Friday, April 10, 2020

I Agree, It’s Time for an Excess Profits Tax 

Some tax commentators are suggesting that it’s time for an excess profits tax. For example, Reuven Avi-Yonah explains his proposal in It’s Time to Revive the Excess Profits Tax, Nick Shaxson provides his similar opinion in Tax justice and the coronavirus, Emmanuel Saez and Gabriel Zucman share their viewpoint in Jobs Aren’t Being Destroyed This Fast Elsewhere. Why Is That?, and Jeremy Kahn offers the same perspective in World War II offers lessons—and warnings—for the coronavirus fight.

The imposition of an excess profits tax is not a new idea. It was used during both World Wars. That’s why Avi-Yonah uses the word “revive” in the title of his commentary. The design already exists, and only a few tweaks are needed to implement it.

Of course, those who are raking in substantial profits are likely to object to this tax. They surely would be vociferously opposed if the rate were set at what it was in some previous years when the tax applied. The rate was as high as 95 percent.

The excess profits tax was enacted during wartime because wars cause economic disruption. So, too, do pandemics, though that is not the reason several national leaders have referred to the effort to combat the SARS-CoV-2 virus as a war. The economic disruption adversely affects many individuals and businesses, while it provide a handful of individuals and corporations an opportunity to rake in significant profits, not because they have invented something but because they are benefitting from the distress of others. They are in a position to raise prices to shocking levels, and some have already done so. Others are manipulating markets to leverage themselves into profits that do not reflect improvements in the quality of what they are brokering, but their ability to take advantage o their relationships with those who supposedly are protecting the markets. Still others are putting buyers into the unfortunate position of competing for falsely scarce equipment and supplies by bidding up prices.

The anti-tax crowd surely will argue that an excess profits tax will discourage individuals and companies from selling what the marketplace needs in the time of a pandemic. That’s true. It will cause profiteers to decide that it’s not worth milking the market for every possible penny of a profit because almost all of that profit will be remitted to a federal or state Treasury. Thus, it becomes an incentive to cut prices and desist from price gouging. Whether economic benefit flows to the distressed portion of the economy through excess profits tax revenue or through the reduction and normalization of prices.

Wars and pandemics ought not be opportunities to businesses to make money hand over fist. That happens, it always has happened, but that doesn’t mean it ought to continue to happen. Even if an excess profits tax doesn’t put an end to pandemic profiteering, it can put a big dent into it. And that, in the long run, is much more beneficial for economic recovery than is the further enrichment of the wealthy and the further impoverishment of everyone else.

Wednesday, April 08, 2020

A Frightening Tax Story 

Reader Morris directed my attention to what he called a children’s book called Tax Story. The site describes itself as a place to “Find Stories and Create Books for Kids.” I’m not certain what is meant by “kids” because some of the words in Tax Story aren’t what I expect children in the early grades to be reading. But my concern is the number of errors in the book. Reader Morris pointed out some of them to me. I found more. I will go through the book sentence by sentence.

According to the book, Jack is a pirate who wants to claim his crew as dependents. That’s problematic, because it is unlikely that the crew will fit the definition. However, the story did not state that he did so, only that he wanted to do so. The story continues by stating that Jack went to the post office and “picked up his W-2 form.” Well, first of all, Jack is described as an independent contractor pirate so who would be issuing a W-2 form to him? And perhaps he is picking up mail at the post office, and the mail includes, weirdly, a W-2 form but the story also notes that Jack tries to pick up a 1040 EZ form, so the implication is that one goes to the post office to pick up W-2 forms and 1040 EZ forms. He doesn’t get a 1040 EZ form because “he made to [sic] much money.”

Jack then picks up IRS Publication 561 “so he could figure out the value of the goods he had donated.” Technically, that publication simply tells Jack HOW to figure out the value of the goods he had donated. That is a fact question and it requires evidence not found in Publication 561.

The story tells us that “Jack found out that he would only receive a standard deduction because he was not married filing jointly.” Someone who is married and files separately indeed can get a standard deduction, provided the spouse does not itemize deductions.

Jack then “discovered that he had sent to [sic] much in withholdings to the government,” but again, who is withholding taxes from Jack’s pay if Jack is an independent contractor pirate? Worse, Jack “had received several tax credits due to his charity work,” but not only does charity work not generate a tax benefit, as only donations of property do, but the benefit is not a credit but a deduction.

Jack then “requested a direct deposit, but because he did not have a bank account, an agent of the Internal Revenue Service (IRS) cane and gave Jack his large refund.” Goodness, that is not how refunds of any size are delivered to taxpayers. Absent direct deposit, a check is sent in the mail.

The author of the book is “jarredcope.” Nothing on the web site provides any information about him, other than he joined the site in 2013. The book bears a copyright of 2010, but it is unclear if that was when the book was written. A thought popped into my head. Perhaps he is himself a child and is writing a story based on what he has heard others say about taxes, or what he thinks he has heard others say about taxes. So I did a little research, and the only Jarred Cope I find graduated from high school in 2014. So if he is the author of the book, he published it when he was a high school junior. If he is the author, I then wondered if he based the story on what he was being taught in a high school business or similar course.

So I don’t know if the author of the book should be criticized, though perhaps running it by a tax professional would have been wise. Yet I don’t know what constraints were put on him when he wrote the book. Was he prohibited from doing research or getting advice? I don’t know to what extent he was misinformed. Perhaps he was restricted to what he was taught in a class, and there’s no way to know if he was taught the wrong things or didn’t pick up what was being taught correctly. Yet if it were the latter, would what I presume was an assignment that he later published not have been returned to him with corrections?

I worry how many people are reading this book and coming away with wrong ideas about how the federal income tax works. But, there are so many books and articles on the web with erroneous information that this book is just one drop of water in an ocean of error.

Monday, April 06, 2020

Was Tax Avoidance the Reason for This Bizarre Transaction? 

