CNN, who sometimes puts out pure and utter crap, has issued a 50-state ranking of potential tax revenues that could be earned if marijuana was legalized and taxed.
The ranking is based on “state-by-state marijuana consumption, from Jeffrey Miron (Harvard University, Department of Economics), Budgetary Implications of Marijuana Prohibition,” according to Paul Caron at TaxProf Blog. The total tax revenue projected by the study is $778 million.
Shockingly, California would benefit the most (especially since they won’t get additional money from Ahnuld), earning an estimated $105 million. A couple of notable states in the top twenty include Colorado and Oregon who both jumped considerably on the list as compared to where they rank in population. In other words, ganja use per capita is higher there (yes, that’s an intentional pun).
What the study fails to incorporate is the increase in sales tax revenues that would result from the surge in junk food and movie ticket sales. Despite this omission, the study demonstrates that all states would earn money that they would otherwise gone to some weird dude that only has black lights in his apartment.
Since this partial solution makes entirely too much sense, we expect the majority of states to continue to cut education and public service jobs to meet their budget goals.
Projected Revenues From Marijuana Tax [TaxProf Blog]
Tag: Taxes
L.A. Times: ‘Think of it as a forced, interest-free loan’
Starting Sunday, [November 1,] cash-strapped California will dig deeper into the pocketbooks of wage earners — holding back 10% more than it already does in state income taxes just as the biggest shopping season of the year kicks into gear.
Technically, it’s not a tax increase, even though it may feel like one when your next paycheck arrives. As part of a bundle of budget patches adopted in the summer, the state is taking more money now in withholding, even though workers’ annual tax bills won’t change.
Think of it as a forced, interest-free loan: You’ll be repaid any extra withholding in April. Those who would receive a refund anyway will receive a larger one, and those who owe taxes will owe less.
Californians, take it from here.
California to withhold a bigger chunk of paychecks [LAT]
See also: California Borrows from Peter to Pay Peter Then Robs Paul at Gunpoint [JDA]
‘Sex Is Kind of Like Dancing, Right?’
ACORN, yes, Bill O’Reilly’s favorite non-profit, is giving tax advice. Apparently, prostitution qualifies as a performing art. Who are we to argue?
Yes, it’s almost ten minutes but it’s worth it.
Check out Part II over at TaxProf Blog.
Wanted: New Political Rhetoric to Pander to the Populist Masses
Wealthy taxpayers now have some legit data that allows them to give the finger to all the rabid populist outrage that’s been going around. According to the most recent data provided by the IRS, the top 1% of taxpayers pay more taxes than the bottom 95%. The wealthiest 1% picks up 40.4% of the tax bill while the bottom 95% gets 39.4%.
This amounts to pretty inconvenient data for lots of Democrats politicians who have been screaming for years that the wealthiest Americans need to pay more taxes.
Tax Burden of Top 1% Now Exceeds That of Bottom 95% [Tax Policy Blog via TaxProf Blog]
Going Concern is Not Immune to the Michael Jackson Circus
We’ve been able to avoid the whole Michael Jackson debacle up until now. We couldn’t, in good blogging conscience, avoid this particular story.
The estate of Michael Jackson is probably going to have to turn over at least $80 million to the IRS and they get to cut the line right to the front to collect.
“As in a bankruptcy case, Jackson’s creditors will jockey for first crack at his fortune. But the estate’s initial obligation will be to pay the late star’s taxes, said Beth Kaufman, a Washington-based attorney specializing in estate tax issues. ‘There is no question that the U.S. government has first priority,’ she said.
Oh, and the Service is not going to take the royalty rights to She Loves You or I am the Walrus either:
To settle his tax bill, the executors of his estate may have to sell or borrow against lucrative but hard-to-value assets or ask the IRS for a multi-year extension. That could allow the estate to pay the tab over time with earnings from Jackson’s share in rights to songs by the Beatles and his own music — prized properties whose value will likely make the estate’s tax bill only bigger. “The government is not going to take a Beatles record as payment. They want to be paid in cash,” said Roy Kozupsky, a veteran estate lawyer in New York who has worked on behalf of several wealthy clients.
Reportedly, Jackson still made $40 million a year from his ownership of the recordings. This will no doubt make the calculation of the tax bill more complicated and thus, we’ll continue to be saturated with all the excruciating details about this story that we just don’t want to hear.
