Category: tax policy

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crime and punishment free trade & free markets tax policy

What Pfizer Pfolks Got

Pfizer, drugs, taxes, corruption, Covid

Yesterday, a whole lot of people paid a whole lot of taxes. It was Tax Day — filing day — for most Americans.

Truth is, American workers pay income tax with every paycheck. And they pay other taxes too.

Somehow, though, Pfizer — one of the world’s most profitable companies — did much better than we did. “Drugmakers make big profits in the U.S.,” explains Sydney Lupkin at NPR. “But many pay taxes far below the 21% corporate tax rate. Pfizer’s effective tax rate is so low it’s getting a big refund despite booking $59 billion in revenue.”

Did you get a big refund on top of a huge wage hike? No?

Well, you should lobby Congress more.

Now, Pfizer’s long had a cushy/pushy relationship with the U.S. Government. The company’s had to pay loads of legal penalties for malfeasance, but it’s also received subsidies, immunities, and government-forced clientele — in the rollout of its most famous product. But through thick and thin it faces our byzantine tax code with ease, for it’s that tax complexity that really gives Big Pharma the advantage, compared to smaller companies.

I have never argued for more taxes. I wonder if corporations should even be taxed based on income, which gets complicated to figure since it’s based on profits and losses and investments etc., thus opening the door to corrupt insider politics. Plus, those taxes simply get passed on to us. 

But if corporations are taxed, how indecent that small companies tend not to get huge refunds on years in which they make stellar returns.

Though I suppose if Congress keeps on awarding more to the bigger, that’s a problem that sort of solves itself. 

With the smaller companies just dying out.

This is Common Sense. I’m Paul Jacob.

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initiative, referendum, and recall tax policy

Preparation HH Hornswoggle

Colorado, tax

Tonight, I’ll be anxious for election returns from Colorado on Proposition HH, a measure Democrats in the legislature placed on the ballot to both lower taxes and raise revenue. 

Huh?

Americans for Tax Reform President Grover Norquist wrote recently in The Denver Gazette, that the proposition “would result in the largest tax hike in Colorado history.”

Yet, the ballot title begins: “SHALL THE STATE REDUCE PROPERTY TAXES FOR HOMES AND BUSINESSES, INCLUDING EXPANDING PROPERTY TAX RELIEF FOR SENIORS . . . ?”

“Democrats have advertised Prop. HH primarily as a property tax cut that will save homeowners hundreds of dollars per year,” explains Colorado Public Radio’s Andrew Kenney, “which is true.”

But Kenney goes on to plainly present the rest of the story, that HH would also “raise the state spending limits created by TABOR, allowing the government to eventually keep hundreds of millions, and then billions, of dollars more tax money each year instead of refunding it.”

TABOR stands for the Taxpayer Bill of Rights, which voters passed by citizen initiative back in 1992. Under TABOR, government spending growth is limited, with excess revenue returned to taxpayers. Prop HH is designed to offer immediately small property tax relief attached to letting the legislature grab much bigger money from not providing refunds in the future.

Norquist correctly dubs it “a bait-and-switch tax hike scheme.”

It’s the usual stock-in-trade of the political class. The difference in Colorado, however, under the Taxpayer Bill of Rights, is that politicians are required to ask voters for permission . . . to hornswoggle them in this way. 

Politicians have been asking for higher taxes again and again for years. (Not to mention going to court in a failed attempt to overturn TABOR.)

But voters have the final say. Today.

This is Common Sense. I’m Paul Jacob.

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Accountability national politics & policies tax policy

Kick the Can

Rep. Matt Gaetz (R.-Fla.) , Congress, spending

At first blush, it seems like the most pointless political move ever.

When Rep. Matt Gaetz (R.-Fla.) moved to oust Rep. Kevin McCarthy (R.-Cal.) from his role as Speaker of the House, lots of eyebrows were raised, and at least one pair of lips was licked. But did it make any sense?

