JPMorgan CEO Says Rich Should Pay "Lion's Share" of Taxes

According to JPMorgan Chase Chief Executive Jamie Dimon, the rich should pay the majority of taxes in this country. He made the statements on Tuesday at a meeting of the Council of Institutional Investors. Head of the financial powerhouse also said that if “we are no tvoluntarily fiscally responsible, we will be involuntarily fiscally responsible.”

Reuters reports:

Dimon, who also backed getting government spending under control, spoke as Republicans and Democrats failed to reach agreement during White House talks aimed at forging a budget deal that would keep the U.S. government operating beyond Friday.

On Tuesday, House Republicans also unveiled a plan for tackling long-term budget shortfalls that focuses on slashing spending including what goes to Medicare and Medicaid.

"I for one have no problem, as a well-off American... paying taxes," Dimon told the annual spring meeting of the Council of Institutional Investors.

"I think those well off should pay a lion's share, I have no problem with that," he said. "But I think we can't just go on endlessly spending money."

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The Price of Taxing the Rich

A drastic salary reduction for the top 1% of earners in states like California and New York has led to serious local revenue problems. Economist says the problem is depending upon those taxes for so much of the budget is that high earners have much larger fluctuations in income than lower-earners.

From WJS.com:

As Brad Williams walked the halls of the California state capitol in Sacramento on a recent afternoon, he spotted a small crowd of protesters battling state spending cuts. They wore shiny white buttons that said "We Love Jobs!" and argued that looming budget reductions will hurt the Golden State's working class.

Mr. Williams shook his head. "They're missing the real problem," he said.

The working class may be taking a beating from spending cuts used to close a cavernous deficit, Mr. Williams said, but the root of California's woes is its reliance on taxing the wealthy.

Nearly half of California's income taxes before the recession came from the top 1% of earners: households that took in more than $490,000 a year. High earners, it turns out, have especially volatile incomes—their earnings fell by more than twice as much as the rest of the population's during the recession. When they crashed, they took California's finances down with them.

Mr. Williams, a former economic forecaster for the state, spent more than a decade warning state leaders about California's over-dependence on the rich. "We created a revenue cliff," he said. "We built a large part of our government on the state's most unstable income group."

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IRS Audits 18.4% of the Richest Taxpayers

Last year, the Internal Revenue Service audited 18.4% of taxpayers with incomes exceeding $10 million. Audit rates went up across the board for 2010, except for those without any adjusted gross income.

Bloomberg reports:

Audit rates increased in 2010 for all income groups, except for people with no adjusted gross income, according to data released today in Washington for the fiscal year that ended Sept. 30.

Highest earners had the sharpest increases in audit rates. The IRS audited 11.6 percent of taxpayers reporting adjusted gross income between $5 million and $10 million, up from 7.5 percent the year before. Taxpayers making between $75,000 and $100,000 faced the least chance of an audit, with a 0.64 percent rate.

Through its voluntary offshore disclosure programs and court cases involving Swiss banks, the IRS has gotten a better understanding of how wealthy people in non-corporate businesses manage their assets, said George Clarke, an attorney at Miller & Chevalier Chartered in Washington.

“They learn things and then they roll those things out across the board,” he said.

The overall audit rate for income tax returns was 1.11 percent, up from 1 percent the year before. The IRS had previously reported some of this data without the breakdowns at the top of the income scale.

Concerted Effort

The increase in audits of people making more than $10 million is part of a concerted IRS effort to focus on the business dealings of the wealthiest individuals.

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Website lets Taxpayers Redirect Breaks

GiveItBackForJobs.com is a new website that allowings high income taxpayers to donate the money from their extended tax breaks to charity. According to the site, they intend to both "make it easy for those with extra moolah to donate and to send a political message that they are doing so." I’m really curious to see who will donate, especially after all those millionaires’ “raise my taxes” media campaigns.

From CNN.com:

Three Ivy League professors, a law student and a designer created the site out of opposition to the extension of tax benefits for the wealthy, the founders write on the site.

"GiveItBackforJobs enables joint action, by all visitors to this site, to redirect our Bush tax cuts to the wise and just programs that our government would promote if it had not been hijacked," they write.

