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Two Questions

Bruce Krasting's picture




 
IRS Bounty Hunters

I saw this article in a leading Swiss Newspaper. Understandably, this story has the bankers in Zurich on edge, again. The banner (Google translation):

Back in 2007 the IRS refined its program to pay for information leading
to a conviction for a tax fraud. The new rules allow for a payment of as
high as 30% of the taxes collect. The story in this paper is about one
case announced recently where an individual was paid $4.5mm after the
IRS collected $20mm from the tax cheater. Of interest to me is that the
guy doing the ratting was also the tax accountant for the cheat.

I pay a bunch in taxes and I hate it. It pisses me off when I (we) end
up paying more because there are folks cheating the system. I’m not at all sure how much anyone should be paying in taxes. My answer is that it’s not zero.
If you put those two thoughts together the notion that the IRS is now
paying big bucks for “tips” is probably not such a bad thing.


That said, I’m troubled by this. The IRS has turned the civilian
population into its enforcement division. Yes, some good may come from
this, but some bad will too. This has a whiff of vigilante-ism to it.

The IRS bounty rules only apply for settlements in excess of $2mm. So
your average, cabdriver, part-time tutor, waiter/bartender etc. need not
worry. I don’t think that will stop people from ratting out some small
fry (friends and neighbors included) who are dipping a bit with the IRS.
It certainly will create a cottage industry of PI’s, accountants,
lawyers who are going to start snooping. A $4 million payday brings lots
of slugs into the open.

I’m interested to read your thoughts. Like I suggested above; I go both ways on this one.

On that Tax Hike for the rich folks

I was looking at some IRS numbers on who pays taxes to the federal
government. This data is from 2008. That was a bad year to look at
incomes/taxes. There was a big drop in income due to the recession and
market crash. But it’s still useful to look at.

If we’re going to raise any significant amount of new revenue it will
have to come from the top 5% of earners. Note that in 2008 the top 5%
was anyone who made over $159k. That number has crept up in the last few
years. For 2012 the top 5% will be any household income that is in
excess of ~$170k. Depending on where you live and how big your family is
that is really not so much these days. But it is greater than the rest of the 95%, so that is where the new taxes will have to fall.

Note in 2008 the top 5% (a) earned 35% of all income, (b) paid $600 billion in taxes, (c) paid 59% of all taxes, and (d) the average tax rate was 21%.

I think the AGI revenue numbers are currently running at  ~$9.2T (up 10%
since 2008). Assume that the effective tax rate is about the same. Now
let’s raise the taxes on this group of rich people. How much more
should they pay? How does a 50% increase strike you? Changes in
the tax code to limit deduction AND increase the top bracket that
resulted in an increase from 20% to 30% it would raise an additional
$325billion. With a 1.6 trillion deficit that extra money would come in
handy, but it only covers 20% of that shortfall.

If the tax rate(s) were to be adjusted so that the poor bastards who are
making over $170k get their taxes doubled from 2008 levels it would
still only raise $625b, leaving us with a hole of $1 trillion.

The effective tax rate would have to be raised on the entire top 5% to
75% in order to balance the budget. Put another way; if you were lucky
enough to earn $200k, your take home would only be $50k. And that number
does not include state taxes, property taxes or sales taxes. Basically,
you have nothing left.

If you think that the solution is to raise taxes BIG TIME on the
uber-rich, think again. The top 1% should have about $1.85T in income in
2012. IF we really sock it to them and nailed them at a 90% effective
rate we could cover 1.3T of the 1.6 shortfall. This would imply that the
top 1% would be paying 75% of all taxes collected.

I hope that this shows that raising taxes on wealthy Americans does not
work very well. Yes, we could technically go the route of Sweden and tax
income over $500k at 70% or so. But what might be the consequences?

Question: What should the federal rate on high-income earners be? What
rate would you apply to those making ¼ mil a year or more? ½ mil? A cool
mil?

 

 

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Fri, 04/22/2011 - 22:06 | 1198147 moneymutt
moneymutt's picture

just to push buttons...

Peoples Budget...most of the policy proposals in this poll well with majority of Americans

http://grijalva.house.gov/uploads/The%20CPC%20FY2012%20Budget.pdf

it balance budget at same rate as Ryan plan

There is no 70 percent tax rate, even when you make over a billion a year.

Bruce, you get your first million in income taxed like it is now, but any income over a millon in a year, that over a million is taxed at 45 percent, after your first billion a year, rest of your income gets taxed at 49 percent:

people's budget:

 

 

Individual Income Tax Policies

• Allow the Bush-era tax cuts to expire at the end of 2012, but extend marriage relief, credits, and 

incentives for children, families, and education

• Immediately rescind the upper-income tax cuts in December’s tax deal

• Index the AMT for inflation for a decade (the AMT patch is fully paid for)

• Schakowsky millionaire tax rates proposal (adding 45%, 46%, 47%, 48%, and 49% top rates)

• Tax all capital gains and qualified dividends as ordinary income

• Progressive estate tax (Sanders’ estate tax, repeal of Kyl-Lincoln)

• Limit the rate at which itemized deductions can reduce tax liability to 28%for high earners

