Wednesday, March 26, 2014
Tax Law Complexity Contributes to Federal Budget Ignorance
Almost three years ago, in Americans Still Don’t Grasp Federal Budget Realities, following up on The Grand Delusion: Balancing the Federal Budget Without Tax Increases, I pointed out how pitiful it is that most Americans do not know how their federal income tax dollars are spent. The earlier post considered the results of a Kaiser Family Foundation poll and the follow-up post considered a CNN poll.
Last week, I received an email directing me to the results of a GoBankingRates poll reaching the same conclusion. The poll results are, of course, distressing, because they indicate that Americans have not become any wiser, educated, or informed about the uses to which federal income taxes are put. What was also at best confusing, and at worst troubling, was the inclusion of Medicare among the expenditures funded by the federal income tax. Medicare, as this explanation informs us, is funded by the Medicare portion of the federal payroll tax and by premiums charged to Medicare participants. Interestingly, social security payments were excluded from the list, but yet even though Medicare is also administered through a trust fund, it was not similarly excluded.
One of many disadvantages of a tax system as complicated as the one that lobbyists have created is that it’s too easy to be confused, to reach erroneous conclusions, and to spread intentionally misleading or incorrect information. The GoBankingRates error surely is not intentional, but it suggests how even those more familiar with the tax laws can be caught by tax law complexity. Productive debate and progress with respect to tax policy cannot be accomplished until citizens know how the tax law works and how tax revenues are used. And at the moment, that does not appear to be happening for enough people.
Last week, I received an email directing me to the results of a GoBankingRates poll reaching the same conclusion. The poll results are, of course, distressing, because they indicate that Americans have not become any wiser, educated, or informed about the uses to which federal income taxes are put. What was also at best confusing, and at worst troubling, was the inclusion of Medicare among the expenditures funded by the federal income tax. Medicare, as this explanation informs us, is funded by the Medicare portion of the federal payroll tax and by premiums charged to Medicare participants. Interestingly, social security payments were excluded from the list, but yet even though Medicare is also administered through a trust fund, it was not similarly excluded.
One of many disadvantages of a tax system as complicated as the one that lobbyists have created is that it’s too easy to be confused, to reach erroneous conclusions, and to spread intentionally misleading or incorrect information. The GoBankingRates error surely is not intentional, but it suggests how even those more familiar with the tax laws can be caught by tax law complexity. Productive debate and progress with respect to tax policy cannot be accomplished until citizens know how the tax law works and how tax revenues are used. And at the moment, that does not appear to be happening for enough people.
Monday, March 24, 2014
Philadelphia’s BRT Encounters a Provision That Bars Solving the Problem that the Provision Created
Last Monday, in Sometimes, They Cannot Win, I commented on the strange outcome of the proposal to increase the salaries of some members of the Board of Revision of Taxes in Philadelphia. Though one might think that increasing someone’s compensation would make the person better off economically, in the case of at least one board member the outcome would be a decrease in total income because a pension would be forfeited. The saga of the tribulations of the Board of Revision of Taxes is a long one, with my commentary beginning with An Unconstitutional Tax Assessment System, and continuing with Property Tax Assessments: Really That Difficult?, Real Property Tax Assessment System: Broken and Begging for Repair, Philadelphia Real Property Taxes: Pay Up or Lose It, How to Fix a Broken Tax System: Speed It Up? , Revising the Board of Revision of Taxes, How Can Asking Questions Improve Tax and Spending Policies?, This Just Taxes My Brain, Tax Bureaucrats Lose Work, Keep Pay, Testing Tax Bureaucrats Just Part of the Solution, A Citizen Vote on Taxes, Freezing Real Property Tax Reassessments: A Nice Idea, The Tax Price of a Flawed Tax System, Can Bad Tax Administration Doom the Tax?, Taxes and Priorities, R.I.P., BRT, A Tax Agency Rises from the Dead, Tax Law as Subterfuge: Best Use Valuation v. Current Market Valuation, How to Kill a Bad Tax System That Will Not Die?, The Bad Tax System That Will Not Die Might Get Another Lease on Life , Robbing Peter to Pay Paul, Tax Style, Don’t Rob Peter to Pay Paul: Collect Unpaid Taxes, The Philadelphia Real Property Tax: Eternal Circles , A Tax Problem, A Solution, So Why No Repair?, Can the Philadelphia Real Property Tax System Be Saved?, Alarm Bells Ringing for Philadelphia Property Tax Reform, A New Chapter in the Philadelphia Property Tax Story, and Sometimes, They Cannot Win. In that last post, a week ago, I noted that “this story will continue.” And indeed it does.
Now comes an observation that the provision generating the mess that the proposal is designed to fix also prevents the proposed remedy. According to this story, Article 3, section 27 of the Pennsylvania Constitution provides that “No law shall extend the term of any public officers, or increase or diminish his salary or emoluments, after his election or appointment." So when the compensation of the board members was reduced, the incumbents were protected. That created the compensation differential that some think accounts for the board’s sluggish response to the roughly 24,000 property tax appeals that have been filed with it. But solving the problem by raising the compensation of those earning less also appears to be prohibited.
There are two solutions. One is to clean house and appoint an entirely new board. Politics surely gets in the way of that solution. The other is to abolish the board, which is what the city tried to do, but the courts blocked that move. Finding a solution is going to require putting the well-being of the city and its residents over the interests of politics and politicians. The chances of that happening are low enough that I can again predict with confidence that the story will continue.
Now comes an observation that the provision generating the mess that the proposal is designed to fix also prevents the proposed remedy. According to this story, Article 3, section 27 of the Pennsylvania Constitution provides that “No law shall extend the term of any public officers, or increase or diminish his salary or emoluments, after his election or appointment." So when the compensation of the board members was reduced, the incumbents were protected. That created the compensation differential that some think accounts for the board’s sluggish response to the roughly 24,000 property tax appeals that have been filed with it. But solving the problem by raising the compensation of those earning less also appears to be prohibited.
There are two solutions. One is to clean house and appoint an entirely new board. Politics surely gets in the way of that solution. The other is to abolish the board, which is what the city tried to do, but the courts blocked that move. Finding a solution is going to require putting the well-being of the city and its residents over the interests of politics and politicians. The chances of that happening are low enough that I can again predict with confidence that the story will continue.
Friday, March 21, 2014
Worried About the Wrong Tax Collector
A recent story about an architect taking selfies to prove that he is not in New York for more than 182 days. He is doing this, according to the story, to “avoid a run-in with the IRS.” The tag line on the video in which the story is reported (after a 25-second advertisement) declares, “Man Takes Selfies to Avoid Extra Tax from IRS.” Here’s the problem. Staying in New York for 183 or more days might generate federal tax issues in terms of deductions for travel away from home, but probably would work to the taxpayer’s benefit. What staying in New York for 183 or more days will do is trigger taxation as a resident by New York State and New York City. The tax collectors that the taxpayer should be worrying about are the revenue departments of the state and city of New York, not the IRS.
