Category Archives: Taxes / IRS

The Carteret Commissioners take on the Springsted Study

Tomorrow morning, the Carteret County Commissioners will hold a special session beginning at 8:30am in the usual meeting room for the purpose of further deliberations on the Compensation Study done by the Springsted Corporation, and on Springsted’s recommendations for revising the County’s employee compensation policies.

At this point, there are four options before the Commissioners.  In the following options list, the term “SAFE Minimum Level” refers to the levels that are believed to be comparable to the compensation being paid in neighboring counties based on the Springsted survey.

1]  Moving the salary of most employees up to the SAFE Minimum Level, expected to cost the County about $1,007,952.  Employees who are already being paid above the minimum would be unaffected.

2]  Moving the salary of all employees up to the SAFE Minimum Level or to a level that is 2% above their current salary, whichever is greater, expected to cost the County about $1,158,071.

3]  Moving the salary of all employees up to the SAFE Minimum Level plus an additional one/half percent of their current salary for each year of service, expected to cost the County about $1,667,450.

4]  Moving the salary of all employees up to 110% of the SAFE Minimum Level plus an additional one/half percent of their current salary for each year of service, expected to cost the County about $3,389,367.

Over the weekend I read the Springsted report and several related documents, and some of my conclusions will be presented at the CCTPP meeting tonight.  If you are interested in this issue, please try to attend.

If time permits, we will also show the “Rocky Mountain Heist” video at tonight’s meeting.  For the trailer and more on this 45-minute video, click HERE.

The Internal Revenue Service, a Law Unto Itself

I did not post about this in the run-up to Election Day, but not because it does not deserve our fullest attention.  Reporter Shaila Dewan of the Obama_HammerNew York Times put up an article on October 25th (possibly behind a pay wall) about the latest egregious abuse by the Internal Revenue Service, this time relating to the practice of “structuring”.  These are the two opening paragraphs:

For almost 40 years, Carole Hinders has dished out Mexican specialties at her modest cash-only restaurant.  For just as long, she deposited the earnings at a small bank branch a block away — until last year, when two tax agents knocked on her door and informed her that they had seized her checking account, almost $33,000.

The Internal Revenue Service agents did not accuse Ms. Hinders of money laundering or cheating on her taxes — in fact, she has not been charged with any crime.  Instead, the money was seized solely because she had deposited less than $10,000 at a time, which they viewed as an attempt to avoid triggering a required government report.

and later in the article:

… money was seized under an increasingly controversial area of law known as civil asset forfeiture, which allows law enforcement agents to take property they suspect of being tied to crime even if no criminal charges are filed.  Law enforcement agencies get to keep a share of whatever is forfeited.

Critics say this incentive has led to the creation of a law enforcement dragnet, with more than 100 multiagency task forces combing through bank reports, looking for accounts to seize.  Under the Bank Secrecy Act, banks and other financial institutions must report cash deposits greater than $10,000.  But since many criminals are aware of that requirement, banks also are supposed to report any suspicious transactions, including deposit patterns below $10,000.  Last year, banks filed more than 700,000 suspicious activity reports.  Owners who are caught up in structuring cases often cannot afford to fight.  The median amount seized by the I.R.S. was $34,000, according to the Institute for Justice analysis, while legal costs can easily mount to $20,000 or more.

There is nothing illegal about depositing less than $10,000 cash unless it is done specifically to evade the reporting requirement.  But often a mere bank statement is enough for investigators to obtain a seizure warrant.  In one Long Island case, the police submitted almost a year’s worth of daily deposits by a business, ranging from $5,550 to $9,910.  The officer wrote in his warrant affidavit that based on his training and experience, the pattern “is consistent with structuring.”  The government seized $447,000 from the business, a cash-intensive candy and cigarette distributor that has been run by one family for 27 years.

I don’t think the idea of a truly flat tax is feasible, but one strong argument in its favor is that the IRS could be virtually eliminated.

The full article is HERE.

New Court-Ordered IRS Testimony on Lerner’s HDD

Josh Hicks, a reporter for the Washington Post, wrote a new piece late last week about the court-ordered filings of under-oath statements by two IRS officials on the subject of Lois Lerner’s computers and her HDD crash.  The statements were mandated by the presiding judge as a consequence of the lawsuit filed by the conservative group True The Vote.