Sometimes I wonder why television court shows with episodes involving tax tend to show up in clusters. Is it my viewing habit? Perhaps. Is it purely random? Perhaps. Maybe someone in need of a research topic can study why there is such a feast-or-famine aspect to tax issues showing up in television court shows. No matter, it’s time for another one, to be added to the list that includes Judge Judy and Tax Law, Judge Judy and Tax Law Part II, TV Judge Gets Tax Observation Correct, The (Tax) Fraud Epidemic, Tax Re-Visits Judge Judy, Foolish Tax Filing Decisions Disclosed to Judge Judy, So Does Anyone Pay Taxes?, Learning About Tax from the Judge. Judy, That Is, Tax Fraud in the People’s Court, More Tax Fraud, This Time in Judge Judy’s Court, You Mean That Tax Refund Isn’t for Me? Really?, Law and Genealogy Meeting In An Interesting Way, How Is This Not Tax Fraud?, A Court Case in Which All of Them Miss The Tax Point, Judge Judy Almost Eliminates the National Debt, Judge Judy Tells Litigant to Contact the IRS, People’s Court: So Who Did the Tax Cheating?, “I’ll Pay You (Back) When I Get My Tax Refund”, Be Careful When Paying Another Person’s Tax Preparation Fee, Gross Income from Dating?, Preparing Someone’s Tax Return Without Permission, When Someone Else Claims You as a Dependent on Their Tax Return and You Disagree, Does Refusal to Provide a Receipt Suggest Tax Fraud Underway?, When Tax Scammers Sue Each Other, One of the Reasons Tax Law Is Complicated, An Easy Tax Issue for Judge Judy, Another Easy Tax Issue for Judge Judy, Yet Another Easy Tax Issue for Judge Judy, Be Careful When Selecting and Dealing with a Tax Return Preparer, Fighting Over a Tax Refund, Another Tax Return Preparer Meets Judge Judy, Judge Judy Identifies Breach of a Tax Return Contract, When Tax Return Preparation Just Isn’t Enough, Fighting Over Tax Dependents When There Is No Evidence, If It’s Not Your Tax Refund, You Cannot Keep the Money, Contracts With Respect to Tax Refunds Should Be In Writing, Admitting to Tax Fraud When Litigating Something Else, When the Tax Software Goes Awry. How Not to Handle a Tax Refund, Car Purchase Case Delivers Surprise Tax Stunt, and Wider Consequences of a Cash Only Tax Technique.

This time it was a rerun of Hot Bench season 6, episode 34, which I had not previously seen. So perhaps my viewing pattern is a factor in when I get to write about television court shows that involve tax issues.

The plaintiff, who operates a solar panel business, entered into an arrangement with a third party to purchase an interest in the plaintiff’s business. The plaintiff directed the third party to send a check for the purchase price of shares in the company to the company’s business manager rather than to the plaintiff. The plaintiff directed the business manager, who was inexperienced and on the job for only a few months, to deposit the check into a bank account in her name that had been set up by the plaintiff. The plaintiff also directed the office manager to then withdraw the amount of the check in cash and deliver the cash to him. The plaintiff sued the office manager because, according to the plaintiff, she failed to deliver the cash to him. The office manager testified that she did deliver the cash to the plaintiff.

When asked why he structured the transaction in this manner, the plaintiff replied that he did so because he did not have a bank account. But on further examination, he admitted that he did have a business bank account and that checks had been deposited into it. The plaintiff also added that the defendant office manager would be give a Form 1099 for the amount of the check she deposited. When asked to provide proof that the defendant did not give him the cash, the plaintiff offered several requests sent to the defendant shortly before the trial but could not provide proof requested by the judges that he had reacted at the time of the check deposit with inquiries about the alleged failure of the defendant to deliver the cash.

The third party who was buying shares in the plaintiff’s company testified that he wrote the check to the office manager because he was told to do so because her name was on the account, and that he was also told that the check would clear more quickly if he did it that way. He admitted on questioning that it did seem odd to him, and one of the judges remarked, not odd, but stupid. To prove what the transaction was, the plaintiff submitted a stock purchase agreement, which turned out to be unsigned, and to which was attached a notarized statement having nothing to do with the unsigned stock purchase agreement.

An independent contractor who worked as the operations manager for the plaintiff testified that in her time doing work for the plaintiff she had seen similar dealings that she characterized as shady. She described the defendant office manager as honest, and claimed that the defendant had paid the cash to the plaintiff. She noted that the office manager was retained as an employee of the plaintiff’s company for at least two more months after the check was deposited, and suggested that this retention was inconsistent with the plaintiff’s claim that the defendant did not pay him the cash. The plaintiff admitted that the defendant had continued to be employed by the plaintiff’s company for two months after the transaction. The independent contractor also testified that the plaintiff was being sued by other people in multiple cases, including one in which the independent contractor was suing the plaintiff for nonpayment.

During the trial, the judges offered several observations. One noted that it made no sense to issue a Form 1099 to the defendant, who was an employee and not an independent contractor. One of the judges described the situation as a bizarre arrangement and that its only purpose seemed to be tax avoidance, in an attempt to have the amount in the check taxed to the defendant. One of them pointed out that neither party seemed upset about not having the money, and said that something wasn’t “sitting right” about the situation. One of the judges suggested the situation should be referred for prosecution, pointing out that tax fraud puts a burden on taxpayers who pay what they owe.

In chambers, one judge said she was unclear if it was tax fraud or some other scheme. They all agreed that the plaintiff did not have clean hands. They also agreed that he did not prove that the defendant did not pay him the cash. The judges were unanimous that the plaintiff had committed a fraud.

In the closing interview, the plaintiff said he was going to file a police report against the defendant for theft. Asked about possible IRS action, he replied that he was unconcerned.

Surely there are missing facts. Something isn’t right. For example, if the check written by the third party was to purchase additional shares issued by the plaintiff’s company, it would not constitute gross income to anyone. So what would be the point of shifting it into the defendant’s bank account? Maybe the check was for stock owned by the plaintiff, with a significant amount of gain, possibly short-term capital gain. The transaction surely was designed to hide something, probably to hide it from the IRS. Whenever something is made more complicated than it needs to be, there’s something else happening. I doubt we will ever know what was underfoot in this situation.

Friday, April 03, 2020

Of Course He Does Not Understand Basic Tax Law and the Separation of Powers Doctrine 

So the President, according to various reports, including this one, wants to “restore corporate tax deductions for business meals” because the coronavirus outbreak is hurting restaurants. He explained that he had “spoken with celebrity restaurateurs including Wolfgang Puck, Daniel Boulud and Jean-Georges Vongerichten on the subject.” I wonder if he speaks with restaurant owners who are not celebrities or campaign donors. I also wonder why he wants to restore the deduction for corporations but not for individuals, partnerships, and limited liability companies.

