Tag Archives: taxes

Responding to a small businessman who says he did it without any government help AT ALL

A few days ago I offered up Art Pope and Pat McCrory leading North Carolina into the 19th century, a collection of thoughts on the state I was born and raised in. The comment thread wandered a bit, as they tend to do when you say things other people don’t want to hear, and eventually one commenter – a Stan Lee Harrison – weighed in with this:

I run a small business [without any assistance from the state or Federal governments] and interact with customers every day.

Wow, you’re probably thinking. A truly self-made man, eschewing handouts and welfare state charity and Obama-style Socialism and everything else that the authentic Randite is vehemently opposed to. Up until they aren’t, anyway.

I got to thinking about Mr. Harrison’s remarkable claim and decided that it deserved a serious response. In some cases I’m skeptical – can’t help it, I’m afflicted with an inherently critical mind and have never been able to do much about it – and in others I have honest questions. If he can do it, maybe I can, too. When it comes to my perennially underwhelming pursuit of financial solvency, I’m always willing to learn.

What follows is a slightly revised version of my answer, which has so far received no response.

—–

Dear Mr. Harrison:

Since you “run a small business [without any assistance from the state or Federal governments] and interact with customers every day,” I have to admit that I’m having a hard time trying to guess what kind of company this is. I mean, it obviously has to be home-based, because you don’t use any state or federally constructed or maintained transportation infrastructure. This means you don’t make a product that has to be moved via roads and highways, or rail, or air. It can’t make use of the maritime system, which relies on government ports and management. You have to be working from home because you can’t be driving around on the roads that the rest of us use. You certainly don’t fly to visit clients in other cities because without the government airplanes would be crashing in midair every day. Amtrak is obviously out.

Not sure how you’re interacting with customers, either. Pretty much every corner of our communication system requires government regulation of some sort because if it didn’t you’ve have such a morass of unstandardized channels that nobody could talk to each other. And wait a damned minute. You’re using the Internet right now. Do you you turn it off as soon as you start work? If not, I’m going to need you to explain how the Internet was erected by private entrepreneurs with no government help at all. If you aren’t e-mailing your customers and you don’t have a Web site or a social media presence, I really don’t envy your marketing director.

I also assume that your home office is pretty spartan. Getting no help from the government and all, there’s no electricity or running water. Your cave must be in a gated community because you receive no protection whatsoever from law enforcement and if it weren’t for the high fence and the concertina wire and the private security force your home office would have been looted by now. Not sure what you’re going to do if you’re ever ripped off, though, because your only recourse (short of going vigilante) is the government court system.

I’m guessing that you don’t have any employees, because in your corner of the world you’d almost certainly have to hire people who at some point attended public schools. And forget college. Given the cost of higher ed these days they’d probably have had no choice but to rely on federal grants or scholarships and/or federal student loans. Or maybe you just hire uneducated people. Of course, that kind of mitigates against success, doesn’t it?

(Wait – you didn’t go to a public school, did you?)

Let’s see. You had to have been born rich. Taking a bank loan means federal and/or state influence on the system to assure that you weren’t scalped. And I’m especially wondering about how your company is incorporated. Every business of any magnitude makes use of a limited liability structure. If it weren’t for that, you’d be bankrupt and homeless the first time you screwed something up. And let’s be honest, we all make mistakes. In this same vein, if you have customers, that probably means you have contracts of some sort. How do you enforce them?

Also – do you keep your money in a bank or under your mattress? If in a bank, are your funds insured by the FDIC?

Since you aren’t in jail (you aren’t writing from jail, are you?) I’m guessing that you pay taxes (or at the least you have an accountant who helps you avoid paying them). From your tone, I’m guessing you’re the sort of person who takes advantage of every single deduction legally available to you. That’s a government thing – you could get a new car “for business use” and write it off, whereas I can’t unless I’m also pimping that government system.

What else, what else? Oh, right. Duh. How do your customers pay you and how do you pay your bills? Since you eschew any sort of federal support, that means you aren’t using the dollar. Do you accept payment in chickens?

