It seems like every other day there is a new rumor about Vice Presidential Nominee Sarah Palin. Yesterday I posted an entry taking a deeper look at the truth about her tax views, but there are dozens of other non-tax related stories floating the Internet about Palin. Below are some of those rumors – either true or debunked – from a list compiled by Charlie Martin of Pajamas Media, who took the time to separate the fact from fiction in recent rumors about the Governor.
Both presidential candidates have chosen their Vice Presidential picks and Election Day is a mere two months away. On August 29, 2008, Sen. John McCain announced his choice to have the Governor of Alaska, Sarah Palin, serve as his running mate. Within minutes, controversy began, and Palin’s personal life was thrown into the limelight – as well as the rest of her family. However, with so much media attention on Palin’s personal life, it is hard to get a clear view of her position on more important issues, like taxes. To help the readers of my blog make an educated decision come this election I have put together the following outline of Palin’s tax views.
Energy Tax Rebates
In her own state of Alaska, Palin proposed a monthly $100 rebate for all Alaskans to help deal with energy and fuel prices. She soon dumped the monthly idea and decided to make it a flat rebate of $1,200 instead. However, criticism rose almost immediately because the flat rate did not suit every Alaskan’s needs, as fuel prices and demand are different in every region.
Balanced Budget and Tax Relief
As soon as Palin was elected as Governor she carried out a campaign promise and sold a corporate jet purchased by her predecessor for $2.1 million on eBay. Determined to reduce State Budget, she then signed the largest operating budget in Alaska history, $6.6 billion. She also slashed hundreds of construction projects in Alaska, cutting $237 million from the construction budget. The closure of some projects was applauded, while others were criticized, but the state needed the funds regardless of popularity.
In 2007 Palin took on the biggest construction project, the infamous, “Bridge to Nowhere”, which she had originally wanted to rebuild but then later opposed. “She made the final decision to kill a very bad project, so she deserves credit for that. But she didn’t do it as an ideological opponent of earmarks. She did it as someone who had to balance the books,” Keith Ashdown, a tax investigator told the Washington post.
Oil Taxes
Alaska’s economy and way of life has come to depend strongly on oil wealth. Palin proposed a $750 million oil tax increase, which eventually came to $1.5 billion. As soon as the bill was approved in the state’s legislature, Palin signed it into law.
However, she has also fought hard to try to open the Arctic National Wildlife Refuge for drilling, which many environmentalists and citizens across the country strongly opposed. The people of Alaska however, who’s economy depends on oil, agree with the drilling.
Finally, Palin has also been a strong supporter of a gas tax holiday, which received national attention when it was supported by McCain and Sen. Hilary Clinton.
Dairy Farm Closure
One of Palin’s more controversial finance choices was her choice to keep a state-owned dairy farm open. The Alaska creamery board recommended that the Matanuska Maid Dairy be closed, but Palin decided to keep it against their advice. Controversy arose when Palin replaced the entire membership of the Board of Agriculture and conservatism (the only people who could fire or hire members of the Alaska creamery board). In 2007, it became clear that the business was unprofitable and not worth keeping. At that time, Palin decided to just sell the farm.
Sales Tax Increase
As mayor of Wasilla, Palin followed through promises to reduce property taxes as well as her own salary. However, she did have to raise the sales taxes by almost half a percent to pay for an indoor ice rink and sports facility though. The project would cost over $15 million to build, but could greatly stimulate small town’s economy. The tax increase was necessary to pay for the ice rink, as the state had already spent their budget on road and sewer projects. Palin pushed to have the sports facility built quickly, before the city had a clear title, and got a bad reputation as the property was in litigation for 7 years.
According to a new study from Rutgers University, American workers are worse off than they have been in years. The study finds that more than 10% of the country is currently unemployed, or underemployed. This number represents a huge increase from last year, and is a bad indicator for our economy.
The study also had a few more interesting statistics about the economy which are outlined below.
From NYTimes.com:
Barack Obama is often described as a post-partisan politician who transcends traditional ideological divides. Is it true? At least when it comes to one small but important aspect of tax policy — the treatment of corporate dividends — the answer appears to be yes. Without much fanfare or public notice, Senator Obama has embraced a central element of the Republican agenda.
