Thursday, November 06, 2008

Tax Fantasy and Today’s Election Season Rhetoric

From Community Times:

Remember how Sen. John McCain made Joe “the plumber” Wurzelbacher of Holland, Ohio, into a working-class hero for questioning Sen. Barack Obama’s tax plans? A Nashville-based publicist, Jim Della Croce, said Joe’s hired him to help deal with the media attention.

There’s talk of a book, recordings and ... who knows? Maybe a radio talk show, which has become the last refuge of the famously outraged.

Quite a few readers have criticized me and other media folks for picking on Joe. When he turned out to have had a tax lien on his house, for example, it seemed to me as though he should be nicknamed Joe the Tax Dodger.

But, no problem. Joe appears to be having the time of his life. At this rate, he might even make enough money to qualify for Obama’s proposed tax increase.

Tax policy is worth a serious debate. It’s too bad that we didn’t hear it.

Instead, McCain, Alaska Gov. Sara Palin, and some of their most prominent supporters touted Joe, hoping voters were too dense to know the difference between a three-point rise in the top marginal tax rate and the threat of a Marxist takeover.

Politics often is called “show business for ugly people” because both blur the lines between facts and fantasy. Enter Joe the Plumber, who presents the image of a man who is burdened by government, even when he isn’t.

Wurzelbacher asked Obama why he should have to pay more taxes if he buys the business he hopes to buy. Obama’s plan called for families that earn more than $250,000 a year to pay higher taxes. That’s about 5 percent of the population and way above what most plumbers make.

“My attitude is that if the economy’s good for folks from the bottom up, it’s gonna be good for everybody,” Obama explained. “I think when you spread the wealth around, it’s good for everybody.”

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MA Rejects Elimination of State Income Tax

From the Boston Herald:

Massachusetts’s voters rejected a call to eliminate the state’s income tax after critics said it would have wreaked fiscal havoc at a time when the state is already grappling with a financial downturn.

The measure would have cut the 5.3 percent tax rate in half in January, and then killed it completely in January 2010.

Supporters, led by the Committee for Small Government, had argued the best way to cut government waste and overspending was to eliminate the tax, which would have reduced annual state revenues by 40 percent or about $12.5 billion.

Backers also said the question would have saved the average taxpayer about $3,700.

Committee Chairwoman Carla Howell blamed the defeat on the massive advertising campaign by opponents of the measure, saying both sides were initially in a dead heat in the polls and that voters were ultimately swayed by "scare tactics." Opponents spent more than $5 million while supporters raised only about $500,000.

"We knew this was a David vs. Goliath battle," Howell said. "All we needed was a bigger stone."

Tuesday, November 04, 2008

McCain, Obama economic policies appear to be politics as usual

From LA Times.com:

As Americans head to the polls, they carry their deep fears about the economy coupled with the weight of dire warnings about the potential economic fallout of an Obama or McCain presidency.

Democrat Sen. Barack Obama is accused of having a "socialist agenda," and Republican Sen. John McCain allegedly wants to further enrich "millionaires and billionaires." To listen to the campaigns, the risks for ordinary Americans are extraordinary.

The heated rhetoric is tapping into more than politics as usual. The election is occurring at a time of serious long- and short-term problems in the U.S. economy.

Ever since the late 1960s, incomes have been growing more unequal, leaving middle-class wage earners with a smaller share of the American pie while vast fortunes have been accumulated by a tiny few at the top.

The nation has just ended a long era of economic growth that left the median incomes of Americans lower in 2007 than in 1999, according to Census Bureau data. The impact was particularly hard at the lower end of the income scale.

Election Night on FOX Business News

I am excited to announce that I will once again be a guest on FOX Business News tonight night for a live segment during their election coverage, which will air from 9:00 PM – 12:00 AM EST live. Throughout the segment, I will be interviewed on the next President’s tax proposals and their implications on individual taxpayers, small business owners, and corporations. I am looking forward to this great opportunity, and cannot wait to answer questions from both Alexis Glick and viewers of the program. Be sure to tune in on tonight to watch the coverage!