As a side note, you never died as a result of rubella, smallpox, measles, or any of the other diseases that government immunization programs have mostly eradicated. (I’m assuming you aren’t a zombie here, although I admit, it would be pretty damned cool if you were.) You probably didn’t have polio, either, right? What other life-threatening medical conditions did you never contract and die from as a result of federally driven research into prevention and treatment? Because when it comes to running a successful business, such as yours, there’s really no substitute for being, you know, alive.

Also, does your business market a product or service that emerged in some way from federally funded research? There’s a lot of things that we sell that we wouldn’t have without those programs. I’m including in this research conducted at private universities which received substantial government support, like my alma mater, Wake Forest, which as I’m sure you know is one of the nation’s premier private institutions (Go Deacs!).

In conclusion, I cannot imagine what sort of business you run. I can’t think of single company that doesn’t get “any assistance from the state or Federal governments.” Not. One. I can’t even imagine how such a thing is possible.

So I hope you’ll fill me in. This seems like a great opportunity to learn something valuable that I might be able to use in my own career. Like every smart business guy, I’m always looking for an edge.

Thanks for your time and consideration.

Sincerely,

Sam Smith

IRS/Tea Party controversy: progressive groups “targeted,” too, and corporate media once again refuses to tell Americans the whole truth

CATEGORY: TaxationLate Saturday we posted a Scrogues Converse Roundtable looking at the IRS/Tea Party controversy. The debate got started when our colleague Dr. Sid Bonesparkle suggested that perhaps the IRS wasn’t out of line in taking a good hard look at organizations dedicated to undermining the tax system trying to organize using 501 status, which is reserved for social welfare oriented nonprofits.

Perhaps Sid was, if anything, too generous regarding the alleged facts of the case. Surprise, surprise: The version of the story that, thanks to the slothfulness of our corporate media establishment, has now been accepted as gospel turns out to be inaccurate.

In short, the IRS did not “target conservative groups.”

The corporate media is blasting out the story that the IRS “targeted conservative groups.” Some in the media say there was “IRS harassment of conservative groups.” Some of the media are going so far as claiming that conservative groups were “audited.”

This story that is being repeated and treated as “true” is just not what happened at all. It is one more right-wing victimization fable, repeated endlessly until the public has no choice except to believe it.

Conservative Groups Were Not “Targeted,” “Singled Out” Or Anything Else

You are hearing that conservative groups were “targeted.” What you are not hearing is that progressive groups were also “targeted.” So were groups that are not progressive or conservative.

All that happened here is that groups applying to the IRS for special tax status were checked to see if they were engaged in political activity. They were checked, not targeted. Only one-third of the groups checked were conservative groups.

Once again: Only one-third of the groups checked were conservative groups.

Conservative groups were not “singled out,” were not “targeted” and in the end none were denied special tax status – even though many obviously should have been.

Bloomberg details three progressive groups that were probed, noting that one of them had its application rejected.

The Internal Revenue Service, under pressure after admitting it targeted anti-tax Tea Party groups for scrutiny in recent years, also had its eye on at least three Democratic-leaning organizations seeking nonprofit status.

One of those groups, Emerge America, saw its tax-exempt status denied, forcing it to disclose its donors and pay some taxes. None of the Republican groups have said their applications were rejected.

Progress Texas, another of the organizations, faced the same lines of questioning as the Tea Party groups from the same IRS office that issued letters to the Republican-friendly applicants. A third group, Clean Elections Texas, which supports public funding of campaigns, also received IRS inquiries. [emphasis added]

All told, the IRS’s poking about seems to have been extensive and non-partisan.

…agency officials told lawmakers in a briefing yesterday that 471 groups received additional scrutiny, a total that indicates a crackdown on politically active nonprofit groups that extends beyond the Tea Party outfits.

A look at the questions presented to Progress Texas suggests that if the Tea Party was being “harassed,” so were they.

“Progress Texas and the Tea Party strongly disagree on the role of government,” the group’s executive director, Ed Espinoza, said in a statement. “Yet, when we applied for tax-exempt status, Progress Texas received the same type of additional scrutiny that Tea Party groups are complaining about. The similar treatment indicates the IRS was likely addressing a flood of 501c4 applications after Citizens United, and undermines the paranoid notion that Tea Party groups were singled out.”