The confusion is indicative of how much Americans don’t know and understand about taxes. This issue isn’t a matter of complex rules and computations. It’s simply a matter of knowing that taxes are imposed not only by the federal government, but also by state and local governments. This outcome of insufficient education also manifests itself when people complain about “the government,” as though there is one monolithic government. My response to these sorts of complaints is a simple, “Which government?” It often brings a silent stare. Is it any wonder that the misinformation merchants thrive in this country?
The confusion is indicative of how much Americans don’t know and understand about taxes. This issue isn’t a matter of complex rules and computations. It’s simply a matter of knowing that taxes are imposed not only by the federal government, but also by state and local governments. This outcome of insufficient education also manifests itself when people complain about “the government,” as though there is one monolithic government. My response to these sorts of complaints is a simple, “Which government?” It often brings a silent stare. Is it any wonder that the misinformation merchants thrive in this country?
Wednesday, March 19, 2014
Are the Rich Less Altruistic or More Altruistic Than the Poor?
Last week, I received an email from Queendom, which is a outfit that provides tests and surveys for a variety of purposes and users. According to the press release contained in the email, its survey indicated that when it comes to the impact of money on whether a person is more egoistic or more altrustic, there “isn’t a great deal of difference between classes.”
The survey asked respondents to answer a series of questions, such as whether they “regularly do favors for others without being asked,” “will only do something nice for others for personal gain,” and “feel bad when they see someone less fortunate.” The outcomes, sorted into three categories of low socio-economic status, middle status, and high socio-economic status, pretty much came out the same way for all three groups, but for the question about giving to charities on a regular basis.
Whatever anyone wants to make of the survey results, it is important to understand that on these sorts of surveys, people lie. As explained in this advice to survey designers, people are dishonest on surveys if they fear their answer is contrary to what is socially acceptable, if they want to appear sophisticated, tolerant, or up-to-date, if they want to be mischievous, or if they dislike the survey or surveyor. Some things measured by surveys, such as the one in question, are often better resolved by observation. For example, a survey asking people if they have ever run a red light almost certainly generates results inconsistent with information gathered by observers stationed at intersections.
How people really feel reveals itself in actions. There’s a reason that the old saying, “Actions speak more loudly than words,” has hung around for so long. Unlike some survey responses, it’s true.
The survey asked respondents to answer a series of questions, such as whether they “regularly do favors for others without being asked,” “will only do something nice for others for personal gain,” and “feel bad when they see someone less fortunate.” The outcomes, sorted into three categories of low socio-economic status, middle status, and high socio-economic status, pretty much came out the same way for all three groups, but for the question about giving to charities on a regular basis.
Whatever anyone wants to make of the survey results, it is important to understand that on these sorts of surveys, people lie. As explained in this advice to survey designers, people are dishonest on surveys if they fear their answer is contrary to what is socially acceptable, if they want to appear sophisticated, tolerant, or up-to-date, if they want to be mischievous, or if they dislike the survey or surveyor. Some things measured by surveys, such as the one in question, are often better resolved by observation. For example, a survey asking people if they have ever run a red light almost certainly generates results inconsistent with information gathered by observers stationed at intersections.
How people really feel reveals itself in actions. There’s a reason that the old saying, “Actions speak more loudly than words,” has hung around for so long. Unlike some survey responses, it’s true.
Monday, March 17, 2014
Sometimes, They Cannot Win
On Wednesday, in Is a Tax Appeal Delayed a Tax Appeal Denied?, I discussed how an attempt to reduce city expenditures by reducing the pay of members of the city’s Board of Revision of Taxes is considered to be at least part of the reason almost 24,000 property tax valuation appeals have not yet been decided and are projected to be in the queue for quite some time. As a consequence of a court decision holding that the pay of incumbent members could not be reduced, the Board ended up with two members earning $70,000 salaries and the others being paid on an hourly basis. Wednesday’s post was the latest in a long series of commentaries on the saga of the BRT, beginning with An Unconstitutional Tax Assessment System, and continuing with Property Tax Assessments: Really That Difficult?, Real Property Tax Assessment System: Broken and Begging for Repair, Philadelphia Real Property Taxes: Pay Up or Lose It, How to Fix a Broken Tax System: Speed It Up? , Revising the Board of Revision of Taxes, How Can Asking Questions Improve Tax and Spending Policies?, This Just Taxes My Brain, Tax Bureaucrats Lose Work, Keep Pay, Testing Tax Bureaucrats Just Part of the Solution, A Citizen Vote on Taxes, Freezing Real Property Tax Reassessments: A Nice Idea, The Tax Price of a Flawed Tax System, Can Bad Tax Administration Doom the Tax?, Taxes and Priorities, R.I.P., BRT, A Tax Agency Rises from the Dead, Tax Law as Subterfuge: Best Use Valuation v. Current Market Valuation, How to Kill a Bad Tax System That Will Not Die?, The Bad Tax System That Will Not Die Might Get Another Lease on Life , Robbing Peter to Pay Paul, Tax Style, Don’t Rob Peter to Pay Paul: Collect Unpaid Taxes, The Philadelphia Real Property Tax: Eternal Circles , A Tax Problem, A Solution, So Why No Repair?, Can the Philadelphia Real Property Tax System Be Saved?, Alarm Bells Ringing for Philadelphia Property Tax Reform, and A New Chapter in the Philadelphia Property Tax Story.
Now comes news that City Council has voted to boost pay for all members of the Board so that all of them receive a $70,000 salary. The hope, or perhaps expectation, is that the raises will encourage the board members to work longer hours. Interestingly, the Board continues to exist even though the city tried to abolish it, because another court decision requires that the board be maintained as the venue for appeals of property tax valuations.
The change would increase one member’s pay from $50,000 to $70,000, which he would collect in addition to his $88,800 annual state pension. Another member, currently being paid $150 per hour, would earn $70,000, along with his $95,000 annual state pension. But for another member, who receives a $64,000 annual city pension, a switch from $150 per hour to a $70,000 salary would mean surrender of the pension. So, in a bizarre twist, the attempt to create a financial incentive for this member backfires, as he would earn more if he remained a $150 hourly employee.
It’s unclear whether a member can refuse the switch to a salary and remain as an hourly employee. It’s also unclear whether a “raise” leaving a member in worse financial shape would cause that member to resign from the board. Sometimes things aren’t as they appear to be, and often things aren’t simple. In this case the simple concept of a raise creates the appearance of something that it isn’t.
The measure needs the mayor’s approval. There are rumblings that it is being criticized in his office. So this story will continue.
