Category: Taxes

Tease

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People are crowing about the arrest of Trump Organization CFO Allen Weisselberg for tax fraud.

A lot of people think that this is the beginning of the end for Trump, but that it just wishful thinking.  It is not even the end of the beginning.

I’ve seen this scenario too many times before.  The bad guys walk:

New York prosecutors on Thursday unveiled a 15-count indictment charging the Trump Organization and its finance chief, Allen Weisselberg, with a wide-ranging conspiracy to avoid paying taxes, launching the first criminal case resulting from a multiyear investigation into former President Donald Trump’s business affairs.

In a Manhattan courtroom, prosecutors described a 15-year-long tax-fraud scheme involving off-the-books payments to employees at the Trump Organization. Executives took perks such as car leases and Manhattan apartments without the company or the recipient paying taxes, prosecutors said.

………

“There’s no clearer example of a company that should be held to account,” said prosecutor Carey Dunne in court. “It’s not about politics.” He said the investigation was ongoing.

Mr. Weisselberg, appearing in handcuffs, pleaded not guilty. He was released pending trial, though he was required to surrender his passport after prosecutors said he was a flight risk. His lawyers said he would fight the charges.

The top charge for Mr. Weisselberg—grand larceny in the second degree—is a felony that, upon conviction, carries a maximum sentence of 15 years in prison. Mr. Weisselberg was charged with 15 counts. In addition to grand larceny, prosecutors charged him with scheme to defraud, conspiracy, four counts of criminal tax fraud and other crimes.

The Trump Organization, through its attorneys, also pleaded not guilty. The company was charged with 10 counts, including scheme to defraud, conspiracy and four counts of criminal tax fraud.

………

The charges could ratchet up the pressure on Mr. Weisselberg to turn on Mr. Trump, who wasn’t charged Thursday. Mr. Weisselberg has so far declined to cooperate, but some defendants change course when faced with the possibility of prison time, former prosecutors said.

He’s not going to flip.

………

Prosecutors would need to show three things to charge Mr. Trump: knowledge, intent and participation, said Daniel Horwitz, chairman of the white-collar defense and investigation practice at McLaughlin & Stern.

And they will not get that if Weisselberg does not flip.

………

A case solely focused on fringe benefits is unusual, former prosecutors said. Charging an individual or company for failure to pay taxes on employee benefits alone is rare, though such charges are used as part of larger cases.

Which is one reason why I think that we will not see anything reaching Trump.  The case, at least until the DA adds charges, is not going to put Trump in jail.

………

………

In a possible bid to escalate pressure on Mr. Weisselberg and other executives to cooperate, the indictment mentions—though doesn’t name—Mr. Weisselberg’s son, who paid $1,000 a month on one Trump Organization-owned apartment for seven years and then paid no rent on another Trump-owned apartment in 2018. The rental payments weren’t reported as income to tax authorities, prosecutors said. The Wall Street Journal has reported that his son, Barry Weisselberg, lived in Trump-owned apartments. A lawyer for Barry Weisselberg didn’t respond to a request for comment

This case is not a nothing-burger, but the chance that it will place Donald Trump appear to be quite small, though it does appear to be a threat to the Trump organization, as it is likely to make lenders skittish about extending additional credit.

Data Point of the Day

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Did you know that about 90% of Californians have lower taxes than Texas?

It’s true.  Texas, and this applies to a lot of so-called “Low Tax Jurisdictions”.

They are not low tax states for the bulk of their population, they are just low tax states for rich people and large corporations.

This certainly matches the experiences of two people I know/knew, an author and an artist.

The former found his taxes and fees lower in Maryland than in Pennsylvania, and the latter found the same case for New Hampshire and Massachusetts:

………

These statistics are relevant, though, to any discussion of why so many people have been leaving California. Taxes often dominate public discussions of such trends, thanks in part to the unrelenting efforts of Republican policy entrepreneurs Arthur Laffer and Stephen Moore, whose 14th annual, mostly tax-based economic competitiveness report for the conservative American Legislative Exchange Council is out this month. But it’s awfully hard to argue that taxes have been the main thing driving the California exodus, given that (1) it has been concentrated among the less affluent, (2) their No. 1 destination has been Texas, according to 2010-2018 Internal Revenue Service data that I tallied up early last year and (3) lower-income and middle-income people face higher effective tax rates in Texas than in California.

………

Middle-class taxes are lower in Nevada, the No. 2 beneficiary of net migration from the Golden State, but for a household at the 2019 California median income of $75,235 the 1.8 percentage point difference in effective tax rate adds up to $1,354 whereas the difference in average annual rent for an apartment or house between metropolitan Los Angeles and metro Las Vegas is $6,336, according to Apartment List’s April estimates.

For those in the top 1% of the income distribution, who in California in 2018 had adjusted gross incomes that started at $680,687 and averaged $2.2 million, the story is much different.

I’m thinking that people who protest against inequality should try to address things like states tax codes, particularly those with no income tax, like Washington, Texas, and Florida, and those with flat income tax rates, like Massachusetts, Illinois, and Pennsylvania.

Soaking the rich is popular right now, and the number of people who actually relocate for tax purposes is very small.

1000 Leona Helmsleys, Writ Small

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The not-for-profit news org Pro Publica has come into IRS records for some of the wealthiest people in America, and it turns out that the richest people in the United States pay little or no taxes.  They are claiming that they do not know the identity of their source.)

This has gotten notice from major mainstream news sources.

