Free Republic

"The power to tax is the power to destroy." - Chief Justice John Marshall The US tax code is a marvelous and impressive intellectual structure. As an engineer I took a business class in taxation for corporations while getting my MBA. Engineering is the art of extracting utility from first principles of science and combining it with hard-won practical experience. I found, to my frustration, that taxation is not like that. Taxes are whatever Congress and the IRS say they are, logic or principle be damned. Tax codes are often written to support national goals, above and beyond mere revenue...

Note: The following text is a quote: THE BRIEFING ROOM • THE BLOG WEDNESDAY, SEPTEMBER 30TH, 2009 AT 5:59 AM Streaming at 12:30: PERAB Meeting on Tax Reform Posted by Austan Goolsbee Today, the tax subgroup of the President's Economic Recovery Advisory Board (PERAB) will hold a meeting to gather ideas on tax reform. It will be the first of several such meetings. The meeting will center on tax simplification and will be live streamed at www.whitehouse.gov/live. I wanted to take the opportunity to explain why we assembled this subgroup, what areas the PERAB tax reform subgroup will focus on...

Not even three months into his presidency, Barack Obama already has developed a nasty habit of making grandiose promises and proposals, doing precisely the opposite of what he says and celebrating his hypocrisy and insincerity as a policy triumph. Keep lobbyists out his administration? That lasted a couple of days. Lead a new era of fiscal responsibility? His agenda will run up budget deficits that George W. Bush couldn't have dreamed of. No tax increases of any kind for households earning less than $250,000 per year? He signed off on a huge cigarette tax hike that will pummel the poor....

Mending America’s broken tax code Published: April 13 2009 19:16 | Last updated: April 13 2009 19:16 The approach of tax-filing day on April 15 invariably lowers spirits in the United States. Many taxpayers expect a refund when they have finished their calculations, but even this does little to improve the mood. The system’s surreal complexity is enough to defeat candidates for senior positions in the Treasury, let alone Joe the Plumber. Struggling with it arouses the suspicion that the income tax code is chiefly an instrument of political repression – a reminder of who is in charge. Ceaseless meddling...

MORE than anything else, business needs a predictable environment if it is to create jobs. Changes in the regulatory environment and the tax code make it almost impossible for businesses to make investments. Yet President Obama seems to ignore this reality. Each day's news brings another bold and far-reaching proposal to change the fundamentals of the US economy. And each time he indulges his personal ideology with such a pronouncement, businesses all over the world cut back on their planned investment until the dust settles. Most incredible was the fact that he chose the middle of a deep recession to...

WASHINGTON (AFP) — The White House Wednesday announced a new task force headed by former Federal Reserve chairman Paul Volcker to reform the Byzantine US tax code in the hope of recouping billions in lost revenue. White House budget chief Peter Orszag said Volcker and four other top economists will report their recommendations back to President Barack Obama by December 4, and their review will cover three main areas. "One is tax simplification, the second is closing tax loopholes and reducing tax evasion, and the third is reducing corporate welfare," the director of the Office of Management and Budget told...

“Let's take a look at the top 1 percent, the truly "evil" in the Obama-Pelosi-Reid worldview. According to the IRS, they earn about 20 percent of the income in America, but pay 40 percent of the income tax. The top 5 percent pay 60 percent of the income tax. The top 10 percent pay 70 percent of the income tax.”

For Dale Allee, a second-generation cattle rancher in southern Colorado, the idiom that nothing is certain but death and taxes is now a reality. "I just turned 80 last week. You know what that means? That means I'm not going to be around here very long, and somebody's going to have to pay those taxes," said Allee, who fears federal estate taxes will thwart his plans to pass his 4,200-acre Pueblo County ranch to his children. Land-rich but cash poor, Western ranchers are lobbying Washington to exempt them from the estate tax, which can force heirs to sell their inheritance...

