Archive | Politics

The real IRS tax-exempt scandal is who they DIDN’T go after

By on May 18, 2013 in Democracy in Action, Elections, Internal Revenue Service, Politics, Tax Evasion

The rolling sideshow of hearings and revelations about the IRS department responsible for reviewing organizations applying for 501(c)(4) tax-exempt status might not ever get around to dealing with a larger question: Why were some little organizations steamrolled with questions and scrutiny, while major national operations apparently got a pass?

As ProPublica pointed out in a long piece examining what it characterized as dysfunction at the IRS, a review by the Inspector General said that there was insufficient oversight of 200 lower-level employees responsible for examining more than 60,000 nonprofit applications annually.

“The main question raised…is how the Cincinnati office and superiors in Washington could have gotten it so wrong,” the story notes. “The audit shows no evidence that these workers even looked at records from the Federal Election Commission to vet much larger groups that spent hundreds of thousands and even millions in anonymous money to run election ads.”

The tax-exempts that didn’t come under scrutiny, as The New York Times points out, included mega-fundraisers from both sides of the political spectrum, such as Crossroads Grassroots Policy Strategy, Karl Rove’s organization, and the Democratic-oriented Priorities USA.

Organizations are supposed to operate “exclusively” for the promotion of social welfare in order to qualify as a 501(c)(4) tax-exempt group. At least, that’s what the tax code says. But the IRS has given a pass to groups that can show they are not “primarily engaged” in election-related activities.

Admit it: Regardless of where you stand politically, isn’t this one area where you’d like to see the IRS enforce the very letter of the tax code?

World’s teeniest tax bracket

By on January 22, 2013 in Creative, Internal Revenue Service, Politics, The Economy

With the new tax bill passed by Congress in January 2013, there are now seven marginal tax brackets–10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. OK, no big problem there.

Here’s the stupid thing: The only single filers who fall into the 35% marginal bracket will be those with taxable income of $398,350 to $400,000.

That’s right–there is now a tax bracket with a range of $1,650. One Thousand, Six Hundred Fifty Dollars.

You can see the new 2013 tax brackets for yourself here, courtesy of The Tax Policy Center, which estimates that fewer than 500 singles nationwide will fall into this bracket in 2013. You can also find Forbes contributor Howard Gleckman, in primo head-shaking mode, weighing in here.

I can’t make this stuff up.

Late refunds this year, courtesy of Congress

By on January 15, 2013 in Internal Revenue Service, Politics

Are you used to filing your returns in January so you can get your tax refund early?

For 2013, think again.

Because Congress didn’t give us the final tax code for 2012 until January of this year, many taxpayers will be unable to get their returns processed by the IRS until late February or early March.

Who can’t file early? Anyone whose return includes depreciation (Form 4562), a residential energy credit (Form 5694) adoption expenses (Form 8839) and about two dozen other forms.

You can find out if you have one of the forms on the late list by checking here.

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Who would pay for lower estate taxes on the super-rich? Working families.

By on November 5, 2012 in Internal Revenue Service, Mitt Romney, Politics

On the eve of the election, it seems like a good time to highlight one of the tax provisions that Mitt Romney says he would wholeheartedly support–one that would increase taxes on millions of working people.

Right now the estate tax applies only to estates worth more than $5 million ($10 million for married couples). Republicans in Congress want to keep these high levels instead of the still-generous $3.5 million/$7 million for couples that were in effect in 2009.

How many people would actually benefit from these highest-wealth tax breaks? The estates of about 7,000 individuals or families nationwide.

How would the Republicans pay for this break, which saves the wealthiest about $1.1 million apiece?

They would slash the child tax credit and the Earned Income Credit, which combined help more than 13 million working families. That’s right–they would increase taxes on 13 million families to pay for a tax break on 7,000 estates.

These numbers are stunning. In the swing state of Virginia, for example, 220 estates would get the seven-figure tax break. Yet 275,000 families, including a half-million children, would pay for it.

The New York Times has all the gory details here.

Vote.

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How the economy went bad, in one easy column

By on October 16, 2012 in Banking and loans, The Economy

When someone asks if I can explain how the entire American economy fell into the dumper, I’ve typically tried to explain the phenomenon of collateralized debt obligations, or maybe recommended reading Michael Lewis’s The Big Short . (After you read it I guarantee that for at least 10 minutes you will understand exactly what a synthetic collateralized debt obligation is.)

No more. Now I’ll refer people to Paddy Hirsch and this excerpt from his book, Man vs. Markets . It’s a clear-language explanation of how the deeper in the banks got making potentially bad loans, the more money they made, and the more they had to make more potentially bad loans. Depressing but great reading.

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