Tax Update Blog: QUOTATIONS Archives
The mediocre and the inadequately illuminated
October 07, 2008
Instapundit says:
Yes, the political class isn't attracting the best talent in the nation. It's not even attracting the second-best.
Former Ways and Means Chairman Bill Thomas put it this way back in 2006 ($link):
"Don't think in this business that you're dealing with the best and the brightest," he said. "You're dealing with the available and the willing. One of the basic criteria is usually warm and vertical. That's optional in some instances."
A compelling argument for not giving them more to do.
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Good Morning!
October 07, 2008
Tyler Cowen yesterday:
How to tell if things are going very badlyIf the Fed ends up guaranteeing commercial paper and/or interbank loans. Too many people are listening to Polonius.
Wall Street Journal today:
Fed to Purchase Commercial Paper In New Facility Backed by Treasury
If you can't find me, I may be under my desk with my teddy bear.
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INSIGHTS ON TAX CRIMINAL PROSECUTIONS
July 15, 2008
Tax Analysts has a fascinating interview up ($link) with Paula Junghans, a criminal tax litigator and former acting assistant attorney general in the Justice Department Tax Division. A few of her insights:
You can read some of the old shelter cases that look a lot like the current shelter cases where no one even got assessed a penalty, and now suddenly we're talking about people going to jail for a long, long time....
Tax enforcement was moribund until 2002, as a result of the 1998 [Internal Revenue Service Restructuring and Reform] Act. It has picked up in the last five years.
...
The trick for prosecutors is to go after the right people for the right crimes and seek the right level of punishment. And I'm not convinced in any white-collar cases that these 15-, 20-, or 25-year sentences make sense at all. The public has a very short memory and will forget five years from now that anyone is still rotting in prison. And in my experience, white-collar defendants get it real fast.
You need a Tax Notes subscription to read the whole thing. Why don't you have one yet?
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THEY ARE UNCLEAR ON THE CONCEPT IN IOWA, TOO
May 06, 2008
So House Republicans in Washington are preparing to propose a $10,000 tax credit for first-time homebuyers -- outbidding the Democrats' $5,000 - $7,500 subsidy plan. The funny part? They call this plan "market based." From the Tax Policy Blog:
According to a press release from Rep. Lee Terry (R-Nebraska) (emphasis added):This Republican proposal offers a market-based plan with a tax credit and other reforms that will stimulate the housing market[....]So the idea is to use government tax policy to give subsidies to one group of people, paid for by extracting taxes from others, with the goal of distorting the decisions that would otherwise be made by individuals. That's the opposite of "market-based."
Republicans in the Iowa Legislature have the same blind spot. They think a subsidy provided through tax credits is somehow not a subsidy -- even though taking less tax from your friends or giving cash grants to your friends is the same thing. That's why there has been so little opposition to the dozens of special favor credits in Iowa, in exchange for high tax rates for those of us without lobbyists. Sure, the other party supports the credits (mostly) too, but they actually believe in big government, so they have an excuse.
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CONGRESSIONAL CLARITY
May 02, 2008
This post at the Tax Policy blog is worth repeating, so I will:
Here's is the logic of our elected representatives in Congress when it comes to taxing profits:Oil companies are benefiting from the higher price of an asset (oil), some of which is driven by speculation. So the proper policy prescription is to impose a special windfall profits tax on them during that boom period.
Home builders benefited from the high price of an asset (housing), some of which was driven by speculation. So the proper policy prescription is to allow them to reduce their tax bills they paid during that boom period via a special loss carryback provision.
Can you tell it's an election year?
Not every congressional district has an oil company, but they almost all have homebuilders.
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POOR ISN'T ALWAYS SIMPLE
March 31, 2008
Some states determine compensation based on the value of an estate. To me, these things have little relation. The lives of the poor can be very complicated; the lives of the rich may not be.
Iowa is one of those states.