Think that class warfare and mindless anti-business hatred don’t have real-life consequences? Think again: ------------------------------------------------------------------------------ Much political hay has been made in Congress about “unpatriotic” corporations that move operations abroad. Weatherford International is the latest, taking its headquarters from Houston to Switzerland. The oil services company said that it wants to be closer to its markets. But what it really meant was that it no longer saw the future in the U.S. In a political atmosphere of blaming corporations, it’s no wonder. Halliburton fled to Dubai in 2007. Tyco International, Foster Wheeler and Transocean International all went to Switzerland. As...

Lou Dobbs Tonight -- CNN -- November 14 "They're using identities of American citizens and the IRS is allowing it to happen." Casey Wian: More than 1,300 illegal aliens near Greeley, Colorado, have been using either stolen or phony Social Security numbers to receive at least $2.5 million in tax refunds, according to local law enforcement officials. (unbelievalbe video clip) Chief Jerry Garner, Greeley PD: These folks that are here illegally are victimizing American citizens by stealing their identity. Very, very often they are victimizing American citizens who are Latino. John Cooke, Weld County Sheriff: They're using identities of American...

Housing Numbers Were Skewed, Lehman Says (RTTNews) - Housing starts were biased higher in June due to a change in the building code in New York City, observe the analysts at Lehman Brothers. Starts jumped 9.1% to 1.066 million in June as multi-family construction in the Northeast surged 102.6%. Effective July 1, the 421-a tax incentive program for multi-family construction in NYC will expire, encouraging builders to rush to start construction. This also pushed up permits for multi-family construction in the Northeast, which jumped 73%, as developers rushed to lay foundation after receiving permits. We expect a reversal in multi-family...

SACRAMENTO -- One severely broken part of California's state government is the tax code. It's antiquated and unreliable. Government financing is too heavily dependent on the rich, who have good and bad years, causing roller-coaster tax trauma in the Capitol. And there isn't enough help from the creaky old sales tax. The volatility of the tax system keeps getting worse, making it increasingly difficult for policymakers to plan ahead. New Assembly Speaker Karen Bass (D-Los Angeles) has taken up the cause and is bent on creating an independent blue-ribbon commission to overhaul the tax code. "The economic crisis is national,...

Incoming state Assembly Speaker Karen Bass on Tuesday said one way to solve California's continual budget mess is to revamp the state's tax code, possibly raising income taxes on the wealthy, levying sales taxes on services and closing tax loopholes. In an interview with The Associated Press, the Los Angeles Democrat said she wants a bipartisan panel to examine the code and recommend ways to change it. "The state of California is in a crisis," Bass said. "I want to set up a commission outside of the Legislature that will look at more long-term solutions and evaluate whether the tax...

Tax Policy: The "rebate" side of the economic stimulus package would split the nation about equally between payers and takers. Will we now get a taste of class warfare to come?Leona Helmsley once notoriously proclaimed that "only the little people pay taxes." Turns out she was wrong. Not only did the billionaire end up going to prison for federal tax evasion, she didn't even get the trend right. When it comes to federal income taxes, Leona's "little people" have been migrating off the rolls in large numbers for a couple of decades. Now it's the "big" (i.e., rich) people who...

WASHINGTON -- The IRS is making a big push this year to make sure certain taxpayers know they can take the earned income tax credit, a benefit for lower income workers and working families that goes unclaimed by up to 25 percent of those who are eligible.The EITC is intended to offset a portion of Social Security and Medicare taxes, thus boosting take-home income in low-wage jobs and providing an incentive to work. It's a "refundable" credit, meaning that after it is figured against your tax liability, the IRS sends you any money you're due.For 2007 tax returns, the maximum...

The Alternative Minimum Tax may be the all-time winner of Good Ideas Gone Bad award. Written to make sure tax-dodgers didn't pile up deductions to escape the IRS, it's now threatening to sweep in 25 million taxpayers, up from four million last year. This headache of a tax grew in scope thanks to inflation and rising incomes as lower-earners graduated into a higher tier. But it's also provided a stage for Congress to display a knack for feuding instead of fixing. The result could be a longer tax season, ample confusion and deepening voter resentment. Since it was passed in...

