Tag: tax

Why Can’t States Just Say No to Corporate Giveaways?

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Crop Circles in Colorado

The New York Times reports on a topic near and dear to our interests:

No place better illustrates the absurdities of the proliferating use of tax incentives for job creation than the Kansas City metro area, which straddles the Missouri-Kansas state line.

Over the past decade, Missouri and Kansas have offered more than $330 million in tax breaks to lure companies back and forth across State Line Road. More than 100 companies and more than 12,000 workers have moved to new offices, some headed east, some headed west. Missouri poached Swiss Re and Applebee’s; Kansas got JPMorgan Chase and AMC Entertainment.

The net result? No increase in economic activity; no improvement in the lives of workers. Just a few more jobs in Kansas, a few less in Missouri — and a big loss of tax dollars.

Corporate tax incentives are a dubious business. The giveaways frequently serve no higher purpose than rewarding businesses for moving where they already plan to move or creating jobs they already plan to create. And even when incentives prove motivational, there is often reason to question whether governments are getting value for the money.

The black comedy of corporate relocation across State Line Road is an extreme example, but it is by no means unique. Half of the nation’s 10 most populous metropolitan areas — New York, Chicago, Washington, Philadelphia and Boston — include portions of multiple states. So do smaller metro areas such as St. Louis; Charlotte, N.C.; Portland, Ore.; Cincinnati; and Memphis. And all are struggling to limit a practice that amounts to paying your furniture to rearrange itself.

(click here to continue reading Opinion | Can States Just Say No to Corporate Giveaways? – The New York Times.)

Fog Over Boeing HQ

A variant of the sports ball stadium boondoggle which we’ve also covered ad nauseam, corporate tax giveaways rarely, if ever, make sense in the long term. The politicians who vote for the tax giveaways are usually long gone, but the bill remains, payable by taxpayers. Consultants have raked in their consulting fees, businesses continue doing what they would have done, albeit with a slightly improved quarterly profit for a several years.

Salugula Pool

Not to mention, sometimes the corporation moves to somewhere else:

But the success stories tend to be celebrated while the failures are forgotten — and studies find that over time, the recipients of tax incentives are no more likely to create jobs or to drive investment than companies that don’t get a break. The plain truth is that governments have no special ability to predict which companies will thrive. Recipients of tax incentives aren’t even guaranteed to stay put. Missouri used $12.9 million in tax breaks to lure Applebee’s corporate headquarters from Kansas in 2011. Four years later, the company moved to California.

Why do politicians still lavish money on corporations for dubious reasons? Who knows, perhaps there should be a study of how many people involved in these sorts of decisions directly benefit from them within a decade. 

All Politicians Should Be Required to Release Their Taxes

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 I Am A Lonely Visitor

Kevin Kruse wrote about the history of presidents releasing their taxes:

On November 17, 1973, the president sought to reestablish his credibility in the fantasy-friendly confines of Disney World. In a televised Q&A session with 400 newspaper editors, he hoped to convince the nation of his honesty and integrity. He only made things worse.

Nixon grew increasingly angry and agitated at the podium when the Orlando press conference turned to questions about his finances. Reporters had been hounding him for weeks, asking how he could afford two separate private homes on his relatively meager presidential salary and whether he’d benefitted personally from administration dealings. There had even been rumors that the President of the United States was being bankrolled in some way by the eccentric billionaire Howard Hughes.

…

To prove that he wasn’t a crook – or at least not the particular kind of crook detailed in those allegations – Nixon reluctantly released his tax returns a week later.

The paperwork dispelled most of the larger suspicions about him, but also showed that Nixon had taken advantage of every possible deduction he could have used. (In 1970, for instance, he and his wife paid only $792.81 in taxes on more than $200,000 in income.) More damning, the president had claimed a deduction he shouldn’t have used, backdating the donation of his vice presidential papers. As a result, Nixon owed a considerable sum in back taxes. He paid up and the press moved on to the other “White House horrors.” Nine months later, Nixon was gone.

In the wake of Watergate, the United States embraced a wide array of reforms to make sure that nothing like that would rock the nation again. As part of this trend, it became standard practice for presidential candidates to release details of their tax returns. For a while, anyway.

(click here to continue reading All the Presidents’ Taxes.)

Look At All These People Who Care About Your Taxes

I believe that every politician seeking national office1 should be required to release multiple years of full tax returns. If that means that people like Howard Schultz, Michael Bloomberg and Donald Trump decide not to be politicians because they don’t want people to know how much the wealthy can avoid paying taxes, well, so be it. We as a country will recover from the loss.

Mitt Romney released a partial year return for 2010 and 2011, but in my estimation, that wasn’t detailed enough. Three years, full returns, no exceptions. If you are a thin-skinned plutocrat with political ambitions, take a few years off of your normal tax avoidance schemes and have a cleaner return that you can release. 

