by | BLOG, OBAMA, POLITICS, TAXES
The Weekly Standard has a fascinating discussion this week regarding the Obama Administration and Koch Industries. It describes how Obama singles out these libertarian billionaires for their opposition to Democrats — something that other Democrat politicians have begun to do en masse.
Apparently, as part of Obama’s attack strategy, his administration disclosed tax information about Koch Industries (which, under law, is supposed to be confidential) in an effort to hint at tax impropriety.
There was also another important part of the article regarding taxes that was misrepresented by the Obama Administration.
“According to Mark Holden, senior vice president and general counsel of Koch Industries, a senior Obama administration official told reporters at an August 27 on-the-record background briefing on corporate taxes:
So in this country we have partnerships, we have S corps, we have LLCs,we have a series of entities that do not pay corporate income tax. Some of which are really giant firms, you know Koch Industries is a multibillion dollar businesses. So that creates a narrower base because we’ve literally got something like 50 percent of the business income in the U.S. is going to businesses that don’t pay any corporate income tax. They point out [in the report] you could review the boundary between corporate and non-corporate taxation as a way to broaden the base.
Holden tells THE WEEKLY STANDARD that this quotation from a senior administration official “came to our attention from different avenues”.
Folks, here we have a senior Obama Administration official going after non-corporate entities on-the-record. Austan Goolsbee intimated this very line of thought during his recent interview with Chris Wallace on September 12. That’s pretty bad.
What the administration also purposefully does not explain, however, is that the reason why these businesses file as non-corporate entities is so that they can avoid the egregious problem in our tax code known as double taxation.
Some companies–say a Fortune 500–pay taxes at corporate rates. The highest corporate rate is 35%. Right now, if a corporation pays taxes and reinvests its profits, there is no extra tax. But if it profits are given to the owner, they are taxed again on that amount–which is knows as double taxation. Those business owners who wish to avoid the double taxation instead pay at individual rates, the highest of which is also 35%.
Obama is specifically trying to discredit Koch Industries and a plethora of small businesses by leaving the impression that not paying corporate taxes is somehow wrong or underhanded. These types of small businesses are the backbone of our country. They will further be impacted if the Bush tax cuts for the top earners is allowed to expire because many of these non-corporate entities pay in that highest individual tax bracket, which is set to rise to 39.6%.
For an administration to target small businesses in this way is unacceptable. Doing it while discussing sensitive tax information that likely should not be disclosed (from my perspective as a CPA) is quite alarming.
by | BLOG
The media continues to debate Obama’s plan to let the Bush tax cuts expire for the highest tax margin. With percentages set to rise to 39.6 percent, top earners will have tens of thousands less in their pockets to reinvest in the economy. My discussion ensues at the Palm Beach Post:
But Dlugash, the New York CPA, says the tax increases would sap much-needed investments made by the wealthy. For a $1 million earner, the tax increase amounts to a year’s tuition and fees at a top private college, or 160 shares of Apple Inc.
“This is $43,000 extra a year,” Dlugash said. “To whom do you think that doesn’t mean a lot? To think that that’s not important is crazy.”
Obama is intent on punishing higher income earners for the sake of fairness.
http://www.palmbeachpost.com/money/what-would-end-of-tax-breaks-for-rich-918539.html
by | BLOG
The standard cliche for Labor Day is that it’s the day to celebrate the triumph of workers over exploitive capitalist employers. This got me thinking about a better cliche–The Cliches of Socialism, by Hans F. Sennholz. For today, I recommend Number 11, which ends on this little gem:
“The rise of unionism during the past century is a result of the fallacious labor theory of value, which held that all profit and rent and interest had to come out of the “surplus value” unfairly withheld from the workers. Labor unions are the bitter fruit of this erroneous theory, with a record of exploitation of workers far more grievous than the alleged evils the unions were supposed to rectify”.
by | ARTICLES, NEW YORK
Rasmussen polling has Democrat Kirsten Gillibrand in a double-digit lead going into the homestretch before NY’s upcoming primary to select a Republican challenger. Yesterday, Rasmussen released the results of its latest poll, giving her 51% over her opponents.
However, there are a few interesting things to note, reminding us how inaccurate polling really can be:
*Still, “over 15% of voters are either undecided or prefer another candidate in both match-ups”, a big vote swing. Likewise, “the margin of sampling error is +/-4.5 percentage points”.
*”More than 40% of voters in New York do not know enough about any of the three GOP candidates to venture even a soft opinion”. That’s nearly half.
*”Gillibrand is viewed Very Favorably by 25% and Very Unfavorably by 22%”. Both extremes have close numbers.
