Oh, the misplaced agony and outrage over smaller IRS refund checks!

For a while this morning the lede news story on Yahoo!’s opening page was a HuffPost piece about people being angry that they are getting smaller refunds due to the Trump tax cuts.

The story reports on the chagrin thusly:

“The average refund check paid out so far has been $1,865, down from $2,035 at the same point in 2018, according to IRS data. Low-income taxpayers often file early to pocket the money as soon as possible. Many taxpayers count on the refunds to make important payments, or spend the money on things like home repairs, a vacation or a car.”

The story does at one point in passing note that the tax code changes meant that in some cases not enough money was withheld by employers. But nowhere in it does it note that in the vast majority of these cases the total tax bill for 2018 is less than the prior year. People just got to kept it with each paycheck and did not make interest-free loans to the federal government.

At the least the USA Today version of this story does mention the overall lower tax bill, but not until the last paragraph, which reads:

“Getting a smaller refund doesn’t mean you’re paying more in total in taxes. In many cases, much of your tax savings showed up in each paycheck, which could result in a smaller refund.”

As Bugs Bunny would say: What a bunch of maroons. Chalk this up as fake news.

USA Today photo illustration

 

Democrats out to help the fat cats in certain ‘blue’ states

Of course, now that Democrats — who have made a career out of demanding soak-the-rich taxes in order to redistribute it to the poor — are in control of the U.S. House of Representatives one their first priorities will be to provide a tax break for the rich — in certain Democrat-controlled states.

According to Forbes, today’s Review-Journal editorial and others, a top priority will be a repeal of the $10,000 cap on IRS deductions for state and local taxes (SALT).

According to  the Tax Policy Center, three-quarters of the benefit of the SALT deduction goes to households making $153,000 or more. The Tax Foundation says 88 percent of the benefits flow to those making more than $100,000 a year.

So it benefits the rich, but just the rich in certain states.

Nevadans — along with residents of New Hampshire, Florida, Wyoming, Texas, South Dakota and Alaska — get to deduct about 1 percent or less of their adjusted gross income, while those who live in New York, Maryland, D.C. and California deduct more than 5 percent.

Nearly one-third of the dollars generated by the SALT cap is borne by Californians and New Yorkers, both heavily Democratic states.

Using 2010 statistical data from the IRS, you find Californians who filed for state and local income tax deductions claimed deductions of $10,700 per return. Nevadans who filed for the state and local sales tax deduction claimed only $1,430 per return.

Calculated on a per capita basis, Californians claimed $2,116 in federal income tax deductions, while Nevadans claimed only $166 per person for sales tax deductions.

Tax fairness. Not hardly.

Newspaper column: Why Nevada must hit the brakes on taxes

WSJ illustration

It’s called voting with your feet.

A remarkable number of well-heeled Americans are doing just that, and it should serve as a warning to Nevada voters and candidates as we enter an election year. Though Republican governors in recent years have shepherded through the Legislature record-high tax increases, Nevada still fares fairly well in comparison to other states when it comes to the tax burden borne by citizens of the Silver State.

According to the Tax Foundation’s analysis of state and local tax burdens per capita for fiscal year 2012 — which is after Gov. Kenny Guinn’s billion-dollar tax hike but before the $1.5 billion tax hike pushed by Gov. Brian Sandoval — Nevada ranked 43rd lowest in the nation, while neighboring Taxafornia ranked sixth highest.

Nevada tax collectors grabbed 8.1 percent of the state income through state and local taxes or $3,349 per capita. Meanwhile, California snatched 11 percent of state income or $5,237 per capita.

Perhaps that explains why, according to Internal Revenue Service data on taxpayer migration, from 2014 to 2015 about 10,500 Nevada taxpayers moved to California, while 17,700 California taxpayers moved to Nevada. Even more telling is the fact that the Californians fleeing to lower-taxed Nevada averaged $91,000 in gross adjusted income, while the Nevadans heading to California averaged only $47,400 in adjusted gross income.

It seems people with higher income have a tendency to find ways to keep more of it for themselves.