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NOW HE TELLS US
March 25, 2008
Former Treasury official Michael Doran in Tax Notes ($link) on the execrable Sec. 409A deferred compensation rules:
In fairness to the regulators who wrote the section 409A regulations, the statute itself is fundamentally unsound. I had all too close a look at the legislative problems when I was part of the Treasury Department team that provided technical advice to the congressional staffers who drafted section 409A. Although staffers added the worst feature -- the 20 percent penalty tax on "bad" deferred compensation -- after I left government, the wheels came off early in the process. Without question, I share responsibility for the poor legislative product.
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PARTNERSHIP TAX IS HARD
March 21, 2008
Villanova tax law professor James Maule:
Partnership taxation probably is the epitome of what's wrong with the tax system. It is almost a farcical exaggeration. Yet it is very real, and very challenging to tax practitioners. It could be simplified, but attempts to do so would bring howls of objection from those who find in its complexities little folds and wrinkles in which they can hide yet another scheme to circumvent the general purpose of subchapter K. Simplification attempts would also be opposed by those who have advantages under the current system that they would lose if the partnership provisions were simplified.
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YOU DON'T SAY
February 18, 2008
Quote of the day from David Vaudt, Iowa's state auditor:
"To spend at such a torrid pace, we must increase taxes and fees at a torrid pace. That, in turn, could adversely impact economic growth in our state."
Don't look for tax cuts in Iowa soon.
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TRUER WORDS WERE NEVER SPOKEN BY AN ECONOMIC DEVELOPMENT OFFICIAL
January 09, 2008
I don't think he really meant this, but he's absolutely right:
"You can't underestimate the excitement and the impact that comes from making a movie in Iowa," said Mike Tramontina, director of the Iowa Department of Economic Development.
No, really, you can't possibly. No matter how low you go. And no matter how much taxpayer cash you give away to the filmmakers.
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QUOTE OF THE DAY
November 06, 2007
"Unfortunately, this sort of erratic, spasmodic overreaction to employee benefits abuses has now risen to the level of a pattern."
-Attorney and University of Michigan Law School instructor Andrew W. Stumpff on the awful Section 409A deferred compensation rules.
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AND THAT WOULD BE DIFFERENT...HOW?
October 25, 2007
"We are looking at a filing fiasco come April 15th," said Charles E. Grassley (Iowa), the ranking Republican on the Senate Finance Committee. "That is unacceptable."
-Senator Charles Grassley, speaking of the need for Congress to act on an "AMT Patch" to kick the massive expansion of the alternative minimum tax back one more year, as quoted by the Washington Post.
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QUOTE OF THE DAY
June 12, 2007
Economist Martin Sullivan in today's Tax Analysts online ($link)
Like most tax expenditures, the research credit injects many complexities and inefficiencies into tax administration. It provides uncertain benefits, while its negative impact on federal finance is not in doubt. We must ask ourselves whether competitiveness would be better served by a simple tax system with low tax rates that keep government out of the marketplace -- in the 1990s we called that "tax reform" -- or by the current ragtag collection of temporary subsidies superimposed on the world's second-highest rate of corporate tax.
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YES TO BALONEY!
March 13, 2007
P.J. O'Rourke has never been to central Iowa, as far as I know, but he seems to have an intuitive understanding of the proposal to increase our sales tax to 7%. Today's "quote of the day" is from his book "On the Wealth of Nations" (emphasis mine):
And Maryland Congressman Benjamin L. Cardin said (using the synonym for "future" that sets of the baloney alert), "The deficit raises serious questions about our ability to control our destiny."
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EITHER HE DIDN'T REALLY MEAN THIS, OR THE BUDGET PROBLEM IS SOLVED
March 06, 2007
Ways and Means Chairman Rangel said Sunday ($link)
"You know, we have 23 million people in this country that have alternative minimum tax burdens close to a trillion dollars over the next 10 years. And that's not even on the president's radar screen."
That many people owe a TRILLION dollars? I had no idea that many people made anywhere near that much.
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WHITHER TAX POLICY?
January 09, 2007
Tax Analysts today publishes a diverse collection of commentary on the tax policies of the upcoming Congress. It's good stuff, but unfortunately for most readers, its available only to subscribers.
