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LindaMBeale
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Thanks to all of you who have expressed your support here and through emails in response to my 'returning to blogging' post. Encouragement does wonders for one's psyche. Linda
Toggle Commented Oct 21, 2014 on Return to Blogging at ataxingmatter
Typepad HTML Email By that criteria, the rather boring, predictable, and obnoxious Nancy Grace—who has a national television audience for her newsopinion programming —must be considered to “get it.” But all she gets, as far as I can see, is that blabbing on and on about her own views on highly charged criminal cases gets her celebrity status.
Typepad HTML Email Kessler’s article is little more than an opinion piece outlining the emotions of the ex-pat community that wanted the anonymous bank account system to continue forever. She assumes that there are very few ex-pat tax cheats but lots of citizens put into an emotionally charged choice of moving assets to relatives’ names or renouncing citizenship. FATCA deals with a real tax evasion problem. Lawyers who represent ex-pats who were holding assets offshore in order to evade taxes tell me that there were many many of these accounts and that most accounts were quite large and had existed for the express purpose of avoiding US taxation. Many of the banks rejecting American deposits are ones that are or think they may be in trouble for the way they have mishandled those accounts (even under the earlier reporting requirements, pre-FATCA, such as the “qualified intermediary” “know your customer” rules). Again, it may be that in some cases American ex-pats find themselves in worrisome positions vis-à-vis their banking choices. But It’s not surprising that an ex-pat abroad might find financing on better terms for a US purchase from a US bank. In many ways, the ex-pat clamor seems to be another version of the radical libertarianism that the elite so often use to justify continuing their lifestyle-- “we liked it the way we had it; we don’t like paying taxes on our capital income”.
Typepad HTML Email Suzanne Laws aren’t perfect, and rules always leave somebody in an awkward situation. That’s part of the price of citizenship. While I can understand anyone’s frustration when they have to pay attention to administrative headaches or have to pay more than they personally think they ought to have to pay, I’m not sure that justifies changing the laws to let everyone in that situation off the hook.
Typepad HTML Email Sorry, Mike. You are the one in the box.
Typepad HTML Email Mike Citizenship carries both benefits and responsibilities. So renounce. Fine with me. But til you do, all I ask is that you comply with the law. As for the exclusion for foreign earned income, one could easily see how the person staying at home could find it unfair that someone from their company working broad for 2-3 years and earning the same or more in gross income from the firm would pay taxes on a very small portion of that. Like the “active business exception” to offshoring company assets, the exclusion acts as an incentive to encourage working abroad and results in tax discrimination against those who don’t do so.
Typepad HTML Email MikeIt appears misleading to me to use state to state movement as equivalent to country to country movement—it is like using an individual household’s revenues and debt as an analogy for thinking about how much debt a sovereign nation with money-creating capacity should take on. The two situations are so different and incommensurable that the analogy leads to quite clearly wrong conclusions. Your point of view has been made clear many times in comments here. You seem uninterested in other points of view.
Typepad HTML Email Mike The tax laws governing nonresident aliens and citizens or resident aliens are determined by Congress—not the IRS and Treasury. People seem to confuse federal law passed by Congress (the laws passed governing the environment, the laws passed governing entry of foreigners into the country, the laws passed governing taxation) with federal regulations (the rules passed by agencies designated by congressional statute to implement particular sets of laws). For example, section 911 of the Internal Revenue Code (the codified set of statutes passed by Congress implementing the federal income tax) governs the tax treatment of “citizens or residents of the United States living abroad”. Section 911(a) provides an election to exclude certain amounts from gross income of a “qualified individual” and 911(d)(1) defines a “qualified individual” as one whose tax home is a foreign country but who is a citizen or resident of the US who satisfies certain residency requirements in the foreign country. The IRS does not make the law. It is an executive agency that enforces the laws. Implementation and enforcement of laws does require interpretation, and the agency designated by Congress (IRS/Treasury) is the primary interpreter of the tax laws. Agencies generally also have some administrative discretion to prioritize enforcement and to allow (hopefully de minimis) variation from expected compliance behavior because of concerns about ability to administer the law fairly without so doing. This is not so different from the discretion exercised by prosecutors etc Linda
Suzanne-you're comment on repatriating versus renouncing goes to the cited article, not my own language. Mike claims that there are no real benefits to holding on to US citizenship. Fine, then anyone who thinks that should renounce (and go through whatever requirements the US law has for doing so, including the tax laws). I'm fine with anyone who has left and is living elsewhere renouncing--it seems like the appropriate thing to do. As for how those who have renounced should be treated post-renunciation when they want to visit the US, etc., that's a matter for legislative consideration. Not my area of expertise by any means and I haven't really given it much thought.