"As more and more Americans do so, GiveItBackforJobs will begin to replicate good government policy, outside the government and free from the grip of Senate Republicans."

Users simply select their filing status (single, married filing jointly, etc.) and enter their adjusted gross income. The site calculates the tax savings under the law. The resulting amount can then be donated on the same page to Habitat for Humanity, the Salvation Army, the Children's Aid Society, Nurse Family Partnership, or a charity of the user's choice.

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IRS Audits Jump by 11 Percent; Wealthiest Targeted

The IRS increased the number of tax returns examinations by around 11% this past year. The agency released statistics yesterday showing that wealthy taxpayers are among those most likely to be targeted for an audit.

According to the Associated Press, the IRS examined more than 1.58 million individual returns in the budget year that ended in September, up from 1.43 million the year before. Of course, for most people the odds of being audited are still hovering around 1 percent.

The IRS collected $57.6 billion through enforcement actions, an 18 percent increase from the previous year.

Overall, a little more than 1 percent of returns were audited, either by mail or in person. More than 8 percent of the returns with incomes above $1 million were audited.

Read more at Google News

Under Obama Tax Deal, 2011 Could Be Best Year For The Rich

From Forbes.com:

If the Obama-Republican tax deal passes, 2011 could turn into the best year yet to be rich, tax wise. The capital gains tax, a key rate for the very rich, will remain at its historically low 15%, while the top ordinary income tax rate will stay at 35%. The 2010 $800 per couple Making Work Pay credit, which wasn’t available to the better off, will be replaced by a Social Security tax cut that will save a two-high-earner couple $4,272 in 2011. Meanwhile, the estate and gift tax regime will become even friendlier to wealthy families.

Friendlier? How could wealth transfer taxes be any friendlier? After all, under the Bush tax cuts the estate tax disappeared in 2010 (for just one year) allowing families of billionaires who died this year, including Yankees owner George Steinbrenner and Metromedia founder John Kluge, to inherit free of federal estate taxes.

True enough. But for a family to benefit from that one year lapse, a (presumably) loved one had to actually die. For 2010, the amount a still breathing rich person can transfer to his kids or grandkids without owing taxes remains the same as a decade before: just $1 million.

By contrast, under the version of the Obama-Republican deal introduced late Thursday by Senate Majority leader Harry Reid, D-Nev., the exemptions from the gift tax, estate tax and generation skipping transfer tax (the tax imposed on gifts to grandkids if their parents are still alive) are “unified”–meaning they’ll all rise in tandem in 2011 to $5 million, from the $1 million or so they would have been next year after the Bush tax cuts expired.

Millionaires to Obama: Tax us

For months we have seen anti-tax activists who are calling on legislators to extend all of the Bush tax cuts. However, a group of wealthy taxpayers have emerged that are actually asking to be taxed. More than 40 of the wealthiest people in the U.S. are asking the government to raise their taxes; saying they have more than they can ever need, so why not spread it around?

Yahoo News reports

More than 40 of the nation's millionaires have joined Patriotic Millionaires for Fiscal Strength to ask President Obama to discontinue the tax breaks established for them during the Bush administration, as Salon reports.

"For the fiscal health of our nation and the well-being of our fellow citizens, we ask that you allow tax cuts on incomes over $1,000,000 to expire at the end of this year as scheduled," their website states. "We make this request as loyal citizens who now or in the past earned an income of $1,000,000 per year or more."

The group includes many big-time Democratic donors such as Gail Furman, trial lawyer Guy Saperstein and Ben Cohen of Ben & Jerry's ice cream (pictured). The list remains open to millionaires who want to sign on.

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Are Low Taxes Exacerbating the Recession?

The housing and financial crash has long passed, and there are now hundreds of theories as to why the country is still in its worst economic state since the Great Depression. Some experts are even asserting that the real problem lies in low tax rates.

U.S. Secretary of State Hilary Clinton recently voiced her support for this theory. According to this article from the San Francisco Gate, Clinton was quoted saying that the high tax equals high revenue formula "used to work for us until we abandoned it."

As history (and Freakonomics) teaches, such oversimplified memes tend to obscure the counterintuitive notions that often hold the most profound truths. And in the case of the WRSTGD, the most important of these is the idea that we are in economic dire straits because tax rates are too low. This is the provocative argument first floated by former New York Gov. Eliot Spitzer in a Slate magazine article evaluating 80 years of economic data.