Although it now appears that Lerner had both a desktop computer and a laptop at her workstation, it was the laptop drive that crashed.  However, the fact that she also had a desktop means that there may have been e-mail messages stored on it as well.

NC Senate to change local Sales Tax options, Crowdfunding?

Laura Leslie of WRAL news is reporting on some draft changes that the NC Senate’s Finance Committee has made to House Bill 1224, changes that may help the Carteret County Commissioners address the County’s need for options to deal with local dredging costs.

An excerpt:

The new version of House Bill 1224 would still cap local sales taxes at 2.5 percent.  But it deletes a proposal to force counties to choose between funding education or transit through additional taxes.  Most counties would have as much or more flexibility to raise sales taxes with voter approval under the new version as they do under current law.  It would allow counties to raise local sales taxes up to a quarter-percent for “general purposes,” rather than solely for education or transportation.

For the tax-and-spenders, however, the new flexibility was not enough.

Johanna Reese with the NC Association of County Commissioners thanked Senate leaders for removing the “either/or” sales tax funding restriction, but said the cap is still a concern for her group.

Erin Wynia with the N.C. League of Municipalities urged lawmakers again to study the proposal over the interim.  “We don’t believe this bill goes far enough in giving local communities the flexibility to decide what’s best for them,” she said.   

And, as to the crowdfunding provisions:

The new version of the bill also includes the crowdfunding provision that passed the House last year.  It would allow North Carolina companies to solicit up to $1 million a year in small investments – up to $2000 –  from state residents.  [NC Senate sponsor Rick Gunn, R-Alamance] said it would be “an appropriate tool” for the state to use to encourage start-ups, tech firms, and enterpreneurs.

The Senate Finance Committee is expected to vote on the changes later this week, after which, presumably, the House will be asked to concur.  For the full WRAL article, click HERE.

Lois Lerner’s Poor Little Hard Disk Drive

In an article by Bernie Becker on The Hill blog, he reveals that IRS officials have now confirmed, under oath, the assertions made about Lerner’s hard disk drive (HDD) by IRS Commissioner John Koskinen in his testimony before Congress last month.

Not much is new in the article, except for the fact that Lerner apparently never had a desktop computer at the IRS.  The HDD in question was in a laptop, which I never understood before now.  The drive crashed in 2011 and was deemed by the IRS tech crew to be unrecoverable, after which it was subjected to magnetic deguassing and then shredded.  For a typical consumer, this would constitute extreme overkill, but the IRS alleges that it is a routine procedure when a HDD may contain confidential taxpayer information.

The full article is HERE, but it does not address the more important issue of the e-mail servers to which Lerner’s laptop were connected.

Nixon’s Secretary RoseMary Woods lost 18 minutes, Obama’s IRS loses two years.

In an iteration of the Friday afternoon news dump, CBS News reported yesterday, HERE, that the Obama adminstration is claiming that most of the Lois Lerner e-mail messages from 2011 and prior have been lost due to a crash of her IRS computer workstation.GangstaGuv

The e-mail messages would likely have been strong proof, perhaps even dispositive proof, that Lerner had a hand in the inappropriate scrutiny of many tea party groups’ applications for 501(c)(4) tax exempt status, and that some of her superiors in the Obama administration might have directed her actions.  This unfortunate development will, therefore, put an end to all those complaints.

Oh, wait …

Scott Johnson and John Hindraker of PowerLine demonstrate how ridiculous the claims are, first in THIS post and again in THIS one.  An excerpt from the second:

E-mails are collected on e-mail servers. Each user (e.g., Lois Lerner) has an account on an e-mail server, where that person’s e-mails are collected.  It is common for e-mails to be deleted from the user’s own desktop or laptop computer, but no one worries about that.  When it is time to collect e-mails – something I do all the time in my law practice – you go to the e-mail server and pull out the user’s entire account.  A crash of the user’s computer is irrelevant and will not cause e-mails to be “lost.”

Further, e-mails are universally backed up in some other medium, often electronic tape, for long-term storage.  Thus, even if an e-mail server is destroyed, or all e-mails are deleted from a server after a specified length of time, the e-mails are still recoverable from back-up storage media.

Next it will be that the dog ate the e-mail servers.

Although details are sketchy, the ABC News article from yesterday, HERE, had this interesting snippet:

But an untold number are gone.  Camp’s office said the missing e-mails are mainly ones to and from people outside the IRS, “such as the White House, Treasury, Department of Justice, FEC, or Democrat offices.”