There has been some push-back from the usual suspects demanding, while the usual douche bags are demanding an aggressive criminal investigation.  Said douche bags include US Attorney General Merrick Garland.  (Multiple officials in the Biden administration has given every indication that it will extend the Jihad against whistle-blowers to the IRS leaker.)

We find a similar pattern in the tax filings of private equity (PE) firms, with the things like the carried interest loophole, the “fee waiver,” an under resourced IRS, and a revolving door of senior officials.

I kind of filed this under, “Same old, Same old,” until Pro Publica revealed that one of the leading candidates for Manhattan District Attorney was mentioned in the files as having paid little or no taxes on her husband’s multi-million dollar pay.

So, if these files become public, there is a pretty good chance that one of the go to sources for crappy candidates who stand for nothing that is routinely tapped by the Democratic Party establishment (There is no Democratic Party establishment), hedge fund managers, and PE types, who have lots of money, and spend profligately to get elected.

Now, it the people who are looking to cash in will have to go though a trove of tax data to make sure that THEY are not on that list:

The leading candidate to take over the investigation relating to former President Donald Trump’s taxes paid virtually no federal income taxes in four of six recent years.

Tali Farhadian Weinstein, who is married to hedge fund manager Boaz Weinstein, is running for Manhattan district attorney in the Democratic primary, in which early voting has already begun. She and her husband reported income as high as $107 million in 2011, and she recently donated $8.2 million to her campaign — more than her seven Democratic rivals have raised in total.

But in 2017, according to a trove of tax data obtained by ProPublica, she and her husband paid no federal income tax. In 2015 and 2013, they also paid no federal income tax. In 2014, she and her husband paid $6,584.

………

In two of the years in which the Weinsteins paid no federal income taxes, they reported negative income, losses that appear to be driven by the volatile performance of Boaz Weinstein’s hedge fund. They also claimed and received a refundable tax credit — a total of $5,000 over those two years — designed to help middle- and lower-income families with the costs of raising children.

In the other two years in which they paid little or no federal income taxes, they reported adjusted gross income of about a million dollars each year. They were able to reduce their income tax bill in those years by using a variety of deductions.

There’s no indication the Weinsteins did anything illegal.

That last bit is the REAL problem.

The fact that these sort of shenanigans are completely legal is a national embarrassment.

The Solution Is

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It appears that the wild swings in heavily shorted stocks, most recently for AMC movie theaters, is causing instabilities in the market that threaten the stability of index funds.

The solution to this is fairly straightforward, first and most importantly, enact a transaction tax for all financial transfers to increase the friction, and hence reduce the speculation.

It might also be a good idea to ban Payment for Flow Order, which is a Bernie Madoff inspired “Innovation” which is little more than an excuse for front running, where a broker executes their trades before those of their customers for their own personal profit.

Speculation is a cost we pay for investment, an evil that we tolerate in order to encourage investment.

A tax of between 10 and 50 basis points (⅒% — ½%) tax per transaction. 

Even if it does not generate as much revenue as its supporters predict, it will produce a very real public good:

Index funds are supposed to cut out the human-driven craziness that periodically infects markets, but the recent meme-stock fever proved the $11 trillion industry is far from immune.

The remarkable surge in shares of AMC Entertainment Holdings Inc. and a handful of other stocks is showing up in multiple exchange-traded funds, skewing portfolios, altering risk profiles and exerting outsized influence on prices.

Take the $68 billion iShares Russell 2000 ETF (ticker IWM). In the past week through Thursday, AMC powered 70% of the product’s advance. The stock was responsible for less than a 10th of the fund’s return in the previous week.

It’s a timely reminder that even diversified funds on autopilot remain subject to the whims and eccentricities that frequently lash markets out of nowhere.

………

“For index investing, the appeal is that human decision-making, human emotions are taken out of it,” said Tom Essaye, a former Merrill Lynch trader who founded “the Sevens Report” newsletter. “That works all well and good until a stock that is supposed to be 50 basis points of the fund now becomes 6%.”

This is going to destroy us all.

Of Course They Do

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The UK, normally the United States’ poodle in all matters, is not offering its support for Biden’s global business tax plan. 

This is not a surprise.  The British financial sector, known colloquially as the City of London, has two areas where it dominates world markets: Tax evasion and currency speculation.

The US may dominate the UK, but the City of London owns the whole government, lock, stock and barrel.

Of course they are objecting to a plan with makes revenue shifting a less profitable enterprise.  It’s their profits that they are protecting.

A Perfect Metaphor for American Startup Culture

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It should surprise no one that gypsy cab company Uber is less of a ride sharing company than it is an exercise in fraud. 

By this, I don’t mean that it has no path to profitability (though it doesn’t), I mean that Uber, and WeWork, DoorDash, and pretty much the entire investment portfolio of Softbank is an attempt to generate buzz through a massive infusion of capital, followed by an IPO that offloads the company to suckers.

It seems to me that in addition to those startups, the management of Softbank should be frog-marched out of their offices in handcuffs when the reckoning comes.

It also turns out that Uber is an example of particularly extreme financial engineering:

Uber is not a business in the traditional sense. It’s a “bezzle” (“the magic interval when a confidence 

trickster knows he has the money he has appropriated but the victim does not yet understand that he has lost it”).

The only reason Uber was able to attain growth was because investors gave it billions to lose. First, it was the Saudi Royals, hoping to spend their way to a transportation monopoly.

