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Senate Finance Committee cuts tax return preparer regulation

by Linda Beale

Senate Finance Committee cuts tax return preparer regulation

As most tax practitioners realize, many people who hold themselves out as “tax return preparers” actually know nothing about the tax laws and may even assist their clients in cheating on their taxes by inventing home offices, travel-away-from-home expenses, or other fictional deductions.

The U.S. Department of Treasury sought to deal with this by amending regulations governing “practice before the IRS” in Circular 230 to require those who prepare returns for payment to acquire an identification number and pass certification requirements.  The ABA Tax Section has been supportive of these requirements, because it is clear that both individual taxpayers whose returns are not accurate and the U.S. government suffer when scams are perpetrated by shady tax return preparers.

But some of those regulated under Circular 230 objected and brought suit.  They got the D.C. Court of Appeals, in Loving, to hold that the longstanding provision that permits the Treasury to regulate tax practitioners that ‘practice before the IRS’ covered only litigation-like controversies.  This is, in my view, patently absurd.

If anything constitutes practicing before the IRS, the preparation of taxpayers’ tax returns must.  It is the core interaction of a taxpayer with the IRS/Treasury, and is something that we must do.  If an ‘adviser’ prepares the return for us, that adviser is representing us to the government.  That clearly should constitute “practice before the IRS.”

So once the Loving court ruled against the government on its ability to regulate these maverick ‘tax return preparers’ who do not have to know or follow the law, many tax practitioners and others pushed Congress for legislation to permit the Treasury to regulate tax return preparers.

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Denmark, the VAT Tax and Paul Krugman

So Sanders and Clinton are arguing about soda taxes — Clinton for, as a way to raise money for good stuff while discouraging self­-destructive behavior, Sanders against, because regressive. I have no illusions that rational argument will make much difference in the short run; we’re in that stage where anything Clinton supports is ipso facto evil. It’s like that point in 2008 when Obama supporters hated, hated the individual mandate that eventually became, as it had to, a central piece of Obamacare.

But anyway, it does seem worth pointing out that progressivity of taxes is not the most important thing, even when your concern is inequality. Notably, Nordic countries — very much including Denmark, which Sanders has praised as a model — rely heavily on the VAT, which is a regressive tax; but they use that revenue to pay for a strong social safety net, which is much more important.

If we add in the reality that heavy soda consumption really is destructive, with the consequences falling most heavily on low-­income children, I’d say that Sanders is very much on the wrong side here. In fact, I very much doubt that he’d be raising the issue at all if he weren’t still hoping to pull off some kind of political Hail Mary pass.

A Note on the Soda Tax Controversy, Paul Krugman, yesterday

One of the hallmarks of this Democratic primary season is the extent to which high-profile liberal baby-boomer political journalists and pundits have been willing to make what are, at least to me, transparently illogical arguments in support of Hillary Clinton.

One particularly annoying canard, offered originally by Jill Abramson in an op-ed published in The Guardian last month, is that Politifact found Clinton to be the most honest of the candidates.  Specifically, Abramson wrote:

As for her statements on issues, Politifact, a Pulitzer prize-winning fact-checking organization, gives Clinton the best truth-telling record of any of the 2016 presidential candidates. She beats Sanders and Kasich and crushes Cruz and Trump, who has the biggest “pants on fire” rating and has told whoppers about basic economics that are embarrassing for anyone aiming to be president. (He falsely claimed GDP has dropped the last two quarters and claimed the national unemployment rate was as high as 35%).

Referencing both the Abramson op-ed and the Politifact statistic that Abramson used, but dropping the qualifier “on issues” that Abramson had used, Nicholas Kristof wrote in his column last Sunday titled “Is Hillary Clinton Dishonest?”:

One basic test of a politician’s honesty is whether that person tells the truth when on the campaign trail, and by that standard Clinton does well. PolitiFact, the Pulitzer Prize­winning fact­checking site, calculates that of the Clinton statements it has examined, 50 percent are either true or mostly true. That compares to 49 percent for Bernie Sanders’s, 9 percent for Trump’s, 22 percent for Ted Cruz’s and 52 percent for John Kasich’s. Here we have a rare metric of integrity among candidates, and it suggests that contrary to popular impressions, Clinton is relatively honest — by politician standards.