Now comes news that City Council has voted to boost pay for all members of the Board so that all of them receive a $70,000 salary. The hope, or perhaps expectation, is that the raises will encourage the board members to work longer hours. Interestingly, the Board continues to exist even though the city tried to abolish it, because another court decision requires that the board be maintained as the venue for appeals of property tax valuations.
The change would increase one member’s pay from $50,000 to $70,000, which he would collect in addition to his $88,800 annual state pension. Another member, currently being paid $150 per hour, would earn $70,000, along with his $95,000 annual state pension. But for another member, who receives a $64,000 annual city pension, a switch from $150 per hour to a $70,000 salary would mean surrender of the pension. So, in a bizarre twist, the attempt to create a financial incentive for this member backfires, as he would earn more if he remained a $150 hourly employee.
It’s unclear whether a member can refuse the switch to a salary and remain as an hourly employee. It’s also unclear whether a “raise” leaving a member in worse financial shape would cause that member to resign from the board. Sometimes things aren’t as they appear to be, and often things aren’t simple. In this case the simple concept of a raise creates the appearance of something that it isn’t.
The measure needs the mayor’s approval. There are rumblings that it is being criticized in his office. So this story will continue.
Friday, March 14, 2014
Cigarettes, E-Cigarettes, and Taxes
I don’t smoke, so there are limits to what I understand about cigarettes and e-cigarettes. I do know that cigarettes are subject to special taxes, as are some other items and activities, such as alcohol and gambling. These special taxes are justified in part as providing revenue to offset the long-term societal costs of the items and activities, and in part as providing incentive for people to refrain from certain behavior. Yet at the same time, these activities are not prohibited, and some states even participate in activities such as gambling. Sometimes it is tempting to think that the legislative attitude simply is one of “they’re going to do this no matter what, so let’s tax it and get some revenue.”
According to this story, the governor of New Jersey proposes a new tax on e-cigarettes. Though e-cigarettes are not illegal in New Jersey, using them in public has been prohibited. It is unclear whether the proposed tax is designed to discourage the use of e-cigarettes or to provide funding for the long-term societal cost of their use. It’s unclear, as explained in this story, whether e-cigarettes help people stop smoking tobacco or encourage people who wouldn’t otherwise smoke tobacco to transition from non-smoking through e-cigarettes into tobacco use. Another study, according to this story, concluded that e-cigarettes causes an increase in the number of tobacco smokers.
It has been suggested that New Jersey’s proposed tax would push e-cigarette stores out of business because the tax would at least triple the cost of the liquid used in e-cigarettes, and encourage some users of e-cigarettes to turn to tobacco products. Others think that taxing e-cigarettes at rates less than those applicable to tobacco products would signal that the legislature thinks e-cigarettes are safer than tobacco.
Public hearings are scheduled to consider the proposal. They should be interesting.
According to this story, the governor of New Jersey proposes a new tax on e-cigarettes. Though e-cigarettes are not illegal in New Jersey, using them in public has been prohibited. It is unclear whether the proposed tax is designed to discourage the use of e-cigarettes or to provide funding for the long-term societal cost of their use. It’s unclear, as explained in this story, whether e-cigarettes help people stop smoking tobacco or encourage people who wouldn’t otherwise smoke tobacco to transition from non-smoking through e-cigarettes into tobacco use. Another study, according to this story, concluded that e-cigarettes causes an increase in the number of tobacco smokers.
It has been suggested that New Jersey’s proposed tax would push e-cigarette stores out of business because the tax would at least triple the cost of the liquid used in e-cigarettes, and encourage some users of e-cigarettes to turn to tobacco products. Others think that taxing e-cigarettes at rates less than those applicable to tobacco products would signal that the legislature thinks e-cigarettes are safer than tobacco.
Public hearings are scheduled to consider the proposal. They should be interesting.
Wednesday, March 12, 2014
Is a Tax Appeal Delayed a Tax Appeal Denied?
A tax appeal delayed is not a tax appeal denied if the taxpayer making the appeal is not required to pay the disputed tax until the disagreements are resolved, especially if interest and penalties do not accrue while the appeal is pending. This issue has popped up as the latest installment in the long-running story about Philadelphia and its difficulties with its real property tax. That story has been the subject of numerous posts, beginning with An Unconstitutional Tax Assessment System, and continuing with Property Tax Assessments: Really That Difficult?, Real Property Tax Assessment System: Broken and Begging for Repair, Philadelphia Real Property Taxes: Pay Up or Lose It, How to Fix a Broken Tax System: Speed It Up? , Revising the Board of Revision of Taxes, How Can Asking Questions Improve Tax and Spending Policies?, This Just Taxes My Brain, Tax Bureaucrats Lose Work, Keep Pay, Testing Tax Bureaucrats Just Part of the Solution, A Citizen Vote on Taxes, Freezing Real Property Tax Reassessments: A Nice Idea, The Tax Price of a Flawed Tax System, Can Bad Tax Administration Doom the Tax?, Taxes and Priorities, R.I.P., BRT, A Tax Agency Rises from the Dead, Tax Law as Subterfuge: Best Use Valuation v. Current Market Valuation, How to Kill a Bad Tax System That Will Not Die?, The Bad Tax System That Will Not Die Might Get Another Lease on Life , Robbing Peter to Pay Paul, Tax Style, Don’t Rob Peter to Pay Paul: Collect Unpaid Taxes, The Philadelphia Real Property Tax: Eternal Circles , A Tax Problem, A Solution, So Why No Repair?, Can the Philadelphia Real Property Tax System Be Saved?, Alarm Bells Ringing for Philadelphia Property Tax Reform, and A New Chapter in the Philadelphia Property Tax Story.
In the latest installment in this saga, it seems that it will take years for the Board of Revision of Taxes to work through the approximately 24,000 appeals that have been filed. More than $48 million in tax revenue has not been collected while the appeals are resolved. According to this report, one of the reasons that the process is taking so long, aside from the huge volume of appeals, is the decision of some board members to hold out for a pay increase. It is expected that by the end of this month, about 10 percent of the appeals will be resolved. At that rate it will take years to work through the appeals, and certainly more will be added to the backlog when another real property tax year rolls around.
Currently, though two members of the board are paid $70,000 a year for their work, others are paid as little as $150 per day, which works out to roughly $38,000 a year. City Council claims that it has made money available to the board to hire staff, but apparently that money was used to comply with a court order requiring back pay for several board members. The board spends two days a week listening to arguments on behalf of taxpayers, and three days a week dealing with appeals for which taxpayers have not requested the opportunity to make presentations. On those days, the board meets for about an hour, sometimes less. It seems that for $150 a day, board members aren’t inclined to put in 40-hour weeks. So now attempts are underway to increase the pay of all the board members to $70,000. The situation is muddied by the fact that the city had tried to reduce the pay for all the board members from $70,000 to $50,000 for the chair, $45,000 for the secretary, and $150 per meeting for the other members. But the courts held that pay could not be cut for members already holding office, which generated back pay for them, and left only the new members being paid $150 a day. Legislation is working its way through City Council that would restore the $70,000 salary for all board members, in an attempt to “make the BRT members feel encouraged to finish the hearings by the end of the year.” The Mayor and his spokesperson are questioning why this plan wasn’t brought forward months ago.