"During the period 1951-63, when marginal rates were at their peak - 91 percent or 92 percent - the American economy boomed, growing at an average annual rate of 3.71 percent," he wrote in February. "The fact that the marginal rates were what would today be viewed as essentially confiscatory did not cause economic cataclysm - just the opposite. And during the past seven years, during which we reduced the top marginal rate to 35 percent, average growth was a more meager 1.71 percent."

Months later, with USA Today reporting that tax rates are at a 60-year nadir, Secretary of State Hillary Clinton told a Brookings Institution audience that "the rich are not paying their fair share in any nation that is facing (major) employment issues ... whether it is individual, corporate, whatever the taxation forms are."

Continue reading at SF Gate.com…

Inherited Wealth Shouldn't get a Free Pass on Taxes

From LA Times.com:

Dan Duncan is reportedly the first billionaire to die during the one year since 1916 in which there is no estate tax in place. And guess what…his heirs have hit the tax-free jackpot!

Duncan is the poster child for opponents of the estate tax. Described by the New York Times as a "soft-spoken farm boy who started with $10,000 and two propane trucks," he grew his business until he became the 74th wealthiest person in the world.

With an estimated net worth of $9 billion, Duncan embodies the rags-to-riches story that Americans love. Even his choice of bequests — leaving his money to his family and his favorite charities — makes him seem "just like us." Who better to enjoy Congress' largesse?

However appealing, this story fails to capture the nature of the estate tax, including the people who benefit and are harmed by its repeal.

The one person who absolutely cannot benefit is Dan Duncan himself. When Duncan died, he was separated from all his property by a force even more powerful than the federal government.

World’s Wealthy Tapped for Cash as Governments Tax High Incomes

From Bloomberg.com:

From Athens to Olympia, Washington, governments made poorer by the recession are looking to higher taxes on the rich for cash.

Spain’s wealthiest should be tapped to help close the euro region’s third-largest budget deficit, Prime Minister Jose Luis Rodriguez Zapatero said yesterday. The U.K. has boosted taxes on high earners and French and Swedish politicians are calling for the same. The top U.S. tax rate is set to rise in 2011, while at least 14 states have lifted rates or are considering increases.

“There’s a real move to get at whatever revenue you can get at without being so broad as to get the populace all up in arms,” said Scott Pattison, executive director of the National Association of State Budget Officers in Washington. “You go where the money is.”

The longest recession since the Great Depression has deprived governments of revenue, opening gaps between what they take in and what they must spend to sustain their economies. Budget deficits in advanced economies have swollen more than eight-fold since 2007 to about 9 percent of gross domestic product, the International Monetary Fund said.

U.S. states are projected to confront $124 billion in cumulative budget gaps in the next two fiscal years, according to the Pew Center on the States, confronting politicians with the need to raise revenue and cut spending to balance budgets.

IRS Launches New Global Program to Target High Wealth Individuals

IRS Commissioner Douglas Shulman spoke with the media yesterday about the IRS’s new program targeting wealthy Americans. The IRS is hoping to identify better methods to ensure compliance among these individuals, who’s returns are complicated by investment income and capital gains. You can watch a video of Commissioner Shulman’s statement here or read more about the program and what it hopes to achieve courtesy of CNS News.

The Internal Revenue Service has launched a new global program to target what it calls “high wealth individuals,” IRS Commissioner Douglas Shulman said Monday.

“Through our new global high wealth operating unit we are taking a unified look at the entire web of business and economic entities controlled by high wealth individuals so we can better assess the risk such arrangements pose to tax compliance,” Shulman said at the National Press Club on Monday.

Shulman said the IRS is using “our robust and evolving enforcement program that ensures that everyone pays what they owe.”

The IRS initiated its Global High Wealth Industry group in the Fall. Schulman told an October 26 meeting of the American Institute of Certified Public Accountants that it would be part of “the globalization of tax administration,” which he called a “game changing trend” in tax enforcement:

“This brings me to another important development--a game changing trend--the globalization of tax administration,” said Shulman.

Continue reading at CNS News.com…