You’d Better Start Saving Those Home Depot Receipts (Anthony Nitti)

Jack Townsend,  Prominent Neurosurgeon Convicted for Offshore Accounts

 In Section 1301, silly. Where Are You, Income Averaging? (Jim Maule)

Look on the sunny side!  Gloom or Doom from CBO (Roberton Williams, TaxVox)

Regrets:  I Should Have Been a Manufacturer of Traffic Cameras  (Jason Dinesen)

Does that mean we can finally stop worrying about the Redcoats? Judge Wants Tax Increase To Defend Against (Possible) Civil War  (TaxGrrrl):

In Lubbock County, Texas, there’s talk of a tax increase. The increase is to be 1.7 cents per $100 for the next fiscal year, boosting the rate to 34.6 cents from the current rate of 32.9458 cents.

The increases have been touted for a number of reasons. This week, on Fox TV, Lubbock County Judge Tom Head explained why he favors an increase. He wants additional funding to retain attorneys at the county level, expand the sheriff’s deputy staffing to decrease call times and minimize officer fatigue, prevent a civil war…

Interesting county they have there.

 

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Tax Roundup, 8/21/2012: Branstad to push income tax rate cuts? Also, tax and marriage. Plus more masterminds!

Tuesday, August 21st, 2012 by Joe Kristan

Will Iowa finally do something about it’s horrendous income tax?  Governor Branstad provided a glimmer of hope, according to the Quad City Times’ Rod Boshart (my emphasis):

Gov. Terry Branstad said Monday that any legislative effort to raise the state’s gas tax would be contingent on Iowa lawmakers approving tax relief for property owners and income earners.

Branstad told reporters he intends to advocate for a reduction in the commercial/industrial property tax rate, a limitation on increases to residential and agriculture property tax rates and a reduction in Iowa’s individual and corporate income tax rates once the newly elected members of the 85th Iowa General Assembly convene their 2013 session next January.

So what does that mean?  It doesn’t sound like a bold call to reform Iowa’s high-rate, high-loophole income tax.  It sounds more like a trial balloon to tie a gas tax increase to income tax rate cuts; the rate cuts, possibly trivial, could provide political cover for a gas tax increase.  I hope I’m wrong.

Be bold, Governor!  Go big!  Go for the Quick and Dirty Iowa Tax Reform Plan!

 

Meanwhile, it’s business as usual on the Iowa corporate welfare front.  The Iowa City Press Citizen reports:

Development on the Iowa River Landing is moving full steam ahead in Coralville, aided recently by up to $2 million in state tax credits for four companies developing portions of the mixed-use development along Interstate 80.

The Iowa Economic Development Authority board approved the grants at a meeting Friday as part of its Brownfield and Grayfield Redevelopment Tax Credit Program, a series of tax credits the state doles out annually to redevelop properties around the state with environmental issues or other hindrances to development.

Grayfields?

A Grayfield is an industrial or commercial property that already has infrastructure, such as a building, in place, but whose use is outdated, Iowa Economic Development spokesperson Tina Hoffman said. Tax credits for Grayfields can be for up to 12 percent of the qualifying investment.

“Grayfields”  then means “just about any place that has ever been developed.”

If a building doesn’t need government help to be built, it shouldn’t get it.  If it does need government money, it probably has no business going ahead in the first place.  The buildings developed with government help will compete with those already in place and paying taxes to help subsidize the new ones.

Related: State 29, Live By The Tax Credit, Die By The Tax Credit

 

Yesterday we noted how the IRS is being swindled to the tune of billions by petty thieves in Tampa.  News of another criminal mastermind who outwitted Doug Shulman’s IRS to get taxpayer cash comes out of Chicago:

The Department of Justice says 41-year-old Katrina Pierce was sentenced in federal court Monday. She pleaded guilty in January to fraud and aggravated identity theft.

The department says Pierce used a collection of stolen identities to defraud the Illinois Department of Human Services of more than $146,000 in child-care benefits between 2006 and 2010.

Pierce also filed about 180 fraudulent income tax returns from the 2006 and ’07 tax years and collected more than $60,000 in refunds.

We aren’t dealing with criminal geniuses here, but they are smart enough to fool Doug Shulman’s IRS for billions of dollars.  Remember, each of those 180 fraudulent returns come at the expense of a victim like Jason Dinesen’s client, who gets the IRS runaround while the thief gets her cash.

 

Thinking about a ring?  The Tax Policy Center has some advice for the lovelorn with TPC’s New Marriage Bonus and Penalty Calculator(TaxVox)

Still not sure?  The Tax Policy Blog’s Monday Map asks: Does your state have a marriage penalty?

 

 

TaxGrrrl, Romney’s ‘Number’ Is 13.9: What’s Yours?