If these messages had been sent via the IRS e-mail host, then they should indeed be recoverable.  However, if Lerner had used her internet access to log onto her personal e-mail account, say AOL, and sent them from there, then the messages would have been on the AOL servers, and not on the IRS servers.  Of course, this scenario begs the question of why Lerner would do such a thing when conducting official IRS business.

The Obama folks seem to be scrapping the bottom of the stalling tactics barrel.  If the Republicans gain control of the Senate next year, I look forward to a more vigorous investigation of this, so hold your nose and vote for Thom Tillis.

Were Our Efforts For Naught? Maybe Not!

PowerLine Co-blogger Paul Mirengoff notes today that the volume of comments in opposition to the proposed IRS regulatory constraints on organizations that have or sought tax-exempt status under Section 501(c)(4) have forced a reconsideration.  An excerpt:

I don’t know whether the criticisms have been heard by the IRS but their weight has been felt.  Today IRS Commissioner Koskinen told an audience at the National Press Club that his agency is unlikely to finalize the proposed regulations this year.

Koskinen said:

During the comment period, which ended in February, we received more than 150,000 comments.  That’s a record for an IRS rulemaking comment period.  In fact, if you take all the comments on all Treasury and IRS draft proposals over the last seven years and double that number, you come close to the number of comments we are now beginning to review and analyze.

It’s going to take us a while to sort through all those comments, hold a public hearing, possibly repropose a draft regulation and get more public comments.  This means that it is unlikely we will be able to complete this process before the end of the year.

Great news, if true, because putting off the implementation of the proposal until next year means that there is a greater probability that a larger Republican presence in Congress might kill them altogether.

We should all recognize that this result is largely due to the efforts of Washington DC attorney Cleta Mitchell, and to all the conservative and Tea Party groups around the country that raised such holy hell about the proposal.  Including us, the Crystal Coast Tea Party Patriots.

Really? A “Profile In Courage” or an “Act Of Betrayal”?

Former President George Hiram Walker Bush (Bush-41) is being given a Profile In Courage Award by the JFK Presidential Library Foundation for his capitulation to the Democrats in the 1990 Congress, in which he agreed to raising tax rates as a part of that year’s budget deal.  There are at least two things about this that are of note:

  1. The first is the irony of being given an award for raising taxes by the Presidential Library Foundation of the President that urged onto Congress the largest reduction in marginal income tax rates in the last half-century.
  2. The second is that Bush-41’s son George W. Bush, who became President in his own right (Bush-43) has acknowledged his opinion, to many of his friends in private, that the single biggest factor in the failure of his father to win re-election against Bill Clinton in 1992 was his father’s betrayal of his “read my lips, no new taxes” pledge during the 1988 campaign, in which he won over Democratic candidate Michael Dukakis.

The full story, from USA-Today, is HERE.

Democrat Intransigence on the Proposed IRS Regs: Were Our Efforts For Naught?

President Obama wants increased funding for the International Obama_HammerMonetary Fund (IMF), and the Senate wants to give it to him.  And at first blush, it seems like a straightforward and uncomplicated proposition, as reflected in this excerpt from Thursday’s post at CNN’s Money blog:

The International Monetary Fund [IMF] has agreed to lend Ukraine up to $18 billion over the next two years as its new government tries to stave off economic collapse.  Kiev has been running dangerously low on cash to pay for imports and service its debts since the ousting of pro-Moscow former President Vitkor Yanukovych last month, which killed off a $15 billion financial lifeline from Russia.

and

“The IMF package should be sufficient to prevent the country falling into a full-blown balance of payments crisis, in which the hrvynia would drop sharply and output would collapse,” said William Jackson, emerging market economist at Capital Economics.  In return for the bailout, Ukraine will implement a program of unpopular reforms aimed at stabilizing the economy and creating the conditions for a return to sustained growth.  Central to the program are commitments by Ukraine to tackle corruption — a major concern of international lenders — and reforming the country’s energy market, including the gradual withdrawal of subsidies on natural gas.

But with 100,000 Russian troops poised at the border, things are getting more complicated.  On top of that, the House Republicans, who are reluctant to bless the IMF expansions that the President favors, want a quid pro quo.  They have agreed to pass the IMF funding bill, which will enable the IMF to prevent chaos in the Ukrainian monetary system, in return for the Obama administrations’s promise to back off on implementation of the new IRS regulations that would restrict the political activism of the many conservative organizations that fall under the IRS Section 501(c)(4) rules for non-profits.