Republicans have rejected a request by Majority Leader Harry Reid (D-Nev.) that the Senate approve by unanimous consent a one-year patch to the Alternative Minimum Tax (AMT) with no accompanying tax increases. Democrats quickly made political hay of the GOP move, which contradicted earlier Republican calls for extending tax relief with no offsets. Sen. Max Baucus (D-Mont.) blamed Republicans for obstructing tax relief, and called Reid’s request a “huge concession” on the part of Democrats. “If the AMT hits more taxpayers next year, it’s because of the Republican caucus. That’s clear,” said Baucus, who chairs the Senate’s tax-writing committee. Sen....

Washington – The Club for Growth praised Senator Fred Thompson for the release of his pro-growth tax reform plan this morning on Fox News Sunday with Chris Wallace. The seven-part plan is the most comprehensive tax reform plan offered to date by a presidential candidate. The plan will: Permanently extend the 2001 and 2003 tax cuts Permanently repeal the Death Tax Repeal the Alternative Minimum Tax Reduce the corporate tax rate to no more than 27% Permanently extend small business expensing Update and simplify depreciation schedules Expand taxpayer choice Most commendable is Thompson’s plan to expand taxpayer choice by adopting...

One advantage of having a subscription to The Atlantic is finding out what the Democrats propose to do next. Clive Crook in under the rubric of "The Agenda" wrote a recent article on homeownership called Housebound. After agreeing with some benefits of homeownership he then lists the reasons why this is a bad idea. Among his complaints are: Homeowners are less mobile. Homeowners act as cartels interfere with zoning changes, suppress new developments, etc. And, not the least is that they have an unfair advantage in mortage-interest deductions. The last of these, interest deduction for mortgage interest, seems to be...

Senior Democrat proposes U.S. tax overhaul Thu Oct 25, 2007 9:51am EDT WASHINGTON (Reuters) - The top U.S. congressional tax writer proposed sweeping tax legislation on Thursday that would repeal a tax for the rich that has been hitting more middle-class Americans and replace it with a new tax on high-income earners. The $1 trillion bill proposed by Rep. Charles Rangel, chairman of the Ways and Means Committee in the U.S. House of Representatives, would also reduce taxes for millions of middle- and low-income taxpayers. Private equity fund managers who pay a 15 percent capital gains rate on earnings from...

When 2008 rolls around, investors who anticipated a capital gains tax exemption on the sale of their investment real estate may run across a kink in their plans. HR 3648, a bill working its way through Congress, would alter the requirements for exemption on primary residences so that many investment properties will no longer qualify, leaving investors to pay a capital gains tax from which they would previously have been exempt.

Folks who move into their second homes and later sell won't get as big a tax break as they may be expecting, thanks to legislation that Congress will pass this fall. A provision in a pending mortgage relief bill blocks homeowners from excluding all of their gain on a second home, even if the home is sold more than two years after it becomes their primary residence. Here's how the change will work: Currently, you can sell your primary residence and exclude up to $500,000 of gain ($250,000 for singles) if you lived there for two out of the past...

The Tax Foundation has published Summary of Latest Federal Individual Income Tax Data: New data released by the IRS today offers interesting insights into the distributional spread of the federal income tax burden, new analysis by the Tax Foundation shows. The new data shows that the top-earning 25% of taxpayers (AGI over $62,068) earned 67.5% of the nation's income, but they paid more than four out of every five dollars collected by the federal income tax (86%). The top 1% of taxpayers (AGI over $364,657) earned approximately 21.2% of the nation's income (as defined by AGI), yet paid 39.4% of...

<p>Manchester – Calls to abolish the Internal Revenue Service and repeal the Constitutional amendment that established the federal income tax drew loud applause yesterday for Republican presidential candidate Ron Paul.</p> <p>The Texas Congressman drew an eclectic mix of more than 500 supporters -- young and old, Libertarians and anti-war Democrats, independents and conservative Republicans -- who cheered his message of limited government, low taxes, free markets, bringing the troops home from Iraq, and returning to a monetary policy based on the gold standard.</p>

John Dingell proposes not only a huge gas tax but also ENDING THE HOME MORTGAGE DEDUCTION for “large” homes–all this to fight global warming change. (Pause. Laugh. Roll eyes.) Now, Dingell’s not serious about any of this–he said as much over the summer on the Sunday talk shows. He says he just wants to get the discussion going–and, if my memory is correct, he also said that he wants to show others that it’s impossible to pass this kind of stuff. But just now he’s acting serious about it. As a conservative/libertarian, this is wonderful news to me. There is...