Typepad HTML Email Laura: You say, as a given, that “there shouldn’t be any penalty or stigma attached to expatriation.” That’s an opinion, not a statement of fact. And one could come up with a variety of arguments on both sides. We generally rely on the legislative process to iron those out. My view is that FATCA’s disclosure and reporting rules regarding offshore bank accounts are reasonable rules that seek transparency around the process of holding assets offshore. And they serve as a means of preventing tax evasion under the current rules.
Typepad HTML Email Mike You say “everyone should have the right to end a citizenship with any country without penalty or attack for doing so.” That, like so many of your statements, may sound reasonable on the surface, but when you look at it, it is not so clear. From birth to death, persons and entities located in a country exact a toll on everything from natural resource allocations to roads and parks to various forms of physical and intangible infrastructure. One could think of this as an imputed charge associated with the tangible and intangible benefits of participating as a citizen/formed entity in a country—a charge that citizens and entities are not ordinarily called upon to pay. But if a person or entity decides to “exit” the country, then that would be the logical point to have the imputed unpaid charge transform into a real charge (an exit tax). I think your statement also confuses “free will” and “ability to satisfy requirements for implementing certain decisions”. Linda
Typepad HTML Email If indeed some are repatriating because they don’t want to comply with the law and think this will allow them to avoid it, odds are that they ALREADY have failed to comply with the law and pay taxes in this income (they have been required to report these accounts long before FATCA).
Typepad HTML Email John Interesting observation. I agree that the anti-communist and pro-religionist agendas have long been conjoined in a “super” patriotism that seems to include believing in (a Christian) God with being “anti” anything that smacks of government intervention all the way from democratic socialism to communism and to produce a naïve “faith” in the Chicago School’s “free marketarianism” version of capitalism as a corollary. The relationship goes back to the Soviet communist view of religion as “the opiate of the people”—a view that invites those who identify with religion to identify with anti-communism and thus invites the merging of religious and patriotic feelings into a super-religious “pro capitalism” patriotism. Even more curiously, the pro-religion agenda generally is also “pro-war”—the sentiment expressed in that old Christian hymn “Onward Christian Soldiers” transmogrifying into a dogmatic belief that the battle for people’s spiritual hearts is one with a battle for people’s (and countries’) physical bodies. The excessive use of the term “hero” for anybody engaged in the military is another aspect of that militaristic sentiment, as is the right’s extraordinary commitment to military funding even while supporting the evisceration of the social safety net. Though there are other foundations for it, the pro-war sentiment reinforces the right’s commitment to Israel and willingness to condone Israel’s multi-decade occupation of Palestine (even though the right—along with much of the rest of America—did nothing to support allowing Europe’s Jews to settle in America just prior to and during Hitler’s assault on them). I’m sure there are some historical and/or political science studies on this, but I haven’t researched them yet. I think the correlation has frequently been made as we’ve done it—an anecdote-based observation of correlation of ideas. Let me know if you find an empirical, fact-based study of the development of an anti-communist, pro-religionist (and, I would add, pro-freemarketarian) definition of “patriotism.” Linda
Good point, Jerry. The Tea Party doesn't really care about debt; it wants to stop already-approved future spending on things right-wingers don't like (or that the Koch and other wealthy funders of the Tea Party movement don't like and use various misinformation/guile/deception to convince Tea Partiers that they shouldn't like either)--like public education, infrastructure spending, environmental protection spending, unemployment, child health, Medicaid, and Social Security. So it claims that limiting debt requires drastic cuts in spending already approved by Congress. The use of the debt ceiling is just another way that the Tea Party right-wingers are attempting to nullify majority rule.
Toggle Commented Oct 28, 2013 on Time to Eliminate the Debt Ceiling at ataxingmatter
No extension of filing deadline. That's reasonable, since people still have as long as they ever had to file. The reason for the delay in starting the filing season had to do with IRS problems caused by shutdown. That didn't affect taxpayers' ability to file by the deadline.