So, does Boehner have a deal?  Nope, nada, no way, Jose.  As reported earlier this week by Eliana Johnson at the online National Review (with my slight editing for brevity):

In the ongoing negotiations over a bill to fund aid to Ukraine, Republicans in both chambers told Democrats privately that they would cede ground on the IMF provision — which gives more influence within the organization to developing countries and, Republicans say, diminishes that of the United States — if Democrats agreed to delay the proposed rules.

and

Democrats wanted approval for new IMF rules and more funding for the president’s pre-kindergarten program, among other things, but were unwilling to give in on the IRS regulations: Democrats and the administration rejected [the] offer to trade increased funding for the IMF for an amendment that would have delayed them.  “The spin is that Republicans are so petty, but the truth is that Democrats are willing to sacrifice everything, including the IMF reforms they wanted, to keep them,” says a senior Republican aide.

For more, check out THIS at CNN, and THIS at National Review.

Mexican Tax Preparers Defrauding the US Taxpayers?

My friend Warren is no longer with us, but in his years as an independent tax prepayer with Enrolled Agent status, he often regaled and horrified me with tales of the many Hispanic clients who would claim the refundable Earned Income Tax Credit (EITC) on the basis of having many children listed as dependents.  Now, Carolina Journal is reporting on a similar scheme brought to light by the confessions of a Hispanic tax prepayer who apparently has a conscience.

Read the full article, HERE.

TOMORROW is the Deadline for Comments !

I have called attention several times in this space to the threat posed by the proposed IRS rule revisions to Section 501(c)(4) of the tax code, which is the section under which most of the larger Tea Party and other conservative activists groups seek tax exemption.  The deadline for public comments on the proposals is tomorrow, so please, if you have not done so already, click THIS link for access to a quick and easy process for making your voice heard.

For even more motivation, click HERE to read the latest news, posted by Eliana Johnson of National Review, on the legislation that is planned for introduction in the House tomorrow.  This new bill, written primarily by Dave Camp (R-MI) would:

… directly address the circumstances that led to last year’s scandal.  The specter of Lois Lerner looms large in the minds of many Republicans, and the plan mandates the termination of any IRS employee found to have taken official action for political purposes.  The 1988 bill that restructured and reformed the IRS spells out ten actions for which the IRS commissioner must terminate an agency employee after an “administrative or judicial determination” that the employee has committed the prohibited action — among them, providing a false statement under oath on a matter involving a taxpayer and violating the rights of a taxpayer.  Today’s bill would add the commission of politically motivated acts to the list.

The plan would also require the IRS to modify its interpretation of a critical provision of the Internal Revenue Code that has been used to protect the privacy of those accused of leaking confidential taxpayer records and to deny information to the victims of IRS abuse.

Under the proposed reforms, the provision, Internal Revenue Code section 6103, would require the government to disclose to victims both the status of an investigation as well as its result, including the identity of the perpetrator.

Your turn.  Now, reach out and touch the IRS.  You can even do so anonymously.


UPDATE — WHITE HOUSE VOWS VETO !!

From PJ-Media, just past 5pm:

The White House threatened to veto a House bill that would block the Internal Revenue Service from issuing a rule that would narrow the definition of who qualifies for a 501(c)(4) exemption as a social welfare organization.

Ways and Means Committee Chairman Dave Camp’s (R-Mich.) Stop Targeting of Political Beliefs by the IRS Act, which was in the Rules Committee on Tuesday evening, would freeze the finalization of the rule for one year and restore the 501(c)(4) standards and definitions that were in place before conservative groups started to come under extra scrutiny in 2010.

Shortly after the Rules Committee meeting began, the Office of Management and Budget issued a statement warning that the administration “strongly opposes” the bill, which has 66 co-sponsors.

More HERE.

Oh! How The Money Rolls In!