This has never happened before, a House Speaker ousted by his own party mid-session.

That’s not an argument against the move, though. It was Gaetz who had blocked McCarthy back in January, through more than a dozen votes, allowing the moderate Republican to serve only with explicit conditions. Gaetz now says that McCarthy has failed to meet those conditions. Arguably, that’s accountability in action. Good?

Or mere revenge? After all, McCarthy had just made a deal with a sizable number of minority Democrats to fund the government and prevent a federal shutdown — thus kicking the overspending/insolvency can down the road again. Gaetz and his closest colleagues in the House made the same deal with the opposition party, ousting McCarthy. 

It’s a game of kick the can, however you look at it.

Gaetz argues that McCarthy did not do what was required to bring fiscal responsibility, such as un-package spending bills. “We told you how to use the power of the purse: individual, single-subject spending bills that would allow us to have specific review, programmatic analysis and,” explained Gaetz, “that would allow us to zero out the salaries of the bureaucrats who have broken bad, targeted President Trump or cut sweetheart deals for Hunter Biden.”

But the deed is done. McCarthy’s out. Now, who to replace him?

Funny that no one mentions the wild plan to put Trump into the job — you know, the plan first floated after Election 2020?

It was such a snickered-at notion, just a goofy way of taking 1600 Pennsylvania Avenue from Joe Biden.

Still, it was a plan. Only in the next few days and weeks will we learn if Gaetz really has one.

This is Common Sense. I’m Paul Jacob.

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deficits and debt election law tax policy

Slasher Needs Slashing

California Assembly, tax, taxes

A perennial bill in the California Assembly, Constitutional Amendment 1, would make it harder for voters to block local tax increases in accordance with the provisions of Proposition 13, which voters passed in 1978.

ACA 1 would shrink the percentage of voters who must approve certain tax increases from two thirds to 55 percent in cases where the money would purportedly be used for infrastructure or public housing.

Passage would further erode the legacy of Prop 13, which in addition to cutting taxes, limiting tax increases, and requiring a two-thirds legislative majority to increase state taxes, also imposed a two-thirds threshold for voter approval for special local taxes.

In 2000, voters accepted a lower threshold for approval of school bonds — 55 percent instead of two thirds — enabling billions more in property taxes.

That’s bad enough, but things could easily get worse.

Jon Coupal of the Howard Jarvis Taxpayers Association observes that if enacted, ACA 1 would be used to raise taxes repeatedly in local elections by dint of dubbing all government spending “infrastructure.” 

The infrastructure exemption is an innovation of the 2023 version of the bill (the tricky tricksters never stop).

Moreover, if passed, the amendment would take effect immediately. “Billions of dollars in tax hikes will start that much faster.”

Coupal stresses that the new exactions would be added to property tax bills “above and beyond Prop 13’s one percent cap” on property taxes.

ACA 1 keeps getting reintroduced and, so far, keeps getting killed off, like the mad killer in a teen slasher movie. Only to be revived for the sequel.

Kill it again.

This is Common Sense. I’m Paul Jacob.

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Won’t Come A-Knockin’

IRS, audit, tax, taxes

The Internal Revenue Service says it will end “most” surprise visits to homes, like the one an agent made to the home of journalist Matt Taibbi the day he was telling Congress about governmental use of social media to censor people.

According to IRS Commissioner Danny Werfel, the many surprise visits each year looked bad, and “making this change is a common-sense step.” (The IRS wants to still be able to surprise-visit taxpayers whose assets it is seizing. . . .)

Let’s hope that the reform, even if partial and inadequate, is for real. It’s long overdue.

But can we trust these “revenuers”?

The agency periodically says that it will now respect taxpayer rights, now be nicer, etc., usually soon after publicity about awful IRS abuses. As a result of such attention, some IRS personnel are then probably nicer in some ways to some taxpayers sometimes.

And things could always be worse.