Footnotes:
  1. or even local office [↩]

As Big Retailers Seek to Cut Their Tax Bills, Towns Bear the Brunt

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There Is More Than One Way To Stop 

The New York Times:

WAUWATOSA, Wis. — With astonishing range and rapidity, big-box retailers and corporate giants are using an aggressive legal tactic to shrink their property tax bills, a strategy that is costing local governments and school districts around the country hundreds of millions of dollars in lost revenue.

These businesses — many of them brick-and-mortar stores like Walmart, Home Depot, Target, Kohl’s, Menards and Walgreens that have faced fierce online competition — maintain that no matter how valuable a thriving store is to its current owner, these warehouse-type structures are not worth much to anyone else.

(click here to continue reading As Big Retailers Seek to Cut Their Tax Bills, Towns Bear the Brunt – The New York Times.)

Corporate welfare, alive and well, decimating American communities one by one…

The GOP Tax Cuts Are a Blatant Scam

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Tax Refund Received

Joshua Holland of The Nation reports:

But it’s the brazenness with which the Republican Party abandoned any last remaining pretense of caring about deficits or federal spending that may come back to haunt them, and mark a shift in the political landscape around taxes and spending. It goes further than the $1.9 trillion in additional deficits, including higher payments on the national debt, that the Congressional Budget Office (CBO) projects will result from the tax bill over the next 10 years. When the nonpartisan number crunchers evaluated the fiscal impact of all of the legislation passed since mid-2017, including new spending, their analysis found that the GOP will add $2.6 trillion to the deficit over that period. What’s more, as Catherine Rampell noted in The Washington Post, that assumes that the economy will continue growing apace, and that the “temporary” individual tax cuts will expire according to the written law. But recent history suggests otherwise—most of George W. Bush’s budget-busting cuts were made permanent under Obama. In CBO’s worst-case scenario, “deficits would be larger by an average of a full percentage point of GDP, rising by a total of $2.6 trillion to yield a cumulative deficit of nearly $15 trillion” over the next 10 years.

Then, having created massive deficits for as far as the eye can see, House Republicans had the chutzpah to try to pass a constitutional amendment that would bar future Congresses from running any deficits at all. It’s a remarkably stupid policy. Running deficits isn’t inherently a bad thing if the purpose is to stimulate the economy during a recession or address a national emergency. The problem with these deficits is that they come at a time when the economy is growing and mostly just enrich the wealthy and pump up corporate profits.

(click here to continue reading The GOP Tax Cuts Are Such a Blatant Scam That They Might Change the Whole Conversation | The Nation.)

Paul Ryan’s real legacy is this. GOP-style austerity only applies to social safety net programs, not corporate tax give-aways.

And as Holland mentions in his article, Democrats like Senator Brian Schatz note the GOP fiscal hypocrisy.

Look At All These People Who Care About Your Taxes 

Vox reports on Senator Schatz’s plan for making college more affordable, and includes this exchange:

But overall, Schatz sees little appetite from his Republican colleagues to reform the system. And with hastily passed GOP tax cuts estimated to add $1 trillion to the national deficit over the next decade, Schatz said he’s not yet going to wade into details of how he’ll pay for his plan because he thinks there’s a double standard with Republicans and Democrats.

“I don’t play the pay-for game. I reject the pay-for game,” he said. “After the Republicans did the $1.5 trillion in unpaid-for tax cuts, and as we’re doing a bipartisan appropriations bill — which I support — which is also an increase in federal spending [that’s] unpaid for … I just reject the idea that only progressive ideas have to be paid for. We can work on that as we go through the process, but I think it’s a trap.”

And he’s under no impression that his bill will gain traction in the current Republican-controlled Congress, especially given the tumult of news swirling around President Donald Trump and few signs from Republicans that they’re going to seriously entertain the issue.

“One of the things I have observed among Republicans — and part of it is that they’re just unserious about governing in the first place, but I certainly observed on health care that they had no actual legislative program once they got the gavels,” Schatz said. “And I think it’s important for us to draw a clear contrast with Republicans over the rest of the year, but also be ready to govern.”

 

(click here to continue reading Exclusive: Sen. Brian Schatz’s ambitious new plan for debt-free college, explained – Vox.)

What’s the Matter With Trumpland?

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No One Will Know How Things Are Between Us
No One Will Know How Things Are Between Us

Paul Krugman writes:

Many of the states that have refused to expand Medicaid, even though the federal government would foot the great bulk of the bill — and would create jobs in the process — are also among America’s poorest.

Or consider how some states, like Kansas and Oklahoma — both of which were relatively affluent in the 1970s, but have now fallen far behind — have gone in for radical tax cuts, and ended up savaging their education systems. External forces have put them in a hole, but they’re digging it deeper.

And when it comes to national politics, let’s face it: Trumpland is in effect voting for its own impoverishment. New Deal programs and public investment played a significant role in the great postwar convergence; conservative efforts to downsize government will hurt people all across America, but it will disproportionately hurt the very regions that put the G.O.P. in power.

(click here to continue reading Opinion | What’s the Matter With Trumpland? – The New York Times.)