Let’s start with some history. Before 2003, when a person received dividends from his stock holdings, this income was taxed at ordinary income tax rates. That is, a dollar of dividends generated the same individual income tax liability as did a dollar of wages.
But many economists have long argued against taxing dividends this way. Dividends are a stockholder’s payment from corporate profits, and these profits have already been subject to the corporate income tax. Any tax on dividends represents a second tax on essentially the same income.
One can question whether this double taxation of income from corporate capital is fair. But fairness aside, there is also the problem of incentives. Taxing dividends twice substantially raises the overall tax burden on this form of income and distorts various decisions. Whenever taxes, rather than true costs and benefits, drive the allocation of resources, the economy shrinks below its potential.
Here are five ways a heavy tax on dividends messes things up:
CONSUMPTION VS. SAVING
When the tax system depresses the return on a major asset class like corporate equities, households have less incentive to save for the future. Reduced saving means less funds for capital accumulation, which in turn impedes economic growth.
HOUSING VS. BUSINESS CAPITAL
Wealth invested in your own home has several tax advantages. These include the mortgage interest deduction and the absence of any tax on imputed rent (the value that homeowners earn implicitly by getting a place to live). By taxing business capital highly, the tax laws induce people to invest too much in housing and too little in businesses.
NONCORPORATE VS. CORPORATE
Because non-corporate businesses like partnerships are taxed only once, they have an advantage over twice-taxed corporations. Consequently, too much of the economy’s capital stock ends up in the non-corporate, business sector.
DEBT VS. EQUITY FINANCE
Because interest payments on corporate debt are deductible for corporate income tax calculations, this capital income is taxed only once. This asymmetric treatment of debt and equity finance induces companies to issue more debt than they otherwise would, increasing leverage and the economy’s financial fragility.
RETAINED EARNINGS VS. DIVIDENDS
Companies can avoid the dividend tax by retaining earnings rather than paying dividends. Excessive retained earnings, however, impede the movement of capital from older cash-generating companies to newer ones with better prospects.
At the end of last week, Sen. John McCain officially accepted the Republican nomination for president, and spoke to the crowd at the Republican National Convention. Embedded below is a video of McCain’s speech, and I have also included bullets of the tax issues mentioned in his speech, thanks to TaxProf.
According to the newest press release form the IRS, they have setup a program to provide relief for victims of Hurricane Gustav. Below is a snippet from the release, but click here to read the full text, and to learn how to qualify for disaster relief.
“The IRS is postponing until Jan. 5, 2009 deadlines for taxpayers who reside or have a business in the disaster area. The postponement applies to return filing, tax payment and other time-sensitive acts otherwise due between Sept. 1, 2008 and Jan. 5, 2009. This includes:
Individual estimated tax payments due Sept. 15, 2008.
Corporate extended 1120 tax returns due Sept. 15, 2008.
Individual extended 1040 tax returns due Oct. 15, 2008.
‘As residents of Louisiana return to their homes following Hurricane Gustav, taxes are one thing they won’t need to worry about,’ IRS Commissioner Doug Shulman said. ‘This relief gives them extra time to get their lives in order before having to deal with their tax matters.’
In addition, the IRS will waive the failure to deposit penalties for employment and excise deposits due on or after Sept. 1, 2008 and on or before Sept. 16, 2008 as long as the deposits are made by Sept. 16, 2008.
Taxpayers who reside in or have a business located in the following parishes qualify for the relief announced today:
Acadia, Allen, Ascension, Assumption, Avoyelles, Beauregard, Cameron, East Baton Rouge, East Feliciana, Evangeline, Iberia, Iberville, Jefferson, Jefferson Davis, Lafayette, Lafourche, Livingston, Orleans, Plaquemines, Pointe Coupee, Rapides, Sabine, St. Bernard, St. Charles, St. James, St. John the Baptist, St. Landry, St. Martin, St. Mary, St. Tammany, Tangipahoa, Terrebonne, Vermilion, Vernon, West Baton Rouge and West Feliciana.