• Replace the tax exclusion for interest on state and local bonds with a subsidy for the issuer

 

Corporate Tax Reform

• Tax U.S. corporate foreign income as it is earned

• Eliminate corporate welfare for oil, gas, and coal companies

• Enact a financial crisis responsibility fee

• Financial speculation tax (derivatives, foreign exchange)

• Reinstate Superfund taxes

 

Health Care

• Enact a public option

• Negotiate Rx payments with pharmaceutical companies

• CMS program integrity and other Medicare and Medicaid savings in the president’s budget

• Prevent a cut in Medicare physician payments for a decade (maintain doc fix)

 

 

Social Security

• Raise the taxable maximum on the employee side to 90% of earnings and eliminate the taxable 

maximum on the employer side

• Increase benefits based on higher contributions on the employee side

 

Defense Savings

• End overseas contingency operations emergency supplementals starting in Fiscal Year 2013, 

providing $170 billion in FY2012 to fund redeployment, while saving more than $1.8 trillion 

from current law spending levels over ten years.  

• Reduce baseline defense spending by reducing strategic capabilities, conventional forces, 

procurement, and R&D programs

 

Comprehensive Jobs Program

• Invest $1.45 trillion in job creation, education, clean energy and broadband infrastructure, 

housing, and R&D

• Infrastructure bank

• Surface transportation reauthorization bill ($213 billion

 

 

Fri, 04/22/2011 - 07:29 | 1195606 Bruce Krasting
Bruce Krasting's picture

Thanks for all these comments. I will be sending this off to the IRS Commissioner.

There is no "consensus view" from these comments but these are some of the most common thoughts.

-Raising income taxes is not the solution. Cutting spending is the preferred solution.

-Having bounty hunters is "necessary" as we have a tax code that encourages cheating as it is so complex and easy to manipulate. A VAT type tax structure is very hard to cheat on.

-Although some did advocate very high (60+%) taxes on high income (over $1mm) I was surprised that this was not the consensus opinion. There is a broad recognition that higher rates does not necessarily mean higher revenue.

-I was struck by the comment from laosuwan. 

He reported that there are 1,000's (?) of IRS types in the money centers of Asia looking for US tax cheats. This confirms my worst fears.

-Leo K wrote that he was solidly behind Whistle Blowers. I call this "Rat Money". The audience agrees. Leo was junked ten times for his support of the IRS Gestapo.

-GE and their 'no tax' was mentioned many times. I think this is important for two reasons:

1) We are going to get a new tax code for the corporate side. GE will not be able to make $14b and pay no US taxes. This has to change.

2) GE is hated for the 'no tax' on these pages. This says to me that Obama has a headache with Jeff Immelt as his finacial advisor. For political reasons, look for Imelt to go before the next election cycle really begins.

Tks again.

bk

 

Fri, 04/22/2011 - 16:49 | 1197473 moneymutt
moneymutt's picture

"We are going to get a new tax code for the corporate side. GE will not be able to make $14b and pay no US taxes. This has to change."

 

Bruce, can we just propose AMT for corporations, just like people?

Fri, 04/22/2011 - 10:20 | 1195907 RockyRacoon
RockyRacoon's picture

Thank you, Bruce.  You come here to give us your information, opinion, and news.   Many others with your turn(s) of fortune (or lack thereof) would be off in a corner licking their wounds, but you are here in the fray.   It takes a form of courage to do this in the face of trolls who can be emotional (childish) when they don't have to look you in the eye, can take snippets out of context, and be off-topic regularly.   I appreciate your articles and hope that you keep the fortitude to post in the future.

Fri, 04/22/2011 - 05:49 | 1195544 Coldfire
Coldfire's picture

Tax is theft, pure and simple.

Fri, 04/22/2011 - 04:46 | 1195518 Itsalie
Itsalie's picture

Corporate profit in 2010 was $1.62 tr. Of this, corporates paid taxes of $416b (up 25% over 2008, 30% over 2009), dividends $732b, retained earnings $475b. Presumably in 2011, profits would increase by 15% as forecasted by "analysts" to $1.86tr and assuming the same rate of dividend payout, dividends should be about $800b. If corporate tax cannot be raised for whatever reasons, then raise dividend tax to 75%.

Fri, 04/22/2011 - 16:08 | 1197337 moneymutt
moneymutt's picture

corporations want to be people, supreme court say they are...so why can't we AMT corporation like we do people. I would feel better about GE having to pay some min. tax rate than forcing some guy  to a min tax rate, say that is a doctor, who has huge student loans, works and lives in an expensive town like NY so has high income but also high mortgage costs. If he can't get all the deductions he is due, but has to pay an AMT, what about GE and Exxon who have been paying little or no taxes or who have even gotten rebates? Its only fair they get AMT'd

Fri, 04/22/2011 - 03:08 | 1195467 dondonsurvelo
dondonsurvelo's picture

Bjorn Borg left Sweden for Monaco because of the tax rate on his earnings.  What would sotop the top 1% from leaving for a more accomodating tax haven?  They already have most of their money offshore as it is.

Fri, 04/22/2011 - 01:26 | 1195391 Yen Cross
Yen Cross's picture

Based on corporate earnings, and repatriation. I would do a flat ( TAX). I'm a die hard Rebublican!