Not a brand new phenomena, but relatively new. I call it the Fox News effect: the conservative red states who have been bamboozled to reflexively refuse the exact government help that would assist them in their lives because their spiritual/cultural leaders yelling at them on the tee-vee have convinced them that tax cuts and a smaller government is panacea, plus it will “trigger the liberals”. Yeah, those liberals, always trying to help, what’s wrong with them?

So Kansas1 and Oklahoma have cut taxes so much that teachers are having to strike for living wages. In my ideal world, teachers would be paid as much as least as much as investment bankers. Teachers should at least get a living wage, preferably more so that the “best and brightest” choose the teaching profession. Good teachers are important to our civil society, essential even, why should they get sub-poverty wages just so the Koch Brothers can pay slightly less in taxes?

South River Public School
South River Public School

The Guardian reports:

While Oklahoma has the country’s lowest tax on oil and natural gas production, teachers’ salaries remain stubbornly low, at 49th in the nation. According to data provided by the National Education Association (NEA), teachers make $45,276, nearly $13,077 below the nationwide average of $58,353 and well below the nationwide high of New York at $79,152.

…

“Over a decade of neglect by the legislature has given our students broken chairs in classrooms, outdated textbooks that are duct-taped together, four-day school weeks, classes that have exploded in size and teachers who have been forced to donate plasma, work multiple jobs and go to food pantries to provide for their families,” said the Oklahoma Education Association in a statement. “We are saying enough. No more empty promises. The governor and legislature need to act now to fix this.”

It’s a feeling shared by teachers in places like Arizona, New Jersey, Pennsylvania and other states, who are all also considering action.

The strikes are unique in that they are not being called for by the leadership of the unions, but often through direct appeals of rank-and-file members using social media and their own personal networks to organize across entire states and now the country.

(click here to continue reading Wave of teachers’ wildcat strikes spreads to Oklahoma and Kentucky | US news | The Guardian.)

Not to mention the whole conservative pushback to the Affordable Care Act:

A new wave of teacher strikes has highlighted a growing problem for all US workers – growing health costs which have become a “hungry tapeworm” on Americans’ wages.

In the most expensive health system in the world and the only industrialized nation without universal healthcare, more than 177 million Americans get health insurance through an employer. But insurance is rarely free.

“They’ve shifted the healthcare costs and the pension costs on to employees, so employees are making less and they’re spending less,” said Randi Weingarten, president of the American Federation of Teachers, which represents 1.7 million members. “It’s a double whammy.”

Conservative legislatures’ push to shift health and pension costs on to individual teachers means in some states, teachers take home less pay than they did five years ago.

(click here to continue reading ‘Double whammy’: teachers strike as healthcare costs cut into earnings | US news | The Guardian.)

I hope these teachers get their raises, and that they vote in 2018 for Democrats.

Footnotes:
  1. which we’ve discussed before [↩]

Democrats to unveil $1 trillion infrastructure plan, seek reversal of GOP tax cuts to finance it

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Jammed Up

Speaking of the Democrats alleged “lack of an agenda”1, here’s one item that sounds good to me…

As the White House struggles to finance an ambitious infrastructure plan, Senate Democrats are proposing one alternative — albeit one unlikely to pass muster with President Trump: rolling back the recently passed Republican tax overhaul.

The proposal unveiled by Democratic leaders Wednesday would plow just over $1 trillion into a wide range of infrastructure needs, including $140 billion for roads and bridges, $115 billion for water and sewer infrastructure and $50 billion to rebuild schools.

The spending would be offset by clawing back two-thirds of the revenue lost in the Republican tax bill by reinstating a top income tax rate of 39.6 percent, restoring the individual alternative minimum tax, reversing cuts to the estate tax, and raising the corporate income tax from 21 percent to 25 percent.

Senate Minority Leader Charles E. Schumer (D-N.Y.) said in an interview Tuesday that the plan sets up a stark contrast for voters ahead of the midterm elections.

“We believe overwhelmingly the American people will prefer building infrastructure and creating close to 15 million middle-class jobs than giving tax breaks for the wealthy,” he said.

(click here to continue reading Democrats to unveil $1 trillion infrastructure plan, seek reversal of GOP tax cuts to finance it – The Washington Post.)

We’ve long lamented about the lack of infrastructure investment in America. Whatever happened to our can-do attitude that built railroads where there were none, built the Hoover Dam, built the interstates, yadda yadda. The Koch Brothers and their minions would rather have the tax cuts, but the rest of us would rather have bridges that didn’t fall down and water supplies that don’t have lead.

Footnotes:
  1. which is an obviously false statement [↩]

Shocker: Democrats’ predictions about the GOP tax cut are coming true

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We Pronounce Joy Like A Word Of Our Own
We Pronounce Joy Like A Word Of Our Own

It is strange that one party in our two party system doesn’t believe in facts, nor seemingly pays much of a penalty for blatant lies about a plethora of topics. Climate change, immigration, gun control, trickle-down1 economics; the list of Republic falsehoods injected into the public discourse could go on for hours, if one were so inclined.