In Bleak Times, the I.R.S. Looks Good

From NYTimes.com:

Benjamin Franklin said that nothing in this world is certain except death and taxes. When death is not an option and the world is maximizing the uncertainty, taxes look like an intriguing career alternative.

Or, more precisely, what the Internal Revenue Service calls tax administration.

The I.R.S. dangled the possibilities when it held an open house at the federal office building at 290 Broadway in Lower Manhattan on Tuesday. An hour before the fair was scheduled to begin, the crowd began lining up — recently laid-off Wall Street types in charcoal-gray pinstripe suits and trench coats; less formally dressed people; a woman with a new accounting degree on her résumé and a 14-month-old baby in a stroller.

Before their face-to-face encounters with I.R.S. employees, before they got a chance to hear about the agency’s “work-life balance” and its portable retirement plan, they had to do some waiting. The line for the career fair stretched along Broadway, turned the corner, ran down Reade Street and turned the corner again at Elk Street.

Once the job seekers reached the lobby, they had to shed their umbrellas and rain gear. Following security guards’ instructions, they also had to remove shoes, belts and watches, and step through a metal detector.

Hope was an elevator ride away, on the 30th floor, where tables had been set up with handouts describing the particulars of different I.R.S. units. Employees of the agency were waiting to talk about their own careers but were not there to offer jobs on the spot. Most prospective applicants said they were told to go home and search a Web site — www.jobs.irs.gov — for positions they might be qualified for, and to apply online.

IRS Announces New Members and a Chairman for ETAAC

According to their newest press release, the IRS has announced the selection of five new members and the new chairperson for the Electronic Tax Administration Advisory Committee (ETAAC).

“IRS is pleased by the continued support it receives from ETAAC,” said David R. Williams, director of IRS Electronic Tax Administration and Refundable Credits. “ETAAC helps the IRS work toward achieving its modernization goals and helps enhance tax administration on behalf of all taxpayers.”

“The 14-member ETAAC serves as a public forum for discussion of electronic tax administration issues and supports the goal of increasing electronic interactions between tax professionals and the IRS. ETAAC, which was created in 1998, submits an annual report to Congress on the progress of the IRS’ electronic tax initiatives.

Chris Beach of Sacramento, Calif., has been selected to serve as the Chairman of ETAAC for the 2008-2009 term. Beach, who joined ETAAC in 2006, is the Director of Filing Methods for the California Franchise Tax Board where he oversees business operations and product development for the state’s e-file and electronic services programs.

The new members, who will replace the outgoing members whose terms expired, will each serve three-year terms beginning October 2008 and ending October 2011.

The new members are:

Jean-Philippe Choudhry of Agoura Hills, Calif., is the Chief Process Officer for 1099 Pro Inc. where he is responsible for developing and defining processes to meet federal and state requirements for filing information returns. The company’s reporting methods include Web-based solutions and desktop software. 1099 Pro’s clients e-file hundreds of millions of information returns annually with the IRS FIRE (Filing Information Returns Electronically) system.

Paul Colombo of Colchester, Vt., is the former State Coordinator for the American Association of Retired Persons (AARP) Tax-Aide program. His accomplishments include achieving an 80 percent e-file rate, with the help of 120 volunteers, at three dozen sites serving 12,000 clients each year. He has extensive experience with web design, creation, and programming.

Phillip Poirier of San Diego, Calif., is Vice President of the Government and Consumer Tax Division at Intuit. He is responsible for government initiatives relating to Intuit’s consumer businesses (TurboTax and Quicken). Poirier has extensive experience in business development, with privacy/security matters in connection with electronic commerce initiatives and with providing legal and regulatory compliance counsel.

Andrew Sidamon-Eristoff of New York is a former Commissioner of the New York State Department of Taxation and Finance and the New York City Department of Finance. Sidamon-Eristoff has been a leader in conceiving, implementing and promoting e-filing and electronic taxpayer services at the state and local government levels. He is currently a private investor and international consultant in tax administration.

