Californians, Your Taxes Just Increased

Posted on August 27, 2009 by Russ

California’s tax brackets are indexed for inflation. Normally, the marginal tax brackets go up each year. But 2009 is anything but a normal year.

The Franchise Tax Board announced the new brackets, and deflation is the name of the game. Tax brackets will fall, and that means if your income is the same in 2009 as 2008, the amount you will pay to California just went up. And that’s besides the tax increase that came in February by bad budget #1.

Don’t worry, Democrats in the state legislature haven’t given up trying to pass even more tax increases.

I’ll have a lengthy post about 2009 California tax brackets and related items in a couple of weeks.

Posted in Legislation | Comments Off on Californians, Your Taxes Just Increased

Taxes Are For Little People

Posted on August 27, 2009 by Russ

That’s the gist of the famous line uttered by Leona Helmsley. She ended up spending time at ClubFed. It appears that philosophy is shared by the Chairman of the House Ways and Means Committee, Charles Rangel (D-NY).

Mr. Rangel amended his 2007 disclosure report to note an account at the Congressional Federal Credit Union of at least $250,000; stock at PepsiCo and Yum Brands; and real estate in New Jersey that he undervalued. You might say he “Missed it by that much,” as he initially reported that it was worth between $6,511 and $17,900; the amended report notes the true value as between $45,423 and $134,700.

Now news comes out that besides just slightly undervaluing his property he ‘forgot’ to pay his property taxes on that property. Yes, the back taxes are only about $160 but it’s the principle of the matter.

Oh, Congressman Rangel has quite a bit to do with taxes. All tax legislation in Congress must originate in the House Ways and Means Committee. So a gentleman who has plenty of problems reporting and paying his taxes is responsible for the writing of tax policy in the United States. Makes you feel comfortable, right?

Mr. Rangel should resign his position as Chair of the Committee but the chances of that happening are somewhere between slim and none.

Hat Tip: Don’t Mess With Taxes, Instapundit

Posted in Legislation | Comments Off on Taxes Are For Little People

California, Nevada, and Texas

Posted on August 26, 2009 by Russ

A California State Assemblyman is upset with the ads that the Nevada Development Corporation is running. California is golden, and Nevada is silver. Why would any business leave? Here’s Assemblyman Jose Solorio’s (D-Anaheim) response:

Before I comment on that, there’s also a great op-ed piece in the Dallas News about the difference between California and Texas. One state is gaining business and one is, well, issuing IOUs. Hint: California isn’t the golden state in comparison to Texas.

As for Assemblyman Solorio, he may want to watch these two short spots.

It’s one thing to say, “California is great.” Can Assemblyman Solorio deny that it costs far more for a business to operate in the Golden State than it does in the Silver State? Unfortunately, everything in the Nevada Development Authority’s advertisements is true.

Posted in California, Nevada, Texas | Comments Off on California, Nevada, and Texas

Unlikely Duo of Lawsuits Could Impact Illinois

Posted on August 26, 2009 by Russ

Rocky Wirtz is a folk hero among Chicago’s long-suffering hockey fans. After his father, William (Bill) Wirtz, passed away in 2007, he changed the Blackhawks’ philosophy. Suddenly, the laughable losers turned into winners, and the Blackhawks played in the Western Conference Finals last year.

Mr. Wirtz also owns a liquor distributorship in Chicago. It’s not a little business–it’s a $1.5 billion company. And so when Illinois lawmakers decided to balance its budget partially by hiking liquor taxes, he was annoyed. Well, more than annoyed. He’s challenging the liquor tax hike on grounds that it violates the state’s constitution by covering disparate subjects.

Mr. Wirtz is also challenging Illinois’ new video poker law. In theory, come mid-September there should be video poker terminals in bars and taverns throughout Illinois. Hogwash, says Aaron Jaffe, chair of the Illinois Gaming Board. While the state legislature approved the video poker terminals, they didn’t fund any of the needed personnel or the $75 million needed to just implement the program. So if there’s no court order stopping the program it’s likely that video poker is still months away.

But Mr. Wirtz is challenging the gaming expansion, too. He claims that the expansion violates federal gambling law. Mr. Wirtz’s attorney is asking for an immediate injunction.

Meanwhile, the AFSCME has filed a lawsuit to stop Illinois from laying off 2,600 state workers. The union argues that under their collective bargaining agreement, layoffs must be negotiated.

One thing is certain: Expect lots more labor unrest as state budgets shrink. That’s a conclusion that everyone involved can agree with.

Posted in Illinois | Comments Off on Unlikely Duo of Lawsuits Could Impact Illinois

Another Don’t Try This at Home Story

Posted on August 23, 2009 by Russ

Back in July 2007, the IRS demanded that Richard M. Arnold of El Reno, Oklahoma, pay back taxes in the amount of $317,000. This wasn’t his first brush with the IRS; back in 1999 the IRS filed a $300,000 lien on his property.

Most of us, when we have tax problems, will work with the IRS, hire reputable representation, and attempt to resolve the problems. While it’s possible that Mr. Arnold did this (the news story isn’t clear on that), he did one thing that was sure to cause grief if discovered. He used an entity he created in Panama to purchase a $78,000 SUV in Oklahoma.