The questions resembled the list of 35 questions (PDF) sent to the Liberty Township Tea Party, which has complained of IRS harassment.

The real culprit here is the infamous Citizens United decision.

The year 2010 began a busy period for the IRS office in Cincinnati, the home of the tax-exempt determinations unit. That January, the Supreme Court handed down its Citizens United decision, which loosened the rules governing contributions to political causes and candidates. Applications flooded in to the office from groups seeking tax-exempt status, many with a political agenda.

The IRS has admitted it flagged applications from groups with “Tea Party” or “Patriot” in their names. But applications from other groups were closely scrutinized as well.

An Austin, Texas-based progressive group, Progress Texas, was one of them. Its executive director, Ed Espinoza, says it took almost a year and a half for the IRS to review the application from his organization.

In 2010, some 1,700 applications for 501(c)(4) tax-exempt status came into the Cincinnati office. That number nearly doubled by 2012. Yet according to the IRS Inspector General’s Report, just one person was originally given the task of sifting through the applications deemed politically sensitive.

Another application that seemingly got caught up in the backlog came from a group of journalists in Chicago. The Chicago News Cooperative provided news for the Midwest edition of The New York Times. The co-op also sought tax-exempt status. Veteran journalist James O’Shea, a former managing editor of The Chicago Tribune, was in charge.

“There were political organizations trying to get these exemptions, and I think the IRS was concerned — and probably appropriately so — that some of these news organizations were really political organizations,” he says, “and so they were examining that, and we just got caught up in that.”

For more than two years, the Chicago News Cooperative waited for an IRS ruling. But without tax-exempt status, foundation support dried up, and the cooperative went out of business. [emphasis added]

The final score, then: Conservative groups “targeted” accounted for about a third of the total. None were denied nonprofit status. Meanwhile, at least one liberal group was turned down and at least one innocent bystander was forced out of business.

All thanks to a pro-corporate, pro-conservative Supreme Court ruling.

It’s probably not fair to assume that big money media organizations are always wrong, but you have to be positively daft to assume that you’re getting the truth, the whole truth and nothing but the truth from them.

Forewarned, forearmed.

Secession: it’s fun to talk about, but is it actually plausible?

Ever since FOX called Ohio for Obama last Tuesday night (touching off a near-hysterical conniption from Karl Rove), talk of secession has been rampant. Groups in all 50 states have started petitions aimed at leaving the Union, with Texas (predictably) reaching the minimum threshold of signatures first.

We’ve written about secession here at S&R a good bit, with Frank Balsinger’s piece the other day (“Want to secede? Are you really sure about that?“) being the most recent. I think the general sentiment among the staff is that the people carping the loudest about leaving really haven’t thought things all the way through: the states where we find the most anti-Union sentiment tend to be the states that receive more in Federal outlays than they contribute in tax revenues (“taker” states), and they’re also home to some of the most irrationally rabid anti-taxation sentiment in the nation. It’s easy to envision how a new country built around these dynamics might find itself in dire economic straits rather quickly. Some of us have also admitted that we think we’d be okay with a partition, and I went so far as to write a three-part series hypothetically considering some of the logistical challenges surrounding the proposed divorce.

Normally, it would be easy enough to dismiss petitioning as the work of fringe cranks, because in nearly all cases that’s precisely what’s going on. Now, though, there’s a new factor to ponder. In short, the secessionists have caught the fancy of the media. Google “secession.” It’s a little mind-boggling, to be honest. And if the last decade has taught us anything, it should be that no idea, no ideology, no delusion is so extreme that the mainstream press cannot haul it ranting and lathering into the Overton Window. Obama is a Kenyan, after all. And a Muslim. And despite being objectively to the right of Richard Nixon, a socialist. Climate disruption is a liberal plot. Now, as Dave Johnson explains, we have the tried-and-true Shock Doctrine approach being employed to create a fiscal cliff “crisis” that is pure manufactroversy. The terror is being aided and abetted by a corporate media that either a) doesn’t understand how it’s being played, b) is actively complicit in the disinformation campaign, or c) doesn’t care one way or another, so long as it’s good for ratings.