Apparently it didn’t occur to either of these writers that the statistic was a mathematical function of the high number of statements of Clinton’s that fact-checking websites, including PolitiFact, are asked to and do fact check.  And that a high percentage of those statements are ones citing statistics of one type or another.

A review of a number of Clinton’s statements that PolitiFact examined shows that she usually is accurate when stating simple statistics but often misrepresents her opponent’s—Sanders’s—policies, statements or positions, sometimes explicitly, sometimes by clearly-intended inference.  An example of both in a single sentence was one I’ve mentioned in earlier posts: her recent statement that she “couldn’t believe” that Sanders opposes the Paris climate change agreement.  The express falsehood was that Sanders opposes the agreement.  The intended inference, clearly false, was that he opposes it because he thinks it goes too far.  Sanders supports the Paris climate agreement but thinks it doesn’t go far enough and believes much more is necessary.

A favorite tactic of Clinton’s in this primary campaign has been to rely upon the public’s presumption that her statements support (or at least are relevant to) the claim she’s clearly trying to make, in order to mislead by stating something that may be true—e.g., Sanders complained about the Paris agreement—but is irrelevant to her presumed point.  In that instance, Clinton slyly told her listeners that Sanders opposes the agreement because it goes too far.  These pundit apologists for Clinton fool mainly themselves with their obliviousness.  They get neither the substantive policy reasons for the strength and durability of the Sanders movement nor the nature of the distaste for Clinton herself among progressives.  Sleight-of-hand-as-prime-modus-operandi tends not to instill confidence about the general veracity of the hand-sleighter.  People do catch on when it’s a habit.

But Krugman’s Clinton-vs.-Sanders writings stake out a territory all their own.  They are rants notable less for their Clinton puffery than for their vitriol toward Sanders and his supporters, and sometimes include what seems to me real intellectual dishonesty.  That’s how I read his VAT tax remark in the excerpted post above.

It is, as Krugman says, worth pointing out that progressivity of taxes is not the most important thing, even when your concern is inequality.  And the Nordic countries’ strong social safety net, I agree, is much more important than the progressivity of the tax to fund it.*

But the Nordic VAT taxes are on all, or at least most, types of products.  The social safety net, or any one part of it, is not funded mainly by lower-income people by applying the tax only to a product or products favored more by lower-income people.  And since the gap there between lower and higher income people is tiny compared with the gap in this country, and since lower-income people have access to a full panoply of safety-net and other government programs and therefore can better afford to contribute substantially to the funding of the safety net, Krugman’s invocation of Denmark as a slam against Sanders for voicing objection to the soda tax proposed by Philadelphia’s mayor is a real sleight of hand.

Krugman links to a blog post from last Friday in the New York Times by Margot Sanger-Katz titled “A New Policy Disagreement Between Clinton and Sanders: Soda Taxes,” which reports:

Last week, Mrs. Clinton became the first presidential candidate to explicitly endorse a tax on sugary drinks. At a Philadelphia event Wednesday, she said a proposal there to use a soda tax to fund universal prekindergarten was a good idea.

“It starts early with working with families, working with kids, building up community resources,” Mrs. Clinton said, according to a CNN report. “I’m very supportive of the mayor’s proposal to tax soda to get universal preschool for kids. I mean, we need universal preschool. And if that’s a way to do it, that’s how we should do it.”

Yes, that’s a way to do it.  But of course there are other ways to do it, too.  One would be a small across-the-board sales tax increase, rather than a large one on this one product.  Another, albeit not one available to city mayors, of course is a slight income tax increase or a securities-transaction tax.

Clinton’s statement that “[i]t starts early with working with families, working with kids, building up community resources” strikes me as really troubling.  She’s running for president.  Does she really think the best way to fund universal preschool is to build up community resources?   How about building up federal resources, via a more progressive tax code, and funding universal preschool universally?  A municipal soda tax may be okay as a stopgap funding method.  But beyond that?  That’s it?

The issue of whether or not to tax soda pop as a way to discourage its use, especially by kids from lower-income families, is separate.  I think there are better ways to try to accomplish that goal, just as I think there are better ways to fund universal preschool.  But my concern here about Krugman’s post is his disingenuous use of Northern European VAT taxes in the service of another of his gratuitous attacks on Sanders and Sanders’ supporters.  Including me.

*Sentence rewritten for clarity and typo correction. 4/26 at 11:25 p.m.