When that didn’t work, the company’s investors suckered the public into taking their shares off their hands in an IPO premised on two things:

  1. Self-driving cars

  2. All buses and subways in the world being scrapped and replaced with Ubers.

Neither of those things have happened, of course. Uber actually had to pay someone else $400m to “buy” the self-driving car division it sank $2.5b into (the resulting cars could not travel for one mile without a serious accident).

………

Uber’s “innovation” wasn’t self-driving cars. It was cheating. Uber is really f%$#ing good at cheating.

How good? Well, last year, Uber managed to dodge tax on $6b in global revenues by laundering its income through fifty Dutch shell companies.

………

It’s quite a whirlwind of socially useless financial engineering, composed of obvious frauds like “selling” its IP to a Dutch subsidiary financed with a $16b “loan” from a Singaporean subsidiary, garnering 20 years‘ worth of $1b annual tax credits.

The Netherlands may be a bastion of progressive politics, but it’s also one of the world’s leading onshore-offshore tax havens, joining Cyprus, Luxembourg, Delaware, Wyoming and the City of London as a key player in the global money-laundry.

Our multinational financial system is one big case of, “If fraud can happen, it will already have happened.”

If we actually enforced the tax and fraud laws, there would be millions of people nationwide who would be in the dock right now.

If It Makes You Nervous, Find a New Job

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Arguably the most popular policies of  Joe Biden with the general public is raising taxes on the rich.

Even a majority of Republicans support raising taxes on the rich.

Still, it appears that this fantastically popular policy prescription is giving moderate Democrats the vapors, because they have nothing to offer but the ability raise money from rich people.

Seriously, soaking the rich is good policy and good policy, but these guys are so afraid of offending the money bags types they are useless:

President Biden’s desire to offset more than $4 trillion in spending proposals with higher taxes is struggling to gain momentum in Congress.

Pockets of skepticism have emerged within Biden’s party over White House plans to raise the corporate tax rate, revamp the international tax system and double tax rates on wealthy investors, among other measures critical to the administration’s plans. The party faces regional divides over taxes as well, with farm-state Democrats skittish about taxes on heirs and coastal Democrats demanding the repeal of limits on state and local tax deductions, which would amount to an expensive tax cut that would require higher taxes elsewhere.

Yes, these tremulous Democrats are determined to save tax breaks for rich folks.

………

The open-ended nature of the discussions has led to a bevy of ideas from Democrats and little clear progress toward a resolution. Democrats said some donors are anxious about the political ramifications of raising taxes before the midterms, especially given the party’s tough odds to hold onto the House. Rep. Sean Maloney (D-N.Y.), chair of the Democratic Congressional Campaign Committee responsible for party fundraising, has privately warned the tax plans could hurt vulnerable House Democrats up for reelection in 2022, said two people familiar with the matter, who spoke on the condition of anonymity to discuss internal matters.

It won’t hurt anyway.

………

“The administration knows these taxes are very popular,” said Celinda Lake, a Democratic pollster who advised Biden’s campaign. “But Democrats in Congress are nervous from decades about being attacked as tax and spenders.”

When Bill Clinton created budget surpluses, and destroyed welfare, Democrats were attacked as tax and spenders.  It is going to happen anyway.

Living in fear of your own shadow is not is not living/

Today in Hack Journalism

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It’s the WSJ, so it’s no surprise that their article on a tax break primarily used by speculators is cast as a betrayal of the sacred obligation that we have to family farmers.

It’s also not true, but who needs truth if it’s dull, I guess

President Biden has said his tax proposals would make big business and wealthy investors pay their fair share.

His package would also likely deliver a blow to American farm owners by limiting a longstanding tax break. The provision allows landowners to defer paying capital-gains tax when they sell investment property and put the proceeds toward the purchase of other real estate.

Farmers for generations have used the tax break to cheaply and quickly relocate farm operations to lands with better soil, diversify the crops they grow and consolidate land holdings. Some have used it when exiting the farming business at retirement. Farm owners in 2012 held 915 million acres, about 40% of the land in the continental U.S.

No, this has been used as a subsidy that primarily benefits speculators, farmers do not change farm the same way that the rest of us change socks, but Wall Street banksters do.

Farmers were hit four years ago when the Trump administration narrowed the use of this tax deferment, known as a 1031 like-kind exchange. The provision, named for a section of the tax code, used to apply to many types of personal property, including farm equipment and livestock. Farmers exchanged their old tractors and upgraded to newer and better ones without having to pay tax on their trade-ins.

A subsidy to farm equipment makers more than it is a tax break to farmers.

Also, who trades in a car or a tractor for more than they paid for it?  There is no gain to tax.

………

Farmers and land brokers said the latest proposal, capping the profits from land sales that can be tax-deferred at $500,000, would add another burden on farming.

Mr. Biden’s proposal would also raise the top capital-gains tax rate that land sellers would have to pay to 43.4% from 23.8%. It would impose capital-gains taxes at death on appreciated asset gains, a change farmers worry will make it difficult to keep land in the family. However, the Agriculture Department has said the plan would exempt farmers from those taxes at death, if the farm remains both owned and operated by family members.

Family farmers are being pushed out of farming as a result of rents charged by seed and agricultural companies, equipment companies selling them equipment that they cannot maintain, and speculators  who drive up the price of land for would be new farmers.

This tax break enriches these who prey on the family farmer, not the family farmer.

Their Tears Will Salt My Soup

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When I see a headline like this:

Richest Americans Face Biden’s Tax Hike With Anger, Denial, Grief

I smile.