Even worse, in my estimation, is that much of the corporate media does what Paul Waldman of the Washington Post calls out in his column -by reducing GOP falsehoods to “critcs say”, aka “both sides” aka “false equivalency”2, the GOP’s non-factual assertions are treated as serious, when they really are not…

Among the things Democrats pointed out was that even before the tax cut, corporations were making near-record profits and sitting on mountains of cash; if they wanted to invest, create jobs and raise wages, they already had the means to do it. They also observed that even before the tax cut passed, corporations were saying publicly that they intended to use the money for stock buybacks.

But what about those bonuses that companies announced and that Trump kept touting? It’s true that some companies did give workers one-time bonuses. But it was essentially a PR move. Take Walmart, for instance. It made a splashy announcement that it would be giving bonuses of up to $1,000 to workers, which sounded great. But then it turned out that you’d only get that much if you’d been working there for 20 years, and the average worker would get around $190. Which is better than nothing, but it isn’t exactly going to transform your life.

And as ThinkProgress noted, the total value of Walmart’s bonuses was $400 million, which seems like a lot until you learn that over 10 years the value of the tax cut to the corporation will be $18 billion. In other words, about 2 percent of its tax cut is going to workers, at least in the short run.

How many times do we have to play this game? When a new policy debate emerges, Democrats try to make an argument that has some connection to reality, while Republicans make absurd claims in the knowledge that even if they get debunked in the occasional “news analysis” piece, on the whole they’ll be treated with complete seriousness, no matter how ridiculous they are.

It’s in part because lies about the future — and that’s what they are when you know that what you’re saying is utterly bogus — will not be policed with nearly the same vigor as lies about the past. If Trump claims that he had the largest inaugural crowd in history, it will immediately get shot down and subject to mockery even from neutral reporters. But if he says that all the benefits of his corporate tax cut will flow to workers, which is no less a lie, it will usually be met with “Critics question whether there is evidence to support his assertion.” When Republicans said that their tax cut wouldn’t increase the deficit because it would create so much economic growth that revenue would actually increase, it was treated as a questionable claim, not an assertion on par with “If I flap my arms, I can fly to the moon” or “With a week of training, my dog will be able to do a perfect rendition of ‘Enter Sandman’ on the electric guitar.”

(click here to continue reading Shocker: Democrats’ predictions about the GOP tax cut are coming true – The Washington Post.)

The Illustrated Police News October 17 1896
The Illustrated Police News – October 17,1896

In an ideal world, the same reporters and television talking heads would aggressively come after the GOP liars, quoting their words back to them and demanding answers, as if the journalists were high school children from Parkland, FL, or Dutch questioners of Ambassador Hoekstra. If only our corporate media courtiers were as persistent as the Dutch press, we’d all be better off.

 

Peter Hoekstra, the newly minted U.S. ambassador to the Netherlands, held his first news conference with the Dutch media at his new residence in The Hague on Wednesday.

It did not go well.

Dutch journalists peppered Hoekstra with questions on unsubstantiated claims he made in 2015 about chaos that the “Islamic movement” had allegedly brought to the Netherlands.

“There are cars being burned. There are politicians that are being burned,” he said then, at a conference hosted by a conservative group. “And yes, there are no-go zones in the Netherlands.”

The comments have widely been described as inaccurate, and seem to reflect certain conspiracy theories about sharia law that crop up in some circles of the far-right in the West. When pressed by the Dutch reporters, Hoekstra declined to retract the comments or give specific examples to back them up.

In fact, after saying that he would not be “revisiting the issue,” he simply refused to answer the question at all.

 

But the reporters were not done with the line of questioning. Instead of moving on, another reporter would simply ask a variation of the query again.

“Everybody there had one question: That crazy statement you made, are you going to withdraw it?” Roel Geeraedts, a political reporter at the Dutch television station RTL Nieuws, said in a phone interview about the event. “We were not getting answers, so we all kept asking it.”

 

(click here to continue reading Trump’s Netherlands ambassador Peter Hoekstra grilled by Dutch press over Islam comments – The Washington Post.)

I would so love if this style overcame the “access journalism” practices by many Washington-based journalists.

Footnotes:
  1. Supply-side [↩]
  2. as Jay Rosen often notes [↩]

Another College Sports Boondoggle

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The Twelfth Player in Every Football Game
The Twelfth Player in Every Football Game

In addition to the elimination of property tax exemptions for rich nonprofits that we’ve mentioned previously, here’s another piece of tax reform I support – the repeal of the tax payer subsidy to college sports…

Eric Zorn writes:

College sports is a big-time business, tickets are in high demand at major universities and charging what the market will bear is the American way. In fact, judging by the secondary market on StubHub, where single seats to the Ohio State game are going for more than $2,000, tickets to Michigan football games are still vastly underpriced.

What I don’t understand, however, is the law that allows ticket buyers to write off 80 percent of their “preferred seating donation” as a charitable contribution for federal tax purposes.

That’s right. High rollers in the swankiest suites can subtract $4,500 from their taxable income, a benefit worth up to $1,782 off their tax bill, as though they had given that money to a soup kitchen or hurricane relief.

Put another way, for each such privileged fan, the federal government effectively provides a $1,782 ticket subsidy.