Toggle Commented Oct 28, 2013 on Tax Filing Season Delay at ataxingmatter
Tex. 1. Just what part of the grantor trust rules set out in the Internal Revenue Code do you think are not settled law? Just what part of the many court decisions that have legitimated marketability discounts do you think are not part of settled law? Who are the "many" that think GRATs don't work or marketability discounts aren't viable strategems? 2. Inequality has certainly been around a long time--our country was founded by royalists and elitists who treated those who owned property as people and people as property. That doesn't excuse what has happened in the last four decades or so, when the right has successfully pushed policies based ostensibly on "market economics" a la the Chicago School that have reified elite capitalists (thus providing preferential capital gains rates to already wealthy elites) and scorned ordinary workers (thus saying that discrimination and other problems in the marketplace will be "solved" by the market place, an oxymoronic thought if there ever was one). Inequality was made much better when the inordinately wealthy suffered considerable wealth loss in the Great Depression, but the Great Recession and its outcome have left the rich well off and the rest of us worse off. Wages have stagnated for ordinary workers, while CEOs and their groupies have made out like bandits (which they are, in a way). 3. Yes, Clinton was better than the GOPers before him, but not much, and he was enthralled with the Wall Street crowd and let them determine most of his economic policy. But it was actually a Republican Senator who put the deregulation of derivatives into law by introducing the commodities futures act at the last minute right before Christmas, with very few people reading it. And it was the general takeover of most law schools by a "law and economics" mentality that allowed Chicago School theories to be considered a reasonable basis for thinking about almost everything, even though those theories are built on a foundation of sand (universal preferences, rationality, etc.).....We are all to blame for not dealing with these measures better. But you seem to lay the blame exclusively on presidents and the IRS, which seems a rather naïve understanding of legislative and executive powers and process.
Typepad HTML Email Tex Grasser: You started out from a perspective that I do not share—that government is inherently bad, and Congress cannot act responsibly. It seems that this particular Congress has been rendered dysfunctional by an infestation of economic terrorists, consisting primarily of anarcho-libertarian Tea Party members who would rather see the federal government drastically harmed (with whatever collateral damage that does to individuals and other countries as may be) than have federal programs that serve “the 99%” enacted. That doesn’t mean Congress will or must continue to be dysfunctional—the people can choose a different type of Congress if they but will tune out the sloganeering of the elite and radical right. Elections can still make a difference. I remain hopeful that we will regain a saner Congress. The problem is that the schemes outlined here DO work under existing laws. The “law and economics” domination of fiscal and economic policy thinking for four decades has resulted in ideas like the “marketability discount” being considered “settled law.” Similarly, the taxation of trusts is generally settled law, utilizing the grantor trust provisions and other rules and regulations. It will take Congressional action to eliminate these gift and estate tax avoidance techniques. If Congress ever does get around to doing so, it should also revisit the estate tax. It is ludicrous to have a rate of 35% that applies no matter how humongous the estate. Just as the income tax needs to have an expanded number of brackets, so that those who make tens of millions are taxed at a higher rate than those that merely make hundreds of thousands, the estate tax needs a rate for those who pass along estates of tens of millions that is lower than the rate for those that pass along estates of hundreds of millions or billions. If the people don’t elect a decent Congress, we will reap what we have sown. We will continue to have anti-government people in government whose aim is to please a narrow band of elite while catering to an equally small minority of radical right-wingers. Democracy itself is at stake. As for your question “why would anyone support increasing tax rates when the existing laws are totally gamed by the 1%”—if we do not use the tax system to address, at least at the margins, the increasingly destructive inequality of allocation of resources in this country, we will end up no better than most third-world countries. The gated wealthy will use the rest of us as their peons. Property, status and power will be inextricably connected even more tightly than they are now. Those without will garner less and less of the productivity gains from their labor—as they do now. Those with will hoard what is good for themselves, as they increasingly do now with their ability to dominate the conversations about labor unions (see, e.g., Michigan’s right-wing elite’s ability to get a “right-to-work” law passed t eviscerate public employee unions) and wages (see, e.g., the sad state of the minimum wage nationally, at half what it should be if it merely kept pace with inflation).