Getting through these appeals requires all the board members to put in full-time weeks. It makes no sense to pay two of them $70,000 a year and the others $150 a day. This is what happens when someone thinks that saving a few hundred thousand dollars by cutting government spending is a good idea, when in fact the cost of the delay triggered by the outcome delays collection of almost $50 million in tax revenue. It’s not unlike the foolishness of cutting the IRS budget and then wondering why there is a federal budget deficit, knowing that the annual $300 billion shortfall over several decades accounts for quite a chunk of the national debt. Short-term thinking, one of the banes of modern culture, is bad for long-term progress. Surely there will be more chapters in the Philadelphia property tax story.
In the latest installment in this saga, it seems that it will take years for the Board of Revision of Taxes to work through the approximately 24,000 appeals that have been filed. More than $48 million in tax revenue has not been collected while the appeals are resolved. According to this report, one of the reasons that the process is taking so long, aside from the huge volume of appeals, is the decision of some board members to hold out for a pay increase. It is expected that by the end of this month, about 10 percent of the appeals will be resolved. At that rate it will take years to work through the appeals, and certainly more will be added to the backlog when another real property tax year rolls around.
Currently, though two members of the board are paid $70,000 a year for their work, others are paid as little as $150 per day, which works out to roughly $38,000 a year. City Council claims that it has made money available to the board to hire staff, but apparently that money was used to comply with a court order requiring back pay for several board members. The board spends two days a week listening to arguments on behalf of taxpayers, and three days a week dealing with appeals for which taxpayers have not requested the opportunity to make presentations. On those days, the board meets for about an hour, sometimes less. It seems that for $150 a day, board members aren’t inclined to put in 40-hour weeks. So now attempts are underway to increase the pay of all the board members to $70,000. The situation is muddied by the fact that the city had tried to reduce the pay for all the board members from $70,000 to $50,000 for the chair, $45,000 for the secretary, and $150 per meeting for the other members. But the courts held that pay could not be cut for members already holding office, which generated back pay for them, and left only the new members being paid $150 a day. Legislation is working its way through City Council that would restore the $70,000 salary for all board members, in an attempt to “make the BRT members feel encouraged to finish the hearings by the end of the year.” The Mayor and his spokesperson are questioning why this plan wasn’t brought forward months ago.
Getting through these appeals requires all the board members to put in full-time weeks. It makes no sense to pay two of them $70,000 a year and the others $150 a day. This is what happens when someone thinks that saving a few hundred thousand dollars by cutting government spending is a good idea, when in fact the cost of the delay triggered by the outcome delays collection of almost $50 million in tax revenue. It’s not unlike the foolishness of cutting the IRS budget and then wondering why there is a federal budget deficit, knowing that the annual $300 billion shortfall over several decades accounts for quite a chunk of the national debt. Short-term thinking, one of the banes of modern culture, is bad for long-term progress. Surely there will be more chapters in the Philadelphia property tax story.
Monday, March 10, 2014
Are the Rich Different When It Comes to Discussing Money?
The topic of the email caught my eye. It simply stated, “Money is the last social taboo for the rich, reveals deVere study.” Curious, I looked more closely at the press release. Though I could not find the actual survey results, the press release noted that:
In the global survey conducted by deVere Group, one of the world's largest independent financial advisory organisations, 61 per cent of those polled ranked personal finance as the most difficult subject to discuss with family, friends and colleagues.My first reaction was not one of surprise, but one of curiosity. Did these results differ from how people not considered high-net-worth individuals would reply. Digging around, I discovered that Wells Fargo had done a similar survey of individuals aged 25 to 75, without regard to financial status. According to the news release, the results were a different:
It came ahead of politics (14 per cent), sex (11 per cent), religion (8 per cent), and health issues (6 per cent) in the study of 1,125 clients who have investable assets of more than £1m. The respondents came from, the U.K, the U.S., the United Arab Emirates, Hong Kong and South Africa.
A new survey from Wells Fargo (NYSE: WFC) revealed that Americans find discussing personal finances as difficult as talking about other thorny discussion topics like religion and politics. Nearly half of Americans say the most challenging topic to discuss with others is personal finances (44%), whereas death (38%), politics (35%), religion (32%), taxes (21%), and personal health (20%) rank as less difficult.It seems that a somewhat higher percentage of the high-net-worth individuals found finance discussions difficult. What is interesting is that despite that difference, for most people, conversations about money present the toughest challenge. That’s not a surprising result. So however the differences might be with respect to the other topics – the survey results are presented in a way that prevents comparison – it seems that rich, poor, or in between, talking about money continues to be a social taboo.
Friday, March 07, 2014
Cracking the Tax Protest Movement
Few people delight in paying taxes, though some people pay them with the same sort of acceptance that people project when stopping for a red light. There are people, however, who cannot abide compliance with societal norms. Some, equipped with sufficient resources, find ways to buy their way out of paying taxes. Others, frustrated that they lack those resources and resulting influence, rebel by taking matters into their own hands, refusing to pay taxes, and justifying their actions with voluminous quantities of nonsensical arguments. It is not difficult to understand the anger that motivates the tax protest movement, many of whose members would abandon it if they were able to obtain the special tax breaks that have been acquired by others.
The unfortunate thing about the tax protest movement is that most of the people in it are vulnerable folks who fall for the siren song of the ringleaders, just as those who support special tax breaks, even without benefitting from them, have fallen for the siren songs of those who procure special tax breaks for themselves and their clients. Just as most of those arguing for the wonderfulness of economic inequality take their words from a few propagandists, so, too, most people in the tax protest movement blindly follow the words and instructions of the movement’s ringleaders.
This is what happened to Steven T. Waltner. Following the advice given by Peter Hendrickson in “Cracking the Code: The Fascinating Truth About Taxation in America,” Waltner and his wife submitted returns showing zero wages, two deductions, and a zero tax liability. Listing their occupation as “private-sector workers,” they attached Forms 4852, Substitute for Form W-2, reporting zero wages, including boiler-plate statements that they did not receive wages. Waltner also attached a “correcting” Form 1099-B, on which he replaced the gross proceeds amount with a zero, and at the bottom of which he included more boiler-plate language.