The President explained that he had “asked Treasury Secretary Steven Mnuchin and Labor Secretary Eugene Scalia ‘to immediately start looking into the restoring of the deductability of meals and entertainment costs for corporations.’” Those deductions had been severely curtailed by that unwise 2017 tax legislation, and cut back the deductions not only for corporations, but also for individuals, partnerships, and limited liability companies. Repealing those restrictions would benefit hotels, golf clubs, and resorts owned by Trump and his family members, as they include “high-end restaurants on site.” Vongerichten operates the top-end restaurant in the Trump International Hotel and Tower. Is there some sort of mutual back-slapping underway here?

Apparently the President does not realize that his Treasury Secretary and Labor Secretary cannot change the tax law. He needs Congress to do that. Persuading Congress to lift the restriction on corporations but no one else might not be so easy to do.

Changing the deduction rules would have little or no immediate effect even on the restaurants that would benefit. So long as people are under stay-at-home orders, they should not be patronizing sit-down restaurants. I wonder if these top-end restaurants do take-out and delivery. I don’t know. I’ve never asked. I’ve never patronized one.

This proposal comes from a guy who back in 2015 claimed, “Who Knows Taxes Better Than Me?,” as I reported in ”Who Knows Taxes Better Than Me?”. Back then, I noted that his statements about “fair tax” and “flat tax” proposals “demonstrate [he] know[s] very little about taxation that matters.”

Ignorance is dangerous. It is particularly dangerous when exhibited by those with serious responsibilities.

Wednesday, April 01, 2020

Wider Consequences of a Cash Only Tax Technique  

It’s time for another television court show commentary. There’s no predicting when one of the episodes I watch will have a tax angle. But when one does, it’s time for me to comment. I’ve done that more than a few times, with posts such as Judge Judy and Tax Law, Judge Judy and Tax Law Part II, TV Judge Gets Tax Observation Correct, The (Tax) Fraud Epidemic, Tax Re-Visits Judge Judy, Foolish Tax Filing Decisions Disclosed to Judge Judy, So Does Anyone Pay Taxes?, Learning About Tax from the Judge. Judy, That Is, Tax Fraud in the People’s Court, More Tax Fraud, This Time in Judge Judy’s Court, You Mean That Tax Refund Isn’t for Me? Really?, Law and Genealogy Meeting In An Interesting Way, How Is This Not Tax Fraud?, A Court Case in Which All of Them Miss The Tax Point, Judge Judy Almost Eliminates the National Debt, Judge Judy Tells Litigant to Contact the IRS, People’s Court: So Who Did the Tax Cheating?, “I’ll Pay You (Back) When I Get My Tax Refund”, Be Careful When Paying Another Person’s Tax Preparation Fee, Gross Income from Dating?, Preparing Someone’s Tax Return Without Permission, When Someone Else Claims You as a Dependent on Their Tax Return and You Disagree, Does Refusal to Provide a Receipt Suggest Tax Fraud Underway?, When Tax Scammers Sue Each Other, One of the Reasons Tax Law Is Complicated, An Easy Tax Issue for Judge Judy, Another Easy Tax Issue for Judge Judy, Yet Another Easy Tax Issue for Judge Judy, Be Careful When Selecting and Dealing with a Tax Return Preparer, Fighting Over a Tax Refund, Another Tax Return Preparer Meets Judge Judy, Judge Judy Identifies Breach of a Tax Return Contract, When Tax Return Preparation Just Isn’t Enough, Fighting Over Tax Dependents When There Is No Evidence, If It’s Not Your Tax Refund, You Cannot Keep the Money, Contracts With Respect to Tax Refunds Should Be In Writing, Admitting to Tax Fraud When Litigating Something Else, When the Tax Software Goes Awry. How Not to Handle a Tax Refund, and Car Purchase Case Delivers Surprise Tax Stunt.

This time, it was Judge Judy’s turn. The title of episode 183 of season 24 got my attention: “I'm a Cash Guy, Not a 'Tax' Guy!” Though the title suggested that a tax issue was front and center, after a few minutes of watching, I realized it was not. So it took a bit of time to make the connection, and it will take a bit of reading to get to the clincher.

The plaintiff sued his former friend, demanding the return of property, and seeking damages for the defendant’s alleged filing of a false police report. The facts weren’t too complicated.

The plaintiff had been doing work for the defendant. At a previous time, because the plaintiff needed a truck to do the work he was doing for the defendant, the defendant gave the plaintiff a truck in exchange for work that the plaintiff had done. That truck, however, became unreliable. So the plaintiff transferred that truck back to the defendant, and asked the defendant’s help in getting a new truck. The plaintiff had $1,000 but did not have adequate credit. So the new truck was purchased in the defendant’s name, and the defendant agreed to have the bank take monthly payments out of his bank account. The plaintiff and defendant agreed that the plaintiff would pay the defendant each month the amount taken out of the defendant’s bank account each month.

The truck was purchased in April 2019, with the first payment due in May 2019. The plaintiff made the agreed-upon payments to the defendant until September 2019. At some point there was discussion about refinancing the truck, but that did not happen.

In June, the plaintiff and defendant had some sort of dispute about the work that the plaintiff was doing. The outcome of that dispute was not clear, other than it resurfaced in September. Apparently the plaintiff thought he was entitled to payment for some work he did for the defendant, but the defendant disagreed. So the plaintiff decided not to make the required October payment to the defendant. The defendant’s wife contacted the plaintiff and told him he had a choice. He could either make the October payment or return the truck to the defendant. The plaintiff testified that he told the defendant that the finance company had put everything on hold because of the supposed refinancing plan. Whether that was true was not established. The defendant, however, wen to the police, told the police he had loaned a truck to a friend who refused to return it. The police tried to contact the plaintiff, and after he failed to respond, put the truck in the category of stolen. Shortly thereafter, the police stopped the plaintiff while he was driving the truck, took the truck, and put it into impound. The defendant’s wife and son got the truck out of impound.

The plaintiff sued for return of his property that he said was in the truck. He also claimed that the defendant had filed a false police report. Judge Judy first determined that the defendant had not filed a false police report, had told the police true facts, and had not characterized the truck as stolen, as that was something the police decided. So she dismissed that part of the plaintiff’s complaint. Next, after the defendant denied that he had any of the plaintiff’s property, the judge dismissed that part of the plaintiff’s complaint, and told the plaintiff that he should sue the defendant’s wife. The plaintiff claimed he had done so and the case was pending, but the defendant countered that his wife, who was not in the courtroom, had prevailed in that lawsuit.