A Tax Break for Driving to Work? The Fair Tax Will Fix This By Herman Cain August 20, 2007 There is a little-known deduction in the tax code that 400,000 people know about, and by which they avoid $150 million dollars in taxes each year. The issue is not that most of us do not know about this little sneak-a-tax, or even the amount that the rest of us are picking up through a higher federal deficit. The issue is that this is another example of how the tax code is used to encourage a desired behavior. The deduction encourages...

People often laugh when I say on the campaign trail that the tax code should be taken behind the barn and killed with a dull axe. In fact, one man in Iowa was so excited by this proposal that he presented me with an axe before I finished my remarks (fittingly, I was speaking in a barn). There's a reason people welcome my proposal to kill the tax code -- it's a monster of inscrutable complexity, and I say that as a former lawyer who took every tax law class I could. Today's tax code -- which is sixteen times...

NEW YORK, June 26 -- Warren E. Buffett was his usual folksy self Tuesday night at a fundraiser for Sen. Hillary Rodham Clinton (D-N.Y.) as he slammed a system that allows the very rich to pay taxes at a lower rate than the middle class. Buffett cited himself, the third-richest person in the world, as an example. Last year, Buffett said, he was taxed at 17.7 percent on his taxable income of more than $46 million. His receptionist was taxed at about 30 percent.

A modest proposal: Let’s dump the entire tax code. Let’s gather all the tax documents we can find, put them in a big heap, and have a nationally televised Tax Code Burning Day. If the tax lobbies protest, toss them on the fire, too. Good riddance. Tax Code Burning Day is possibly a bit extreme, but the idea of chucking our income tax system has been around for quite a while. When I suggested 10 years ago that we were all suffering from TDB - Tax Debate Burnout - 5,000 readers agreed. They sent in letters and postcards in support...

While Americans struggle to comply with one of the world’s most complicated tax codes, it’s worth noting that about one-dozen nations have adopted simple and fair flat-tax systems. Hong Kong has had a flat tax for nearly 60 years, and has gone from being one of the poorest places on the planet to a first-class economic powerhouse. Even the rulers in Beijing who now control the former British colony are smart enough to realize that it would be foolish to change course and kill the proverbial goose. Too bad American politicians aren't as economically astute as Chinese communists. Congress occasionally...

Behold the simple virtues of a fair national sales tax : Tax code is a disgrace that needs an overhaul By LEO LINBECK WITH millions of Americans once again struggling to complete their federal income taxes, it is a good time to reflect on the profoundly dysfunctional and highly punitive federal tax code that only gets more complicated year after year. ADVERTISEMENT The patchwork quilt of tax loopholes, exclusions, adjustments and various forms and schedules that we all struggle to understand is a reflection of the wholesale auctioning off of the tax code over the last several decades into the...

WASHINGTON (AP) -- Dissatisfaction remains high after numerous changes in tax law since the late 1980s. The Reagan administration led a tax overhaul two decades ago that significantly lowered tax rates and eliminated or reduced several deductions. The first President Bush abandoned his "read my lips, no new taxes pledge" in a 1990 budget deal that raised taxes. The Clinton administration won passage in 1993 of a deficit-reduction measure that blended tax increases, budget cuts and rebates for the working poor. And the second Bush administration pushed successfully for tax cuts that lowered the top income tax rate to 35...

On Tax Day, $125 billion in waste By Matt Schumsky April 14, 2006 Another dreaded April 15th – Tax Day – is nearly upon us. Our annual tax ritual requires over 26 hours from the average person filing a standard 1040, and over 60 percent of Americans seek professional help. The reason: The U.S. tax code now exceeds 60,000 pages, and those pages often give conflicting advice. No wonder that in 1976, presidental candidate Jimmy Carter declared, “Our income tax system is a disgrace to the human race.” In many ways, things are worse today than they were then. Our...

