Category Archives: Taxes

A few taxpayer dollar misdirects from Senator Coburn’s 2014 Wastebook

Cover of Senator Coburn's 2014 Wastebook.
Cover of Senator Coburn’s 2014 Wastebook.

Senator Coburn’s office released its 2014 Wastebook. Last year I looked at a few highlight (lowlights) from the 2013 Wastebook. This book includes one hundred outrageous wastes of taxpayer dollars. In a day when even some big-government type politicians are starting to worry about the national debt and deficit (not so low as touted) it is worth finding programs such as this to trim. There are over $25 billion worth of government waste in this years edition. That is slightly down from the $30 billion in last years edition; but it worth noting that many of the programs from last years edition are still going…

Often when talking about government waste I will hear something similar to “well, these government agencies are doing good and are very thrifty with the taxpayers dollars”. Even supposing most government agencies are doing good work for the public (which I doubt with most agencies), it still doesn’t mean these agencies are being thrifty with the taxpayer dollars. Here are some examples from the 2014 Wastebook highlighting how various government agencies are misdirecting taxpayer dollars in a way that is clearly out of alignment with what their mission is.

#15 – US Coast Guard protects the parties of the rich

Faced with budget cuts, the U.S. Coast Guard reduced drug and migrant interdictions while continuing to provide free patrols in the waters along “some of the country’s most exclusive real estate” to stop uninvited guests from crashing private parties.

 

While taxpayers appreciate the crucial role the Coast Guard serves protecting our nation’s waterways and rescuing nearly 5,000 people a year,255 most are probably unaware its crewmen also serve as bouncers to keep the general public and other uninvited guests out of private events on and along yachts, beaches, and estates.

The Wastebook goes on to tell examples of the Coast Guard being used as basically private security for the rich, all put on the bill of the taxpayers. It is estimated that such protection for rich boaters has cost US Taxpayers over $100,000. Of course since the Coast Guard doesn’t document all of this security work it is hard to tell for sure. And don’t be mistaken, the security work being done is not against terrorists or anyone that wishes to cause harm. Rather the coast guard is making sure that rich boaters are not disturbed by common folk. That doesn’t sound like a good use of Coast Guard resources to me.

#39 – SBA backs Polynesian Resort loan guarantees for Disney

One of the biggest companies in the world, the Walt Disney Company ranked 61st in the Fortune 100 rankings for 2014 – and may not seem like an obvious candidate to benefit from small business assistance.538 It operates nine of the world’s ten most popular amusement parks, which together bring in more than $2 billion in annual profit.539

The Small Business Administration provided a total of $1.4 million in surety bond guarantees to two firms hired by Disney, meaning if they fail to perform the taxpayer will step into make sure Disney is made whole.

I believe most taxpayers would be hard pressed to believe Disney would qualify as a small business. Since the SBA supposedly is there to help small businesses it seems odd they would put $1.5 billion dollars of taxpayer dollars on the line in order to help one of the largest corporations in the world. Of course I personally believe the SBA should be done away with. Recent research shows that the SBA may actually be reducing economic growth within the US. But that is a different debate. Whether the outcomes of the SBA are good or bad, it is hard to discern why the SBA would be so blatantly providing a corporate-welfare type safety-net to one of the world largest corporations.

#75 – Federal dollars spent to promote tax increases in Austin

An extensive, and expensive, rail project for the City of Austin, Texas, is getting some fiscal assistance from Washington. Project Connect, the program management group spearheading transit for the Central Corridor Advisory Group in central Texas, has spent $157,000 on an ad campaign to prop up public support to approve floating a billion dollar bond to help pay for the rail line.9

The catch? Approximately 80% of the ad campaign is being financed with federal grant money, essentially using taxpayer money to encourage taxpayers to pay more taxes. Critics have voiced concerns over the media campaign’s funding sources and questioned want to know how it can be considered appropriate when “Taxpayers are paying money to the federal government, which is then turning around and lobbying Austinites to support more taxpayer spending.” The advertisements ended just before being subjected to provisions on election laws regarding ballot measures

Talk about taxpayer dollars being used against them. In this case federal dollars were used to create a media campaign to raise local taxes for a special interest group. I actually spoke with a friend of mine that lives in Austin. He said the fliers he received during this campaign from Project Connect were outright misleading. Sadly it is typical for political propaganda fliers to be misleading (I’m sure plenty of people received many misleading fliers during the 2014 election); what is troubling though is that taxpayer dollars were used to for a special interest group so they could use the peoples own money to lobby against them.

