Following The Money

Money does not always determine the outcome of an election (see the presidential election of 2016), but in many cases, large amounts of money can make a difference. Name recognition is important in an election, and being able to purchase ads to answer false charges against an opponent is also important. The mid-term elections are crucial for the Democrats–if enough Republicans win who care about government integrity, the Democrats may not be able to survive the investigations that follow. So the Democrats need lots of money from various sources.

On Tuesday, The Washington Examiner posted the following headline, “Fake charities are spending millions to help Democrats win elections.”

The article reports:

In fact, what the IRS isn’t doing in the nonprofit (or “public charity”) sector will affect the midterm elections far more than any FBI raid ever could.

A big part of the IRS’s job is the oversight of 501(c)(3) nonprofit organizations that are awarded tax-exempt status because of the beneficial work they do. There are many different rules that 501(c)(3) nonprofit groups must follow to maintain their favored status, but the most important is that 501(c)(3)s are forbidden to engage in partisan electioneering, or efforts to aid political candidates and affect the results of elections, in any way.

Advocacy and political bias are allowed, but elections are strictly off-limits.

Enter fake charities such as the Voter Participation Center, State Voices, and the Voter Registration Project that siphon tens of millions of dollars every year from billionaires and their charitable foundations to use in ways that the IRS strictly forbids. By abusing their knowledge of racial demographic voting trends and enormous microtargeted voter databases, these groups can ensure they only register people likely to vote for Democrats and function as tax-exempt Democratic PACs.

The partisanship of these “civic participation” nonprofit groups has been an open secret for decades.

The Association of Community Organizations for Reform Now is the best and earliest example — and the one most people know. During the 2008 election cycle, ACORN harvested voter registration forms from over 1.3 million people, and the organization crumbled after numerous ACORN activists were investigated and charged with forgery, fraud, and bribery related to voter registration work.

Later, in the 2012 book The Victory Lab: The Secret Science of Winning Campaigns, liberal journalist Sasha Isenberg wrote of the Voter Participation Center (which raised $88 million in 2020): “Even though the group was officially nonpartisan, for tax purposes, there was no secret that the goal of all its efforts was to generate new votes for Democrats.”

Remember Lois Lerner, director of the Exempt Organizations Unit of the Internal Revenue Service (IRS), who was the central figure in the 2013 IRS targeting controversy. The IRS denied conservative groups tax-exempt status outright or delayed that status until they could no longer take effective part in the 2012 election.  The Democrats have always understood the value of politically-aligned groups. It’s time all of those groups were recognized for what they are so that the public can make informed decisions.

Please follow the link to read the entire article. What has happened to our elections in recent years may result in the end of our representative republic as we know it.

When You Don’t Deal With A Lawbreaker…

On Tuesday, Townhall reported that the Biden administration has chosen the person to lead the new, expanded Internal Revenue Service.

The article reports:

As the Biden administration continues its attempts to consolidate power within the federal government and among its leftist allies, there’s a familiar face being tapped to lead Biden’s effort to surge power, resources, and agents to the IRS — and she has quite the track record of working to target conservative groups and organizations. 

One of Lois Lerner’s lackeys from the Obama-era IRS scandal — one that saw the agency target conservative and tea party affiliated groups as a political arm of the Obama-Biden administration — will be leading the Biden administration’s expansion of the IRS and stated goal of hiring 87,000 new agents.

Nikole Flax, who most recently served as the deputy commissioner in charge of the IRS’ Large Business & International Division, has been with the IRS since 2008. According to IRS Commissioner Charles Rettig, Flax will be leading “the creation of a new, centralized office for implementation of all IRS-related provisions” outlined in the boondoggle falsely named the “Inflation Reduction Act.” There’s little Democrats love more than a chance to work on “centralized” anything within the federal government. 

I wonder if the IRS will be used to squelch conservative speech before the mid-terms and before the 2024 presidential election.

The article notes:

Once the IRS was caught in its scheme of treating conservatives disparately from liberal organizations, Flax was one of several senior IRS officials who had their emails conveniently get “lost,” along with Lerner’s, as Katie reported in 2014. “One of those officials is former chief of staff to former Acting Commissioner Steven Miller, Nikole Flax,” Katie also noted. “The ‘lost’ emails fall during the time period when ‘the Washington, DC office wrote and directed the Cincinnati field office to send abusive questionnaires, including inappropriate demands for donor information, to conservative groups,” according to the House Ways and Means Committee.”

Somehow in Washington, the excuse ‘the dog ate my emails’ is accepted.

The article concludes:

As a refresher, the emails that *were* recovered from Lerner and other high-ranking officials included explanations of their main goal in going after conservatives and tea party groups: “One IRS prosecution would make an impact and they wouldn’t feel so comfortable doing stuff,” Lerner wrote.

Flax also, as Katie reported here, “visited the White House 35 times after talking with former head of tax exempt groups Lois Lerner about working to criminally prosecute conservative tea party groups for ‘lying’ about political activity.” What was Flax doing at the White House? Who did she talk to? Was she reporting progress or taking orders? All that’s known is that Flax will again now have a leading role within the IRS as the Biden administration steps up its attacks on conservatives by labeling vast swaths of Americans as fascists.

A Facebook friend who does excellent research points out:

Nikole Flax was the pointPERSON in the Obama program to target conservative businesses. When it was discovered that they broke the law in specifically targeting opposition, the inspector general sent Flax instructions to deliver her computer to his office for inspection.
She miraculously had a hard drive crash that very instant and, notwithstanding the incredible amount of computer geeks at the FBI, no one was ever able to recover a single bit of information from her hard drive. Imagine that.
She was never prosecuted for abuse of power, obstruction of justice, or destruction of evidence.
Instead, China Joe has appointed her to head the IRS Central Office controlling the audits for the 87,000 new agents as well as its existing auditors. The White House did not disclose whether she gets one of the new AR-15s and some high-capacity magazines the IRS recently purchased.
Do you really think they are going to enforce the law equally?
Not since Vladimir Putin has an evil person in government been given so much power.

Stay tuned (and make sure you are current on alternative news sources)!

What Was This About?

On Tuesday I posted an article that I had serious doubts about posting. I posted it anyway because it was true. I was hoping it wasn’t true, but history has a way of repeating itself. Please keep that article in mind while reading the following.

On Wednesday, Townhall posted the following:

IRS Job Page Removed After Alarming Description of the Special Agent Position Got Exposed

Numerous people on the internet took screenshots of the job page before it was removed.

Here is one of those screenshots:

The article at Townhall concludes:

Excuse me? The link got taken down, but given what has transpired at the IRS, the FBI, and the DOJ—it sure looks like the organs of the state are mustering for armed confrontation with the Left’s political enemies. Let’s not forget that the IRS got busted for targeting conservative non-profits in 2013. The recent spending bill passed by Senate Democrats aims to appropriate $80 billion to the IRS, which even former commissioners admit won’t be spent efficiently, but it will add another 87,000 employees to the agency to apparently go on search and destroy missions if we don’t pay our taxes.

