President Joe Biden's proposal to give the Internal Revenue Service an extra $80 billion over the next decade to go after tax cheats — which the ol' blog talked about earlier this month in this post — is getting a lot of attention in advance of his nationally televised speech night. I suspect the current IRS hierarchy is pleased, despite the comments to The New York Times by a former commissioner that an extra $25 billion over a decade would be sufficient. "I'm not sure you'd be able to efficiently use that much money. That's a lot of money," said... Read more →
Rich Wealthy
Some come to the Cayman Islands for the beauty of Seven Mile Beach and other natural recreational areas. Others enjoy the Caribbean locale for financial and tax reasons. For more than a decade, wealthy U.S. tax evaders have taken advantage of a gaping tax law loophole that allows them to stash billions in foreign bank accounts, according to a recently released congressional report. Even though the 2010 Foreign Account Tax Compliance Act (FATCA) requires them to report any non-U.S. accounts and pay taxes on all income earned, too many non-taxpayers are using what the Senate Finance Committee report describes as... Read more →
Photo by krakenimages on Unsplash Are you freaking out about the possibility that one of the new Internal Revenue Service enforcement agents will be coming for you? Most of us don't have to worry. The prime targets are the very wealthy. Why has the IRS been instructed to go after this filing demographic? One reason is because the richest taxpayers who try to hide taxable assets offer the biggest return when they are caught. Another reason is that they've been flying under the IRS audit radar for way too long. Dramatic drop in high wealth audits: A Government Accountability Office... Read more →
Tax legislation is much more than just changes to the Internal Revenue Code. It's also a political statement. In an election year, which is essentially every year nowadays, it's also a political weapon. Republicans, who currently are slightly outnumbered on Capitol Hill by Democrats, didn't waste any time latching on to the Senate's passage on Aug. 7 of the Inflation Reduction Act. Notably, they cited potential added Internal Revenue Service scrutiny of taxpayers, thanks to part of the bill. Well aware that every federal return filer, even the most honest among us, worries about the IRS taking a closer look... Read more →
Robert J. Brockman speaking at the dedication of Centre College's Young Hall on in October 2011. (YouTube screenshot) The Texas billionaire charged in what Internal Revenue Service investigators called the largest U.S. tax fraud case ever died late Aug. 5 at his Houston home. The 81-year-old Robert J. Brockman suffered from Parkinson’s disease and dementia. In May, a federal judge deemed the former CEO of Reynolds & Reynolds, a software company for auto dealerships, was competent to face charges that he evaded taxes on $2 billion of income. A February 2023 trial date was set. So what happens now to... Read more →
Panoramic view of Los Angeles, California (Photo by Anthony Brown) There's been a boom this year in the price of houses. Now some Californians are hoping that the money sellers are making also can help the homeless. Los Angeles voters will decide in November on a higher tax rate on sales of high-value homes. The proposed 4 percent tax on the sale of homes valued $5 to $10 million and 5.5 percent on homes valued at more than $10 million would go toward affordable housing and homelessness prevention efforts. In addition to applying to residential sales, commercial property sellers would... Read more →
Update, Monday, Aug. 8, 2022: Robert J. Brockman died at his Houston, Texas, home on Aug. 5, 2022. That effectively ends federal prosecutors' criminal tax evasion case against Brockman. Civil tax litigation, however, will continue against his estate. Shutterstock The billionaire charged in the largest U.S. tax fraud case ever is one step closer to facing trial. Robert J. Brockman, the former CEO of Reynolds & Reynolds, a software company for auto dealerships, was indicted on Oct. 1, 2020, on 39 counts of evading taxes on $2 billion of income. The 20-year scheme, according to the Internal Revenue Service Criminal... Read more →
President Joe Biden's fiscal year 2023 budget proposal of a minimum tax on the wealthiest Americans, as well as a levy on unrealized gains on assets (including stock holdings), is getting the most attention. Biden's plan to collect at least a 20 percent tax on U.S. households worth more than $100 million would apply to about 20,000 households, but more than half the revenue would come from households worth more than $1 billion, according to White House estimates. It also would, says the administration, help reduce the nation's budget deficit by $1 trillion over the next decade. Wish list only:... Read more →
SoFiStadium.com It's a Sunday afternoon, so of course I'm channel surfing watching sports. Not only are the various athletic offerings great entertainment, they produce big bucks for teams and athletes. They also cost us taxpayers, regardless of whether we attend or watch the events, big time, especially when cities and states help build the sporting facilities. Since 2000, subsidies for financing professional sports stadiums have cost taxpayers $4.3 billion, according to three members of Congress. Since the owners of the sports teams that use the sites are raking in billions of dollars every year, the Democratic trio has introduced a... Read more →
AMT law changes plus annual inflation adjustments mean that this parallel tax aimed at the wealthy is no longer such a broadly-based ATM for the tax collector. The political and legislative battle over how to collect from the wealthiest taxes, which was mentioned in yesterday's Part 6 tax inflation post on (among other things) estate taxes, is not new. It's been going on for decades. The Alternative Minimum Tax, or AMT, is one way that Washington, D.C., came up with to ensure that the rich pay at least some taxes. This post, Part 7 of the ol' blog's 10-part inflation... Read more →