#88 – The Navy’s green initiative utilizes massive amounts of paper to propagandize itself

Yet for all its efforts to showcase itself as the “Great Green Fleet,”1011 the Navy still mails out 9,500 hard copies of the magazine every quarter, including 535 to each member of Congress, at a cost of an additional $72,000 a year over the $260,000 it takes the staff of four contractors and federal employees to develop the content

This publication, Currents, is little more than a magazine used to promote the Green efforts by the US Navy. Going green is good. What the Navy is doing actually counteracts many of the good green steps they’ve already taken, especially since all issues of Currents are available digital. If the Navy were truly serious about going green they would get rid of this wasteful propaganda program.

It is worth reading the whole 2014 Wastebook to see where taxpayer dollars are going. I believe these few examples I highlighted show some areas that government agencies have used taxpayer dollars in direct conflict to their actual mission. Until such wasteful spending is reduced it is hard to believe that any “revenue enhancements” are ever needed at the federal level.

SD Highway Needs Subgroup meetings this month

SD Senator Vehle speaking at the Ag Summit in Deadwood
SD Senator Vehle speaking at the Ag Summit in Deadwood

There will be a series of public meetings for the SD Legislatures Highway Needs subgroup. These meetings were mentioned last week at the SD Governor’s Agricultural Summit. The session of the summit focusing on Transportation was little more than a sales pitch for Senator Vehle to raise taxes (post forthcoming on the whole event later this week). To make sure the Transportation Needs committee hears from constituents it is important to attend one of these meetings. In fact these meetings have only one agenda item:

Public Testimony

Problems and Solutions concerning State and Local Highways, Roads, and Bridges

It is imperative that anyone who cares about transportation attend these meetings and share their stories; and offer solutions if they have any. During the Ag Summit Senator Vehle said solutions other than tax raises were being looked at, but he wouldn’t elaborate on them. Instead he (and the other panelists) seemed to think raising taxes would fix our transportation issues in South Dakota.

Here are the meetings that are scheduled:

  • 7/1/14 – 11:00 AM – Yankton – Regional Technical Education Center – Agenda (this one starts in less than an hour from writing this post, should have written this post earlier)
  • 7/1/14 – 4:00 PM – Sioux Falls – SETI, Sullivan Health Center, 2nd Floor – Agenda
  • 7/2/14 – 11:00 AM – Watertown – LATI, Student Services Center, Level 4 – Agenda
  • 7/2/14 – 4:00 PM – Aberdeen – Ramada Conference Center – Agenda
  • 7/23/14 – 11:00 AM – Belle Fourche – Community Center
  • 7/23/14 – 4:00 PM – Rapid City – SM&T, Classroom Building, Technology Ct.

I tentatively plan to attend the Aberdeen meeting tomorrow and hope to see a good attendance. This is one of those times for constituents to make themselves be heard!

The CBO provides an infographic for the 2013 Federal Budget

Last week the CBO released an infographic (shown below) looking at the Federal Budget in 2013. I love infographics because they are a nice visual way to present numbers; yet there is nothing about this infographic that leaves me with a nice warm fuzzy feeling.  Here is a look at the three sections of this infographic.

The first chart in this infograhpic shows quite clearly that in 2013 federal spending is outpacing revenues. This chart is an easy way for people to understand where federal spending is going and where the revenue comes from. Some things to take note of in spending and revenues:

  • Mandatory spending accounts for $2 trillion. These are the parts of the government that keep going when the government shuts down slows down. I would expect this to expand even more as ACA becomes implemented.
  • Defense accounts for a little over half of discretionary spending… a good percentage of which is pork that isn’t even needed. Why not look here for smart cuts that brings down our federal spending and still keeps our country safe.
  • All revenues are barely enough to pay for mandatory spending plus interest. Since mandatory spending is so high, almost any money Congress spends in their yearly discretionary budget process will increase the national debt.

