Tax Rascal

Why a Tobacco Tax is Great News for Smokers

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Nobody feels more strongly about high taxes than smokers do, and with good reason: it’s incredibly easy for politicians to raise taxes on smoking, and the average non-smoker doesn’t have a lot of sympathy. So it’s no surprise that the news is full of stories about planned cigarette tax hikes.

But why is it so easy to raise taxes on smokers? Why not bottled-water drinkers, car owners, or life insurance buyers? The reason is simple: cigarettes have the combination of addictive power and brand loyalty. Very few smokers give up if the cost of their smokes goes up 10% — in fact, basically no other product has the long-term resistance to price changes.

It’s also popular among people who don’t …

Why Barney Frank’s Phony AIG Outrage is Worse Than the Bonuses

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It’s an outrage — handing someone millions of dollars when his employer is nearly bankrupt? It’s ridiculous — larding paychecks with taxpayer dollars? It’s unacceptable — paying out a giant bonus in the face of a huge recession?

It’s just business. Even though Barney Frank expressed outrage over AIG’s recent bonuses, people are (deliberately?) forgetting that AIG is a massive company, with over 100,000 employees in 130 countries. And the team responsible for most of the offices was a remarkably tiny group of remarkably arrogant traders.

If AIG’s structured products team is collecting these bonuses, it is, indeed, an outrage. But it’s much more likely that the bonus recipients aren’t the same team at all. AIG has a … Read more...

“Dear IRS…”

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A single letter to the editor in a small Texas town has made it around the country in just a few weeks. Ed Barnett, a typical taxpayer, penned this justified rant to his hometown Wichita Times Record News (I am assuming their archrival is the Wichita Daily Weekly Recorder Courier Journal Democrat-Republican):

Dear IRS,

I am sorry to inform you that I will not be able to pay taxes owed April 15, but all is not lost.

I have paid these taxes: accounts receivable tax, building permit tax, CDL tax, cigarette tax, corporate income tax, dog licence tax, federal income tax, unemployment tax, gasoline tax, hunting licence tax, fishing licence tax, waterfowl stamp tax, inheritance tax, inventory tax, liquor


Tax Mercenaries are a Stimulus Plan

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Today the IRS stopped using private tax collectors. That’s right: they won’t let a single tax mercenary collect overdue taxes.

This sounds great — less money spent on expensive government contractors, and less of our private information being leaked out of the government. But is it really the right decision?

The basic argument against private tax collectors is that we’re paying them to go after money people already owe the government. If they’re not afraid of the Feds, the argument goes, why would they fear some random company? If the companies don’t have any way to convince people rationally, it’s a fair assumption that they’re just using dirtier tactics than the IRS, and making 25% of what they collect … Read more...

Reid Hoffman’s Accidental Plot to Bloat the Deficit

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Reid Hoffman (CEO of LinkedIn, and self-proclaimed ‘free-market socialist‘) says we should let startups bail us out. As an investor in more than sixty startups, he ought to know how effective they can be.

His plan comes in three stages:

  1. He wants a program that will provide small loans (up to $50,000) for startups.
  2. He wants to change the current skilled-worker visa system, so that instead of a quota (65,000 H-1B immigrants per year), there’s an unlimited number of immigrants and a 10% payroll tax on each, to be reinvested in job training for Americans.
  3. He wants the government to match investments for venture capitalists and angel investors (giving them 50% of the profits from any investment).

Seven Reasons Conservatives Should Love the New Obama Budget

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The Dow is back down to where it was last time we had a charismatic Democratic president making big, budget-busting promises. And this time, there’s not an intern in sight to spoil the party. We all know we’re in for a giant spending spree: billions for solar-powered underwater basket-weaving communes, all paid for by taxes on people who, y’know, make stuff and do stuff.

But is it that big a disaster? Obama spent ten years teaching at the University of Chicago, a center of modern conservative thought. Did a decade of rubbing shoulders with Milton Friedman’s disciples rub off on him at all?

The answer is yes. In his budget speech last week, he announced several new programs that are … Read more...

How Much Of Citi Did We Already Own?

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Congratulations: you, the taxpayer, now own even more of what used to be America’s biggest bank. That’s right: the government is once again raising its stake in Citigroup by switching from preferred stock (which pays a high dividend, and is basically like a bond) to common stock (which is closer to just owning part of the business).

So, in theory, We The People own 36% of Citibank. And this is considered very big news.

But is it? Consider how much the government is already involved in Citi:

  • Most of Citibank’s deposits are guaranteed by the FDIC. Which means that when you deposit money at Citibank, you’re really lending it to the government, which is lending the money back to Citibank.


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