As the trial progressed, Judge Judy asked the plaintiff why he was unable to purchase and finance the truck in his own name. The plaintiff explained he did everything “in cash.” He described himself as a “cash only” guy. Judge Judy remarked, “You’re a cash guy, not a tax guy,” noting that his cash-only approach prevented the accumulation of information that would contribute to a better credit score. When Judge Judy asked the plaintiff to provide proof he paid the defendant each month, the plaintiff answered that he had no receipts. Judge Judy pointed out that proving things is difficult when someone goes the cash-only route to avoid taxes. The plaintiff countered that he paid taxes, had been audited several years ago, and that the IRS “did my taxes.” My guess is that he was not filing returns and eventually was tracked down by the IRS, which then prepared substitute returns. It was unclear how many years were involved, how long ago it happened, and whether the plaintiff was now filing tax returns.

The lesson is simple. The cash-only-avoid-taxes approach damages those who take that route in more ways than simply being tracked down by the IRS and being required to pay up not only taxes but also interest and penalties. It wrecks credit scores, putting people into situations like the plaintiff found himself when he wanted to purchase a truck. It makes it almost impossible to prove things in court because the no-paper-trail aspect of the cash-only approach deprives those on that path from having evidence that would benefit them at some point.

With the evidence that a deadly virus can linger on cash and coins, with the ever-growing popularity of credit, debit, and gifts cards, and with the increasing use of mobile financial transfer apps, it would not be surprising to discover, in a few years, that cash has disappeared. When that happens, the cash-only tax avoidance crowd will find themselves looking for some other way to hide their transactions. Whether they succeed remains to be seen.

Monday, March 30, 2020

Tax Makers and Tax Takers 

Perhaps I should call this commentary “Revenue Makers and Revenue Takers.” I’ve written about makers and takers in the past, mostly in reaction to the anti-tax crowd that chirps away bemoaning the existence of “takers” while they, holding themselves or their clients or their idols as “makers,” maneuver to downsize government by cutting expenditures for the “takers” and taxes paid by the “makers.” Their arguments sometimes find traction among those who think they pay too much in taxes, some of whom actually are heavily taxed but some of whom are not. And, of course, the genuine question is not whether “making” and “taking” ought to be measured simply by taxes paid and government benefits received, but whether what is made by the “taker” exceeds or does not exceed what the “taker” is presumed to take, and whether what is taken by the “maker” exceeds or does not exceed what the “maker” is presumed to make. I wrote about this issue, for example, in August of last year in Makers, Takers, Givers, Moochers, Taxes, Social Welfare Payments, and Measurement.

Four years earlier, in When Those Who Hate Takers Take Tax Revenue, I explained:
One of the arguments put forth by the anti-government-spending folks is that it is bad morally, socially, and politically to collect taxes from one group and to disburse the receipts to another group. These folks like to brand the first group as “makers” and the second group as “takers.” Yet when the takers are their friends and allies in the movement to feudalize America, not a peep is heard from them.
A year before that, in More Tax Colors, I had written:
Those who are anti-tax seem quite happy to be among the takers even though their mantra in being anti-tax rests principally on a distaste for takers among whom, of course, they don’t count themselves.
I wonder if the events of the past month have changed the outlook, the perspective, or even the minds of those who, perceiving themselves to be oppressed “makers” exploited for the benefit of the “takers,” rallied in defense of more than substantial tax cuts for the wealthy and for large corporations because they were delighted to get a few dollars of tax relief. Some, I know, changed their position after discovering they were among those laid off by companies promising to create jobs.

Several days ago, I read a commentary in the American Prospect by Alexander Sammon. It should be required reading for every American eligible to vote in November. I encourage everyone to read it. So it is with some hesitation that I share a few thoughts on what he has to say, because I don’t want to be the Cliff’s Notes version of his well-written essay. Sammon points out that many of the companies lining up for federal financial assistance have paid little or nothing into the national treasury for at least several, and in some cases many more than several years. He specifically mentions airlines, cruise lines, and fossil fuel companies. Though they may be lining up because of their lobbying efforts or because the Administration or certain members of Congress invited them to the big-corporation-get-more-money party, they have been using all sorts of tax loopholes, including those written into the Internal Revenue Code by that horrific 2017 legislation, to reduce their taxes to zero or almost zero. Granted, there are some companies on the bailout list that have paid taxes at rates much more closely aligned to what individuals have been paying, and that have not engaged in the waste of 2017-enacted tax cuts that has characterized a good bit of the American large corporation sector, but the amount of money being dished out, for which ordinary Americans are paying the price, is mind-boggling.

Sammon points out that since the enactment of the 2017 tax legislation, airlines have reported $30 billion of pretax income and paid federal income tax at an average rate of 2.3 percent, most of it coming from Southwest Airlines. If that company is removed from the computation, the statistics are even worse. At least three companies either had a zero tax rate or a negative tax rate. What did these airlines do with their tax breaks and profits? Did they establish contingency funds as do individuals fortunate enough to be able to do so, or as many state and local governments do? No. They bought back stock, which raised the price of the stock, contributing to what historians will call the Trump bubble in the stock market.

Sammon also explains that cruise lines have managed to register in countries other than the United States. They pay little or no income taxes to the United States. Some end up with negative tax rates. Yet they expect American taxpayers to bail them out. It’s pretty much the same in the fossil fuel industry. Except that it’s worse. Those companies also have a history of benefitting from federal loans, loan guarantees, and previous bailouts.

Sammon sums it up nicely:
So after years, or decades, of salting away record profits, or clamoring for lower and lower tax rates and funneling money to shareholders, the country’s largest corporations are threatening to shut down if the federal government doesn’t show them a bit of generosity. They were happy to reap federal contracts, enjoy federal subsidies, and rack up federal bailouts, taking out public money at every opportunity, all in the name of private profits. But they continue to have no interest in contributing money back into the public coffers, in good times or bad. Their belief in the value of the state, and the public purse, extends only to when they need it to balance out their books.
Sound familiar? I’ve been trying to convey the same message for years. I’m sure Sammon will get the same sort of mixed responses as I do, some agreeing, and others characterizing my position as absurd.

Sammon also wonders why the bailouts are not accompanied by conditions, such as maintaining a certain level of operations, bringing operations back from offshore tax havens, ending artificial and unjustifiable tax breaks, and shutting down opportunities to take more than is given. Just as the Administration and too many in Congress refuse to stand up to these companies and their lobbyists, perhaps because of the flow of campaign cash, so too they refuse to attach the show-us-the-jobs-first precondition to tax breaks justified on false promises of job creation, a position I also have been advocating for quite a while.