The second chart shows the federal deficits over the last 40 years. It is quite clear when the recession started in 2009. The deficits have come down since then, but they are still high! Often the falling deficit is attributed to Obama’s policies. I would say that is a false claim. The highest deficits were early in the Obama years, when he also had control of both houses of Congress. Since some power balance was restored in Congress there has been a number of years where Obama simply wasn’t able to push through the budget he wanted. More importantly sequester cuts slowed growth of government (slightly). I don’t think sequester cuts were the smartest way to reduce the federal deficit, but it has worked better than false promises of DC politicians.

Looking at the federal deficit chart it gives the false impression that the financial stability of the US is turning around… that is until the next chart is viewed.

The third and final chart in this infographic looks at the federal debt over the last 40 years. Federal debt as a percentage of GDP has continued to rise, and is currently at 72%. There is no reason to believe this trend will reverse any time soon. None of the current federal budget proposals in Congress do anything to reduce our debt burden (even the ‘draconian’ Ryan budget increases the debt). It is important for people to keep the actual debt in mind when politicians are talking about deficit. Politicians will try talking about one or the other (debt & deficit) in hopes that people aren’t looking at the bigger long-term picture.

No matter what politics a person follows, I can’t see any way for someone to say the numbers highlighted in this infographic are ‘good’ and that our country is on the right track. I suppose people can say to ignore the debt.. That worked out for Greece. Right?

Click to see a larger version
Click to see a larger version

More Tax Day Music

It is April 15, also know as Tax Day in the United States. For me personally it is an interesting day. On one hand I believe the current progressive tax system utilized in the United States is actually regressive and prevents poor people from advancing their financial lot in life. But on the other hand I married a wonderful tax preparer ten years ago. My wife and I now own a business that specializes in payroll and income taxes. Seeing first hand the impact taxes have on people’s lives has actually reinforced my belief the current tax system is regressive. But that’s a post for a different day…

Last year I posted 5 great Tax Day songs. Here is a list of 5 more tax-related songs to ‘celebrate’ Tax Day 2014.

The first song comes from The Who. This song basically looks at the troubles that comes from success. Particularly success catches the attention of the tax man in this line: “Six for the tax man, and one for the band.”

I think Johnny Cash summed up well the feeling many people have about the current tax system: “‘Cause from those total wages earned, Down to that net amount that’s due, I fee the painful sense of loss between the two.”

Now is a song I feel belongs, but almost kept of the list because it goes way beyond problems with the tax system. Marvin Gaye recorded this song before I was even born, yet the many problems he lists in this masterful work seem all the more relevant today. Specifically for this post, I am taking note of Gaye talking about not being able to pay taxes due to bad breaks. Many Americans can relate to that today. But even more important in this song is the mention of inflation. Inflation in the United States is actually purposely created by the Federal Reserve and through Congressional spending. It is the biggest and most regressive form of taxation on the poor. Anyway, here is the song:

And now to Willie Nelson. This song is definitely a familiar situation for those trying to do better in life. Among the many things making it hard to keep going is the “money went to taxes”.

Finally I have to include a song from Remy. Just in time for Tax Day he has released a new song (that is a rework of Pharrell Williams song “Happy”).

Bonus Tracks

I don’t know why I even try to keep myself to just five songs. Here are a couple more songs that are worthy of mention on Tax Day.

This is an older song from Remy, but I actually think it says even more about our current tax system than his newer song.

This is one I came up while searching YouTube. I think this song sums up my feeling pretty well.

Another song I found while searching YouTube. A piece of satire to the tune of American Pie.

Happy “Tax Day” everyone!

South Dakota state senator wants to raise road taxes

"Highway To Anywhere" by Kim Newberg
“Highway To Anywhere” by Kim Newberg

Last week AP reported that South Dakota state senator Mike Vehle (R-20) is continuing his fight to raise road taxes in South Dakota. This from a story posted on SFGate:

Republican Sen. Mike Vehle, of Mitchell, chairman of the Senate Transportation Committee, plans to hold a series of hearings when the 2014 Legislature opens in January to gather information about the need for highway funding and how that revenue might be raised. Any bill to raise highway taxes would not be introduced until 2015, he said.

