Tag: taxes

Voting for Audits

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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Illustration created with Midjourney and DALL-E2

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initiative, referendum, and recall too much government

SF Scheme Scuttled

The proposed tax was very popular. In San Francisco. It polled at nearly 75 percent in favor.

But it possessed a fatal flaw.

And worse.

The fatal flaw? The numbers didn’t add up.

Organizers spent nearly half a million bucks developing and promoting and getting the petition signatures to place Proposition K on this November’s ballot.

The notion? Tax Amazon sales within city limits to fund a guaranteed income scheme in the Golden City.

But then they learned — after it qualified for the ballot — that it was an incoherent tax-and-spend mess. Its chief pusher, John Elberling, admitted, reports The San Francisco Standard, that “he made mistakes in calculating how Amazon earns its revenue in the city.” And, The Standard continues, “the City Controller’s office found that the tax measure would actually harm hundreds of small businesses in San Francisco and cut revenue to the city’s general fund by about $10 million a year.”

So Elberling ate crow, admitting to error (and also, apparently, to misleading petition signers), and a judge removed Prop K from the ballot.

Whew. Disaster averted.

Alas, Elberling promises to “perfect” his scheme, and advance it again.

Which is ominous, for the core idea itself — adding on more taxes to fund a trendy-but-disastrous “guaranteed income” — is not the way out of California’s progressive-induced nightmare. It’s just a vastly bigger version of what’s gone on before.

If Californians don’t develop more common sense about the limitations of salvation-by-government, they are doomed to repeat such folly.

That goes double for San Franciscans.

Who this time have a reprieve, thankfully.

This is Common Sense. I’m Paul Jacob.

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tax policy too much government

For a Thousand Years

Time for a gas-tax holiday.

When the people lie prostrate, when the people groan under heavy burdens, when the people just can’t take it anymore — and when an election is coming up — that is the time for politicians to relieve everyone’s burden.

A bit.

Treasury Secretary Janet Yellen favors considering a temporary gas-tax holiday to emulate some of the states. Reviving the Keystone oil pipeline — no, not something to consider, she says. But she’s okay with a brief gas-tax break.

Let’s do better.

I propose a millennium-long gas-tax holiday, government-barriers-to-drilling holiday, regulation-of-all-industries holiday. Under my plan, government gets all the way out of the way of all markets so we can all be as prosperous as possible, whether or not a big economic crisis is underway.

But would there be any such crises — long-term and intractable economy-wide crises, I mean — if my plan were enacted?

When government does everything possible to injure the economy and prevent recovery, it takes a long time for markets to bounce back from shocks. If ever.

Un-fetter the markets, though, and economic actors would be able more rapidly to adjust to major jolts. If gas imported from overseas plummets, producers could then quickly adapt by expanding production. They cannot readily do so now because government imposes so many barriers.

The politicians’ preference for modest, namby-pamby reprieves are not only substantially weak, they send the wrong signals. They get doled out as if government were doing us a special favor … by not beating us up so badly for a very little while.

We need freedom. On an ongoing basis.

This is Common Sense. I’m Paul Jacob.

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Tags free markets, Janet Yellen, laissez faire, regulations, tax policy, taxes

Accountability deficits and debt national politics & policies subsidy

What a Relief

Based on a quick look at the Edward M. Kennedy Institute for the United States Senate’s splash page, I wasn’t immediately sure what, precisely, the institute’s raison d’être might be. On the top menu bar there’s a slogan: “Just Vote.” Big clue?

On the About page, though, we are told its mission: “educating the public about the important role of the Senate in our government, encouraging participatory democracy, invigorating civil discourse, and inspiring the next generation of citizens and leaders to engage in the civic life of their communities.”

As for the vision thing, that’s supplied by its namesake, Ted “I Survived Chappaquiddick” Kennedy: “To preserve our vibrant democracy for future generations, I believe it is critical to have a place where citizens can go to learn first-hand about the Senate’s important role in our system of government.”