Diverse? There's this from left-side economist Martin Sullivan ($link):
In the likely event that gridlock returns, we may be in for a repeat of 1992. Back then a Democrat-controlled Congress spent months on a tax bill President George H.W. Bush promised to veto. There was no pretense of enacting real law.
And this from right-leaning Tax Foundation's Scott Hodge ($link):
Twenty years ago, it took Democratic Sen. Bill Bradley reaching out to Republican President Reagan to bring about the Tax Reform Act of 1986. The tax code has deteriorated badly since then. But with the right spirit of cooperation, perhaps the conditions are right for a Democratic Congress and a Republican president to put aside their differences and give our 21st-century economy a 21st- century tax code.
And the amazing thing: they're both right! The stars are right for either gridlock or major reform.
One person who is right for sure is former Assistant Treasury Secretary for Tax Policy Mark Weinberger when he says ($link):
The Trees Are Taking Over the Forest
Well, yes, that's why they're called "forests," instead of, say, "prairies," "deserts," or "parking lots."
Finally, we pass on the sage advice to Congress from the Tax Analysts president himself, Chris Bergin ($link):
If you and the president manage to do nothing for the next two years when it comes to the tax laws, the country should be grateful -- and whether or not most of us are grateful, we'll all be better off.
Amen to that.
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BILL BRADLEY DON'T GET AROUND MUCH ANYMORE
December 01, 2006
Not if he really believes this:
"There's nothing that people care more about than the tax code."
Of all people, former Senator Bradley should know better. Among many other things, basketball is a higher concern at the moment for more people than the tax code about now. Even Iowa basketball, even this year.
Via Dr. Maule.
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BUILDING A BETTER TAX BOMB
November 21, 2006
Darryl Jones, a visiting professor at Stetson University College of Law, has the quote of the day:
Antiabuse provisions published by the IRS are the legal drafting equivalent of a U.N. watchdog issuing a written prohibition against the development of nuclear arms with detailed instructions on how to build that which is prohibited.
From "Black-Letter Subchapter K," in today's Tax Analysts online ($link)
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QUOTE OF THE DAY
August 22, 2006
"When you're headed for a cliff . . . slowing the speed of the car from 60 to 30 when you're approaching the cliff is not adequate to get the job done."
-U.S. Comptroller General David Walker on Administration plans to cut the budget deficit in half by 2009, as quoted by Tax Analysts ($link)
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EXACTLY SO
June 23, 2006
From the Tax Policy Blog:
If a country desires a corporate income tax, it should have as broad a base and as low a rate as possible to ensure economic neutrality between industries. Unfortunately, the United States’ corporate income tax has neither.
The U.S. statutory corporate income tax rate is as high as 35 percent. At the same time, the corporate tax code is riddled with exemptions, credits, deductions, and other special provisions—many of which have no economic rationale except to appease special interests and rent-seeking industries.
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TAX POLICY QUOTE OF THE DAY
June 16, 2006
From a post at the Tax Policy Blog on a proposed presidential line-item veto on tax bills:
What is the difference between a direct subsidy on the spending side to a company that is poor spending policy and an equal tax deduction that is poor tax policy? Nothing, except that going through the tax code is often less transparent, and therefore easier for tax lobbyists to get inserted into law.
Indeed.
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QUOTE OF THE DAY
June 02, 2006
From today's Tax Notes ($link):
"We're in the neighborhood of the right answer, even if we're not exactly at the house with the right answer."-Heather Maloy, IRS associate chief counsel, discussing proposed regulations on partnership compensatory options.
I'll have to try that line with a client sometime.
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QUOTE OF THE DAY
April 04, 2006
Martin A. Sullivan on tax incentives in Today's Tax Analysts online:
Tax incentives sap the strength from the tax system. By draining resources from administration, by creating complexity, by affording new opportunities for tax planning, and by raising perceptions of unfairness, they draw it away from its core purpose: raising revenue efficiently and fairly.