Of course, the IRS issued notices of deficiency to the Waltners. The ensuing litigation generated enormous activity, ranging from multi-hundred-page discovery requests, dozens of orders by the Tax Court, and eventually the Waltners paid the taxes that were due. But the case didn’t end at that point. The IRS had asserted section 6673 sanctions against the Waltners, and the Waltners in turn asserted similar sanctions against the IRS. In Waltner v. Comr., T.C. Memo 2014-35, the Tax Court upheld a $2,500 penalty against Waltner, even though it was authorized to impose a penalty of as much as $25,000.
Rather than simply pointing out that the Waltners had filed frivolous returns and imposing the penalty, the Court took the time, and many pages, to rip apart Hendrickson’s book. The Court’s effort is intended to prevent others from wandering down the deceptive path on which Hendrickson has been leading people looking for a quick way to live life without contributing to what society provides them. Anyone who thinks Hendrickson is sharing any sort of valuable tax information needs to read the case to learn why he simply is regurgitating the same, long-disproven, nonsensical arguments that analytical examination readily identifies as silly and dangerous. The best part of the opinion, for me, having read numerous rebuttals of the tax protest creed, is the description of Hendrickson’s tax protest activities. The court notes that nowhere in his book does Hendrickson provide his credentials, confining himself to a claim that he is a “researcher, analyst and scholar.” The court continues, “Add to that felon and serial tax evader.” Hendrickson not only has been indicted for tax-related crimes, but also placing and using explosives in the mail, and he ultimately pled guilty to some of the charges. Subsequently, he was again indicted on 20 counts of federal tax crimes, and eventually convicted. At his trial, Hendrickson defended himself by making the same arguments he made in his book, and those arguments were soundly rejected by the court.
Even though Hendrickson’s ideas, broadcast in his book, have been rejected, some people seem intent to treat it as worthy of being followed. It doesn’t seem to matter to them that Hendrickson went to prison for following his own advice. Do they think they’re headed anywhere else if they persist in going along the same path? It doesn’t seem to matter to them that Hendrickson proclaims Irwin Schiff, another convicted ringleader of the tax protest movement, to be his mentor. They’re so angry about paying taxes that they would follow these Pied Pipers right over the cliff as they play their pipes.
Yes, the tax system is a mess. But the path to its reform is to clean up the Congress that is responsible for the mess. To do that, control of the Congress needs to be taken away from the moneyed interests that have corrupted it to their purposes. Going down the tax protest path does nothing but to strengthen the power of the moneyed elite over the Congress. If those in the tax protest movement took their energy, their anger, and their frustration, and directed those feelings into reforming the Congress, they’d be pleasantly surprised by the outcome.
The unfortunate thing about the tax protest movement is that most of the people in it are vulnerable folks who fall for the siren song of the ringleaders, just as those who support special tax breaks, even without benefitting from them, have fallen for the siren songs of those who procure special tax breaks for themselves and their clients. Just as most of those arguing for the wonderfulness of economic inequality take their words from a few propagandists, so, too, most people in the tax protest movement blindly follow the words and instructions of the movement’s ringleaders.
This is what happened to Steven T. Waltner. Following the advice given by Peter Hendrickson in “Cracking the Code: The Fascinating Truth About Taxation in America,” Waltner and his wife submitted returns showing zero wages, two deductions, and a zero tax liability. Listing their occupation as “private-sector workers,” they attached Forms 4852, Substitute for Form W-2, reporting zero wages, including boiler-plate statements that they did not receive wages. Waltner also attached a “correcting” Form 1099-B, on which he replaced the gross proceeds amount with a zero, and at the bottom of which he included more boiler-plate language.
Of course, the IRS issued notices of deficiency to the Waltners. The ensuing litigation generated enormous activity, ranging from multi-hundred-page discovery requests, dozens of orders by the Tax Court, and eventually the Waltners paid the taxes that were due. But the case didn’t end at that point. The IRS had asserted section 6673 sanctions against the Waltners, and the Waltners in turn asserted similar sanctions against the IRS. In Waltner v. Comr., T.C. Memo 2014-35, the Tax Court upheld a $2,500 penalty against Waltner, even though it was authorized to impose a penalty of as much as $25,000.
Rather than simply pointing out that the Waltners had filed frivolous returns and imposing the penalty, the Court took the time, and many pages, to rip apart Hendrickson’s book. The Court’s effort is intended to prevent others from wandering down the deceptive path on which Hendrickson has been leading people looking for a quick way to live life without contributing to what society provides them. Anyone who thinks Hendrickson is sharing any sort of valuable tax information needs to read the case to learn why he simply is regurgitating the same, long-disproven, nonsensical arguments that analytical examination readily identifies as silly and dangerous. The best part of the opinion, for me, having read numerous rebuttals of the tax protest creed, is the description of Hendrickson’s tax protest activities. The court notes that nowhere in his book does Hendrickson provide his credentials, confining himself to a claim that he is a “researcher, analyst and scholar.” The court continues, “Add to that felon and serial tax evader.” Hendrickson not only has been indicted for tax-related crimes, but also placing and using explosives in the mail, and he ultimately pled guilty to some of the charges. Subsequently, he was again indicted on 20 counts of federal tax crimes, and eventually convicted. At his trial, Hendrickson defended himself by making the same arguments he made in his book, and those arguments were soundly rejected by the court.
Even though Hendrickson’s ideas, broadcast in his book, have been rejected, some people seem intent to treat it as worthy of being followed. It doesn’t seem to matter to them that Hendrickson went to prison for following his own advice. Do they think they’re headed anywhere else if they persist in going along the same path? It doesn’t seem to matter to them that Hendrickson proclaims Irwin Schiff, another convicted ringleader of the tax protest movement, to be his mentor. They’re so angry about paying taxes that they would follow these Pied Pipers right over the cliff as they play their pipes.
Yes, the tax system is a mess. But the path to its reform is to clean up the Congress that is responsible for the mess. To do that, control of the Congress needs to be taken away from the moneyed interests that have corrupted it to their purposes. Going down the tax protest path does nothing but to strengthen the power of the moneyed elite over the Congress. If those in the tax protest movement took their energy, their anger, and their frustration, and directed those feelings into reforming the Congress, they’d be pleasantly surprised by the outcome.
Wednesday, March 05, 2014
Tax Fun and Tax Hilarity
Last Wednesday, in Making Taxes Fun, I reacted to a quip by Harry Gross in which he asked and answered a question, “Fairest [tax] of all? A self-assessed tax on men based on virility, and on women based on beauty.” I pointed out that, as a practical matter, it would be too easy for people to claim that they were “horrifically unattractive.”