Current political talk (OK, fights) on Capitol Hill is full of discussions (OK, fights) over how and how much to tax the rich. The discussions (OK, fights) are driven by the fact that the tax code already is full of provisions that help the wealthiest among us stay that way. But some of the tax laws can help all of us, regardless of our income level, increase our relative wealth. And some of those Internal Tax Code components are adjusted each year for inflation. This Part 6 of the ol' blog's annual tax inflation series looks at how these annual... Read more →
Yes, cash sometimes is called lettuce, but tax gain harvesting isn't just about more green for your wallet. It could help reduce taxes you sell on assets you sell in the future. Even if you're not among the wealthiest, if you have invested a bit, you probably keep an eye on the markets. And you probably took a long look yesterday, when the Dow topped 36,000 for the first time ever. Hey, I'm right there with you. I checked my holdings to see how much they were up at that point. We all like positive reinforcement. If you're investing for... Read more →
Elected officials come into office with grand plans. Then the reality of governing hits. Although President Joe Biden has a nominally Democratic House and Senate, the margin in both chambers, especially when we're talking about the perpetually infighting Dems, is razor thin. That means Biden is not going to get everything he proposed on the campaign trail. That's become obvious in the wrangling still going on over his scaled-back Build Back Better (BBB) budget bill. Estate tax/other benefits tradeoff: The Biden Administration had hoped to help pay for new and increased family-focused tax breaks in the BBB by upping another... Read more →
As the battle over how to pay for the Biden Administration budget continues on Capitol Hill, much of the focus has been on the wealthy. A new annual tax on billionaires' unrealized capital gains is the latest suggestion to help pay for the nearly $2 trillion bill. Under current law, every property owner, regardless of income, pays tax on assets when they realize a gain from them, usually by selling them. This so-called wealth tax, however, would force the ultra-wealthy to pay tax on the value or their holdings, stocks as well as real estate, before realizing the gains. It... Read more →
The tax voyeur in all of us enjoyed the latest unsurprising revelations of how rich people hide money around the world, including a dozen U.S. states and D.C., to avoid paying taxes. The attention to this not really news item also is a good time to note the difference between illegal tax evasion and legal tax avoidance. The South Dakota capitol building is in the state's capital city of Pierre. The state itself is the U.S. capital as far as the most trusts identified in the Pandora Papers. (Photo by Jake DeGroot via Wikipedia) Last week we got news that... Read more →
Congress currently is debating who to tax and how much to pay for the Biden Administration's Build Back Better plan. The public, however, seems to have decided. A recent Pew Research Center poll found that a majority of Americans are for raising taxes on households that make more than $400,000 a year. Overall, the survey says that 61 percent of respondents approve of raising ordinary income tax rates on their wealthier neighbors. The current top rate is 37 percent, which was lowered from 39.6 percent with the enactment in late 2017 of the GOP-written Tax Cuts and Jobs Act (TCJA).... Read more →
Looking to hide money from the Internal Revenue Service in another country? The tax agency makes finding such funds a priority, but one man accused of helping set up tax shelters has managed to slip through U.S. tax officials' hands. (Photo from Pixabay via Pexels) More than five years ago, 11.5 million leaked documents detailing information for more than 214,000 offshore companies were made public. The world was fascinated with the tale of how wealthy individuals, with the help of money managers and bankers, created tax shelters. That reveal by the International Consortium of Investigative Journalists, dubbed the Panama Papers... Read more →
Even before the COVID-19 pandemic created a plethora of economic problems, student debt was a national concern. Student loans are among the largest contributors to household debt, according to a recent U.S. Census Bureau analysis. It cites Department of Education estimates that in 2017 the total amount owed in federal student loans was $1.37 trillion. That figure no doubt has grown dramatically in the last four years, exacerbated by the recent job losses caused by the coronavirus. Federal student debt relief moves: As the higher education debt dollars pile up, Washington, D.C., is working on ways to deal the costs... Read more →
View from the Astros' dugout in Minute Maid Park. (Photo by Kay Bell) The National Basketball Association's (NBA) championship series is on and, at least to this casual fan, surprisingly competitive. Major League Baseball (MLB) has started its second-half, with my two favorite teams at polar opposite ends of the playoff picture. National Football League (NFL) players will report to training camps this month. But aside from summer crossover, there's one other thing professional sports teams have in common. The billionaire owners of major league sports franchise owners are always the winners, even when their teams lose. How? By utilizing... Read more →
Some of the world's billionaires are looking to escape earth, but for those who like terra firma, New York City is home to most of the world's richest people. (Photo of lower Manhattan skyline by MusikAnimal via Wikimedia Commons) Richard Branson today proved yet again how different the rich are from you and me. The British billionaire owner of Virgin Galactic and three spaceplane crewmates reached suborbital heights on Sunday, July 11, before gliding back to earth. I was once a child with a dream looking up to the stars. Now I'm an adult in a spaceship looking down to... Read more →
We regular folks tend to have a complicated relationship with the wealthy. And by complicated, I mean one-sided, unrealistic, and too often reverential. Being aspirational, we love to gawk at what they can get away with because of their money, and dream of one day being in their Manolos and mansions. That's fueled way too many not-really reality shows. Such hopes also are a big reason scammers can convince wealthy wannabes to fall for schemes that peddle false hopes of large tax deductions. In real-life tax reality, these dodges simply are a way to push hopeful taxpayers further away from... Read more →