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Internet shedding light on hidden history of Mormonism

The Mormon church reaches out over the whole world to get converts. Their missionaries present pamphlets about their history and doctrines. The pamphlets paint a picture of wholesomeness and purity. Yet the pamphlets are propaganda that distorts historical truth.

It is important to know the truth behind Mormonism because members of the church have become economically and politically powerful, for example, Glenn Beck and Mitt Romney. The internet now allows people to bring together all the historical documents to piece together the true history of Mormonism.

What is the basic image portrayed by the pamphlets?

jstranslatesbom4

A young pure-hearted boy named Joseph Smith was disappointed by the churches of his day and asked God to know the real truth. Then one night an angel, named Moroni, visited him floating in the air surrounded by a bright light and gave him instructions to look for golden plates hidden in the forest. The angel visited him 3 times. He was supposed to translate the plates and restore the true church of God to the earth. He found the plates in the forest and eventually translated them. At one point, both God and Jesus appeared to him giving him blessings. The pamphlets show images of a noble-hearted Joseph Smith sitting at a table with the golden plates next to him while he translates them. The angel Moroni who had hidden the plates centuries before was his guide to translate the plates. The translation became the book of Mormon.

What do the historical records now show? (I am leaving out many details to keep this post short.)

Joseph Smith in his youth would put a stone into a hat. He had found this stone in a well. Then he would look at the stone with the hat closed around his face. Then he would tell people where hidden treasures were in the forest. He would receive money for this information. He would take people into the forest and point to a spot to dig. Upon not finding the treasure, he would say that the treasure had moved through the earth because someone had disobeyed the guidelines of the spirit. They would have to dig in another spot nearby. He was once charged with disorderly conduct because of these deceits.

Joseph Smith came from a family with a tradition of magical folklore. According to this folklore, an angel had to visit 3 times to be true. If not, the angel was not telling the truth. There were all sorts of angels purported to visit the people in that tradition. The angel Moroni came 3 times to satisfy that folklore tradition and the blessings of his folklore father who encouraged young Joseph Smith to bring him the plates. But Joseph said that the angel would not give him the plates.

500px-Anthony_Sweat_Translating_with_Martin

It turns out that the Joseph Smith did not translate the plates as shown in the pamphlets. He actually would look into a hat at the same stone he had used to find false treasures. Then he would speak the story while someone sitting near him would write down what he said. A few different people ended up writing his dictations. He would say the plates were still in the forest or in a nearby box while he saw words on the stone. He said that he was receiving the translation with the help of the angel Moroni.

Most Mormon temples put the angel Moroni on top. Was this angel real or a fictional character in a novel? Nobody but Joseph Smith ever saw the angel Moroni. Did he see it in his imagination, or was the angel real?

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In his youth, Joseph Smith would entertain his family and friends with grand stories of the past and a history of the Indians. They would all sit around and listen to him weave stories. They enjoyed his stories according to historical accounts. The book of Mormon also tells stories of the past and the history of the Indians. Joseph Smith had a talent for story-telling. Was he preparing stories that would eventually become the book of Mormon?

At the beginning of the book of Mormon, witnesses signed a document to swear that they had seen the golden plates. When some of these people were pressed later if they had seen the plates with their physical eyes, they said that they had seen the plates with their spiritual eyes instead, like seeing a city on the other side of a mountain.

Let me present another historical event… The book of Abraham written by Joseph Smith.

One of the canonized books of Mormonism is the book of Abraham. The story is that an actual Egyptian scroll made its way to Joseph Smith by a traveling salesman while he was living in Kirkland, Ohio. The scroll was torn a bit and missing some pieces. Followers of Joseph Smith knew he could translate the scroll since nobody in the world was able to translate that forgotten language. And Joseph had translated the plates. So Joseph Smith said he could translate the scroll. He talked with some friends with money and bought the expensive scroll. Then over the next few weeks, he wrote the translation of the scroll. The translation tells a grand story of Abraham and came to be called the book of Abraham.

Years later the Rosetta stone was found and scholars were able to translate ancient Egyptian. As it turns out, Joseph Smith’s translation was complete fiction and had no relation to the common funeral scroll. The actual scroll that he translated was eventually found in a museum. His wife, Emma, who had bitter memories of her husband’s adulterous relationships (more dark secrets of Joseph Smith) gave the scroll to a museum with a letter of its history.

