Supreme Court Expands Congressional Tax Power

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Tax relief for people who buy certain things? — sure (like real property).  A tax imposed on people who buy certain items? — sure (like cigarettes).  But a tax imposed on people who do not buying something?  That’s definitely new!  Apparently penalizing citizens for not purchasing health insurance now passes constitutional muster as a “tax,” or so says the Supreme Court.

Roberts recast the [health care] mandate as a tax, a rationale that was not in the law or the government’s case. He rewrote the administration’s position, baptized it, and then blessed it. Roberts’ defenders argue that he did so to avoid a constitutional crisis, but he may have created another by judicially re-legislating policy, a policy paid for and enforced by what could be essentially the largest tax increase in American history.

~William J. Bennett, CNN Contributor

 I guess it’s true what they say about the government’s taxing power.  It’s sort of a “catch-all” for federal programs that seem unconstitutional in all other respects.

Bullet Point Friday

I definitely don’t want to be responsible for pulling anyone away from their taxes this weekend with a riveting and lengthy blog post.  So this one will be short and non-riveting.  The long-winded tax attorney is just gonna use bullet points today:

  • Obama released his 2011 tax return.  He paid $162,074 on income of $789,674 (20.5 percent rate).  When Romney was asked to disclose his return too, he responded by saying he’s filing for an extension.  See full story here.
  • If you’re interested in free Tax Day noshing at Panda Express, Chevy’s, P.F. Chang’s, etc., you may benefit from a perusal of this story.
  • The Giants shut out the Pirates 5-0 today in their first home game of the season.  Matt Cain threw a one-hit complete game.
  • Axl Rose declined Rock and Roll Hall of Fame induction like a little baby.  Part of his letter reads like his lawyer wrote it for him:
I strongly request that I not be inducted in absentia and please know that no one is authorized nor may anyone be permitted to accept any induction for me or speak on my behalf. Neither former members, label representatives nor the Rock And Roll Hall Of Fame should imply whether directly, indirectly or by omission that I am included in any purported induction of “Guns N’ Roses.”

IRS Enforcement of ObamaCare

As you may know, the IRS is supposed to be the agency to oversee enforcement of the new health care law, in the event that it does not get thrown out.  Perhaps the reasoning there was, they’ve been so good at denying tax relief over the years, they’re now ready for more responsibilities.

But the IRS really doesn’t want this additional duty.  They would have to hire 4,000 new employees, and they would have to train them (along with their current personnel) to do something they have never done before.  Furthermore, the IRS definitely doesn’t want to have to deal with all the thorny privacy issues that would crop up.

Apparently the IRS is moving forward with the hiring spree without waiting to see if ObamaCare makes it or not.  As some point out, it’s not only about ObamaCare; they are needed to enforce the current tax laws and collect taxes regardless of what happens.

See the recent Fox News debate.  Steve Forbes expresses probably some of the most bold opinions in this short debate.  He thinks that the numbers used to convince Congress to pour more money into the IRS have been spun — the idea that through IRS enforcement efforts, the government collects $4 in revenue for every $1 spent to collect is bogus.

Forbes and others agree that our focus should be on simplifying the tax code, not spending more on enforcement.

Obama Staffers are Human: They Owe $834k in Back Taxes

The IRS released data showing the tax debt statistics of federal employees, and it has created just a little buzz. I realize that most of the stories circulating around the web these past few days carry the more impressive headline of “3.4 billion owed,” but that includes ALL federal employees, even retirees. There are a lot of federal employees around the nation. I think it is more impressive to focus on those closer to the president.

36 of the approximate 1,800 Obama staffers owe a combined $834,000, which equates to roughly 2% of all executive office employees. Of course this wouldn’t be nearly as big a deal if President Obama had not been focusing so much on tax equality and the need to fix the tax code so that everybody is required to pay their fair share. Many news sources are seeing this as an opportunity to find flaws with Obama and his administration.

However, for me, more than anything, this story is a reminder of how pervasive tax problems are in this country. Literally anyone can find themselves in a situation where they cannot afford to pay what they owe when they owe it. It is not uncommon for ordinary folks to incur a little tax debt at some point in their lives, and factors like race, gender, economic status, and education do not accurately predict who will owe. If an employee of the US Senate can owe back taxes (and according to the report, 217 of them do), then you could owe too.

Obama’s Deficit Reduction Plan

How does President Obama propose to reduce the deficit by just over $2 trillion in 10 years?  In a nutshell:

Tax the Rich

  • repeal of the Bush-era tax rates for couples making more than $250,000
  • place limits on deductions for wealthy filers
  • end certain corporate loopholes and subsidies for oil and gas companies
  • combined $1.5 trillion in new taxes

Cuts to Benefit Programs

  • $248 billion cut from Medicare
  • $72 billion cut from Medicaid & other health programs
  • $430 billion in savings from lower interest payment on the national debt
  • $1 trillion in savings from drawing down military forces from Iraq and Afghanistan

See details here.