…

And, in the mid-1980s, when these preferred-seating donation scams first arose, the Internal Revenue Service issued a common-sense ruling that a mandatory donation linked to the purchase of seasons tickets was a quid pro quo and so not deductible for tax purposes.

Legislators representing schools in the powerful Southeastern Conference “went crazy,” said University of Illinois emeritus law professor John D. Colombo, a specialist in tax laws governing charitable organizations. And in 1988, Congress added subsection 170(l) to the IRS code that specifically allowed for an 80 percent deduction on donations to “institutions of higher education” that granted “the right to purchase tickets for seating at an athletic event.”

…

In 2015, the Obama administration asked Congress to repeal subsection 170(l), claiming it will drain at least $2.5 billion from public coffers over the next decade. Duke University law professor Richard Schmalbeck estimated the 10-year tax receipts loss at $20 billion.

Congress ignored the suggestion.

(click here to continue reading If Congress can’t eliminate the college football ‘charity’ scam, what hope is there for a tax overhaul? – Chicago Tribune.)

Ain’t that a bitch? Our tax dollars hard at work, inflating college coaches salaries, fancy high-tech training facilities, inflating player salaries, oh, wait, the colleges don’t even pay their athletes a stipend, the players work for basically, “exposure”.  Hmmm, maybe there are deeper issues that need to be solved with Division 1 teams. 

Oklahoma vs Texas
Oklahoma vs Texas

Abolish property tax exemptions for rich nonprofits

Seth Anderson0 comment

Dom Sub Invoc S Hedwigis
Dom Sub Invoc S Hedwigis.

David M. Simon elaborates on a point I’ve made before: wealthy non-profits like churches and universities shouldn’t be tax exempt.

Illinois is the land of special favors for those with lobbyists, connections or clout. Just look at the state’s property tax laws and the exemptions for rich nonprofits.

Retired homeowners living on fixed incomes pay hefty property taxes, despite the so-called “senior exemption.”

On the other hand, real estate owned by many rich nonprofits is completely exempt from property taxes. This includes private university campuses and their sports facilities, the gleaming skyscrapers of qualifying private hospitals and magnificent church cathedrals. And lots of other expensive real estate owned by other qualifying nonprofits. All completely exempt — and unfair.

Wealthy nonprofits with expensive real estate use and benefit from the same law enforcement, fire protection and other basic services as other property owners. These nonprofits may not principally use their real estate to make money, but neither do most families.

This system also dumps the hefty shares of the tax burden that these nonprofits should pay on the rest of us.

(click here to continue reading Abolish property tax exemptions for rich nonprofits – Chicago Tribune.)

Jesus Is A Hoarder
Jesus Is A Hoarder

What are these organizations doing for our society? Is it justified for them to be takers on the basis of whatever their so-called mission is? For instance, Scientology? Or college and professional sports stadiums? Not if I had a vote.

I had a 3 A.M. thought. Mayor Daley the Younger was bad for the city in a lot of ways1 but inarguably there was one aspect he was better at than the current administration: keeping the city gleaming, especially downtown, but everywhere really. Today, in many nooks and crannies of the city, there are mounds of McDonald’s wrappers, Starbucks coffee cups, cigarette butts, puddles of stale urine that haven’t been touched in years. Rain washes some of this detritus off the streets and sidewalks, but then it accumulates in stairways, alleys, and other locations. Nobody is power-washing the sidewalk, nobody is picking up the garbage that doesn’t make it into a garbage can.

What if in exchange for tax-exempt status, a non-profit had to adopt a city block and keep it clean? There could be some formula based on the annual financial report of the organization and the total number of city blocks. So the Heritage Foundation would be required to keep clean 5 blocks on the South Side somewhere near the Koch Brothers coal dust repository, while Northwestern Memorial Hospital would be responsible for 23 blocks in a cluster near Garfield Park. Or however the math works. 

Impractical, unlikely, and unwieldily, like most 3 AM thoughts…

Footnotes:
  1. enthusiastically privatizing city assets, allowing the police free rein to ride roughshod over civil liberties, frequently walking right up to the line of corruption, and even putting his toe over the line, and so on [↩]

IL Supreme Court Weighs Whether Hospitals Can Avoid Property Tax

Seth Anderson0 comment

Sun Setting On A Sacred Cow
Sun Setting On A Sacred Cow

Personally, I don’t think hospitals should be exempt from property tax. What exactly is the standard here, that if a corporation “does good” they don’t have to pay their fair share of tax? Who defines what the good is? Who monitors it? 

Lisa Schencker reports:

Illinois not-for-profit hospitals currently are exempt from having to pay hundreds of millions of dollars in property taxes so long as the value of their charitable services is equal to or greater than their estimated tax liabilities.

…

But some municipalities argue that many not-for-profit hospitals are more like businesses, making handsome profits. They say hospitals should have to contribute their fair share of taxes to their communities, like any other business. A 2009 report by the Center for Tax and Budget Accountability said 47 Chicago-area not-for-profit hospitals had property tax exemptions worth a total of $279 million.