Let’s see how bad this is. Offshore companies, assets moved offshore, hiding assets from the IRS…well, I think you get the idea. Mr. Arnold pleaded guilty last week to the charge of concealing property upon which levy was authorized for the purpose of evading or defeating the assessment or collection of federal taxes. He’ll be sentenced later this year and could get three years at ClubFed.

If you get into tax trouble realize that taking money you’ve moved offshore and purchasing luxury items is a good way of getting in deep trouble.

Posted in Tax Evasion | Comments Off on Another Don’t Try This at Home Story

He Fought The IRS, and the IRS Won

Posted on August 23, 2009 by Russ

I really wanted to title this piece He Fought the Law, and the Law Won, but that just wouldn’t be true. Wiley Kuyrkendall doesn’t believe that the IRS can collect income taxes. I’ve gone over such tax protester arguments in the past, but they really don’t bear much thought; they’re as phony as three dollar bills.

But Mr. Kuyrkendall decided to go one step further. He sued the IRS for $1.1 Billion alleging that Congress didn’t have the authority to impose an income tax, and the IRS couldn’t collect a tax. Back in January 2006 his lawsuit was dismissed with prejudice—the judicial equivalent of “You’re not just wrong, you’re dead wrong.”

Mr. Kuyrkendall perhaps should have kept in the shadows. Since he didn’t believe in the income tax he didn’t file tax returns. Did I mention he earned $800,000 from 2002 through 2005? And that once he filed his lawsuit someone at the IRS was bound to look for his non-existent tax returns?

Mr. Kuyrkendall was found guilty in Jackson, Mississippi last week of not filing tax returns. He’ll likely get to visit ClubFed…and have to pay his back taxes.

Posted in Tax Evasion | Comments Off on He Fought The IRS, and the IRS Won

Moving Your Cash Receipts to an ATM Won’t Strip Away the Income

Posted on August 21, 2009 by Russ

Unless Congress exempts income, it’s taxable. Cash income is just as taxable as checks or credit cards. As I reported last December, one enterprising Minnesota strip club owner didn’t think that was the case. He was wrong.

As Joe Kristan noted, Larry Kladek stocked the ATM in his club with his cash receipts. All went well until the IRS found out. He pleaded guilty last year to tax evasion; he was just sentenced to 20 months at ClubFed.

Posted in Tax Evasion | Comments Off on Moving Your Cash Receipts to an ATM Won’t Strip Away the Income

When a Fee Is a Tax

Posted on August 21, 2009 by Russ

San Diego has had budget problems for many years. One step that San Diego used to balance its budget was ruled an illegal tax this pat week by a court.

San Diego charges a collection fee on its business tax. The city says its to cover mailing and handling costs. Fees don’t need approval by voters; taxes do. Two landlords filed a lawsuit claiming the fee was an illegal tax (the fee was never approved by San Diego voters).

The Court agreed with the landlords, noting:

Whereas before the enactment of the Resolution a portion of the Business Tax proceeds were necessarily expended on the cost of administering the Business Tax program and collecting the tax, the imposition of the levy raised funds to pay for those costs, thereby permitting all of the Business Tax proceeds to be deposited in the general fund for expenditure on any and all governmental purposes. Thus, in practical effect, the levy is an increase in the Business Tax and therefore an increase in a general tax.

The Tax Foundation filed an amicus curiae brief on the case, and they were pleased with the ruling.

“San Diego wanted more revenue. Rather than just going to voters, they chose to play this definitions game,” said Joseph Henchman, tax counsel for the Tax Foundation in Washington, D.C., which filed a brief in support of getting rid of the fee. “To us, it’s such an obvious issue of trying to mislabel something that is clearly a tax.”

Posted in California | Comments Off on When a Fee Is a Tax

Perhaps It Was The 300 Million Witnesses….

Posted on August 21, 2009 by Russ

Joe Kristan (Roth Tax Updates) brought news of my favorite tax evader, Richard Hatch, to my attention. It seems that Mr. Hatch believes the only reason he was imprisoned was that he was gay.

Well, I beg to differ. When 300 million witnesses get to see you win $1 million and you decide not to pay taxes on it, bad things will happen. Add in evading tax on $300,000 of income from a radio broadcast, and you have a recipe for ClubFed. And to top that off, at trial evidence comes out that he filed a tax return that his accountant told him not to file.

Even Perry Mason couldn’t have gotten Hatch off.

Posted in Tax Fraud | Tagged | Comments Off on Perhaps It Was The 300 Million Witnesses….

The Next California Bomb: Pensions

Posted on August 20, 2009 by Russ

From Mish comes a report of problems with pensions in California. This isn’t a surprise; our liberal state legislature increased pension benefits when times were good. Unfortunately, things aren’t so good today.

“I don’t want to sugarcoat anything,” Ron Seeling, the CalPERS chief actuary said as he neared the end of his comments. “We are facing decades without significant turnarounds in assets, decades of — what I, my personal words, nobody else’s — unsustainable pension costs of between 25 percent of pay for a miscellaneous plan and 40 to 50 percent of pay for a safety plan (police and firefighters) … unsustainable pension costs. We’ve got to find some other solutions.”

There’s really no choice: Benefits will need to decline in some manner or every government body will be declaring bankruptcy. This is a disaster that’s definitely going to rear its ugly head in coming years.

Posted in California | Comments Off on The Next California Bomb: Pensions