Princess Vlandamir of Dallas is a Tax Strategist and Project Manager for Ernst & Young, supporting the Tax Practice. She co-leads e-filing initiatives, assists in solving return reject problems and manages the filing- season readiness program. Vlandamir also works on tax software applications and eStorage.”

Monday, November 03, 2008

Top 10 Tax Related Lies from the Candidates

Election Day is just a few hours away, and although most people have already decided which candidate they are voting for, there are still many people who are undecided. To help the readers of my blog who are trying to sort through all of the lies that the candidates have been spreading I have put together the following list of the top 10 tax related lies this election season.

1. McCain’s claim that Obama’s plan will increase taxes on 50% of small business revenue.
Facts: The candidates have both been trying hard to win the hearts of small business owners waiting too see which candidates plan better benefits their business. McCain’s statement however, was simply false. Studies have found Obama’s plan will not raise taxes for the large majority of small business owners and McCain’s numbers were very inflated.

2. Obama’s claim that for every dollar that he has proposed in new spending, he has also proposed an additional cut so it matches.
Facts: The Tax Policy Center (TPC) debunked Obama’s plan (as well as McCain’s) saying Obama’s plan would “substantially increase the national debt over the next ten years”. The only way Obama’s statement could possibly become a reality would be the introduction of some huge government spending cuts he has not yet mentioned.

3. McCain’s claim “Joe the Plumber” would face much higher taxes under Obama’s tax plan.
Facts: Obama’s tax plan does give higher taxes to some business owners, but only ones making over $200,000 a year. “Joe the Plumber” would actually be exempt from Obama’s tax increase, as well as the health coverage fine because of his business’ size.

4. Obama’s claim that “independent studies have looked at their respective plans and concluded that his tax plan provides three times the amount of tax relief to middle-class families than McCain’s.”
Facts: The study that Obama is referring to, done by the TPC, did indeed cite this information. However, the TPC failed to include the candidates individual health care tax plans. When you factor in the health care plans, McCain actually gives more tax breaks to middle-class families, and the “three times as much tax relief” no longer works.

5. McCain’s claim that earmarks have tripled in the last five years.
Facts: McCain has used earmarks repetitively throughout the campaign as one of his main points. He has spoken out profusely against them and stated he does not himself partake on requesting them. However, he made the mistake of publicly stating earmarks have tripled, when in fact they have dramatically declined in the past 5 years.

6. Obama’s claim that McCain’s health care tax plan is a loss for the average family.
Facts: Obama makes a point of saying the average plan costs $12,000 and McCain’s $5,000 tax credit will not cover that. However, Obama is basing these figures on two assumptions; the employer will drop the workers insurance, and the workers wages will not increase to offset the loss. A lot of times employers will drop insurance benefits but raise wages to make up most of the difference. In this case, a $5,000 tax credit would more than offset the difference.

7. McCain’s claim that Obama will tax home heating oil.
Facts: In reality, Obama has not proposed a single plan to raise taxes on electricity or home heating oil. In fact, he proposed a $1,000 per family rebate for increased heating oil costs.

8. Obama’s claim that McCain’s tax plan, gives CEOs of Fortune 500 companies an average of $700,000 in reduced taxes, while leaving 100 million Americans out.
Facts: When Obama says that McCain’s plan will give CEOs reduced taxes he is being somewhat misleading. He is referring to the Bush tax cuts, which do in fact benefit a majority of wealthy Americans. However, McCain wants to extend the breaks which are due to expire in 2011, therefore he is not creating new tax cuts but rather extending existing breaks.

9. McCain’s claim that he wants to “double the dividend from $3,500 to $7,000 for every dependent child in America.”
Facts: Although McCain used the term “dividend” incorrectly (he meant exemption), that is not the point. He says he wants to double the exemption, but studies find his plan will actually only increase the exemption by 50% or so.