Anthony Nitti, Leave Romney Alone:

This is who Mitt Romney is, at least in part: a rich guy with rich guy tax problems and rich guy tax solutions. Romney wasn’t obligated to pay any more tax than the law required, and he very likely didn’t. His refusal to overpay the government shouldn’t be an indictment on his ability to lead a government.

 

Jack Townsend, Judge Apportions Restitution in a Massive Tax Shelter Case:

Judge Baer of SDNY imposed restitution against one of the individual defendants in the massive BDO Seidman tax shelter case, but apportioned the restitution so that the defendant, who pled to a conspiracy count for the large conspiracy, is liable for only a portion of the tax loss.

 

Russ Fox:  Not Only Were the Employees Outsourced, The Taxes Went Away, Too.  An “professional employer organization” that let employers outsource their payroll function is accused of swindling clients out of their payroll taxes:

From San Antonio comes word of a company that allegedly took care of small businesses’ taxes in a way that’s, well, arresting.  John Bean apparently owned a professional employer organization named “Synergy Personnel.”  Most PEOs become the actual employer and, for a fee, they relieve a small business of the duties of personnel including the payment of taxes.  Mr. Bean’s company allegedly had a unique and (if proven) very illegal method of dealing with those taxes: They didn’t.  The FBI and IRS allege that Mr. Bean’s company kept the money for taxes and workers’ compensation insurance.

The IRS will still want the taxes from the company’s clients.  Cases like this remind us how wise it is for employers to set up with EFTPS, the Electronic Federal Tax Payment System, even if they outsource the payroll function.  You can go online with EFTPS and make sure your tax deposits are really going to the IRS.  Nobody wants to pay their payroll taxes twice.  If your PEO arrangement doesn’t support this, you are taking a potentially-expensive leap of faith.

 

Peter Reilly, DOMA Takes the Security Out of Social Security for Married Gay Seniors

Robert D. Flach, OUR PPACA IS HERE TO STAY (AT LEAST FOR NOW)

Kay Bell, 401(k) fee disclosure info due Aug. 30

William Perez, IRS Offers Tips for Correcting Tax Returns

Crisis!  Peter Luger: Steak Prices May Soar As Drought Culls Herds.  (via Going Concern).

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Tax Roundup, 7/23/2012: Chasing smokestacks, catching smoke. Also: final film credit trial starts; 1040s and summer homes.

Monday, July 23rd, 2012 by Joe Kristan

So the guy who swindled customers in his commodity brokerage in Cedar Falls also swindled Iowa “economic development” smokestack chasers.  From QCTimes.com and AP (via State 29):

Even before its dramatic collapse last week, an Iowa-based brokerage implicated in a $200 million fraud scandal had defaulted on the terms of a $1.24 million state incentives package that helped the firm build a state-of-the-art headquarters, newly released records show.

The Iowa Economic Development Authority warned Peregrine Financial Group, Inc. in March that it had violated its contract by paying employees lower salaries than promised and must pay back some of its aid immediately, according to a letter released in response to a request from The Associated Press.

It’s yet more evidence for what I’ve long said about “economic development incentives”:

When Iowa tries to pay other businesses to come here, it’s like a guy who brings his wife’s purse into a bar to buy drinks for the girls. The girls aren’t impressed, and any he does pick up aren’t worth much.

That’s something Iowa should ponder before it signs the check to bribe a fertilizer plant to locate in Iowa with tax money paid in part by competing fertilizer plants that are already here.

Who pays the bills? The Tax Foundation has a map showing the Percentage of Federal Income Tax Revenue from Filers Making Over $200,000:

Airball. The former owner of a Kansas City minor league basketball team will go away for 51 months for crimes that included not remitting payroll tax withholidngs, reports CJOnline.com:

James Clark, 53, of Overland Park, a former owner of the Kansas City Knights basketball team, pleaded guilty to one count of tax fraud and one count of bank fraud. Clark admitted that he withheld payroll taxes from employees of his company, SWISH Holding Corp., while failing to pay more than $502,000 to the Internal Revenue Service. He diverted the funds and used them for his own purposes, including the operation of the basketball franchise.

Many people think that they are just “borrowing” money when they fail to remit withheld taxes.  It can be tempting when suppliers are howling for cash.  This case shows that failure to remit withholdings can have consequences much more serious than cash late penalties and interest.

 The last scheduled trial of an Iowa film tax credit fiasco figure is slated  to start today.  Chad Witter, an accountant who worked as a middleman in obtaining and marketing film credits, will go on trial in Polk County District Court on charges of theft, fraudulent practice and ongoing criminal conduct.  Dennis Brouse, a producer who worked with Mr. Witter, was sentened to ten years in prison earlier this year on charges arising out of the disastrous program to bribe filmmakers to come to Iowa with transferable tax credits.

How Government Limits Upward Mobility (Howard Gleckman, TaxVox):

True, social welfare programs provide a valuable safety net for the very poor. For instance, the Earned Income Tax Credit and the Child Tax Credit are important income supports for low-income families.

