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FairTax eliminates need for IRS - Gilmer Mirror

Google IRS Federal Income Tax - Sun, 2014-07-06 05:05

FairTax eliminates need for IRS
Gilmer Mirror
President John F. Kennedy said, “The largest single barrier to full employment of our manpower ... and a higher rate of economic growth is ... federal income taxes.” If you are a person who prefers solutions to merely complaining, start asking around ...

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IRS seeks unpaid federal taxes from Itta Bena - SunHerald.com

Google IRS Federal Income Tax - Sun, 2014-07-06 04:52

IRS seeks unpaid federal taxes from Itta Bena
SunHerald.com
The Internal Revenue Service took the action Tuesday, reports the Greenwood Commonwealth (http://bit.ly/1vLbogg), giving the federal government the power to seize city property if taxes remains unpaid. Between January 2012 and March 2013, the city ...

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Marijuana is illegal under federal law, so should the IRS be able to collect ... - fox6now.com

Google IRS Federal Income Tax - Sat, 2014-07-05 16:44

Marijuana is illegal under federal law, so should the IRS be able to collect ...
fox6now.com
Tom Gorman, who heads the Federal Drug Task Force said. Attorney Amanda Cruser, who once worked in the Justice Department's Tax Division says the IRS just wants its money. “They can collect taxes on gross income from whatever source derived.

Categories: Tax news

FairTax eliminates need for IRS - Gilmer Mirror

Google IRS Federal Income Tax - Sat, 2014-07-05 07:36

FairTax eliminates need for IRS
Gilmer Mirror
The tax would be collected by the states, with no concern for income. President John F. Kennedy said, “The largest single barrier to full employment of our manpower ... and a higher rate of economic growth is ... federal income taxes.” If you are a ...

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Categories: Tax news

Hate Taxes? Move To Tax-Free Puerto Rico, Stay American, Avoid IRS - Forbes

Google IRS Federal Income Tax - Sat, 2014-07-05 03:00

Hate Taxes? Move To Tax-Free Puerto Rico, Stay American, Avoid IRS
Forbes
The incentives include an income tax in Puerto Rico of only 4%. Compare that to your combined federal and state income tax burden you may pay now! Legally avoid the 39.6% federal rate and the 13.3% California (or other state) rate? That sounds pretty ...

Categories: Tax news

Estimating Taxes Within the IRS' Good Graces - Fox Business

Google IRS Federal Income Tax - Sat, 2014-07-05 02:56

Estimating Taxes Within the IRS' Good Graces
Fox Business
You can avoid the "penalty for underpayment of estimated tax" for 2014 if you pay 100% of your 2013 tax if your adjusted gross income, or AGI, was $150,000 or less. ... To ensure compliance with requirements imposed by the IRS, we inform you that any U ...

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Edgewater Man Sentenced to 42 Months in Prison for $7M Fraud - Patch.com

Google IRS Federal Income Tax - Fri, 2014-07-04 16:23

Edgewater Man Sentenced to 42 Months in Prison for $7M Fraud
Patch.com
Federal prosecutors say Vernon J. Smith III fraudulently obtained more than $52 million in government contracts, then hid income spent at casinos and on luxury vacations. Posted by Deb Belt ... Not only did Smith decide not to pay his fair share of ...

Categories: Tax news

Mansfield same-sex couple seeking retroactive tax recognition from IRS - Attleboro Sun Chronicle

Google IRS Federal Income Tax - Thu, 2014-07-03 21:55

Mansfield same-sex couple seeking retroactive tax recognition from IRS
Attleboro Sun Chronicle
A Mansfield couple is suing the Internal Revenue Service to gain compensation for taxes they paid before the federal Defense of Marriage Act, or DOMA, was ruled unconstitutional. Daniel Austin Horowitz, 35, and Mark Vigorito, 36, of North Main Street ...

Categories: Tax news

Edgewater Man Sentenced to 42 Months in Prison for $7M Fraud - Patch.com

Google IRS Federal Income Tax - Thu, 2014-07-03 21:50

Edgewater Man Sentenced to 42 Months in Prison for $7M Fraud
Patch.com
Federal prosecutors say Vernon J. Smith III fraudulently obtained more than $52 million in government contracts, then hid income spent at casinos and on luxury vacations. Posted by Deb Belt ... Not only did Smith decide not to pay his fair share of ...

