Taxes

Amazon.com Fights Board of Equalization

by Will Tew on July 1, 2011 · 1 comment

in Tech & Telecom

Amazon.com is standing strong against California’s attempts to extort money from the online bookseller. Just a few days ago, Governor Jerry Brown (whose aura smiles and never frowns) signed a bill into law aimed at extracting taxes from online retailers. As it is now, the state requires consumers to keep receipts of online purchases, calculate sales tax on those purchases, then send a check to Sacramento. Obviously, this policy proved difficult to enforce.

California’s Board of Equalization (the sinister-sounding body charged with collecting the state’s sales tax) issued a stern warning to Amazon and its comrade-in-arms Overstock.com: pay up or we’re coming after you. California’s case against the retailers rests on going after affiliates and subsidiaries in the state. Amazon has already begun cutting affiliates like gangrenous limbs. California still thinks the law will work; fortunately, they might be wrong, as a Declan McCullagh of CNET writes:

The only problem for enthusiastic politicians and tax collectors is that the new law might not be entirely, well, legal.

In 1994, a California appeals court rejected state tax collectors’ arguments when they tried a similar approach. The case involved a Colorado-based company, Current, which sold greeting cards, gift wrapping paper, and so on through the mail. It had no contacts with California.

Current’s parent company, Deluxe Corp., did do business in California. The state Board of Equalization, operating under the theory that the finer points of corporate structure weren’t that relevant, levied $344,088 in taxes on Current.

The appeals court tossed out that argument, saying that courts in Pennsylvania, Illinois, and Connecticut had considered similar cases and had all ruled against the tax collectors. Those decisions were “persuasive,” a three-judge panel unanimously ruled, and Current and Deluxe “did not have integrated operations or management” and were “separate and distinct corporate entities.”

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New Bill Would Tax Online Gambling

by Michelle Minton on June 21, 2011

in Deregulate to Stimulate, Economy, Nanny State, Personal Liberty

Yet another online gambling bill to add to the pile, Rep. Jim McDermott introduced the igaming taxation and regulation bill that he unsuccessfully introduced in 2009. While McDermott’s bill wouldn’t legalize online gambling, it is companion legislation to the bill HR 1174 introduced earlier this year by Reps. John Campbell and Barney Frank, which would legalize and regulate online wagering.

This time around, The Internet Gambling Regulation and Tax Enforcement Act, (HR 2230), which was introduced today by Reps. Jim McDermott, John Campbell, and Barney Frank, would require gambling platforms to report to the federal government on players’ financial activities and withhold a 2 percent federal tax on deposits received each month. The bill gives states the option to tax the sites an additional 6 percent on deposits. Both of these taxes would be paid by the websites and would not be paid by players.

A report from H2 Gambling Capital, released after McDermott introduced his first online gambling tax bill, looked at online wagering over a five-year period. According to the report, legalized online gambling could create 32,000 jobs, $94 billion in economic activity, and an additional $57.5 billion in tax revenue.

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Big Company With Ties to White House Paid No Taxes; GE Also Got Corporate Welfare and Bailout on Special Terms

by Hans Bader on March 27, 2011

in Bailout Watch, Economy, Energy, Environment, Stimulus to Nowhere

“The top corporate tax rate in the United States is 35 percent, one of the highest in the world,” but General Electric, whose CEO was recently tapped to lead President Obama’s Council on Jobs and Competitiveness, pays no taxes at all, reported the New York Times.

The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.  Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

This negative tax rate is the product of lobbying aimed mostly at liberal lawmakers. “G.E. has spent tens of millions of dollars to push for changes in tax law,” such as “‘green energy’ credits for its wind turbines.” “Since 2002, the company has eliminated a fifth of its work force in the United States while increasing overseas employment.”

In his State of the Union address, President Obama called for even more spending on forms of energy that benefit GE.  Government energy spending and tax credits disproportionately benefit GE, which recently spent  $65.7 million on lobbying to get government subsidies.

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PolitiFact: Obama Made False Claims About Health Care, Taxes, and Court Rulings

by Hans Bader on February 11, 2011 · 1 comment

in Economy, Employment, Healthcare, Legal, Regulation

PolitiFact, which earlier took Obama’s side about whether Obamacare is a government takeover of  health care, now is criticizing President Obama for making false claims about health care and taxes. In a pre–Super Bowl interview with Bill O’Reilly, Obama made the false claim that 12 judges have rejected “the notion that the health care law was unconstitutional.” As PolitiFact notes, only “four judges have ruled on the merits of various cases challenging the health care law. Two ruled in favor of the administration and two against.” (Earlier, we explained why the recent ruling by a Florida judge striking down Obamacare was not judicial activism.)

