by | FREEDOM, OBAMA, POLITICS
As a CPA who has practiced for four decades, I can say without hesitation that the IRS conduct was severely overreaching. The cherry-picking of organizations and the burdensome scrutiny that was administered by IRS official is utterly beyond the scope of anything they should, and are allowed, to do.
The likelihood that the White House coordinated with the IRS (as well as the media) is strengthened based on the well-researched timeline provided by Kim Strassel at the WSJ. She demonstrated that the IRS attacks on conservative groups happened at the same time the Obama Administration and the media began chiding activity by ominous “shadowy groups”. In one specific example, Americans for Prosperity — a conservative 501c4 — was derided by the White House and media while also simultaneously being subject to intense scrutiny by the IRS.
Part of the issue stems from the difference between a 501c3 and a 501c4. A 501c3 engages in charitable, educational or religious activity, and donations are tax-deductible. Not so with a 501c4, whose main purpose is social welfare, and whose donations are not deductible.
It must be noted that tax-exempt social-welfare groups organized under section 501(c)(4) of the Internal Revenue Code are allowed to engage in some political activity, but the primary focus of their efforts must remain promoting social welfare. That social-welfare activity can include lobbying and advocating for issues and legislation, but not outright political-campaign activity.
But some of the rules regarding 501c4s leave room for IRS officials to make judgment calls and probe individual groups for further information. This is how the IRS justified their targeting, except that they went way beyond what is normal and customary procedure.
In reality, the concept of being a “tax-exempt” organization really has little to no meaning. Despite what the Left has been trying to portray or insinuate, being “tax-exempt” does not mean tax evasion in any way, but rather that the particular organization simply generates no income. And if it does not generate income, it cannot be taxed. But there is nothing untoward about an organization being “tax-exempt” (except perhaps that the government laments this category as “lost revenue”).
A 501c4 operates by collecting money to do things in a collective manner, meaning as a group — as opposed to individually. This organizational status then allows them to function as a group and lets the IRS know that monies collected are for its own non-taxable (non-income generating) purposes.
The fact that there was a coordinated effort by the White House, media, and DCCC to try suggest that conservative-formed 501c4s might be operating in an illegal or clandestine manner is chilling. What’s worse is that low-information voters bought into the narrative because they cannot even recognize anymore whether or not they like a particular idea or position on an issue without knowing where it comes from.
We have freedom of speech and freedom of assembly in this country guaranteed under the First Amendment. If the Left truly believed that their ideas were right and true, those ideas should survive on merit. But that is not what has happened in this country. To go beyond the usual “talking points” that happens in the normal course of politics and use a function of the government in such an overreaching manner is alarming. It is anathema to many Americans that the Left has gone to such great lengths to try to silence or intimidate those who may have viewpoints counter to that in the White House. Such actions are disdainful and they are not the American Way.
by | ARTICLES, BLOG, FREEDOM, OBAMA, TAXES
In another class-warfare move, The Hill reports on the latest Obama gimmick: Obama’s budget includes a cap on IRAs and other retirement accounts.
The White House apparently has a problem with how much money might be in your retirement account(s).
The senior administration official said that wealthy taxpayers can currently “accumulate many millions of dollars in these accounts, substantially more than is needed to fund reasonable levels of retirement saving.”
The administration official then proceeds to define their level of reasonable retirement: $205,000/year, or around $3 million. Tax-deferred retirement accounts — like IRAs — will be prohibited from containing more than that.
The government is just salivating over the thought of tax-deferred money just sitting around. By capping the amount allowed in such an account, it keeps money from being deferred (hint: taxed now) so it can go directly in the government coffers. “The proposal would save around $9 billion over a decade, a senior administration official said, while also bringing more fairness to the tax code”.
So, what’s really going on?
$9 billion over a decade. That’s $900 million in revenue a year for 10 years. When that amount is checked against the more than $1 trillion in deficit per year the last several years, the suggestion that capping retirement accounts is part of a grand plan to reduce the deficit is insulting.
It’s not about deficit reduction. It’s about class warfare and need. The White House cites this measure as a way to bring more “fairness” in the tax code. Fairness? Restricting any American taxpayer how much money they can save for retirement is not fair. Pre-determining for any American taxpayer what is “needed to fund reasonable levels of retirement saving” is not fair.
They use the word need to get what they want. William Pitt the Younger sagely put it, “Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.”
So it’s not about deficit reduction and it’s not about any real fairness either. It is about a body politic with a rapacious appetite. First it determines your needs, and then goes after the wealthy because the wealthy have what it needs (money for more spending).
As I have written before, the question of additional taxes on the wealthy is really a liberty and equity issue, impinging on the very entrepreneurial environment that made our country great. At the heart of any monetary decisions should be free will, not free money (for the government).