WASHINGTON - Almost as certain as death and taxes is the public's feeling that the U.S. income tax system is not fair. An Ipsos Poll released this week found almost six of 10 people, 58 percent, say the system is unjust, a number that is virtually unchanged from two decades ago. ADVERTISEMENT People think the middle class, the self-employed and small businesses pay too much in taxes, the poll found. And they think those with high incomes and big businesses don't pay enough. The survey was conducted in the days before the mid-April deadline for filing income tax returns. Dissatisfaction...

Americans should be concerned about the competitive edge that our tax system gives foreign manufacturers. We should no longer allow the income tax to make foreign-produced goods more competitive than our own. Replacing the income tax with the Fair Tax, a highly progressive federal consumption tax, will end this practice and make American products 20 percent to 30 percent more competitive, both at home and abroad. What a break for U.S. producers and consumers as well! Getting rid of the income tax will dramatically lower production costs in this country. And competition will ensure that these cost savings will flow...

Recently the Internal Revenue Service released a report showing that nearly three quarters of 82 tax-exempt groups investigated during the 2004 elections took part in prohibited political activity. But now, churches and nonprofit organizations have a new resource to help keep them out of trouble with the IRS. The IRS says several of the organizations and churches will probably lose their tax-exempt status, a fact that will very likely affect future contributions to these groups. In an effort to help churches, ministries, and other faith-based institutions avoid such errors, The Rutherford Institute, a Virginia-based civil liberties organization, has issued guidelines...

Tax-Overhaul Panel Gives Bush Two Choices Options to Consider Include A Simplified Current System Or a Consumption-Based Levy By ROBERT GUY MATTHEWS Staff Reporter of THE WALL STREET JOURNAL October 19, 2005; Page A4 WASHINGTON -- President Bush's tax-overhaul panel agreed to offer two alternatives to the present tax code: one that streamlines the current income tax and another that would replace it with a progressive tax on consumption. SNIP Neither is likely to become law, but they offer the Treasury Department and the White House a framework for legislative proposals that could be considered by Congress next year. SNIP...

WASHINGTON, Oct. 11 - President Bush's tax advisory commission indicated today that it would not propose replacing the income tax with a national sales tax or a value-added tax but would recommend modifications in the popular tax deductions for mortgage interest and employer-provided health insurance. (Excerpt)

KPMG avoided the fate of Arthur Andersen yesterday... over the marketing and sale of "abusive" tax shelters. But the price of survival was high. The accounting firm will pay $456 million in fines and restitution and has agreed to let a federal monitor look over its shoulder. At the same time, no fewer than eight former KPMG executives and an outside lawyer were indicted on conspiracy charges for designing and selling the shelters.... KPMG will survive this "deferred prosecution" by admitting wrongdoing. But it's easy to forget amid the righteous indignation over tax shelters with names like FLIP, BLIP, OPIS...

President Bush says he wants to reform the tax system and has appointed a tax-reform commission that will issue a report in September. It was originally supposed to have reported by July 31, but the White House asked the commission to delay its report so that it would not interfere with the Social Security-reform effort, which needs a few more months before it can be declared legally dead. I've long thought that the White House had made a very serious error in attempting to do both Social Security reform and tax reform at the same time. The issues were too...

There’s an old tale which says that if you take a frog and throw him in a pot of hot, boiling water the frog will jump out. But if you take the frog and put him in a pot of cold water, and gradually turn up the heat, little by little over a long period of time, the frog’s body will adjust to the incremental increases of heat and eventually boil to death. The U.S. economy is like a frog in a pot of boiling water and he can’t jump out to save himself. One of his legs is the...