First, it was the irresistible Siren call of the the lottery bounty that made the hearts of avaricious state legislators around the nation go pitty-pat, but now there is marijuana, their new inamorata.  In joyful news from earlier this week, the AP reports on the tax revenues arising from Colorado’s new legal pot law:

Colorado’s legal marijuana market is far exceeding tax expectations, according to a budget proposal released Wednesday by Gov. John Hickenlooper that gives the first official estimate of how much the state expects to make from pot taxes.

and

The initial tax projections are rosier than those given to voters in 2012, when state fiscal projections on the marijuana-legalization amendment would produce $39.5 million in sales taxes next fiscal year, which begins in July.  The rosier projections come from updated data about how many retail stores Colorado has (163 as of February 18th) and how much customers are paying for pot. There’s no standardized sales price, but recreational pot generally is going for much more than the $202 an ounce forecasters guessed last year.

Mason Tvert, a legalization activist who ran Colorado’s 2012 campaign, said other states are watching closely to see what legal weed can produce in tax revenue.  “Voters and state lawmakers around the country are watching how this system unfolds in Colorado, and the prospect of generating significant revenue while eliminating the underground marijuana market is increasingly appealing,” said Tvert, who now works for the Marijuana Policy Project.

Yep.  I think there is a danger that legalizing marijuana will follow the same path as lottery legalization.  As states, especially the blue and purple states, continue their profligate spending practices, they will become so desperate for funding that they will get into the drug business just as they got into the gambling business.  Anyhoo, for the full article, click HERE.

Not Even A Smidgeon Of Corruption?

Yeah, right.  Cleta Mitchell, a top attorney at Washington, DC law firm Foley & Lardner is on the case, in only two minutes, thirty-four seconds.

For more, Powerline’s original post on this is HERE.

And a reminder — the deadline for public comment to the IRS on the issue of their proposed rules for treatment of Section 501(c)(4) organizations (which includes most Tea Party groups) is February 27th, so if you haven’t already, please use the boilerplate text to copy and paste an e-mail to the IRS expressing your opposition.  Access the page by navigating via the menu bar [ Current Issues / IRS 501(c)(4) Rules ], above.  Please, do this soon.

Obama’s Hammer — The Internal Revenue Service

The primary goal for the GOP in 2014 is to achieve electoral control of Obama_Hammerboth houses of the United States Congress.  The primary goal of the Obama administration is to thwart that ambition, because they know that Republican control of the House and Senate would make President Obama the lamest of lame ducks.  Their tactics for the next nine months, therefore, will be to use the leverage of government toward their ends, and to raise continual political distractions in the hope of making right leaning voters and legislators lose their focus on ObamaCare, Benghazi, and the other issues that have the potential to move the electorate.

One of the ways in which the Obama administration is using the leverage of government is to loose the jackals at the IRS onto conservative political advocacy groups, in particular those organized as non-profits under IRS code Section 501(c)(4).  One of the more diligent watchdogs working to keep the conservative public informed about this danger is Cleta Mitchell, a partner in the Washington, DC law firm of Foley & Lardner.  Ms. Mitchell has represented Tea Party groups in a number of legal confrontations with the IRS in recent years, and she has fully explained the threat in a video.  The deadline for public comment to the IRS is February 27th, so please click the link below to view the video in order to fully appreciate the threat that this proposal poses to our liberty, then use the boilerplate text to copy and paste an e-mail to the IRS expressing your opposition.  Access the page by clicking HERE, or by navigating via the menu bar [ Issues & Education / IRS 501(c)(4) Rules ], above.  Please, do this soon.

All, repeat ALL, of the Audited 501(c)(4) Groups were Conservative!

Following is the entire text from the TownHall.com post from earlier this Obama_Hammerweek by Carol Liebau:

Less than two weeks after President Obama insisted that there wasn’t even a “smidgen of corruption” involved in the IRS targeting scandal, it appears that the scope of that scandal is widening.

Dave Camp, chairman of the House Ways and Means Committee, revealed yesterday that the committee’s investigation had found that it wasn’t only conservative groups applying for 501(c)(4) status that came in for IRS targeting and harassment.  Existing 501(c)(4)’s were targeted, as well.  In fact, Camp stated,

At Washington, DC’s direction, dozens of groups operating as 501(c)(4)s were flagged for IRS surveillance, including monitoring of the groups’ activities, websites and any other publicly available information.  Of these groups, 83% were right-leaning.  And of the groups the IRS selected for audit, 100% were right-leaning.

That’s right — “somehow,” every single 501(c)(4) that the IRS selected to endure the time, expense, distraction and stress of an audit just happened to be conservative.