When ridiculous ideas are presented to normal people, those people tend to laugh, shake their heads and ease away, careful not to make any sudden moves. But the repetition of ridiculous ideas over an extended period of time, especially by large media agencies with a measure of presumed credibility (and the “experts” they invite on to discuss “serious” issues), though, exerts a corrosive effect on rationality. I wonder if, given enough time and cash, you could create a “public debate” over whether gravity is a fact or merely a “theory.”

The sheer volume of noise we’re hearing right now about secession perhaps makes you wonder: is it possible that the cranks and their corporate enablers could turn this into a real concern?

The coherent answer (for the moment, at least) is no. The media thrives on decibel level, and a few overstimulated wack jobs can make a great deal of noise. But actual secession isn’t about how loud the screaming is, it’s about how many voting adults are screaming. I have no problem believing that a statewide referendum on whether or not to secede could garner 27% of the vote; as noted recently, any analysis of the US population is safe enough assuming that percentage of the population is certifiably insane. Deep in Takerstatestan, you might nudge that number up above 30%. 50%, though, is hard to imagine, even in places like Texas or South Carolina.

A woman I know, a Texan with more than her share of well-placed friends and acquaintances, once laughed at the idea that Texas would ever secede. There’ll be plenty of bluster amongst certain testosterone-soaked segments of the population, but the ladies who run the moneyed homes will put a quick and certain stop to it as soon as it threatens cotillion season. (If this strikes you as a tad sexist, bear in mind that I’m just paraphrasing the words of a thoroughly progressive woman.)

It’s also worth noting that the howling secessionist contingent so far contains no real established leaders (that I’m aware of). Prominent GOP governors are having none of it (including Rick Perry, who not all that long ago certainly seemed willing to entertain the idea). Louisiana’s Bobby Jindal, who’s been acting remarkably lucid of late, called the whole thing “silly.”

Even Justice Anotnin Scalia, who’s as wide-right as they come, says it’s a non-starter:

“I cannot imagine that such a question could ever reach the Supreme Court,” Scalia wrote. “To begin with, the answer is clear. If there was any constitutional issue resolved by the Civil War, it is that there is no right to secede.”

In other words, if you want to secede, it looks like your options are limited to either moving to another country or taking the somewhat more permanent route opted for by Key West resident Henry Hamilton, may he rest in peace. History tells us that all great empires fracture in the end, and I’d be surprised to see the US still in one piece in, say, 50 years. But for now, as badly as the Deep South and I would love to be rid of each other, it looks like we’re stuck in the same boat.

None of this should keep you from enjoying the political media theater, though.

“Teabagger Paradise” revisited: Colorado Springs begs for mercy

Back in February I authored a look at the implications of Colorado’s infamous Taxpayer Bill of Rights (TABOR) on the state, and in particular on the city of Colorado Springs, which has been forced to cut services that most would regard as essential in order to comply with one of the most foolish bits of legislation in the nation. Teabagger Paradise, I called it, and it must be admitted that my tone was on the snarky side in spots, and I accept that those who don’t share my take might have been a little put off. Sorry about. Still, I stand by my conclusions.

When all is said and done, the most satisfying course of action will be to grab some popcorn, pull up a chair and enjoy the show. Read more

Welcome to Colorado Springs, America’s teabagger paradise

Colorado is a beautiful place and it always ranks right at the top of those most desirable places to live rankings (heck, a new poll says the People’s Republic of Boulder is the happiest place in America), but be clear about one thing before you pack up the family to head this way: a consistent voting majority of our citizens are butt-stupid when it comes to taxes. We’re the ones who blazed the trail for the “Taxpayer Bill of Rights” (TABOR) movement, and we’ve been paying a steep price for it ever since. For instance:

  • Under TABOR, Colorado declined from 35th to 49th in the nation in K-12 spending as a percentage of personal income.
  • Colorado’s average per-pupil funding fell by more than $400 relative to the national average. Read more