We all remember Lois Lerner who targeted conservative groups and has now happily retired with her pension. This is one agency that does not need to add additional personal nor does it need to be armed.

Thank God for the alert Internet users who found the ad and shared it.

 

 

This Is Probably A Done Deal

Now that Arizona Senator Kyrsten Sinema has agreed to vote for it, the Inflation Reduction Act will probably pass the Senate and become law. That is not good news for Americans.

The Conservative Treehouse points out some of the changes that were made to the law to get Senator Sinema to agree to vote for it:

Arizona Senator Kyrsten Sinema has announced her support for the senate climate change spending and tax proposal after some modifications to the new taxation.

To support the hedge fund donors, Senator Sinema insisted the carried interest loophole tax provision be removed and instead replaced with a corporate tax on stock buybacks.  Any time a corporation wants to buy back their own shares of stock, they will now pay the U.S. government a tax for doing so; at least that’s the ¹intent.

[¹Note: taxing shares of company stock will never work, because that’s exactly what shell companies were designed to avoid. Set up a child shell company to purchase the stock and the parent company doesn’t pay taxes on the child’s purchase. It’s a shell game]

Additionally, according to reports, there is some kind of agreement to modify the 15% corporate minimum tax. Details unknown. Bottom line, Senator Sinema now supports the $700 billion climate change spending and tax proposal.

The Tax Foundation has an analysis of exactly what the financial impact of the bill will be:

Last-week’s Democrat-sponsored Inflation Reduction Act (IRA), successor to the House-passed Build Back Better Act of late 2021, has been touted by President Biden to, among other things, help reduce the country’s crippling inflation. Using the Tax Foundation’s General Equilibrium Model, we estimate that the Inflation Reduction Act would reduce long-run economic output by about 0.1 percent and eliminate about 30,000 full-time equivalent jobs in the United States. It would also reduce average after-tax incomes for taxpayers across every income quintile over the long run.

By reducing long-run economic growth, this bill may actually worsen inflation by constraining the productive capacity of the economy.

Our analysis contains estimates of the budgetary, economic, and distributional impacts of the Inflation Reduction Act as specified in bill text provided on July 27.

Using the General Equilibrium Model, we estimate that the tax provisions, IRS enforcement, and drug pricing provisions in the bill would increase federal revenues by about $656 billion over the budget window, before accounting for $352 billion in expanded tax credits for individuals and businesses, resulting in a net revenue increase of about $304 billion from 2022 to 2031.

Excluding the anticipated revenue from increased tax compliance and the drug pricing provisions, the bill would lose about $126 billion in revenue over the budget window.

The article includes the following chart:

The bill also includes almost $80 billion in appropriations for the Internal Revenue Service to put toward taxpayer services and enforcement. I suspect those of us in the middle class will feel that change. Even if your taxes are done correctly to the penny, the IRS can make you very uncomfortable. My husband and I experienced that after we donated to the tea party. The next year we were audited. We sent them all the applicable information, and they delayed the case for a year. They couldn’t find anything wrong, but they took a long time admitting that. The IRS does not need more money–it needs to go away and have our tax code replaced by something that people can understand and can fit on one sheet of paper.

 

 

Is There Anyone In Government Who Cares About The Taxpayers’ Money?

On Saturday, Just the News posted an article about the Internal Revenue Service’s issuance of improper pandemic tax credits.

The article reports:

This week’s Golden Horseshoe is awarded to the IRS for issuing almost $1 billion in improper pandemic tax credits — and rebuffing an inspector general’s recommendations to recover the erroneous payments.

The tax collectors issued potentially $898 million in improper Recovery Rebate Credits (RRCs) to ineligible individuals, including potential nonresident aliens, according to a final audit report by the Treasury Inspector General for Tax Administration (TIGTA).

The CARES Act authorized Economic Impact Payments in varying amounts depending on income and filing status. Any eligible individual who did not receive the stimulus payment could claim the missing amount on their tax return as an RRC on their taxes in 2020 and 2021.

“As of May 27, 2021, the IRS had processed 26.3 million tax returns with RRC claims totaling $39.2 billion,” according to the TIGTA final audit report. “Of these, the IRS issued potentially improper RRC payments totaling $898 million. These include $79.8 million in the RRC that should have been paid to eligible individuals and $818.5 million in the RRC that was paid to ineligible individuals.”   

The IRS declined to review or take steps to recover approximately two-thirds of the erroneously disbursed amounts, the inspector general revealed.

…Declining to review such ineligible claims processed after May 27, 2021, Corbin said the recovery effort “would require the IRS to divert limited resources to review these returns when such a small percentage, five one-hundredths of one percent, are projected to be affected by the issue.”

Democrats increased the IRS budget by 6% in the recent omnibus spending legislation, and an additional 10,000 agents were expected to be hired. 

How much money would taxpayers save if the additional agents were put to work tracking down erroneous pandemic payments rather than harassing ordinary Americans who might have made an honest mistake on their tax returns?

The Role Of The Internal Revenue Service In Elections

On Sunday, The American Thinker posted an article about the role the Internal Revenue Service has played in American elections.

The article notes:

Should the projections of a Republican tsunami at the midterms prove true, there are so many things that a Republican Congress must prioritize. Not the least of which is revising the civil-service laws to permit removing incompetent and corrupt bureaucrats, cutting drastically the federal bureaucracy, and reforming, among other agencies, the CDC, NIH, FBI, and the IRS.

I’m focusing now on the IRS, which first hit my radar screen when with no consequences whatsoever.  Loretta Lynch’s Department of Justice declined to press criminal charges against Lois Lerner, whose outfit delayed and denied the Tea Party reform groups the tax-exempt status to which they were entitled, hamstringing them against the very well-financed (probably including illegal funds from abroad) Obama crowd. 

This time, pay attention to Black Lives Matter, an utterly corrupt outfit whose riots and lootings destroyed so many cities and wreaked havoc on the black communities and their businesses.

The damage continues to this day as the riots fueled the defund police movement, a ridiculous effort that leaves the poor and the black communities particularly vulnerable to violent crime, and as another consequence caused an exodus of needed businesses from those places.

On her own, the mayor of D.C. ordered one street painted in huge letters “Black Lives Matter.” School kids were urged to walk out to support the group, while big corporations sent them money. All told, the group reportedly raised $90 million in 2020.