It seems that many of these folks, who were born on 3rd base and thought that they had hit a triple, are so personally offended to be made pay their fair share.

They are losing their sh%$ over the lower tax rate for capital gains going away.

They keep saying things like, “Over-taxing success is un-American.”

Oh, you poor delicate snowflake.  Your subsidy is going away, and your feelings are hurt.

F%$# you with Cheney’s dick.

I Am Amused

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Washington State, which is known, and notorious for, its regressive tax policies, has passed one of the higher levies on capital gains taxes in the nation.  (If passed, the 7% tax would take the state from 50th to 13th in the nation)

Given the enormous amount of wealth subject to the tax, and the fact that Bezos set up Amazon in Washington State specifically to avoid taxes, I am find this situation intensely amusing.

As a state that has some extreme wealth inequality, it’s also good policy:

The home of the two richest men in America is on the brink of implementing a new tax on capital gains that would raise billions of dollars for early childhood education and child care programs — while setting off a years-long legal fight that could end a nearly century-long resistance to an income tax.

Washington state legislators are finalizing language on a bill that would tax capital gains over $250,000 at a 7 percent rate, in what may prove to be one of the most substantial tax increases approved by any state legislature in 2021.

Supporters of the measure say it would fall on just a few thousand of the wealthiest families in a state full of major technology companies and budding startups, from Amazon and Microsoft — companies founded by Washington residents Jeff Bezos and Bill Gates, numbers one and two on the list of the world’s richest people — to IMDb and Redfin.

In a state where the tax code remains one of the most regressive in America, the new tax would help even out the growing disparities between the wealthy and a shrinking middle class that has been pushed to the brink.

………

The capital gains tax has passed both the state House and Senate, though the two chambers have appointed members of a conference committee to hammer out several disagreements between the two versions. The legislators on the committee have until Sunday, the end of this year’s legislative session, to reach a deal.

Tara Lee, a spokeswoman for Gov. Jay Inslee (D), said Inslee would sign the bill if it makes it to his desk in time.

Legislative analysts estimate the new tax would pull in $550 million a year beginning in 2023, when it would take effect. Some estimates suggest it would impact about 8,000 tax filers, while others say it could hit up to 60,000 people — in either case, just a fraction of the 2.9 million households in the state.

………

But the proposed bill, Washington Republicans say, comes with a twist: Opponents see a longer-term legal play aimed at overturning an 85-year-old policy that has made Washington one of the few remaining states without an income tax.

Washington’s Supreme Court ruled in a landmark 1936 case that the state constitution required all property to be taxed at the same rate. The court ruled that income counted as property, striking down a graduated income tax rate that voters had approved a few years earlier.

Since then, Washington has been one of just a handful of states without an income tax. Voters have defeated six subsequent attempts to implement an income tax at the ballot box.

If the new tax on capital gains passes, Republicans see it as a path to open a new legal challenge to the validity of a graduated tax, one that might find a more receptive audience before a more liberal state Supreme Court.

………

Washington is one of just nine states that does not levy a tax on capital gains. A 7 percent rate would put Washington on par with states like South Carolina, Connecticut and Maine, which tax capital gains at about the same rate.

I rather imagine that Jeff Bezos is going to throw a sh%$-fit over this, because not paying his fair share is something that he thinks is his due.

Also, the idea that it is a camel’s nose under the door regarding an income tax is something that recommends the tax even more.

Soak the rich.  The alternative is to eat the rich, and that is not kosher.

Surprised in a Good Way

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Joe Biden has announced that he intends to raise the capital gains tax rate on the wildly communist idea* that people who work for a living should be taxed at a higher rate than people who sit on their ass waiting for their properties to appreciate.

I did not expect Biden to do something like this, but it is the right thing to do.  Capital has been under-taxed, and labor has been over-taxed for decades:

President Biden will seek new taxes on the rich, including a near doubling of the capital gains tax for people earning more than $1 million a year, to pay for the next phase in his $4 trillion plan to reshape the American economy.

Mr. Biden will also propose raising the top marginal income tax rate to 39.6 percent from 37 percent, the level it was cut to by President Donald J. Trump’s tax overhaul in 2017. The proposals are in line with Mr. Biden’s campaign promises to raise taxes on the wealthy but not on households earning less than $400,000.

$400,000 is still rich.  It’s about 7 times the median family income.

The president will lay out the full proposal, which he calls the American Family Plan, next week. It will include about $1.5 trillion in new spending and tax credits meant to fight poverty, reduce child care costs for families, make prekindergarten and community college free to all, and establish a national paid leave program, according to people familiar with the proposal. It is not yet final and could change before next week.

………

To offset that cost, Mr. Biden will propose several tax increases he included in his campaign platform. That starts with raising the top marginal income tax and the tax on capital gains — the proceeds of selling an asset like a stock or a boat — for people earning more than $1 million. The plan would effectively increase the rate they pay on that income to 39.6 percent from 20 percent.

Capital gains income would also still be subject to a 3.8 percent surtax that helps fund the Affordable Care Act. It was unclear if the tax increase would also apply to income earned from dividends.

Hopefully, it will.  The rich, which means capital gains and dividends, have increasingly sucking more and more out of our society while contributing less and less.

*Note for the snark impaired, the invocation of communism is sarcasm.

Your Daily Schadenfreude

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The DoJ has sued Roger Stone for $2 million in unpaid taxes.

That’s what they got Al Capone for: 

The Justice Department sued Roger Stone on Friday, accusing him of failing to pay more than $2 million in taxes.

