A new study from the Tax Policy Center discovered that more taxpayers will be subject to the alternative minimum tax in the coming years — 6.1 million by 2023 — but man, things could've been really interesting/irritating. Without the fiscal cliff deal, 22.6 million taxpayers would've gotten to know Form 6251 in 2013, growing to 56.3 million by 2023. An H&R Block franchisee can dream, I guess. [TPC via The Hill]
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It’s Being Suggested That Higher Taxes on Alcohol Will Reduce Crime
It’s ironic that I read this this blog post today (rather than on Friday) since A) approximately a third of the country is in a some stage of a hangover B) I’m listening to “Rehab” by Amy Winehouse as I write this and C) there was a murder at a fraternity in Youngstown, Ohio over the weekend (I realize it’s a stretch to assume that anyone would have been drinking at a frat party) but this is pie-in-the-sky postulating that just begs to be mocked.
Janet Novack’s post at Forbes discusses a recent article written by two professors who are crime fighters in the economic persuasion:
Would raising the tax on beer reduce the number of young folks who get caught up in crime and the high budget and social costs of locking up so many people?
In a provocative article, The Economist’s Guide To Crime Busting, in the new issue of The Wilson Quarterly, Duke University’s Philip J. Cook and the University of Chicago’s Jens Ludwig suggest that it would. (The article is here, but isn’t free.) The profs argue that crime policy (from an economist’s point of view) should focus “both on making criminal opportunities less tempting and the law-abiding life more rewarding” and offer three strategies which they say have been shown to do just that: raising the mandatory age through which kids must attend school; creating business improvement districts with private security guards (a tactic Los Angeles has used with great success); and yes, raising taxes on alcohol.
Our favorite passage being the “making criminal opportunities less tempting and the law-abiding life more rewarding” because this what someone walking into the liquor store is thinking, “Jeepers, the cost of binge drinking on the weekend has gone up significantly and no longer fits my monthly budget. I guess I’ll stay sober and won’t break the law today.”
It continues:
The average state excise tax on beer, they note, is now only about 10 cents per 12 ounce bottle. Raising it to 55 cents they write, would persuade some teenagers “not to pick up that second six-pack on Thursday night” and would produce such extra benefits such as “fewer auto accidents and more money for state treasuries.” Data from Cook’s 2007 book, Paying The Tab, suggests a 55 cent per bottle levy would reduce beer consumption perhaps 10% and crime maybe 6%, they note.
Never mind how the neo-con scamps over at American for Tax Reform would react; this assumes that the demand for alcohol is elastic. You could easily argue that most people with the necessary means will pick their potent potable of choice regardless of price and even if they did decided to tighten the booze budget, they’d just go for a cheaper alternative, they wouldn’t actually buy or drink less.
I’m no economist but this kind of reasoning simply defies logic. People will drink regardless of the cost and they will continue to act like idiots and commit crimes when doing so. If you want to discuss that from a tax/fiscal policy standpoint raising taxes on booze (or taxing other sins) is a good idea then a discussion can be had. But let’s not get all crazy and start claiming that our country will become a bunch of law-abiding teetotalers the second a sixer of suds goes up $6.
Super Bowl Question:Would Higher Beer Tax Reduce Crime? [Forbes]
“Even liars and hucksters have First Amendment rights”
A horrible fate must await an attorney when a judge has these things to say about him:
“Just because other accountants and professionals were doing something wrong does not excuse Defendant’s misconduct.”
“Defendant’s reasoning is so specious that he should have known it was wrong.”
“Defendant has been quite adept at hiding his involvement in these activities in an effort to develop what he believes is plausible deniability. Ultimately, his denials are implausible.”
“As stated earlier, the Court believes that promotion of tax schemes and structures is now Defendant’s modus operandi. These were not isolated occurrences, and the nature of his preferred method of business indicates it will continue to ng business.”
“Defendant describes himself as a “rainmaker,” and the Court finds that practically everything he has done in that capacity has been improper. The Court has no reason to believe he would not concoct and promote some other scheme of doubtful validity.”
So this led to…maybe a referral to the local attorney disciplinary board? A broad and sweeping injunction against doing further tax work?
Well, a Kansas City judge barred defendant A. Blair Stover from promoting three “schemes” he no longer promotes anyway. The judge also required him to run any other tax planning ideas by the IRS before marketing them. No disbarment. No banishment. Just “sin no more.”
Why the seeming leniency?
An injunction prohibiting Defendant from providing tax advice raises serious First Amendment concerns. The Government has a strong and valid interest in preventing fraud, and the First Amendment does not protect fraudulent statements. However, the Government has no interest in preventing true statements, and even liars and hucksters have First Amendment rights. Conceivably, Defendant could provide lawful and accurate tax advice, and the Court is unwilling (and probably unable) to prevent him from doing so.
I like the First Amendment. Without it I might have been moved to an oubliette underneath IRS Headquarters long ago. Yet the first in line in the bill of rights hasn’t stopped other judges from shutting down tax scheme promoters. For example, a federal judge enjoined tax protest guru Bill Benson from:
promoting, organizing, or selling (or helping others to promote, organize, or sell) any other tax shelter, plan, or arrangement that incites or assists others to attempt to violate the internal revenue laws or unlawfully evade the assessment or collection of their federal tax liabilities or unlawfully claim improper tax refunds.
Benson appealed on First Amendment grounds. The Seventh Circuit turned him down:
Benson purported to be selling a way to avoid tax liability; what he was actually selling was a way to increase tax and criminal liability for failing to pay taxes. That is false advertising, which may be banned consistent with the First Amendment.
Some years back a Des Moines gentleman vigorously promoted Employee Stock Ownership Plans as a tax cure-all, which had a number of unfortunate consequences. The Eighth Circuit didn’t let the First Amendment get in the way from permanently enjoining him and his CPA practice “…from acting as a service provider to any ERISA plan.”
Perhaps there’s something in ERISA that overrides the First Amendment the same way “ERISA preemption” keeps states from regulating many features of pension plans. Maybe the Eighth Circuit was wrong. But if the Kansas City judge’s opinion gets it right, you can get away with a lot in tax practice before you are drummed out altogether.
Did Anthony Weiner Pump Up His Itemized Deductions?
The Post reports that Anthony Weiner’s “2010 tax return shows he took $40,521 in unspecified itemized deductions on an income of $156,117.”
It quotes “Manhattan CPA” Jonathan Medows as saying “It’s definitely a very large deduction,” and “[they] appeared to include more than the standard writeoffs for state and local taxes and Weiner’s mortgage.” If you were to guess to where the “unspecified itemized deductions” of $40k were located, they are probably included on line 28 of Schedule A for “Other Miscellaneous Deductions.” Of course what exactly the deductions are, is a mystery. But if you’ve got some ideas, we’d love to hear them. [NYP]