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Archive for the ‘taxes’ Category

A tax reform to support

Posted by Charles II on November 22, 2012

One of the ways that the very wealthy avoid taxes is by receiving their income from tax free investments such as Treasuries. Treasuries yield much less than other investments in ordinary times, and the nation as a whole benefits from low interest rates on US debt, so it seems fair.

But what about Munis (municipal bonds)? Lowering those interest rates benefit only a locality, while often the state or even the federal government is implicitly backstopping them, reducing the risk to the bond purchaser. Why should they enjoy a federal tax break?

Capping Muni tax exemptions is one of the reforms being discussed in Washington. Patti Domm, CNBC:

While Congress isn’t yet expected to try to change muni bonds’ tax-free status, industry experts think lawmakers could take a first step by limiting how much income investors could deduct under the popular tax break, which has been around since 1913.

Alexandra Lebenthal, CEO of Lebenthal and Co, said … a possible outcome is that individuals will be restricted on how much muni income they can deduct.

“Basically, you would be limited in terms of the deductions you can take and in terms of your tax exempt income to at least that earlier 28 percent bracket. In the past you could have obviously had so much tax exempt income that you were in no tax bracket or in a lower tax bracket than 28. That’s what people should be thinking about now is that 28,” said Lebenthal.

The argument will be made that rebuilding after hurricane Sandy will require Muni issuance and so Congress will cave in to lobbyists doing special pleading for municipal bonds on the grounds that they need to rebuild. I think what this really means is that we ought to recognize that the federal role in insuring against disasters needs to be elevated and we should stop pretending that states can handle the large financial demands levied by a disaster of the magnitude of Katrina or Sandy.

Posted in taxes | Comments Off on A tax reform to support

GOP to reality: “Shut up!”

Posted by Charles II on November 3, 2012

Via Rachel Maddow, the GOP has suppressed a Congressional Research Service Report saying that tax cuts do not increase economic growth. Inconvenient, that. Also inconvenient is the fact that Maddow posted a link to the report on her blog, going here:

The results of the analysis suggest that changes over the past 65 years in the top marginal tax rate and the top capital gains tax rate do not appear correlated with economic growth. The reduction in the top tax rates appears to be uncorrelated with saving, investment, and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie.

However, the top tax rate reductions appear to be associated with the increasing concentration of
income at the top of the income distribution.

I can see why the Republicans are shouting SHUTUPSHUTUPSHUTUP!

Posted in anti-truth, economy, taxes, The Plunderbund | 3 Comments »

Multiple choice Mitt gets every option wrong on his tax plan

Posted by Charles II on October 17, 2012

Romney has proposed a 20% rate cut and limiting deductions to $17,000 or $25,000 or $50,000, depending how generous he’s being with imaginary money that day. So, would such a tax reform be revenue neutral, or even raise revenue?

Tax Policy Center:

Eliminating all itemized deductions would yield about $2 trillion of additional revenue over ten years if we cut all rates by 20 percent and eliminate the AMT. Capping deductions would generate less additional revenue, and the higher the cap, the smaller the gain. Limiting deductions to $17,000 would increase revenues by nearly $1.7 trillion over ten years. A $25,000 cap would yield roughly $1.3 trillion and a $50,000 cap would raise only about $760 billion.

Without more specifics, we can’t say how much revenue such limits would actually raise. But these new estimates suggest that Romney will need to do much more than capping itemized deductions to pay for the roughly $5 trillion in rate cuts and other tax benefits he has proposed.

So, even at its best, Romney is talking about cutting revenue by about $300B per year. Like, say, cut Medicare benefits by nearly half. That would do it.

Posted in liars, Mitt Romney, taxes | 2 Comments »

Fiscal cliff: it’s a big deal

Posted by Charles II on October 5, 2012

$2000 on a typical family

Very bad for low income families, and crushing for the economy.

Posted in economy, taxes | 1 Comment »

Romney campaign FBAR

Posted by Charles II on August 15, 2012

Zach Carter and Ryan Grim, HuffPo

WASHINGTON — Mitt Romney has not released his full tax records from 2010, including key documentation connected to his Swiss bank account.

people who own foreign bank accounts are required to file a separate document with the IRS that provides additional details on such overseas bank holdings, and Romney has not released that form to the public.

Tax experts say it is almost certain that Romney did file the form, known as a Report on Foreign Bank and Financial Accounts, or “FBAR” in accountant slang. The penalty for not filing an FBAR can be severe, and the IRS would have expected to receive the form since Romney listed the Swiss bank account on his tax return.