I guess that explains why the institute’s Boston location sports a replica room of the U.S. Senate chambers.

Which costs serious money, of course.

Paid for entirely by the ultra-rich Kennedys?

Fact check: no.

Some of it is paid for by you and me — courtesy of Congress and COVID!

You see, part of last year’s $350 billion in pandemic relief went to Boston’s memorial outfit for its once-favored now-deceased multi-millionaire politician. Five million bucks, it turns out, was used (the AP tell us) to pay off the institute’s debt.

But don’t worry: the Kennedy Institute wasn’t singled out. Relief funds — which you might think would focus on struggling local libraries, community centers, and the like — also went to building a posh hotel and a minor league baseball stadium. And much, much more.

While politicians are good at spending money, especially for “emergencies,” they aren’t good at spending it well.

This is Common Sense. I’m Paul Jacob.

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deficits and debt

Sitting on the Volcano

“Wait, it gets worse.”

Over halfway through Eric Boehm’s Reason discussion of our government debt situation, he gets to a crucial point: “The federal government’s debt is particularly susceptible to rising interest rates … because so little of it is locked into long-term interest rates. If you have a 30-year fixed-rate mortgage on your house, rising interest rates won’t bother you much. But the federal government overwhelmingly relies on short-term debt, with an average maturity time of just 69 months.”

So the standard approach to inflation, with the Federal Reserve raising interest rates, would hit the federal budget like an exploding volcano.

When talking trillions, it’s hard to keep a sense of proportion. Boehm puts it this way: “A one percentage point increase in interest rates translates into a $30 trillion increase in interest costs.”

Debt service is one of the reasons why the sages at the founding of America were, if not united in opposition to federal debt, overwhelmingly leery of it. But that leeriness did not stop federal borrowing. Only for one brief moment did the United States’ government not hold debt.

Borrowing was one thing when gold or silver fettered our finances to some limits. But paper and digital money have divorced us from a sense of reality.

We pretend that debt’s reality can be perpetually postponed, but we always “pay” — in lost prosperity; in inequality; in economic dislocation; in political unrest. But when the volcano erupts, then we really pay.

As we awake to our indebtedness, let’s recognize that our political culture has allowed it to get so far out of hand. Fundamental political reform is imperative.

This is Common Sense. I’m Paul Jacob.

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Tags debt, economics, national debt, spending, taxes

national politics & policies partisanship tax policy

Billionaires Backed Better

Post author By Redactor
Post date November 18, 2021
No Comments on Billionaires Backed Better

It’s a cliché of politics that the Republican Party is The Party of the Rich while the Democrats serve the Poor and Downtrodden.

But were that true, why so many Democratic billionaires?

And why is President Biden’s Build Back Better legislation offering the top income quintile a tax cut worth billions and billions?

At issue is a “$285 billion tax cut that would almost exclusively benefit high-income households over the next five years,” write Alyssa Fowers and Simon Ducroquet in the pages of The Washington Post. “The measure would allow households to increase their deduction from state and local taxes from $10,000 to $80,000 through 2026, and then impose a new deduction cap through 2031.”

“It’s the second-most expensive item” — when figured in budgeting terms, not merely in outlays.

True to form, Democrats promise that it would raise revenue, actually — eventually. In time-honored procrastination fashion, the legislation jiggers with the deduction cap over time, decreasing the cap in the future. A typical (and easy to re-jigger) politicians’ ploy.

What this is all about is subsidizing the rich in high-tax “blue states” — politically protecting Democrats in California and New York, to name the most obvious two, allowing them to pretend to “soak the rich” and “help the poor,” and decreasing the incentive in those states for the rich to leave for lower-tax environments, like Texas and Florida.

Arguably, these “SALT” caps are the worst sort of tax break possible, since they are regional (affecting different states differently) and even partisan. Not to mention regressive.

Instead of “Build Back Better,” the Biden plan should be dubbed the “Failed State Bailout.”

This is Common Sense. I’m Paul Jacob.

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billionaire

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