Vehle has been vocal the last few years about raising road taxes. It is commendable that Vehle is holding a series of hearings to determine how much funding the highway department requires. The motor fuel tax in South Dakota has not been raised since 99 and it is quite possible the current levels will fall short of maintaining the road infrastructure long-term. It is however surprising that a Republican senator is looking to ‘raise revenue’; instead of looking at other places in the budget where funds can be diverted from. Later in the article it clarifies what Vehle means by increasing revenues:

Vehle said he hopes the governor would consider an increase in road taxes because he has supported efforts to build up South Dakota’s infrastructure. And the senator argues the gas tax is more of a user fee than a tax.

“Everyone wants good roads and safe bridges. It’s just that no one wants to pay for it. Well, someone’s got to pay for it,” the senator said.

Vehle said if a consensus can be reached on highway funding, he and others could spend the next year explaining the issue to the public before the Legislature votes in 2015 on any tax increases.

It is quite clear that Vehle is planning to use the hearing as a means raise taxes. Calling the tax raise a “user fee” increase doesn’t fool anyone. This is the same trick Representative Ryan used to increase taxes in the Federal Budget with the aviation security services ‘fee’. Conservatives didn’t fall for this double-speak at the federal level, and it shouldn’t be allowed at the state level either. It is mind-boggling that a Republican state senator would use hearings as a means to justify more taxes.

Wouldn’t it make more sense to hold the hearings where it can be determined if the current road infrastructure funding is too low for long-term maintenance. Once the hearings are completed there would be a better understanding of how much, if any, extra revenue is needed. There are many possible answers that don’t involve raising any taxes at all. Here are a few ideas for the legislators to look at if there is a need for increased highway maintenance funding:

  • Find other places in the transportation budget which can be cut.
  • Analyze and renegotiate contracts for highway construction and maintenance projects. Private sector businesses will find ways to cut costs if it looks like they will lose a cushy government contract.
  • Find other places in the overall state budget which don’t need to be funded to their proposed levels. The Governors Office of Economic Development (GOED) is a great place to start. GOED takes taxpayer dollars and gives it to favored businesses. Instead of this cronyistic approach, why not eliminate GOED and increase funding in road infrastructure maintenance. That would be a move that benefits all businesses in South Dakota.
  • Refuse federal funds that have stipulations attached. I am not sure if this applies to transportation funding or not. However federal education funding often comes with requirements that actually make the state pay out more money than if they had not accepted the funds. Analyze all federal dollars being used to fund infrastructure maintenance and withdraw from any programs that are causing the state to waste federal and state taxpayer dollars.

There are likely more ways to raise highway maintenance revenues. Unfortunately the state senator appears set on ‘fixing’ the current perceived funding issues by raising taxes. Senator Vehle may find more support for increased revenues going to highway maintenance if he wasn’t using it a means to raise taxes. Hopefully there will be enough fiscal conservatism left in the Pierre legislator to fight such an attempt.

PS. I predict now that Vehle or another state legislator will also propose a new tax for miles driven as an other solution.

A new tax for miles driven is the wrong solution

Recently the LA TImes published a story about the government entities looking to implement a new tax system based upon miles driven. A crumbling infrastructure along with increased mileage of newer vehicles are being touted as the reason this new tax is needed. I think the fact a new tax is being suggested highlights the current “lets create a new tax” environment that exists in politics today.

Lets look at the reasoning for this tax. This from the LA Times story:

The push comes as the country’s Highway Trust Fund, financed with taxes Americans pay at the gas pump, is broke. Americans don’t buy as much gas as they used to. Cars get many more miles to the gallon. The federal tax itself, 18.4 cents per gallon, hasn’t gone up in 20 years. Politicians are loath to raise the tax even one penny when gas prices are high.

I do actually believe higher gas mileage has had the consequence of lower tax revenues from the gas tax. For years there has been pressure for better fuel economy. The battle for better use of energy resources is winning! But now, thanks to that battle being won, DC politicians want to use it an excuse to create a new tax. A new tax would be more feasible if the only source of revenue for the government was through gas taxes. It is not.