10. Obama’s claim that under my tax plan, 95% of Americans will get a tax cut.
Facts: Although Obama’s plan does give a high percentage of Americans a tax cut, the actual amount is actually 81.3%. The number, while still high, is not 95%.

Wednesday, October 29, 2008

Schwarzenegger calls Legislators for Emergency Budget Session

From LA Times.com:

Gov. Arnold Schwarzenegger has set Nov. 5 -- the day after next week's election -- as the start of an emergency legislative session to address the state budget deficit, which has swelled by several billion dollars in recent weeks as the stock market has continued its tumble and the economy has soured.

Schwarzenegger said this year's deficit will be "much more" than the $3 billion that state officials projected two weeks ago. Capitol budget analysts say preliminary data indicate the problem will probably grow to at least $10 billion.

The governor and legislative leaders made the announcement to reporters in the hallway outside Schwarzenegger's office, where they had been meeting in private to discuss the fiscal crisis. They said that in the coming days they also will form a commission to study ways to restructure the state tax code to make revenue more stable

Schwarzenegger's move comes a month after lawmakers passed the current budget and adjourned until December, when the next class of lawmakers is scheduled to begin work. But the governor said state revenues are dropping so fast that he and legislative leaders decided to call a lame-duck session.

"The situation is far more severe than it was when we were negotiating the budget" over the summer, Schwarzenegger said.

House Holds Hearing on Economy

According to their announcement, the U.S. House of Representatives Ways and Means Committee will hold a hearing “focusing on economic recovery and job creation through investment.”

In announcing the hearing, Chairman Rangel said, “American families are hurting and they are looking to Congress for solutions to help our economy recover and create new jobs. This hearing will examine the growing challenges facing working families as well as State and local governments to determine how we can best restore economic security throughout our nation.”

FOCUS OF THE HEARING:

The hearing will focus on challenges facing American families and State and local governments during the economic downturn and solutions to improve economic security, create new jobs and invest in America’s infrastructure.

Experts See Little Difference Between Obama's & McCain's Plan for Small Businesses

From Kansas City.com:

As the presidential campaign is in its final week, John McCain and Barack Obama each argue that his tax plan is better to help the ever suffering small-businessman.

Tax experts, however, suggest that the candidates' blueprints for helping small business are virtually identical for all but 2 percent to 3 percent of the highest-income small businesses. For them, McCain's plan is more generous.

The issue has been a campaign centerpiece since the emergence earlier this month of "Joe the Plumber," an Ohio voter who would benefit under Obama's plan but favored McCain's because it preserves the current tax brackets.

"Joe's dream is your dream," McCain said Monday night at a rally in Pottsville, Pa. "It's to own a small business that will create jobs, and the attacks on him are attacks on small businesses all over this nation. They should be ashamed."

Here's what the candidates actually propose. McCain wants to leave in place President Bush's tax cuts of 2001 and 2003 that lowered the top tax bracket from 39.6 percent to 35 percent and lowered the capital gains tax, a tax on profits, to 15 percent.

Obama would let those tax cuts expire on Jan. 1, 2011, as called for under current law, for individual tax filers whose adjusted gross income exceeds $200,000, and for joint filers whose adjusted gross income is more than $250,000.

The Democratic nominee assured a rain-soaked crowd Tuesday in Chester, Pa., "If you make less than a quarter of a million dollars a year, which includes 98 percent of small business owners, you won't see your taxes increase one single dime."

Both candidates' comments have created confusion by giving the impression that the term "small business" is somehow a special tax designation. It's not.

"People think that small businesses pay a tax and their tax is being increased," said Eric Toder, a tax analyst at the Tax Policy Center, a nonpartisan research organization in the nation's capital. "There is a perception that more people are affected by this than actually are."

So who's right?

Roughly 75 percent of small businesses file as individual tax filers, not corporations, and most report their business income using various tax forms, called schedules, for income from business ventures, farming or rental properties.