An enterprising reader, far more steeped in popular culture than I am, sent me an email and pointed me in the direction of this number from Boardwalk Empire: Don’t Put a Tax on the Beautiful Girls. Just imagine an exemption for beautiful girls. It’s not difficult imagining the lobbying that would take place in favor of such an exemption. Nor is it difficult to imagine that every female would claim to qualify. But what about the handsome men? What would they do? One can only imagine. The entire concept is not only hilarious but ridiculous.
If anything, all of this simply proves that individuals are intent on seeking an edge over everyone else. Whether it’s going straight out of the left-turn lane, sneaking into a movie theater without paying, or getting a tax break based on some supposedly unique or limited feature or characteristic. Too often, the feature or characteristic has nothing to do with sensible measure of a tax base, but is hyped as having some rational connection with how revenue is raised. The point of the suggestion made by Harry Gross is that the best tax is one that requires declarations against one’s own interest. That, however, is not easy to construct.
So I’ll toss out another idea. Perhaps people should be taxed on income equal to the amount they claim as income when they apply for a loan or try to impress a date, and perhaps property taxes ought to be paid on the value of the homes, boats, cars, airplanes, and other items that people claim to own when they are trying to get an edge in some arena other than taxation.
Yes, sometimes tax policy can generate hilarity. And ridiculousness.
An enterprising reader, far more steeped in popular culture than I am, sent me an email and pointed me in the direction of this number from Boardwalk Empire: Don’t Put a Tax on the Beautiful Girls. Just imagine an exemption for beautiful girls. It’s not difficult imagining the lobbying that would take place in favor of such an exemption. Nor is it difficult to imagine that every female would claim to qualify. But what about the handsome men? What would they do? One can only imagine. The entire concept is not only hilarious but ridiculous.
If anything, all of this simply proves that individuals are intent on seeking an edge over everyone else. Whether it’s going straight out of the left-turn lane, sneaking into a movie theater without paying, or getting a tax break based on some supposedly unique or limited feature or characteristic. Too often, the feature or characteristic has nothing to do with sensible measure of a tax base, but is hyped as having some rational connection with how revenue is raised. The point of the suggestion made by Harry Gross is that the best tax is one that requires declarations against one’s own interest. That, however, is not easy to construct.
So I’ll toss out another idea. Perhaps people should be taxed on income equal to the amount they claim as income when they apply for a loan or try to impress a date, and perhaps property taxes ought to be paid on the value of the homes, boats, cars, airplanes, and other items that people claim to own when they are trying to get an edge in some arena other than taxation.
Yes, sometimes tax policy can generate hilarity. And ridiculousness.
Monday, March 03, 2014
Find Some Money, Pay Some Tax
Every now and then we read of someone finding something valuable. This time, it’s a California couple who found a stash of gold coins on their property. According to this story, the couple found eight cans containing 1,400 coins, valued at approximately $10 million.
The joy of the moment is tempered, of course, by the existence of income taxes, both federal and state. Must the couple pay tax? Yes. The value of the coins is included in the couple’s gross income. It is ordinary income. The law is settled. See, for example, Treasury Regulation section 1.61-14(a), Cesarini v. U.S., 296 F. Supp. 3 (N. D. Ohio 1969), aff’d, 428 F.2d 812 (6th Cir. 1970); Rev. Rul. 53-61, 1953-1 C.B. 17.
If the couple treat the coins as an investment does that turn the income into capital gain? No. Holding the coins as an investment generates capital gain or loss when the coins are sold by the couple. Capital gain or loss treatment requires a sale or exchange. Acquisition of something by finding it and reducing it to possession is not a sale or exchange. Assume that the coins in fact are worth $10 million. The couple reports $10 million of ordinary gross income, and obtains a basis of $10 million in the coins. If the couple hold the coins as an investment and sell them for, say, $11 million, there will be capital gain of $1 million. Whether the capital gain is long-term or short-term depends on when they sell the coins.
But if the couple treat the coins as inventory, any gain on subsequent sale of the coins would be ordinary income. According to the story, the couple plan to sell the coins individually or in small bundles using on-line sites. That approach raises the possibility that they will be treated as dealers.
It has been suggested that because the couple found the coins on land that they owned, that they purchased the coins when they purchased the land, that part of what they paid for the land should be treated as having been paid for the coins, that they thus invested in the coins, so that selling the coins generates capital gain. This argument simply prevents the couple from having gross income when they purchased the land equal to the difference between what they paid for it and its value as computed with $10 million of gold coins buried in it. In other words, the acquisition transaction by which they were enriched did not take place when they purchased the land, but when they extracted the excess value by discovering the coins. If instead of discovering coins they had discovered natural gas, oil, or minerals naturally in place and extracted those items, they would have gross income, not when they purchased the land but when they sold the natural gas or oil. At best, the argument supports a delay in the timing of the income but does not convert it into capital gain any more than a landowner who discovers and sells oil from the land has capital gain.
If the couple reports capital gain, the IRS surely will adjust their return. If they choose to contest that decision, they will end up in court, and the world will know who they are. To date, they have carefully protected their identity and the location of the land, understandably, and have chosen to remain anonymous. It is unlikely that they would surrender that anonymity for the sake of saving some tax dollars net of the cost of contesting the IRS assessment.
Thanks to the reader who raised the question about the tax treatment of this event.
The joy of the moment is tempered, of course, by the existence of income taxes, both federal and state. Must the couple pay tax? Yes. The value of the coins is included in the couple’s gross income. It is ordinary income. The law is settled. See, for example, Treasury Regulation section 1.61-14(a), Cesarini v. U.S., 296 F. Supp. 3 (N. D. Ohio 1969), aff’d, 428 F.2d 812 (6th Cir. 1970); Rev. Rul. 53-61, 1953-1 C.B. 17.
If the couple treat the coins as an investment does that turn the income into capital gain? No. Holding the coins as an investment generates capital gain or loss when the coins are sold by the couple. Capital gain or loss treatment requires a sale or exchange. Acquisition of something by finding it and reducing it to possession is not a sale or exchange. Assume that the coins in fact are worth $10 million. The couple reports $10 million of ordinary gross income, and obtains a basis of $10 million in the coins. If the couple hold the coins as an investment and sell them for, say, $11 million, there will be capital gain of $1 million. Whether the capital gain is long-term or short-term depends on when they sell the coins.
But if the couple treat the coins as inventory, any gain on subsequent sale of the coins would be ordinary income. According to the story, the couple plan to sell the coins individually or in small bundles using on-line sites. That approach raises the possibility that they will be treated as dealers.