About 156 of Illinois’ more than 200 hospitals are not-for-profit.

In the case before the state Supreme Court, the city of Urbana and others argue that Carle Foundation Hospital in Urbana should not be exempt from paying property taxes. They say the 2012 state law allowing hospitals to be exempt if they provide charity equal in value to their property tax liabilities is unconstitutional. The state constitution only allows such exemptions if the property in question is used exclusively for charitable purposes, they say.

…

Urbana Mayor Laurel Prussing said after oral arguments Thursday that regardless of what the court decides — or doesn’t decide — the issue is one the legislature should weigh.

The hospital association might work with lawmakers to craft a new law if the court strikes the current one down. Association President and CEO A.J. Wilhelmi has said the group will “assess all options” once a ruling is made.

“Why should the most profitable companies in the state be shifting their burden onto every other business and homeowner?” Prussing asked.

Last year, a study published in the journal Health Affairs named Carle the 10th most profitable hospital in the country when it came to patient care services, with $163.5 million in profits in fiscal year 2013.

 

(click here to continue reading Illinois Supreme Court weighs whether hospitals must pay property taxes – Chicago Tribune.)

There Are Some Things To Talk About
There Are Some Things To Talk About

I don’t believe that churches should be exempt either, unless they can scientifically prove that god exists. Are medical cannabis dispensaries tax exempt? Planned Parenthood clinics? Is Feeding America’s offices on Wacker Drive tax free? What about ACLU headquarters? Union halls? Bars and taverns? Wrigley Field? Seriously, where does it end? Our society would be much better off and more equitable if corporations didn’t get so many freebies from taxpayers. I’ve always liked the idea of a “mandatory minimum” for corporations above a certain size – the idea that Boeing and Archer Daniels Midland and all the rest can’t evade taxes by exploiting shell corporations and loopholes.

Chicago to Tax Streaming Providers

Seth Anderson0 comment

Netflix Streaming July 2015

Wow, 9% is rather a large increase to my Netflix bill. I wonder if databases like Hoover’s  will be affected? Seems like they might. 

Chicagoans who pay to stream movies and music from services like Netflix and Spotify will now need to fork over an additional 9 percent for the privilege, as will Chicago businesses that pay to use everything from real estate to court databases online, under a decision the city quietly made recently to expand its taxing power.

The added costs are the result of a ruling by the city Finance Department that extends the reach of ordinances governing two types of taxes — the city amusement tax and the city personal property lease transaction tax — to cover many products streamed to businesses and residents alike.

…

According to the Finance Department changes, the 9 percent amusement tax, which has mostly been tacked onto tickets to concerts and sporting events, also now applies to paid subscriptions for streamed digital music and to streamed rental movies or TV shows, and “for the privilege of participating in games, on-line or otherwise,” if the person paying to receive the data is in Chicago.

 …

The personal property lease transaction tax expansion also applies to professional services, like electronic property databases real estate agents use, court case databases lawyers rely on and various financial information networks.

 

(click here to continue reading City extends taxing power to online movies, music, more – Chicago Tribune.)

Could I get around this by using a VPN? 

The Laffer Curve has flatlined

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Sketchy ATM Inside

It is almost amusing how much crazy economic policy was initiated by the expense account of Dick Cheney and Donald Rumsfeld. Without the Laffer Curve, there would be no Supply Side Economic Voodoo theory, and perhaps our country wouldn’t be on a downward spiral. Also, the Laffer Curve, as originally formulated, never claimed to know what the magical tax rate was, and in fact, could be interpreted as arguing that tax rates should increase! 

The Laffer Curve came about as the result of a lunch conversation in 1974 among conservative economist Arthur Laffer, Dick Cheney, and Donald Rumsfeld. The curve in question is the relationship between tax revenues and tax rates—at zero percent, no tax revenue will be collected because no income is taxed, while at 100 percent, no revenue will be collected because there is no incentive to work if all income is confiscated. Somewhere in the middle is a sweet spot: the perfect rate of taxation at which revenue is maximized, and where any tax increases past that point will actually result in a decrease in revenue.

The Laffer Curve has been consistently used as justification for the supply-side belief that tax cuts will pay for themselves through the increased economic activity that they will create. This belief is no longer simply a theory, but is now official federal policy: the 114th Congress changed the rules for how budget bills are evaluated from static scoring to what is called “dynamic scoring,” which will mask the actual cost of tax cuts by simply assuming that they will increase economic output.

(click here to continue reading The Laffer Curve has flatlined.)

As an aside, I’m amazed that for years, the PR slogan was that the Republican Party was the business party, despite much evidence to the contrary. 

Since World War II, there’s been a strikingly consistent pattern in American politics: The economy does much better when a Democrat is in the White House.

More specifically, since 1947, the U.S. economy has grown at an average real rate of 4.35 percent under Democratic presidents and just 2.54 percent under Republicans

(click here to continue reading The U.S. economy does better under Democratic presidents — is it just luck? – The Washington Post.)