ZHD: I don't know of any grounds for choosing to make payments on formal securities (i.e., interest and principal on Treasury bonds) instead of making payment on any other other legally valid payment obligations of the US government, such as debt obligations of the US government held by the Social Security trust fund and payment obligations under Medicare and various other government obligations. Just how should the Treasury prioritize such obligations? They all stand on the "full faith and credit" of the US government. Remember that the Social Security trust fund has been used to fund ongoing government in return for US debt obligations. Various scholars have proposed that the President should have constitutional power to issue debt in spite of a congressionally set debt ceiling, because the spending amount and the tax amount are also congressionally set, so if the equation Spending - Revenues = Borrowing is not satisfied for spending and revenues already set by the government, it appears that the government HAS TO borrow to make up the difference. The debt ceiling limitation is an anachronism that no other advanced country has, and one that--as clearly shown in this crisis--mainly serves the purposes of economic extortionists like the Tea Party economic terrorists in the House. It should be eliminated, but it is not clear how best to go about doing that with the kind of partisanship from the dogmatically ideological right currently ascendant in the House.
Toggle Commented Oct 14, 2013 on The GOP Default Enthusiasts at ataxingmatter
Typepad HTML Email Mike As usual, your comment is loaded with false assumptions and ad hominem attacks. And it is just plain wrong on many counts. As for the ad hominem part: I’d be just as upset if the Dems tried to pull a stupid stunt like this one. What the Tea Party Republicans are trying to do is hijack democratic process to impose the will of a minority of extremists the country at large, with no concern whatsoever for the incredible personal suffering and national economic harm that their hijack attempt will have. This is not a “she-said, he-said” situation. This is an intentional, planned attempt by extremists on the far right to extort a change in law from the nation based on the threat of destroying the nation’s economy and doing great harm to individuals. The Republican right is fearful that if OBamacare is really implemented as it should be, it will be an improvement that is obvious to many of their base (those who have preexisting conditions and can suddenly get insurance; those who have young 20s children who can now be covered on their parents’ insurance, etc.) and that the people will demand to have what every other advanced civilization has—universal single-payer health care through their government. This isn’t about the government making health decisions for the individual. It’s about empowering individuals to have decent health care by restraining the reckless profit-taking that leads insurers to defer/refuse payment; hospitals to charge outrageous prices for common medicines and services; and doctors to think they have to make 100 times the median salary to be decently paid. Are you really going to argue all the right’s purported “values” issues to justify the Tea Party Republicans’ willingness to destroy the government unless it gets its way on Obamacare? So as long as you disagree with the majority that has passed any kind of legislation, you think it is okay to destroy the country to try to get your way? That is behavior that will throw the United States back into the Dark Ages. Besides, your “values” arguments are laden with preconceptions that are not supported in the evidence—such as that those who are wealthy have “worked hard” whereas those who need help from the government have “chosen not to work”. These are just the same old empty (and ungrounded in facts) arguments that the Koch Brothers and Walton heirs have been paying to have broadcast over Fox and to all the “grassroots” right-wing extremist echo chambers that they’ve funded. And by the way, Mike, if you think the Tea Party/GOP coalition in the House is “standing up for the majority of Americans”, you need to expand your reading and listening beyond the right-wing echo chamber.