* New Yorkers overwhelmingly cite “the economy” as their top concern (52%), with domestic issues far behind in second place at 13%. The Democrats’ current policies are worsening our economic recovery.
September 14th is Primary Day to chose the challenger who will face win against Gillibrand in November.
by | BLOG
There has been much talk and support on the Left for the concept of a “public option” in health care. The rationale behind this, according to the federal government, is that there is not a sufficient “free market” for health insurance in some parts of our country.
Accordingly, they have deemed it their job to get consumers the best coverage at the best price, by competing with a public option, seemingly on equal footing with private insurers.
The promulgation of the Public Option was deceitful–there was never going to be an equal footing, as the Government would severely limit the range of allowable insurance and then use its financial and political muscle to gain customers, as acknowleged by Senator Schumer among others. Nevertheless, it had so much support that it was included in the health care bill passed by the House of Representatives.
My question is this: If this “public option” was viewed as a necessity in terms of competition and “free market”, why should there not be a “private option” in every area that Government – federal, state, local – has staked out an unnecessary monopoly for itself?
Other than National Defense and the Criminal Court Systems, there appears to be no reason – other than creation of a power base to enable the bloated government salaries that we see today – that the private sector should not be given an opportunity to compete on a level playing field.
There should be a Private Option in virtually every area of public service.
by | ECONOMY
In a report over at Bloomburg, Jim Tisch gets right to the heart of spending. He surmises:
[E]conomic growth will remain sluggish in part because executives lack confidence in the Obama administration’s policies….President Barack Obama’s health care reform, financial regulation and moratorium on offshore drilling are keeping businesses from spending money to expand….“The thing that business people don’t like is uncertainty. Part of the problem is that business has very little confidence in what’s been going on and very little visibility.”
I’ve been constantly saying that consumptive spending is not enough to have any real stimulus effect; it is investment spending that will make any noticeable difference. But businesses are plagued by a precarious economy, and therefore are choosing to hold off on projects and expansion that would normally pump revenue into the economy. As a result, the growth and recovery that we need is inert.
http://www.crainsnewyork.com/article/20100826/FREE/100829836#
by | NEW YORK, TAXES
Bagel lovers, beware! In order to provide more tax revenue for the cash-strapped state, NY plays Goliath to the Brueggers bagel company.
Picking out some obscure tidbit in the state sales tax law, NYS has successfully forced this company to cough up additional tax revenue…on sliced bagels and items eaten in-house. A nice chunk of dough for the tax man, indeed.
Interestingly enough, the rule isn’t explicitly stated in the tax code. Some sliced items (bagels) are taxable, but others, such as sliced bread, are not. These differences are inconsistent at best. Worse, they’ve only targeted Brueggers– presumably because it owns 33 franchises.
Seems as if the State Department of Taxation doesn’t even know its own code; the WSJ reports that NYS “will provide additional guidance via our Web site and publications in the near future.“. Guess they can continue to make up the rules as they go along and as needed. In New York, what else is new?
http://online.wsj.com/article/SB10001424052748704340504575448033463314628.html?mod=WSJ_NY_LEFTTopStories
by | ARTICLES
FHA Irony: A Lifeline to Luxury Condos
CrainsNewYork is reporting how our tax dollars are now supporting a new type of bailout—the luxury condo market in Manhattan. FHA has recently modified its rules to allow this new special financing where private lenders won’t dare to delve.
The irony exists in the very purpose of the FHA, which was created during the Depression to allow lower-income citizens achieve the dream of homeownership. The fact that commercial property managers are allowed to pursue this avenue is just another example of government run amok. Lowering the standards of lending creates more government dependency. As with all FHA loans, a mortgage default will be paid by the agency.
The facts speak for themselves: From 1998 to 2008, no building financing in Manhattan received—much less applied—for FHA financing. Today, real estate agents are pushing for this new option. Why the change?
Christopher Mayer over at Columbia’s Business School hits the nail on the head. He surmises, “It’s not an accident that the FHA is offering this — not private lenders. An unfilled condominium complex is not the kind of thing that a bank looking to rebuild its balance sheet on real estate is looking to do.” So, once again, it’s the government to the rescue.
Unfortunately, the lending rules aren’t the only alteration. It appears that the industry mentality has changed along with it. Crain’s reports that,
“The government is taking on more risk,” said Guy Cecala, publisher of Inside Mortgage Finance. “That’s the bottom line. They really can’t say no, because that’s their purpose. It’s to support the housing market when there’s no other funding.”
So the purpose of the government is now to prop-up, support, and bailout the sectors of the economy that are floundering—with our tax dollars.
http://www.crainsnewyork.com/article/20100813/REAL_ESTATE/100819896