Really though, it seems as if the GOP is better for business executives instead of businesses. The executives make more, by outsourcing jobs, enjoying reduced tax rates and increased tax loopholes for things like private jets and so on. More take-home pay, in other words, and less investing in the business itself. For non-executives, the GOP is not your party, nor are you even invited, except during election season. 

I Am A Lonely Visitor
I Am A Lonely Visitor

Reactionary conservatives like Governor Sam Brownback and Governor Scott Walker have put the Laffer Curve to work, slicing government revenue, with predictably dire results:

Kansas Gov. Sam Brownback brought on Arthur Laffer as an advisor to steer his radical experiment of cutting taxes to the bone under the assumption that the cuts would simply pay for themselves through economic expansion. The results, however, have been absolutely horrific: job growth on the Missouri side of the Kansas City metropolitan area is occurring at four times the rate on the Kansas side. Education is being vastly underfunded. And perhaps most tellingly, the state collected far less money in taxes than it expected in December, even after downgrading expectations. In other words, Laffer was wrong in every single way possible.

In Wisconsin, meanwhile, Republican Gov. Scott Walker has followed a path nearly has extreme as that of Brownback, but is being forced to scale his ambitions back because the theory just isn’t working:

Earlier this year, just before enacting the half-billion-dollar tax cut, Walker said it was just the beginning — that he wanted to eliminate income taxes. Now, a representative of Walker, asked about the elimination plan said the governor “has only said that he would explore other areas of tax reform.” The state has a projected $2.2 billion deficit for the next biennium, 2015 to 2017. There’s also a transportation funding problem.

Now, not even his top allies in the House think new cuts aren’t possible.

The situation is so bad in Wisconsin that to try to balance the budget in anticipation of a possible 2016 presidential campaign, Walker is rumored to be considering selling off public assets as a stopgap measure just to make the numbers look good. The contrast with states like California, which raised taxes to help balance its budget and cover a shortfall in education, couldn’t be clearer: California’s revenue is surging, while tax-cutting states are figuring out how to mitigate the damage.

(click here to continue reading The Laffer Curve has flatlined.)

Put Money in the Parking Meter or else!
Put Money in the Machine or else!

Will this example stop the next GOP executive branch from claiming that cutting tax rates will help grow economies? Probably not. In fact, I wouldn’t be surprised if newly elected Illinois Governor Bruce Rauner tries his best to lower tax rates on his own wealth during the next four years. If Rauner was such a good business man, perhaps he’d let facts and history convince him that perhaps the marginal tax rates are too low…

To maximize real economic growth in the United States, the top marginal income tax rate should be about 65%, give or take about ten percent. Preposterous, right? Well, it turns out that’s what the data tells us, or would, if we had the ears to listen.

This post will be a bit more complicated than my usual “let’s graph some data” approach, but not by much, and I think the added complexity will be worth it. So here’s what I’m going to do – I’m going to use a statistical tool called “regression analysis” to find the relationship between the growth in real GDP and the top marginal tax rate. If you’re familiar with regressions you can skip ahead a few paragraphs.

Regression analysis (or “running regressions”) is a fairly straightforward and simple technique that is used on a daily basis by economists who work with data, not to mention people in many other professions from financiers to biologists. Because it is so simple and straightforward, a popular form of regression analysis (“ordinary least squares” or “OLS”) regression is even built into popular spreadsheets like Excel.

(Click here to continue reading http://angrybearblog.com/2010/12/top-marginal-income-tax-rate-should-be.html The top marginal income tax rate should be about 65%…)

Congress Extends Itself Tax Extender Style

Seth Anderson0 comment

Relentless
Relentless

Gail Collins provides a good elevator pitch description of a tax policy tool called tax extenders…

One of the very, very few things the current Congress seems determined to deal with before it vanishes into the night is the problem of “tax extenders.” Extenders are strange but much-loved little financial mutants. Sort of like hobbits or three-legged kittens.

Congress, in its wisdom, has created a raft of temporary tax breaks for everybody from teachers to banks that make money overseas. Most are really intended to be permanent. But calling them short-term measures tricks the Congressional Budget Office into underestimating how much they cost.
“If you pass a new tax cut, you’ve got to find offsetting spending cuts. But these are in a sense free,” said Howard Gleckman of the Tax Policy Center.

…

After the election, both parties appeared inclined to just extend all the tax cuts for two years while making principled mumbling about reform down the line.

But then the Koch brothers roared into the picture. They feel that it’s wrong for the government to give a special benefit to an industry that’s one of their competitors. Especially a government that they and their associates devoted nearly $60 million to getting into office. Politico reported that their representatives have been meeting with Speaker Boehner’s staff.

And you know, they have a point. If Congress actually wanted to do serious reform, it should get rid of special tax breaks for the wind and solar energy sectors. While, of course, also removing all the tax breaks for drilling oil.

(click here to continue reading Congress Extends Itself – NYTimes.com.)

