Monday, June 8, 2009

Voting With Your Feet

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

Microsoft, Symantec and others don't like the idea of repatriating and taxing corporate income earned abroad. They're threatening to vote with their feet and move more of their businesses overseas. You can read more about it at The prez wants to remove $190 bil in corporate overseas tax breaks.

This is the mega-corp version of Rush Limbaugh and others leaving New York for the tax-friendlier shores of Florida. When taxes are oppressive, those who can leave, do. Those who remain, with far fewer resources, are left to fill the revenue gap. The remaining economy enters its death spiral. Hello, New York and California.

Did you read that New York is shocked that its income tax revenue is down 49%? Wow, who could have seen that coming? Hint: It's not entirely the economy and it's not entirely Limbaugh's fault. There's no one at the helm and that's an iceberg up ahead, Gov. Patterson. It's too late to miss it. All you can do is try to mitigate the damage.

Rush isn't the only bigshot to leave. Super-rich ex-Dem major contributor Tom Golisano is also outta there. Same reason: Taxes are too high and government is out of control.

Meanwhile, there was a coup in the NY Senate today, with the Repubs taking over the majority with the help of two Dems (who are under some serious investigation, BTW). Don't look for any meaningful legislation in NY any time soon. Patterson will veto. The legislators will continue cashing their paychecks.

Did I mention The Taxblog Alternative? Things are going to get worse. Let me know when you get it.

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I finally got a look at the Kerry campaign's tax lien. Not exactly as advertised, employment taxes, but for failure to file information returns, IRC 6721. Makes the "clerical error" defense a little more credible. I'll wait for more but in the meantime this needed to be said.

The tax was assessed (and the first bill went out) 01-07-08 and IRS' ACS finally filed the notice of lien 2-5-09, giving the campaign time to close up without regard to the debt.

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Can you withhold welfare payments? CA is doing it. Has to, Arnie says. Sure, some people get hurt but taxpayers are already getting hurt.

Ask yourself, why can't governments stop giving away money? Just... stop.

Arizona just passed a drastically scaled-back budget after all but one of the Dems walked out. State agency spending would be cut by 6.4%. They would swoon at 25%. Doesn't matter much since the Dem governor will veto. Somewhere the concept of "the will of the people" is dying an agonizing death.

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The Supremes just delayed the sale of Chrysler assets to Fiat. They want to see whether creditors' rights have been violated, as asserted by some Indiana pension funds who stand to lose everything if the sale goes through. They say, understandably, that they are being disadvantaged as the government ignores creditors' priorities in its haste to sell Chrysler and give the money to the UAW and other favored non-priority creditors. Makes sense to me. Everyone is supposed to play by the same rules. This will be interesting.

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New Jersey has collected $64.4 mil to date through their income tax amnesty. Not yet the $200 mil they promised but they shouldn't have predicted the results in the first place.

As much as I hate tax amnesties -- they generally lead to expectations of further amnesties, thus becoming deterrents to tax compliance; see multiple tax amnesties and the 1986 immigration reform act for examples -- NJ has been modestly successful. It's hard to quantify the amount they might lose in foregone future compliance so there is no ready measure of success v. cost but at least they did something

Don't believe the part about deterring future compliance? Mass. has had three tax amnesties since 2002. Do you think Mass. taxpayers think there might be another? Of course they do, so why pay now?

France, seldom an illustration of sound fiscal policy, is adamantly refusing an amnesty for the massive amount of repatriated money coming back as the result of the recent crackdown in bank secrecy and tax havens (see . Why shouldn't they? France is in its own revenue crisis caused in part by these very same tax cheats. This is NOT a no harm, no foul offense.

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A democratic government is the only one in which those who vote for a tax can escape the obligation to pay it. -- Alexis de Toqueville

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