The article concludes:

While the IRS makes it harder for you to get your refunds, Black Lives Matter is not the only sketchy Democrat-controlled election-rigging outfit whose tax-exempt status the IRS has not looked into. David Horowitz and John Perazzo detail how Mark Zuckerberg funneled $419.5 million to tax-exempt outfits (Center for Election Innovation and Research and the “Safe Elections” Project of the Center for Technology and Civic Life through yet a third tax-exempt outfit, the Silicon Valley Community Foundation.)

The purpose of these grants was obvious — it was to tip the scales for the Democrats in the 2020 election despite the fact that such tax-exempt foundations are “barred from contributing their resources to election campaigns.”

The grants to these two outfits and the ways they used them to tip the election for Biden are well laid out in this article. 

Under the Internal Revenue Code, all section 501(c)(3) organizations are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office. Contributions to political campaign funds or public statements of position (verbal or written) made on behalf of the organization in favor of or in opposition to any candidate for public office clearly violate the prohibition against political campaign activity.

The existence of such a regulation is meaningless, however, if it is not enforced. Consequently, this ban on campaign activities by “charitable” organizations didn’t daunt Facebook billionaire and Democrat Party patron Mark Zuckerberg and his wife when they plotted a massive campaign to swing the 2020 presidential election in favor of the Democrat, Joe Biden.

The Facebook couple donated to two left-wing tax-exempt foundations “with the intention of tipping the result to Biden by launching “get-out-the-vote” campaigns focused on Democrat precincts in battleground states.” And they achieved that purpose.

The authors contend that none of these travesties could have taken place “without the seditious collusion of I.R.S. Commissioner Charles Rettig and his 63,000 agents“ who neglect their duty to protect our tax laws and elections.

I find their argument compelling. On the one hand, they tied the hands of the Tea Party, on the other, they put on blinders to the patent corruption of the BLM and Zuckerberg-funded outfits.

Please follow the link to read the entire article. If we don’t vote the current crooks (in both parties) out of office in November, I fear we will lose our country.

When The Numbers Do Not Align With The Words

On Sunday, The Blaze posted an article about the Tax Cuts and Jobs Act of 2017. At the time the tax cut was passed, Democrats loudly professed that the bill was only ‘tax cuts for the rich.’ The article illustrates the fallacy of that claim by reporting actual numbers. You can follow the link above to the article to read some of the ridiculous claims made by Democrat leaders.

After detailing some of the claims made by leading Democrats, the article reports:

However, new analysis shows the Republicans’ 2017 tax cuts benefited middle-income and working-class Americans the most. The Heartland Institute — a free-market think tank — analyzed data from the U.S. Internal Revenue Service. The analysis declared that assertions made by Democrats about the GOP’s tax cut law were incorrect.

The Heartland Institute examined IRS data from 2017 to 2018, the first year the tax cuts went into effect.

“The Tax Cuts and Jobs Act reduced average effective income tax rates for filers in every one of the IRS’s income brackets, with the largest benefits going to lower- and middle-income households,” the report stated.

“For example, after accounting for all tax deductions and credits, filers with an adjusted gross income (AGI) of $40,000 to $50,000 received an average tax cut of 18.2 percent,” the Heartland Institute said.

“The IRS data further show that the Tax Cuts and Jobs Act appeared to have a strong upward effect on economic mobility,” the report noted. “The number of filers with an adjusted gross income of $1 to $25,000 decreased by more than 2 million in just one year, while the number of households reporting incomes higher than $25,000 increased in every income bracket.”

The article concludes:

The Heartland Institute concluded, “The available evidence is clear: Based on tax data from 2017 and 2018, the Tax Cuts and Jobs Act reduced taxes for the vast majority of filers, led to substantial improvements in upward economic mobility, and disproportionately benefited working- and middle-class households, many of which experienced tax cuts topping 18 percent to 20 percent.”

Contrast the above with one of the provisions in The Build Back Better Bill. That bill will raise the SALT (state and local tax) deduction to $80,000. That means that you can deduct up to $80,000 in state and local taxes from your federal income tax. The tax plan instituted under President Trump limited that deduction to $10,000. Do you honestly know any middle class Americans who pay $80,000 in state and local taxes? Raising the SALT tax limit to $80,000 is indeed a tax cut for the rich.

This Really Isn’t A Surprise

Yesterday The Daily Caller posted an article about President Biden’s spending plans.

The article reports:

President Joe Biden’s administration is facing a daunting reality check after claiming for months that their spending agenda will “cost zero dollars,” with the head of the Congressional Budget Office (CBO) saying the White House drastically overestimated the revenue the IRS could gain by cracking down on tax loopholes.

Biden and numerous other senior Democrats in the White House and on Capitol Hill have repeatedly insisted that their $1.85 trillion social spending package will add nothing to the national debt. They argued the package included enough pay-fors to offset the spending programs. CBO chief Phillip Swagel brought that claim down on Monday, however, saying that the tax loophole crackdown in the bill would only garner $120 billion, a far cry from the White House’s projected $400 billion, according to The New York Times.

Why didn’t these numbers come out before they voted on the Infrastructure Bill?

The article notes:

The CBO, which is a non-partisan organization, is set to release its official report Friday. The White House is shoring up support and urging lawmakers to disregard the report ahead of its release.

“In this one case, I think we’ve made a very strong empirical case for CBO not having an accurate score,” Ben Harris, assistant secretary for economic policy at the Treasury Department, told the NYT. “The question is would they rather go with CBO knowing CBO is wrong, or would they want to target the best information they could possibly have?”

Why do we have the CBO if lawmakers are going to disregard their research? Again, why didn’t the lawmakers wait for the report before they voted on the spending?

A New Tax Proposal

The Democrats are currently floating the idea of taxing unrealized capital gains. As is their usual modus operandi, the Democrats are saying that this new concept of taxation will only apply to billionaires. Of course it will.

Today The American Thinker posted an article about the idea.

Here are a few highlights from that article:

Our current secretary of the Treasury, Janet Yellen, is busy trying to find a way to tax wealth without calling it taxing wealth.  She has eyes on taxing unrealized capital gains.  What this means simply is taxing people for money they have not earned or received.  That’s it in a nutshell.  That definition should leave even those who have never had a course in accounting or finance shaken.

Not only is Janet Yellen considering this, but the Democrat party is on board as well.  Democrats claim that it is needed in order to pay for their agenda.  You know — the one that President Biden says pays for itself.  The idea of taxing you for the income you have not made is also a policy speaker of the House Nancy Pelosi proposes.  Apparently, there is some confusion here.

Looking at this from my point of view, I recalled a picture of Casey Stengel, nicknamed “the ol’ Professor,” when he was the manager of the New York Mets in 1962 — a team considered the worst team to ever play in the major leagues.  He had his hat off and scratched his head with the caption: “Can’t anybody here play this game?