Indeed, they may be getting worse. Our Congress recently moved to expand IRS funding by $80 billion over the next ten years (part of the laughably named Inflation Reduction Act). Over the last few years, the IRS has spent millions on “weaponry and gear.” And the question of what to do about the latest bad-looking IRS abuses of the taxpayer never seems to go away.

It will probably never be realistic to expect the IRS to always play nice and in strict accordance with all pertinent legalities and constitutional rights.

But if the Congress that funds the IRS actually represented us, the American people, maybe these issues would’ve been solved a long time ago. 

This is Common Sense. I’m Paul Jacob.

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crime and punishment deficits and debt tax policy

Just Say NO to the IRS

taxes, Bernie Sanders, Nancy Pelosi, Congress, audit, IRS

The IRS wants to do your tax returns. Should we let it?

On this question, the agency has stacked the deck in its favor by commissioning an “independent” review by a left-wing think tank, New America, already on record in support of giving IRS officials authority to do this.

Basically, the IRS handed $15 million (of taxpayer money) to New America to say “Yes, based on our very independent review, we agree with you and ourselves about thus expanding your power over taxpayers.”

Under the proposed IRS Direct File program — already being tested in a pilot program — taxpayers would use government software to let IRS crunch the tax numbers.

Mark Tapscott’s report for Epoch Times cites many objections to the scheme.

Among the most pertinent is voiced by David Williams, president of Taxpayers Protection Alliance. He notes that when individuals and private tax preparers fill out tax forms, they’re typically trying to keep the tax take to a minimum. But the IRS won’t have the same incentive to maximize deductions and refunds.

Moreover, “There is no reason to trust the IRS with even more sensitive financial information. . . .”

Participation in the IRS Direct File program would not be mandatory, at least not initially.

Once established, though, the program would make it easier to mandate participation for at least some categories of tax returns. 

And let us not pretend that such a development would be surprising. Governments tend to use precedents of newly granted power to expand that power.

This is Common Sense. I’m Paul Jacob.

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deficits and debt tax policy

Deadbeat California

Gavin Newsom, California

The injustices pile up so thick and fast that one can’t really keep track. Some state governments are especially prolific in producing them. Governments like the Deadbeat State, formerly known as the Golden State.

Now businesses in California must pay the price for the state government’s profligacy during the pandemic, when it borrowed $20 billion from the federales to help pay unemployment benefits. California is refusing to repay.

In the budget proposal for 2023-2024, $750 million had originally been set aside to begin repaying this debt. But Governor Gavin Newsom killed the provision. So, in accordance with federal regulations, businesses must take up the slack. Starting in 2023, the unemployment tax rate that businesses will pay, which had been 0.6 percent, is being increased by 0.3 percent until the loan is repaid.

“California is just not really an employer-friendly state,” says Marc Joffe of the Cato Institute. “This one thing will not be a difference between a business remaining open or closing, but it’s just another burden on top of the many burdens the state puts on employers.”

A major contributor to the size of this debt is the state’s failure to act to prevent massive fraud in filings for unemployment benefits. LexisNexis estimates that fraudulent payments amount to more than $32 billion.

California taxpayers must pay for this unsalutary neglect one way or another. But what Newsom has done ends up penalizing businesses in particular. 

Yet another reason to avoid doing business in the state.

This is Common Sense. I’m Paul Jacob.

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media and media people national politics & policies tax policy

Decreases & Increases & Krugman

Paul Krugman, taxes, Social Security

Social Security was never designed for sustainability. The “Ponzi” element was there at the beginning: early recipients received HUGE benefits over their contributions, but as the population matured, that ratio of what working taxpayers put in compared to what they received in benefits decreased. 

Further, because there never was a “lock box” much less any investment of funds — it was always a transfer scheme — as the system matured it hit the point of financial default. Back in the 80s this was fixed by raising the taxes on working people.

And then the kicker: with the rate of reproduction in the U.S. falling like Sisyphus’s rolling stone, the ratio of taxpayers to subsidized retirees went in the wrong direction. The folks assigned to keep track of the system’s finances predict that a major insolvency moment occurs about a decade from now, a few years ahead of earlier predictions.