Fri, 04/22/2011 - 01:08 | 1195375 apartofthings
apartofthings's picture

If you want to raise tax revenues, go where the money is: in the financial markets. Apply a 0.5% tax on all transactions over, say, $1M. This would bring in lots of money, and on top of that would discourage HFT as a plus.

Fri, 04/22/2011 - 00:19 | 1195296 Yen Cross
Yen Cross's picture

ONLY 2 wishes?(aka. questions) Is the Genie saving the last wish for HIMSELF?

Thu, 04/21/2011 - 23:54 | 1195248 ebworthen
ebworthen's picture

JUBILEE.

50% reduction in population.

Problems solved (for 28 years or so)...

Thu, 04/21/2011 - 23:16 | 1195177 Agent 440
Agent 440's picture

So... they blew what they took from you and then some... and you want to figure out how to get them more... You guys must be rich to be able to aford the way you think.

Thu, 04/21/2011 - 22:58 | 1195132 moneymutt
moneymutt's picture

I know they are not tied because FICA is supposedly in a self-sufficient trust fund, where benes and FICA taxes should be adjusted to make the trust fund solvent within itself, but that is not what happening, Gore's mocked lock-box was never implemented so after Soc Sec surplus for last 2 decades funded deficit spending, it seems to FICA is just another tax, given the benes paid for by FICA are not going to be honored to level the trust fund could have.

So given that, check out the second chart on this link. The increase in FICA tax is almost exactly the mirror image of the decreases in corporate tax revenue. So as spending was increased but corporate taxes revenue decreased from 8 percent of GDP to 2 percent of GDP, deficits ballooned, and now, these debts and deficits, partly contributed by decrease in taxes from corporations, are being asked to be balanced on limiting Medicare and Soc Security benes.

This analysis only looks at revenue as a percent of the whole GDP, but the increasing tax burden going to regular middle class working folks versus corporations and high income folks would look even worse if we considered how much of the GDP is going to each of these groups compared to historical splits. While regular folks, even well educated, upper middle class people suffer high unemployment, corporations are doing really pretty damn well with record profits, record cash on hand. I don't blame businesses, they are doing their thing, getting productivity from techonlogy, cheap labor thru outsourcing etc. But fact remains as corporations take a bigger chunk of GDP and workers can no longer demand a big share of GDP and income equality expands, so rich get more and more of GDP compared to middle class, as this all happens, regular working folks tax rate per whole GDP is up relative to corps, and rich.

 

http://www.taxpolicycenter.org/briefing-book/background/numbers/revenue.cfm

Thu, 04/21/2011 - 23:41 | 1195223 Agent 440
Agent 440's picture

I'm sorry. Government spending, Federal alone was 20% of GDP, pushing 25% during Bush.  If corporations are eating your lunch, it's because your elected officials are feeding it to them.

I love it. The public parasites are angry at the corporations who care and feed them, because they're using the funds paid by taxpayers for the public parasites pensions as working capital. But parasites want their cake today and their cake for tomorrow today. Even a bankster bitchz would blush.

Thu, 04/21/2011 - 23:56 | 1195247 moneymutt
moneymutt's picture

we had a surplus in 2000, how about we just go back to that budget regime....cut Medicare part D, cut Medicare Advantage, return taxes to Bush 1 and Clinton years, cut defense spedning/end wars...basically if undue all the W and Repub congress policies that created deficits...all that is left then is the extra costs due to recession compared 1999 economy...once we have repealed all Ws budget costs, spending and tax cuts, once we have done that, whatever the remaining difference, I'd be happy to talk about how we close that remaining gap, due to recession, with more cuts or fairer taxes...like say ethanol and farm subsidies, oil subsidies, closing hodge podge patchwork of tax deductions.

Really, quitting the credit card will be painful after 11 years of deficit spending, but really were the Clinton years that horrible, did we wipe out Medicare and Soc Sec? Were taxes so overbearing?

Fri, 04/22/2011 - 12:44 | 1196484 malek
malek's picture

Now you forgot to mention you would also need to create another stock market bubble, and let house prices at least slowly appreciate. And somehow the number of those pesky retirees would have to be lowered, or their benefits reduced accordingly, to get back in line with the Clinton years. Then we might be able to make it back to the good ol' B years, laugh.

But don't worry, after 8 years Obama, it will look like the good ol' W years to you - too!

Fri, 04/22/2011 - 15:56 | 1197294 moneymutt
moneymutt's picture

I do acknowledge difference in economy between Clinton years and now and certainly housing bubble and tech bubble brought in a two sets of windfall of revenue that was not sustainable or advisable...so that is an additional issue...but still, getting back to a surplus not an insurmountable issue, difficult yes, not without hurt, yes, but impossible, no...it is possible.

Fri, 04/22/2011 - 00:17 | 1195282 Scritchy
Scritchy's picture

Brilliant analysis!

(Disclosure: This was originally a double post, made the most of it by editing.)