From 2014 to 2015 Nevada netted an increase in total adjusted gross income reported to the IRS of $1.43 billion. Of that, $1.1 billion came due to the influx of Californians changing residencies.

An analysis of a sampling of that IRS data shows the California-Nevada migration pattern is no anomaly.

In that one year, the state of New York, which has the highest state and local tax burden of any state at 12.7 percent of income and $6,993 per capita, lost $4.4 billion in income.

No. 2 highest Connecticut lost $1.3 billion in income. No. 3 highest New Jersey lost $2.46 billion. No. 5 Illinois lost $3.47 billion. No. 6 California lost $2.09 billion.

Meanwhile, state income tax-free Texas, ranked 46th lowest, added $3.61 billion, and state income tax-free Florida, though only 34th lowest, added $11.65 billion. The latter might have something to do with weather as well, since $2.62 billion of that came in from former New Yorkers, $1.49 billion from former New Jersey residents and $1.47 billion from former Illinoisans.

The New Jersey residents who moved to Florida had an average income of $121,000, while Floridians moving to New Jersey averaged $72,500.

This is hardly surprising nor a new phenomenon. In an article in The Wall Street Journal in 2009 under the headline, “Soak the Rich, Lose the Rich,” economist Arthur Laffer and WSJ economics writer Stephen Moore updated previous studies and found that from 1998 to 2007, more than 1,100 people every day of the year relocated from the nine highest income-tax states — such as California, New Jersey, New York and Ohio — mostly to the nine tax-haven states with no income tax — including Florida, Nevada, New Hampshire and Texas.

Laffer and Moore determined that over that period of time the no-income tax states created 89 percent more jobs and had 32 percent faster personal income growth than the high-tax states.

“Did the greater prosperity in low-tax states happen by chance? Is it coincidence that the two highest tax-rate states in the nation, California and New York, have the biggest fiscal holes to repair?” they asked. “No. Dozens of academic studies — old and new — have found clear and irrefutable statistical evidence that high state and local taxes repel jobs and businesses.”

A recent WSJ editorial noted that billions in income are still flowing out of New York, New Jersey and Connecticut and into Florida.

“As these state laboratories of Democratic governance show, dunning the rich ultimately hurts people of all incomes by repressing the growth needed to create jobs, boost wages and raise government revenues that fund public services,” the editorial concluded.

Voting with the feet is sure to increase since the recent tax reform limits federal income tax deductions for state and local taxes.

Let this be a lesson for Nevada. Chase the rich, they’ll run away.

A version of this column appeared this week in many of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel and the Lincoln County Record — and the Elko Daily Free Press.

Editorial: Tax reform that could benefit Nevadans slipping away

It looks like a tax reform proposal that could have resulted in lower income tax rates for Nevadans is swirling down the drain.

The Los Angeles Times is reporting that congressional Republicans are considering jettisoning a part of President Trump’s proposal that would eliminate IRS deductions for state and local taxes. Dropping the deduction would generate $1.3 trillion in additional federal revenue, thus allowing lower rates for the 70 percent of Americans who do not itemize and take the standard deduction.

While Democrats insist tax reform should in no way benefit the wealthy, the retention of the state and local tax deduction does precisely that for the wealthy who live in Democrat-controlled high tax states, such as New York and California.

The Times conceded that Californians benefit more from the state and local tax deduction than taxpayers in any other state. In fact Californians managed to dodge $101 billion in taxes in 2014 — New York, New Jersey and Illinois were next on the list of top tax dodgers. Of the top 10 states for the deduction, Trump carried only three.

The New York Times also is reporting that some Republican spines are weakening, noting that elimination of the deduction has Republicans in high-tax states worried about backlash from voters whose tax bills might rise.

The newspaper said that Rep. Chris Collins, a New York Republican, said in an interview that party leaders had assured him “there’s not going to be full repeal” of the state and local tax deduction. The paper also quoted Gary Cohn, the director of the National Economic Council, as saying the deduction was not a “red line.”