So what does Nobel-winning economist Paul Krugman, of The New York Times opinion page, advise?

While we fret about the devastation that benefit cuts and tax hikes would cause, Reason’s Eric Boehm notes that Krugman doesn’t think the cuts are necessary. “First, Krugman says the CBO’s projections about future costs in Social Security and Medicare might be wrong. Second, he speculates that they might be wrong because life expectancy won’t continue to increase. Finally, if those first two things turn out to be at least partially true, then it’s possible that cost growth will be limited to only about 3 percent of gross domestic product (GDP) over the next three decades and we’ll just raise taxes to cover that.”

Hope over reason! And the progressive’s blithe acceptance of always-increasing tax burdens.

Serious people should confront facts . . . and avoid Krugman.

This is Common Sense. I’m Paul Jacob.

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crime and punishment general freedom tax policy

Voting for Audits

IRS, tax audit, taxes

Eighty-seven thousand new IRS agents!

What could possibly go wrong?

In a bill passed and signed last August, “$80 billion worth of new funding over the next decade” was shoveled at the Internal Revenue Service “so it could” — as a recent Reason article summarizes — “hire 87,000 new workers, purportedly to better target millionaire and billionaire scofflaws.”

The assurance that the new investment in personnel would not be directed towards “those making under $400,000 annually” was, as Reason’s Liz Wolfe makes clear, “not provided within the text of the actual bill.”

Ah — political promise over actual law and all bureaucratic experience. The IRS, you see, prefers to focus its audits on the lowest income earners, who were audited more often than millionaires.

Why? Well, the key is one feature of the tax code: the earned income credit. Which, it just so happens, is easy to get wrong. And upon which lower-income workers have come to rely.

The other reason is even more basic: “given a dearth of experienced auditors not likely to be fixed soon, the agency would rely on the easiest and least time-consuming types of audits.” Which are conducted through the mail. Easy. Cheap. And annoying.

Even with more IRS auditors with more experience, this path of least resistance — these earned income credit audits — will likely get the most use.

The reasons behind the reasons? Why were Democrats so eager to increase the ranks of tax collectors? Sure, Democrats love taxes. But like most tax hikers, they promote the idea that others will pay all those taxes; they promise to stick it to the rich . . . while ever-so consistently missing the mark and whacking the poor and middle classes.

This is Common Sense. I’m Paul Jacob.

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Fourth Amendment rights general freedom tax policy

Not Inadvertent

political donations, IRS, government surveillance, privacy

Maybe we can put a stop to the assault on the privacy of donors to political causes.

By “we” I mean The Buckeye Institute and the Institute for Free Speech, who have teamed up to challenge “a decades-old law that forces the IRS to demand that nonprofit charities hand over the private information of their largest donors every year.”

The IRS itself admits that collecting this personal data “poses a risk of inadvertent disclosure.”

Also a risk of fully advertent disclosure. 

The IRS has often been used to harass the political enemies of federal officials in a position to tell the agency what to do.

Buckeye Institute President Robert Alt reports the Institute’s own experience as Exhibit A. In 2013, soon after it had urged Ohio to reject Obamacare-inspired efforts to expand Medicaid, the Institute was subjected to an IRS harassment-audit.

The specter of this investigation was a scary one for the Institute’s major donors, who reasonably assumed that the audit was retaliatory. They worried that if their own names came up during the audit, they too would be subject to IRS attention. Many donors drastically scaled back their giving so they’d be less of a target; others stopped donating altogether.

Prospects for the Institutes’ litigation are good. The U.S. Supreme Court determined in a 2021 ruling that the government must at least consider “the potential for First Amendment harms before requiring that organizations reveal sensitive information about their members and supporters.”

Anonymity in political activism has a long American history — from the start, actually.

It’s what democracy looks like.

This is Common Sense. I’m Paul Jacob.

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