Using these three income-reporting categories, the Tax Policy Center has concluded that 1.9 percent of all individual filers reporting business income would see their taxes go up under Obama's plan. Of those who get more than 50 percent of their income from business ventures, 2.7 percent would pay higher taxes.

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Biden’s Tax Gaffe

Last week Democratic Vice Presidential Nominee Joe Biden misspoke during a television interview and broke from the Obama’s campaign in saying that no one making under $250,000 would pay more in taxes under an Obama administration. The campaign quickly tried to clarify by saying, “anyone making between $150,000 and $250,000 wouldn't get a tax cut but also wouldn't pay higher taxes.” But the interview left many people wondering “will families making less than $250,000 get a tax cut under President Obama, or not?”

Well according to WSJ.com’s opinion section, “we suspect what's going on here is more than Mr. Biden's normal gift of gaffe. As with his admission that a President Obama would quickly be tested by our enemies, the Delaware rambler was stumbling into the truth. An Obama Administration couldn't possibly pay for a tax cut for 95% of Americans by raising taxes on a mere 5%. Those 5% don't make enough money, or at least they won't after they find ways to shelter more of their income when their tax rates rise.

Just as Bill Clinton promised a ‘middle-class tax cut’ in 1992 only to raise taxes on the middle class in 1993, Mr. Obama will quickly find that his tax-revenue math doesn't add up. Add in the demands on Capitol Hill to spend more and to offset the Alternative Minimum Tax, and our bet is that even $150,000 would soon prove to be a moving tax target. Remember when the AMT was only supposed to hit 21 millionaires? Next year, without relief, it could hit 26 million taxpayers. Tax increases always hit the middle class because that's where the money is.”

What a Tax Lawyer Dug Up on 'Dracula'

From: WSJ.com:

"There are such things as vampires," says Dr. Van Helsing in Bram Stoker's novel "Dracula." The famous line comes about two-thirds of the way into the story, but it hardly delivers the punch of a staggering revelation. By the time Van Helsing utters it, the book's other characters essentially have figured out the weird truth for themselves.

Readers know even more. Does anybody pick up a copy of "Dracula" these days without first realizing it's about a supernatural bloodsucker from Transylvania? Or were you expecting a spoiler alert?

This is a challenge for a lot of classic books: The stories are so familiar that their twists and turns fail to shock or awe. Yet the publisher W.W. Norton & Co. seems to have found a commercially viable way out of this fix, with a series of annotated volumes that perform the marketing miracle of making the old seem new again. The latest, "The New Annotated Dracula," is out just in time for Halloween.

A novel such as "Dracula" still possesses plenty of well-told pleasures. An early scene in which its iconic antihero climbs out a window and crawls headfirst down a castle wall remains one of the creepiest in English literature. Yet it's the exceedingly rare reader who will scratch his head in bewilderment when Van Helsing breaks out the crucifixes and garlic.

Leslie S. Klinger, the editor of "The New Annotated Dracula," nevertheless manages to enliven the experience of reading about the world's most famous undead white male. Like a movie studio that adds "bonus features" to a DVD, Norton includes extensive commentaries in "The New Annotated Dracula" and even offers what appears to be a genuine literary discovery: The volume describes a previously unknown "alternate ending" to the 1897 text.

"The New Annotated Dracula" probably wouldn't exist but for the success of several predecessors. Annotations aren't exactly an innovation, of course, and many publishers have glossed the plays of Shakespeare and the poetry of "Paradise Lost" for college students. Norton's breakthrough idea was to produce lavish volumes full of illustrations, essays, appendices, and discursive footnotes for general readers.

A decade ago, Robert Weil, an editor at Norton, conceived of "The Annotated Alice: The Definitive Edition." It brought together Lewis Carroll's "Alice's Adventures in Wonderland" and "Through the Looking-Glass," combining and updating previous annotations by Martin Gardner, a renowned Carroll expert. "Our goal was to publish a beautiful book that would allow adults to relive a classic that they knew as children and to understand it in a new way," says Mr. Weil.