Think about how absurd this idea is. Imagine if an Internal Revenue Agent showed up at your house and said, we decided that you have to pay tax on the money you never earned. Aside from how insane that sounds on the surface, one need only ask: “If I didn’t receive or earn that money, with what do you expect me to pay the tax?” That, in a nutshell, is the entire problem.

Please follow the link to read the entire article. It describes some of the lessons we can learn from history about creative accounting. If you honestly believe that the ultra-rich will not find a way to avoid this tax so that it has to be passed down to the middle class, then you have truly not been paying attention.

Don’t Count On This To Prevent The Passage Of The Bill

The Epoch Times posted an article today about the ongoing negotiations among the Democrats about their massive spending bill. We have been hearing for months that Senators Joe Manchin and Kyrsten Sinema will save us from this bill. It is possible that Senator Sinema will vote against it, but don’t bet money on Senator Manchin. Historically he only votes against the Democrats when it doesn’t matter.

The article reports:

Sen. Joe Manchin (D-W.Va.) has come out against a revenue scheme proposed by his party that would have allowed the Internal Revenue Service (IRS) to gather information on the inflows and outflows of American citizens’ bank accounts.

The measure initially came to light as a part of Democrats’ $3.5 trillion reconciliation bill. In an attempt to head off concerns from moderates, Democratic leaders and rank-and-file lawmakers have desperately marketed the bill as being completely paid for with no substantial effect on the deficit or national debt.

…Speaking at a Tuesday meeting of the Economic Club in Washington, Manchin vehemently opposed the program.

Manchin agreed that the IRS should be somewhat strengthened. Under the reconciliation bill, insisted Manchin, “The IRS is going to be able to do the job that they’re supposed to be doing.”

But Manchin ruled that his party’s snooping scheme did not fall into the category of what the IRS should be doing. “[The IRS was] never able to go into bank accounts,” he noted.

Manchin related a conversation he’d had with President Joe Biden about the program: “I said ‘Mr. President, I don’t know who put this out or how it got screwed up but they said basically, ‘We’re gonna start looking at $600 transactions.’ Even if it’s $10,000, okay, that’s only $800 or $900 [of activity per month].”

Manchin said that he asked the president, “Do you understand how messed up that is? To think that Uncle Sam’s gonna be watching transactions?”

“I said ‘I don’t know how this happened, but this cannot happen. This is screwed up.’”

The article concludes:

The party is now considering a new tax on unrealized capital gains that would target only individuals with $1 billion or more of income per year or individuals with $100 million of income for three consecutive years. Manchin, Sinema, and other moderates have not yet given a nod of approval to this most recent measure.

BEWARE!!! Any tax levied on individuals with $1 billion or more of income will eventually be levied on individuals with $1 or more of income (because individuals with $1 billion or more of income can afford to hire the tax lawyers to avoid the tax) and the government will still want the revenue. Also taxing unrealized capital gains has never been done and is a really bad idea. What happens if those gains become losses? Do you get your tax money back? What a nightmare.

Some Good News

NewsMax is reporting today that the Internal Revenue Service (IRS) has reversed its position on granting tax-exempt status to a group called “Christians Engaged.”

The article reports:

The action came after numerous Republican lawmakers rebuked the agency for overt political bias last month after it had first denied the status to Christians Engaged.

“The IRS has granted tax exempt status to Christians Engaged, a nonprofit organization that educates and empowers Christians to pray for our nation and elected officials, vote, and be civically engaged,” the conservative legal group First Liberty Institute announced in a statement.

“The reversal comes after a national backlash against the IRS’s initial rejection of Christians Engaged’s nonprofit status because, the IRS claimed, “[B]ible teachings are typically affiliated with the [Republican] party and candidates.”

Lea Patterson, counsel for the First Liberty Institute, applauded the move.

“This is truly great news for our client, as well as religious organizations and churches across America. We are grateful the IRS changed course to bring its decision into line with the Constitution and its own regulations,” she said.

Christians Engaged had appealed the IRS’ initial ruling with help from the First Liberty Institute.

When the IRS denied the tax-exempt status, they claimed that because the group followed Biblical teachings, it was too closely aligned with the Republican party. It is not the fault of any religious group that the Democrat platform does not align with Biblical teachings! The Bible is apolitical–it is God’s guide to a better life. The fact that the principles in the Bible work and may align more closely with one particular political party is totally irrelevant!

When The Cancel Culture Meets The Internal Revenue Service

Yesterday The Epoch Times posted an article about a recent decision by the Internal Revenue Service regarding the tax-exempt status of a religious organization.

The article reports:

An IRS official denied tax-exempt status to a Texas group that encourages church members to pray for state and national leaders, regardless of their party affiliation, because it benefits “the private interests of the [Republican] Party.”

“You do not qualify as an organization described in IRS Section 501(c)(3). You engage in prohibited political campaign intervention,” wrote Stephen A. Martin, director of the IRS Office of Exempt Organizations Rulings and Agreements, in a May 18 letter (pdf) to Christians Engaged, the Garland, Texas-based prayer group recognized by Texas officials as tax-exempt.

“You are also not operated exclusively for one or more exempt purposes within the meaning of Section 501 (c)(3), because you operate for a substantial non-exempt private purpose and for the private interests of the D party.”

The “D party” is a reference to the Republican Party, according to a novel “legend” that Martin provided at the top of his letter to the Texas group.

The article then explains:

Martin also noted that the group’s activities “educate believers on national issues that are central to their belief in the Bible as the inerrant Word of God.

“Specifically, you educate Christians on what the Bible says in areas where they can be instrumental, including the areas of sanctity of life, the definition of marriage, biblical justice, freedom of speech, defense, and borders and immigration, U.S. and Israel relations,” he wrote.

“The Bible teachings are typically affiliated with the D party and candidates. This disqualifies you from exemption under IRS Section 501(c)(3).”

The D party in this case refers to the Republican party. This is a blatant attempt to keep Christian values (and those who hold them) out of the public discourse. It is a violation of the First Amendment rights of the group and should be treated as such.

The article includes the following:

First Liberty Institute is appealing Martin’s decision on behalf of Christians Engaged.

“The IRS states in an official letter that Biblical values are exclusively Republican. That might be news to President Joe Biden, who is often described as basing his political ideology on his religious beliefs,” First Liberty Institute counsel Lea Patterson said in the statement.

“Only a politicized IRS could see Americans who pray for their nation, vote in every election, and work to engage others in the political process as a threat. The IRS violated its own regulations in denying tax-exempt status because Christians Engaged teaches biblical values.”

The IRS believes that Biblical values are exclusively Republican. Wow. Considering the role that Biblical views played in the founding of our nation, that idea should send Americans to the polls to vote for Republicans. Stay tuned. I suspect we haven’t heard the last of this.

Fudging The Numbers (As Usual)

Townhall posted an article today about President Biden’s plan to pay for his massive spending programs. He plans to close the gap between what taxpayers legally owe and what the IRS actually takes in.