The suit, filed in federal court in Fort Lauderdale, Florida, alleges Stone, 67, and his wife, Nydia, dodged $1,590,361 in taxes between 2007 and 2011 and stiffed the IRS of $407,036 in 2018 alone. The couple used a company, Drake Ventures, to “shield their personal income from enforced collection and fund a lavish lifestyle,” according to the Justice Department.

The DOJ calls Drake Ventures “an alter ego of the Stones,” alleging that despite appearances of separation between the couple and the company, “the Stones dominated and controlled Drake Ventures to such an extent that it does not exist as an independent entity.” The mailing address of the company is the Stone’s house, and the husband and wife each own 50 percent of the LLC, according to the suit. The Florida Secretary of State has twice dissolved the company.

The Stones allegedly sent checks that listed Roger Stone as the payee to Drake Ventures, upwards of $1 million in total for 2018 and 2019. The company would pay for most of the Stones’ purchases and financial liabilities, including $500,000 in taxes in 2018 and 2019 and the $140,000 down payment on their condominium in February 2019. The company did all this, the DOJ alleges, without keeping necessary documentation. The financial arrangement “evaded and frustrated the IRS’s collection efforts,” DOJ lawyers wrote.

“[The Stones] used Drake Ventures to receive payments payable to Roger Stone personally, pay their personal expenses, shield their assets, and avoid reporting taxable income to the IRS,” the DOJ alleges.

In addition to the Stones and Drake Ventures, the Justice Department is also suing the company that owns the Stones’ condominium, Bertran Family Revocable Trust, alleging that the transfer of ownership was a fraudulent transaction meant to further hide the Stones from financial liability. Nydia Stone is sole grantor and sole trustee, the suit says, giving her complete control over it.

How sweet.  The lovely couple is dodging taxes together, just like Carlo Ponti and Sofia Loren, only, of course, we don’t generally associate Ponti and Loren with ineluctable evil.

This is a Very Good Thing

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Did you know that investors are pissed off because Biden’s infrastructure plans do not include any public-private partnerships? (PPPs)

They want to see public private partnerships, where the private participants are guaranteed a profit, and then borrow money at inflated rates from Private Equity, and ding the taxpayers for decades for user fees for doing basically nothing at all.

I feel pretty good about this:

Finance executives are lamenting being frozen out of plans to bolster America’s dilapidated infrastructure, as the Biden administration pushes a tax-and-spend approach to building projects.

President Joe Biden’s “American jobs plan”, unveiled last month, calls for $2tn of investment in highways, electrical grids and other basic infrastructure.

At the same time, the White House put forward corporate tax reforms that it said would generate enough money to pay for the investment spree within 15 years.

That has disappointed some investors and asset managers who once expected public-private partnerships would be a lucrative financing opportunity.

“I would love to put money into infrastructure projects,” said Christopher Ailman, chief investment officer of Calstrs, the retirement system that pays the pensions of California teachers.

The $290bn fund has held sporadic talks with the US Treasury about investing in infrastructure projects since the Obama administration, Ailman said. “A lot of long-term investors . . . look at infrastructure as being a source of stable long-term returns,” he said.

They are upset that they won’t have the opportunity to loot the taxpayers to buy another yacht. F%$# them with Cheney’s Dick.

………

While Biden’s infrastructure proposal revives some of the unfulfilled ambitions of his predecessor, it does not envisage a role for the private investors who had once expected to be in the driving seat.

“This is a very traditional ‘the government is spending on infrastructure’ plan,” said a lobbyist who regularly represents private equity firms in Congress.

Just kill yourself, you bloody parasite, it will be the best thing you ever do for society. 

Some of the executives say that PPPs can, “Impose commercial discipline and generate savings elsewhere,” only they never have, and they have to pay much higher interest rates on what they borrow than the government does, which means that they can’t.

Instead they are efforts to get money today at the cost of tomorrow, as Richie Daley’s incredibly corrupt parking meter deal in Chicago shows.

There never are any savings, just guaranteed profits with some of the vigorish skimmed off the top and returned to the politicians as bribes and campaign donations.

https://twitter.com/DanielaGabor/status/1381665203524415488

see full thwitter thread 

Cuomo Must Really be on the Ropes

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Because that’s the only way that he would allow taxes to be raised on rich people, and “Rat Faced Andy” just cut a deal in Albany.

Cuomo’s political brand has always been his fundraising prowess, and that in turn was driven by his constant kowtowing to the very rich, and protecting them from things like having to pay taxes.

This would not have happened a year ago:

New York State leaders announced they had reached an agreement on Tuesday on a $212 billion state budget that includes tax increases on the wealthy as well as substantial relief for renters, undocumented immigrants and business owners hit hardest by the coronavirus.

Many of the budget’s key initiatives are aimed at jump-starting the recovery of a state that was the onetime epicenter of the pandemic.

It includes $2.3 billion in federal funds to help tenants late on rent; $1 billion in grants and tax credits for small businesses that suffered from the economic downturn; and a $2.1 billion fund to provide one-time payments for undocumented workers who did not qualify for federal stimulus checks or unemployment benefits, according to budget highlights released by the governor’s office.

All were proposals championed by Democratic leaders of the State Legislature, who leveraged Gov. Andrew M. Cuomo’s weakened political position to forcefully lobby for their priorities, including a long-sought personal income tax rate increase on individuals making over $1 million — overcoming the governor’s longtime aversion to raising taxes on the rich.