But because these safety net programs phase out as incomes rise, some people face marginal tax rates as high as 80 percent for getting a better job or even a raise.  A new Urban Institute calculator shows how this works.

Related:  Taxing the heck out of the top 400 taxpayers won’t help the bottom 20 million

Will your 1040 help pay for your vacation home? My latest post at Iowabiz.com, the Des Moines Business Record group blog for entrepreneurs.

WSJ: IRS Audit of Romney Donor Raises Questions About Presidential Enemies List (TaxProf Blog)

Jana Luttenegger, Summer Camp Tax Credits (DavisBrown Law Firm Tax Blog)

Or somewhere darker: The IRS Art Advisory Panel Has Its Head In The Clouds (Janet Novack)

Kay Bell, Bicycling commuters, you might qualify for a tax-free workplace benefit

Russ Fox, Two Sets of Books Aren’t Better than One.  At least when  one set doesn’t include the skimmed receipts.

Jason Dinesen, Medicare Part B and Same-Sex Married Couples

Jack Townsend, Form 8938 Resource

Peter Reilly wades into the swamp of the tax treatment of Scientology.

TaxGrrrl, Saban Suggests Penn State Tickets Should Be Taxed To Pay For Scandal.  I read that as “Satan” at first.

News you can use: The General Crapiness of Your Life Does Not Relieve You of Your Tax Obligations (Anthony Nitti)

Robert D. Flach will save $11,000 in taxes annually by fleeing New JerseyHe’s getting paid to do something most of us would be happy to do for free.

Help Wanted: The Hunt for a New Going Concern Freelancer Goes OnIf you have a Big 4 bad attitude, what are you waiting for?

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Tax Roundup, 7/6/2012: Conserving public funds; worse things than lost deductions; undermining Obamacare

Friday, July 6th, 2012 by Joe Kristan

Taking care of public funds.  An Oregon woman was arrested yesterday for claiming (and receiving) a $2 million tax refund that she didn’t deserve.  While this is a serious crime, if the charges are true, it’s possible that the defendant may not be the worst steward of public funds out there:

TurboTax (I think it was probably Oregon – ed) issued a Visa debit card to Reyes with $2.1 million on it, and she spent more than $150,000 before her arrest, the statement says. Items she bought included a 1999 Dodge Caravan for $2,000 and $800 worth of tires and wheels for it.

A 1999 Caravan, and new tires?  Would a state agency ever be that thrifty?

Incomplete: House sales not enough; Kenny Stabler owes $265,000 to IRS (Al.com, Via Woodrow E. McNair)

The Real-World Middle Class Tax Rate: 75%“  (Charles Hugh Smith).  Some of this makes sense, but calling medical costs a “tax” loses me.  (Via Instapundit.)

Obamacare: Seven New Taxes on Citizens Earning Less than $250,000 (Robert Allen Bonelli, Breitbart.com, via Instapundit)

Obamacare’s New Taxes, And How You May Be Affected (Philip Dittmer, William McBride, Tax Policy Blog):

A week ago today, the Supreme Court ruled that Obamacare’s individual mandate is a legitimate use of Congress’ power to tax (see our response here). In the wake of the ruling, the House Committee on Ways and Means produced this useful chart (reproduced below), which outlines this and 20 other taxes comprised in the law. Collectively, these new revenue measures are expected to increase taxes/penalties by at least $800 billion over the next 10 years, according to the Joint Committee on Taxation (JCT). 

Follow the link to see the chart.

Will Enough People Enroll in Obamacare?  (Howard Gleckman, TaxVox).  If they don’t, Mr. Gleckman has a goat in mind:

I also suspect that some tea party-types may organize protests against the ACA—encouraging people to refuse to buy insurance or pay the tax. And imagine commercial products aimed at the same goal: “Learn the Secret of  Beating the Obamacare Tax. Send $29.95 now.”

Would such a movement drive enough people to reject insurance so prices for the rest of us would rise significantly? Probably not, but it is hard to know.

If they fail to enroll, it’s not because of the influence of the sinister Tea Partiers, any more than it is the fault of the Masons or the Illuminati.  They will fail to enroll for the same reasons that millions of people go without health insurance now — cost, hassle,  lack of perceived need, etc.  On top of that, the Obamacare rule against pre-existing condition policy restrictions will make it easier to go without insurance.  That way you can just wait until you are sick to go to the insurance company.  People don’t need the Tea Party to tell them that.  Then again, maybe this is Howard Gleckman’s coming out as a Tea Partier himself: “Bottom line: Notwithstanding the nutty Internet rumors that the IRS is hiring 20,000 revenue agents to collect the tax, most people who really want to game the system will probably get away with it.”