IRS computer systems automatically identify taxpayers located in the covered disaster area and apply automatic filing and payment relief. Affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request tax relief.
If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing or payment due date between Sept. 1, 2008 and Jan. 5, 2009.”
The Republicans recently released their 2008 Republican Party Platform, which outlines the party’s views on major issues in the next election. You can download a 67 page PDF of their full platform by clicking here. Below are the tax related items of the platform courtesy of Tax Prof.
“Republican Tax Policy: Protecting Hardworking Americans:
The most important distinction between Republicans and the leadership of today’s Democratic Party concerning taxes is not just that we believe you should keep more of what you earn. That’s true, but there is a more fundamental distinction. It concerns the purpose of taxation. We believe government should tax only to raise money for its essential functions.
Today’s Democratic Party views the tax code as a tool for social engineering. They use it to control our behavior, steer our choices, and change the way we live our lives. The Republican Party will put a stop to both social engineering and corporate handouts by simplifying tax policy, eliminating special deals, and putting those saved dollars back into the taxpayers’ pockets.
The Republican Agenda: Using Tax Relief to Grow the Economy
Sound tax policy alone may not ensure economic success, but terrible tax policy does guarantee economic failure. Along with making the 2001 and 2003 tax cuts permanent so American families will not face a large tax hike, Republicans will advance tax policies to support American families, promote savings and innovation, and put us on a path to fundamental tax reform.
Lower Taxes on Families and Individuals
America’s producers can compete successfully in the international arena — as long as they have a level playing field. Today’s tax code is tilted against them, with one of the highest corporate tax rates of all developed countries. That not only hurts American investors, managers, and the U.S. balance of trade; it also sends American jobs overseas. We support a major reduction in the corporate tax rate so that American companies stay competitive with their foreign counterparts and American jobs can remain in this country.
Promoting Savings through the Tax Code
We support a tax code that encourages personal savings. High tax rates discourage thrift by penalizing the return on savings and should be replaced with incentives to save. We support a plan to encourage employers to offer automatic enrollment in tax deferred savings programs. The current limits on tax-free savings accounts should be removed.
Fundamental Tax Reform
Over the long run, the mammoth IRS tax code must be replaced with a system that is simple, transparent, and fair while maximizing economic growth and job creation. As a transition, we support giving all taxpayers the option of filing under current rules or under a two-rate flat tax with generous deductions for families. This gradual approach is the taxpayers’ best hope of overcoming the lobbyist legions that have thwarted past simplification efforts.
As a matter of principle, we oppose retroactive taxation, and we condemn attempts by judges, at any level of government, to seize the power of the purse by ordering higher taxes.
Because of the vital role of religious organizations, charities and fraternal benevolent societies in fostering charity and patriotism, they should not be subject to taxation.
In any fundamental restructuring of federal taxation, to guard against the possibility of hypertaxation of the American people, any value added tax or national sales tax must be tied to simultaneous repeal of the Sixteenth Amendment, which established the federal income tax.
The Democrats Plan to Raise Your Taxes
The last thing Americans need right now is tax hikes. On the federal level, Republicans lowered taxes in 2001 and 2003 in order to encourage economic growth, put more money in the pockets of every taxpayer, and make the system fairer. It worked. If Congress had then controlled its spending, we could have done even more.
Ever since those tax cuts were enacted, the Democratic Party has been clear about its goals: It wants to raise taxes by eliminating those Republican tax reductions. The impact on American families would be disastrous:
As many of you may know, Governor Sarah Palin spoke at the Republican National Convention a few days ago. To her credit, Palin delivered an excellent speech and got the whole crowd involved. However, as good as her speech may have been, it was unfortunately filled with inaccuracies. Embedded below is a video of Palin speaking, and below are some of the factual errors identified by the Associated Press.
PALIN:
"I have protected the taxpayers by vetoing wasteful spending ... and championed reform to end the abuses of earmark spending by Congress. I told the Congress 'thanks but no thanks' for that Bridge to Nowhere."