Obama’s problem with numbers isn’t new; during the 2008 campaign, he claimed that he had been to “57 states.” So he may not have been deliberately lying about this.

But as John Kartch noted earlier, Obama made a far more flagrantly false claim when he insisted to Bill O’Reilly that “I didn’t raise taxes once” while president. It’s hard to view that claim as anything other than a lie. Obama has signed into law a long list of tax increases on consumers and investors, which Kartch lists here. That includes “two dozen new or higher taxes” just in the health care law alone.

Some of the biggest of Obama’s tax increases haven’t gone into effect yet, and won’t go into effect until after the 2012 election, such as the new 3.8 percent tax it levies on many of America’s investors. As PolitiFact noted in debunking Obama’s claim that he hadn’t raised taxes, “starting in 2013,” “Individuals who make more than $200,000 and couples that make more than $250,000 will see additional Medicare taxes of 0.9 percent. They will also, for the first time, have to pay Medicare taxes on their investment income at a 3.8 percent rate.”

By contrast, an excise tax increase Obama signed in 2009 went into effect “soon after” he took “office,” and some of the tax increases in the health-care law that affect middle-class patients and medical-device manufacturers are already in effect.

For the moment, Americans’ taxes are not that high, because many of the tax increases already signed into law have yet to kick in. But appearances are deceiving, for as Kartch notes, “100% of the tax increases Obama signed into law are … permanent,” while “over 90% of the dollar value of the tax cuts Obama signed into law are only temporary.”

I earlier discussed why PolitiFact was wrong to accept the Obama administration’s claim that Obamacare was not a government takeover of the health care system.

While it dramatically increases regulation and red tape, Obamacare has done little to control costs; health insurance premiums have risen substantially in many states as a result of its passage, such as a 47 percent increase for some policyholders in Connecticut. Obamacare contains provisions that are harmful to the economy and medical innovation. Earlier, I discussed some of the bad effects of Obamacare on patients, employers, consumers, and the insurance market.

Transparency Bill Proposed Solution to Public Employee Pension Problems

by Kathryn Ciano on February 9, 2011

in Economy, Labor

At a House subcommittee meeting discussing one proposed solution for public employee pensions, a transparency bill designed to trace federal and state funds set aside to cover pension guarantees. Lawmakers and media types weigh in on taxes, Social Security, and how their interest groups are affected by pension cures.

Paul Ryan enters fresh from Bernanke’s hearing, to quote the Federal Reserve chair’s uncertainty as to when and how public employee pensions will be paid. This echoes Grover Norquist’s statement earlier in the same conference that everyone’s answer to the question of the day — Will public employees get the pensions promised them by their states? — is: We’re pretty sure.

Covering public employee pensions has become an enormous problem for states unable to cover even the going expense of running a government. California offered IOU’s to some employees this year, and state employees whose pensions are guaranteed by the state are subsisting on promises and guarantees, but many have not been paid. Arnold Schwarzenegger endorsed this transparency bill as he exited the office of governor, according to a presenting Ways and Means committee member.

Rep. Darrell Issa reminds the room that we will all pay for any failure. If one city or state fails, the entire country will bear the burden. Public employee pensions may not rise to the highest level on some conservative dockets, but as baby boomers retire, public budgets are braced to absorb the shock wave anticipated when the pension crisis hits.

As with every area of the economy, uncertainty quashes growth. As go public employees relying on a lifetime of pension pay-ins, so goes America, relying on receiving checks from social security, not IOU’s.

New CEI Podcast — December 28, 2010: IRS as Tax Preparer?

by Ryan Young on December 28, 2010

in Deregulate to Stimulate, Economy, Regulation

Have a listen here.

Fellow in Regulatory Studies Ryan Young looks at the IRS’ proposal to save you time by doing your taxes for you. Because you would be liable for any of the IRS’ mistakes, you would still have to check over your return. This negates much of the time savings. It could also cost employers as much as $5 billion in increased reporting requirements. Then there is the conflict of interest between your collector also being your tax preparer.

