Tag Archives: regulation

In Which the IRS Gets Away with It

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Judge Reggie Walton, of the DC District Court, dismissed all counts brought by the conservative non-profit, True the Vote, against the IRS for the IRS’ harassment of the organization when it tried to register as a 501(c)(3). The IRS had, on receiving that application

IRS was subjecting [True the Vote founder Catherine Engelbrecht] to multiple rounds of abusive inquiries, with requests to provide every Facebook and Twitter entry I’d every posted, questions about my political aspirations, and demands to know the names of every group I’d ever made presentations to, the content of what I’d said, and where I intended to speak for the coming year.

Under the law defining a c3 organization, none of this information is relevant to the IRS’ application investigation. Indeed, Walton’s ruling explicitly makes no reference to the legitimacy of Engelbrecht’s charges.

Walton dismissed the counts because the IRS—eventually, but before this lawsuit was resolved—registered True the Vote as the c3 for which it had applied.

Unless an actual, ongoing controversy exists in this case, this Court is without power to decide it….

Because

The defendants’ grant of tax-exempt status to the plaintiff, and the defendants’ suspension of the alleged IRS targeting scheme during the tax-exempt application process, including remedial steps to address the alleged conduct, coupled with the reduced “concern about the recurrence of objectionable behavior” government actors….

Never mind that this is a purely voluntary “suspension,” subject to removal at IRS whim, conservative speech remains chilled, other attacks against other conservative entities remain (think Wisconsin), and so on. The present assault has stopped, so there’s nothing for a good judge to decide.

Let me see if my understanding of this is correct. If I stop beating my wife, wholly voluntarily and on my own initiative, I’m home free? My wife has no recourse? Never mind that I’ve only voluntarily suspended the beatings, never mind that my wife remains intimidated and vulnerable, I’ve got nothing to worry about from any court?

Walton’s ruling can be seen here.

European Taxes

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…and, by extension, the goal of this administration’s Europe-wannabe tax schema.

Matthew Karnitschnig and Robin van Daalen, in The Wall Street Journal, interviewed the newly retired Marius Kohl, who was for 22 years the Attendant—head—of Luxembourg’s Sociétés 6, or Companies 6, the Luxembourg government agency that, among other things, determines the annual tax owed by each of roughly 50,000 Luxembourg-registered holding companies.

It’s a wide-ranging interview and well worth the read, but I want to focus on one small bit of it.

One outcome of Kohl’s stewardship is that Luxembourg became a corporate tax haven: companies registered there generally paid little in the way of taxes. This especially stands out against the EU average headline corporate rate above 21%, rates running as high as France’s 33%, and Luxembourg’s own 29%.

Naturally, the EU is dismayed with this, and with Kohl’s departure, it’s pushing Luxembourg to “fix that.” Luxembourg is being unfair, say the EU’s functionaries, and it should raise its corporate tax to be more in line with the rest of the EU.

Notice that. The EU declines to compete with Luxembourg (or with Ireland, whose official rate of 12.5% is being raised with the Irish government surrender to EU pressure) for business and associated employment. Instead, Luxembourg must make itself less competitive, must lower itself to the EU’s plain.

Because, it really isn’t people’s money, its government money that government kindly lets people use some of. Because, people are just piggy banks for the men of government, we’re not really in this for our own benefit.

This is where the US is headed, for all that President Barack Obama is talking about lowering our own corporate rate from 35% to 28%.   Obama, after all, is holding out for more taxes raised elsewhere in return.

A Number of Misunderstandings

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Los Angeles passed an ordinance requiring hotel operators to give up data in their guest registers to the police, even when they don’t have a warrant.

The ordinance, approved by the city in 2006, requires hotels to collect and maintain guest information such as name and address, the number of people in the guest’s party, vehicle information, arrival and checkout dates, room number, and method of payment. Hotel operators who fail to comply with it face as many as six months behind bars and a $1,000 fine.

A motel operator demurred, and at this point, the 9th Circuit agrees: they struck the ordinance as unconstitutional under the 4th Amendment.

There are a couple of fundamental misunderstandings, though. One is in the 9th‘s ruling, paraphrased by Joe Palazzolo at the above link:

[H]otels have an interest in keeping guest records private, even if the guests themselves have no such privacy rights because they willingly give their information to a third party.

Guests do have a legitimate expectation of privacy regarding “their information,” though. They’re not giving their information to “a” third party; they’re giving it to a particular third party as a necessary thing so that the particular third party can provide the contracted service. Moreover, much of the information that is given over is not necessary for the transaction to occur; it’s mandated by a different third party—a government entity, for the government’s convenience.

A second misunderstanding is in the argument offered by LA’s lawyers.

These laws expressly help police investigate crimes such as prostitution and gambling, capture dangerous fugitives and even authorize federal law enforcement to examine these registers, an authorization which can be vital in the immediate aftermath of a homeland terrorist attack[.]

Say that’s all true. Get a warrant. Time hardly seems of the essence in these hypotheticals, even with the apocalyptically offered “homeland terrorist attack:” the cops are unlikely to be near the hotel or motel when an attack goes in. If time really is of the essence, come armed with a warrant in the first place; they’re disappointingly easy to get.

