On CNN Anderson Cooper 360, Political Analysts and Commentators Van Jones, Ryan Lizza, Matt Lewis, Gloria Borger, Paul Begala and Jason Miller discusses the 2005 President Trump’s Tax returns released by the White House showing that Trump paid $38 millions in taxes, though the legitimacy of the tax return has not been verified.
— Anderson Cooper 360° (@AC360) March 15, 2017
…One of the more frustrating and fruitless conversations in modern politics is with a Trump supporter who just insists that Trump can be trusted. But trusted to do what? If you want boots on the ground in the Middle East, Trump’s your guy. If you want America to stop sending its soldiers to die on foreign soil, Trump’s your guy. If you want higher taxes, Trump’s your guy. If you want lower taxes, Trump’s your guy. The list goes on…
Read more at NRO.
Source: National Review
‘None of these people have any incentive to undertake the job of decreasing the complexity of the tax system.’
primatologist writes: If most people in the US knew the truth about the tax system in their country, there would be blood in the streets. Most individuals file a very simple federal income tax return – perhaps they take a few deductions for their mortgage interest, medical costs and the like. But this annual experience for the vast majority of Americans gives them a very skewed view of the great mass of the US tax system – it is the tiniest visible sign of an enormous tumor that grows beneath the surface, invisible to most US citizens and tax payers.
“This is how it works: To escape the high tax rates on business activities in the US, armies of lobbyists work ceaselessly to insert arcane, narrow exceptions and exemptions into federal and state tax laws at the legislative level. The exceptions and exemptions are as narrow as possible and often use very convoluted and technical language. The use of opaque language is intentional: it helps legislators avoid the kind of political trouble that comes from handing out tax exemptions.”
Two facts that are rarely discussed by the US media and which never come to the attention of the majority of US individual taxpayers illustrate this: The US has by far the highest corporate income tax rate of any developed country (and among the highest marginal tax rates for individuals who live in high tax states), and the US has an incredibly large and complex structure of tax laws. While most US taxpayers don’t know about the relatively high rates of US taxation, the crucial reality of the US tax system that is hidden from almost everyone is the insane complexity of the US tax code that applies to investment and business activities.
“Why uncertainty? Because as the tax laws and regulations become more and more complex, and the language in which they are expressed becomes more and more divorced from normal usage, only very intelligent people who spend all their time doing nothing but learning and manipulating tax language can even begin to know what the laws and rules mean.”
This is how it works: To escape the high tax rates on business activities in the US, armies of lobbyists work ceaselessly to insert arcane, narrow exceptions and exemptions into federal and state tax laws at the legislative level. The exceptions and exemptions are as narrow as possible and often use very convoluted and technical language.
The use of opaque language is intentional: it helps legislators avoid the kind of political trouble that comes from handing out tax exemptions. (There is also the factor that legislators all play the game of “I’ll vote for your campaign contributor’s tax exemption if you’ll vote for mine.”) Tax authorities (that’s the IRS for the federal government, but it happens at the state and local level, too, in high-tax states and cities) create voluminous regulations to implement these tax laws. Lobbyists also work to influence that process, as well as returning to the legislature to create exceptions to the exceptions to the exceptions created in the regulations.
“Trying to undo the complexity of the tax code would reveal all this incredible responsive complexity: And it would cause massive economic losses. Trillions and trillions of dollars worth of value is invested in ways that are structured in response to the complexity of our tax laws. Without those giant stacks of tax rules and exceptions and exceptions to exceptions, etc., those investment and business operations structures would not make sense legally or economically.”
Meanwhile, “tax planning” to take advantage of this constantly growing and increasingly complex web of laws and regulations becomes a bigger and bigger part of how businesses structure their enterprises and investments. “Tax planning” is carried out by armies of accountants and lawyers and consultants, all of whom are handsomely paid to do work that contributes nothing to economic growth or prosperity.
[Also see – Nobody Knows How Many Federal Agencies Exist]
The work of the “tax planning” professionals becomes more and more complex and incomprehensible to those outside their fraternity, as it is essentially the incantation of linguistic “magic spells” that have nothing whatsoever to do with the actual business enterprise, and everything to do with fitting into the ever-more-convoluted language of the tax codes. More and more layers of complexity are added, each with additional cost and uncertainty.
“The same process applies to entirely domestic business. Entrepreneurs and investors spend huge amounts of money on lawyers, accountants and consultants to create complex – and completely unnecessary – corporate and operational structures aimed solely at taking advantages of complex tax benefits.”
Why uncertainty? Because as the tax laws and regulations become more and more complex, and the language in which they are expressed becomes more and more divorced from normal usage, only very intelligent people who spend all their time doing nothing but learning and manipulating tax language can even begin to know what the laws and rules mean.
“One consequence of this process that everyone who is involved in international business knows very well is that no one wants to do business in the United States if they can help it.“
And they won’t all agree – until a very clear case is litigated to conclusion in a court or the IRS issues a “clarification,” it’s all just educated guesses. By the time a term comes to have well-understood meaning, the exceptions to the rules that use that term – using new words that were intentionally difficult to understand in the first place – have to be interpreted and clarified.