USGovernmentSpending.com has some interesting numbers to look at for 2013 total federal and state spending. Here is a high level chart showing total 2013 spending in US by Federal, State, and Local governments.

govtspending2013chart
Chart Source USGovernmentSpending.com

Total spending between the Federal, State, and Local governments was projected to be about $6.4 trillion, with $3.7 trillion of that being the Federal government. Total spending on transportation was only 4% from all three sources. Total for the federal government was 3%. States spend a lot more on transportation at 8%. Looking at the above total spending it is not hard to find areas where money can be shifted. Here are a couple of suggestions of how to better spend taxpayer dollars to take care of the crumbling infrastructure:

  • Stop borrowing so much money! Governments spend much more in interest payments from our current ‘put it on the credit card’ policies than go to transportation. Even if 1% of overall spending could be shifted from interest payments to transportation that would be a large increase in the dollars available for infrastructure. This is why so many fiscal conservatives were mad when the debt ceiling was raised yet again with no real cuts. Money borrowed is NOT free! Every dollar going to interest payments could have been better used in other places.
  • Don’t spend so much on Defense! Defense is important and is actually one of the few government responsibilities mentioned in the Constitution. However that does not mean we should spend without regard to cost. DC politicians have been talking about a leaner and smarter military for years. It is time for DC politicians to stop sending pork to the military-industrial complex and actually work on a lean and effective military. Money saved there could easily be shifted to transportation infrastructure.

I could probably look at each spending area and make cases for each to be reduced. However I believe interest payments and defense spending are two easy places to get more resources for the crumbling infrastructure. A new tax is not needed. We need politicians in DC to stop pork spending and over-borrowing so we can actually pay for road maintenance. There may be other solutions as well. I just fear DC will continue its “we need a new tax” attitude without looking at other possibilities.

PS: I am going to blog about the privacy issues of this story on a different day. I will also deal with the supposed libertarian support for this concept at that time as well.

American’s are worried about government over-spending according to Reason-Rupe poll

gringer_Piggybank-pinkThe results from a recent Reason-Rupe public opinion survey has just been released (PDF). There are some interesting results from this poll, which happen to mirror what I hear from many people. Just as with any poll I would say these results are interesting, however polls should never be used as proof of anything. One change of a word in a poll question can change the numbers dramatically. Having said that I would like to highlight some interesting government spending results from this poll.

Here is the first question:

1. Generally speaking, would you say things in this country are heading in the right direction or in the wrong direction?
• Right direction………………………………..28%
• Wrong direction………………………………61%
• Neither (VOL.)…………………………………..7%
• DK/Refused………………………………………3%
• Total…………………………………………….100%

Question 1 was not necessarily a government spending question. However it can be assumed that most Americans consider the economy is an important factor in the direction of the country. In this poll almost 2/3 of respondents believe the US is headed in the wrong direction. That is a large amount of people!

Question 6 has an interesting question relating to government spending:

6. For every dollar you pay in federal taxes, about how many cents do you think are wasted by the government? (OPEN-END; RANGE 0 TO 100)
• MEAN………………………………………….$0.60
• MEDIAN……………………………………….$0.60
• DK/Refused………………………………………9%
• Total…………………………………………….100%

Wow. Americans feel 60% of taxpayer dollars spent by the government is wasted. No wonder there has been a surge of populist libertarianism lately. If people feel over half of their taxpayer dolalrs are being wasted during an economic downturn they are likely to reevaluate the role of government spending.

Question 7 expands upon Question 6:

7. In your view, does the federal government spend too much money, too little money, or about the right amount of money?
• Too much……………………………………….76%
• Too little…………………………………………..7%
• Right amount………………………………….11%
• DK/Refused………………………………………6%
• Total…………………………………………….100%

This result is even more interesting. 3/4 of respondents feel the government spends too much money. Taken together, questions 6 and 7 show a majority of respondents feel the government is wasting too much taxpayer dollars. These results seem to show that Keynesian ‘spend until you drop’ economic policies are starting to be rejected by the American people.