Brad Malt, the manager of Ann Romney’s blind trust, told reporters the Romneys had an account with Swiss bank UBS worth about $3 million, which generated roughly $1,700 in interest [the sum is so small as to be bizarre in itself].

Other accounts that simply executed transactions and forwarded the money along to U.S. accounts would not have to be reported on the tax return. They would, however, have to be listed on the FBAR form Romney has not released to the public.

That Romney’s disclosed account was with Swiss bank UBS has also raised eyebrows. In 2008, a whistleblower at the bank informed the IRS of thousands of accounts being operated by American clients to avoid paying U.S. taxes.

Posted in (Rich) Taxpayers League, 2012, Mitt Romney, taxes | 4 Comments »

Flying the Jolly Roger: wealthy stash trillions in “pirate banks”

Posted by Charles II on July 23, 2012

Via Robert Frank, CNBC, the Tax Justice Network issues a report that alleges that trillions of dollars of the world economy is beyond the supervision of any nation:

A significant fraction of global private financial wealth — by our estimates, at least $21 to $32 trillion as of 2010 — has been invested virtually tax-free through the world’s still expanding black hole of more than 80 “offshore” secrecy jurisdictions. We believe this range to be conservative, for reasons discussed below.

7. The active role of private banks. Our analysis refocuses attention on the critical, often unsavory role that global private banks play. A detailed analysis of the top 50 international private banks reveals that at the end of 2010 these 50 collectively managed more than $12.1 trillion in cross-border invested assets from private clients, including via trusts and foundations.

9. New Revenue Sources for Global Needs. Finally, if we could figure out how to tax all this offshore wealth without killing the proverbial Golden Goose, or at least entice its owners to reinvest it back home, this sector of the global underground is also easily large enough to make a significant contribution to tax justice, investment, and paying the costs of global problems like climate change.

the term “offshore” refers not so much to the actual physical location of private assets or liabilities, but to nominal, hyper-portable, multi-jurisdictional, often quite temporary locations of networks of legal and quasi-legal entities and arrangements that manage and control private wealth — always in the interests of those who manage it, supposedly in the interests of its beneficial owners, and often in indifference or outright defiance of the interests and laws of multiple nation states.

In short, this comparative handful of major private banking institutions now accounts for 62 to 74 percent of all offshore private wealth. Many readers will recognize the names of the dominant players, as they have done for decades: UBS, Credit Suisse, Citigroup/SSB/Morgan Stanley, Deutsche Bank, BankAmerica/Merrill Lynch, JPMorganChase, BNP Paribas, HSBC, Pictet & Cie, Goldman Sachs, ABN Amro, Barclays, Credit Agricole, Julius Baer, Societe General, and Lombard Odier.

I can’t vouch for the methodology (the report’s writing is uneven), but it’s plausible. What it means exactly is also unclear. There’s nothing intrinsically illegal about using foreign firm to do investments. But it raises a red flag regarding tax evasion, especially the income and estate taxes. Certainly investigations of the Swiss tax havens demonstrated massive tax evasion, with the cost to the US Treasury estimated by the Senate at $100B annually, according to Laura Szarmach). The Tax Justice Network has estimated that it’s more like $1T. Whatever it is, it’s enough that the USG ought to be enforcing the law.

Crossposted to DailyKos.

Posted in taxes | 1 Comment »

In the “conservatism is based on stupidity and lies” category: ITEP shows that low taxes are bad for growth

Posted by Charles II on June 25, 2012

Institute on Taxation and Economic Policy:

One of the most frequently repeated talking points used by lawmakers seeking to reduce or eliminate income and estate taxes is that doing so will usher in an economic boom. Recently a number of observers, led by supply-side economist Arthur Laffer, have sought to bolster this argument by claiming that states lacking an income tax or estate taxes have economies that far outperform those in the states with the highest top tax rates.

Three new reports from Institute on Taxation and Economic Policy show that the truth is exactly the opposite.

Specifically:

residents of “high rate” income tax states are actually experiencing economic conditions at least as good, if not better, than those living in states lacking a personal income tax. As Figure 1 shows, the nine “high rate” states identified by Laffer have actually seen more economic growth per capita over the last decade than the nine states that fail to levy a broad-based personal income tax. Moreover, while the median family’s income, adjusted for inflation, has declined in most states over the last decade, those declines have been considerably smaller in “high rate” states than in those states lacking an income tax entirely. Finally, the average unemployment rate between 2001 and
2010 has been essentially identical across both types of states.