TaxProf: IRS Goes on ‘Hiring Frenzy’ After Supreme Court Ruling Upholding Affordable Care Act

Kay Bell: 12 midyear tax moves for 2012

Anthony Nitti, Tax Court: Third Party Loan to S Corporation Does Not Give Shareholder Debt Basis

Yes, it can. Worker Classification Issue Can Be Worse Than Disallowed Deductions (Peter Reilly)

News you can use: Canada Has Some Very Nice Farmland (Paul Neiffer)

 

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Tax Roundup, 6/8/2012: S corporation tax boost attempt dies; Flimsy foreign account secrecy; miseducation

Friday, June 8th, 2012 by Joe Kristan

Miseducated? Entertainer Lauryn Hill Facing Tax Charges (TaxGrrrl)

A nod to reality: (Tax Analysts)

In a June 7 letter to Republican leaders, Senate Majority Leader Harry Reid, D-Nev., offered to proceed with two nontax offsets to prevent student loan interest rates from doubling on July 1, suggesting the Democrats have abandoned an earlier proposal that would have raised taxes on some S corporations.

The half-baked proposal to tax some small S corporations never had a prayer to start with.

Should you count on foreign bank account secrecy?  From an article quoted by Jack Townsend:

U.S. persons having interests in foreign financial accounts should not find comfort in a belief that their foreign financial institution will somehow refrain  from disclosing very small accounts in the current enforcement environment. Those who think too long may be sorely surprised at the high level of ultimate cooperation of their institution with the U.S. government. 

If you have an undisclosed foreign financial account, read the whole thing.

 Howard Gleckman: Should We Delay the Tax Cut Debate Until Early 2013?  “I can’t think of much worse tax policy than extending virtually the entire Revenue Code for a few months at a time.”

Sound advice from Robert D. Flach: OPEN A ROTH FOR YOUR KID.  I have.

And because of where it would come from: California cigarette tax hike doomed because of where the money would go (Kay Bell)

Well, wouldn’t you?  Will Bullied Kids Enjoy Tax Free Legal Settlements? (Anthony Nitti)

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D-Day Tax Roundup: 6/6/2012: don’t bait the sentencing judge; why they flee; eco-traitors!

Wednesday, June 6th, 2012 by Joe Kristan

A better bass case

If anything will save the newspaper industry, it’s openly-biased funny reporting.  Like this, for example, from “The State, South Carolina’s Homepage:

U.S. District Judge Joe Anderson is a judge who’s willing to give criminals at least a tiny break at sentencing if they show any remorse.

But Tuesday, when Hopkins tax cheat Dorothy Anderson (no relation to the judge) began to lecture him on the law and said she didn’t consider herself a crook even though a jury had pronounced her guilty, Anderson gave her the maximum prison sentence allowed by law – 75 months.

“The prosecutor has said I’m a convicted felon,” Dorothy Anderson whined to Judge Anderson at her sentencing hearing Tuesday.

The judge replied, “With all due respect, ma’am, the jury has said you are a convicted felon.”

That whining defendant!  I don’t mind biased journalism, most of it is.  Just own it!

Be calm, all is well: “According to one CBO budget scenario, federal debt would exceed the GDP by 90% in 2022 and would approach 200% in 2037. ” (C-span) Related: The Better Base Case (Joseph Rosenberg).

The law fought the law, and the IRS won:

A former police officer was sentenced to more than six years in federal prison and ordered to pay more than $874,000 in restitution for helping conspirators in a Tampa tax fraud scheme to cash U.S. Treasury checks.

Investigators say Dana Brown used his access as an Ocala police officer to look up personal information in a state driver’s license database that could be used to produce fake identifications matching the names on the Treasury checks.

Via tbo.com of Tampa Bay, at the unlikely ground zero of ID-theft tax refund fraud.

 

Arkansas Governor Questions Anyone’s Patriotism Who Can’t Get Behind Tax Breaks for Wind Energy  (Going Concern).  Heck, if you don’t like pouring money into inherently inefficient and wasteful green technologies, you hate the planet itself!   More from unapolagetic eco-traitor David Brunori.

Phil Hodgen,Why people expatriate“:

They do it because keeping U.S. citizenship is getting more expensive, in economic and non-economic terms.  Many of the non-economic reasons people expatriate are due to tax enforcement policies and a culture of fear encouraged by the IRS. 

 Just keep shooting the jaywalkers, Commissioner Shulman.

If they can’t get you to pay to see the movies, they’ll have your legislature make you pay to make them.   Filmmakers Shoot for Breaks; California Gives $100 Million in Rebates as Other States Poach From Hollywood.  After bitter experience, Iowa is taking a different approach to filmmakers.

Confession is Good for the — Taxpayer? (Kaye A. Thomas)

Catch Robert D. Flach’s Wednesday Buzz roundup of tax posts.

News you can use: How to Avoid Additional Taxes, Penalties, and Interest by Filing Your Tax Return on Time (The Missouri Tax Guy)

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Tax Roundup, 5/30/2012: life among the jaywalkers. What rich folk don’t pay taxes? And does having someone else cover your losses make a bad investment a good one?