Two new brackets would also be introduced for incomes over $5 million and $25 million. The changes mean wealthy residents of New York City would effectively be subject to the highest combined local and state personal income tax rates in the nation, surpassing California.

Good.  Our taxes are too damn low.

Some people will argue that the rich will move to lower tax states, to which I say, f%$# the rich with Cheney’s dick.

As was noted earlier, “The Problem with Living in Florida is that You Have to Live in Florida.” 

If there is a mass exodus of the rich from Manhattan, then the rents will go down, and the 99% will be able to afford to live there again.

Some Foresight Here

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I did not expect the Democrats to insert a section into the stimulus bill preventing states from cutting taxes with relief money, but this is what they did.

I guess that they have enough experience in dealing with Republican ideology to realize that giving money to states would be subject to sabotage otherwise:

A last-minute change in the $1.9 trillion economic relief package that President Biden signed into law this week includes a provision that could temporarily prevent states that receive government aid from turning around and cutting taxes.

The restriction, which was added by Senate Democrats, is intended to ensure that states use federal funds to keep their local economies humming and avoid drastic budget cuts and not simply use the money to subsidize tax cuts. But the provision is causing alarm among some local officials, primarily Republicans, who see the move as federal overreach and fear conditions attached to the money will impede upon their ability to manage their budgets as they see fit.

………

Under the new law, $25 billion will be divided equally among states, while $169 billion will be allocated based on a state’s unemployment rate. States can use the money for pandemic-related costs, offsetting lost revenues to provide essential government services, and for water, sewer and broadband infrastructure projects.

But they are prohibited from depositing the money into pension funds — a key worry of Republicans in Congress — and cannot use funds to cut taxes by “legislation, regulation or administration” through 2024.

………

Senator Joe Manchin III, Democrat of West Virginia, explained why he pushed for the language in a briefing this week, arguing that states should not be cutting taxes at a time when they need more money to combat the virus. He urged states to postpone their plans to cut taxes.

It sounds like Joe Manchin, for once, did something useful.  (You could knock me over with a mackerel)

Still, the tax language has angered Republicans — none of whom voted for the rescue package — and on Thursday, Senator Mike Braun, Republican of Indiana, introduced legislation to reverse it.

Oh, you poor delicate snowflakes.

Pass the Popcorn

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Without comment, the Supreme Court has rejected Donald Trump’s bid to conceal his tax returns from the Manhattan prosecutor:

The Supreme Court on Monday rejected former president Donald Trump’s last-chance effort to keep his private financial records from the Manhattan district attorney, ending a long and drawn-out legal battle.

After a four-month delay, the court denied Trump’s motion in a one-sentence order with no recorded dissents.

District Attorney Cyrus R. Vance Jr. has won every stage of the legal fight — including the first round at the Supreme Court — but has yet to receive the records he says are necessary for a grand jury investigation into whether the president’s companies violated state law.

Vance responded to the court decision with a three-word tweet: “The work continues.”

………

Vance’s inquiry is one of two known criminal investigations involving the former president. The other, led by the district attorney in Fulton County, Georgia, focuses on Trump’s controversial coversations with state officials amid his failed effort to overturn that state’s election result.

Trump has waged an extraordinary battle to keep private his tax records, which every other modern president has released as an expected part of seeking the presidency. The court’s action does not mean Trump’s tax records are to become public — Vance has said they will be protected by grand jury secrecy rules — but is likely to accelerate an investigation that might be Trump’s biggest legal threat.

………

Forensic accounting experts from FTI Consulting are expected to assist prosecutors in assessing whether the Trump Organization manipulated property values for tax breaks, or to obtain favorable loan rates, The Washington Post previously reported.

The investigation is fairly developed, but the tax returns are an integral part of the picture. The Supreme Court order — allowing Vance to execute the subpoena — could mean a lot of work is ahead for investigators as the records are voluminous, spanning eight years.

………

The current fight is a follow-up to a July decision by the high court that the president is not immune from a criminal investigation while he holds office.

………

Vance is seeking eight years of the former president’s tax returns and related documents as part of what was initially an investigation into alleged hush-money payments made ahead of the 2016 election to two women who said they had affairs with Trump years before — claims Trump denies. Investigators have indicated they want to determine whether efforts were made to conceal the payments on tax documents by labeling them as legal expenses.

I’m expecting the investigations to reveal that Trump is basically broke, despite the millions that he managed to extract from the government and government supplicants.

I will love to see him broken like a yearling horse, and I know that he’s going to whine about conspiracies, but, “That’s what I thought you’d say, you dumb f%$#ing horse.“*

*Credit where credit is due, I am quoting comedian John Mullaney.

Worse Response to a Bad Idea

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The Australian government is in the process of passing a law that requires payment for linking to news sites, which to my mind is a horrible idea, and Mark Zuckerberg’s response to all of this is to have Facebook ban all Australian news content from their platform. 

Granted, Australia is not a huge market, at 25 million people, it’s only about 5 million more people than the New York City metropolitan area, but this ham-fisted response is going to do a lot of damage to Facebook while mildly inconveniencing the people of Australia.

I don’t expect Zuckerberg to cave, and in that case, I see Australia generally moving to some other source of rumors, genocidal racists, fascism, and cat pix.

The Australians are a hardy and inventive people:

Facebook has followed through on its threat to ban Australians from seeing or posting news content on its site in response to the federal government’s news media code.

The tech giant’s Australian and New Zealand managing director, Will Easton, said this would block links to Australian publishers from being posted, while no Australian users would be able to share or see content from any news outlets, both Australian and international.