The article reports:

Commissioner Rettig’s testimony appeared to provide groundbreaking new information that the tax gap has reached $1 trillion, with major media outlets like the New York Times taking this statement as gospel — even though it’s nearly three times what had been previously estimated by the IRS. Rettig’s statements were soon followed by a plan from Biden to raise $780 billion over the next decade by spending $80 billion on increased enforcement.

But the context of Rettig’s statements show that it was not a new agency estimate. Rettig was asked by Senator Ron Wyden (D-OR) to state his “personal opinion” on the size of the tax gap, and responded by saying that “it would not be outlandish to believe” that the tax gap “could approach or possibly even exceed $1 trillion.” Note also that the IRS Commissioner made this statement while trying to secure increased agency funding.

While this statement may be interesting, to portray it as equivalent to an official IRS estimate is absurd. Less than two years ago, the IRS estimated that, after factoring in enforcement and late payments, the net tax gap was $381 billion. Clearly the gap hasn’t more than doubled in just over 18 months.

The article notes that increased funding of the Internal Revenue Service would bring in some additional revenue, but nowhere near what is needed:

The government’s official budgetary scorekeeper, the Congressional Budget Office (CBO), does believe that some additional revenue could be raised by increasing tax enforcement spending. But the CBO estimates that increasing IRS funding by $40 billion would increase collections by just $103 billion over ten years. Based on that, the Administration’s claim that it could raise $700 billion on net is ludicrous.

The article concludes:

All of this means that closing the tax gap is not as simple as grabbing revenue the IRS thus far simply has not bothered to collect. It would cost money and would end up targeting a broad swath of taxpayers, not just the wealthiest. That means auditors combing through the lives of thousands of Americans, many of whom would be lower income. And it would probably yield far less than Americans are being led to believe.

Biden’s promises of easy revenue from tax cheats are overblown at best. While enforcing owed tax payments isn’t inherently bad, throwing more money at the problem than the IRS would know what to do with is impulsive and wasteful.

Has anyone considered that the way to cut the deficit might be to examine the budget for wasteful spending (and end earmarks again)?

Is This Part Of Our Future?

Reparations has been discussed in political circles for a while now. So far no one has explained how to make reparations to families of slaves, but not to the families whose loved ones died freeing the slaves. Do people who weren’t here before 1860 have to pay reparations? Do people whose ancestors were indentured servants get reparations too? There are an awful lot of unanswered questions.

On April 5th, The New York Sun posted a very interesting article on reparations.

The article poses an interesting question:

Could a racial priority for getting a Covid-19 vaccine turn out to be just the first stop on the way to race-based tax rates?

A tax bill that varies depending on the taxpayer’s race might strike readers as some law professor’s remote fantasy, far from anything that might become reality.

Things are developing more quickly on this front, though, than is widely recognized.

Just this month, the governor of Vermont, Phil Scott, a Republican, attracted attention when he announced, “If you or anyone in your household identifies as Black, Indigenous, or a person of color (BIPOC), including anyone with Abenaki or other First Nations heritage, all household members who are 16 years or older can sign up to get a vaccine!”

A Reason article notes that in December 2020, while Republican Donald Trump was still president, the federal Department of Veterans Affairs announced that it would prioritize Black, Hispanic, Native American, and Asian veterans in vaccine distribution. Reason cites the Cato Institute’s Walter Olson as describing these schemes as unconstitutional, a violation of the “equal protection” clause of the 14th Amendment.

The article reports:

“Prediction: By tax year 2024, Americans will be asked to indicate their race on the Form 1040,” tweeted Scott Greenberg, a former analyst at the Tax Foundation who now writes about tax policy in a Substack newsletter called “No Withholding.”

Greenberg was reacting to a tax-policy reporter for the Wall Street Journal, Richard Rubin, who had flagged the news that the Biden administration had put the Treasury department’s top tax-policy official on an “equitable data working group.”

According to the Biden executive order, “Many Federal datasets are not disaggregated by race, ethnicity, gender, disability, income, veteran status, or other key demographic variables. This lack of data has cascading effects and impedes efforts to measure and advance equity. A first step to promoting equity in Government action is to gather the data necessary to inform that effort.”

The Census provides plenty of race-based income and poverty data, but the IRS has not done so. That surprises even some savvy observers. Kai Ryssdal, of the public radio show “Marketplace,” devoted a recent segment to an interview with Dorothy Brown. A law professor at Emory, Ms. Brown is the author of “The Whiteness of Wealth: How the Tax System Impoverishes Black Americans — And How We Can Fix It.”

Isn’t it interesting that the same Democrat party that fought so hard against civil rights legislation is still working hard to divide Americans by race. \

The article concludes:

The tax code already rewards or punishes all sorts of behaviors — home-ownership, say, or marriage and child-rearing, retirement saving, even electric-vehicle purchasing. In that context, a reparations credit seems less exceptional than it otherwise might.

There are plenty of potential downsides other than the constitutional obstacles. Yet those taxpayers who think Form 1040 is already complex enough, thank you, without adding race to the mix might want to get their arguments in order lest they find themselves, in some future tax season, in the IRS equivalent of the back of the vaccine line.

Let’s hope that if reparations through the IRS ever takes place, the Supreme Court shoots it down immediately.

This Might Be A Really Good Year To Make Sure Your Taxes Are Filed Accurately

In November, Accounting Today posted an article reporting that the Internal Revenue Service (IRS) plans to ramp up audits of smaller businesses and their investors by about 50 percent next year, following years of persistently low examination rates, an agency official said Tuesday.

The article reports:

“The IRS is focusing our efforts to increase compliance activity in this area of not only partnerships, but also investor returns related to pass-throughs,” De Lon Harris, the IRS deputy commissioner of examination for small businesses, said at an American Institute of Certified Public Accountants event. For 2021 “we are planning for 50 percent more than we had in the previous year.”

Pass-through entities, which include partnerships, limited-liability companies and sole-proprietorships, are incredibly difficult for the IRS to audit because they frequently have complex structures that can involve dozens of inter-related entities. Pass-throughs don’t pay taxes themselves, but “pass” along the profits and tax liabilities to investors — who then pay the taxes on their individual returns.

The article concludes:

The IRS is hiring 50 more specialized auditors to work these cases, with the aim of having them in place by February, Harris said. The IRS can select returns to audit that are up to three years old. If the agency finds significant problems in a taxpayer’s filings, the auditors can examine returns that are even older.

New audit procedures that Congress approved in 2015 mean that the IRS can more easily collect any underpaid taxes it finds during the audit. Instead of having to track down each investor, the IRS can now collect the money from the partnership itself.

File your taxes carefully!