It has been suggested that because the couple found the coins on land that they owned, that they purchased the coins when they purchased the land, that part of what they paid for the land should be treated as having been paid for the coins, that they thus invested in the coins, so that selling the coins generates capital gain. This argument simply prevents the couple from having gross income when they purchased the land equal to the difference between what they paid for it and its value as computed with $10 million of gold coins buried in it. In other words, the acquisition transaction by which they were enriched did not take place when they purchased the land, but when they extracted the excess value by discovering the coins. If instead of discovering coins they had discovered natural gas, oil, or minerals naturally in place and extracted those items, they would have gross income, not when they purchased the land but when they sold the natural gas or oil. At best, the argument supports a delay in the timing of the income but does not convert it into capital gain any more than a landowner who discovers and sells oil from the land has capital gain.
If the couple reports capital gain, the IRS surely will adjust their return. If they choose to contest that decision, they will end up in court, and the world will know who they are. To date, they have carefully protected their identity and the location of the land, understandably, and have chosen to remain anonymous. It is unlikely that they would surrender that anonymity for the sake of saving some tax dollars net of the cost of contesting the IRS assessment.
Thanks to the reader who raised the question about the tax treatment of this event.
Friday, February 28, 2014
The Decline in a City’s Middle Class
According to this story, a study sponsored by the Pew Charitable Trusts has determined that the percentage of people in Philadelphia who belong to the middle class has fallen from 59 percent in 1970 to 42 percent in 2010. The study did not determine whether those who left the city’s middle class fell into the lower-income class, moved out of the city, or died. What is clear is that they did not join the ranks of the city’s upper class, because the percentage of the city’s population in that group went from 11 percent in 1970 to 10 percent in 2010. The percentage of the city’s population in the lower class increased from 30 percent to 48 percent during the same period.
The thought that these statistics reflect mere geographical movement is negated by another bit of information from the study. During a comparable forty-year period, 1971 through 2011, the percentage of the nation’s population that belonged to the middle class fell from 61 percent. This news is exacerbated by a realization that the economic condition of the middle class also has fallen, because middle class income has stagnated.
The decline of the middle class is not because those in it lack education. The study revealed that in 1970, only 56 percent of the city’s middle class had at least a high school education, and only 18 percent had any college education. By 2010, 92 percent of the middle class had finished high school, and 50 percent had at least some college education.
According to the study, the biggest drop in the city’s middle class, from 55 percent to 48 percent of the population, took place during the 1980s. The biggest increase in lower-class membership, from 36 percent to 45 percent, took place during the same decade. That decade, hailed by many as a time of American prosperity, surely didn’t do wonders for Philadelphia’s middle class.
The thought that these statistics reflect mere geographical movement is negated by another bit of information from the study. During a comparable forty-year period, 1971 through 2011, the percentage of the nation’s population that belonged to the middle class fell from 61 percent. This news is exacerbated by a realization that the economic condition of the middle class also has fallen, because middle class income has stagnated.
The decline of the middle class is not because those in it lack education. The study revealed that in 1970, only 56 percent of the city’s middle class had at least a high school education, and only 18 percent had any college education. By 2010, 92 percent of the middle class had finished high school, and 50 percent had at least some college education.
According to the study, the biggest drop in the city’s middle class, from 55 percent to 48 percent of the population, took place during the 1980s. The biggest increase in lower-class membership, from 36 percent to 45 percent, took place during the same decade. That decade, hailed by many as a time of American prosperity, surely didn’t do wonders for Philadelphia’s middle class.
Wednesday, February 26, 2014
Making Taxes Fun
This one is clever. A reader wrote to Harry Gross, finance columnist for the Philadelphia Daily News, complaining about the complexity of the federal income tax. In his response, after giving several dozen examples of the deductions and credits that needlessly clutter the income tax law, Harry Gross wrote, “Fairest [tax] of all? A self-assessed tax on men based on virility, and on women based on beauty.” What a clever idea. Imagine how many people would end up describing themselves as horrifically unattractive! But that could be done at little cost. Perhaps the fairest tax is a self-assessed tax on people based on how much they contribute to the economic well-being of the world. Just think. The ultra wealthy who agree with Tom Perkins, as discussed in Getting to the Root of the Problem, that “The 1 percent work harder, the 1 percent are much bigger factors in all forms of our society” would be forced to avoid taxes by claiming that they are miniscule factors. Imagine asking for a raise after claiming that one’s contribution to societal well-being is nil. Or perhaps this idea might catch on. Instead of using the Tom Perkins votes-based-on-wealth absurdity, discussed in Some Ultra Rich Reveal Their Hands: Intentional or Accidental?, perhaps votes could be assigned on the basis of how much one pays in taxes.
Sometimes, especially during tax season, it helps to find humor in the tax world. It can require digging deep or reaching far, but it’s worth it. Thank you, Harry Gross, for making me laugh and inspiring me to think about taxes in a fun way.
Sometimes, especially during tax season, it helps to find humor in the tax world. It can require digging deep or reaching far, but it’s worth it. Thank you, Harry Gross, for making me laugh and inspiring me to think about taxes in a fun way.
Monday, February 24, 2014
Why Does Deep Inequality Matter?
It is important to understand that objections to income and wealth inequality, such as those I’ve shared in Getting to the Root of the Problem, Absurdity Breeds More Absurdity, Income and Wealth Inequality: A Threat, Not a Distraction, Working Hard?, and Some Ultra Rich Reveal Their Hands: Intentional or Accidental? are not objections to inequality. There simply is no way that absolute income or wealth equality can be attained. It is administratively unworkable, and the cost of accomplishing it would be too great. The objection is to deep inequality, the situation in which the disproportionality is severe and unwarranted by any sort of measuring stick. Those who claim that the wide discrepancies are the product of the market place conveniently ignore the fact that the market is skewed, and skewed in favor of those with disproportionate wealth and income, so that they have the opportunity to increase the disproportionality.
Last week, Eric Liu explained, in a commentary that needs to be read by everyone who votes or should be voting, why the suggestion by Tom Perkins that each voter should be given a number of votes equal to the voter’s wealth in dollars doesn’t present as radical a change as it appears to be. Liu draws our attention to information that most people haven’t noticed, because if they had, the outcry would be even louder than it has been.
Liu begins by asking why Perkins is getting attention. What Perkins says, according to Liu, reveals that “he has no command of American social or political history, no appreciation for the multigenerational legacy of public investment that made his success possible, and no apparent empathy for anyone outside his rarefied circle.” But his comments get widespread coverage simply “[b]ecause he's spectacularly rich.”
Liu then turns to voting booth strength. Among voters with incomes of $150,000 or more, 78 percent vote. On the other hand, among voters with incomes of less than $15,000, only 41 percent vote. The rich vote at twice the rate as do the poor. One cause is that too many of the poor aren’t getting themselves – or cannot get themselves – up and out to the polling place. On the other hand, the poor who are aware of the campaign by the rich to disenfranchise them through the pretext of voter ID concerns are probably so discouraged that they have given up. The rich run the country, and when this is the outcome, they have some explaining to do.
