Lee A Shepphard: Massive Giveaway in Partnership Compensatory Options Regs.
Category: Taxes
Americans Outside the Tax System
Patrick Fleenor and Scott A. Hodge:
One of the biggest obstacles facing President Bush’s Advisory Panel on Federal Tax Reform is the fact that America has become divided between a growing class of people who pay no income taxes and a shrinking class of people who are bearing the lion’s share of the burden.
Despite the charges of critics that the tax cuts enacted in 2001, 2003 and 2004 favored the “rich,” these cuts actually reduced the tax burden of low- and middle-income taxpayers and shifted the tax burden onto wealthier taxpayers. Tax Foundation economists estimate that for tax year 2004, a record 42.5 million Americans who filed a tax return (one-third of the 131 million returns filed last year) had no tax liability after they took advantage of their credits and deductions. Millions more paid next to nothing.
Should Milwaukee Suburbs Pay for City Services?
AP:
A new study shows Milwaukee residents are way behind their neighbors when it comes to taxable property values, prompting some officials to urge wealthy suburbs to share their tax revenues in exchange for their use of city services.
The Southeastern Wisconsin Regional Planning Commission ordered the study from consulting firm Ruekert & Mielke Inc. to analyze 147 cities, towns and villages in the counties of Milwaukee, Waukesha, Ozaukee, Washington, Racine, Kenosha and Walworth.
The study released last week shows that Chenequa in Waukesha County boasts the top “fiscal capacity” rate, a measure of property value per resident, of $600,570, while Milwaukee ranks at the bottom with a rate of $36,507.
Former Madison Mayor Paul Soglin mentioned this strategy as well – tax ’em while they are driving in.
Fifty States, A Thousand New Tax Laws = Decoupling
For most of the 92 years since the federal income tax was established, the states followed Washington’s lead concerning how to tax people and businesses. That ended in 1981, when 21 states adopted their own rules on depreciation in response to a Reagan tax cut. Many of these renegades — California being a notable exception — later went back to a more uniform tax code. But the precedent was set. When Congress began slashing federal rates in 2001, many cash-strapped state legislatures opted to go their own way once again.
Tax experts call this “decoupling.” That’s a jargony name for a practice that can — and most likely will — cause you to run screaming to your accountant. “It is a zoo,” says Jere Doyle, an estate-planning and tax expert in Mellon Financial’s Boston office. “Everybody thinks ‘federal, federal, federal,’ and assumes that the same rules will apply at the state levels. But they do not
The Tax Mess: Sticking It To Us. Presidio Fires Back
Lynnley Browning sort of misses the point of Presidio’s lawsuit against the US Government. Browning focuses on the personalities, rather than the larger constitutional question.
Presidio’s suit is an attempt to test how the tax code’s ambiguities and complexity stand up in a federal court.
It’s easy to find zero sympathy for the wealthy, however, recent tax law changes, including large corporate giveaways supported by our “populist” US Senators Russ Feingold and Herb Kohl demonstrate the problems (and opportunities) that our tax law spaghetti creates.
Growing tax code complexity simply means more opportunities for the wealthy and growing hassle for the rest of us….. Disclosure: One of Presidio’s principals is a good friend of mine.
UPDATE: Andrew Ross Sorkin takes an interesting look at a Wall Street case that NY Attorney General Eliot Spitzer lost. Sorkin digs up quite a quote from a juror:
The jury was split 11 to 1 – with all but one juror prepared to acquit Mr. Sihpol of all charges. The lone juror told reporters that she was convinced of Mr. Sihpol’s guilt because she just could not believe the government would bring a case if there wasn’t something to it.
Having said all that, if Presidio did break the law, then they will deal with the consequences. It’s difficult for me, a laymen, to understand all the nuances of our tax system. Time to start over, I think.
America Runs on AMT
The AMT, as it is widely known, was created to catch up with the clever rich. Now, though, it has little impact on those folks and instead is whacking millions of fairly ordinary Americans. In fact, according to the Treasury Department, next year a typical family with two children will have to pay the AMT if its income exceeds $67,890. And by 2015, as many as 50 million taxpayers will have to pay it.
The AMT has, however, been very, very good to the Treasury. It is pulling in $18 billion in tax revenue this year, and by 2015 the AMT could be pouring $210 billion annually into the government’s coffers. Washington insiders for some time now have been laughing that it would be cheaper for the government to repeal the regular income tax and keep the AMT.
This may be funny, but it’s not a joke. The crossover point, when the AMT begins to produce more revenue than the regular tax, is now projected to be 2013.
Meanwhile, our Senators Kohl & Feingold recently voted for a massive big business tax giveaway on overseas earnings.
Bush Seeks Tax Reform Input
Hmmm. I wonder what the odds of “public input” ending up in final tax legislation… Here’s the site.
IRS Income Statistics
New York Telecommuter Tax
Taxprof takes a look at New York’s Telecommuter tax efforts.
Feingold’s Big Business Tax Cut
Russ Feingold voted for this giveaway (I’d like a 5.25% tax rate, please). Alex Berenson looks at one of the windfalls: Large drug companies:
A new tax break for corporations is allowing the biggest American drug makers to return as much as $75 billion in profits from international havens to the United States while paying a fraction of the normal tax rate.
The break is part of the American Jobs Creation Act, signed into law by President Bush in October, which allows companies a one-year window to return foreign profits to the United States at a 5.25 percent tax rate, compared with the standard 35 percent rate.
…….
Though the companies stand behind their accounting, financial analysts and tax lawyers say that the drug makers’ claim defies reality and that their profits come mostly from sales in the United States.