A Subtle Way To Infringe On A Constitutional Right

“America’s 1st Freedom” is a magazine distributed by the National Rifle Association. I am not including a link to the article I am posting about because I can’t find the article electronically although it is in the April 2020 issue of the magazine.

The title of the article is “The New Gun-Control Activism.” It deals with the strategy those who oppose the right of Americans to own guns are using to limit the availability of guns to Americans.

The article notes:

Last year, for example, Connecticut State Treasurer Shawn Wooden, who commands $37 billion in public pension funds, announced plans to pull $30 million worth of shares from civilian firearm manufacturer securities. Wooden also intends to prohibit similar investments in the future and to establish incentives for banks and financial institutions to adopt anti-gun protocols. The proposition was immediately praised by Sen. Richard Blumenthal (D-Conn.) and other Connecticut politicians who view the divestment from five companies–Clarus Corp., Daicel Corp., Vista Outdoor Inc., Olin Corp., and ammunition maker Northrop Grumman–as a step toward reducing gun violence.

…Wooden also requested that financial bodies disclose their gun-related portfolios when endeavoring to wok with the treasurer’s office. Wooden subsequently selected tow firms, Citibank and Rick Financial Product (both had expressed the desire to be part of the “solution on gun violence”), to take on the roll of senior bankers in Connecticut’s then-forthcoming $890 million general obligation bond sale.

Technically I guess this is legal. It is a very subtle infringement on the Second Amendment and would be very difficult to prove in court. It is also not a new approach. During the Obama administration, the administration put in place guidelines that prevented gun dealers from getting business loans from banks.

On May 19, 2014, The New American reported:

Following the Obama administration’s “Operation Broken Trust,” an operation that began just months into his first term, the Financial Fraud Enforcement Task Force was created initially to “root out and expose” investment scams. After bringing 343 criminal and 189 civil cases, the task force began looking for other targets.

The task force is a gigantic interagency behemoth, involving not only the Department of Justice (DOJ) and the FBI, but also the Securities and Exchange Commission (SEC), the U.S. Postal Service, the Internal Revenue Service (IRS), the U.S. Commodity Futures Trading Commission (CFTC), and the U.S. Secret Service.

The next target for the task force was credit card payment processors, such as PayPal, along with porn shops and drug paraphernalia stores. In 2011, it expanded its list of “high risk” businesses to include gun shops. Peter Weinstock, an attorney with Hunton & Williams, explained:

This administration has very clearly told the banking industry which customers they feel represent “reputational risk” to do business with….

Any companies that engage in any margin of risk as defined by this administration are being dropped.

In 2012, Bank of America terminated its 12-year relationship with McMillan Group International, a gun manufacturer in Phoenix, and American Spirit Arms in Scottsdale. Said Joe Sirochman, owner of American Spirit Arms:

At first, it was the bigger guys — gun parts manufacturers or high-profile retailers. Now the smaller mom-and-pop shops are being choked out….

They need their cash [and credit lines] to buy inventory. Freezing their assets will put them out of business.

That’s the whole point, according to Kelly McMillan:

This is an attempt by the federal government to keep people from buying guns and a way for them to combat the Second Amendment rights we have. It’s a covert way for them to control our right to manufacture guns and individuals to buy guns.

With the Obama administration unable to foist its gun control agenda onto American citizens frontally, this is a backdoor approach that threatens the very oxygen these businesses need to breathe. Richard Riese, a senior VP at the American Bankers Association, expanded on the attack through the banks’ back doors:

We’re being threatened with a regulatory regime that attempts to foist on us the obligation to monitor all types of transactions.

All of this is predicated on the notion that the banks are a choke point for all businesses.

How you vote matters.

I Guess We Haven’t Entirely Cleaned Up The Internal Revenue Service

Bay City News posted an article today with the following headline: “IRS analyst charged with leaking Michael Cohen bank records.” What was leaked was a bank report of suspicious activity. IRS investigative analyst John Fry, 54, was charged in federal court in San Francisco on Feb. 4 with leaking information about Michael Cohen’s (formerly President Trump’s personal attorney) bank records. Michael Avenatti, a lawyer for adult film actress Stormy Daniels, posted those records online. An employee of the IRS has stated that Fry talked with Avenatti the day before the records were posted online.

The crime that John Fry is charged with carries a jail sentence of five years if he is committed.

It is time that all of the people in government who are using their positions for political purposes or personal gain were removed. If the IRS cannot clean up its act, it needs to be put out of business.

The Wrong People Are Paying For This

On January 11th, The Daily Signal posted the following article, “Conservative Groups Targeted in Lois Lerner’s IRS Scandal Receive Settlement Checks.”

The article reports:

The federal government in recent days has been issuing settlement checks to 100 right-of-center groups wrongfully targeted for their political beliefs under the Obama administration’s Internal Revenue Service, according to an attorney for the firm that represented plaintiffs in NorCal v. United States.

Three of the claimants in the $3.5 million national class-action suit are based in the Badger State.

“This is really a groundbreaking case. Hopefully it sets a precedent and will serve as a warning to government officials who further feel tempted to discriminate against U.S. citizens based on their viewpoints,” Edward Greim, attorney for Kansas City, Missouri-based Graves Garrett LLC told MacIver News Service.

Most of the claimants will each receive a check for approximately $14,000, Greim said. Five conservative groups that were integrally involved in the lawsuit get a bonus payment of $10,000 each, the attorney said.

About $2 million of the settlement goes to cover the legal costs of five long years of litigation. IRS attorneys attempted delay after delay, objection after objection, trying to use the very taxpayer protection statutes the plaintiffs were suing under to suppress documents.

The agency has admitted no wrongdoing in what a federal report found to be incidents of intrusive inspections of organizations seeking nonprofit status. Greim has said the seven-figure settlement suggests otherwise.

Folks, these checks are coming out of our tax dollars. As taxpayers we are paying for the corruption in the IRS during the Obama administration.

The article continues:

Disgraced former bureaucrat Lois Lerner led the IRS division that processes applications for tax-exempt groups. A 2013 inspector general’s report found the IRS had singled out conservative and tea party organizations for intense scrutiny, oftentimes simply based on their conservative-sounding or tea party names. The IRS delayed for months, even years, the applications, and some groups were improperly questioned about their donors and their religious affiliations and practices.

Lerner claims she did nothing wrong. In clearing her of wrongdoing, an Obama administration Department of Justice review described Lerner as a hero. But she invoked her Fifth Amendment right in refusing to answer questions before a congressional committee. The plaintiffs in the class-action lawsuit took the first and only deposition of Lerner, a document that the former IRS official and her attorneys have fought to keep sealed.

“At one level, it’s hard to even assess a dollar amount to what they did, it’s so contrary to what we think our bureaucrats in Washington should be doing. It boggles the mind,” Greim said.