Beyond voting, very few of the poor, and a shrinking sliver of the middle class, show up as political donors, lobbyists, or legislators. During the 2012 election cycle, one-tenth of one percent, or a mere 31,000 people, accounted for 28 percent of campaign contributions, and surely their corporations accounted for yet another chunk. When it comes to lobbyists, 894 of them tossed $34 million to political candidates as part of the process of buying legislation, dictating policy, and running the government.
The ultra rich already have disproportionate advantages in the political process, and it’s one that they hold without needing to implement the votes-tied-to-dollars-owned nonsense trotted out by Perkins. They benefit from a tax law flaw, one that I have criticized for decades. Their dividends, capital gains, and carried interests are taxed at rates far lower than those applicable to salaries and wages. The rich know how to convert their income into low-taxed and no-taxed items, whereas the poor and middle class have no genuine opportunity to turn their compensation into dividends and carried interests, or to circumvent employment taxes in the manner used by those with sufficient wealth to do so. What’s galling is that as the rich find ways to get legislatures to give them and their corporations tax breaks, they continue to whine and cry about how horribly burdened they are with taxes. It’s more than greed. It’s an addiction.
Liu’s conclusion is well worth sharing:
Last week, Eric Liu explained, in a commentary that needs to be read by everyone who votes or should be voting, why the suggestion by Tom Perkins that each voter should be given a number of votes equal to the voter’s wealth in dollars doesn’t present as radical a change as it appears to be. Liu draws our attention to information that most people haven’t noticed, because if they had, the outcry would be even louder than it has been.
Liu begins by asking why Perkins is getting attention. What Perkins says, according to Liu, reveals that “he has no command of American social or political history, no appreciation for the multigenerational legacy of public investment that made his success possible, and no apparent empathy for anyone outside his rarefied circle.” But his comments get widespread coverage simply “[b]ecause he's spectacularly rich.”
Liu then turns to voting booth strength. Among voters with incomes of $150,000 or more, 78 percent vote. On the other hand, among voters with incomes of less than $15,000, only 41 percent vote. The rich vote at twice the rate as do the poor. One cause is that too many of the poor aren’t getting themselves – or cannot get themselves – up and out to the polling place. On the other hand, the poor who are aware of the campaign by the rich to disenfranchise them through the pretext of voter ID concerns are probably so discouraged that they have given up. The rich run the country, and when this is the outcome, they have some explaining to do.
Beyond voting, very few of the poor, and a shrinking sliver of the middle class, show up as political donors, lobbyists, or legislators. During the 2012 election cycle, one-tenth of one percent, or a mere 31,000 people, accounted for 28 percent of campaign contributions, and surely their corporations accounted for yet another chunk. When it comes to lobbyists, 894 of them tossed $34 million to political candidates as part of the process of buying legislation, dictating policy, and running the government.
The ultra rich already have disproportionate advantages in the political process, and it’s one that they hold without needing to implement the votes-tied-to-dollars-owned nonsense trotted out by Perkins. They benefit from a tax law flaw, one that I have criticized for decades. Their dividends, capital gains, and carried interests are taxed at rates far lower than those applicable to salaries and wages. The rich know how to convert their income into low-taxed and no-taxed items, whereas the poor and middle class have no genuine opportunity to turn their compensation into dividends and carried interests, or to circumvent employment taxes in the manner used by those with sufficient wealth to do so. What’s galling is that as the rich find ways to get legislatures to give them and their corporations tax breaks, they continue to whine and cry about how horribly burdened they are with taxes. It’s more than greed. It’s an addiction.
Liu’s conclusion is well worth sharing:
In short, the outrage is not what a Tom Perkins says out loud; the outrage is that we already have something like the system he fancifully, condescendingly proposes.Perhaps these eloquent words will encourage people to read his entire commentary He understands why deep inequality is a serious threat, and he explains it well. Go, and read.
Policy wonks and heroic citizen activists have all proposed reforms. We don't lack possible remedies. What we've lacked is the will to force our government to enact them. And this is why the outrageous self-justifications of an imperious hyper-elite are, perversely, very helpful now.
The game is rigged. Having the likes of Tom Perkins rub our faces in it may be insult enough to awaken us. He suggests giving big money even more political power. Imagine a movement going the other way. Imagine a concerted citizen effort to double voter registration and turnout among poor and working Americans. Imagine cross-partisan collaborations between right and left to curb crony capitalism.
Let's not kid ourselves: It wouldn't be easy to unrig the game and revive the principle of equal citizenship. But let's not kid ourselves about this fact either: The rich already have more votes than the rest of us. The only question is whether we will continue to tolerate it.
Friday, February 21, 2014
Another Weakness of the Anti-Tax Silliness
As snow and ice storms have been battering the Midwest, the Mid-Atlantic, the Southeast, and New England, states, counties, cities, towns, and townships have been spending far more on salt supplies, fuel, and overtime for plow drivers and other personnel than had been budgeted. For example, according to this report, Massachusetts has already exceeded its snow removal budget for the fiscal year. Similar reports are coming in for places such as Norwich, Connecticut, Bloomington, Illinois, and towns in the New York City area.
These jurisdictions have three choices. First, they can stop clearing roads and highways of ice and snow. Surely that is an outcome that would not find favor with anyone other than those who would privatize snow removal so that people could pay more for the same services in order to put more money into the pockets of those who already have more than enough money funneled their way. Second, they can shift money from other budget lines, such as stopping pothole repairs, closing parks and recreation centers, firing police, shutting down firehouses, or mothballing EMT services. Third, they can raise taxes. That’s the sensible thing to do, but it will bring howls of protest from the anti-tax crowd, who, I suppose, think that plow drivers should work for free.
Perhaps one silver lining in this dark and dreary winter is that some folks previously enchanted by the siren song of the anti-tax crowd will come to realize that taxes are a good thing. With that realization, perhaps they will see past the superficiality of the anti-tax sloganeering and recognize the anti-tax campaigns for the threats that they are.
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These jurisdictions have three choices. First, they can stop clearing roads and highways of ice and snow. Surely that is an outcome that would not find favor with anyone other than those who would privatize snow removal so that people could pay more for the same services in order to put more money into the pockets of those who already have more than enough money funneled their way. Second, they can shift money from other budget lines, such as stopping pothole repairs, closing parks and recreation centers, firing police, shutting down firehouses, or mothballing EMT services. Third, they can raise taxes. That’s the sensible thing to do, but it will bring howls of protest from the anti-tax crowd, who, I suppose, think that plow drivers should work for free.
Perhaps one silver lining in this dark and dreary winter is that some folks previously enchanted by the siren song of the anti-tax crowd will come to realize that taxes are a good thing. With that realization, perhaps they will see past the superficiality of the anti-tax sloganeering and recognize the anti-tax campaigns for the threats that they are.