In a free country such as ours, it is entirely my judgment as to whether or not I want to work hard and try to earn a lot of money (or not), and/or save my money (or not). It is unequivocally immoral that our government – or any government – should feel it has the place and authority to come along after I earned my success and basically declare that because I have done well for myself, I should have to now pay more to that government. This is legal plunder.
Why should I, who have proven myself to be successful (according to the government) have to give my success over to people who have proven to grossly mismanage our country’s finances?
This is a true and concerted effort to keep the wealthy less wealthy. It a disincentive against saving and a punishment for success. Why bother to work hard, to be self-sufficient, if the government can potentially decide, willy-nilly, that it needs more money than you?
by | BLOG, BUSINESS, FREEDOM
This past week, The Hill reported that the cost of Obama’s regulations for his first term were $518 billion, with nearly half of that –$236 billion – coming in the year 2012 alone. Expensive and prohibitive government policies such as these are the driving force behind the mass exodus of businesses abroad. (more…)
by | BLOG, FREEDOM, OBAMA, TAXES
Did anyone else notice Justice Antonin Scalia’s headgear at the inauguration today?
Richmond Law Professor Kevin Walsh notes on his blog that
“The twitterverse is alive with tweets about Justice Scalia’s headgear for today’s inauguration. At the risk of putting all the fun speculation to an end . . . The hat is a custom-made replica of the hat depicted in Holbein’s famous portrait of St. Thomas More. It was a gift from the St. Thomas More Society of Richmond, Virginia. We presented it to him in November 2010 as a memento of his participation in our 27th annual Red Mass and dinner”.
(more…)
by | BLOG, ECONOMY, FREEDOM, GOVERNMENT, TAXES
The question of additional taxes on the wealthy is really a liberty and equity issue, impinging on the very entrepreneurial environment that made our country great. At the heart of any monetary decisions should be free will, not a free lunch.
Stop and think about it for a minute. In my adult life, in a free country such as ours, it is entirely my judgment as to whether or not I want to work hard and try to earn a lot of money, and/or risk my money via investments. Such choices are made only after careful deliberation. And one of the factors going into that decision is how much tax I will pay on my winnings, my successes. That is why it is unequivocally immoral that our government – or any government – should feel it has the place and authority to come along after I earned my success and basically declare that because I have done well for myself, I should have to pay more to that government. This is legal plunder.
I have right and the liberty to factor into my decision making process what the government states I must owe under law, and decide whether that amount and calculation would be amenable to my overall situation and goals. The government has no right to retroactively come along and declare that I must detract from my commitment to invest in my self, my education, my career, or anything else because it needs a greater revenue stream. Why should I, who have proven myself to be successful (according to the government) have to give my success over to people who have proven to grossly mismanage our country’s finances?
When people say things such as Exxon makes X so many billions of dollars a year and therefore they can afford to pay more, such a statement only reflects the gross naivete and ignorance of basic financial rules. Without a frame of reference, unless that number is coupled with how much money was invested or needed to be invested in order to earn that earnings figure, such a statement is worthless rhetoric. If a company makes $10 billion, but has $100 billion invested in the company (which is quite typical for major corporations), that would be a 10% return.
When put into that perspective of how much was invested to get that ROI, 10% isn’t quite so much. Would you invest millions or billions for the risk of a 10% return or the risk of losing it all? Most would not. If you have money invested in something like a bank that is a very safe investment, but you also get a pretty low return. If you are investing in something in which you have the chance of losing, you risk everything hoping to get that 10, 15, 20% return. With any investment, be it oil or a bowling alley business, you would not have access to that kind of risk capital unless it was strongly anticipated to get that larger-than-safe-return: you risk losing it all. And yet, many companies and individuals still make the investment. Good for them.
So then with those who were able to make a decent return on investment, Obama’s tax policies are simply a death wish for our country. If we go out in the free market looking at companies and individuals investing millions and billions a year, and the government leaves alone the ones who do poorly on their investments but leeches onto the winners, the successful ones, this is what it essentially tells them: you were so successful, we want and deserve a piece of your success. We are happy, though, to allow you to lose your money alone.
Doesn’t everyone see the lunacy and disingenuousness of going after the oil companies when oil is $100 a barrel but ignoring them when oil is $20 a barrel? Or screaming about their 4% profits yet say nothing about the government’s gas tax of about 18 cents per gallon? This type of targeted hypocrisy only supplies us with 1) more political posturing and talking points and 2) attempts at additional revenue streams.
Having a policy to target the winners with an additional tax after they become winners will eventually destroy those winners because no one will want to invest or earn over a certain threshold. This will stymie and financially ruin our country, founded upon the backs of small businesses, hard work, entrepreneurship, free minds, free society, and free economy.