Bruce Rauner channeled part of fortune to Cayman Islands To Avoid Paying Taxes

Seth Anderson0 comment

A Mere Hint of Evidence
A Mere Hint of Evidence

Illinois Democratic governor Pat Quinn, the incumbent, is not someone to get excited about, but his opponent in the upcoming election is a non-Mormon clone of Mitt Romney, down to the off-shore tax havens. Bruce Rauner won’t release his tax returns either, basically thumbing his nose at the electorate.

Multimillionaire Republican Bruce Rauner has channeled at least part of his fortune into the Cayman Islands, a Caribbean paradise long criticized as a tax haven for American investors, the Chicago Sun-Times has confirmed.

A Rauner spokesman insisted that the former private equity investor has met his legal tax obligations and properly disclosed to the federal government information regarding at least five investments by him or his firm in a country that has no income tax and a financial system cloaked in secrecy.

Rauner’s campaign has refused so far to release a full set of his most recent tax returns to corroborate that and perhaps show the extent and value of those investments in offshore companies. No one has suggested Rauner has done anything illegal. In fact, offshore investments among the wealthy have been a common practice in recent years.

(click here to continue reading Bruce Rauner channeled part of fortune to Cayman Islands | Early & Often.)

Seem Never Satisfied
Seem Never Satisfied

Are people really going to vote for this plutocrat who is too good, too powerful, too rich to pay his fair share of taxes to a near bankrupt state? If you planned to run for political office, why would you do this? And worse, once news of Rauner’s lack of patriotism was exposed, he doubled down on it.

Republican gubernatorial candidate Bruce Rauner funneled part of his wealth to a Caribbean territory long considered a tax haven, a business practice he defended yesterday, stressing there was no impact on his personal tax rate.

…

A central part of Gov. Pat Quinn’s re-election bid has been scrutinizing how the multimillionaire Rauner made his money, and the Chicago Democrat’s campaign has alleged Rauner “stashed” money to avoid paying taxes. “I’d think someone who anticipates being in the public eye wouldn’t be in the Cayman Islands because the question to be asked is, ‘Why would you have invested there?'” Richard L. Kaplan, a University of Illinois law professor told the newspaper. “

AT NO POINT HAVE I TRIED TO AVOID TAXES’

Rauner dismissed the notion yesterday after speaking to Asian leaders in Chinatown.

“At no point have I tried to avoid taxes or done these things that they’re trying to spin,” he said…

“GTCR has its own structure for just a couple of investments. When they invest in overseas companies, they set up that particular structure. It doesn’t impact our personal tax rate whatsoever.”

Cayman, a British territory, is considered one of the world’s largest financial centers and a haven for mutual funds and private equity. International companies and ultra-rich investors have long taken advantage of offshore financial centers there, drawn by regulations and legal systems making it easy to move capital internationally. 

(click here to continue reading Rauner defends Cayman Islands money move – Government News – Crain’s Chicago Business.)

Not A Republican
Not A Republican

and as Aaron Cynic of the Chicagost writes, this isn’t trivial amounts of money, but most likely millions of dollars:

While Rauner might be in full legal compliance, the practice itself allows major corporations and other wealthy individuals to skip out on paying taxes in the United States. According to a June report from the group Citizens for Tax Justice, U.S. based multinational corporations booking profits in tax shelters like the Cayman’s has allowed them to skip out on an estimated $90 billion in federal income taxes. For someone trying to save the Illinois economy with a tax plan that targets professional and business services – many of which are smaller businesses – sheltering profits from a company boasting a $10 billion investment portfolio seems somewhat duplicitous, at best.

(click here to continue reading Rauner Defends Dumping Dollars Into Off-Shore Accounts: Chicagoist.)

Durbin bill to target corporate inversions

Seth Anderson0 comment

Financial Blues Brothers
Financial Blues Brothers

As we mentioned, the anti-moocher bill is finally going to be announced by Senator Durbin, though the odds of it passing through the House are slim, unfortunately…

Sen. Dick Durbin said he and other Democrats today will unveil a bill aimed at curbing corporate tax inversions. No federal contracts would go to businesses that engage in corporate inversions (moving headquarters overseas to lower tax bills), the Illinois Democrat said.

The measure is called the No Federal Contracts for Corporate Deserters Act.

…

The bill would mean no federal contracts would go to businesses that incorporate overseas, are at least 50 percent owned by U.S. shareholders and do not have substantial business opportunities in the foreign country in which they are incorporating. The law now defines a company as being “inverted” if it is at least 80 percent owned by U.S. shareholders after it reincorporates overseas, according to Durbin.

Drugmaker AbbVie of North Chicago is among the corporations that recently have announced they are “moving their mailbox overseas to avoid paying their fair share of taxes,” according to a statement from Durbin and the other Democrats. Deerfield-based Walgreen Co. also is considering such a move.

The others legislators involved are Sen. Carl Levin of Michigan and Reps. Rosa DeLauro of Connecticut and Lloyd Doggett of Texas, who are to appear today with Durbin at the news conference.

…

The White House estimates that nearly $20 billion in corporate taxes could be lost over the next 10 years because of the corporate merger deals known as inversions.

 

(click here to continue reading Durbin bill to target corporate inversions – chicagotribune.com.)