Tag Archives: taxes

Taxes and Audits

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Fox Business reported the following earlier in the week:

The IRS says budget cuts forced the agency to reduce the number of tax audits last year to the lowest level in a decade.

In 2014, fewer than 1 percent of individual tax returns were audited, the lowest rate since 2004. IRS Commissioner John Koskinen says the number of audits is likely to decline again this year.

In a speech on Tuesday, Koskinen said there are fewer audits because the tax agency has fewer agents. He said the IRS is down more than 2,200 revenue agents since 2010.

Congress has cut the agency’s budget by more than $1.3 billion since 2010.

Sounds like another argument for simplifying the Federal tax code, to me. Of course Koskinen could be expected to argue against a reduction in IRS funding or staffing anyway….

The Party of Stupid on the Right

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A group of young conservatives, dubbed “reformicons,” are making inroads among Republican presidential candidates by arguing the party’s traditional reliance on broad-based tax cuts…isn’t enough to cure middle-class woes.
Instead, they are calling for crafting subsidies, tax credits, and other public-policy tools based on conservative philosophies and tastes to help the unemployed and other struggling middle-income households.

And

“For the past 10 years, our biggest issue was whether the top tax rate was 35% or 39.5%. I don’t care anymore,” said Michael Strain, 33 years old and an economist at the American Enterprise Institute think tank. One of his ideas gaining fans on the right: let employers pay some workers less than the minimum wage as an inducement to hire them and use the federal tax code to bump up salaries.

Leaving aside the abject surrender inherent in that “I don’t care” bleat, Strain’s small point—letting employers pay below-minimum wage rates under certain circumstances—is better achieved by curbing yet another government interference in the market, by getting rid of the minimum wage altogether.

Bob Davis’ article in The Wall Street Journal goes on in this vein, but you get the idea.

The larger point, though, is that these reformicons’ ideas are foolish. Using the tax code for social engineering or for favoring some Americans—which can come only at the expense of other Americans—is an inefficient and immoral use of people’s money. Even when it favors those Americans whom Republicans and Conservatives favor.

Government interference in the free market only inhibits the market, only caps what used to be equal opportunity, only reduces prosperity to the lowest common denominator rather than increasing the general prosperity by elevating the lowest common denominator.

These reformicons’ policies, worse, will only exacerbate the byzantine structure of our tax code and make it even harder to get to a single, low tax rate that every citizen pays; a rate based on all income, regardless of source and devoid of special treatment based on that income’s source; a rate devoid of gerrymandering with tax credits here, subsidies there, loopholes over there. A fair tax rate.

Higher Taxes

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Because that’s the Democratic Party’s one size fits all solution to all of the nation’s problems. Because they Know Better how to spend a citizen’s money than does that citizen. Here, via Fox News, is an abbreviated list of tax increases President Barack Obama wants.

  • Limit deductions for top earners to 28% rate, even if income is taxed at 39.6%: $603.2 billion
  • Impose a 14% one-time tax on previously untaxed foreign income: $268.1 billion
  • Impose a 19% minimum tax on foreign income: $206 billion
  • Modify estate and gift tax provisions: $214.4 billion
  • Change the taxation of capital income: $207.9 billion
  • Other increases from reform of US international tax system: $135.8 billion
  • Impose a financial fee on large financial companies: $111.8 billion
  • Increase tobacco taxes and index for inflation: $95.1 billion
  • Repeal LIFO (Last In First Out) method of accounting for inventories: $76.1 billion
  • Conform SECA (Self Employed Contributions Act) taxes for professional service businesses: $74.6 billion
  • Other revenue changes and loophole closers: $47.9 billion
  • Eliminate oil and natural gas preferences: $45.5 billion [Note: don’t eliminate “green” energy tax breaks and other subsidies]
  • Implement the Buffett Rule by imposing a new “Fair Share Tax” (making millionaires pay at least 30% tax rate): $35.2 billion
  • Reform the treatment of financial and insurance industry products: $34.4 billion
  • Limit the total accrual of tax-favored retirement benefits: $26.0 billion
  • Other loophole closers: $24.3 billion
  • Reinstate Superfund taxes: $21.2 billion
  • Tax carried interests as ordinary income: $17.7 billion
  • Make unemployment insurance surtax permanent: $15.7 billion
  • Eliminate coal preferences: $4.3 billion [Note: see oil and gas preferences]
  • Reauthorize special assessment from domestic nuclear utilities: $2.3 billion [Note: see oil and gas preferences]
  • Increase and modify Oil Spill Liability Trust Fund financing: $1.6 billion
  • Repeal tax-exempt bond financing of professional sports facilities: $542.0 million

Notice that many of these tax increases are solely to raise taxes and have nothing at all to do with any real reform of our tax code or of anything else: LIFO elimination, for instance, and those financial and insurance “reforms.”

The total tax increase from these? Nearly $2.7 trillion. Think about how much that will hurt our economy by taking that much money out of it. That is, after all, 13.4% of our GDP, of our economy.

Death Taxes

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Or, as President Barack Obama likes to call them, “trust fund taxes.” Either way, it’s another Progressive attempt to steal the gains of one family—now with its parent safely dead—to transfer them to another group of “families” of whom Obama approves.

As the graph below demonstrates, this latest wealth “redistribution” grab by Obama would represent, if it’s passed, a 36% increase to a world-beating 68% of a family’s hard-earned accumulated prosperity.InternationalDeathTaxRates

Not even the famously social-tax heaven of the UK confiscates that much of a family’s wealth on the death, nor do the social democracy nations of France, Belgium, Spain, Finland, Norway, etc. Russia and the People’s Republic of China have no death taxes at all.

Here’s the deal:

Under current law, when a parent or grandparent dies, the increase in the valuation of his or her asset from when it was originally purchased is not taxed.

This is to offset the effects of the estate tax.

But

Obama’s plan would tax estates and impose the regular capital gains tax on inherited assets—a business, property, or stocks.

That business, far from being a Buffet’s holdings in Berkshire Hathaway, or a Gate’s holdings in Microsoft, is typically the family’s only asset: a mom and pop business that mom and/or pop have spent a lifetime building, with little to no outside cash available with which to pay the Obama vig. They’d have to sell the business; they’d have to sell their children’s future to pay up. That property usually is the family home, which the family finally was able to afford in the late afternoon of the deceased parent’s life. Those stocks…. No trust funds here.

But, no worries. Obama and his Democrat Party Know Better. Their money, temporarily reposing in our hands for a few years, will be well used. Obama says so.

Austerity

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President Obama called for an end to “mindless austerity” on Thursday as he announced his desire to end “sequester” spending cuts in his budget for 2015.

No, Obama wants to perpetuate—even expand—the deliberate austerity of excessive government spending and ever-rising taxes. His “budget” calls for a 7% increase in Federal spending to be paid for with increased taxes, including increases in the death tax on inheritances (which Obama is attempting to disguise by calling it a “trust fund” tax). Indeed, Obama’s “thinking” on taxing was exposed by his attempt to tax Americans’ savings for our children’s college, our 529s.

If the Republicans and Conservatives in Congress are smart, they won’t waste time on the Obama stuff. They won’t even respond to his nonsense. They’ll just ignore it and pass a conservative budget that includes both tax reform and tax rate reductions.

Obama’s going to veto anything this Congress passes, anyway; his vetoes should simply be used to shape the ’16 elections.