Image Credit Irs.gov

Do You Want the IRS Doing Your Taxes?

by Ryan Young on December 1, 2010

in Deregulate to Stimulate, Economy, Politics as Usual, Regulation

The average American spends over 26 hours per year doing taxes. That’s too much. The obvious solution is to simplify the 70,000-page tax code. But that’s politically difficult. So Austan Goolsbee, among others, has an alternative idea: have the IRS do your taxes for you.

This return-free system is a bad idea for a lot of reasons. One of them is the obvious conflict of interest when your tax collector is also your tax preparer.

Another reason is that the IRS is not up to the task. As I explain in an op-ed being distributed by McClatchy News Services, the IRS rarely has all the information it needs to fill out an accurate return for any one individual, household, or business. People change jobs. They have kids. They get married, and sometimes divorced. They buy homes and cars. Who knows what kinds of deductions they qualify for? The IRS probably doesn’t.

And if the IRS makes a mistake on your return, you would be liable for it. If you want to stay on the right side of the law, you would have to calculate your own taxes anyway, to make sure the IRS got it right. So much for saving time.
Return-free systems have already been tried in California and the UK. Neither attempt can be called a success.
It is heartening that officials are looking for ways to reduce the burden of doing taxes. But a return-free system would treat only the symptom, and poorly at that. The root problem is an arcane, 70,000 page tax code. The solution is to simplify it.

CEI Podcast – November 11, 2010: Taxing New IRS Regulations

by Ryan Young on November 11, 2010

in CEI Projects, Deregulate to Stimulate, Economy, Podcast, Regulation

Have a listen here.

Fellow in Regulatory Studies Ryan Young explains how an IRS proposal for mandatory certification of tax preparers would hurt consumers and taxpayers. It is one more example of how regulation can hurt competition. Large tax preparation firms would benefit at the expense of individuals and smaller firms who can’t afford the added regulatory burden.

Regulation of the Day 158: Preparing Taxes

by Ryan Young on November 10, 2010

in Deregulate to Stimulate, Economy, Regulation, Regulation of the Day

The IRS wants to require all tax preparers to register with them, pass an exam, and take continuing education classes. Over at Investor’s Business Daily, Caleb Brown and I explain why that would hurt consumers and taxpayers. Our main points:

  • Since the IRS has the power to revoke registrations, tax preparers will have to be careful not to advocate too aggressively for their clients.
  • There are at least 600,000 unregistered preparers. Many of them are retirees. Others have jobs, but prepare taxes on the side to help make ends meet. Still others are volunteers. They give their services for free to people who can’t afford a tax preparer. How many will give up, rather than jump through the proposed regulatory hoops?
  • Big firms — with more than 500 employees — pay $7,755 per employee per year to comply with federal regulations. Their smaller rivals have to pay a whopping $10,585 per employee per year. That’s a built-in competitive advantage of nearly $3,000 per employee, courtesy of Washington. No wonder so many businesses have D.C. offices these days.
  • H&R Block alone spent nearly $1 million on lobbying in the last half of 2009, much of it pushing for these very tax-preparer regulations. It wants the deck stacked even further in its favor.
  • The best solution to this problem is simplifying the tax code. There is no legitimate reason for the tax code to be so complicated that most people have to turn to others for help.

Malthusian Indoctrination of Children Funded with Your Tax Dollars

by Lee Doren on October 20, 2010 · 1 comment

in Environment, Natural Resources, Private Conservation

Many people are familiar with Annie Leonard, creator of “The Story of Stuff,” a factually inaccurate viral video being shown in classrooms throughout America. In the video, Leonard argues that we are running out of resources, using too much stuff, destroying the planet and anti-capitalist values are the solution to the problem. It is bad enough that “Green Journalists” push Leonard’s falsehoods, and some teachers think her work has educational value, but now I just learned that your tax dollars are funding Annie’s latest project.

Loop Scoops is a new kids program on PBS where Annie is the content director. The cartoon is geared to children 6 to 9 years of age where they are taught that juice boxes are destroying the planet, consuming less is inherently good for society and we are using too many resources. Sadly, the Corporation for Public Broadcasting and the Environmental Protection Agency provided the funding, which means your tax dollars are paying for it.

The video below highlights one of the videos within Loop Scoops.

I’ve heard some people ask me why we shouldn’t teach kids to recycle. The answer is because we are not running out of landfill space, we are not running out of resources and recycling is not always the right thing to do. Just read the Eight Great Myths of Recycling to understand why tax dollars should not be used to indoctrinate kids to fear their juice boxes.  Kids should be able to enjoy their childhoods without being bombarded with Malthusian propaganda.

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