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IRS Announces ITIN Expiry Period - Financialbuzz.com

Google IRS Federal Income Tax - Thu, 2014-07-03 21:07

Financialbuzz.com

IRS Announces ITIN Expiry Period
Financialbuzz.com
IRS, ITIN, Taxes, Returns The Internal Revenue Service (IRS) has announced that Individual Taxpayer Identification Numbers (ITINs) will be discontinued if they are not utilized on returns for federal income tax for five successive years. However, the ...
Five Things Canadians Need To Know Before Selling US Real EstateMondaq News Alerts (registration)

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Categories: Tax news

Found Money is Awesome….But You Must Pay Uncle Sam - Fox Business

Google IRS Federal Income Tax - Thu, 2014-07-03 12:29

Found Money is Awesome….But You Must Pay Uncle Sam
Fox Business
What if you found a treasure trove of cash buried in your basement? Is that taxable income? Federal tax law, specifically IRS code section 61, states, “Gross income means all income from whatever source derived.” That's a pretty broad umbrella. This ...

Categories: Tax news

The IRS Needs Tax Reform Not a Bigger Budget

Tax Foundation - Thu, 2014-07-03 10:30

Washington Post columnist Catherine Rampell says “right now, the IRS desperately needs a champion.” Further, she says, “Our country’s fiscal future — not to mention taxpayers’ collective mental health — depends on it.”

Rampell is among a growing number of pundits and think tank types who say Congress should “stop starving the beast of the IRS.”

Her reasoning is that the IRS is being asked to do more with less.

“Since 2010, when Congress first began hacking away at discretionary spending, the bureau’s funding has fallen 14 percent, in inflation-adjusted terms, according to the Center on Budget and Policy Priorities. Its staff has also shrunk by about 10,400 employees, or 11 percent, over the same period. These cuts have come even though the agency’s responsibilities and workload have increased, thanks to new laws such as the Affordable Care Act and the Foreign Account Tax Compliance Act, as well as the growing problems of identity theft and tax refund fraud.”

Let’s separate the issues here. First, the IRS needs fewer employees because we taxpayers (and technology) are doing their work for them. Of the 145 million individual tax returns filed in 2013, some 121 million, or 83%, were filed electronically. When you add in all the other returns filed electronically by business, estates, and non-profits, a total of 151 million returns were filed in this manner in 2013.

Back in the days when we all filed paper returns, the IRS had armies of people to enter our information into their system by hand. Technology and software such as TurboTax have made those people obsolete. To complain about this is like fretting about the disappearance of operators at Ma Bell.

I agree with Rampell that the IRS has too many responsibilities, and have testified about this problem numerous times before the Finance Committee and Ways and Means. But as I said then the solution is not more funding, but fundamental tax reform.

I’ll repeat here what I told those committees.

Over the past two decades, lawmakers have increasingly asking the tax code to direct all manner of social and economic objectives, such as encouraging people to: buy hybrid vehicles, turn corn into gasoline, save more for retirement, purchase health insurance, buy a home, replace the windows in that home, adopt children, put them in daycare, take care of grandma, buy bonds, spend more on research, purchase school supplies, take out huge college loans, invest in historic buildings, and the list goes on.

In too many respects, the IRS has become an extension of, or substitute for, every other cabinet agency – from Energy and Education to HHS and HUD. But perhaps the most troubling development in recent years is that the efforts of lawmakers to use the tax code to help low and middle-income taxpayers has knocked millions of taxpayers off the tax rolls and turned the IRS into an extension of the welfare state.

The U.S. tax system is in desperate need of simplification and reform. The relentless growth of credits and deduction in the code over the past 20 years had made the IRS a super-agency, engaged in policies ranging from delivering welfare benefits to subsidizing the manufacture of energy efficient refrigerators.

I would argue that were we starting from scratch, these are not the functions we would want a tax collection agency to perform. Tax reform would return the IRS to its core function—simply collecting revenues to fund the basic operations of government.

 

Categories: Tax news

What Are Tax Expenditures?

Tax Foundation - Thu, 2014-07-03 09:15

Tax Foundation Economist Will McBride, PhD, and Fellow Michael Schuyler explain tax expenditures and the importance of saving and investment.

For more videos, click here, or follow us on YouTube.

Categories: Tax news

Complete or Incomplete Gifts? - WealthManagement.com

Google IRS Federal Income Tax - Thu, 2014-07-03 08:56

Complete or Incomplete Gifts?
WealthManagement.com
Rather, this determination was a question of fact, which the IRS deferred until the parties filed their federal income tax returns. Completed Gifts. The IRS next addressed two issues—whether the contribution of property by the settlor to the trust was ...

Categories: Tax news

What is Capital?