 

Fri, 04/22/2011 - 00:13 | 1195277 Scritchy
Scritchy's picture

Quit making so much sense you cute little mutt! These are the days of stimulus via borrowed money. It will be paid back by you and me for our lifetimes, then by our kids for their lifetimes, then by our grandkids for their lifetimes. And if we run a little short, we can borrow some more and that will be paid back by our great-grand-kids. And let's spend enough next year that our great-great-grandkids will pay it off for us.

 

Fri, 04/22/2011 - 16:03 | 1197326 moneymutt
moneymutt's picture

sritchy, you are just agreeing with me cause I'm a dog too...but it's still appreciated

Thu, 04/21/2011 - 22:41 | 1195111 blunderdog
blunderdog's picture

Gummit creates your money, and you only have to pay taxes if you use money.  But if you don't want a gummit in the first place, you really don't have much business using the money it creates.

I don't see a problem.  Folks got no sense of logic.

Thu, 04/21/2011 - 22:32 | 1195082 Broomer
Broomer's picture

Suppose I'm the tax accountant for a rich person or a business.

What blocks me from cheating on purpose and warning the IRS to get the bounty?

Fri, 04/22/2011 - 13:33 | 1196635 Bruce Krasting
Bruce Krasting's picture

I doubt the IRS would pay up for this. But I do think the snoops will be out looking under all rocks. Most of the rocks have nothing to hide. But the snoops will be up their ass anyway.

This creates an  incentive for "nice" people working for the IRS to tap phones, scan hard drives, read all emails and texts. That is not so difficult as you may think.

Every pro-athlete, actor, movie director, corp exec's,W.S. types and EVERY real estate player is on this list.

Thu, 04/21/2011 - 22:15 | 1195047 moneymutt
moneymutt's picture

I'm not a big fan of vigilantism, but the objections to it in regards to rich tax dodgers strikes me as whining about a double standard. Have you spent anytime around a county courthouse, and seen the justice system coming down hard on drug users ( not sellers, just susers), guys that contacted (not beat, but simply contacted) women that had protection orders against them, disorderly conduct alleged because you mouth off when police were being abusive to somone, traffic violations galore for the slightest roll thru stop signs, supposed welfare fraud becuase you paid on two public housing units for two months to make sure you were without housing in a transition, suppose welfare fraud because a old boyfriend came calling twice in one year from his tour making basic salary playing basketball in backwaters of Europe etc...

Seriously, sitting in on a morning worth of sentencing at my county court was an eye opener. If you wonder about our legal system, I highly suggest showing up for a half day of sentencing at your county courts, I think you will find it as interesting as I did. I watched this while waiting for a local community hero to get sentenced for 4 gross misdemeanors for not filing state taxes (that's not, not paying taxes, her taxes were paid, she was a wage earning employee with plenty of taxes being deducted by employer, refunds were actually in order, if she had done her paperwork) IRS says you can file paperwork 3 years late and still get refund if it is due you. IRS says that even non-payment of taxes does not become a criminal case until they suspect you have underpaid by over 50 percent (then they think they can prove intent) but in this case, she was originally charged with 11 felonies and 11 gross misdemeanors for supposedly owing a few thousand dollars to state, over 4 taxes years, which turned out to not at all be case (after looking at her bank accounts they incorrectly assumed reimbusements for expenses were pure taxable income etc). But even tho owing no taxes, and felony tax evasion charges having to be dropped due to no case, she was criminally charged and convicted of gross misdemeanors for simply being late on filing paperwork.

I'm often bemused by well off folks getting upset about harsh justice, realizing how clueless they about how hard laws, even really legit, necessary laws, are enforced on poor, regular working class folks. In my slightly higher end, mostly whitish urban, tree lined neighborhood, I amost never see cops unless they are specifically called in..., even tho there is certainly drug use, domestic issues, traffic violations etc going on in my neighborhood, but if I drive a few miles to one of my favorite food courts in a poorer, more racially diverse neighborhood I find myself surrounded by cop cars roaming the streets, almost always see someone pulled over for some traffic violation, being searched...and have personally witnessed and told by local prosecuter friends that THE guaranteed way to get arrested is to tell the police you know your rights and that they don't have a right to _____, say search you without cause etc....

Laws are for little people, I have a hard time feeling bad when tax law is possibly enforced equally hard on rich people with means to evade and lawyers to protect them.

 

Fri, 04/22/2011 - 04:27 | 1195509 Urban Redneck
Urban Redneck's picture

I think you need to reported to the IRS, and you and your entire family's wealth seized to fund the continued national crack binge, and I will be happy to pocket 30% on the transaction. 

You do realize that the internal IRS seizure processes and the tax courts are the only venues in the US Injustice System where one is legally, "Guilty until proven innocent?"  In all of the  tribulations of the "poor little people" you cite in the first paragraph, they are provided the benefit of "innocent until proven guilty" by conviction in a court, and then sentenced.  Your second paragraph proves the point- It's not the size of the accused's pocket book, it the statutory authority of the accuser. 