A mormon missionary told me that the book of Abraham was a higher truth of the scroll. Joseph Smith had given us a higher understanding. So could it be that Joseph Smith’s translation was truer than the true translation?

Records of these historical accounts were scattered and unknown until the internet and computers allowed people to assemble them and develop a complete story of the truth (lies) behind Mormonism.

The leaders of the Mormon church are currently trying to hide and spin this history. They have too much invested to allow the church to collapse.

Some more history…

Blacks had been seen by the church as accursed by God since the 1840’s. The Mormon church decided to allow Black’s to be priests in the late 1970’s. That is a good thing, right? Well, at the same time institutions of discrimination were losing tax-exemption under Jimmy Carter, like Bob Jones University. The Mormon church was vulnerable to losing their exemption too.  A revelation from God was imminent.

“In 1978, the First Presidency and the Twelve, led by Spencer W. Kimball, declared they had received a revelation instructing them to reverse the racial restriction policy.” (source)

Money talks in the Mormon church. Their prophet and apostles of Jesus and God built a $5 billion mall. At the grand opening of the mall, the current prophet of God, Thomas Monson, said, “1 2 3… Let’s go shopping!” and cut the ribbon.

“When it came time to cut the mall’s pink ribbon, Monson, flanked by Utah dignitaries, cheered, “One, two, three, let’s go shopping!”

While watching a religious leader celebrate a mall may seem surreal, City Creek reflects the spirit of enterprise that animates modern-day Mormonism. The mall is part of a vast church-owned corporate empire that LDS leadership says will help spread its message, increase economic self-reliance and build God’s kingdom on Earth.” (source)

The church puts their apostles at the same level as the apostles of Jesus. Can we imagine the apostles of Jesus opening a mall and promoting shopping? Maybe they would have if it meant tax exemption.

ldstab_mormonmoney_10212~1

There are many many more hidden deceits in the history of the Mormon church that the internet is making known.

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Another Right Wing Propaganda Tank Piles On Tax Complexity Bandwagon

by Linda Beale
Another Right Wing Propaganda Tank Piles On Tax Complexity Bandwagon

As noted in my last post, part of the fanaticism that is surging in the current obstructionist Congress relates to taxes (quel surprise...).  The JEC ran a hearing on Wednesday targeting “complexity” in the tax code as a source of humongous problems.  The clear intent of the GOP in control is, and has been for some time, to pile in on the “blame the IRS” and “get rid of the government beast” bandwagon in order to keep money rolling in to the hands of the rich and prevent any action on public or human capital infrastructure, climate change, or any other reasonable programs that our government should be developing to deal with the many problems in today’s world.

But as I also noted in that post, holding up “simplicity” as a reasonable goal for tax policy is intended to deceive.  Simplicity is generally  important only for tax provisions that are most likely to impact the poor or near poor; it is for all practical purposes an unimportant target for thinking about the appropriate tax provisions for the wealthy and corporate/business elite.  That is because (as I said in that post):

The simpler you make the code, the more loopholes you create.  The more you cut funding for the IRS and tax enforcement generally, the harder you make it for the government to discover the loopholes or catch those who exploit them on audit.  The reason the tax provisions of most concern to big businesses and those with international investments and those with multiple types of investments (CDOs, hedge funds, private equity, partnerships of one kind or another, S Corporations, etc.) are complex is that new, detailed, specific language has to be developed to counter the loophole exploitation by those who apply hyperliteralism and avoid contextual meaning and purpose of the laws in order to have an arguable defense for a tax planning transaction designed to exploit loopholes.

But just as the Walton and other rich families’ money has been spent for years to make ordinary Americans believe that family farms are threatened by the federal estate tax (a fallacious myth); so too has considerable money from wealthy families, spent through the conduit of various propaganda tanks, been used to convince ordinary Americans that it is government, the IRS, and a complex tax code that form the core of their problems in making a decent living in today’s society.  That, too, is a fallacious myth.  It is the wealthy families and owners of corporate stock, who have garnered all the benefit of workers’ productivity over the last few decades and have allowed wages to stagnate so they can grab their “rentier” profits, who carry most of the blame for the precarious situation of America’s middle class.  It is the greed-above-societal-good policies practiced by so many of the wealthy owners and managers of American businesses and lobbied for in Congress, and so easily bought into by those in the majority in today’s House and Senate (most of whom belong to the same elite).