Wednesday, May 30th, 2012 by Joe Kristan

What the war on “international tax cheats” means to the cowering civilians in the bombing area. International tax planning attorney Phil Hodgen dined with some Americans working abroad and reports:

For you, the American living overseas, tax return preparation is an order of magnitude more complicated than for someone living at home in the USA. There are extra forms to fill out. Extra stuff to report. Big, big penalties if you fluff things up. So you either spend an inordinate amount of your free time doing the tax returns yourself, or you pay a lot of money to an accountant to do the work for you. I don’t know what the people around the table last night spend, but it would be common to see tax bills of $3,000 – $4,000 in my experience. Let’s say you only spend $2,000. Lucky you.

The amount of tax that the IRS typically collects from people living in Europe and other high tax countries is ZERO. The foreign tax credit (PDF) ensures this. So does the foreign earned income exclusion (PDF).

Short story? You pay $2,000 or maybe much more to do a tax return that yields zero revenue for the U.S. government. And you burn up a lot of nights and weekends doing the paperwork.

Then you hear some Senator yammering about people like you and how you should be paying your “fair share” to the U.S. Treasury. 

The whole post is very much worth reading.  The pointless burden put on innocent taxpayers by the IRS shoot-the-jaywalkers enforcement of the already ridiculous international reporting rules is most disgraceful of IRS Commissioner Shulman’s many policy blunders.

And Here You Thought It Was Just Peasants Not Paying Any Income Taxes (Going Concern).  They quote a Bloomberg article:

 The percentage of U.S. taxpayers reporting adjusted gross income exceeding $200,000 who paid no U.S. income taxes increased in 2009 to 0.53 percent from 0.51 percent, meaning that one in 189 high earners avoided taxation, an Internal Revenue Service study found. The filers reported tax-exempt interest along with deductible charitable contributions, medical expenses and other items to legally reduce their taxable income.

Of course, the article is wrong in blaming muni bonds, which aren’t included in AGI in the first place.  So how do $200,000 AGI taxpayers get to zero tax?  It’s often where net income is overstated because the gross is in AGI but the expense generating the “income” is an itemized deduction.  Some candidates come to mind:

  • People with big margin interest accounts or other borrowing costs.  If you have $200,000 if interest income, you can deduct $200,000 of expense incurred to buy the interest-generating assets.  The income is “above the line” and included in AGI, but the deduction is a below-the-line itemized deduction.
  •  Gamblers.  A busy slots player can easily burn through $200,000 in “winnings,” which are above the line, offset by below-the-line gambling itemized deductions.

Another likely example is Old folks in a full-time nursing home. The medical costs can go through the roof. 

Readers – if you have other candidates, I’d love to hear about them in the comments.  Related: somehow Linda Beale gets from 1 in 189 high-income taxpayers paying no federal tax to one in fourNot a chance.  I’d say it was a typo, but she makes the assertion both in her headline and in the article text (UPDATE, 5/31: corrected now)

 

New state tax credits making solar a better investment for Iowans. (Sioux City Journal). Nonsense. It doesn’t make it a better investment, it just shifts the loss on the “investment” to us chump Iowa taxpayers who have to pay for other peoples’ solar toys.

Because Congressional accounting is always so reliable? FASB under political heat from Congress over lease accounting (TaxBreak)

 You man people have to pay for something on their own? Hot, Hot, Hot: Air Conditioning Tax Credits Have Disappeared (TaxGrrrl)

Paul Neiffer: Be Careful if You Have a Foreign Account

Jack Townsend: Why We Cheat and Lie — Taxes Included

 Len Burman: Billions in Tax Refund Fraud–and How to Stop Most of it

Howard Gleckman: Tax Reform: Going Long v. Going Prudent

Catch Robert D Flach’s Wednesday Buzz roundup of tax posts.

Dan Meyer: Am”Bushed” by Taxes? Keep or Let Die the Decade-Old Tax Cuts?

Next time he should proclaim himself “Lord Vader of the South” instead.  “Self-proclaimed “Governor” of Alabama Sentenced to Ten Years in Federal Prison for Tax Fraud.”  Just one more bit of proof that “sovereign citizen” tax schemes don’t work.

 At least it’s an aim that any legislator can achieve.  “Legislators aim at tax fraud

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That sure looks like a disincentive to me.

Friday, May 25th, 2012 by Joe Kristan

Linda Beale responds to the piece I linked to yesterday about the disincentives to increased income created by the earned income tax credit phaseout. She cites a study that doesn’t really address the question and then says “look, a squirrel” that the real problem is gender bias.