This was an egregious violation of free speech and disregard for the law, and no one actually was held accountable. That is sad.

One Consequence Of Illegal Immigration

Yesterday Breitbart posted an article about one aspect of illegal immigration–identity theft.

The article reports:

During an interview with SiriusXM Patriot’s Breitbart News Tonight, executive director of the Immigration Reform Law Insitute (IRLI) Dale Wilcox revealed to Breitbart News Senior Editor-at-Large Rebecca Mansour that their latest investigation revealed 39 million cases between 2012 and 2016 where names on W-2 tax forms did not match corresponding Social Security records.

If each fraudulent Social Security Number user submitted only one W-2 form a year under a fake identity, this still amounts to nearly ten million individuals using stolen identities of American citizens. There are more than 12 million illegal aliens currently living in the United States.

Wilcox said American children are the most vulnerable to illegal aliens stealing their identities and using their Social Security Numbers to work in the country.

“Studies have found that it affects children the most because see illegal aliens prefer to use children’s’ Social Security Numbers because your child … won’t apply for a loan for years, so the illegal aliens probably won’t be caught for decades possibly,” Wilcox said.

“A lot of Americans are being harmed by this. These poor kids, when they go to get their first school loan or car loan, they’ve got criminal histories … and bad credit,” Wilcox said. “This is not a victimless crime.”

I know someone whose social security number was used by an illegal alien. The theft of the number was discovered when the person went to file his income taxes. Thankfully the Internal Revenue Service realized what was going on and solved the problem by issuing the person a special PIN number that they now have to use when they file their taxes. This prevents their taxes from being mixed up with any taxes filed by the person who stole their social security number. This is something that would not happen if we were to gain control of our borders and institute a reasonable immigration policy that would be fair to both Americans and people who want to come to America.

The problem with passing immigration reform is that big business pays off the Republicans in Congress and Democrats believe they can persuade the illegal immigrants to vote for Democrats as soon as they are citizens (and unfortunately before they are citizens in some cases). If either party wanted to solve the illegal immigration problem, it would have been solved by now. Democrats had the White House, the House and the Senate for two years under President Obama, and Republicans currently have the White House, the House and the Senate. Although there are some Republicans who would support immigration reform if given the chance, they are outnumbered by those receiving large campaign contributions from corporate interests who want cheap labor. The only way we will have secured borders and sane immigration policies is to vote out those politicians in both parties who are blocking any legislation on the matter.

Only Monitoring The Lawbreakers–Not Arresting Them

CNS News posted an article on Friday about identity theft in America.

The article reports:

The Internal Revenue Service in 2011 through 2016 documented more than 1.3 million cases of identity theft perpetrated by illegal aliens whom the IRS had given Individual Taxpayer Identification Numbers (ITIN), which are only given to people who are ineligible to work in the United States or receive Social Security Numbers, according to information published by the Treasury Inspector General for Tax Administration (TIGTA).

However, in response to inquiries from CNSNews.com, the IRS could not say if it had referred even one of these cases for criminal prosecution.

Imagine how you would feel if you were one of the people whose identity had been stolen–would you want the person prosecuted?

The article reminds us that using a fake or stolen Social Security is a felony.

The article includes a picture of the types of identity theft involved:

The article further reports:

A January 2004 TIGTA report said: “The IRS Office of Chief Counsel determined that, ‘the group of persons with United States federal tax obligations who are not eligible to obtain an SSN is limited to non-citizens who either do not reside in the United States or reside here illegally.”

In 1999, TIGTA released a report warning that with its ITIN program the IRS had embraced a policy to “‘legalize’ illegal aliens” that “increases the potential for fraud.”

In a follow-up report in 2004, TIGTA concluded that ITIN holders who filed tax returns using a Social Security Number were in fact illegal aliens.

“Our conclusion is that, generally, the individuals who file a United States (U.S.) Individual Income Tax Return (Form 1040) with an ITIN as the identification number and receive wages that are identified with a Social Security Number (SSN) on the attached Wage and Tax Statements (Form W-2) are unauthorized resident aliens,” said TIGTA.

Then-Deputy IRS Commissioner Mark Matthews responded to this TIGTA report by conceding that ITIN holders who filed tax returns reporting wages earned in the United States were likely to be illegal aliens and that if they used a SSN it was “stolen or fabricated.”

“The Service has concluded that most resident aliens who hold ITINs and who report and pay tax from wage income are not legally employed in the United States,” he told TIGTA in a memo. “This is because such a taxpayer would have a valid SSN if the holder were legally employed in the United States, making procurement of an ITIN unnecessary and duplicative.”

The article explains the process for dealing with identity theft:

When it notifies victims of employment identity theft, the IRS does not tell the victim the name of the person who stole their identity. The notification form it used in its pilot program told the victim: “Federal law prevents us from providing specific details regarding the identity of the individual who used your SSN for employment purposes.”

However, the IRS can refer identity theft cases to the Justice Department for criminal prosecution.

So, how many of the 1,346,485 cases of employment-related identity theft the IRS documented in 2011 through 2016 did it refer to DOJ? How many of the 1,227,579 cases in 2017 where an ITIN holder used an SSN that was fabricated or had not been issued to them did the IRS refer to DOJ?

The IRS’s Criminal Investigation division publishes an annual report stating how many “prosecution recommendations” it makes each fiscal year and the crimes for which it makes them. In the six fiscal years from 2011 through 2016, according to these reports, IRS CI made 20,986 prosecution recommendations and 4,329 of them were for identity theft cases.

If everyone one of these identity theft prosecution recommendations had been for a case of employment identity theft—rather than refund-fraud identity theft—that would have equaled 0.3 percent of the 1,346,485 ITIN-holder cases the IRS documented in those years.

It seems to me that we should prosecute these cases and send those committing the crimes back to their home countries. It sounds as if our government is not at all interested in protecting Americans from identity theft.

Some Thoughts On The FISA Court

The following video from One America News was posted at YouTube on Friday:

What happened during the end of the Obama Administration was a violation of the Fourth Amendment rights of American citizens by the abuse of a secret court. It is the obligation of the government to insure that never happens again. The surveillance of the Trump campaign and transition team makes the wiretapping engaged in by the Watergate burglars look like child’s play. The use of government agencies for political purposes was something that happened more than once in the Obama Administration–the IRS was eventually forced to pay fines to the conservative organizations it refused to grant tax-exempt status to. The purpose of not granting the tax-exempt status was to silence organizations engaging in conservative speech during the 2012 elections. Regardless of where you stand on the political spectrum, that is a dangerous thing. Remember, it is always possible that someday the shoe will be on the other foot. If we don’t end the practice of using the government against people who disagree with us now, it will not end.

Preparing For The New Tax Bill

Newsmax posted an article today explaining how some taxpayers in high tax states can prepare for the changes in their deductions that will occur in the coming year.