THE FACTS:
As mayor of Wasilla, Palin hired a lobbyist and traveled to Washington annually to support earmarks for the town totaling $27 million. In her two years as governor, Alaska has requested nearly $750 million in special federal spending, by far the largest per-capita request in the nation. While Palin notes she rejected plans to build a $398 million bridge from Ketchikan to an island with 50 residents and an airport, that opposition came only after the plan was ridiculed nationally as a "bridge to nowhere."
PALIN:
"There is much to like and admire about our opponent. But listening to him speak, it's easy to forget that this is a man who has authored two memoirs but not a single major law or reform — not even in the state senate."
THE FACTS:
Compared to McCain and his two decades in the Senate, Obama does have a more meager record. But he has worked with Republicans to pass legislation that expanded efforts to intercept illegal shipments of weapons of mass destruction and to help destroy conventional weapons stockpiles. The legislation became law last year. To demean that accomplishment would be to also demean the work of Republican Sen. Richard Lugar of Indiana, a respected foreign policy voice in the Senate. In Illinois, he was the leader on two big, contentious measures in Illinois: studying racial profiling by police and requiring recordings of interrogations in potential death penalty cases. He also successfully co-sponsored major ethics reform legislation.
PALIN:
"The Democratic nominee for president supports plans to raise income taxes, raise payroll taxes, raise investment income taxes, raise the death tax, raise business taxes, and increase the tax burden on the American people by hundreds of billions of dollars."
THE FACTS:
The Tax Policy Center, a think tank run jointly by the Brookings Institution and the Urban Institute, concluded that Obama's plan would increase after-tax income for middle-income taxpayers by about 5 percent by 2012, or nearly $2,200 annually. McCain's plan, which cuts taxes across all income levels, would raise after tax-income for middle-income taxpayers by 3 percent, the center concluded.
Obama would provide $80 billion in tax breaks, mainly for poor workers and the elderly, including tripling the Earned Income Tax Credit for minimum-wage workers and higher credits for larger families.
Anthony C. Infanti, from the University of Pittsburgh, recently published a very interesting, and well prepared, article on taxes and civil rights. Below is the abstract of the article, but I highly recommend you download and read the full paper by clicking here.
“In this article, I take a novel approach to the question of what constitutes a ‘tax.’ I argue that the unique burdens placed on same-sex couples by the federal and state ‘defense of marriage’ acts (the DOMAs) constitute a tax on gay and lesbian marriages.
The legislature in my home state of California still has not reached an agreement on the state’s budget. As of yesterday the budget was 64 days late, which breaks the record for the longest our state has gone without a budget. Below is a snippet from an article on NYTimes.com about the ongoing budget problems, you can read the full text by clicking here.
“As lawmakers and Gov. Arnold Schwarzenegger continue to haggle over how to plug a $15 billion gap in the budget, health care clinics have reduced their staffs, community college students are being denied tuition grants, and art classes at one high school have moved to the lawn because the school district cannot afford new portable classrooms.
‘This is not a good time,’ David A. Sanchez, president of the California Teachers Association, said of the public school system, which has been denied $600 million during the stalemate.
From the Wall Street Journal:
Sen. John McCain's tax policies are designed to create jobs, increase wages and allow all Americans -- especially those in the hard-pressed middle class -- to keep more of what they earn. His plan achieves these goals in three important ways.
First, he proposes a package of tax incentives that will create jobs and raise earnings by inducing firms to invest more in the U.S. Second, he is strongly committed to blocking any increase in tax rates while doubling the personal exemptions for families with children, which will reduce the tax burden on working Americans. Third, he proposes a new, refundable tax credit that will increase health-care coverage, reduce the cost of health care, and provide more funds for families and individuals to purchase health care.
Here's how the three components of McCain's tax plan will work in practice.
To create jobs, Mr. McCain will reduce the corporate tax rate -- now at 35% the second highest among all industrial countries -- to one that doesn't penalize firms for doing business here. To encourage small businesses to expand, he will fight against higher tax rates on their income.
To increase wages, Mr. McCain will provide incentives to raise productivity, which leads to higher wages. To increase productivity, he will provide incentives for developing and applying new technologies by expanding the tax credit for research and development, and by making that credit permanent.