TaxVox links to “A New Urban Institute Calculator Shows What Taxes and Transfers Mean for Low-Income Families” that illustrates the problem Linda Beale waves away:

A single parent in Connecticut with two young children could have received over $18,000 in transfer benefits if she had no earnings and no income, assuming her pre-subsidy rent was $600 per month. But suppose her earnings increased to $17,000 (poverty level) – spread evenly throughout the year – increases in childcare costs (assumed to be $250 per month before subsidies) and payroll taxes would have reduced her earnings by almost $2,000. Income tax credits and transfer benefits would have then added $16,500 – for a total net income of almost $33,000. If her income increased to twice poverty, she’d have to pay almost $5,600 in subsidized child care costs, state income taxes and payroll taxes. She’d receive about $6,400 in tax and transfer benefits – for a net income of $35,000. Thus, doubling her wages from $17,000 to $34,000 resulted in a net change in income of only about $2,000.

To say that result doesn’t discourage work is to say that the poor are bad at math. No, not all of the lost benefits are from the earned income credit phaseout, but that’s an important part of the picture.  The phase out of welfare benefits, including earned income credits, can cause marginal rates at some levels to exceed 100%.  That problem doesn’t go away no matter how much Linda Beale frets over gender bias.  Arnold Kling has made more constructive suggestions:

 There are two potential solutions. One solution is to base eligibility for means-tested benefits on total income, including other government benefits programs. Another approach would be to abolish a lot of specific programs and replace them with generic cash assistance.

 Simply jacking up the benefit levels of existing programs only makes the disincentive problem worse.

 

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Tax Roundup, 5/24/2012: Vikings pillage taxpayers, Giant, Eagle choose not to help, and why it’s harder to do taxes than to eat right.

Thursday, May 24th, 2012 by Joe Kristan

Like the Vikings of Old: Pillaging Minnesota’s Budget (Tax Policy Blog):

This week in Minnesota politics has been instructive in what kinds of projects warrant state money and attention.  Governor Dayton signed a bill approving the construction of a new stadium for the Minnesota Vikings which he boasted would create thousands of jobs and would not use “a single dollar of General Fund tax revenues“. The state agreed to pay $498 million of the $975 million price tag for the new stadium, with $150 million of their contribution coming from the revenues of Minneapolis’s “hospitality tax” (a sales tax surcharge) and $348 million from electronic pull tabs.

Dayton championed the deal despite the growing body of research that, as academics have observed, “contains no evidence supporting the idea that sports facilities are important engines of economic growth.” That is in part because, as analysts at UBS note, the economic analyses used to support sports stadiums tend to over-estimate the benefit of stadiums by ignoring the substitution effect; individuals who would travel to spend money on live music and restaurants in the downtown area instead spend them on the professional sports team. 

It’s similar to the way Iowa’s economic development officials say they create jobs with tax credits, ignoring the jobs lost by the unsubsidized competitors of the corporate welfare recipients, and the economic activity that would have occurred had the state not taxed the money from us to give away in the first place.

$452 billion tax hike in 2013: Taxmageddon by the numbers (Tax Break):

The expiration of tax breaks like the 2001/2003/2009 tax cuts, as well as the payroll tax cut, estate tax breaks, the R&D tax credit for businesses, combined with the cost of the Patient Protection and Affordable Care Act (“Obamacare”), and other sundry items, will add up to the overall tax increase in 2013 of $451.8 billion.

Repeal of Tennessee Gift and Inheritance Tax Official (Tennessee Tax Guy).  “Without a true income tax, and now without gift and inheritance taxes, Tennessee will likely be viewed as one of the most taxpayer-friendly states of the nation.”  Are you listening, Iowa?  (No.).

Former Dwarf, Crow believed to be in compliance. Former Giant, Eagle Fails to File Tax Returns (TaxDood)

 TaxVox: A Path Forward on Tax Reform.  We’ll go down that path when there are no others left. 

Peter Pappas:  I Am Aaron Worthing (or My Contribution to “Everybody Post about Brett Kimberlin Day”). Is a convicted deomestic terrorist using a 501(c)(3) and celebrity money to threaten and silence political opponents?  More here.

Brian Strahle: Teeter-Totters, Musical Chairs and Tug of Wars: The World of Multistate Income Taxes

Anthony Nitti: Doctor Done In By Tax Court’s “Too Good To Be True” Logic.  The Tax Court says that there was no reasonable cause to file returns based on the word of a promoter of a Sec. 419 tax benefit scheme.

Kay Bell: Beware unsolicited — and questionable — property tax payment plans

More Americans are very confused: More Americans Believe It’s Easier To Understand Tax Than How To Eat Healthy (TaxGrrrl)

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Tax Roundup, 5/2/2012

Wednesday, May 2nd, 2012 by Joe Kristan

In case you need more evidence that your Iowa public officials hold you in contempt:  “Two decisions made in favor of mobile speed cameras; Supervisors OK them for busy Polk roads, while legislators kill a proposed state ban.”   Remember them in November. (Des Moines Register)

The lush life of the washed-up NFL player: three of them charged in ID-theft tax refund scam.  (Kay Bell, Bankrate.com)

Just another humble municipal public servant: Dixon, Illinois financial officer accused of helping herself to $53 million or so.  Think it ever hit her 1040? (Going Concern)

Sadly, they get to pay taxes for humble municipal public servants steal:The Price of Freedom: What Happens to the Wrongfully Convicted?” (TaxGrrrl)

Commissioner Shulman won’t rest until they’re all gone: Wealthy Americans Queue to Give Up Their Passports“‘There is incredible frustration at the audacity and imperial overreach of this law,’ said David Kuenzi, a tax adviser at Thun Financial Advisors in Madison, Wisconsin, referring to Fatca. “ (Bloomberg)

Death and Income Taxes.  My new post at IowaBiz.com, the Des Moines Business Record group blog for entrepreneurs.