"The Annotated Alice" became a hit whose steady sales make it a backlist superstar for the publisher. Norton has gone on to try the same tack with annotated editions of more than a dozen other titles, such as "The Wizard of Oz," "Huckleberry Finn" and "A Christmas Carol." Forthcoming editions include "The Wind in the Willows," "Peter Pan" and the tales of Edgar Allan Poe.

Norton says its first printing of "The New Annotated Dracula" will number about 50,000 copies -- a healthy run for an oversized, 613-page book. Even so, it's a lightweight compared to "The New Annotated Sherlock Holmes," three volumes totaling more than 2,700 pages, also edited by Mr. Klinger.

By day, Mr. Klinger is a Los Angeles tax attorney with clients in the entertainment industry. By night, he turns his attention to genre literature. When he finished working on the Holmes books, he cast around for a similar project. His wife suggested "Dracula," which made sense because it, too, was a product of late-Victorian Britain whose central character had achieved a legendary status in popular culture -- an inspiration for everything from the movies to the Muppets.

In his book, Mr. Klinger does what annotators do. He defines obscure words and terms. He conveys little-known trivia, such as Stoker's consideration of "The Un-Dead" or "The Dead Un-Dead" as potential titles. And he proposes offbeat interpretations. Is it possible, for instance, that Quincey Morris, one of Van Helsing's vampire hunters, is secretly in league with Dracula? Stoker almost certainly didn't intend it, but a careful probing of the text leaves open this intriguing prospect.

In the vast body of amateur scholarship on Sherlock Holmes, there's a tradition of pretending that Holmes was a real person and that Arthur Conan Doyle was not a writer of fictional stories but an actual biographer. Mr. Klinger takes the same approach with "Dracula," with results that will amuse some and annoy others. "You don't have to buy into my crackpot suggestion," he says. "But the idea is to help the reader have fun."

In researching "Dracula," Mr. Klinger had to perform detective work that would do Holmes proud. Stoker left behind not only his published manuscript, but also extensive drafts and notes that provide glimpses of how his ideas about the novel evolved over several years -- rich source material for any annotator. One of the key texts is a 541-page manuscript that turned up in a Pennsylvania barn some years ago. Few people have laid eyes on it, and Mr. Klinger tried to contact its anonymous owner through Christie's, the auction house.

That effort initially failed, though the private collector ultimately approached Mr. Klinger through an intermediary and invited him to spend two days with the manuscript. Mr. Klinger had to sign a nondisclosure agreement, but this summer he received permission to identify the mysterious owner: Paul Allen, the co-founder of Microsoft.

Mr. Klinger draws extensively from this document, and the greatest payoff comes in the last chapter, when he reveals an ending different from the one Stoker put into print. The lost scene shows up in Mr. Allen's manuscript, but not in the novel as it was finally published. It takes place in Transylvania and involves a massive explosion. Saying more would spoil the surprise.

Monday, October 27, 2008

Group asks IRS to investigate Catholic bishop against Obama

From USA Today:

A church-state watchdog group has asked the Internal Revenue Service to investigate whether the Roman Catholic bishop of Paterson, N.J., violated tax laws by denouncing Democratic presidential nominee Sen. Barack Obama.

In a letter sent to the IRS on Wednesday (Oct. 22), Americans United for Separation of Church and State accused Paterson Bishop Arthur Serratelli of illegal partisanship for lambasting Obama's support of abortion rights.

In a column posted on the Diocese of Paterson's website and published in its weekly newspaper, Serratelli also compared Obama to King Herod, the biblical monarch who ordered the death of John the Baptist.

The bishop did not refer to Obama by name but only as "the present democratic (sic) candidate."

Under federal tax law, nonprofit groups — including religious organizations — are prohibited from intervening in campaigns for public office by endorsing or opposing candidates.

Fact Check: Would Obama's tax policy harm people with special needs?