More savings and investment in businesses also raise productivity. Mr. McCain will stimulate saving by keeping tax rates low on the returns to saving in the form of dividends and capital gains. He will also allow faster depreciation of assets, which encourages investment. And he will strengthen the incentive to save by reducing the maximum estate tax rate, with a substantial, untaxed exemption.
In stark contrast to Sen. Barack Obama, Mr. McCain believes that tax policy should be used to foster the creation of jobs and higher wages through economic growth, rather than to redistribute incomes. The economy is not a zero-sum game in which some people can enjoy higher incomes only if others are made worse off.
Mr. McCain's plan will significantly ease the tax burden on American families with children by doubling the personal exemption to $7,000 from $3,500. This means a larger percentage tax reduction for families with smaller taxable incomes, and specifically helps families in the middle income levels. And a President McCain will enable people to keep more of their earnings by preventing Congress from raising tax rates.
From NYTimes.com:
“Clearly, there are major differences between the economic policies of Senators Barack Obama and John McCain. Mr. McCain wants more tax cuts for the rich; Mr. Obama wants tax cuts for the poor and middle class. The two men also disagree on health care, energy and many other topics.
Such differences are hardly surprising. Democrats and Republicans have followed different approaches to the economy for as long as there have been Democrats and Republicans. Longer, actually. Remember Hamilton versus Jefferson?
Many Americans know that there are characteristic policy differences between the two parties. But few are aware of two important facts about the post-World War II era, both of which are brilliantly delineated in a new book, “Unequal Democracy,” by Larry M. Bartels, a professor of political science at Princeton. Understanding them might help voters see what could be at stake, economically speaking, in November.
I call the first fact the Great Partisan Growth Divide. Simply put, the United States economy has grown faster, on average, under Democratic presidents than under Republicans.
The stark contrast between the whiz-bang Clinton years and the dreary Bush years is familiar because it is so recent. But while it is extreme, it is not atypical. Data for the whole period from 1948 to 2007, during which Republicans occupied the White House for 34 years and Democrats for 26, show average annual growth of real gross national product of 1.64 percent per capita under Republican presidents versus 2.78 percent under Democrats.
That 1.14-point difference, if maintained for eight years, would yield 9.33 percent more income per person, which is a lot more than almost anyone can expect from a tax cut.
Such a large historical gap in economic performance between the two parties is rather surprising, because presidents have limited leverage over the nation’s economy. Most economists will tell you that Federal Reserve policy and oil prices, to name just two influences, are far more powerful than fiscal policy. Furthermore, as those mutual fund prospectuses constantly warn us, past results are no guarantee of future performance. But statistical regularities, like facts, are stubborn things. You bet against them at your peril.
According to their newest press release, the IRS’ next Tax Talk Today Web cast will be next Tuesday (September 9, 2008) at 2 p.m. The topic of the next web case will be EITC Due Diligence - It’s Your Responsibility.
“Practitioners who prepare Earned Income Tax Credit (EITC) claims must meet four due diligence requirements. For example, they must ask the required questions on Form 8867, Paid Preparer's Earned Income Credit Checklist, and probe further when information seems incorrect, inconsistent or incomplete.
Failure to meet the due diligence requirements can result in a $100 penalty for each failure.
The broadcast will be a good opportunity for return preparers to review the requirements and get the latest information from the IRS executive and technical staff responsible for this $43 billion program.
Moderated by Les Witmer, panelists for the September program are: Debra S. Holland, EITC program director; Sue Gaston, director of industry operations, H&R Block; Sherrill L. Gregory, an Orange County, Calif., tax practitioner; and Bridget E. Tombul, IRS counsel.
Tax Talk Today is a Web cast aimed at educating tax and payroll professionals on the most current and complex tax issues. Tax professionals are encouraged to watch and submit questions.
To access the Web cast at no charge, viewers can register online. Tax professionals in need of continuing education credits are eligible to receive one CPE credit by viewing the September 9 Web cast.”