Off the barbie: Crocodile Dundee settles Oz tax bill (Kay Bell)  TaxDood has more.

No.  “Would a Romney Presidency Bring Sweeping Tax Cuts?” With the debt we’ve been accumulating, avoiding tax increases will be an accomplishment. (Anthony Nitti).

Are the new broker basis reporting rules worth it?Five Challenges for the IRS’s New Capital Gains Reporting Rules“(TaxVox)

News you can use: Beating The Possible Estate Tax Increase Without Switching To Cat Food – The Midmill Dilemma.  An issue for folks with net worth of $4 million to $14 million. (Peter J. Reilly)

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Tax Roundup, 3/30/2012

Friday, March 30th, 2012 by Joe Kristan

Nikki Haley

Rumors seem to be rampant that South Carolina governor Nikki Haley will soon be indicted on tax chargesThe TaxProf rounds up the gossipUPDATE, 3/31:  Apparently there’s nothing to the gossip.

Kay Bell and Peter Reilly say a New Jersey decision will throw a damper on telecommuting.  The Garden State imposed income tax on a Maryland company who hired a New Jersey resident as a telecommuter, working at home.  It strikes me as an unsurprising result, and one that has much more support than the tax imposed on KFC and Jack Daniels in Iowa based solely on use on “intangibles” in the state.

There’s a lot more tax to Obamacare than the penalty for not buying insurance that may bring the whole thing down.  Howard Gleckman at TaxVox reminds us of the other taxes, like the 3.8% tax on “passive” income, that take effect in 2014.

21st Century morals: “A new survey suggests Americans consider cheating on their taxes more socially acceptable than shoplifting, drunk driving or even throwing trash out the window of a moving car,” reports Janet Novack.

The IRS is taking a page from the “Occupy” movement and going after the top 1%. Peter Pappas and Dan Meyer have the scoop.

You think you have tax problems?  “Italy in shock after man sets himself alight for tax evasion

A former Dodger pitcher will be sent down for awhile for admitting tax evasion on an illegal karaoke scheme, of all things.

You’ll be shocked, shocked! to learn there is tax fraud in the hip-hop recording business.

 

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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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Just put it on the tab

Wednesday, February 15th, 2012 by Joe Kristan

It looks like Congress has come up with a miraculous solution to financing the 2 percentage-point reduction in the employee FICA tax for the rest of the year: spend money they don’t have. Howard Gleckman of TaxVox reports:

On Monday, the House Republican leadership announced it would support a 10-month extension without offsetting spending cuts. Problem solved. Just put another $100 billion on the tab.
This wouldn

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True in Washington, true in Des Moines

Friday, February 3rd, 2012 by Joe Kristan

As Iowa rushes to pass yet another narrowly-targeted tax break, Iowa’s legislators would be wise to ponder this from Roseanne Altshuler at TaxVox:

We seem to have forgotten that the fundamental purpose of our tax system is to raise revenue to fund government. The current system is riddled with tax provisions that favor one activity over another or provide targeted tax benefits to a limited number of taxpayers. Whether permanent or temporary, these provisions create complexity, impose enormous compliance costs, breed perceptions of unfairness, create opportunities to manipulate rules to avoid tax, and lead to an inefficient use of our economic resources. The tax code has become less stable, increasingly unpredictable, and more and more difficult for taxpayers to understand.

While she is talking about the federal income tax, it all applies just as much here in Iowa. But it is hoping for way too much to expect wisdom under the domes.
Related: The Quick and Dirty Iowa Tax Reform.

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Happy 2012! Your taxes may have just gone up!