Those who are prosperous should be given the same liberty to manage their success as any other citizen, not additional tax penalties. How can we honestly and morally take extra money from those taxpayers who have been able to create wealth and employment successfully and give it to the government and politicians who manage to continuously and egregiously squander income?
by | FREEDOM
This says it all:
by | ECONOMY, FREEDOM, OBAMA, TAXES
Consider this: if we go over the fiscal cliff, about $600 Billion will be taken out of the economy in a combination of tax increases and lower spending. This is certain to put a stranglehold on an already weak economy. Obama has had trillion dollar deficits each year of his presidency — the highest deficits of all the presidents in history. Even by reducing the deficit to about $500 Billion by the automatic fiscal cliff triggers, Obama would still be responsible for a deficit that is larger than all of his predecessors. Clearly, spending is at the heart of the problem.
by | FREEDOM, TAXES
These are the times that try men’s souls. The summer soldier and the sunshine patriot will, in this crisis, shrink from the service of their country; but he that stands by it now, deserves the love and thanks of man and woman. Tyranny, like hell, is not easily conquered; yet we have this consolation with us, that the harder the conflict, the more glorious the triumph. What we obtain too cheap, we esteem too lightly: it is dearness only that gives every thing its value. Heaven knows how to put a proper price upon its goods; and it would be strange indeed if so celestial an article as freedom should not be highly rated.
– Thomas Paine: “The Crisis”, December 23, 1776
by | ECONOMY, FREEDOM
President Obama, please stop lying. There are no “tax cuts for the wealthy” on the table. The Bush tax rates are what the taxpayers pay and have been paying for 10 years. Keeping the rates the same does not equate to a tax cut. And changing the rates to the Clinton-era rates is, in fact, a tax increase.
These current tax margins have been built into the economic market for a decade. Our economy – for better or for worse – has operated on that particular set of data. Increasing of the rates would have the effect on the marketplace and in the business world of immediately reducing the value (by reducing the after-tax cash flow) of all existing investments, and, by reducing the expected return of prospective investments, will eliminate many of them (and the jobs that would have gone with them).
To talk about “restoring the old Clinton-era rates” is ludicrous for several reasons: 1) the Clinton-era economy was stronger than our current one; 2) the Clinton rates did not have the burdens of taxation introduced by legislation since then; 3) state and local tax rates are significantly higher (and states have much higher debt levels which portend even greater increases); 4) the enormously increased burden of Obama (and some Bush) era regulations exists, which have the same effect of still further tax increases, and 5) we now have to contend with Obamacare and all the staggering taxes associated with it.
Additionally, spending during the Clinton-era was much lower than now. Currently, Obama is spending 24% of the GDP, compared to 18% with Clinton. It was Clinton who specifically declared “the era of big government is over”; he aimed to reduce the spending in order to substantially reduce the size of government. Not so with Obama. Really, how in the world does Obama have the chutzpah to compare himself to Clinton when talking taxes?
Referring to a continuation of the same law is not a “tax cut”. Just because the liberals have not accepted it doesn’t mean it’s not the law. Increasing tax rates on any segment of taxpayers, especially the segment responsible for nearly all job creation, is irresponsible.
by | ARTICLES, FREEDOM, SOCIAL SECURITY
It is a national tragedy that people may be willing to put aside the issue of Social Security reform because Congressional Leaders on the Democrat side – such as Dick Durbin and Harry Reid – have been standing behind the position that Social Security is not a problem. While discussing the impending “fiscal cliff” negotiations last week, Harry Reid proclaimed (yet again), that
“Social Security is not part of the problem, That’s one of the myths the Republicans have tried to create,” he said. “Social Security is sound for the next many years.
Reid justifies this outrageous and distorted view by asserting that Social Security is not adding to the current deficit since the the cash in and out is roughly the same. While that may technically true, it is technically true only in the sense that it is analogous to an individual who is running up millions in credit every day — and then that person says that since he doesn’t have to pay it back right away till next year or the year after, it doesn’t affect his immediate budget.
The fallacy of this logic is that although the Social Security cash in may be equal to the cash out, the cash in includes everything we are getting, while the cash out doesn’t include the responsibilities due to come. The cash out formula they are referring to excludes the trillions that are being promised to existing workers in the future while their Social Security tax is being collected today. As the years go by we are continuing to incur the deep cost of future payment obligations that the Democrats are conveniently not accounting for – and it’s going to get impossible to pay those bills when they come due. Yet, those obligations are every bit as real as charges on a credit card.
Equally disturbing is the fact that the media is complicit in promoting this fable. Each year that that passes without fixing the system creates trillions of additional deficit to be paid by our children and grandchildren. Our media is feeding the Democrats’ incompetence by promoting their sham and failing to report the truth about the insolvency of Social Security.
(crossposted at redstate.com/alanjoelny)