A third misunderstanding is in Judge Richard Tallman’s dissent, again summarized by Palazzolo.

[T]he hoteliers challenging the ordinance failed to show that police were applying the statute in an unconstitutional way.

The hoteliers had no requirement to do so. The law must be constitutional in the first place; its application by the police is wholly irrelevant after its unconstitutionality is shown.

The matter now is before the Supreme Court, and we’ll learn later who’s right. Legally, anyway.

Trust

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I’m going to poke my nose into European affairs, again.

The backdrop is the French budget crisis. The backdrop to that is this. In one of the EU’s responses to their part in the global economic crisis of 2008-2009, the EU passed the Stability and Growth Pact, which authorized the European Commission, the executive body of the European Union (though the Commission has its own president, the body acts like a President-by-Committee) to require EU member nations to submit their national budgets to Commission approval. If the Commission disapproved the budget and the nation in question refused to make Commission-directed corrections, the Commission could levy very serious fines on that nation.

Among the rules of the Pact is that a national deficit cannot exceed 3% of its GDP: cuts to spending and/or increases in taxes could be required by the Commission to bring the nation’s deficit in line. Various smaller nations in the EU already have been subject to budget disapproval and Commission-required corrections or fines. Belgium, for instance, faced a fine of some €800 million in 2011 ($1,131 million dollars in 2011) until it made corrections. Greece and Italy also have been hit with Commission budget mandated corrections, and they have complied.

Enter France. French Prime Minister Manuel Valls has indicated flatly that France will not play by the EU rules to which it is signatory.

I will not permit people to discuss France in this context. France is a big country. We won’t [comply with Commission budget reform requirements].

The French Finance Minister has echoed his boss.

[W]e won’t cut more anywhere, and we also won’t raise taxes.

The Germans, though, despite being economically powerful enough—because it’s still economically sound—to get France to comply, is apparently too timid to do so. Chancellor Angela Merkel has dragged out an old chestnut of hers: “contractual agreements.” These are

written agreements between the European Commission and a Eurozone country that commit that member state to undertake specific savings measures or clearly delineated structural reforms. Under the original plan, the country could then obtain financial aid from a special fund in return. For France, the reward would be a further suspension of the deficit rules.

However. With France saying it’s going to welsh on one contract that it’s signed—that Stability and Growth Pact—how could it be trusted to honor another contract it might sign, a “contractual agreement?”

Manfred Weber, who leads the European People’s Party (think of them as all of Europe’s various Christian Democrats) in European Parliament emphasized the problem.

Europe is at a crossroads. The European Commission’s credibility is at stake with its review of the French and also the Italian budgets. France’s budget has to be rejected. President Hollande needs to make improvements.

There are two questions here. Is the EU’s word worth anything? Can they be trusted to carry out their own mandates? That question won’t be answered until the end of the month, when the Commission will attempt to give its final answer regarding the French budget.

The other question is whether the French word has any value, whether it’s possible to rely on any contract France or a French entity might sign. That question seems clearly answered.

Federal Subsidies and Block Grants

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I’ve written elsewhere about converting Medicaid subsidy transfers to the states to block grants on a declining schedule that eliminates the Medicaid subsidy altogether over a 10 year period.

In an era of excessive Federal government spending, ongoing Federal budget deficits as the normal state of affairs, and the resulting burgeoning Federal debt, it’s time to look at converting all Federal transfers to the states on a declining schedule that eliminates the subsidies altogether over a 10 year period.

It’s time to restore the Federalism to the Federalism concept of our Constitution.

In 2013, the Federal government transferred to the 50 states and an untold number of local governments, just in the form of grants-in-aid, some $450 billion. In 1953, 60 years prior, that number was $0. Between 2008 and 2010, the number rose especially sharply, from $371 (!) billion to a peak of $505 billion.

Total Federal transfer payments were $2.3 trillion in 2013, up from not much more than zero in 1953. Some of that largest recipients of these transfers in 2010 (to mix years of data) were California, getting $63 million; Illinois, getting $19 million; New York, getting $50 million; and Texas, getting $41 million.

This needs to stop.

Federal payments to the states are every bit as addictive for those states as heroin is for a junky; the states will need time to adjust their budgets. Accordingly, I propose taking the 2014 transfer payments to each state as the baseline for that state and beginning in 2015, converting each state’s aggregated collection of transfer payments into a single block grant, with no strings attached—the states need to start learning responsibility and prioritization; the grant should be for the state’s use as it sees fit.

In each year after 2015, the block grant paid to each state should be reduced by 10% of the baseline value so that by the end of 10 years, the transfer payments will be reduced to zero. After that, each state would be required to meet its spending “needs” from its own resources, getting aid from the Federal government—which is to say, for instance, California getting tax money paid by New York citizens, among others—only in an emergency declared and agreed between the state governor and the President.

There would be two outcomes of interest here. The first is that the states would regain their responsibility for their own future, instead of their internal imperatives being dictated by the Federal government through the plethora of strings attached to each of the existing transfers and grants.

The second is that, by eliminating the enormous Federal expenditure, a major step would be taken toward getting Federal spending under control, eliminating the budget deficits that are too routine, and being paying down our outlandish national debt.