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Is the Road to Hell Paved with Pareto Improvements?

In a large multiplayer prisoner’s dilemma, any change in any one individual’s strategy doesn’t affect anyone else, so a player can know that defection will be a Pareto improvement. We might say that the problem of social evil is that the road to hell is paved with Pareto improvements. — Ted Poston, “Social Evil,” Oxford Studies in Philosophy of Religion, Volume 5

Poston’s “social evil” is what previous authors have called a social trap or, more famously, the tragedy of the commons.

A Pareto improvement is a change that makes at least one person better off without making anyone worse off. According to the standard fable, voluntary exchange results in a Pareto improvement because each party in the exchange gets something they wanted more than what they gave up for it.

A prisoner’s dilemma involves a situation where the individual payoff to each player for defection is better, regardless of whether the other player defects or co-operates but the collective payoff is maximized when both players co-operate.

In a large multiplayer prisoner’s dilemma game, defection by some players may have no effect on the other players’ outcomes, while defection by a large number of players may have catastrophic effects after some vaguely defined tipping point has been reached. Within limits, defections thus appear to result in a Pareto improvement, where some players are made better off and no one is made worse off.

In Fights, Games and Debates, Anatol Rapoport presented a production and exchange model that deserves to be much better known. It is a very elementary model and thus, as Rapoport warns repeatedly, the results should not be taken as a faithful depiction of what is likely to happen in reality. However, it offers some critical insights into “common sense” assumptions and specifically into the idea of Pareto improvement, which is also based on extreme simplification.

Rapoport’s production and exchange “society” consists of two people who each produce goods and exchange with each other a uniform, fixed ratio of their products. The individuals derive utility from the goods they produce and, presumably, can increase their utility by exchanging some of the goods they produce for the different goods their counterpart produces.

Effort to produce those goods, however, is a disutility. The utility from goods increases logarithmically as the quantity of goods increases but the disutility of effort increases in proportion to the amount of effort expended.

Agents in this model can only change their utility by increasing or decreasing their own effort and output. Thus, plotted on a graph, X can only move along the x-axis and Y can only move along the y-axis. Under the stipulated conditions, a stable equilibrium can only be achieved when the utility of the proportion retained by each producer is larger than the disutility of effort.That is to say, the proportion retained cannot be too small and the disutility of effort cannot be too large.

In the absence of a stable balance, any relaxation of effort by one of the agents will lead to parasitism by that agent as the other will immediately compensate by increasing effort, the first agent will slack off more to compensate for the increased effort of the other — and so on.

But even in the presence of a stable equilibrium, the total utility of the two agents, at the balance point, will be less than the total would be without exchange, as long as their production/effort decisions are guided solely by their own utility rather than by some agreement about how to link their production effort to achieve a “social optimum.” This outcome is contrary to the “common sense” interpretations of Pareto improvement and Pareto optimality. As Rapoport cites his mentor, Nicolas Rashevsky, it turns out that:

The only ‘ethics’ which leads to the attainment of maximum joint utility in the model of society we have considered is the ‘egalitarian ethic,’ in which the concern for self and for other are of equal weight.

It would be easy to dismiss Rapoport’s conclusion as pertaining only to very restrictive premises. This is a point that Rapoport reiterates throughout his exposition. But the objection applies equally to Pareto’s model.

Vilfredo Pareto is not readily perceived as a proponent of the egalitarian ethic. In his model, though, Rapoport unpacked a tacit premise of Pareto that rational agents would act “as if” guided by some unacknowledged intuition of linkage — one might even call this invisible intuition “moral sentiments.”

Furthermore, the restrictiveness of Rapoport’s assumptions may not be as unrealistic as it seems at first. The fixed ratios of exchange can be relaxed to merely widespread similarities in the ratios of exchange. The specification for a stable equilibrium that the proportion of an individual’s product exchanged does not exceed the proportion retained can be rationalized by the fact that there is a roughly equal number of hours of unpaid household work performed in the world as there are waged hours of labor. All this is before we move on to the issue of “multiplayer games” — of a society in which individual actions that ostensively do no harm may accumulate into “social evil.”