How did an economist come to exactly the wrong conclusion? By combining–in a study of state tax rates– federal and state taxes to muddy the waters. Also, by choosing as the time frame for his study the period when growth was picking up due to the real estate boom (which, of course, was greatest in low/no tax states like Florida and Nevada). In other words, by sculpting his data and methods to fit his desired conclusion. In layman’s terms, by lying.

Laffer also claimed that Tennessee’s estate tax cost 220,000 jobs. Unfortunately for him, he produced zero credible evidence for this assertion. But he did make a testable prediction: that people are moving from Tennessee to Florida to escape the estate tax. The data do not show this.

God help us, people like Laffer are in charge. They are completely corrupt, blind, drunk on ideology.

Posted in anti-truth, taxes, Uncategorized | 4 Comments »

CTJ digest

Posted by Charles II on June 22, 2012

States are underinvesting:

A new report from the National Governors Association (NGA) and National Association of State Budget Officers (NASBO) explains that an uptick in revenues from modest economic growth is not enough to undo the damage from years of cuts to state governments during the recent economic downturn when revenues were underperforming. According to NASBO, while state revenues are returning to pre-recession levels, spending is not, largely because lawmakers are being conservative – replenishing rainy day funds, for example – rather than restoring revenues to agencies that have been under-serving citizens for years.

with the cost of education and health care (the two biggest chunks of total state spending) growing faster than the economy and taking an ever growing bite out of budgets, states are facing a genuine crisis.

state governments can and should make systemic changes such as expanding the state sales tax base to include services, eliminating tax loopholes (like those for capital gains) and ending corporate tax breaks that allow corporations to dodge taxes with accounting tricks.

Republican governors actually demonstrate leadership:

Iowa Governor Terry Branstad recently joined with a dozen other Republican governors in calling for Congress to pass a measure that would allow states to require the largest online retailers to collect sales taxes. In pushing for the measure, however, Republican governors are finding that their biggest roadblock is opposition from their own party in Congress, who perceive the measure as being a “tax increase.”

The growth in online shopping is staggering and it is costing states tens of millions a year in lost sales tax revenues.

Give ’em credit. Sales taxes may be regressive, but the only people benefiting from the sales tax exemption for online sales are either shareholders of online retailers or high end customers who do a lot of their shopping online.

Comparison of Obama vs. GOP on tax policy.

Posted in taxes | Comments Off on CTJ digest

Starving at the corporate trough

Posted by Charles II on March 20, 2012

Citizens for Tax Justice:

The latest monthly statement by the Treasury Department contains a startling revelation: the amount that Treasury expects to collect in corporate taxes in 2012 has been slashed by more than 28 percent, from $333 down to $237 billion.

With such a dramatic revision, one might expect that lagging corporate profits or a sudden economic disruption is to blame. In reality however, corporate tax revenue continues to limp in spite of the fact that corporate profits have rebounded to record highs.

If corporate profits are not behind this $96 billion drop in expected corporate tax revenue, then what is?

The Wall Street Journal’s David Reilly suspects that there are two critical drivers: the offshoring of more profits through overseas entities by multi-national corporations; and the continuation of extravagant corporate tax breaks for accelerated depreciation of assets like equipment. Last month, the Congressional Budget Office (CBO) came to the same basic conclusion….

Corporations use the facilities of the United States of America, ranging from its courts to its highways to its Medicaid system to its schools to its university research labs. It has stopped paying for the privilege. This is wrong.

Posted in 'starving the beast', corporatists, taxes, The Plunderbund | Comments Off on Starving at the corporate trough

One of the higher mysteries

Posted by Charles II on March 13, 2012

Duff McDonald, Fortune (via Ritholtz):

To readers of the business press, the story is a familiar one: fifteen months ago, superstar analyst Meredith Whitney rocked the world of municipal finance with a December 2010 prediction on 60 Minutes that a wave of municipal debt defaults was headed our way. Her forecast was quite specific: “You could see fifty to a hundred sizable defaults,” she told her interviewer, correspondent Steve Kroft. “This will amount to hundreds of billions of dollars’ worth of defaults.”

If you followed Whitney’s advice and didn’t buy munis (especially after her prediction sent the market crashing), you missed one of the better investments of many a year.

Or maybe not. The way that municipalities avoided defaulting was by putting off vital infrastructure and reducing critical services. When the streets are awash in sewage, or rats make the tony side of the city into their playgrounds, maybe people will discover that they actually like paying taxes.

Posted in eedjits, financial crisis, taxes | Comments Off on One of the higher mysteries

 
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