Tuesday, January 3rd, 2012 by Joe Kristan

Is this the year “temporary” actually means it?
It’s an old joke that nothing is as permanent as a temporary tax break. The research tax credit has been on borrowed time, one or two years at a time, since the 1980s, to allow congresscritters to pretend that it doesn’t really cost much. This congressional lie has now been extended to dozens of tax breaks, most of which Congress has no intention of letting expire. Yet expire they will if Congress fails to take action. With both Congress and the President in full electile dysfunction mode, failure is always an option.
The recent incentives for fixed asset purchases are perhaps the most likely candidates for expiration. While 100% bonus depreciation and the $500,000 limit on the Section 179 deduction are popular with businesses, they are also big revenue losers. With Congress spending about $1.67 for each dollar of revenue, it may find it easy to let this one go. It failed to pass this before year-end with the payroll tax cut extension, which shows that extending these breaks are not the top item on their to-do list.
The least-likely candidate for actual expiration is the “AMT Patch.” This is the recurring increase in the individual alternative minimum tax exemption to prevent inflation and the Bush-era regular rate reductions (which themselves have become another regularly-expiring provision, but not for 2012) from throwing over 20 million additional taxpayers into AMT. Affected taxpayers would see an average annual tax increase of $3,900 on average according to the Congressional Budget Office, and some would see an increase of over $8,000.
The Research Credit is also technically dead as of January 1. It has been extended, with one temporary exception, since the 1980s, and is likely to be again extended retroactively.
The fate of some 50 other “temporary” breaks
that expired January 1, including 15-year depreciation for “qualified restaurant buildings” and “qualified leasehold improvements” and seven-year depreciation for “motorsports entertainment complexes” is less certain. The more often they are extended, the less likely it is that they will be permitted to die, but with the continuing budget disaster, only the AMT Patch and the research credit seem like sure bets for continuation this year.
If Congress wanted to honestly budget these items, they would treat any provision extended more than once as permanent for budgeting purposes. That would require them to face up to the real effects of these items, and limit the regular enactment of permanent tax increases to pay for “temporary” breaks. It would also simplify the tax law and remove uncertainty from taxpayer lives. Yet it is clearly in the interest of congresscritters to force beneficiaries of these provisions to have to beg for them to be extended every year or two, so expect the lie to continue.
Link: Joint Committee on Taxation list of expiring provisions.

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53 tax breaks slated to die tomorrow. As if.

Friday, December 30th, 2011 by Joe Kristan

Expiring tax breaks rarely die, and if they do, they rise like Lazarus. TaxVox explains:

But Congress has made a habit of letting these measures expire and then bringing them back to life, no matter how useless they are. In the end, most of those who benefit from these temporary provisions will likely keep their tax breaks. It

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A deductible last ride in Virginia?

Wednesday, December 14th, 2011 by Joe Kristan

Few of us think of the tax implications of that last ride in the black Cadillac. The estate tax return allows a deduction for funeral expenses, but most of us aren’t blessed with $5 million estates.
Fortunately, a delegate to the Virginia General Assembly is thinking about it for us. He wants to provide a deduction for launching your mortal remains into space — if you use a Virginia space port, and you die between 2012 and 2020. Howard Gleckman has the scoop at TaxVox:

One firm, Celestis Inc, advertises several memorial spaceflight services. The low-end earth rise service is just $995 but that sounds like little more than a high-tech elevator ride. According to its Website, the trip “affordably launches a symbolic portion of cremated remains to space, and after experiencing the zero gravity environment, returns the individual flight capsules and modules back to Earth.”
I

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The rich guy still isn’t buying the drinks

Wednesday, December 7th, 2011 by Joe Kristan

Many commentators — not to mention a certain billionaire, and the President — are obsessed with increasing taxes on “the rich.” They imply that the government’s fiscal disaster would be solved if the plutocracy would just pay in some of those $100 bills they use to light their cigars. The leave out one thing: taxing the rich doesn’t solve the problem.
TaxVox, a blog of the center-left Tax Policy Center, has an excellent mental exercise on how much taxes would have to be raised across the board to get the nation’s fiscal problems under control without tax cuts — or, alternatively, how much would have to be raised in a VAT on top of the current income tax.

The goal of the exercise was to reduce the ratio of debt to Gross Domestic Product (a standard way of measuring red ink) to 60 percent…
Assuming current tax policy does not change, they estimate it would take a VAT rate of 22.9 percent in 2015 to meet the debt target in 2020. Because the glide path would be longer, the 2015 rate would only have to be 16.7 percent if the goal is to hit 60 percent by 2035.
To hit the 2020 target though an across-the-board income tax rate increase, rates in 2015 would rise from today

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Why you should file that unneeded estate tax return

Wednesday, November 30th, 2011 by Joe Kristan

It seems odd. With the estate tax exclusion at $5 million — higher than ever — why is the IRS bracing for a flood of estate tax returns? Roberton Williams explains at TaxVox:

Portability

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Supercommittee fails. In other news, it gets dark early this time of year.

Tuesday, November 22nd, 2011 by Joe Kristan

To the surprise of nobody born before yesterday, the Congressional Superfriends failed to slay the deficit dragon. The committee was designed to fail to deliver even its token $1 trillion goal in deficit reduction (John Kerry? Really?), and it worked. So we now face the meaningless draconian unlikelihood of cuts in programs starting next October, except that Congress has until then to do whatever it wants to keep that from happening.
TaxVox gets it right:

Much like the European Community over the past few years, Congress

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