Naked Capitalism has more about Why Strike Debt’s Rolling Jubilee Puts Borrowers at Risk. Serious tax stuff. Not only isn’t this simple, but it actually does seem to carry real risks all around.
Category Archives: Law: Tax
I wrote previously of Occupy Wall Street’s plan to buy and forgive distressed consumer debt. A commentator on that post noted that it created a tax issue, and a colleague agreed it was a risk. A fuller treatment of the problem, and some instant revisionist thinking about the ‘Jubilee’ program in general is over at the excellent Naked Capitalism blog, Occupy Wall Street’s Debt Jubilee: A Gimmick with Tax Risk.
Like most of the things they run, well worth a read.
Today’s NYT article on how the Estée Lauder heir Ronald S. Lauder uses tax shelters to protect his billions reminded me of An Investment Manager's View on the Top 1%:
A highly complex set of laws and exemptions from laws and taxes has been put in place by those in the uppermost reaches of the U.S. financial system. It allows them to protect and increase their wealth and significantly affect the U.S. political and legislative processes. They have real power and real wealth. Ordinary citizens in the bottom 99.9% are largely not aware of these systems, do not understand how they work, are unlikely to participate in them, and have little likelihood of entering the top 0.5%, much less the top 0.1%. Moreover, those at the very top have no incentive whatsoever for revealing or changing the rules. I am not optimistic.
(Incidentally, there’s some other interesting stuff there, including a rich-person’s view of why the 99.5% and up are so different from the bottom half of the top 1% (ie. 99.0 – 99.5). That group is mostly very successful professionals who find their retirement prospects to be better than most, but still less certain than they would like. The top 0.5%, on the other hand, the writer says, are or were in finance.)
While it would be good to do some serious reform of the tax system, the vested interests are in fact all pushing hard the other way (e.g. the quiet concerted action to destroy the inheritance tax).
Perhaps, therefore, as a first step we could require that anyone who uses a tax credit or deduction that saves them more than, say, $250,000 in tax liability, must disclose what tax credit/deduction they used, how much they saved and have it recorded along with their names on a registry published online, in a nice searchable format, by the IRS. There is a long tradition of having tax returns private, but perhaps for this we should change it: if you want to keep your privacy, don’t take the tax shelter. Note that my proposal does not require that the taxpayer disclose either income or total tax liability, just the size of the savings and its source.
As I’ve said before, I’m not at all a tax lawyer. I invite people who know more about tax law to explain why this idea is unworkable, pointless, or fattening.
In Why The Tax Code Encourages American Airlines to Award Bonus Miles for Checking Bags in Boston View from the Wing explains how the tax code encourages airlines to add fees to base ticket prices rather than bundle prices like cable TV companies do.
I guess this means we have to start taxing baggage checking fees?
[Edited shortly after original posting for clarity.]
The NYT reports that the admonistration is manipulating the IRS for political gain: I.R.S. Going Slow Before Election,
The commissioner of internal revenue has ordered his agency to delay collecting back taxes from Hurricane Katrina victims until after the Nov. 7 elections and the holiday season, saying he did so in part to avoid negative publicity.
The commissioner, Mark W. Everson, who has close ties to the White House, said in an interview that postponing collections until after the midterm elections, along with postponing notices to people who failed to file tax returns, was a routine effort to avoid casting the Internal Revenue Service in a bad light.
Except that it isn’t routine at all: “four former I.R.S. commissioners, who served under presidents of both parties, said that doing so because of an election was improper and indefensible.”
Kudos to David Cay Johnston for doing a little fact checking.
Nixon politicized the IRS. Are there any bad habits of Nixon’s left that we haven’t seen in this lot? (Not to mention all their newly-minted bad habits.)
There is a cancer on the Presidency. And this is one of its many symptoms.
Here's a taste:
Why were charities Mr. Abramoff’s go-to vehicles as he sought to transfer funds covertly through Washington’s corridors of power? The primary attraction was their opacity: their ability to raise money in any amount, without limit, from any individual or entity anywhere in the world without disclosing the contributors to anyone.
This makes good sense for honest charities helping people in need. But Mr. Abramoff took advantage of this situation to circumvent campaign finance laws and Congressional ethics rules and provide illicit benefits to powerful politicians.
Gee. Think there just might be a connection between this story in today’s paper,
Tax Cheats Called Out of Control: So many superrich Americans evade taxes using offshore accounts that law enforcement cannot control the growing misconduct, according to a Senate report that provides the most detailed look ever at high-level tax schemes.
and last week’s story,
I.R.S. to Cut Tax AuditorsThe federal government is moving to eliminate the jobs of nearly half of the lawyers at the Internal Revenue Service who audit tax returns of some of the wealthiest Americans, specifically those who are subject to gift and estate taxes when they transfer parts of their fortunes to their children and others.
Both stories are by David Cay Johnston, but he’s too coy to remind us of the first when writing the second…