WASHINGTON -- As taxpayers recover from finishing their annual filing chores, a presidential commission studying the tax laws has reached the conclusion that there are just too many deductions and credits. To help taxpayers deal with college costs there are -- depending on which applies to a particular individual -- two different kinds of tax credits, a deduction for student loan interest and special tax-advantaged savings plans. Special urban and rural tax zones encourage investment and job creation. Dozens of other tax benefits help families raise children and save for retirement, encourage adoption, nudge drivers toward hybrid cars and push...

Champagne drinker: "Only the little people pay taxes" It won't seem that way to the millions of Americans who file their tax returns by the deadline on Friday, but there is a mountain of evidence that tax avoidance (the legal variety) and even tax evasion (the illegal variety) are growth industries. Accountants in the field have even come up with the term "tax avoision" to describe the grey areas in between. It was Leona Helmsley who said famously that "only the little people pay taxes". You might forgive her cynicism. The assertion was over-stated but not completely wide of the...

WASHINGTON - Most Americans think federal income taxes are too complicated, but they're not eager to simplify tax preparation by getting rid of some deductions and tax credits, according to an AP-Ipsos poll. Forty-five percent of those polled support eliminating them, while 51 percent oppose that approach. Millions of Americans are scrambling to meet the April 15 tax deadline. Many acknowledge they dread preparing the tax forms. "Anybody who says they don't mind their taxes is lying," said businessman William Long of Ferris, Texas. "I definitely put them off until the last minute, even when money is coming back. I...

Greenspan Calls for Simpler Tax Code Calling the existing U.S. tax code overly complex with an "overlapping web of deductions and exemptions, " Federal Reserve Chairman Alan Greenspan suggested a consumption tax could spur more personal savings and economic growth. Greenspan spoke Thursday before an advisory panel on tax reform appointed by President Bush. He referred to the last tax code overhaul in 1986. "Changes since the 1986 act have been largely incremental without the appropriate all-encompassing context that broad reform brings to the table," Greenspan told the group, according to The New York Times. "It is perhaps inevitable that,...

THERE THEY GO AGAIN! President George W. Bush and the Republican Party are determined to overhaul the tortuous federal tax system just in time for both the 20th anniversary of Ronald Reagan's 1986 tax act and next year's mid-term elections, which could see both parties fighting over large numbers of open seats. Bush promised in his State of the Union address to deliver a tax code that is "pro-growth, easy to understand and fair to all." The current code is so ponderous that it is driving an alarming number of taxpayers to underreport their incomes or not report incomes at...

Panel to Review U.S. Tax Code By Warren Vieth, Times Staff Writer WASHINGTON — A presidential commission today launched what it promised would be a top-to-bottom review of the U.S. tax code, but acknowledged that it might make more sense to modify the income tax than to try to replace it. Members of the president's advisory panel on federal tax reform said all options were on the table, including proposals to replace personal and corporate income taxes with variations on a national sales tax. "The president is committed to major tax reform, to real tax reform, to something more than...

<p>WASHINGTON -- Asked when he was near death to name things he regretted not doing, Andrew Jackson said: ``I didn't shoot Henry Clay, and I didn't hang John C. Calhoun.'' President Bush, who seems determined to leave office with nothing undone -- except, maybe, horsewhipping Harry Reid -- vows to transform not only Social Security but the hydra-headed tax code.</p>

WASHINGTON - Some leading Republicans in Congress are weighing whether to take a chance this year on a massive legislative package that would overhaul Social Security and the income-tax code at the same time - a challenge of historic proportion that could lead to sweeping changes throughout American society. Republicans have reached no consensus on the question, which would disrupt President Bush's preferred schedule of taking on Social Security first and tax changes later. The issue is expected to be one of the main topics that Republican lawmakers will debate during a retreat this week at the Greenbrier hotel and...

WASHINGTON -- President Bush on Friday called streamlining and reforming the U.S. tax code an "essential task for our country," but offered few hints of how he intends to get it done. Treasury Secretary John Snow said "everything's on the table," including possibly the popular home mortgage and charitable deductions and a former senator leading a tax-reform panel for Bush said that a national sales tax or flat tax also could be in the cards. "I am firm in my desire to get something done," Bush said at the end of a White House meeting with former Sens. Connie Mack,...