Using 2010 statistical data from the IRS, Californians who filed for state and local income tax deductions claimed deductions of $10,700 per return. Nevadans who filed for the state and local sales tax deduction claimed only $1,430 per return. Calculated on a per capita basis, Californians claimed $2,116 in federal income tax deductions, while Nevadans claimed only $166 per person for sales tax deductions.

Nevadans — along with residents of New Hampshire, Florida, Wyoming, Texas, South Dakota and Alaska — get to deduct about 1 percent or less of their adjusted gross income, while those who live in New York, Maryland, D.C. and California deduct more than 5 percent.

“Republicans have said the deduction largely affects the wealthy and is unfair to residents in lower-tax states,” the Los Angeles newspaper reported. “Eliminating the break would help simplify the tax code and make it more equitable, White House officials said.”

In 1985 Ronald Reagan argued for eliminating the state and local tax deduction. He said in a speech: “We’re reducing tax rates by simplifying the complex system of special provisions that favor some at the expense of others. Restoring confidence in our tax system means restoring and respecting the principle of fairness for all. This means curtailing some business deductions now being written off; it means ending several personal deductions, including the state and local tax deduction, which actually provides a special subsidy for high-income individuals, especially in a few high-tax states. Two-thirds of Americans don’t even itemize, so they receive no benefit from the state and local tax deduction. But they’re being forced to subsidize the high-tax policies of a handful of states. This is truly taxation without representation.”

Reagan failed, primarily because there were too many Republican lawmakers from New York and California, just as there are today. California has 14 Republicans in the House and New York has nine.

If Congress caves in to the few who want to keep their lucrative state and local tax deductions, it is unlikely the 70 percent of Americans who currently do not itemize can be afforded a doubling of the standard deduction as is currently being contemplated.

The tax code should be fair and equitable for all and not carve out breaks for some.

A version of this editorial appeared this week in some of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel,  Sparks Tribune and the Lincoln County Record.

Editorial: Nevadans would benefit from Trump’s tax deduction change

So President Trump has finally decided to take our advice.

More than a year ago this newspaper noted in an editorial that then presidential candidates Ted Cruz, Marco Rubio, Chris Christie, Jeb Bush, John Kasich and Ben Carson all had proposed repealing the IRS deduction for state and local taxes, but Trump was still vague on the matter.

Nevada is one of only nine states with no state income tax to deduct. Since the creation of the federal income tax in 1913 the residents of states with income taxes have been allowed to deduct those taxes from their federal obligation. Only in recent years have Nevadans been permitted to deduct sales taxes, but this is subject to the whims of Congress because it must be renewed every year.

This past week Trump’s one page tax reform plan called for eliminating all deductions except for home mortgage interest and charitable contributions.

WSJ graphic

Predictably, the high-tax states are whining.

Nevadans — along with residents of New Hampshire, Florida, Wyoming, Texas, South Dakota and Alaska — get to deduct about 1 percent or less of our adjusted gross income, while those who live in New York, Maryland, D.C. and California deduct more than 5 percent. The federal government is effectively subsidizing the big spending in those states at the expense of the lower tax states.

As we pointed out a year ago, using 2010 statistical data from the IRS, the most recent available, you find Californians who filed for state and local income tax deductions claimed deductions of $10,700 per return. Nevadans who filed for the state and local sales tax deduction claimed only $1,430 in deductions per return.

Calculated on a per capita basis, Californians claimed $2,116 in federal income tax deductions, while Nevadans claimed only $166 per person for sales tax deductions.

Heritage Foundation researchers Rachel Greszler and Kevin D. Dayaratna have concluded that the state income tax deductions subject federal tax revenues to the whims of state lawmakers and largely benefit wealthy taxpayers and those in high-tax states.

“The rationale for it is that since state and local taxes reduce individuals’ after-tax income, the income used to pay those taxes should be excluded from federal taxation. …” the researchers wrote. “In practice, however, the deduction allows states to raise taxes higher than they otherwise would and has significant perverse distributional impacts, redistributing income from the poor to the rich and from people in low-tax states to people in high-tax states. Despite some efforts to eliminate it, the deduction for state and local taxes remains one of the largest deductions in the federal tax code.”

