Tag Archives | Taxes

The Big Lebowski Explains the Fiscal Cliff

Kind of a stretch by Jonathan Chait writing for New York Magazine, but on the other hand has anyone else done a better job of explaining the so-called fiscal cliff?
The Big Lebowski

The tax deal completes the first piece of a multistage showdown between President Obama and congressional Republicans over the federal budget and the economic recovery. The Obama administration made concessions, but the concessions were small, and it is gloating that it won a larger strategic victory by breaking Republican anti-tax absolutism. Republicans, including anti-tax absolutists themselves, mostly believe they got through the first and most unfavorable stage as intact as could be. (Grover Norquist: “We’re in this impossible, upside-down position, where if you do nothing, taxes go up. That’s what we got saved from. That goes away now.”)

In gaming out the next, and much more dangerous, stages, the crucial question is, which side is right? I believe Republicans are.

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Want Less Inequality? Tax It

Wikimedia Commons (CC)

British economist Arthur C. Pigou, friend and contemporary of beloved John Maynard Keynes, eventually not only came around to the Keynesian logic, but also expanded on the common-sense philosophy to promote social balance and checks with the gentle, invisible hand of the Public. By incentivizing what benefits the downtrodden (perhaps with subsidies) and disincentivizing poor practices (by taxing rampant, unregulated profits), a more reasonable parity between the classes could be reached, stimulating economic growth and benefiting everyone.

This doesn’t have to be a ‘redistributive’ scheme that pits neoconservatives against progressives. Indeed, such a rational, gradated, and bracketed system makes sense to anyone who believes in the American traditions of pragmatism, equality, openness, innovation and opportunity.

Via the American Prospect by Liam C. Malloy and John Case

But the conventional strategy for fighting inequality—far higher taxes on the rich—usually rests on a foundation of fairness, and the question of what’s fair and what’s unfair turns out to cut different ways, depending on your point of view.

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Banks Forcing Legal Pot Growers to Run Cash-Only Businesses

Picture: Joshua Sandoval (CC)

Even if you’re legally selling marijuana according to the laws of your state, the drug’s federal status may keep banks from doing business with you. Seems like the feds are shooting themselves in the foot when it comes to the potential of marijuana as a taxable revenue, but what else is new?

Via NPR:

Voters in Washington and Colorado just approved measures legalizing marijuana for recreational use. But businesses that want to sell marijuana in those states will face a problem: No bank wants to do business with them.

I called several banks in Washington. I called a local credit union, a tiny bank in the San Juan islands. Everybody said basically the same thing. Even if selling marijuana is legal under state law, it’s still illegal under federal law. And banks and credit unions worry that this could get them in trouble.

So people who want to go into the marijuana business — who want to legally grow, distribute, sell marijuana in the state — are going to have to operate, basically, like drug dealers.

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Activists Present Corporate Tax Avoidance Award At Retirement Banquet

Dave Hartnett is the former top official at the HMRC, the branch of the U.K. government that handles tax collection. His tenure has been marked by controversy over deals in which corporations such as Goldman Sachs and Vodafone may have been let off the hook for billions in unpaid back taxes. Thanks to a group of protesters called WeAreTheIntruders, events at the black tie dinner celebrating Hartnett's service to the nation took an unexpected turn towards the surreal, culminating in a livid official's threatening to release the hounds on the surprise attendees:
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Mitt Romney Would Pay 0.82 Percent In Taxes Under Paul Ryan’s Plan

Commentators have wondered whether the pick of the economically extreme Ryan as a running mate was an error in calculation, but it seems quite pragmatic to me — should Romney win the presidency, and be succeeded by Ryan, Mitt may end up effectively never having to pay taxes again. The Atlantic crunched the figures:

Under Paul Ryan’s plan, Mitt Romney wouldn’t pay any taxes for the next ten years — or any of the years after that. Now, do I know that that’s true. Yes, I’m certain.