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WORDS OF ADVICE FOR ASPIRING ATTORNEYS
February 23, 2006
From law blogger Shaun Martin (via the TaxProf):
Don't be a sleazeball. Don't be a lawyer and be found guilty of conspiring to defraud the United States as well as multiple other federal felonys. Don't resign the State Bar of California with disciplinary charges pending against you and thereafter attempt to ply your legal trade by acting as a "lay advocate" providing legal advice to prisoners and people before administrative tribunals.
Got that? I think the first sentence about covers it, the rest is details.
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ON THE UNWISDOM OF TAX BREAKS FOR GOOD DEEDS
February 14, 2006
The Tax Policy Blog succinctly states why state tax benefits for "good causes," from E-85 to historical rehab, are bad policy:
Filled with deductions and various specific incentives for certain companies and industries that are not provided to other companies or industries, these specific “breaks” are merely the government controlling the allocation of resources through the tax code. Many on both sides of the aisle often call any deduction good policy because it is cutting taxes for someone. However, with the government initially taxing everyone at a high rate, then deciding arbitrarily who gets something back, this is essentially central economic planning by lawmakers -- something few policymakers would be willing to explictly endorse if not disguised in the tax code.
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QUOTES OF THE DAY
January 31, 2006
Much wisdom here:
"If we don't change Social Security, Medicare, or Medicaid, we're gonna raise taxes," he said. "It doesn't matter if you're a Republican, Democrat, or Martian. They're going up. You just can't avoid it."
and
"I think the problem is spending, so let's start with the spending side." (
Douglas Holt-Eakin, former Congressional Budget Office Director, in an interview with Tax Analysts. The second quote was in the context of the future of Social Security, Medicare and Medicaid. ($).
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OH, SO CONTRACTS SIGNED BY YOUR ATTORNEY DON'T COUNT, EH?
December 22, 2005
Quote of the day number 1:
"The state is bound, like any other party is bound, to the contracts to which it freely and knowingly enters, and from which it benefits. Here the state seeks to abrogate that which it has promised but offers neither to forgo future payments or to refund past payments."
- Minnesota District Court Judge Michael Fetsch, in striking down a 75-cent per pack "tobacco health impact fee" enacted in violation of the tobacco settlement.
Quote of the day number 2:
"The judge made a significant error by ignoring the principal of separation of power which is the Legislature's authority to independently make decisions without being bound by prior agreements reached by the attorney general."
- Minnesota Governor Tom Pawlenty, who is still quite willing to cash the checks from the tobacco settlement negotiated by the attorney general.
More here.
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QUOTE OF THE DAY
September 06, 2005
Senator Grassley on panic legislation as a result of high gas prices:
You don’t change the law just for one week.
If only they would change "week" to "month," we'd be getting somewhere.
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QUOTE OF THE DAY
August 25, 2005
In discussing whether a lawyer includes payments in income when he prepares wills for members of his church, who donate cash to the church in return, Professor Maule observes:
Several participants pointed out that "it does not make sense" to treat the donations as the lawyer's gross income. There's something to be said for this position. Yet, it is not unusual for the tax law to require an outcome that does not make sense.
Truer words were never spoken.
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QUOTE OF THE DAY
July 01, 2005
"As insurance brokers it's our job to unreasonably fear change."
-Chad from Tusk and Talon commenting over at Insureblog about tax breaks for health insurance.
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WHISTLE A FARRAGO
February 09, 2005
Quote of the day:
Petitioner filed a timely petition in which he sets out a farrago of nonsense as to why the notice of deficiency is invalid and he does not owe the tax determined.
-Tax Court Special Trial Powell, foreshadowing a defeat for petitioner today in Whistle B. Currier v. Commissioner, T.C. Memo 2005-21.
The case is the usual tax protestor nonsense, notable only for a $2,000 penalty for frivolous arguments, and for using "farrago":
farrago/fraago/
• noun (pl. farragos or US farragoes) a confused mixture.
— ORIGIN Latin, ‘mixed fodder’, from far ‘corn’.
(Oxford Compact English Dictionary)
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