When laws against officers executing those suspected of crimes on the street are revoked, or the IRS decides to allocate resources based on population distribution as opposed to wealth distribution and comes after you, then you and yours will understand what equal enforcement of the laws really is.  Put another way- would you be in support of the DEA offering 30% of the take (in seized house, cars, and bank accounts) for neighbors turning in drug dealers, if the seizure did not require any conviction in a court of law? How confident are that your own neighbors wouldn't covet your property under those circumstances?  You seem to have a problem with police stopping cars on the street, but if the police were to outright seize the car you have no problem with that- as long as the police officer has an IRS badge. 

By the way, when the IRS comes for you- please tell them that you know your rights and that they don't have a right to... they love that one.

Fri, 04/22/2011 - 15:48 | 1197240 moneymutt
moneymutt's picture

umm...you sort of make my point for me with DEA reference...as I was trying to add perspective and say that what is now being complained about has been happening to other people for too long, and your comments show that you have been blind to it, given the media and mainstream societies lack of concern.

See, your DEA example IS what poor and black and Latino people have seen frequently in the last two decades. Drug seizures are a big corrupting influence on local cops and there are all sort of whacked laws about cops seizing things for drug crimes and getting to keep the booty, since early 90s. People in poor communities and people of color have been screaming about the draconian nature of all the stuff being taken as "evidence" never to be seen again. Grandma loses her house to drug seizure laws because her 17 year old son sold some marijuana to a few friends, etc. A corrupt gang task force here in MN was just busted up last year for just plain taking peoples stuff. http://www.kare11.com/news/news_article.aspx?storyid=824998 

 

And from my discussion with people in poorer communities,  for every thing like this does get exposed, there is so much more the goes on with impunity. It is not surprising the lead example in this frontline expose is a Latino guy

http://www.pbs.org/wgbh/pages/frontline/shows/drugs/special/forfeiture.html 

Just so you know the scenario you paint, the one your fear, has been happening all to frequently already in the war on drugs. And of course, even tho drug use among blacks and whites are at very similar rates, and Latinos use at lower rates according to studies galore including FBI data, blacks and Latinos are way disproportionately impacted by drug laws and drug enforcement.

George Mason law professor Ilya Somin points out how state seizure laws can threaten innocent property owners whose car or other property gets swept up in the War on Drugs. In Illinois, state law offers no procedure to challenge the seizure, and requires no proof from police that seizure is necessary to preserve evidence.

And as with this lawsuit's original plaintiffs, this can happen even when the owners are never charged with violating any law.

http://blogs.findlaw.com/blotter/2009/10/property-seizure-in-the-war-on-drugs.html

http://www.fear.org/

Seized property was presumed guilty and could be forfeited based upon mere hearsay—even a tip supplied by by an informant who stood to gain up to 25% of the forfeited assets.  Owners were forced into the untenable situation of trying to prove a negative—that something never happened, even though no proof of any illegal act had been offered at trial.

Newspapers and television stories across the nation documented hundreds of cases of innocent citizens wrongfully deprived of their homes, businesses and livelihoods.  Eighty percent of property forfeited to the US during the previous decade was seized from owners who were never even charged with a crime!

So my point is what you are ranting about, rightfully so, has been happening in brutal ways for decades, not just to limited to poor communities, but especially and disproportionately occurring in poor communities and to black and Latino folks.

We are agreed in that there should always be due process and checks and balances, and I agree no one should have their stuff seized and have to prove its legal to get it back, whether on a bad neighbor tip or the whims of a corrupt cop.

And don't be thrown off by the relatively small, examples of crime I mentioned above, my point was even for small stuff, the police in some communities are heavily coming down on folks, have been for a long time.

There are much bigger tragedies in poor communities than I mentioned. They do not just involve losing all your life savings, but also involve losing your liberty, being sent to prison, losing your means to make a living in future. Shoot, if you are just a regular guy in  a working class job, getting arrested for disorderly conduct and getting locked up for a few days can mean the loss of a job and unemployment for a year, even tho prior work record immaculate, even if you are lucky enough to beat the charge.

I have no doubt the IRS could get abusive and this is not right, but it bothers no one in mainstream middle and upper class life seems to  have cared about similar abuse brought down everyday on some folks.

It does not take a rocket scientist to realize street cops and prosecutors have a wide breath of discretion and if you are corrupt, moral-less and money grubbing, who would you pick on, steal from? who would you target that you think would give you the best chance of getting way with it? An upper middle class lawyer or accountant, or a poor person with no education or a black person? What type of person would you rather be, when facing a cop on the street or facing a jury in court? a white person or a black person? Most cops are likely decent folks but some are, *shock*, asses, racists, or just plain soulless opportunists, money grubbers or power/control freaks. They can arrest you for nothing, and from then on, it is their word against yours.

And that innocent til proven guilty thing, what do you do if the plant a gun in your house or lift your finger prints and put them on something incriminating, all of which they have been caught doing or openly confess to later, all factual occurrences. Shoot, there was a recent case of cop corruption exposed in which the cops admitted to falsely arresting people and getting them convicted, such as a Arab retail store owner, SIMPLY SO THEY COULD GET MORE OVERTIME PAY WHEN THEY HAD TO APPEAR IN COURT? And of course there were the judges taking kick backs from private juvenile prison to lock up more kids in PA. Some cops, prosecutors, and judges are corrupt and soulless, it is just so, and guess who they tend to pick on?

