A proposed gas tax led to some red faces at the White House earlier this week. Ray LaHood -- the only Republican in the Obama administration -- suggested it, perhaps in an effort to put the 'tax' back in 'tax-and-spend'. To the average driver, paying for something you used to get for free sounds like a bad deal. Five reasons it's actually a great bargain instead: 1) The 'fringe benefits' are fantastic: part of the mileage-tax plan requires installing a global network of GPS-based car-tracking systems. There are privacy concerns, of course, and those will need to be addressed. But this plan also makes it possible to do some amazing things. From dynamic traffic maps criminal detection, this would allow the government to start many other programs. And if private companies could use the information (again, privacy is a major roadblock), they'd be able to come up with even more great uses. 2) Smug hybrid owners will have to pay their fair share: I know, I know, playing politics means playing dirty. But surely we can all agree that if gas taxes pay to fix up roads, Prius owners are getting away with highway robbery. 3) Gas-guzzling SUV drivers will still pay up, too: ...

Via TaxProf, I found this article suggesting that we audit all high-ranking politicians political figures. Not to be vindictive -- or not just, anyway -- but because people take cues from politicians on how to behave, and incidents like the Daschle tax affair make people less likely to take taxes seriously. This doesn't just have the obvious effect of streamlining the nomination process by digging dirt in advance. And it's also not just a way to keep politicians honest about the favors they're getting from -- and doing for -- their friends. Nope, it's actually based on a legitimate study, which showed that people cheat less on their taxes when they think others cheat less, too. The great thing about a proposal like this is that it would be so hard for anyone to honestly object. The version suggested in the link actually requires that we not release the results to the public. Instead, people would just be informed if their representatives ahd over- or under-paid. Granted, this is a one-shot deal. If regular audits became more common, a few crooks would shape up, and the rest would just try to be a little more subtle. But in the meantime, it would create the ...

As tax season rolls around for most of us, some folks are nervously remembering April 15ths past, when that tax due date crept up and sprinted past. Fortunately, the IRS is not exactly averse to getting their money, even if it comes a little late. And you don't even have to go through their standard-issue rigamarole, either: over the last few years, plenty of online tax providers have appeared on the scene to help make filing late taxes easy! Here are a few of the top players: TurboTax -- Best known for their plain-vanilla tax software, TurboTax is willing to accomodate taxpayers who missed their deadlines. If you already use TurboTax, it can be a solid choice -- but their late-tax features tend to be bolted on after the fact. TurboTax is tax-paying software that happens to allow late filing, not anything specifically good at that particular issue. PriorTax -- Definitely best of the bunch. PriorTax is a service specifically designed for people who need to pay their taxes late, so every time you use the site, you're using it exactly the way the designers intended. In addition to a great array of tax-filing services, the site has a full glossary and a ...

In the wake of the Madoff scandal, some people have discussed how "fraudulent conveyance" could be a major issue. The doctrine of fraudulent conveyance basically holds that after a fraud, someone who benefited should give up some (or all) of their benefits to those who were wronged, even if they had no idea what was going on. It's a usful doctrine in a lot of cases -- if Madoff, for example, had given his sons tens of millions of dollars but left others high and dry, it wouldn't be a great plan to let them keep the money. But what people don't often mention is the big problem with fraudulent conveyance: it encourages people to look the other way when they suspect that they've accidentally invested in a Ponzi scheme. Imagine a Madoff investor who realizes that Bernie has been lying, and is billions of dollars short of what he said he'd earned. The investor has two basic 'exit strategies': to hope that Madoff makes back the money he said he had, or to pull out money now. But pulling out money makes it harder for Madoff to make it back! If Bernie has $5 billion, and says he has $10 billion, ...

Caroline Kennedy recently withdrew her name from the running for New York's open Senate seat, in a manner that was peculiar, to say the least: There was incredulity in Democratic circles Thursday afternoon after the governor?s camp engaged in a ferocious public back-and-forth with Ms. Kennedy?s side, reaching out to numerous news organizations early Thursday afternoon to disparage her qualifications; one person close to the governor said that her candidacy had been derailed by problems involving taxes and a household employee, but declined to provide details. Taxes and a household employee? The New York Times has more: Ms. Kennedy?s only tax issue on the public record appeared to be a $615 city tax lien that she settled in 1994, a minuscule amount for a multimillionaire. It doesn't take much of a conspiracy theorist to wonder if the tax issue is not really much of an issue; surely if a Geither-sized mistake doesn't cost anyone his job, a $615 lien shouldn't, either. Perhaps she suffered more for her awkward interviews, her flimsy resume, or the fact that Presidential approval polls don't show very much support for political dynasties at the moment. The nice thing about a tax problem is that nearly ...

