Wednesday, January 14, 2009

No, really, you're gonna pay more tax

We tax all the others and pass the revenue on to you

NYTimes columnist Bob Hebert is someone to whom I do not turn for solutions to much of anything. However, he promotes a very good idea today, citing economist Dean Baker: A tax, 1/4 of 1%, on stock transactions. I have never fancied myself as, or wanted to be, a tax policy wonk. I'm just a humble country tax collector. Or was, now a humble tax reform consultant. But this one has a lot of surface appeal. It raises revenue from those who play the market as if it were roulette without the zeroes and it doesn't tax those who don't. It raises the cost of pensions that invest in the market (wouldn't that be nearly 100% of pension plans?) but pension plan admin fees are far above that already, making the tax rather trivial. So trivial, in fact, that if this tax is enacted -- and really, by now surely you understand that someone is going to pay for this mess -- then an increase in the tax will surely follow soon.

TCFR raise tax revenue. Get over it. This one has TCFR's "tax everyone but me" broad appeal: Lots of revenue -- maybe $100B annually -- and little effect on Joe Sixpack. Soak the rich and try not to notice that it is a regressive (OMG!) tax that applies at the same rate to taxpayers regardless of income level. Not unlike, say, sales, auto and property taxes. Works for me. How about you?

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Ooops. I say, OOOOPS! Is Tim Geithner going to be a key international player as SecTreas or just the answer to a trivia question: Who was Obama's original pick as SecTreas?

Nancy Killefer's nannytax problems are merely illustrative of the bi-partisan embarrassments that trip up political appointees. And some perspective is called for. She got caught not paying some chump change taxes on her housekeeper or some such. She "cleared up" the problem somehow, and it's over. Fine, it should be.

Tim Geithner, now that's a different kettle of tax. TimmyG got paid X while working for the IMF in NYC, plus Y to pay his taxes. Yes, working for IMF/Work Bank/UN IS a sweet deal but that's a different story. Believe me, everyone there knows that A) their salaries are taxable in their residence jurisdictions, and B) that they are all but untraceable if you don't pay voluntarily. So TimmyG doesn't bother to declare or pay, the IRS audits for 2003 and 2004 and nails him for $17K. End of story? No way. Obama vetting team auditors (and good for them!) notice that he worked for IMF in 2001 and 2002 and didn't pay taxes on that salary either. Four years running and he thinks his salary isn't taxable? And that his tax make-up money is what, a bonus?

OK, now he's paid up -- $43,200 -- but what does that say about him? It's not a nannytax omission, it's four years of not paying tax on your salary and keeping the extra money you were given specifically to pay your taxes. It at least met the minimums for a referral to IRS Criminal Investigations unit in that it was a) substantial understatement, and B) a continuing pattern. Don't look for the referral to happen any time soon. Meanwhile, all he's asking is a chance to steward a coupla tril of your stimulus/bailout money. You can trust him with that, can't you? Oh, and don't get distracted by his legal-then illegal-then legal again housekeeper or her predecessors. That's just the way they do it in DC and NYC, where the laws don't apply to the lawmakers. It's a non-issue unless you care about character, but who does that any more?

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You didn't miss the Kansas City Chiefs (American pro football, but just barely) story, did you? $25M in state tax credits to help fund the Chiefs move to a new training facility. Maybe, just maybe the 2006 "award" of $50M to renovate the Chiefs and Royals (baseball) stadiums was justifiable. After all, there were no protest riots.

But $25M in state tax credits? What good are they and what are the Chiefs going to do with them? Why, of course: They're going to sell them to someone else! For $10M!!! Poor Kansas taxpayers. Poor Kansas students, too, as they're going to have to pay a "university fee" to help build the Chief's new training facility (Do you see any connection there?) AND "local officials" are going to have to pony up the rest of the $13.5M for the new facility. Have to?

I don't care what anyone legally does with their own money. I might not like it but the law's the law. But shouldn't the public draw a line somewhere when government is spending their tax (and student) money to facilitate things like pro sports? Where's the urgency? Where are the priorities?

All that happened last weekend. Their new governor has already said, in essence, that it's past history and something that he's not going to look at. Technically, last weekend is history, but so is five minutes ago. Sometimes it's hard to tell the difference between robbery and tax policy.

If there is an economic crisis that requires massive amounts of public money for bailouts and stimuli, then shouldn't there be some oversight about where it's going? There hasn't been so far and no sign of that improving on Mr. Obama's watch.

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The Chiefs and Mr. Geithner have at least one thing in common: Neither wants to pay the freight for their lifestyle choices, even when there is lots of money to do so. That tapping sound is Marie Antoinette clapping a fan into her gloved hand.

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