I'm not saying rich people should not get due process. I'm not saying rich people never get abused. I am saying, that now I'm seeing rich people complain about abuse that previously has mostly directed at less fortunate and has been little cared about or noticed, as you comments above indicate.

We are agreed no one should have power to ruin your life, take all your money, or lock you up without a great deal of oversight and checks and balances...but please don't be naive about how much of such law enforcement abuse already occurs and has been occurring, with little mainstream uproar, in poor communities.

If you know both poor and middle class and really very rich people, as you likely do, as I do, I think you will find that law enforcement consistently comes down much heavier and brutally, with less oversight, on poor people, than they do on the rich.

Maybe that will change with misplaced, immoral populist anger and violence in the future, I don't know. But unfortunately, right now, the law enforcement abuse on rich would have to seriously escalate long before it could get anywhere near as bad as what has been happening to others already, routinely.

Sun, 04/24/2011 - 07:46 | 1200498 Urban Redneck
Urban Redneck's picture

You are citing a litany of diverse and questionable sources to make a general point about the numerous and diverse civil forfeiture practices in the US.  Fear.org is an amateur lobbying outfit pursuing an otherwise noble cause.  However, presenting unattributed quotes from officials of NORML as statistics, while ignoring the actual source (IRS) of the bulk of civil forfeitures, as well as the IRS’s & DOJ’s stated priorities (high profile & high net worth, with a stated targets of 75% of revenue which are often exceeded) destroys their credibility.  In Alvarez v. Smith the 7th Circuit held that Illinois practices violated CAFRA (Civil Asset Forfeiture Reform Act), and Illinois returned the property before SCOTUS review, which is why the appeal was vacated and remanded.

 

The examples of civil forfeiture you cite are governed by CAFRA, and involve “someone” breaking a law and a judicial review of the forfeiture.  Whether the “someone” breaking the law is a private citizen in the possession of illegal drugs, or a police officer illegally planting drugs- a crime is being committed.

 

Section 2 of CAFRA places the burden of proof on the government and establishes the threshold as a preponderance of the evidence.  CAFRA protections are specifically excluded from seizures executed by the IRS under Title 26.  Furthermore, the IRS threshold for initiating seizure is probable cause.

 

To place this context, assume John Galt owns a small business, and filed a tax return for last year in which he declared $100,000 in income and paid $50,000 in taxes.  An IRS agent can legally and arbitrarily decide that John Galt had $150,000 income and should pay an additional $30,000 in taxes plus interest and penalties.  The IRS agent can then levy $35,000 in cash held by John Galt in US financial institutions, at which point John Galt can longer afford to cover operating cash flows (including now mandated health insurance payments) and is pushed into the black economy.  In order to get his money back from the IRS John Galt must prove a negative to another IRS agent.  Both IRS agents’ civil service performance reviews (and future compensation) are based on derived metrics revolving around how much money they are able to extract from John Galt.  In order to close the case- the IRS agent offers to settle John Galt’s outstanding liability (as defined by the IRS) for the generous sum of $20,000.  Given that John Galt would have to spend over $100,000, which he does not have, or have access to, in the event that it was on deposit at his bank, in order to bring a legal action against the IRS in Federal Court- he agrees to the $20,000 settlement.  In this example, no one has committed a crime or broken a law, but John Galt is unfairly deprived of $20,000, and two IRS agents get points for their performance reviews.  This is the crux of the point I was making in my previous post.

 

Getting back to Bruce’s example, suppose I am John Galt, and Bruce has a beef with me for running through his ZH posts like a bull in a China shop.  Bruce calls the IRS; their burden of probable cause for any amount is met by Bruce’s phone call.  If Bruce is generous and only tells the IRS that I have $50,000 in undeclared income, then he still stands to personally pocket thousands of dollars of my hard earned money that I don’t actually owe to anyone, and only Bruce is breaking the law, for which he is being richly compensated by me, for his crime against me. 

 

I have seen a significant number of economies collapse, and I work with people who have lived through the examples that I don’t have personal experience with.  One common trait of economic collapse is that corruption (both of the police and the State) increases as national prosperity decreases.  The IRS wants to hire thousands of new agents, and if you are concerned about the poor and defenseless, this should TERRIFY you.    

 

For example, the proceeds of bartering transactions are not just treated as ordinary income, but generally self-employment income under the current US tax code, creating a higher tax liability and other regulatory expenses for taxpayers who engage in bartering transactions.  In addition, squatter’s rent effectively becomes is a taxable benefit at the time that the underlying mortgage is modified or the house is foreclosed upon, even filing bankruptcy does not eliminate the entire debt.

 

There simply isn’t the wealth among the wealthy in the US to cover the US government’s operating expenses, so the IRS will be forced to increase the scope of its targets, moving down the income scale in order to seize increasing wealth from Americans, which is why they are seeking to radically increase the number of agents.  The IRS civil forfeiture process in nothing more than a legally immune sovereign extortion racket, legally codified by the State, and insulated from the State’s own RICO anti-racketeering laws.