Tax Foundation - Thu, 2014-07-03 08:45

Capital is a term to describe the tools that people use to work. More capital is a good thing. Generally speaking, the more tools we have, the more productive we can become.

Think of a man who is hungry. He lives by a stream, which is home to plenty of fish. The man walk down to the stream, steps into the water and attempts to grab a fish with his bare hands. He won’t be very successful will he?

Now let’s give the man a fishing pole, line, and flies. His job suddenly becomes much easier, because he has capital. He catches a fish and satisfies his hunger.

If we were to add more capital, his job becomes even easier. If we give him a basket, he can catch multiple fish in one outing and store them in his basket. If we give him different types of flies and lures, he can change them until he finds one that looks attractive to the fish. If we give him a boat he can go out on to lakes and catch the large fish that swim in the deep.

The capital enables the man to catch many multiples of the amount of fish he could have caught without it. He has become exponentially more productive. This saves him time (he no longer has to stand in the river all day and try to catch fish) and indefinitely increases the amount of fish that he will have to eat.

The same is true in other situations and occupations. Think of a farmer. If he only had his hands to work with, it would take him forever to sow a field. Give him a shovel or a hoe, a mule and a plow, or, better yet, a farm combine, and his life becomes that much easier.

But capital doesn’t just benefit the farmer and the fisher; the productivity the capital enables has the opportunity to benefit those around the fisher and the farmer as well.

Maybe the fisherman catches enough fish that he’s able to trade some to the farmer in exchange for some corn, carrots, and beets. Both parties benefit from the other’s productivity.

It’s important that government tax policy not discourage the creation of capital. Unfortunately, it currently does through high taxes on businesses, poor cost recovery schedules, and the double taxation of capital that we see in the form of capital gains and dividend taxes.

The added expenses created by taxes make it more expensive for the fisher to buy a boat or the farmer to buy a tractor. When this happens, it limits our productivity and hampers the potential of an economy. After all, we’d all go hungry if we try to fish without a pole.

Categories: Tax news

New Study Shows Sound Tax Policy is Associated with Economic Growth

Tax Foundation - Thu, 2014-07-03 07:45

A new study from the National Bureau of Economic Research assesses several different state business climate indexes, investigating their relationship to economic growth and inequality. The authors look at 10 different business climate indexes spreading across a wide range of priorities from the Progressive Policy Institute’s State New Economy Index to the Fraser Institute’s Economic Freedom Index. Our State Business Tax Climate Index was also included. The study found that indexes that assess “productivity and quality of life” (often associated with higher government spending)  are poor predictors of economic growth, changes in inequality, and poverty rates, while indexes that assess taxes and other policy-created business costs predict faster growth, but also faster rising inequality.

However, while those were the study’s general findings, its specific findings with regards to our Index were more positive. The State Business Tax Climate Index has a strong association with greater economic prosperity, but is not associated with any worsening poverty or inequality. This paper provides conclusions consistent with the idea that good tax policy can support economic growth, and that tax policy is a poor tool for social aims like addressing income inequality.

Taxes and Inequality

The authors note that these results can be challenging to interpret. It is not the case that better scores on indexes that penalize government size and higher taxes (“tax-and-cost” indexes) create higher inequality as opposed to better scores on indexes measuring equity, quality of life, and human capital predict lower inequality. No index measured was able to identify policies or variables leading to lower inequality, because inequality rose almost everywhere, no matter what state policies were adopted. As the authors write, “"Touting a state’s high ranking on the productivity/quality-of-life indexes to argue that such a state might, for example, be spared from some of the rising inequality the United States has experienced is not warranted, but instead requires more explicit evidence on specific policies."

More notably for our State Business Tax Climate Index, not all tax-and-cost indexes are created equal. Tax-and-cost indexes generally did predict faster-rising inequality: but only if they included government spending variables. Our index, which includes only tax variables, and other indexes mostly composed of tax variables, did not have a significant association with inequality. The paper states clearly why some indexes better predict rising inequality than others: "Thus, our takeaway from this analysis is that less generous welfare is likely what is driving the relationship between a higher ranking on the EFI tax-and-cost index and faster growth of inequality, which seems a quite reasonable interpretation."

This study provides no significant evidence for the idea that more growth-friendly tax policies lead to faster rising inequality. Insofar as fiscal policy impacts inequality, it does so much more through the spending side of government than the taxing side.

