IRS
The 0% Tax Rate Solution – WSJ.com
The federal income tax code is now so mangled that we can probably increase federal revenues with a 0% income tax rate for a majority of Americans.
Long before President Barack Obama took office, the bottom 40% of income earners paid no federal income taxes. Because of refundable income tax credits like the Earned Income Tax Credit (EITC), in 2006 these bottom 40% as a group actually received net payments equal to 3.6% of total income tax revenues, according to the latest Congressional Budget Office data. The actual middle class, the middle 20% of income earners, pay only 4.4% of total federal income tax revenues. That means the bottom 60% together pay less than 1% of income tax revenues.
This actually resulted from Republican tax policy going all the way back to the EITC, which was first proposed by Ronald Reagan in his historic 1972 testimony before the Senate Finance Committee on the success of his welfare reforms as governor of California. Besides calling for workfare, Reagan proposed the EITC to offset the burden of Social Security payroll taxes on the poor. As president, Reagan cut and indexed income tax rates across the board and doubled the personal exemption. The Republican majority Congress, led by former House Speaker Newt Gingrich, adopted a child tax credit that President George W. Bush later expanded and made refundable, while also reducing the bottom tax rate by 33% to 10%.
read the rest here… The 0% Tax Rate Solution – WSJ.com.
The End of ACORN – Megan McArdle
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I don’t see how ACORN survives at this point; the IRS is the latest to pile on, severing ties with ACORN, and slapping a tax lien for unpaid payroll taxes on top of that blow. The lawsuit seems like an even worse attempt–less of a Hail-Mary Pass than an own-goal. At best, it keeps this distressing story in the news, more firmly impressing it into peoples’ consciousnesses and making it therefore more difficult for Democrats to quietly let the organization back on the government gravy train at some future date. At worst, the lawsuit opens up ACORN to discovery, during which the defense can plunder their records. ACORN appears to be trying to avoid this fate by suing for intentional infliction of emotional distress rather than defamation (for which truth is an absolute defense). But that just makes it more likely that the case will be removed to federal court and dismissed. When that happens, the public mind will not make fine distinctions about legal doctrine. They’ll just remember that a judge thought ACORN was in the wrong.
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James M. Peaslee: Tax Penalties and the Health-Care Bill – WSJ.com
Under current law, taxpayers who lose an argument with the IRS can generally avoid penalties by showing they tried in good faith to comply with the tax law. In a broad range of circumstances, the health-care bill would change the law to impose strict liability penalties for income-tax underpayments, meaning that taxpayers will no longer have the luxury of making an honest mistake. The ability of even the IRS to waive penalties in sympathetic cases would be sharply curtailed.
via James M. Peaslee: Tax Penalties and the Health-Care Bill – WSJ.com.