It’s time for the self-styled “makers” to step out from behind the curtain and reveal themselves as the “takers” that they are. That would put an end to the constant complaining that the actual takers have been trumpeting about perceived takers – who are actually makers – that has adversely affected tax and other public policy decisions for the past several decades.

Friday, March 27, 2020

Tax Hindsight and Damages for Broken Promises 

Readers of MauledAgain know that I have been a critic of the 2017 tax legislation, because it is terrible for most Americans, is mostly a giveaway to the oligarchs, is sloppily drafted, and has caused all sorts of unintended but adverse consequences for taxpayers least able to handle those consequences. I have criticized this tax “reform” mess since the legislation first started making its way through a Congress insensitive to the plight of most Americans. I have written about the flaws of that legislation in posts such as Taxmas?, Those Tax-Cut Inspired Bonus Payments? Just Another Ruse, That Bonus Payment Ruse Gets Bigger, Getting Tax Cut Benefits to Those Who Need Economic Relief: A Drop in the Bucket But Never a Flood, Oh, Those Bonus Payments! Much Ado About Almost Nothing, You’re Doing What With Those Tax Cuts?, Much More Ado About Almost Nothing, More Proof Supply-Side Economic Theory is Bad Tax Policy, Arguing About Tax Crumbs, Another Reason the 2017 Tax Cut Legislation Isn’t Good for Most Americans, Yet Another Reason the 2017 Tax Cut Legislation Isn’t Good for Most Americans , Is Holding On To Tax Cut Failures Admirable Perseverance or Foolish Stubbornness?, What’s Not Good Tax-Wise for Most Americans Is Just as Not Good for Small Businesses, Don’t Want a Crumb? Here’s Dessert But Give Back Your Appetizer and Beverage, How Tax Cuts for Large Corporations and Wealthy Individuals Impact Jobs, Broken Tax Promises: When Tax Cut Crumbs Are Brushed Away, and The 2017 Tax Legislation: A Failure From Every Direction. Simply put, considering most of the tax cuts were giveaways to the wealthy and large corporations and were used for stock buybacks, bonuses for already-highly-compensated executives, and payments to lobbyists to push for more tax breaks, the legislation was a failure. The price paid for that failure is an overwhelming increase in the national debt. In the meantime, many of the corporations receiving tax breaks by promising to created jobs, instead eliminated jobs.

Now the nation, facing a serious pandemic, is struggling to deal with significant economic disruption. The solution, according to some, is to make payments to taxpayers with incomes of less than $75,000. But no sooner had that suggestion gained attention in the Administration and Congress than others jumped in to see what sorts of money they could get for corporations, some of whom did not use their earlier tax breaks wisely, such as setting aside contingency funds as most prudent individuals who budget their finances, and even some state and local governments, do. Still others want to limit the amount of payments made to individuals, or to limit how many individuals qualify for any sort of relief. Some of them claim that “we can’t afford to do this.” Well, perhaps we would find the financial challenges less obstructive if the Congress and Administration hadn’t squandered so many trillions of dollars on tax breaks to their friends.

Is there a solution? Yes. It surely won’t be adopted, is surely will meet with disapproval by oligarchs and their acolytes, but perhaps will find support among those who aren’t getting the help they need. The solution? Take back the tax breaks from those individuals and corporations that failed to live up to their job-creating promises. It might require chasing the money and obtaining the repayment from those to whom these tax giveaways were funneled. When promises are broken, the person breaching the contract must pay damages. That basic legal principle should be applied to this tax-giveaway fiasco.

Wednesday, March 25, 2020

A Good Time for a Tax Laugh? 

With all the unpleasant news, uncomfortable restrictions, and inconvenient precautions so widespread and unavoidable, I thought an email conversation I had with reader Morris might generate a chuckle. Perhaps it will inspire a groan. He was reacting to the last paragraph of my Friday commentary, More Tax Return Preparation Gone Bad. In that last paragraph, I wrote, “The lesson at the moment? Choose a tax return as carefully as choosing a surgeon or child care provider. In other words, do research, talk to friends and neighbors, look at online reviews, and interview the preparer.”

Reader Morris suggested:
And if you see this advertisement don't stop to get tax advice

So, of course, I had to see what he was referencing. I did. I suggest you do now before continuing to read.

My response to reader Morris? “Oh my goodness!!! That is HILARIOUS!!!! Of course, the grammarians will have fun with the ambiguity. Does the ‘and’ separate two phrases or does ‘nude’ function as an adjective for both? !!!!!” In other words, are we dealing with “Nude Psychic Readings, and Tax Advice” or “Nude Psychic Readings and Nude Tax Advice”? Either interpretation is troubling, but the second much more so.

Of course I had to do research. First, I did a google search for “nude psychic readings and tax advice” in quotation marks. Less than two dozen results, and the only one I can even describe with any sense of accuracy is this podcast, which seems to involve jazz or music generally. Wondering about the more troubling second interpretation, I searched for “nude tax advice,” again in quotation marks. I actually found a blog post describing advice given to a couple by an accountant preparing their tax return. Go ahead, read it, it’s not what you think. Most of the other results generated by google weren’t useful and aren’t worth tracking down.

And then I stopped my research. I concluded that I wasn’t going to find who created the phrase, why it was created, or when it was created. I decided I didn’t really need to know. It’s not something that would ever fit into a tax curriculum. At least not in the world in which I move around.

Now for a bigger laugh. Let’s see what the internet search engines and robots do with this post. Maybe the number of views will soar. We’ll see.

Update: Reader Morris just sent along this link to a storefront. I say no more!

Monday, March 23, 2020

Horrific Punishment for Allegedly Not Paying Taxes 

It is one of the most troubling stories involving taxes that I have read. A few days ago, reader Morris directed my attention to this news report about an incident in Milwaukee, Wisconsin. According to the story, Javaunte Jefferson set on fire Savannah Bailey, the mother of his children. He did this on Valentine’s Day. He allegedly did this “because she wouldn’t pay her taxes and was buying other stuff.”

Curious, I did some research, but most of the stories I discovered didn’t add much to what was reported in the story reader Morris shared. But according to several reports, including this one, Jefferson and Bailey had been arguing about financial issues, including the payment of taxes.