“The proposed law fundamentally misunderstands the relationship between our platform and publishers who use it to share news content,” he said in a blog post published on Thursday morning. “It has left us facing a stark choice: attempt to comply with a law that ignores the realities of this relationship, or stop allowing news content on our services in Australia.

“With a heavy heart, we are choosing the latter.”

………

Users on Thursday reported seeing a pop-up error window when they attempted to post links to news, stating these cannot be posted in response to the news media code.

………

Facebook’s move is in contrast to the approach from the other major platform subject to the code, Google.

Although Google had threatened to withdraw its search engine from Australia if the code went ahead, in the past week, Google has signed agreements with some of Australia’s biggest publishers, including News Corp, Nine Entertainment and Seven West Media, for payment for its News Showcase product. The Nine deal is reportedly worth $30m a year.

As several people have pointed out to me, Facebook blocked itself. pic.twitter.com/LVhyJMAHfp

— Josh Taylor (@joshgnosis) February 17, 2021

Yes, Facebook banned Facebook, I think that the Aussies would call this an “Own Goal”

It gets even worse, because Facebook f%$#ed up the rollout of the ban, shutting down non-profits and government agencies as well:

The Bureau of Meteorology, state health departments, the Western Australian opposition leader, charities and Facebook itself are among those to have been hit by Facebook’s ban on news in Australia.

On Thursday morning Facebook began preventing Australian news sites from posting, while also stopping Australian users from sharing or viewing content from any news outlets, both Australian and international.

The social media giant said it made the decision in response to the news media bargaining code currently before the Senate, which would force Facebook and Google to negotiate with news companies for payment for content.

………

As Australia prepares to begin the rollout of Covid-19 vaccines, state health departments, including SA Health and Queensland Health, were unable to post.

St Vincent’s Health in Melbourne said it was “extremely concerning”its Facebook page had been blocked “during a pandemic and on the eve of crucial Covid vaccine distribution”.

Facebook is claiming that this was a “Mistake.”

If you believe that, I have a bridge in Melbourne made completely of Koala poop to sell you.

They Can Find it In Their Couch

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Apple was just assessed a €13 billion ($14.4 B) fine tax delinquency for using Ireland as a tax haven. Essentially the European Commission ruled that Apple received tax breaks from Ireland that amounted to an illegal subsidy to the computer and phone maker:

Apple has warned that future investment by multinationals in Europe could be hit after it was ordered to pay a record-breaking €13bn (£11bn) in back taxes to Ireland.

The world’s largest company was presented with the huge bill after the European commission ruled that a sweetheart tax deal between Apple and the Irish tax authorities amounted to illegal state aid.

The commission said the deal allowed Apple to pay a maximum tax rate of just 1%. In 2014, the tech firm paid tax at just 0.005%. The usual rate of corporation tax in Ireland is 12.5%.

“Member states cannot give tax benefits to selected companies – this is illegal under EU state aid rules,” said the European competition commissioner, Margrethe Vestager, whose investigation of Apple’s complex tax dealings has taken three years.

Here is where it gets weird: Ireland, which stands to benefit to the tune of €2800 for every man, woman, and child in the country is fighting this, as is the US Treasury department, which one would expect to fight this sort of illegal tax scheme:

Vestager’s ruling prompted an angry response from Apple and from Ireland and is likely to spark a political row between the US and the EU. The US Treasury said the ruling threatened to damage “the important spirit of economic partnership between the US and the EU”.

………

The commission said Ireland’s tax arrangements with Apple between 1991 and 2015 had allowed the US company to attribute sales to a “head office” that only existed on paper and could not have generated such profits.

………

The Irish government, however, wants the ruling reversed because it wants to preserve its status as a low-tax base for overseas companies.

Ireland’s finance minister, Michael Noonan, said Dublin would appeal against the ruling. He said: “The decision leaves me with no choice but to seek cabinet approval to appeal. This is necessary to defend the integrity of our tax system, to provide tax certainty to business and to challenge the encroachment of EU state aid rules into the sovereign member state competence of taxation.”

This was money laundering, pure and simple.

And this won’t really hurt Apple:

Apple, which changed its tax arrangements with Ireland in 2015, should easily be able to pay the huge tax bill because it has a cash mountain of more than $230bn (£176bn) of cash and securities, mostly held outside the US. The tech group keeps the money outside the US because it would be forced to pay US tax charges if it repatriated the money.

It’s pocket change for them, but hopefully this will make further Irish tax shenanigans less common.

I would hope that we would see some more movement in this direction, but the Obama administration, in the person of Jacob Lew, seems determined to prove that only little people pay taxes.

Another Myth Busted

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It turns out that rich people do not relocate when a state raises taxes:

When it comes to taxes, millionaires have short fuses. Ratchet up their rates and they’ll blow you off and move to a low-tax, or no-tax, state.

 Or so goes one argument against taxing the rich: States that levy a “millionaires tax” risk chasing those millionaires away to Florida, Texas, and other places with no income tax. Hedge fund manager David Tepper’s recent decision to move from New Jersey to Florida, possibly creating a billionaire-size hole in Jersey’s budget, raised alarms. Golf great Phil Mickelson, shortly after his infamous Dean Foods stock trade, complained about his high tax rate in California and threatened to move to Florida.

Now, a study based on 13 years of tax data finds that most millionaires don’t move cross-country just to avoid a tax bill. It turns out that the rich, while perhaps different from us, aren’t all that mobile. When they do move, it’s often for reasons that have nothing to do with taxes. For one thing, they appear to like the beach.