Pro-state-and-local-tax-deduction groups have been quoted as saying, “Any alterations to the deduction would upset the carefully balanced fiscal federalism that has existed since the permanent creation of the federal income tax over 100 years ago.”

It is long past time to upset this century-old unfair tax break for some and tax burden for others. Where do we go to get a rebate for being overtaxed all those years?

A version of this editorial appeared this week in some of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel,  Sparks Tribune and the Lincoln County Record.

Reid gloats: ‘Trump is a billion-dollar loser’

After The New York Times splashed the news that someone had anonymously mailed one of its reporters Donald Trump’s 1995 IRS returns — reporting of which is a violation of federal law, according to American Thinker — Harry Reid posted to his official Senate website a scathing putdown of the Republican presidential nominee.

The Times account says Trump declared a $916 million loss on his 1995 income tax return and speculated that a loss of that amount could legally allow him to avoid paying any income taxes for up to 18 years.

Reid reacted:

“As I was saying.

“Trump is a billion-dollar loser who won’t release his taxes because they’ll expose him as a spoiled, rich brat who lost the millions he inherited from his father. Despite losing a billion dollars, Trump wants to reward himself with more tax breaks on inherited wealth while stiffing middle-class families who earn their paychecks with hard work.

“Trump is over-leveraged and deeply indebted to someone, but until he releases his taxes we won’t know who. The implications for America’s security are severe. The American people deserve to know who has leverage over this man who wants to be president. In the name of the public interest, the Senate should immediately pass the Presidential Tax Transparency Act, which would force all presidential candidates to release their tax returns. If all senators agreed to pass this act for the good of the country, we could pass it in a matter of minutes.”

Reid added insult to insult by calling Trump “a racist, incompetent failure.”

This is from a member of the Club of 100 which votes on treaties and advises and consents on major presidential appointees but who has consistently refused to release his own tax returns.

In 2012, Reid pounded on Mitt Romney to release his tax returns, speculating he had not paid taxes in 10 years. A Reid spokesman said of Reid’s failure to release his returns: “He’s not running for president. …”

This the same Reid who during his 1974 Senate race against Paul Laxalt questioned Laxalt’s ties to Howard Hughes.

Reid challenged Laxalt to reveal his and his family’s finances, according to a Las Vegas newspaper account years later.

Reid held a news conference to hand out his own financial statements and tax returns for himself and his three brothers, challenging Laxalt to do the same.

“Any man or woman who will not be completely candid about his or her finances does not deserve to be in public office,” Reid was quoted as saying by The Associated Press.

Reid on Senate floor calls Trump a Frankenstein.

 

Trump vets veterans before giving money, but refuses to be vetted

Trump at news conference today. European Pressphoto Agency via WaPo)

Donald Trump spent 40 minutes this morning lambasting the press for daring to criticize his dalliance is delaying providing donations to veterans groups raised during a January fund raiser, as well as giving a rundown of the money his is doling out, including a million bucks of his own money. He called one reporter from ABC a sleaze.

“You have to go through a process. When you send checks for hundreds of thousands of dollars to people and to companies and to groups that you’ve never heard of, charitable organizations, you have to vet it,” Trump said in explaining the delay. “You send people out. You do a lot of work. Now most of the money went out quite a while ago — some of it went out more recently.”

He also noted that a check has been cut for one of the organizations, Project for Patriots, but the check will not be mailed until the vetting is complete. “The check is ready to go, but they don’t have all of their appropriate” documentation, he said. That documentation? An IRS determination letter.

Trump will not give money raised by others to any group until it has proven its worthiness with verification from the IRS.

This is the same Trump who claims he cannot release his 2015 IRS return because he is being audited, even though an IRS spokesman told the media, “Nothing prevents individuals from sharing their own tax information.”

Trump also won’t release past IRS returns, claiming they all are somehow interrelated.