With Election Day only a few months away, both Sen. Barack Obama and Sen. John McCain have announced their running mates. Although everyone in the media is talking about Sen. Joe Biden and Gov. Sarah Palin, no one is really talking about their tax or economic views. With a looming recession, and gas prices expected to spike because of Hurricane Gustav, I decided to take a deeper look into Senator Joe Biden’s tax views.
Ending the War
One of Biden’s most progressive tax views is his adamancy about ending the war. Biden feels the sooner we end the war, the sooner we can start saving money again and reducing our national debt. Currently, the war on Iraq is costing around $100 billion a year, and Biden wants use that money to invest in our own country.
Bush Tax Cuts
The Bush tax cuts have been a large subject of debate this election season. Biden opposes the tax cuts and has voted against them recently and voted against similar tax cuts in the past when Bush Sr. was president. Although the argument has been made that the “trickle down” effect will make sure the tax cuts benefit us all, Biden claims that this tactic has not worked. “Imagine what we could do if we had a president who had the nerve and the wisdom to understand that rich folks are just as patriotic as poor folks--you just have to ask them,” claimed Biden. “I spoke to a group of millionaires about taking away their tax cut, and when I explained how I'd use it, they gave me a standing ovation.”
Health Care
Joe Biden is known for his fight for an ethical and easy health care system for America. Working closely with Social Security as well as Medicare, he has been a big part of numerous changes that have already been made to health care in this country. If elected as Vice President, Biden has claimed that he would like to work alongside Obama to strengthen prescription drug programs and make them affordable and available to everyone.
Biden recognizes that Medicare has many flaws and that it requires improvement. He would like to open programs to promote wellness and disease prevention, waive co-payments, and advance technology within the medical industry. He hopes to fund these new programs by repealing the Bush tax cuts for the top 1% and withdrawing troops from Iraq. However, there are noticeable flaws in Biden's health plans such as his neglect to recognize youth needs. Most of his plans emphasize senior health, which is important but should not be the only part of his plan.
Gas Prices
Taking on the OPEC monopoly is one of the riskier moves Biden wants to make. Some critics think this will not help but hurt the problem, as OPEC is not the only cause of high gas prices. Biden’s other energy plans are to invest in new alternative energies will be pricey at first, but have the potential to save billions in the long-run.
Education and Taxes
Biden has worked on numerous bills designer to make education more affordable, and introduced the college ACCESS legislation that provides a refundable tax credit for struggling students to help pay for tuition. The legislation also expanded grants for low-income families. To pay for the legislation Biden voted yes on shifting $11 billion from corporate tax loopholes to education.
Death Tax Exemption
While in the Senate Biden voted against raising the Death Tax Exemption from $1 million to $5 million. He felt the tax did not apply to most Americans, and only gave more money to wealthy heirs and heiresses such as the notorious Paris Hilton.
AMT Repeal
Senator Biden also voted against repealing the Alternative Minimum Tax (AMT). As we all know, the tax was originally meant to only target only the very wealthy, but is now being levied on thousands of middle class America due to inflation. However, Biden noticed that repealing it entirely would surely put us into deficit, decrease government revenue, and unbalance the budget even more. However, Biden has claimed that he would favor adjusting the ATM for inflation and the standard of living for 2008.
Balanced Budget
Sen. Biden is adamant about his fight for a balanced budget. He voted for the balanced budget amendment in 1997, and voted against making tax cuts a priority over national debt reduction in 2000. He also stated that interest rates should be lowered across the board, and that tax breaks on investment dividends should be repealed.
Hedge Funds
Biden has never been discrete about his dislike of hedge funds, and believes they are a main cause of the credit crunch in the United States. He also disliked equity funds and cites them as another cause of the country’s current financial crisis.
Foreign Aid
When the Georgia-Russia dispute first broke out, Biden immediately called for $1 billion in emergency aid. After meeting personally with Georgia’s president, he was adamant and convinced of his decision. In February of 2008, Biden also pushed for a massive increase of non-military financial aid to Pakistan.
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“The Internal Revenue Service has agreed to suspend collection of alternative minimum tax on incentive stock options, Sen. Chuck Grassley said Friday.