Well, maybe not quite nothing. In 2010 — the only year we have seen a full return from him — Romney would have paid an effective tax rate of around 0.82 percent under the Ryan plan, rather than the 13.9 percent he actually did. How would someone with more than $21 million in taxable income pay so little? Well, the vast majority of Romney’s income came from capital gains, interest, and dividends.

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The Rich Have Hidden $21 Trillion In Global Tax Havens

Wealth inequality between the super-rich and everyone else has been vastly underestimated, the Guardian reports:

The world’s super-rich have taken advantage of lax tax rules to siphon off at least $21 trillion, and possibly as much as $32tn, from their home countries and hide it abroad – a sum larger than the entire American economy.

James Henry, a former chief economist at consultancy McKinsey and an expert on tax havens, has conducted groundbreaking new research for the Tax Justice Network campaign group – sifting through data from the Bank for International Settlements (BIS), the International Monetary Fund (IMF) and private sector analysts to construct an alarming picture that shows capital flooding out of countries across the world and disappearing into the cracks in the financial system.

“These estimates reveal a staggering failure,” says John Christensen of the Tax Justice Network. “Inequality is much, much worse than official statistics show, but politicians are still relying on trickle-down to transfer wealth to poorer people.

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Lauryn Hill Versus The Military-Industrial Complex

Lauryn Hill. Photo: Lisa Liang (CC)

Well what do you think, will Lauryn Hill fare better against the tax evasion charges she faces than Wesley Snipes did? Ms. Hill explains her position on her Tumblr:

For the past several years, I have remained what others would consider underground. I did this in order to build a community of people, like-minded in their desire for freedom and the right to pursue their goals and lives without being manipulated and controlled by a media protected military industrial complex with a completely different agenda. Having put the lives and needs of other people before my own for multiple years, and having made hundreds of millions of dollars for certain institutions, under complex and sometimes severe circumstances, I began to require growth and more equitable treatment, but was met with resistance. I entered into my craft full of optimism (which I still possess), but immediately saw the suppressive force with which the system attempts to maintain it’s control over a given paradigm.

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Identity Thieves Scamming U.S. Government With Fake Tax Refund Claims

identity theftIngeniously devious and glaringly simple. Lizette Alvarez reports on the latest ID theft scam for the New York Times:

Besieged by identity theft, Florida now faces a fast-spreading form of fraud so simple and lucrative that some violent criminals have traded their guns for laptops. And the target is the United States Treasury.

With nothing more than ledgers of stolen identity information — Social Security numbers and their corresponding names and birth dates — criminals have electronically filed thousands of false tax returns with made-up incomes and withholding information and have received hundreds of millions of dollars in wrongful refunds, law enforcement officials say.

The criminals, some of them former drug dealers, outwit the Internal Revenue Service by filing a return before the legitimate taxpayer files. Then the criminals receive the refund, sometimes by check but more often though a convenient but hard-to-trace prepaid debit card.

The government-approved cards, intended to help people who have no bank accounts, are widely available in many places, including tax preparation companies.

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Why Are So Many People Renouncing United States Citizenship?

241px-United_States_penny,_obverse,_2002There’s been a massive amount of fretting over the ethics of Facebook co-founder Eduardo Saverin’s renunciation of his U.S. citizenship (which the Brazilian native gained roughly 15 years ago).

Various scandalized headlines have mentioned that he’s just one of 1,800 other Americans to give up citizenship last year, up from 235 in 2008, while others have speculated that it’s a cynical move to avoid taxes resulting from a massive capital gain when Facebook shares become publicly traded. Saverin has been savaged in the media and on the social web, but in fact it turns out that this cannot be a tax-saving move. Any ideas as to why Saverin and the other ex-Americans gave up the benefits of Uncle Sam’s protections?

Tom Worstall explains why Saverin will actually owe more taxes in Forbes:

Eduardo Saverin, one of the founders and major shareholders in Facebook, has renounced his US citizenship just before the company’s IPO.

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