“And here’s the real horror: No one outside the fraternity of tax regulators, lobbyists, tax lawyers, accountants and consultants really perceives how enormous the structure of tax complexity is. Investors and entrepreneurs learn no more than they have to – just what they have to know to do the specific deal they’re working on or carry out their own narrow business operations.”
This process has been going on for well over a hundred years with no let up. In fact, the scale and complexity of the tax codes continues to grow exponentially, as the feedback process of high tax rates leading to exceptions leading to exceptions to exceptions continues ad infinitum.
“Unwinding all that complexity would wipe out huge swathes of the US economy – and create a whole new set of winners and losers that has nothing to do with the underlying matter of actually creating real value in the real world.”
One consequence of this process that everyone who is involved in international business knows very well is that NO ONE WANTS TO DO BUSINESS IN THE UNITED STATES IF THEY CAN HELP IT. This is the world I work in. In my professional world it is simply taken for granted that people with money to invest will do anything in their power to structure their business so that no possible argument can be made that they did business or invested in the US. Companies and wealthy individuals go to extreme lengths to avoid putting any kind of investment into the US if it is at all possible.
Does this mean that no one invests in US businesses? No. The US consumer market is too big, and innovation in the US is too valuable for that to be true. What it does mean, though is that below a certain very large scale, it just doesn’t pay. Even more important, it also means that every investment in the US is “taxed” in a way that does no one (outside of the business of avoiding tax) any good: Huge amounts of money are spent creating unnecessary complexity to minimize US taxation as much as possible: Extra layers of incorporation and complex accounting structures are created to do everything possible to minimize the amount of income earned in the US. All that time, effort and money spent avoiding US taxation adds to the cost of investment without creating one dime of revenue for the US government. Finally, foreign investors in the US do everything they can to get their money out of the US as quickly as possible: The more time an investment is exposed to US tax law, the larger the chance that some tax law magic spell will be countered by some other tax law magic spell and – BANG! – there go all the profits. Read the rest of this entry »
Doubling Capital Gains Tax Rate on Short-Term Investments: Campaign officials have said that their goal is not to address income inequality or to raise money for the federal treasury, but to ‘change investor behavior’.
Under the Clinton plan, investments held between one and two years would be taxed at the normal income-tax rate of 39.6%, nearly double the existing 20% capital gains rate. Neither figure counts an extra 3.8% tax on net investment income included as part of the health-care law, a campaign official said.
MSM handling bad news about Hillary like… pic.twitter.com/Wqj7CCoJXY
— Matt (@Matthops82) July 24, 2015
The campaign isn’t proposing any changes to the capital gains rate for lower-income taxpayers. The change would affect top-bracket single filers with taxable income above $413,201 and married couples filing jointly with taxable income above $484,850.
The rate for top-bracket taxpayers would be set on a sliding scale, with the lowest rate applied to investments held the longest. To qualify for the existing 20% rate, one would have to hold an investment for at least six years.
Mrs. Clinton will lay out the plan in a speech Friday in New York City, where she plans to spotlight what she sees as unhealthy corporate efforts to boost stock prices. She will argue that a focus on short-term results is undercutting longer-term economic growth and hurting American workers.
Capital gains recap, since 1997: Bill: CUT 28% to 20% W: CUT 20% to 15% O: HIKE 15% to 23.8% Hillary (proposed): HIKE 23.8% to 43.4%
— Phil Kerpen (@kerpen) July 24, 2015
Mrs. Clinton will also endorse a $15 per hour minimum wage proposal for fast-food workers in New York, a campaign official said. Asked about this on Thursday, she hedged as to whether the minimum wage should be that high nationally but said certain cities can justify higher minimums. “I do recognize that the cost of living in Little Rock is different than the cost of living in Manhattan,” she told reporters. Asked if $15 per hour is justified in New York, she said, “That’s up to local leaders in New York. They certainly believe it is.”
The campaign said she would also call for greater disclosure of stock buybacks by companies, saying that while they may give a quick lift to stock prices, they often come at the expense of research and development spending. She will also call for a review of securities rules related to shareholder activism and rules governing tax treatment of executive compensation. Read the rest of this entry »
Chicago to Apply 9% ‘Amusement Tax’ for ‘the Privilege of Witnessing, Viewing or Participating in the Chewing of Gum’Posted: July 12, 2015
[See also – Chicago to Apply 9% ‘Netflix Tax’]
Chicago to Apply 9% ‘Netflix Tax’ for ‘the Privilege to Witness, View or Participate in Amusements that are Delivered Electronically’Posted: July 11, 2015
“The amusement tax applies to charges paid for the privilege to witness, view or participate in an amusement.”
Netflix service in Chicago is about to get notably more expensive. On the hunt for new revenue, Chicago’s Department of Finance is applying two new rules that would impact companies like Netflix and Spotify. One covers “electronically delivered amusements” and another covers “nonpossessory computer leases”; together they form a unique and troubling new attempt by cities to tax any city resident that interacts with “the cloud. According to the Chicago Tribune, streaming service providers need to start collecting the tax starting September 1.