In Beyond the Invisible Hand, Kaushik Basu examined the issue of outlawing yellow dog contracts, as the Norris-LaGuardia Act did in 1932:

It could he claimed that if one worker prefers to give up the right to join trade unions in order to get a certain job that demands this of workers, then this may be a Pareto improvement. But if such yellow dog contracts are made legal, then lots of firms will offer these contracts, and the terms for jobs without a yellow dog clause may deteriorate so much that those who are strongly averse to giving up the right to join unions will he worse off in this world.

Basu proceeds to consider labor standards in cases in which there are multiple equilibria. He asks, “Should the law be used to set a limit on the number of hours that a worker is allowed to work?” His answer — backed by reference to supporting empirical studies — would earn the scorn of economists who fancy a lump of labor behind every proposal for shorter hours:

A statutory limit on work hours can, by limiting the supply of labor, push up the hourly wage rate, and it is possible that at this higher wage rate people would not want to work that many hours. In other words, the labor market may have two or more equilibria, in which case banning the long work-hours equilibrium is fully compatible with a commitment to the Pareto principle.

Unpacking Pareto optimality and Pareto improvement, as Rapoport’s model of production and exchange does, undermines the premise of the road to hell being paved with Pareto improvements. If there is indeed a tacit moral sentiment, a secret egalitarian ethics at the heart of the Paretian idea, then any violation of trust will impose a loss of utility on everyone else — perhaps even on the violator. Those individuals gains through defecting were only “improvements” assuming an ethical vacuum. What is the point of building a road to a hell where one already is? In an ethical world, violations of trust are losses of utility.

 

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New OECD tax agreement improves transparency — but the US doesn’t sign and the US press won’t tell you UPDATED

by Kenneth Thomas

New OECD tax agreement improves transparency — but the US doesn’t sign and the US press won’t tell you UPDATED

Last week 31 countries signed a new Organization for Economic Cooperation and Development (OECD) agreement providing for country-by-country corporate information reporting and the automatic exchange of tax info between countries under the Multilateral Competent Authority Agreement (MCAA).

Country-by-country reporting, the brainchild of noted tax reformer Richard Murphy,* is a principle that makes it possible to detect tax avoidance by requiring companies to list their activities in each country (nature of business, number of employees, assets, sales, profit, etc.) and how much tax they pay in each country. A company with few employees yet large profits is probably using abusive transfer pricing to make the profits show up in that country rather than another one, to give one obvious example of how the idea works. In the OECD agreement, the procedure is that beginning in 2016 each company will file a report to every country where it does business, then all the countries receiving such reports will automatically exchange them with each other, meaning each of these countries will then have a full view of how much business Google, for example, does in every jurisdiction. The shortcoming to this is that while governments will have this data,the public will not have it (a fact criticized by the Tax Justice Network) due to alleged concerns about confidentiality. However, the European Commission, including its Luxembourgian president Jean-Claude Juncker, is now talking about requiring publication of the country-by-country data for each EU Member State.

Which highlights an important aspect of this agreement: Many major tax havens, including Luxembourg, Ireland, Liechtenstein, Switzerland, the United Kingdom, the Netherlands, Belgium, and Austria have all signed on. But the United States did not sign it. Surprisingly, you can’t find this out in any U.S. publication, as far as I can tell. I’m a subscriber to the New York Times, and a search for “OECD tax deal” or “OECD tax” for the past week (it was signed six days ago) yields no results. “OECD” yields one result unrelated to the MCAA. Ditto for the Wall Street Journal. Ditto for my premium Nexis subscription: No U.S. stories on the agreement. You’d almost think they’re trying to keep us from finding out. But no, not exactly: The Financial Times was able to get Treasury Secretary Jack Lew himself to comment in its story on the MCAA. He said, “From a US perspective, there are elements of this that don’t require legislation and we’re looking to getting to work right away.”

That’s certainly a clue: Some of the changes do require legislation, and getting that from the Republican Congress is not going to happen. In fact, Republicans have always been willing to step up to keep the United States a tax haven for foreigners, and the Bush Administration went out of its way to undermine previous OECD attacks on tax havens offshore, as Australian political scientist Jason Sharman masterfully showed in his book Havens in a Storm.

Republicans have done such a good job at helping out domestic tax havens that theUnited States is now “The World’s Favorite New Tax Haven,” according to Bloomberg Businessweek which, in an ironic coincidence, published the story at 12:01AM the day the MCAA was signed (so it didn’t report on the signing either). According to the article, foreigners’ money is pouring out of Swiss banks into the United States, and Rothschild has set up shop in Reno, Nevada.