Typepad HTML Email Agree it is outrageous for corporations like WalMart to so underpay their workers. We need to change tax policy and we need to change other policies, so that this country is investing in its future rather than continuing to over-reward the already wealthy for their purported contributions. A decent living minimum wage would be a necessary start. Maintaining food stamps for those that don’t earn enough to avoid hunger is a necessity. Etc. Linda
Typepad HTML Email Mike I readily agree that many of the tax exemptions/tax expenditures in the Code (beyond the ones discussed in this post) are problematic and would be better handled through general appropriation legislation. Of course, the difficulty in getting any reasonable action on these issues is that we have a highly dysfunctional overly partisan Congress where getting any kind of quality consideration of goals and means for reaching those goals is well nigh impossible….. I’ve made lots of arguments here for removing exclusions/tax expenditures that seem PARTICULARLY problematic—including the charitable contribution deduction, the exclusion for life insurance benefits (contrasted with the provision governing annuities), the too-small estate tax, the too-lax reorganization provisions, the ridiculous carried interest treatment, etc. The discussion of the preference given religious institutions fits in with those—it is particularly problematic because it favors religion over nonreligion, it creates a category for decision-making that is impossible to define appropriately (is it a religion), and it has resulted in a distortion of the very important notion of religious freedom, since many people have confused the rights of individuals to practice as they please with the claims of religious institutions to be able to impose their dogmas on all their employees. That said, I think there are some exemptions, exclusions, tax expenditures that make sense both from a tax policy perspective and from a social justice perspective. The tax break to teachers who have consistently spent more of their personal funds on items essential for their jobs than any other category of employee that I am aware of is a very small one but very reasonable—if we have so many local and state governments that stingily prevent schools from having chalk or crayons or books, then it falls on teachers to provide them. It’s like other “nonreimbursed employee expenses” except that every teacher that I know of has those expenditures, so it is reasonable to have a “rough justice” “same size fits all” no-hassle amount deductible. Contrast teachers with lawyers, for example—lawyers may spend personal funds on job-related stuff, but there is hardly anything they spend that they aren’t reimbursed for, and they get many of their meals paid for as company business, which of course just shows how the “meals and entertainment” tax expenditure primarily provides a subsidy for high living to the well off amongst us and sets that up as another tax expenditure provision that should be at least cut back on. Auto mechanics who work for companies work with company tools, company machines, etc.—they aren’t buying the basic necessities of performing their profession without reimbursement most of the time and in those rare cases where they do, they are able to deduct under the provision for nonreimbursed employee expenses. Nothing like the routine expectation that teachers will pay for any teacher education courses and will buy paper, pencils, chalk, books, etc. for their classrooms out of their own funds. Many (maybe most) universities make “PILOT” (payment in lieu of taxes) payments to their local jurisdictions, usually negotiated periodically to acknowledge the removal of tax lots from jurisdictions when universities expand. I’d be supportive of having all private universities pay taxes just like any other business, and certainly all for-profit universities—maybe that would help put a dint in the ridiculous salaries that university administrators are receiving these days J . I think there would be a fairly strong argument for not requiring taxes from state and local PUBLIC institutions (since it would be taking from the government to pay the government)….. One last comment. Surely you must recognize that unrestrained “freedom from government” implies anarchy—a kind of brute force world that none of us would like to live in, and unrestrained “freedom of government” implies dictatorship—another kind of brute force world that none of us would like to live in. That is why we have a constitution to set bounds—on government and also (especially in the countermajoritarian principles like equal protection and due process) on what majorities can do to minorities. The issue with government is more inclusiveness than freedom, though I suppose one could say that the basic freedom of interest here is “freedom to participate in government” involving everything from voting rights to reasonable restrictions to prevent big dollars (like the Koch brothers and various corporate monies) from “buying” elections/congressmen/legislation. Linda
Toggle Commented Sep 4, 2013 on Time to get God out of taxes at ataxingmatter
Typepad HTML Email Wj That’s similar (a prejudice that was incorporated into state marriage laws) but different. There was no equivalent of DOMA that applied to define marriage for federal tax purposes to “de-recognize” a marriage that a state recognized and then was reversed to have a marriage recognized for federal law that wasn’t recognized in a couple’s state of domicile. In the case of mixed-race marriages, there was no federal marriage law (other than the Constitution), and the state laws against miscegenation were outlawed all at once by the Supreme Court’s decision in Loving v. Virginia. Of course, Loving is obvious precedent for the Supreme Court to find—in a case that arrives with proper standing—that state prohibitions of same-sex marriage are unconstitutional because they violate the equal protection clause in the same way that the miscegenation laws of earlier days did. Linda
Michael Yours is a perfect example of the process to which you object. Nuff said.
Typepad HTML Email All ideas worth considering, but like all these ideas, would face considerable hurdles (including legal ones) to enact.
Typepad HTML Email Jim,I agree that there is currently too much corporate power over government. That is mostly our fault—we don’t vote the scum out, and we don’t holler loudly enough when our representatives engage in quid-pro-quo legislating and we don’t object to the lobbyists loudly enough, we don’t stand up for what is right often enough. We need to be better citizens if we want a better government. The Tea Party could have represented a response to that, but hasn’t. It’s been primarily funded by those very corporatist powers, and primarily supporting the policies that further corporatism in the US. Linda