Taxes, Growth, and Poverty

Consistent with the academic research on the topic, this study confirms the strong association between better tax policies and economic prosperity. Our Index was one of the strongest predictors of employment growth among the indexes studied. On the other hand, for some productivity/quality of life indexes, higher scores are actually associated with worse economic outcomes. This is consistent with our previous arguments, that good tax policy can play a vital role in supporting economic growth.

Meanwhile, no index meaningfully predicted poverty rates (though better Index scores did have a weak association with lower poverty rates). This is important because it reveals how states reduced the growth rate of inequality. States with better tax-and-cost index scores had faster rising inequality but no difference in poverty rates. So while more redistributive policies may reduce inequality, this study offers no evidence that they get people out of poverty.

In sum, this study shows that most policy-connected differences in inequality seem to be associated with differences in spending, not taxes. Even what inequality differences do exist seem to be driven more by the differences in middle- and high-earners than by different poverty rates. There is little evidence that broad tax bases and low tax rates make inequality worse, and none at all that they make poverty worse, while there is good evidence that such sound tax policies support economic growth. Various spending policies may impact inequality, and policymakers may think that is an important consideration. But even for those policymakers who are the most concerned about inequality, this study suggests that tax policy isn’t the best way to address those concerns.

Read more about our State Business Tax Climate Index.

Follow Lyman on Twitter.

 

 

 

Categories: Tax news

Tangible Personal Property Tax Reform on the Ballot in Michigan in August

Tax Foundation - Thu, 2014-07-03 07:00

Yesterday, the Mackinac Center for Public Policy released a great new policy brief outlining the effects of Proposal 1, a Michigan initiative that would significantly decrease personal property tax burdens. The proposal will be put to a vote on August 5th.

According to the report, personal property taxes currently raise nearly $1.3 billion in tax revenue for Michigan. As we’ve written previously, personal property taxes are damaging to economic growth and distort economic decisions. Thankfully, the trend in recent years has been to move away from using personal property taxes as a source of revenue, with per capita collections falling 20 percent over 2000-2009.

Proposal 1 would create three new exemptions for personal property:

Businesses with less than $80,000 in personal property would be exempt. Manufacturing equipment will see phased-in relief if it has been subject to personal property taxes for at least ten years. All new manufacturing equipment would be exempt from personal property tax.

These cuts mostly affect manufacturing firms, but in 2011, Michigan enacted corporate tax reform that mostly benefited non-manufacturing firms. A new, smaller tax on manufacturing personal property would be introduced—but on net, the tax cut is estimated to be about $500 million.

The state also has a plan to offset the decrease in local tax revenue without increasing tax burdens on individuals elsewhere: a portion of the statewide Use tax would go toward reimbursing local governments. The state also expects to see an increase in tax revenue due to the expiration of several tax credits.

Indiana was successful in achieving business personal property tax reform this legislative session, but settled on a first step that was not as substantial as what is being considered in Michigan. The hope is that more US manufacturing hub states will take cues from Michigan and Indiana this year, and limit these taxes on capital improvements.

Read the whole report here.

More on Michigan here.

Categories: Tax news

Get grip on too-big federal government: Letter - NJ.com

Google IRS Federal Income Tax - Wed, 2014-07-02 23:53

Get grip on too-big federal government: Letter
NJ.com
The Department of the Treasury has the Internal Revenue Service, with more than 90,000 employees — of which 1,100 who owe federal taxes received bonuses. Recent focus has been on emails in a congressional probe of the IRS, which the agency says ...

Categories: Tax news

IRS makes it easier to get tax-deductible donations. Maybe too EZ. - SFGate

Google IRS Federal Income Tax - Wed, 2014-07-02 23:50

SFGate

IRS makes it easier to get tax-deductible donations. Maybe too EZ.
SFGate
State charity regulators, most of whom are attorneys general, are supposed to make sure that donations are used as intended. State tax authorities also rely on the IRS. If it issues a determination letter that exempts a charity from federal taxes, the ...
Should Americans Continue Paying Taxes to the IRSCanada Free Press
GUEST EDITORIAL: Incompetence at the Internal Revenue ServiceNorthwest Georgia News
EDITORIAL: More lawlessness at the IRSWashington Times

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Categories: Tax news

Two Massachusetts men sue IRS over lack of retroactive same-sex marriage ... - Boston Business Journal

Google IRS Federal Income Tax - Wed, 2014-07-02 13:02

Two Massachusetts men sue IRS over lack of retroactive same-sex marriage ...
Boston Business Journal
The suit states that they "are being denied their correct spousal status by the Internal Revenue Service on the based of DOMA, and thus have been required to pay more in federal income taxes than other similarly situated opposite sex married persons.".

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