 

Text of CAFRA

http://www.gpo.gov/fdsys/pkg/BILLS-106hr1658enr/pdf/BILLS-106hr1658enr.pdf

 

Treasury Asset Forfeiture Programs

http://www.treasury.gov/about/organizational-structure/offices/Pages/The-Executive-Office-for-Asset-Forfeiture.aspx

 

DOJ Asset Forfeiture Programs

http://www.justice.gov/jmd/afp/

 

IRS Taxpayer Rights

http://www.irs.gov/advocate/article/0,,id=98206,00.html

 

IRS Tax Responsibilities of Bartering Participants

http://www.irs.gov/businesses/small/article/0,,id=188095,00.html

 

 

Fri, 04/22/2011 - 13:39 | 1196650 Bruce Krasting
Bruce Krasting's picture

You take this to the next level. Well done.

If it's okay to turn citizens into IRS Agents able to make a lifetime of income where does it end? It's a bad end.

 

Thu, 04/21/2011 - 23:27 | 1195199 Agent 440
Agent 440's picture

Absolutely. 80 years of liberal social program. We must be on the verge of success. I think Mexico got a good 20 year head start on us and you can see their progress.

Thu, 04/21/2011 - 23:06 | 1195164 Blanche DuBois
Blanche DuBois's picture

moneymutt, Thanks for posting. So TRUE...and So very SAD!

Thu, 04/21/2011 - 22:09 | 1195040 laosuwan
laosuwan's picture

this action by the irs abroad, which we see here in Hong Kong, Thailand and Singapore cannot generate enough revenue even to pay for the thousands, yes that's right thousands, of enforcement agents they have hired to work in asia. the money they collect will not even make the slightest effect on the deficit. the real purpose of this enforcement action seems to be to try to stop the growing exodus of americans with savings from leaving the usa. we see so many europeans getting out of europe, coming here to invest or laundry their money, for many years now. The americans are starting to leave too and I think this enforcement effort is intended to try to prevent them from getting their money out of the country to another place of their choosing. again, the money they can collect, or even prevent from leaving the usa, is not going to help with the deficit even if the irs took it all. it is just a control on the population. at least, that is how it looks to me.

Thu, 04/21/2011 - 21:58 | 1195012 Bicycle Repairman
Bicycle Repairman's picture

Just cut spending first, and work out the proper tax to fund less spending later.

Thu, 04/21/2011 - 21:20 | 1194920 Bicycle Repairman
Bicycle Repairman's picture

Just cut spending first, and work out the proper tax to fund less spending later.

Thu, 04/21/2011 - 20:45 | 1194831 penisouraus erecti
penisouraus erecti's picture

Hmmm, so the problem is with revenue......not spending.........OK.......

Thu, 04/21/2011 - 20:34 | 1194813 John_Coltrane
John_Coltrane's picture

I think we need to be honest about the revenue vs spending problem.  The federalists have collected about 19% of GDP (subject to small fluctuations) for the last 30 years.  But they now spend over 23% of GDP-borrowing the difference.  How can anyone conclude we have a revenue problem?  The solution:  mandate no more than 20% of GDP be spent in any fiscal year.  The great society programs and the welfare state are bankrupting us.  Defense could easily by reduced by a factor of 2 and all foreign aid eliminated along with the useless Dept of Education and Energy.  We got along fine with any of these programs prior to 1960.  And Americans were acutally healthier pre-1960 due to our current obesity and laziness epidemic.  Entitlements create an entitlement mentality.  And debt is slavery which is why both federalists and banksters wish to continue it.  And the reason they established both the FED and an income tax to fund the debt interest.  Getting caught up in tax details in a fundamentally corrupt system isn't productive.   

How to most of the wealthy deploy their wealth?  Investments: via either equity or bonds.  Does anyone seriously think the government can deploy capital more efficiently than the private sector (which actually has a profit motive!).

Thu, 04/21/2011 - 21:05 | 1194867 Fake Jim Quinn
Fake Jim Quinn's picture

@John: You hit it on the head. Any sensible spending authority/business looks at best practice, sets a target (say 20%) then sets priorities. Want more healthcare? Reduce military expense. Want more military? Reduce SS. That is what a democracy should do. But when politicians can simply spend, lubricated by a drunk Fed unbounded by the discipline of gold, will simply bribe their way by stealing from the future.

The healthcare Obamination did not even try to get Americans to reduce their healthcare costs by following practices that avoid the major diseases the drive healthcare costs. If we can't even encourage the population to do things that are healthy for them, how we will get them off the tit that gives them 99 weeks of unemployment, subsidized housing, food stamps, mortgage deductions, et al.

Easier to tax someone else. Someone "rich" that lives in an urban center where $200,000 is the same as $100,000 in non-urban areas.

Ben Franklin said that if the electorate could vote the Treasury, the republic would be finished. Smart man, he.