Questions 8 and 9 ask about the budget:

8. It is estimated that the federal government will spend about $750 billion more than it collects in tax revenue this year. Do you think Congress should…
• Balance the budget immediately……….40%
• Balance the budget over 5 years……….32%
• Balance the budget over 10 years……..16%
• Or not worry about balancing the
budget?…………………………………………..7%
• DK/Refused………………………………………5%
• Total…………………………………………….100%

9. What percentage of federal spending, from zero to 100 percent, would you cut across the board to help balance the budget? (OPENEND; RANGE 0 TO 100)
• MEAN……………………………………………37%
• MEDIAN…………………………………………30%
• DK/Refused…………………………………….18%
• Total…………………………………………….100%

If you add the amount of respondents that want to balance the budget immediately with the amount that want to balance the budget over the next 5 years it is almost 3/4 of the overall respondents. This happens to almost align with the amount of respondents that believe the government spends too much money. Another sign that Keynesian ‘spend now and make your children pay’ economic policies are being rejected by Americans. I actually expected question 9 to show greater amount of dollars to be cut balancing the budget. However this question is harder to answer without actually knowing what percent would actually help balance the budget.

Finally Question 10 is a good debt ceiling question:

10. The federal government is expected to hit its debt limit – which is the legal limit on how much the federal government can borrow to pay its bills – in the next few months. In general, do you favor or oppose raising the debt ceiling?
• Favor……………………………………………..24%
• Oppose………………………………………….70%
• DK/Refused………………………………………6%
• Total…………………………………………….100%

Again, almost 3/4 of the respondents would oppose raising the debt ceiling. This to me is the best result of the poll. President Obama and his followers often tout  that not raising the debt ceiling is the same as ‘not paying your bills’. Respondents are rejecting this misdirect of a message from Obama. Responsible fiscal policy would require lowering these bills and cutting non-essential services the government is paying for. It is obvious from the earlier results that Americans feel too much money is being spent already. Using the argument that the debt ceiling has to be raised ‘to pay the bills’ is a really hard sell for Americans that have had to cut services in their own life to balance their personal budgets.

The poll had a lot more questions (72 total) and has some interesting results. And, as I said before, the results shouldn’t be taken too seriously. However these numbers do give hope that Americans are rejecting the Keynesian economic theory that government cannot spend too much money. Perhaps now we can work on getting an agile and useful government; as opposed to our current bloated and economic-hampering government.

Fiscally conservative politicians need to focus on reducing waste

Small government advocates have many fronts to fight when it comes to reducing the size and scope of the Federal Government. Like many I understand how high and uneven tax rates can hinder economic growth. However, I don’t think going after a simplified tax code is where DC politicians that claim to be fiscally conservative should look at this time. Instead fiscally conservative politicians should focus upon reducing government waste.

Below is an interesting infographic provided by Master of Accounting Degrees. Notice how public opinion on government waste has changed dramatically over the last half-century. Back in 1958 43% of Americans believed the government was wasting tax dollars. In 2012 73% of Americans believed the government was wasting tax dollars. That is a huge increase over the last half century.

Looking further down the infographic it can be seen that most Americans care more about how taxes are used; as opposed to how much they are taxed. I believe both issues to be equally important. However most Americans simply don’t care about over-taxation. Most Americans care about their taxpayer dollars being wasted. This is where fiscally conservative politicians need to focus their attention! If DC politicians can put the needs of their constituents over the wishes of lobby groups (that is a big if), real fiscal progress can be achieved. Lets worry about the cumbersome tax system after making headway on reducing waste. By making headway on reducing waste, fiscally conservative politicians can gain enough taxpayer confidence to actually support reducing taxes.

Here is the infographic provided by Master of Accounting Degrees:

No Confidence: America's Declining Opinion of Tax Policy
Source: No Confidence: America’s Declining Opinion of Tax Policy

h/t to Alex Gauthier over IVN for bringing attention to this infographic

Hopefully Senator Thune can get the Senate to understand the Death Tax needs to go away

jcucurull_The_DeathEarlier this week Senator Thune (R-SD) and Representative Brady (R-TX) officially re-introduced the Death Tax Repeal Act of 2013 (S. 1183H.R. 2429). I am very happy to see a Senator from South Dakota taking a leadership position on such an important issue. Last December I posted about the immoral death tax after a Washington Post reporter called it the morally sanitized euphemism ”posthumous federal levy on accumulated wealth.” I’ll let my old post stand as-is to explain why I think the death tax is immoral. This post will briefly examine the economic reasons to repeal the death tax.