The fact that existing 501(c)(4)’s were targeted along with applicants is important.  First, though it isn’t conclusive, it does provide further evidence (as if any were needed!) that the scrutiny endured by conservative 501(c)(4) applicants had less to do with “confusion” over the (c)(4) rules than with efforts at political suppression.  Second, it suggests that the targeting was part of a deliberate, widespread agency policy rather than restricted to “bad apples” in just one narrow area.

There are still plenty of documents that haven’t been turned over to investigators yet, and plenty of witnesses who haven’t yet been interviewed.  Given how damaging the evidence already is, Democrats eager to defend the IRS and push through formalized rules to suppress (c)(4)’s might be well-advised to hold off until the facts are out — because the scandal is only broadening, and the IRS is looking worse by the day.

Court Decision A Bit Tardy, But Welcome Nevertheless

Excerpts from the article on Loving versus IRS, HERE, authored by law professor Eugene Volokh of the Volokh Conspiracy:Obama_Hammer

In 2011, responding to concern about the performance of some paid tax-return preparers, the IRS issued new regulations.  Among other things, the new regulations require that paid tax-return preparers pass an initial certification exam, pay annual fees, and complete at least 15 hours of continuing education courses each year.  The IRS estimates that the new regulations will apply to between 600,000 and 700,000 tax-return preparers.

[snip]

… the Executive Branch never interpreted the statute to authorize regulation of tax-return preparers.  But in 2011, the IRS decided that the statute in fact did authorize regulation of tax-return preparers….  We agree with the District Court that the IRS’s statutory authority under Section 330 cannot be stretched so broadly as to encompass authority to regulate tax-return preparers.

[snip]

It might be that allowing the IRS to regulate tax-return preparers more stringently would be wise as a policy matter.  But that is a decision for Congress and the President to make if they wish by enacting new legislation….  The IRS may not unilaterally expand its authority through such an expansive, atextual, and ahistorical reading of [the relevant federal statute.]

Bill Hench Says There Are Other Examples of IRS Malfeasance

In Scott Johnson’s PowerLine post of earlier today, William Hench, an attorney in the IRS Office of the General Counsel offers an indictment of Obama_Hammerthe IRS unrelated to their disgraceful persecution of conservative groups.  An excerpt:

… I have personally witnessed improper giveaways of billions of dollars to taxpayers with inside access at the agency, bullying of elderly taxpayers, the cover-up of managerial embezzlement and misappropriation of thousands of dollars in government funds, and a retaliatory audit.  I have also heard credible accounts of, among other things, further improper giveaways, blatant sexual harassment, and anti-Semitism.  All of these matters have been swept under the rug.

Read the entire post, HERE.

Rep. Pat McElraft Bores In On Amazon’s Collection of Sales Taxes

In response to questioning from Representative McElraft and others at the Tuesday meeting of the Legislative Government Oversight Committee, the legislature’s chief economist estimated that the extra sales tax collections in North Carolina resulting from the new Amazon collection policy (effective February 1st) will amount to about $30 million dollars, and possibly as much as $43 million.

Although there has been no official announcement as to why Amazon has suddenly capitulated in the lengthy struggle with the North Carolina Department of Revenue, it is rumored that Amazon has recently established a warehouse and shipping hub within the State, possibly in Greensboro.  If so, this would trigger the applicability of the “nexus” criteria articulated by the US Supreme Court in their decision that prevented states from forcing online retailers to collect sales taxes from buyers in states within which the retailer had no physical presence.

Amazon Begins Collecting NC Sales Tax On February 1st

WSOC-TV in Charlotte is reporting that Amazon will “be required” to collect sales taxes from NC customers beginning February 1st (Hat Tip to the Daily Haymaker).

The question is, why?  It seems unlikely that they were forced to do so by the McCrory administration, so it may be that they have established a warehouse and shipping hub in the state (a “nexus”) that would trigger the applicable conditions under which the SCOTUS has ruled that states may require an online vendor to collect state sales tax.

In any case, bummer.

Uncertain Future For Taxation On Public Pensions

Paul Caron, Pepperdine University Law Professor and purveyor of the TaxProfBlog site, is calling attention to THIS new wrinkle arising from the IRS position on changes to public pension systems that would allow municipalities to shift workers into new, less-expensive plans without losing any tax advantages they had under the old plan.  The situation originated in Orange County, California, but could be coming to a municipality near you.

NC Tax Reform Moves Forward

From NC Civitas:

 

John W. Pope Civitas Institute
April 3, 2013

Tax reform is starting!