The study, published in the June issue of the American Sociological Review, suggests that states—and countries—may have some leeway to raise taxes on the wealthy without scaring away their tax base. It has obvious political implications, possibly serving as ammunition for those who favor taxing the rich. It could help advance the arguments of presidential candidates Hillary Clinton and Bernie Sanders, for example, who have both proposed higher taxes on upper-income Americans.

And if they did leave, good riddance.

If they leave, they lose political influence where they formerly lived, and the less influence that the self-obsessed pampered assholes have, the better.

Your Panama Papers Update

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Bernie Sanders Predicted this in 2011


There appears to be a dearth of US money launderers reported

Rather unsurprisingly, Bernie Sanders is noting his opposition, and Hillary Clinton’s support for the trade deal in his campaign:

Responding to the 11.5 million documents leaked this week showing how a Panama law firm helped some of the world’s wealthiest people establish offshore tax havens on the Central American country — the so-called Panama Papers — Bernie Sanders on Tuesday vowed to end the Panama Free Trade Agreement, tying Hillary Clinton to the same policies that he claimed fostered the practice.

 “The Panama Free Trade Agreement put a stamp of approval on Panama, a world leader when it comes to allowing the wealthy and the powerful to avoid taxes,” the Vermont senator said in a statement released through his campaign, adding that he has been opposed to it “from day one.”

 Vowing to use his authority as president to “terminate the Panama Free Trade Agreement within six months,” Sanders said his administration would “conduct an immediate investigation into U.S. banks, corporations and wealthy individuals who have been stashing their cash in Panama to avoid taxes.”

 “If any of them have violated U.S. law, my administration will prosecute them to the fullest extent of the law,” he said.

 Sanders also said that he had correctly predicted that the passage of the trade deal “would make it easier, not harder, for the wealthy and large corporations to evade taxes by sheltering billions of dollars offshore.”

 “I wish I had been proven wrong about this, but it has now come to light that the extent of Panama’s tax avoidance scams is even worse than I had feared,” he said, before pivoting to Clinton. “My opponent, on the other hand, opposed this trade agreement when she was running against Barack Obama for president in 2008. But when it really mattered she quickly reversed course and helped push the Panama Free Trade Agreement through Congress as Secretary of State. The results have been a disaster.”

It is not an unreasonable indictment of Hillary Clinton’s and Barack Obama’s record on so called free trade agreements.

In what might be a perfect example of Chutzpah, the state of Wyoming, a shell corporation factory that has one corporation for every 4½ residents, has initiated an investigation of a Wyoming based law firm at the center of the scandal:

The Wyoming arm of the law firm at the heart of the Panama Papers global scandal is under investigation by Wyoming state officials for failing to maintain required statutory information about companies registering there, Secretary of State Ed Murray said Wednesday.

 Upon learning of the Panama Papers, a massive leak of secret offshore company data reported on by McClatchy and more than 100 other media partners around the globe, Wyoming initiated an audit of 24 companies registered in the state by the law firm Mossack Fonseca and its partners, he said.

 “The audit concluded around noon on Monday, April 4th, and determined that M.F. Corporate Services Wyoming LLC failed to maintain the required statutory information for performing the duties of a registered agent under Wyoming law,” Murray said in a statement.

 The state followed immediately with administrative action, demanding that required information be provided.

 “Subsequently, M.F. Corporate Services did provide the information,” the secretary of state’s office said, adding that Murray also briefed law enforcement that day. “This investigation of this matter is ongoing.”

This is near toxic levels of hypocrisy.

In an interesting twist of fate, Ken Silverstien, then a reporter at The Intercept was all over the story of Mossack Fonseca 14 months ago, though his employer refused to publish it, so he published on Vice.com.

And then Pierre Omidyar, the publisher of The Intercept, got in his face.

.@MarkAmesExiled FYI @pierre wouldn’t pub story but demanded my fee from VICE. Oh well, at least I’m not in Moscow https://t.co/pZT7qr14yt

— Ken Silverstein (@KenSilverstein1) April 4, 2016

I wonder if perhaps the eBay founder (Omidyar) might have some “interesting” corporate structures for his billions.

The reporting this far seems to be what Yves Smith calls, “The Intercept model, not [the] Wikileaks model“.  See also Craig Murray’s critique of the coverage thus far.

Almost all the reporting thus far, with the exception of Icelands now former PM, has been directed primarily at regimes hostile to the west, with most of the coverage being screaming about Vladimir Putin.

Also note that Suddeutsche Zeitung brought in International Consortium of Investigative Journalists (ICIJ)
Not also the picture in the tweet.

The selective nature of releases to this point also raises the issue that those in the files but not yet exposed may be likely targets for blackmail: (Moon of Alabama)

A real leak of data from a law firm in Panama would be very interesting. Many rich people and/or politicians hide money in shell companies that such firms in Panama provide. But the current heavily promoted “leak” of such data to several NATO supporting news organization and a US government financed “Non Government Organization” is just a lame attempt to smear some people the U.S. empire dislikes. It also creates a huge blackmail opportunity by NOT publishing certain data in return for this or that desired favor.

Both Murray and MoA are implying that the US/NATO state security apparatus are somehow involved in the release of this data.

I have not made up my mind, but if we don’t see some prominent western names in the releases in the next few weeks, Sigmundur Gunnlaugsson doesn’t count, then I will be much more inclined to take their view.