So, if Trump will not allow himself to be vetted, why should anyone think it is appropriate to write him a check or vote for him?

Isn’t his stance a bit hypocritical? Oh yeah, this is Trump, the human Etch-a-Sketch.

Editorial: Stop giving high-tax states an IRS deduction

We have long advocated making the IRS sales tax deduction permanent, instead of having to renew it every year or so, because Nevada is one of only nine states with no state income tax to deduct, which has been deductible practically from the start of the federal income tax in 1913. It’s only fair.

Actually, the fairest thing to do would be to eliminate all itemized state and local tax deductions for IRS taxes, because residents of high-tax states — mostly run by tax loving Democrats — get to deduct a disproportionate share. This causes low-tax states — and Nevada still ranks nearer the bottom despite recent tax hikes — to essentially subsidize the higher-taxed states by paying a greater share of federal taxes.

Although it has been tried before — by Ronald Reagan in 1986 — in this election year a number of GOP presidential candidates are including in their tax reform packages elimination of state and local tax deductions.

According to The Wall Street Journal, Ted Cruz, Marco Rubio, Chris Christie, Jeb Bush, John Kasich and Ben Carson all have proposed repealing this tax break, while Donald Trump, as usual, is vague on specifics.

The Heritage Foundation has estimated that dropping this deduction could allow the federal tax rates to be reduced by as much as 12.5 percent across the board.

Nevadans — along with residents of New Hampshire, Florida, Wyoming, Texas, South Dakota and Alaska — get to deduct about 1 percent or less of their adjusted gross income, while those who live in New York, Maryland, D.C. and California deduct more than 5 percent.

Not surprisingly, The Wall Street Journal reports that all of the top 10 high-tax states voted for Obama, while most of the lower-taxed states voted for Mitt Romney, with Nevada as one of the exceptions. Nearly one-third of the cost of the repeal would be borne by Californians and New Yorkers, both heavily Democratic states.

“If marginal tax rates were reduced in a revenue-neutral and distributionally neutral manner, the more than 70 percent of taxpayers who do not itemize would face lower combined federal and state income tax burdens,” write Heritage researchers Rachel Greszler and Kevin D. Dayaratna. “Additionally, this could lower overall taxes for some taxpayers who itemize but who have relatively lower incomes or live in lower-tax states.”

They concluded that the deductions subject federal tax revenues to the whims of state lawmakers and largely benefit wealthy taxpayers and those in high-tax states.

“The rationale for it is that since state and local taxes reduce individuals’ after-tax income, the income used to pay those taxes should be excluded from federal taxation. …” Greszler and Dayaratna write. “In practice, however, the deduction allows states to raise taxes higher than they otherwise would and has significant perverse distributional impacts, redistributing income from the poor to the rich and from people in low-tax states to people in high-tax states. Despite some efforts to eliminate it, the deduction for state and local taxes remains one of the largest deductions in the federal tax code.”

Using 2010 statistical data from the IRS, you find Californians who filed for state and local income tax deductions claimed deductions of $10,700 per return. Nevadans who filed for the state and local sales tax deduction claimed only $1,430 per return.

Calculated on a per capita basis, Californians claimed $2,116 in federal income tax deductions, while Nevadans claimed only $166 per person for sales tax deductions.

A version of this editorial appeared this past week in many of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel,  Sparks Tribune and the Lincoln County Record. It ran as a column in the Elko Daily Free Press.

Editorial: The IRS should back off changing gaming rules

The Internal Revenue Service is pondering new rules regarding tax reporting by casinos — including tracking player rewards and loyalty card programs and lowering the threshold for reporting electronic jackpots from $1,200 to $600.

At a hearing in Washington this past week Geoff Freeman, president and CEO of the American Gaming Association, testified that the proposed changes would be “far more complicated, onerous and unproductive than may have been understood” by the IRS.

In fact, a Wall Street analyst has estimated the regulations could result in $530,000 less in revenue annually per casino. That might mean the new regulations would not increase tax collections, but actually reduce them.