“This includes not only charges paid for the privilege to witness, view or participate in amusements in person but also charges paid for the privilege to witness, view or participate in amusements that are delivered electronically.”
The new tax is expected to net the city of Chicago an additional $12 million annually.
“The amusement tax applies to charges paid for the privilege to witness, view or participate in an amusement,” states the city’s new ruling (pdf).
“This includes not only charges paid for the privilege to witness, view or participate in amusements in person but also charges paid for the privilege to witness, view or participate in amusements that are delivered electronically.” Read the rest of this entry »
— Victor Davis Hanson (@VDHanson) May 7, 2015
Who will police the tax police?
Why did Rome and Byzantium fall apart after centuries of success? What causes civilizations to collapse, from a dysfunctional fourth-century-B.C. Athens to contemporary bankrupt Greece?
The answer is usually not enemies at the gates, but the pathologies inside them.
What ruins societies is well known: too much consumption and not enough production, a debased currency, and endemic corruption.
Americans currently deal with all those symptoms. But two more fundamental causes for decline are even more frightening: an unwillingness to pay taxes and the end of the rule of law.
Al Sharpton is again prominently in the news, blaming various groups for the Baltimore unrest. But Sharpton currently owes the U.S. government more than $3 million in back taxes, according to reports. His excuses have ranged from insufficient funds to pay them to sloppy record-keeping and mysterious fires.
Sharpton, a frequent White House guest, apparently assumes that his community-organizing provides him political exemption from federal tax law. He seems to be right, at least as long as the current administration is in power.
The Clinton Foundation is expected to refile its tax returns for 2010, 2011, and 2012 after failing to separate government grants from donations. If an average citizen tried to amend his taxes for such huge sums and from that long ago, he would probably be under indictment.
News reports of undocumented donations from foreign governments caught the foundation underreporting its income. The well-connected Clinton clan apparently had assumed that their political status ensured them immunity. Read the rest of this entry »
In making the announcement, the White House also said it will “keep an expanded tuition tax credit at the center of his college access plan.”
The decision came just hours after Speaker John A. Boehner of Ohio demanded that the proposal be withdrawn from the president’s budget, due out Monday, “for the sake of middle-class families.” But the call for the White House to relent also came from top Democrats, including Representatives Nancy Pelosi of California, the minority leader, and Chris Van Hollen of Maryland, the ranking member of the Budget Committee.
While the WH sought to portray the initial plan as taxing the wealthy to benefit the middle class, analysis indicated that a large number people who are far from “wealthy” were benefiting from the ability to put money away for their children’s higher education without fear of it being taxed. Read the rest of this entry »
Silence of the Dogs
Sherlock Holmes famously solved a mystery by noticing the dog that didn’t bark in the night. Dogs that are not barking at night — nor in prime time — provide some useful clues to understanding the significance of this year’s election.
Contrary to the disparagement of some liberal pundits, this election is not about nothing. But is not about certain, specific things they might like to hear.
President Obama recently said that Democrats in serious Senate and House contests this year back “every one” of his programs. But you hear very little about those programs in their ads.
Patient Protection and Affordable Care Act
Higher Tax Rates on High Earners
The stimulus package, for example, is not mentioned much. Nor are proposals by serious Democrats like Clinton administration veteran William Galston for a national infrastructure bank. These dogs aren’t barking.
“As Holmes might deduce, the solution to the clue of the non-barking Democratic dogs is that most voters lack faith in government to solve problems, to make their lives better or even to perform with minimal competence.”
The reasons are obvious. The stimulus didn’t stimulate the economy the way the Reagan tax cuts did in the 1980s. As for infrastructure, as Obama sheepishly admitted, there is no such thing — given environmental reviews and bureaucratic torpor—as a shovel-ready project. Read the rest of this entry »
So far this year, the federal government brought in more money than ever, but even at record tax receipts, the government is far outspending its intake.
During these first 11 months of fiscal year 2014, the feds brought in $2.66 trillion in tax receipts. Despite this, the federal government is still running a $598 billion deficit, according to the latest Monthly Treasury Statement…(more)
WashingtonExaminer reports: Officials of the Export-Import Bank of the United States blew the agency’s travel budget by millions of dollars after taking 400 first-class flights over the last three years, according to records obtained under the Freedom of Information Act.
“Conservatives in Congress have long sought to defund Ex-Im as a corporate welfare program, while President Obama has defended it as a job creator.”
“In fiscal 2012, Ex-Im budgeted $1.7 million for travel expenses but spent $2.7 million. In fiscal 2013, Ex-Im budgeted $1.2 million but spent $2.2 million. And in this fiscal year, Ex-Im budgeted $1.3 million but expects its end-of-year spending to total $2.3 million.”
Last month, the Hill reported that “officials with the Export-Import Bank have exceeded their travel budget over the last three years by $3 million, according to disclosures filed with the House Financial Services Committee.
“A NASA employee flew from Frankfurt to Cologne, Germany, for $6,851, a flight that cost almost 52 times more than the $133 coach fare.”
But documents newly obtained by the Washington Examiner show that it was not just the frequency of the travel that caused Ex-Im officials to exceed their budget, but the way they chose to travel. Read the rest of this entry »