Surely more information is needed to sort this out. It does not appear that Jefferson was upset that Bailey was failing to file taxes for which Jefferson had liability. Was she in fact not paying her taxes? That’s a question to which I have no answer. Even if she wasn’t paying her taxes, why would that trigger the extreme reaction by Jefferson? Perhaps he was reacting to other issues in the argument. If there is a trial, perhaps some answers of this will emerge. Perhaps not. And if there is no trial, probably no one will ever know.

But the most important aspect of this story is the outrageousness of what was done, whether on account of unpaid taxes or any other issue. Violence of this sort, in these circumstances, does nothing, and did nothing, to resolve whatever problems were the subject of an argument. What happened is horrific. No one deserves that sort of reaction.

Friday, March 20, 2020

More Tax Return Preparation Gone Bad 

Almost fourteen years ago, in Should Tax Refund Anticipation Loans Be Blocked?, I mentioned that “Liberty Tax Services of Virginia Beach was told by First Bank of Delaware that it was ending a long-term contractual relationship because Liberty had decided to make riskier loans that the bank went so far as to describe in terms of ‘legally questionable.’” I shared my opinion that tax preparation firms should not be making loans based on refunds because of a conflict of interest. I also shared my opinion that the rates of interest being charged on those loans were outrageous and unconscionable.

That was bad news for one Liberty Tax franchise. Now comes another. According to this United States Department of Justice news release, the former operator of a Liberty Tax franchise in Florida was permanently barred from operating a tax return preparation business and preparing federal income tax returns for other. He also was ordered to pay back $175,000 he received from filing false tax returns on behalf of clients. The court that ordered these restrictions had previously issued similar orders against two other Liberty Tax franchise operators.

Efforts to protect people from unscrupulous tax return preparers have not been as successful as one would hope. I addressed this issue in Tax Return Preparer Regulation: What About Attorneys and CPAs?. I concluded that commentary with these words:
If the goal of preparer regulation simply is to stop preparers from stealing refund checks, then limiting examination and certification to preparers who are not attorneys and CPAs might be defensible. But if the goal is to produce more accurate returns, and thus improve revenue and compliance across the board, as it ought to be, I maintain that most lawyers and many CPAs aren’t as expertised as they need to be. In all fairness, Congress has created a tax law that rivals quantum physics in terms of difficulty, which surely makes attaining competence just that much more elusive, but that does not diminish the need for tax competence by all preparers. Demonstrating that competence ought to be accomplished by actual testing and not by erroneous presumption.
Several years later, in Do-It-Yourself Tax Preparation? Better?, I noted my surprise at a GAO study that revealed the error rate on tax returns prepared by tax return preparers exceeded the error rate on self-prepared returns, and suggested that more research was necessary to get more specific information to identify who is making the errors, why they are making the errors, and what can be done to reduce the error rate.

The lesson at the moment? Choose a tax return preparer as carefully as choosing a surgeon or child care provider. In other words, do research, talk to friends and neighbors, look at online reviews, and interview the preparer

Wednesday, March 18, 2020

Fortune Cookies and Taxes: Part II 

Last Friday, in Fortune Cookies and Taxes, I shared the discovery by Reader Morris that advertisers have been buying space on the reverse side of fortune cookie papers. I suppose when billboards, radio, television, direct mail, telemarketing, web page pop-ups, and emails don’t do enough to persuade people to buy goods and services, what better place to put something in front of a person than a piece of paper that purports to predict someone’s future?

Shortly after my Friday commentary appeared, reader Morris found another tax-related fortune cookie assertion. The one he found is a photograph of a fortune cookie paper, showing that it states, “A fine is a tax for doing wrong. A tax is a fine for doing well.”

Of course, I don’t agree with what appears to be more of a cute sound bite than an accurate statement. Though a fine is imposed for violating a law, rule, or regulation, and thus is imposed for “doing wrong,” it is not a tax, and the fact that it is imposed on someone who has done something wrong does not convert it into a tax. The sort of thinking that classifies a fine in this manner is the sort of thinking that classifies as a tax any payment to which the person objects or doesn’t want to pay.

Of course, a tax is not a fine for doing well. A tax is not a fine. Yes, a progressive income tax is, in some sense, a reaction to someone “doing well,” but in a financial sense. There are many other ways to “do well” that don’t involve money. Perhaps the real property tax could be similarly classified. But no, taxes in general are not imposed because someone has done well financially. The impoverished person who makes a purchase of a necessity that is subject to a sales tax and the low-income worker who pays a gasoline tax while filling the tank of the vehicle used to get to and from work aren’t paying taxes because they are doing well financially.

Though the quip on the fortune cookie slip nicely fits the requirements of a sound bite, namely, short and grossly oversimplified if not worse, it fails, as do most sound bites, to accomplish anything useful in the necessary progression of knowledge, wisdom, or understanding. Certainly there are numerous short quips that can be placed on fortune cookie slips, let alone billboards and other advertising media, that are sufficiently accurate to be either useful, amusing, or even frightening. I’m thinking of things such as “Wash your hands when you should,” “You are about to be $10.95 poorer ($8.95 if you had the buffet,” and “Eventually you will die, of what and when we don’t know.”

Fortune cookie slip writers, just stay away from tax advice. You can make fortune even without doing that.

Monday, March 16, 2020

Taxes and the Virus 

The current Administration seems to think that cutting payroll taxes is an effective approach to deal with at least some of the economic problems caused by the spread of the SARS-CoV-2 virus that causes the Covid-19 disease. There are news articles all over the internet and in newspapers and magazines reporting that the White House wants to stimulate the economy, or at least bail out some sectors of the economy adversely affected by the outbreak, by cutting payroll taxes.

Of course, anyone who understands economics, taxation, and tax policy knows that this approach is as ineffective as pretty much most of the other tax-cut-based economic solutions have been. I’m not alone in that view. For example, the headline to this Business Insider article sums it up, “Trump's idea of a payroll tax cut would be nearly useless for the Americans who need the help the most.” The article points out that it doesn’t help those without jobs or who are losing jobs during this economic freefall, and that it would benefit the wealthy more than the poor, with the amount put into the pockets of the former being more than 10 times what would go into the wallets of the latter. As another example, this Los Angeles Times commentary points out that not only does the payroll tax not help workers, it also would “destroy Social Security.”

Several days ago, Tom Giovanetti of the Institute for Policy Innovation published a commentary in which he disclosed that “we’re not enthusiastic about a payroll tax cut.” Neither am I, but I’m more than simply not enthusiastic. I oppose the idea.