Yesterday, Senator Bob Rucho (R-Mecklenburg) took the first step to reform the NC tax code.

We’ll have to wait a bit longer for the real reforms, but this is a fine start.

He introduced 2 bills – one of which signals much more to come…

Here are the highlights:

  • By 2016, the state personal income tax drops to 0% for married couples making up to $12,500 and singles up to $6,250; with a flat 4% rate for all income above that
  • Authorizes a committee to study the possibility of personal income tax elimination
  • By 2015, the corporate tax is reduced to 6%
  • Repeals several corporate income tax credits

As a first step, this is great news!

Still, we have a long way to go before we can proclaim that North Carolina is “Open for Business”.

I have good news for the new committee to study eliminating the income tax:

“WE’VE DONE YOUR WORK FOR YOU! IT’S SITTING ON YOUR DESK!”

On the off chance that you haven’t yet seen our work, here’s a quick update:

We produced a study that shows the way forward on tax reform – here it is.

We came up with a “Response to Critics” to combat the arguments from the left – here it is.

And we have a growing petition movement to eliminate the income tax – here it is.

The research is done and the groundwork has been laid for reform. And North Carolina is controlled by conservatives in every office that counts!

I applaud the legislature and Sen. Rucho’s first step. But I need you to help me remind them that:

The time for reform is now!

The research is already done!

And we’re tired of waiting for growth and opportunity in North Carolina – We have to make it happen!

Sign our petition to Repeal the Income Tax here.

I’m looking forward to more good news out of the legislature – and soon!

Semper Fi,

Francis X. De Luca
Col. USMCR (Ret)
President

P.S. We haven’t gotten exactly what we wanted yet, but this is a good sign of what’s to come. I am going to continue to educate the legislature on tax reform and make sure they know the best way forward. I need your help to remind them how much we need this reform! Please go to www.noincometaxnc.org, and sign the petition to repeal the income tax, send this email around to your friends, and get them to sign it too. If the electorate shows it’s officials that it wants reform, we will get it!

Flat Tax vs. FairTax Debate

The Tax Foundation

July 14, 2008

Flat Tax vs. FairTax Debate

by Joseph Henchman

One of last week’s FreedomFest 2008 events was a debate between proponents of the FairTax and the Flat Tax. Both are tax reform proposals that would replace much of our existing federal tax system. The FairTax is a national sales tax imposed on retail transactions, coupled with a “prebate” sent to each American each month. There are many Flat Tax proposals, but all aim to eliminate many of the deductions and credits in the tax code, and tax all income at one rate.

Dan Mitchell of the Cato Institute began by arguing that a flat tax is preferable because 25 nations have already adopted it; no nation has yet replaced an income tax with a national sales taxes. He argued that because a flat tax is a low-rate system with no double taxation, it can produce greater economic growth. Mitchell also expressed concern that if the U.S. adopted a national sales tax, it could end up with both the existing income tax plus the national sales tax.

David Tuerck of the Beacon Hill Institute argued that the FairTax ensures that all Americans pay taxes, unlike income tax systems which can have large numbers of voting Americans not paying tax. He also noted that flat income taxes tend to erode and become less flat as “rent-seeking special interests” turn the tax code into a “grab bag.” Tuerck also argued that administrative costs of the FairTax would be easier, since approximately 1.1 million businesses would have to pay the FairTax, compared to 132 million+ income tax filers.

Stephen Moore of the Wall Street Journal editorial board emphasized that the flat tax would create much growth, and that it is more politically possible than the FairTax. Richard Rahn of the Cato Institute responded that it is defeatist to view tax reform as politically unpalatable, and that a FairTax is preferable since it would tax consumption, not income, and eliminate the IRS.

After the debate concluded, the audience voted on which plan they preferred. The vote was very close, but the FairTax won, according to the moderator, “by a nose.”

More on the FairTax vs. Flat Tax debate:

FairTax Facts – Wall Street Journal editorial by Leo Linbeck (pro-FairTax)

What’s Foul About the FairTax – Boston Globe editorial by Bruce Bartlett (anti-FairTax)

Un-FairTax – Washington Post editorial (anti-FairTax)

Huckabee’s Flat Tax is a Fair Tax – editorial in The Fergus Daily Journal (pro-FairTax)

And read the Tax Foundation’s statement on tax reform proposals here.