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Archive for September 8th, 2010

Here’s a clever video produced by the Winston Group, comparing the tax policies of two Democratic Presidents. Having previously highlighted Kennedy’s tax-cutting approach, it is painful for me to observe the class warfare approach of the Obama Administration.
 

What’s especially fascinating is that JFK intuitively understood the Laffer Curve, particularly the insight that deficits usually are the result of slow growth, not the cause of slow growth.

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When all you have is a hammer, everything begins to look like a nail. That old saying makes a lot of sense. As a tax economist, I’m sometimes guilty of looking at all sorts of issues based on their relationship with the tax code. In my defense, however, the tentacles of the IRS now reach into almost every nook and cranny of our society. And greedy tax collectors on the state and local level make a bad situation even worse. Two things from today’s inbox illustrate my point.

First, you may remember that the IRS is going to be a chief enforcer of Obamacare. Well, our friends at the tax collection agency have just released a draft form for the “credit for small employer health insurance premiums.” We already have a tax system that takes up 72,000 pages and requires more than 1,000 different forms and publications, but now we can add 25 more lines of mind-numbing, eye-glazing bureaucratese, all of which doubtlessly will lead to innocent mistakes that cause many more taxpayers to have nightmarish interactions with the IRS. (click here to see a full-size version of the form)

Second, here’s an article on telecommuting which largely focuses on the environmental and quality-of-live advantages of people working from home. What does this have to do with taxes, you ask? It turns out that greedy state politicians have an annoying tendency of trying to tax people who live elsewhere. This form of taxation without representation imposes both bureaucratic and economic barriers that hinder an otherwise desirable development.

Possibly the biggest barrier to telework are state tax laws. Many states implement some form of double taxation on out-of-state teleworkers. For example, New York applies a “convenience of the employer” doctrine on out-of-state teleworkers who work for a New York–based organization, which requires them to pay income tax to New York for telework days outside of the state. All work done outside of New York is subject to New York income tax, unless the work is done outside of New York out of necessity to the employer . In 2005, the New York State Court of Appeals upheld the “convenience of the employer” doctrine in Huckaby vs. New York State Division of Tax Appeals. Thomas Huckaby, a Tennessee resident, worked for a New York–based company, but teleworked 75 percent of the time. On his New York State nonresident tax returns, Huckaby allocated 25 percent of his income to New York, and 75 percent to Tennessee; however, the New York State tax department determined that Huckaby should have paid New York income tax on 100 percent of his income. The court sided with the New York State tax department, stating that the doctrine was constitutionally applied. As many as 35 states have some form of double taxation for teleworkers.

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A man in New York recently scared off some gang members by firing a couple of warning shots into the ground. When the cops arrived, did they congratulate the man for protecting his family and start looking for the thugs? That’s what would happen in a logical and just society, but the anti-gun mentality in New York is so pervasive that the cops actually arrested the homeowner. Needless to say, I can’t imagine this happening in Georgia or Wyoming – places where both the law and cops seem to be more rational. Some day, I hope to be on a jury and have a case like this so I can vote not guilty and engage in the noble tradition of jury nullification. Here’s an excerpt from the story I saw on Drudge.

He was arrested for protecting his property and family. But it’s how the Long Island man did it that police say crossed the line. …George Grier said he had to use his rifle on Sunday night to stop what he thought was going to be an invasion of his Uniondale home by a gang he thought might have been the vicious “MS-13.” He said the whole deal happened as he was about to drive his cousin home. “I went around and went into the house, ran upstairs and told my wife to call the police. I get the gun and I go outside and I come into the doorway and now, by this time, they are in the driveway, back here near the house. I tell them, you know, ‘Can you please leave?’ Grier said. Grier said the five men dared him to use the gun; and that their shouts brought another larger group of gang members in front of his house. “He starts threatening my family, my life. ‘Oh you’re dead. I’m gonna kill your family and your babies. You’re dead.’ So when he says that, 20 others guys come rushing around the corner. And so I fired four warning shots into the grass,” Grier said. …You may think a person has the right to defend their home. But the law says you can only use physical force to deter physical force. Grier said he never saw anyone pull out a gun, so a court would have to decide on firing the gun. Police determined Grier had the gun legally. He has no criminal record. And so he was not charged for the weapon.

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