As someone who has worked in an Accounting office (working on books and tax returns for farmers and business owners) I can say the death tax DOES impact the economy. The 2013 exemption of $5,250,000 (IRS) sounds like a lot of ‘money’ to those that fight to keep the death tax. There are two reasons this is simply not true:

  1. The death tax is not just a tax upon “money”, it is a tax on transferred property. Five million dollars worth of land, equipment, and other physical assets is not as much as it sounds like. The monetary value for assets of a farmer, construction contractor, or  small manufacturer are likely to be far greater than five million dollars.
  2. The current tax system has caused most businesses to become credit heavy. Businesses are cash strapped. Any assets being passed on to the next generation from a business will not likely include liquid assets. Any person(s) inheriting such a business will be starting their business in debt to the IRS and even more credit-dependent than the previous generation.

These two reasons add up to one sad fact: the death tax kills many small businesses. Overcoming the effects of the death tax during a time of grief is very difficult to those inheriting business assets. This is not a theoretical situation as many death tax proponents state. Ask any good-sized accounting firm or business tax preparation firm about death taxes and they will be able to confirm it is not theoretical (but because they privacy serious they won’t be able to state cases without permission). Many accountants, tax preparers, and financial advisers try to get people to do something before death to prevent (or at least reduce) the effects of the death tax. But I would contend it should not be necessary to plan a fight against the IRS after death. The inheritor of a business should be able to continue operations as if nothing happened. Instead many of these businesses have some or all of their assets sold to pay the tax. This has the real world implication of people losing their jobs.

Whether it be for moral or economic reasons I believe the answer is the same: the death tax must be repealed. Hopefully Senator Thune will be able to gain enough support in the Senate to get this immoral and job-killing tax repealed. I guess we’ll just have to wait and see if Senator Baucus (D-MT) allows the bill out of the Senate Finance Committee. I wouldn’t hold out too much hope on Baucus though, as a Democrat politician he probably loves the ”posthumous federal levy on accumulated wealth.”

 

PS. Rep Noem, SD’s lone Representative, has become a co-sponsor on the House version of the bill. Being anti-economy, I would expect SD’s Senator Johnson to vote against this important bill (if Baucus allows it to reach the floor).

The IRS targeted Tea Party groups! But it was not politically motivated???

PrinterKiller_Cup_of_TeaAP posted a story titled “IRS apologizes for targeting conservative groups” earlier this morning. It appears last year when many liberty-focused non-profit groups said they were being unfairly targeted by the IRS it wasn’t paranoia as the left-leaning media and bloggers claimed. Rather it was a decision made and carried out by IRS agents.

AP has the following quote from Lois Lerner, the person in charge of the division that overseas tax-exempt groups:

Lerner said the practice was initiated by low-level workers in Cincinnati and was not motivated by political bias. After her talk, she told The AP that no high level IRS officials knew about the practice.

Really? It’s almost astonishing this claim would be made: “not motivated by political bias”. Groups that are openly opposed to big government and over-taxation happen to be directly targeted by the government’s tax enforcement wing. And Lerner has the cojones to say it was “not motivated by political bias”! Among the organizations singled out were any with the words “tea party” or “patriot” on their tax-free status application. So IRS agents targeting “tea party” was “not motivated by political bias”?

Going forward I’m sure there will be an investigation. Since the government will be doing its own investigation I don’t think they will find anything of use.

But, a full investigation is not required to start actions that will prevent this in the future. A good place to start would be to fire the agents in Cincinnati who (according to the IRS) initiated this attack upon Tea Party groups. Since this is supposedly the work of a small group of workers in the Cincinnati office the IRS has knowledge of who is responsible. Fire them. There is no excuse for such behavior.

The IRS has taken other steps to prevent this in the future:

“Mistakes were made initially, but they were in no way due to any political or partisan rationale,” the IRS said in a statement. “We fixed the situation last year and have made significant progress in moving the centralized cases through our system.

Ahh, so the IRS isn’t actually saying what steps were taken to fix this. We are just supposed to trust them to fix it.

But at least the IRS apologized. Right?

“The IRS would like to apologize for that,” she added.

Hmm. “The IRS would like to apologize for that”. That sounded more like a “my bad” type of apology rather than a “we are taking this serious” type of apology.

Reason has posted some of the letters received by Tea Party groups last year. It will be interesting to see how the mainstream media decides to cover (or avoid) this story.