A recent New York Times editorial recently made the case for a trading tax. Superficially, it's tempting: if we have a way to make counterproductive gamblers pay up for their vices, why not use it? There are several problems with the proposal: As Christine Hurt at Conglomerate points out, this tax could hurt the traders who do the worst anyway: "We like to say that the "buy-and-hold" people come out on top, so then isn't the tax regressive -- taxing the silly speculators who don't understand investing, just like lotteries are regressive taxes on poor people who are bad at math?" It's a tax on liquidity, and we really need liquidity right now. One of the great things about the stock market is that, unless you own millions of dollars worth of something that doesn't trade very often, you can convert your stock into cash in a few clicks or a single phone call. That's true because of the activity of what the article calls "speculators" (they're actually market makers). A tax on that activity might mean that your retirement savings end up being suddenly worth 10% or 20% less when you try to sell, simply because there's no longer an incentive ...

New Yorkers collectively groaned in outrage when the proposed 'fat tax' got closer to passing with the help of a survey of health care experts. But is it really such a great plan? And are the experts really experts? The argument behind the 'fat tax' is pretty simple: people who drink non-diet soda (for example) weigh more, are less healthy, and thus end up costing more taxpayer money in medical expenses and lost tax revenue. Simple dollars and cents -- and yet common sense seems to be absent from the debate. Why not look into what actually happens when you substitute diet drinks for the regular kind? The results aren't pretty: if one study is any guide, New Yorkers choosing diet drinks face an elevated risk of cancer -- or worse, weight gain. That's right: when your body realizes that the sugar-taste doesn't mean you're getting any sugar, it gets confused, and tries to stock up on more fat to be on the safe side. Oddly enough, many of these laws have the same effect on human behavior. The mortgage-interest tax deduction was supposed to make houses cheap, but everyone realized that this would make people want to buy houses, which made other ...

It's startling to hear about a giant, $300 billion tax cut from the tax-and-spend party (which beat the spend-and-spend-and-spend party in a hotly contested election). Incredibly, after months of childish bickering on both sides, this new tax plan treats the average taxpayer like an adult. How? It's a cut in withholdings, rather than a refund check. If you get $300 back in one lump-sum, you can spend it all on something really fantastic -- and at the end of your evening, you'll feel like you got dinner and a concert on Obama's dime. But turn that $300 into weekly payments of $6, and what do you get? An extra Obama-tizer at TGIF? Paying this money out in a small and forgettable way instead of in a giant lump is a great way for politicians to take the back seat to practical considerations. Some of it goes to corporations. Even though corporations really collect, rather than pay, taxes (the money gets taken from shareholders, customers, or employees, because the corporation doesn't have any real existence beyond how it interacts with them), it can be politically hard to cut taxes for rich companies. But those same companies pay most of the wages in this ...

Online and off, there's a lot of hope and fear about the next year. Will we see our tax system revamped with new tax breaks and incentives that make things easier for the middle class? Will new social programs make the existing tax burden much heavier? Predicting policy is notoriously tricky, but here are a few best guesses: How much will the tax code change? Less than you'd think. When politicians run for office or pose for the camera, they have every incentive to exaggerate their plans and abilities. Once it's actually time to come up with a law, though, those exaggerated claims bump into each other and lead to some long, drawn-out compromises. Usually, these compromises are solved with a little pork-barrel spending -- the difference between a giant spending bill passing or failing might be an expenditure of a few million taxpayer dollars in a strategically important district. So the political process, and the eventual result, won't change fast enough for taxpayers to see a huge difference on their next return. But what about..? There are lots of big ideas floating around, but often those get dissolved into lukewarm compromises. So what kinds of changes will be big news? It's impossible ...

When Bernie Madoff made every scammer in history look like an amateur with his $50 billion haul, I'm not sure how many people wondered what positive effects he might have had. But think about the argument for a stimulus program: let's say we give Taxpayer A $1,000 right now, and saddle him with another $1,500 in higher taxes down the road. The $1,000 makes him feel richer, so he spends it -- the $1,500 is a problem, but not just yet (and it's a problem for a more robust, post-stimulus economy). The stimulus even works if it's a different taxpayer: if taxpayer A gets the check and taxpayer B pays the consequences, B doesn't spend less until the bill comes due, but A can go on a spending spree right away. Let's compare that to Madoff's situation: If you had $1 million with Madoff, you made a fake $120,000 every year. Let's assume that Madoff did invest the money, but skimmed off the profits for his own purposes (nobody knows just what he did with it, but we do know that he didn't lose all of it and that he never did anything like what he told investors he did). In this ...