The reason Giovanetti is unenthusiastic about using a payroll tax cut to deal with the problems is that he prefers economic stimulus. He prefers supply-side approaches rather than the demand-side approach that I advocate. I’m not alone. For example, the Center on Budget and Policy Priorities issued a report explaining why payroll tax cuts won’t get the job done because it’s too slow, badly targeted, and too narrow, suggesting instead direct cash payments to some households, with details forthcoming. Giovanetti and others oppose that approach because it requires borrowing money, but I suppose he and the others would not be surprised that I also oppose borrowing but would be disappointed that I also advocate repealing the badly-designed and harmful tax cuts enacted in 2017, coupled with a refund to the American people from those who obtained those cuts on the basis of promises they never kept and in many cases had no intention of keeping.

Giovanetti recognizes the mess that has been created. He points out, correctly, that options are limited. As he puts it, “Interest rates are already extremely low, the Federal Reserve has already tried quantitative easing, we’ve already cut corporate taxes and passed expensing of business investment. The toolbox for juicing the economy is just about empty.” He’s correct, but I wish he would examine the underlying cause of the mess.

His solution? Personal retirement accounts, which, he says, “could even be called Trump Retirement Accounts.” Is he kidding? Putting that name on anything is a sure way to fire up even more opposition. But, name aside, we already have personal retirement accounts. They’re called 401(k) plans, 403(b) plans, Keogh plans, IRAs, SEPs, SIMPLEs, and others that I’m leaving out because the list is long enough to make the point.

Why the enthusiasm for replacing Social Security with personal retirement accounts? It puts even more retirement dollars into Wall Street. Is that a good thing? No. Unlike Social Security, Wall Street guarantees nothing. Imagine what would happen if these were with us all along, with no Social Security, and someone was compelled to retire last week. And unlike Social Security, these sorts of accounts divert fees and commissions and other charges into the other people’s pockets.

He claims that these proposed accounts could “be made absolutely safe,” would “allow low- and middle-income workers their first real opportunity to build wealth,” and “would rescue future retirees from Social Security’s eventual meltdown.” These claims are the same ones made when privatization of Social Security was proposed more than a decade ago, and they still can be rebutted as they were back then. For example, this analysis examines twelve flaws in this idea. The analysis points out it removes current protection against disability and early death, would leave Social Security with outstanding obligations but devoid of additional inflows, would dampen economic growth rather than boost it as Giovanetti and others assert, failed in Chile, the UK, and other places, pose the risk of bad investment returns, put the retirement annuity at the mercy of how the market is doing at retirement especially when the worker has not choice in the timing of retirement, would increase Wall Street’s revenues, would require a new government bureaucracy, would put the cost of transforming the program on young people, would disadvantage women, minorities, and others who work fewer years outside the home, earl less, and live longer after retirement, and lack inflation protection.

It is becoming increasingly disappointing and dangerous that every time an economic crisis pops up, proposals are made that in the short-run and long-run shift wealth to the oligarchy. The sales pitches made for these proposals are disturbing. And every time they are bought by legislators they cause another crisis, which then provides the opportunity for yet another bad proposal to be made. Yes, I do think it is all part of a much bigger plan. But when plans backfire, as this one will, it’s not the planners who pay the price. That’s wrong, sad, and unacceptable.

Friday, March 13, 2020

Fortune Cookies and Taxes 

Reader Morris had an experience that surprised me. He went to his “regular Chinese restaurant,” had his meal, and opened his fortune cookies. The message? “Tax tip # 8 Travel could be considered a business expense. Even that island vacay. TaxAct Surprisingly legal. Start for Free: TaxAct.com”

Reader Morris noted, “Taxes are everywhere.” His experience suggests to me that “Tax advertising is everywhere.” From time to time I eat at Chinese restaurants. I always get fortune cookies. I’ve never seen one mentioning tax. But now I need to keep my eyes open.

I did a bit of research. Apparently the marketing world has discovered it can make use of the flip side of the paper on which the fortune is printed. According to several sites, such as Adweek and MediaPost, advertising agencies are buying that blank space on fortune cookie inserts. Who knew? I didn’t. Now I do. And so do you.

Apparently reader Morris also did some research, for shortly after he shared his dining experience he sent a link to the “Fortune Cookie: Bake. Learn. Give. Save” facebook page. Its “About” page explains the “Save” portion of the plan as follows: “Save- Pay your child for their time baking, packaging, and delivering the cookies for your small business, and put their earnings into a custodial Roth IRA.” A post on its main page elaborates: “Small business owners who are registered as an LLC can pay their dependent children up to $12,000/year without having to issue a w-2 or the kid having to file taxes.” Reader Morris asked, “Is this tax advice correct?” As a general proposition, yes. For many years, business owners have been hiring children to work in the business, paying wages included in the child’s gross income and deducted by the parent who owns the business, thus shifting the income to the child’s bracket, which at present is zero if it is less than the standard deduction (which is now $12,200, so the “advice” is technically out of date in that respect). Of course the children must actually be doing work and the wages must be reasonable in amount. Because the IRS looks closely at these arrangements, payment should not be in cash but by check or direct deposit into the child’s account.

But the tax advice offered on the Fortune Cookie facebook page is incorrect when it states that small business owners can pay their children up to $12,000 per year “without having to issue a w-2.” As the IRS explains in its General Instructions for Forms W-2 and W-3:
You must file Form(s) W-2 if you have one or more employees to whom you made payments (including noncash payments) for the employees’ services in your trade or business during 2020. Complete and file Form W-2 for each employee for whom any of the following applies (even if the employee is related to you).

• You withheld any income, social security, or Medicare tax from wages regardless of the amount of wages; or
• You would have had to withhold income tax if the employee had claimed no more than one withholding allowance (for 2019 or earlier Forms W-4) or had not claimed exemption from withholding on Form W-4; or
• You paid $600 or more in wages even if you did not withhold any income, social security, or Medicare tax.

Only in very limited situations will you not have to file Form W-2. This may occur if you were not required to withhold any income tax, social security tax, or Medicare tax and you paid the employee less than $600, such as for certain election workers and certain foreign agricultural workers.
And though the child might not be required to pay federal income taxes on wages of $12,200 or less, the child still needs to file a return so that the Form W-2 can be matched against a return.

Wednesday, March 11, 2020

A New and Questionable Type of Tax 

Last week, voters in San Francisco, by a 69.6 percent to 30.3 percent margin, approved a vacant storefront tax. Though the margin appears overwhelming, the tax barely passed because enactment required approval by two-thirds of those voting.