Seventeen members of the House of Representatives who represent districts with casinos — including all four of Nevada’s representatives, Joe Heck, Mark Amodei, Cresent Hardy and Dina Titus — have sent a letter to the IRS Commissioner John Koskinen urging the agency back off the changes.

They noted that the gaming industry supports 1.7 million jobs in this country from $240 billion in business activity and the proposed changes would have detrimental affects on those jobs and local economies.

“Since the $1,200 threshold level was originally adopted in 1977, to account for indexed inflation the threshold should actually be approximately $4,700 today,” the letter argues. “We strongly believe the IRS should not consider any reduction of this reporting threshold, as any lowering from $1,200 would have significant negative impacts on casino operations and consumers. Any reduction in this threshold would dramatically raise costs to comply, decrease gaming revenue due to more frequent ‘lock-ups,’ and would greatly increase the burden workload for IRS.”

Sounds like a full-employment plan for IRS paper pushers because the agency would be flooded with W-2G forms. The cost of processing the paper could well exceed any additional revenue.

In prepared remarks for the IRS hearing AGA’s Freeman said, “Finally, regarding the suggestion in the proposed guidance that sometime in the future the slot jackpot reporting threshold could be cut in half, from the current $1,200 level to $600, to be clear the casino gaming industry strongly opposes any such reduction. Our written comments detail the myriad adverse impacts that would result for the customer, the IRS and the industry — ranging from significant labor cost increases to more lost business revenue from machine down-time. We do not believe that the resulting flood of additional W-2Gs to the IRS will produce any meaningful additional tax revenue and will simply be more administrative burden for everyone involved, including the IRS.”

After the Washington hearing Freeman told a reporter, “The customer would walk away. This would have enormous implications not just for loyalty cards in the casino industry but in the broader hospitality industry — hotels, airlines and others.”

Both the industry and congressional representatives urged the IRS to scrap its proposed mandatory reporting requirements and take a voluntary approach that lets the many jurisdictions where gambling takes place to craft workable solutions.

We urge our congressional delegation to continue to pressure the IRS to relent from this damaging and counter-productive effort that will cost Nevada’s economy dearly and doubtlessly result in job losses that we can ill afford.

A version of this editorial appears this past week in some of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel,  Sparks Tribune and the Lincoln County Record.

Press ignores the news about IRS ‘losing’ Lerner’s emails

Paul Jacob has an interesting take on the IRS losing Lois Lerner’s emails.

He points out the incredible lack of coverage in any of the major newspapers, with the exception of The Wall Street Journal. Though the AP posted a story on the topic Saturday, the Las Vegas newspaper’s editors also did not deem it significant enough to print today.

The IRS is either incompetent or is lying to Congress. It took a year for the agency figure out it had “lost” those emails between Lerner and the White House and the Justice Department. Nothing to see here. Move along.

The lede on Jacob’s piece under the hed “The Dog Ate My Country” reads:

“If I had to choose between government without newspapers, and newspapers without government,” Thomas Jefferson once wrote, “I wouldn’t hesitate to choose the latter.”

In his day, Mr. Jefferson was attuned to a hyper-partisan, mudslinging, muckraking, bulldog press corps, not our modern mainstream media lapdogs. Today, with our government taking on more and more while competently performing less and less, the public needs more mud slung and more muck raked.

Yet, the Washington Post that had been slung onto my driveway Saturday morning carried not a single word, much less an in-depth story, about the Internal Revenue Service scandal that strikes at the very core of a free versus an authoritarian society: the ability of citizens to organize and speak out politically.

Though I was joking yesterday when I suggested Congress not ask the IRS for the emails but instead ask the NSA, Jacob reports that U.S. Rep. Steve Stockman, R-Texas, sent Admiral Michael S. Rogers, the NSA director, a letter asking the agency to “produce all metadata it has collected on all of Ms. Lerner’s email accounts for the period between January 2009 and April 2011.”

IRS’ Lois Lerner looking down her upturned nose with contempt at Congress.

Raking out the muck from this administration is a Herculean task, up to which the press is not, apparently.