Archive | Democracy in Action

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

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?

The Democratic convention windfall: Not just rental income — tax-free rental income!

The New York Times says that homeowners in Charlotte, NC are increasingly wondering whether they could reap a mini-windfall by renting out their houses for the Democratic National Convention

A tax loophole may help them decide: The money they get could be free of all federal income tax.

Here’s the deal: While all rental income ordinarily has to be declared, there’s a little loophole for anyone renting our their home (or second home, for that matter) for no more than 14 days during the year. Keep that rental use to no more than two weeks, and the rent you take in is tax-free. You also don’t have to keep track of any expenses related to the rental, of course.

The 14-day test is the key. It doesn’t matter if you get $100 a night or $10,000 a night — it’s all tax-free. But if you rent your property out a total of 15 or more days during the year, the loophole closes.

I think of this as the Masters Loophole, because it is very popular with people who own pleasant homes that become extremely attractive rentals for brief periods of time. Think the week of the Masters Golf Tournament in Augusta, Georgia.

When will this little loophole be closed? Probably when there are no longer any Congresspeople who have vacation homes that they’d like to rent out tax-free for a couple of weeks a year.

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Ronald Reagan: Tax-reform hero for wage-earners

So now we know–Mitt Romney had a 13.9% tax rate on his income of $21.6 million dollars in 2010, and he’ll pay about 15% in 2011.

ronald reagan Ronald Reagan: Tax reform hero for wage earnersThat sure grabs everyone’s attention. But what we don’t know is how much additional income he’s had prior to 2010–or how much in gains he’s just sitting on right now and deferring tax on. One way wealth and profit can stay hidden is by not being sold. That strategy can keep taxable gains off of a tax return for years or even decades.

The fact that Romney has a lower tax rate than most working Americans is another example of how it’s not someone’s illegal or shady manipulation of the tax code that is shocking–it’s the ordinary and totally legitimate stuff done straight-out in the open that sets people’s eyes pinwheeling.

The 13.9% Romney paid in 2010 is about the same rate, as The New York Times pointed out, that you’d typically see for a family earning about $80,000. Two decades of changes to the tax code that overwhelmingly favor people who are rich enough to live off of their money instead of off of their labor have left us with a system that infuriates many working Americans.

Here’s an idea: Let’s treat income from wages and income from capital gains and dividends identically for tax purposes. Sound impossible? Sound hopelessly liberal? Well, the tax code provided for exactly that from 1988 to 1990, after President Ronald Reagan spearheaded the Tax Reform Act of 1986.

Yup. Ronald Reagan, champion of tax fairness and equality. There you go again.

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A fertilized egg is not a person, and other off-off year election news

Apparently a majority of Mississippi voters who bother to go to the polls in an off-off-year election do not believe that a cluster of 16 cells is entitled to the same rights as a person. A measure that would have declared a fertilized human egg to be a person and effectively classified some forms of birth control as murder was defeated by 58%-42%. Of course, that means that 42% of the voters thought this was a heck of a good idea, but for today let’s accentuate the positive.

This vote means that for now I can no longer spend time speculating on how a cluster of cells called a person would be treated for tax purposes. But given the three-ringed circus of American politics, you know it won’t be long before something equally interesting is in the spotlight.

By the way, it was a tough night overall for the far right. Voters in Ohio repealed a Republican-backed law that had shredded collective-bargaining rights for state employees. Maine voters pushed back against a Republican-backed rule to restrict same-day voter registration. And the president of the Arizona state senate and architect of that state’s notorious immigration law was tossed out of office before he could have expected, recalled by the voters.

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How could any American patriot not love vote-by-mail?

By October 20, I’d already cast my vote in November’s special election in Oregon to replace disgraced congressman David Wu (D). Voting took just a few minutes and consumed no gasoline, parking spots or time away from work.

The reason: this election—like every election in Oregon—was strictly vote-by-mail. It’s been like that here for years.

voting How could any American patriot not love vote by mail?Vote-by-mail is secure, safe, gives people time to consider their ballot, and increases voter turnout. In 2008 more than 80% of registered Oregon voters cast ballots. Since vote-by-mail was adopted, turnout in Oregon is always among the nation’s highest.

Because of those kinds of numbers, the Republican party hates hates HATES vote-by-mail.

In fact, the GOP is generally opposed to anything that makes it easier for folks to vote. After all, there are only so many upper-income people—the natural Republican constituency and, these days, the group that Republicans in Washington cater to. The more people who can vote, the more likely those voters will be, you know … lower-income. Working-class. Poor. Not Republican.

So around the country, Republican-backed initiatives—falsely characterized as aimed at reducing voter fraud–are trying, and in some cases succeeding, at changing voting laws in ways that will suppress voter turnout. Restrictions are being placed on how soon in advance of election day people can cast votes. Several states may require that people present government-issued photo identification in order to vote—tough luck for anyone who doesn’t have a driver’s license, the major form of government-issued ID. Other rules would make voting tougher for college students and anyone else who has moved recently. Officials are even looking at reducing the number of voting locations and voting machines. Remember the scenes in 2008 that looked like some third-world country just beginning an experiment with democracy, of Americans waiting in serpentine lines for hours to exercise their right to vote? That may wind up looking like a practice run for what we’ll see in 2012.

And let’s not even talk about the idiocy of scheduling voting for Tuesdays — a working day for most people — or the complete refusal by the political establishment to consider a two-day voting “day” on the weekend. (The whole idea of registering to vote adds yet another barrier to voting. In Australia, where all eligible voters are automatically registered, folks who don’t vote pay a fine.)

Don’t forget the perennial favorite for politicians who want to disenfranchise whole blocks of Americans: state laws making it illegal for anyone convicted of a felony to vote, even after the individual has served their time and paid their debt to society.

If politicians really want to be sure that a ballots are honestly and legally cast, I have the solution: Make vote-by-mail the nationwide standard. Authorities will have plenty of time to review any questionable ballots and compare signatures with the registration rolls. No threats of mistaken identity; no Dead Men Voting. No intimidation near the polls by people trying to prevent voting, as, sadly and unbelievably, still happens in some parts of the country. In Oregon, the county clerks start authenticating ballots (but not counting votes) as soon as the ballots arrive at their offices, with observers from both parties present to monitor the proceedings. They’ll even give you a call if they have any question about your signature or registration.

The only losers might be television reporters who will lose their standard-issue Election Day background of people waiting at the polls. Democracy definitely wins.

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