The tax, as described in this article, applies to property owners in any of the city’s commercial districts whose storefront remains vacant for more than 182 days in the year. For the first year, the tax equals $250 for each linear foot of street-facing wall. The linear foot rate increases to $500 for the second year, and $1,000 for the third and later years. Revenue from the tax, which begins next year, would be used to help small businesses the city.

The tax is a reaction to complaints about empty storefronts that have popped up throughout the city. Supporters of the tax argue that the vacancies are caused by property owners holding out for high rents, rents too high for the marketplace.

The owner of one storefront business remarked that landlords "have an economic incentive to keep a building vacant where they can write off the lost [revenue] that they've had from a previous tenant as an expense." There is no deduction for revenue that isn’t received. Instead, I think the business owner was attempting to point out that when revenue goes down, income taxes also go down, which is the same effect that a deduction has on tax liability.

Opponents of the tax argued, in effect, that there can be economic conditions, such as online shopping and recessions, that make it difficult, if not impossible, to find tenants for storefronts in the city. One real estate broker pointed out that as younger people move into neighborhoods they are more likely to shop online rather than going to a brick-and-mortar establishment. He also complained that city regulations, including permit rules and inspection requirements, make it more difficult to rent out storefronts. My guess is that these regulations are more of a problem when the nature of the use of the space changes, such as a hardware store being converted into a restaurant. A Chamber of Commerce official suggested that the solving the vacant storefront problem requires changes in zoning and planning rules.

It seems to me that there are multiple factors contributing to the vacant storefront problem. To the extent that landlords holding out for excessively high rents are a cause, any tax addressing that problem needs to be more nuanced than a simple number-of-vacant-days and storefront-linear-feet computation. Surely a formula that compares the asking rent to comparable rents in the neighborhood can be added to the calculation. Another factor would be the number of offers from potential tenants, the amount of rent prospective lessees offer, and the counter-offers from the landlords. External economic factors, such as city GDP for the quarters in play, job numbers, and street and other construction impacting the storefront in question could be taken into account.

Only time will tell if this tax solves anything or even makes a dent in the inventory of vacant storefronts in San Francisco. I’m confident officials and businesses in other towns and cities will be watching.

Monday, March 09, 2020

The Primary Goal of the Philadelphia Soda Tax: Not a Reduction in Soda Consumption 

The soda tax is one of those topics that probably will never go away. I have been writing about the soda tax since 2008, in posts such as What Sort of Tax?, The Return of the Soda Tax Proposal, Tax As a Hate Crime?, Yes for The Proposed User Fee, No for the Proposed Tax, Philadelphia Soda Tax Proposal Shelved, But Will It Return?, Taxing Symptoms Rather Than Problems, It’s Back! The Philadelphia Soda Tax Proposal Returns, The Broccoli and Brussel Sprouts of Taxation, The Realities of the Soda Tax Policy Debate, Soda Sales Shifting?, Taxes, Consumption, Soda, and Obesity, Is the Soda Tax a Revenue Grab or a Worthwhile Health Benefit?, Philadelphia’s Latest Soda Tax Proposal: Health or Revenue?, What Gets Taxed If the Goal Is Health Improvement?, The Russian Sugar and Fat Tax Proposal: Smarter, More Sensible, or Just a Need for More Revenue, Soda Tax Debate Bubbles Up, Can Mischaracterizing an Undesired Tax Backfire?, The Soda Tax Flaw in Automotive Terms, Taxing the Container Instead of the Sugary Beverage: Looking for Revenue in All the Wrong Places, Bait-and-Switch “Sugary Beverage Tax” Tactics, How Unsweet a Tax, When Tax Is Bizarre: Milk Becomes Soda, Gambling With Tax Revenue, Updating Two Tax Cases, When Tax Revenues Are Better Than Expected But Less Than Required, The Imperfections of the Philadelphia Soda Tax, When Tax Revenues Continue to Be Less Than Required, How Much of a Victory for Philadelphia is Its Soda Tax Win in Commonwealth Court?, Is the Soda Tax and Ice Tax?, Putting Funding Burdens on Those Who Pay the Soda Tax, Imagine a Soda Tax Turned into a Health Tax, Another Weak Defense of the Soda Tax, Unintended Consequences in the Soda Tax World, and The Soda Tax “War” and a Pathway to Tax Peace.

Now comes news from the Philadelphia Inquirer that a recent study by Drexel University researchers indicates that the amount of soda and other sugary drinks consumed by Philadelphia residents declined so little since enactment of the soda tax that the change is statistically insignificant. The decline was essentially the same as in places without a soda tax. Interestingly, a study in Washington state determined that soda sales in Seattle, which has a soda tax, dropped by 30 percent while sales in Portland, Oregon, which does not have a soda tax, dropped by 10 percent. However, not all sources of sugary beverage purchases were taken into account, and though retail establishments outside each city were included in the survey, only those within two miles were considered. The sweetened beverage tax in Cook County, Illinois, which didn’t last very long, reduced sales by 21 percent, according to the study reported in this story, but purchases outside the county limits did not seem to have been taken into account. One conclusion from these results is that consumption of sugary beverages is dropping generally, for a variety of reasons other than taxes, and that soda taxes are contributing, at best, a marginal increase in that decline.

Yet what struck me from the Philadelphia Inquirer story is something said by Lauren Cox, a spokesperson for the administration of Mayor Jim Kenney, the principal supporter of Philadelphia’s soda tax. As I described in Philadelphia’s Latest Soda Tax Proposal: Health or Revenue?, Kenney voted against the soda tax when it was proposed by his predecessor, but once he took office he flipped positions. Why? I suggested, “The answer appears to be quite simple. The new mayor has discovered that his spending proposals, such as universal pre-kindergarten, community schools, park and recreation center upgrades, and similar projects, require revenue. Rather than raising any existing taxes, he has turned to a tax on certain sugary drinks.” I added, “If the concern is health, as soda tax advocates claim, and if a significant cause of health problems is sugar, as soda tax advocates claim, and as research tends to demonstrate, then why not a sugar tax? Why not a tax not only on sweetened drinks, but also on cakes, cookies, pies, donuts, sugared coffee, ice cream, and candy?” According to the Philadelphia Inquirer story, Cox “said that reducing consumption was not the city’s primary goal in implementing the tax.” So what was the primary goal? Let me guess. Revenue.

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