Thu, 04/21/2011 - 20:40 | 1194816 penisouraus erecti
penisouraus erecti's picture

++

Thu, 04/21/2011 - 20:32 | 1194809 Fake Jim Quinn
Fake Jim Quinn's picture

Huey Long's famous quote:

"Don't tax me, don't tax thee, tax the man behind the tree"

Class warfare. Jealousy. No willingness to give up the nanny state benefits. We're screwed

 

Fri, 04/22/2011 - 00:11 | 1195270 JW n FL
JW n FL's picture


by Fake Jim Quinn
on Thu, 04/21/2011 - 20:32
#1194809

Class warfare. Jealousy. No willingness to give up the nanny state benefits. We're screwed

******************************************************************************

No! Spending Cuts Needed! We Need Corp's To Pay Taxes! http://goo.gl/PuoLH / $39M Lobby PAY NO TAXES! http://goo.gl/c2s7q

http://goo.gl/zacwI 12 Corporations who Spent $1 Billion to Bribe the Lobby Whores into a 0% Tax Bracket thru Loopholes!

CLOSE THE LOOPHOLE: Hedge Fund Manager John Paulson Earned $5 Billion In 2010, Paid Only 15% Tax http://goo.gl/soFL5


Republicans Block! a Push by Democrats To End The Tax Break for Sending U.S. Jobs Offshore! http://goo.gl/6qhnK

$14 Trillion Dollar Deficit http://goo.gl/FnxBZ And! Then! Another! $15 Trillion Dollars in Loans to Rich Fuckers and Gaddafi! http://goo.gl/EXzal  /  http://goo.gl/d0DLP

Sure Dumb Fuck! Austerity... for the poor! will fix all of our problems!


Spend! $3.5 Trillion to produce $255 Billion in GDP growth (7% efficiency!) http://goo.gl/w81XR


http://goo.gl/oyEh9 27 Statistics that PROVE the U.S. Economy is NOT Improving Unless You are Wall Street

9 Things The Rich Don't Want You To Know About Taxes! http://goo.gl/p5p5E

I could go on but if this isnt enough for you to see the light you should do us all a favor and drown your dumb fucking offspring and shoot yourself.

Thu, 04/21/2011 - 21:41 | 1194978 Yes_Questions
Yes_Questions's picture

Kingfish was probably killed over pointing out those behind the tree..

 

 

Thu, 04/21/2011 - 20:24 | 1194789 JW n FL
JW n FL's picture


 

UBS Whistle Blower in Jail for helping the IRS with over 2,000 Tax Dodgers! http://goo.gl/s8JYp  

 

 

'Austrian tax evasion whistleblower' dies in Swiss jail http://goo.gl/w3bqP

Swiss tax whistleblower to give WikiLeaks new data & in Jail for it http://goo.gl/KiQhV  

 

No Bankers in Jail, No Tax Dodgers in Jail and Wall Street is Leveraged MORE than before! Tell the Truth? Go To Jail!

Thu, 04/21/2011 - 20:11 | 1194766 dkdtcspo
dkdtcspo's picture

I thought those were the rates we used to have (in the 50's, top marginal rate of 90%, in the 60's and 70's top rate of 70%), until Reagan lowered them to 50%, and then 38%. 

Thu, 04/21/2011 - 20:02 | 1194745 Bear
Bear's picture

I'm sorry, all this talk about taxing income is so prosaic, what we really need to do is ... tax wealth

Thu, 04/21/2011 - 20:03 | 1194683 honestann
honestann's picture

Wait one second here.  Let me get this straight.  If the mafia collects 10% from everyone on your street, but the barber 3 stores down somehow manages to avoid having 10% stolen from him, you are pissed off?

So, if anyone is abused and screwed, everyone must be abused and screwed?

Boy, the predators-that-be and predator-class sure love people who think like you, "buddy".

You're wrong about something else too.  The federal tax rate is (and should be) zero - ethically, lawfully and constitutionally.  If "predators DBA government" want to offer services that people can subscribe to or not (without consequences), then that's fine, because the money paid to government is voluntary subscription fees, not taxes.

What we need to do is exactly the opposite of "snitch and fleece" as advocated by the IRS.  What we all need to do is "protect each other from the predators-that-be and predator-class", which means "government and corporations".

Thu, 04/21/2011 - 20:41 | 1194822 penisouraus erecti
penisouraus erecti's picture

+

Thu, 04/21/2011 - 20:17 | 1194770 blindman
blindman's picture

first, eliminate federal reserve notes, or open the

field up to legal competition and they will be gone. 

Thu, 04/21/2011 - 19:33 | 1194646 bastardchildofmary
bastardchildofmary's picture

I say we move to china. Communist China. they have no income tax. [yet] and we do? whats wrong with that?

Thu, 04/21/2011 - 19:23 | 1194623 rosethorn
rosethorn's picture

This is no different than rewards offered by law enforcement agencies for info leading to arrests.  As an accountant by profession I would be more than happy to bust wealthy tax cheats to earn a living.  Anyone should take every deduction or credit the law allows.  But if you are a top 10% and cheating on your taxes, you are fair game.  Actually managing to ssucceed as an IRS bounty hunter would take effort and skills that most folks don't have.

 

Thu, 04/21/2011 - 18:48 | 1194527 gorillaonyourback
gorillaonyourback's picture

who the fuck in their right mind would willfully want to pay taxes to this government of fascism, kleptocracy, elitism, cronyism,etc....?

Answer that question first for yourself, to decided if it is with in you moral and ethical frame work to participate.

in my opinion the debt free money printing will accomplish this with out have taxes or the irs. gnaw on that for a little while:)

 

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