The article explains:

Homeowners will be allowed to pre-pay their 2018 state and local real estate property taxes before the end of the year and deduct them on their 2017 returns only under limited circumstances, the Internal Revenue Service said Wednesday.

The announcement comes after many homeowners in states with the highest property taxes rushed to prepay their 2018 property taxes in hopes of saving on their federal taxes since the deduction will be scaled back in the tax law passed by Republicans last week.

The IRS in its statement said taxpayers can claim an additional property tax deduction on their 2017 returns if taxes are assessed and paid for before the end of the year. Some states and localities allow people to prepay their state and local taxes, including property taxes, but other states and localities that don’t will have to interpret exactly what that means for their residents.

Under the recently passed tax bill, residents in states with high taxes will be limited to $10,000 in state tax deductions. When you consider that some residents of New York, New Jersey, California and certain other states may pay as much as $30,000 in property taxes, that will be a significant change. What this change means to the people in states with reasonable taxes is that the residents of those states will no longer be subsidizing the people who live in high tax states. That is actually a more equitable system–even if the people in the high tax states don’t appreciate the change!

How Does This Math Work?

CNS News posted an article today detailing which Americans pay our taxes under the current tax code. Please follow the link to article and read all of the statistics. It is amazing that America has prospered at all under this warped tax code.

The article reports:

Of the 150,493,263 filers who submitted individual income tax returns to the Internal Revenue Service for the 2015 tax year, only 99,040,729 paid any income tax at all.

Together, those Americans paid a record $1,457,891,441,000 in total income taxes — for an average of $14,720 per taxpayer.

The other 51,452,534 — or about 34.2 percent of all filers — did not pay a penny. Their average income tax payment was $0.

This is a fundamental divide in the American tax system. On one side are those who do pay taxes; on the other, those who don’t.

It gets worse:

So who paid the taxes the federal government needed to send that $89,614,669,000 to those 30,417,609 who paid no income tax?

One major contributor was a group the IRS calls “married persons filing jointly.”

In 2015, according to Table 1.2 in the IRS report, 54,294,820 belonged to this group — with 41,551,043 joining the side that did pay taxes, and 12,743,777 joining the side that did not.

Thus, while 34.2 percent of all filers paid no income taxes, only 23.5 percent of married couples filing jointly paid no income taxes.

The 41,551,043 married couples filing jointly who did pay income taxes accounted for only 27.6 percent of all 150,493,263 filers. But they made up about 42 percent of the 99,040,729 filers who did pay income taxes.

More tellingly, of the record $1,457,891,441,000 in total income taxes the IRS collected for tax year 2015, married couples filing jointly paid $1,040,684,097,000 of it — or about 71.4 percent.

So, married couples filing jointly constituted only 42 percent of filers who actually paid income taxes, but they paid 71.4 percent of the income taxes.

Obviously, this is a tax system that drastically needs to be overhauled. Hopefully the tax bill passed today represents that overhaul.

Preventing The Fleecing Of The Middle Class

The American tax code is a tribute to the effectiveness of lobbyists and big campaign donors. The loopholes in the code for people who make a lot of money are numerous. Even with loopholes in place, the rich pay a lot of taxes. As I have previously reported, The top 10 percent of income earners, those having an adjusted gross income over $138,031, pay about 70.6 percent of federal income taxes. About 1.7 million Americans, less than 1 percent of our population, pay 70.6 percent of federal income taxes. These numbers come from actual IRS data.

However, it seems that when it comes to eliminating loopholes, it’s always the middle class loopholes that go away.

Breitbart posted an article today about Congress‘ latest effort to take away a middle-class tax break. Because of a certain lack of faith in the future solvency of Social Security, many employers offer employees 401k retirement plans. Aside from allowing middle-class families to save for the future, these programs provide a place to put money so that it will not be taxed during the highest earning period of the employee. It will be taxed later at retirement when traditionally a person’s earnings are lower and generally taxed at a lower rate. Congress was evidently planning to alter the current system.

Breitbart reports:

“There will be NO change to your 401(k),” Trump tweeted. “This has always been a great and popular middle class tax break that works, and it stays!”

House Republicans were considering a plan to slash the amount of income American workers can save in tax-deferred retirement accounts. Currently, workers can put up to $18,000 a year into 401(k) accounts without paying taxes on that money until they retire and withdraw money from their savings. Proposals under discussion on Capitol Hill would set the cap lower, perhaps as low as $2,400. The effect would be a huge tax hike on middle class workers.

The plan to lower the cap on 401(k)’s would not have had an effect on long-term government deficits. Instead, it would have raised tax revenue now but lowered it in the future, since the retirement savings would already have been taxed. But taxing the savings would have had an impact on household budgets and may have discouraged workers from saving, increasing their future dependence on government benefits.

Let’s cut spending to ‘pay for’ tax cuts. Actually, if taxes are cut, economic growth should increase to a point where there is no loss of revenue. During the 1980’s, after President Reagan cut taxes, government revenue soared. Unfortunately, the Democrats who controlled Congress at the time greatly increased spending, so the government debt increased rather than decreased. Generally speaking, lowering taxes increases revenue–people are less inclined to look for tax shelters.

The Laffer Curve works:

Congress needs to keep this in mind while revising the tax code.

 

The Need For Fiscal Responsibility In Washington

Yesterday The Washington Times reported that the Internal Revenue Service was extremely generous with taxpayer money–paying millions of dollars in refunds to people who were not legally entitled to them.

The article reports:

The IRS doled out more than $24 billion in potentially bogus refunds claimed under several controversial tax credits in 2016, according to a new audit that said $118 million was even paid to people who weren’t authorized to work in the U.S. in the first place.

Some $16.8 billion in payments were made on improper claims under the Earned Income Tax Credit, signifying a 24 percent error rate. Investigators also estimated $7.2 billion in improper payments for the Additional Child Tax Credit, representing 25 percent of the total, and $1.1 billion in improper payments, or 24 percent, for a higher education tax credit.

The totals and error rates for the earned income and child credits were comparable for 2015, while the education tax credit saw improvement.

The article explains that Congress passed a law in 2015 that was supposed to curb payments to people who were not entitled to them.

The article reports:

Both the inspector general and the tax agency said that steps have already been taken to try to prevent a repeat in the future, saying that a law passed in late 2015 should help.

Treasury Inspector General for Tax Administration J. Russell George said the IRS needs to follow through on the 2015 law, which imposes more restrictions on certain filers and delays refunds for people claiming the credits to give agents more time to flag suspicious returns.

One particular problem the IRS faces is checking people who have Social Security numbers but who aren’t authorized to work in the U.S.

This is one place that the federal budget could be easily cut. Tax refunds should only go to the people entitled to receive them.