A little too ironic…

* As regular readers know, Murphy is someone I frequently cite in these pages.
UPDATE: @AlexParkerDC from Bloomberg BNA was kind enough to send me to a couple of his posts on the OECD’s Base Erosion and Profit Shifting (BEPS) negotiations. These suggest that the Obama Administration believes it can implement country-by-country reporting through regulation alone, and had already committed to it in the BEPS process. However, the IRS has proposed not to implement country-by-country until 2017, while the new OECD agreement begins with this year’s tax information, as noted above.

cross posted with Middle class political economist

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Should simplicity be a primary goal of tax reform?

by Linda Beale

Should simplicity be a primary goal of tax reform?

I was at a housewarming party last Saturday and talked to quite a few people I didn’t know.  One was an economics professor at a regional school.  Naturally, economists and tax professors gravitate towards talk about the economy and tax policies, so it isn’t surprising that our talk got there fairly quickly.   I will add that his views were not too surprising, either: he suggested that corporate inversions and other forms of corporate tax planning and abusive transactions would disappear if only we made the tax code “simpler.”  Not surprisingly, that is the issue I hear most insistently from many of the economists that I talk to– especially those who have bought into Milt Friedman’s free marketarianism:  they suggest that the entire problem of the tax code–or the problem of the unprecedentedly low percentage of GDP we raise from corporate taxes in particular–could be solved if only we made the tax code simpler.

One thing they don’t seem to realize is that the neoliberal approach has led to corporations treating their employees as just another number to be crunched for the benefit of the bottom line,  their obligation to community and people as just another PR element, and their obligation to pay a fair share of their income to support the many levels of legal stability and benefits that they receive from government –including the benefits from basic research supported by government funding–as just another expense to get rid of in any way possible.  If the statutory rate is 35% even though the ACTUAL EFFECTIVE RATE is near zero for 75% of corporations and no higher than 20-26% for many corporations, they will still argue that the statutory rate should be 25%.  If it is lowered to 25% (and the effective rate for almost all corporations is near zero with a few paying around 10%), they will argue for a statutory rate of 10%.  And so on.

The argument from simplicity is, these days, mostly another example of class warfare being waged on behalf of the wealthy, corporatist elite against ordinary American workers.

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Consumer Expenditures Survey: incomes rose sharply from June 2014-June 2015

by New Deal democrat

Consumer Expenditures Survey: incomes rose sharply from June 2014-June 2015
A major piece of data came out last week that has been totally unreported in the media and econoblogosphere:  the Consumer Expenditures Survey (CES) for June 2014- June 2015.

This is the first CES report to include the period of rapidly declining gas prices. And at least on initial examination, to my nerdy eyes, it’s a stunner.

The CES income data has been the source of most of the reporting over the last few years indicating that the vast majority of workers have seen a real decline in wages.  For example, using the CES data, the NELP reported last August that real wages had declined across the board since the end of the recession in June 2009:


And in a report just a few weeks ago, the Pew Foundation showed the inflation-adjusted  CES income and expenditures through June 2014 into this graph:

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The US suicide rate has increased markedly over the past 8 years

The US suicide rate has increased dramatically (via Kevin Drum whose commentary is excellent as usual)

I have two thoughts about possible causes

One hand gun ownership. I know the rate of gun ownership has declined (always explained by the alleged decline in hunting). It is rare for people to kill themselves with rifles. I have a sense that handgun ownership has increased, but google didn’t send me to handgun specific data in5 minutes. Gallup & GSS give contradictory numbers. I will look at Gallup. Here there is a strong geographical pattern with increases in the East and MidWest. That can be compared to suicide rates by someone less lazy than me.
http://www.gallup.com/poll/150…

Suicide rates by sex shout out that it has a lot to do with guns. I think the evidence is mainly state level correlation http://www.hsph.harvard.edu/ne…

The other idea is recent wars and suicide. The rate of suicide among veterans is far about that of the general population. The increase in suicides in your graphs is roughly equal to total suicides by veterans. Suicide rates are highest for young men. Young veterans with recent service are most at risk. This can’t be the whole story (the numbers are change compared to total) but the correlation is in the time series.

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