The suspension of collection efforts will give Congress time to ease the burden on affected taxpayers, according to Grassley, R-Iowa, ranking Republican on the Senate Finance Committee and former committee chairman.
Alternative minimum tax is an alternate tax calculation system targeting high-income Americans that ensnares more people each year because it is not indexed for inflation. Incentive stock options are a type of employee stock option with a tax benefit, when exercised, of not having to pay ordinary income tax. Instead, the options are taxed at a capital gains rate. However, they involve more risk for the option holders because they must keep the options longer in order to qualify for the lower capital gains rate.
The application of alternative minimum tax to income from incentive stock options is widely regarded as unfair because it left thousands of taxpayers with huge tax bills on income they never actually realized. Most of the taxpayers had stock options on shares of the technology companies at which they were employed. They exercised the options just before the technology bubble burst in 2001 and 2002, causing the price of tech shares to plummet. But the IRS calculates the income based on the value of the shares at the time they were exercised rather than at the time they were sold. That left many taxpayers with huge tax bills without stock profits they could use to pay the IRS.
Among the victims of the tax were many employees of telecommunications companies operating in Cedar Rapids, such as McLeodUSA, now part of PAETEC, and MCI, now Verizon Business.
Ron Speltz of Ely, a McLeodUSA executive who now works at PAETEC, and his wife, June, crusaded nationally to correct the tax code, working with the Coalition for Tax Fairness and other groups. Their efforts were rewarded by a legislative fix in the Tax Relief and Health Care Act of 2006 that provided gradual refunds of previous payments. But the legislative fix did not stop the IRS from trying to collect the original tax, penalties and interest.
"These families are facing the garnishments of wages, foreclosures of homes, seizures of retirement accounts, and all the other tools available to the IRS to settle uncollected tax debts," said a letter to IRS Commissioner Douglas Shulman cosigned by Grassley and 26 other members of Congress.
As many of you have probably already heard, Presidential Candidate Sen. John McCain made headlines around the world when he announced that his Vice Presidential running mate would be Gov. Sarah Palin. Although there still has not been much written about her tax views, I found this interesting article on 10 Things to Know About Sarah Palin and Energy. Below are a few items that I found most interesting from the list, but you can read the whole article by clicking here.
Standing Up to Big Oil
Serving as the ethics commissioner of Alaska’s Oil & Gas Commission, Palin built her reputation on cracking down on big oil and her fellow Republicans for corruption. As governor, she also successfully led a bipartisan tax levy on big oil’s profits.
Creation of Alaska’s Climate Change Sub-Cabinet
Palin does recognize that her home state is thawing. Palin created the Climate Change Sub-Cabinet to consolidate the state’s knowledge on climate change and guide the state’s mitigation and adaptation policy. The Cabinet was also charged with exploring the state’s renewable energy potential, especially “geothermal, wind, hydroelectric, and tidal resources.”
Drill, Drill, Drill
As governor of an oil-rich state, it is no surprise Palin is in favor of domestic oil production. While McCain has reversed his position on drilling on the outer continental shelf (OCS), he has yet to call for drilling in the Arctic National Wildlife Refuge, which Palin refers to as “that little 2,000 acre plot.” But Palin thinks he’ll change his mind: “[McCain] came around on OCS…I anticipate the same with ANWR.”
Energy Rebate Check
Palin issued a press release praising Obama’s proposal for $1,000 energy rebate checks. She had proposed a $100-a-month energy debit card, but dropped that plan in favor of a $1,200 one-time special payment to eligible Alaskans, which she signed into law just this week.
Gas Tax Holiday
Alaska has some of the highest gasoline prices in the country and Palin signed into law a gas tax holiday, suspending the motor fuel tax on gasoline, marine fuel, and aviation fuel for one year. McCain and Clinton both were in favor of gas tax holiday while Obama claimed such a move was merely a “gimmick.”
As you can see, for the approximately 147,000 families that make up the top 0.1 percent of the income scale, the difference between the two plans is stark. While McCain offers a $269,364 tax cut, Obama would raise their taxes, on average, by $701,885 – a difference of nearly $1 million.
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