Death and taxes: Big IRS bill looms for MJ estate [AP via TaxProf Blog]
WSJ: Entrepreneurs Win Tax Case Versus IRS
Get some coffee, we’re about to talk some tax law…
In a major win for small businesses, a U.S. Tax Court ruled in favor of farmers in Nebraska who claimed that losses from their LLC were not “passive” as the IRS has been arguing for years.
As a result of the ruling, losses from investments in LLP’s and LLC’s held by active participants will be allowed to offset said individual’s personal and investment income.
Prior to the ruling some losses were being carried forward for years until the investment produced a profit or was sold and because the case was heard in U.S. Tax Court, the ruling applies to all states.
The IRS, as always, seems to have outs. Sayeth the Journal, “The agency could appeal the Tax Court ruling to the Eighth Circuit Court of Appeals. It also could try to get Congress to change the law or try a new strategy to maintain the status quo.”
Okay, we made it through that…
Entrepreneurs Win Tax Case Versus IRS [WSJ]
Swiss Gov’t: You Want the Names? You’ll Have to Waterboard Us.
With only days until a showdown between the IRS and UBS, the Swiss Government has announced that it will stop the release of the 52,000 client names even if the U.S. Court orders the names to be released.
Now before you say, “Oh, Swiss Government, you’re so cute with your braided blonde hair and neutrality,” they sound pretty serious:
“Switzerland makes it perfectly clear that Swiss law prohibits UBS from complying with a possible order by the court in Miami to hand over the client information,” the Swiss Justice Ministry said. “On the basis of the Federal Council’s landmark decision, UBS will by no means be in a position to comply with such an order.” The Finance Ministry added that “all the necessary measures should be taken to prevent UBS from handing over the information on the 52,000 account holders demanded in the U.S. civil proceeding.”
We really feel that a few Toblerones would really go a long way to convincing the IRS that the names aren’t really that important. Just say the word IRS and we’re sure that they can make it happen.
Switzerland: Will Block UBS From Giving U.S. Client Data [WSJ]
H&R Block Suggests That You Start Saving Receipts
H&R Block announced yesterday that it expects the IRS to get less kind and gentle in the coming years as the Service attempts to close the $345 billion tax gap.
The announcement states that the IRS is nearly doubling its budget for next year and that last year, 1 in 99 individual tax returns were audited as compared to 1 in 202 in 2000.
Maybe the Democrats do want all our money…
Audits Double This Decade [H&R Block Press Release]
BBC: Grant Thornton is Scheming for the Rich People
Okay, so large accounting firms don’t have the best reputations. They also have the tendency to be thick as thieves when they come under scrutiny. And the green eyeshade look has never been one that screams trustworthy.
But now, in what might be a bit of presumptuous awesomeness, the BBC is coming right out and calling Grant Thornton’s Growth Securities Ownership Plan (GSOP) a scheme. Maybe we’re jumping to conclusions but the subtitle doesn’t strike us as being subtle: “A big accountancy firm has denied that it has been peddling a tax avoidance scheme to help rich people avoid paying the new 50% income tax rate from 2010.“
Let’s break some of the key words and phrases down:
Peddling: Use of this word basically implies that narcotics are involved
Tax Avoidance Scheme: Implies a conspiracy of smart people to screw the tax authority on behalf of…
Rich People: Not the best time in history to be lumped into this particular demographic
WTG, G to the T. Not only are you trying to screw the taxing authority in Britain by virtue of the equivalent of slinging financial smack, you’ve got the audacity to do it on the behalf of rich people.
Accountants deny ‘new tax dodge’ [BBC]
UBS Closer to Getting the McCarthy Treatment
If you’ve got a Swiss bank account, here’s hoping you opened it because it was convenient for your monthly skiing/Toblerone getaway.
The U.S. and Swiss governments have agreed to share more tax information in order to crack down on all the tax dodgers out there that send their money offshore. The timing of this agreement is is especially diabolical because the IRS is currently trying to get Swiss bank behemoth UBS to name names of over 50,000 American clients.
Hearings in Miami are scheduled for next month to see if the names can be released, however, the Swiss have stated that this may violate Swiss law of double-secret-no-tattling-on-clients.
Ultimately, the Swiss Federal Council and Parliament will decide if the new agreement is kosh but judging by the Obama Administration’s hard-on for closing tax loopholes, they’ll probably play ball.
U.S. and Switzerland to Share More Tax Data [DealBook/NYT]