From CNN.com:

The Statement:

During a speech Friday, Oct. 24, in Pittsburgh, Pennsylvania, Gov. Sarah Palin noted that parents of children with special needs often set up trusts to help ensure long-term assistance. "Many families with special needs children or dependent adults" are concerned that Sen. Barack Obama "plans to raise taxes on precisely these kinds of financial arrangements," she said. "They fear that Senator Obama's tax increase will have serious and harmful consequences, and they're right."

The Facts:

Some parents create special needs trusts in order to help ensure that their children with disabilities or other special needs will have help well into the future, after the parents retire or die. The Federal Citizen Information Center Web site explains that the primary advantage of a trust, rather than a gift or inheritance, is that the assets are owned by the trust, not the beneficiary. So, funds will be available to the person with special needs, but will not cause that person to be disqualified from the government-run Medicare program. The trust funds typically provide for such things as glasses, independent checkups, transportation, equipment, training, education, and other programs, the Web site says.

The way most of these trusts are structured, the interest they gain is taxed as part of the parents' income. Palin, in her remarks, suggests that Obama will increase taxes on these trusts in general, thereby reducing the funds in them. The McCain campaign did not respond to requests to explain or comment on the record.

Obama has pledged to increase taxes only on individuals with incomes over $200,000 and families with incomes over $250,000. He is not offering an exception for interest in special needs trusts — that income counts toward the total. So, if someone's taxes go up under Obama, the interest in a trust fund is part of what will be taxed at a higher rate.

But Obama does not have a plan to increase taxes on special needs trusts in general. And Jason Furman, economic adviser for the Obama campaign, noted that Obama has vowed to fix his plan if any individual making less than $200,000 or family making less than $250,000 is left paying higher taxes. So, if Obama's tax plan, unintentionally, forced taxes up on a special needs trust for someone at a lower income, the tax plan would change, and the person's taxes would not go up, Furman said.

Sen. John McCain is promising across-the-board tax cuts, so no one with a special needs trust would see a tax hike under his plan. As the CNN Truth Squad has reported, the nonpartisan Tax Policy Center says Obama's tax cuts would be larger for people in middle and lower income ranges.

Before Palin launched this attack Friday, the McCain campaign told the Wall Street Journal that it was coming. The newspaper, in an article published online Friday, quoted Andy Imparato, president of the nonpartisan American Association of People with Disabilities, saying he has not heard any complaints from constituents about Obama's tax plan. It was not clear what Palin's evidence was that "many families" were concerned about Obama's plan.

The Verdict:

Misleading. Obama's plan would increase taxes on individuals making more than $200,000 and families making $250,000, and it would include the income on interest in special needs trusts. But Obama does not have a plan to raise taxes on special needs trusts in general.

Progressive Income Taxation and Socialism

Professor James Edward of Mauled Again has posted his take on the “progressive tax” concept. Below is a quote from the entry, but you can read the full text by clicking here.

Perhaps we interpret Obama's statement differently. I did not read it as revoking the tax cut on the wealthy in order to give cash to the poor and middle class. I read it as revoking the tax cut on the wealthy so that the government did not need to rack up deficits to provide the health care, school lunches, head-start education programs, and other benefits that indeed give opportunity to people who otherwise would be stuck in poverty.

This nation has been doing that for decades. It's socialism, perhaps not as far along the spectrum as Sweden's version, but it's socialism. When the administration refused to raise taxes to finance the war, it ended up cutting benefits to those in need. Obama seeks to fix that problem. That problem is exacerbated by the impact of cutting taxes on the wealthy, who didn't trickle much down to the poor other than short-term smoke and mirrors and longer-term financial distress. The poor and lower middle class will suffer far more from the present and continuing recession (depression, perhaps) than will the wealthy.

What I think underlies these charges of socialism is fear. It's fear, not of millionaires paying another fifty or a hundred thousand dollars in taxes, not of government taking over ownership of all assets, but of change. For quite some time, the economic and tax arrangement have favored the wealthy. They created this arrangement by persuading the middle class and even the poor that life would be better if income taxes were cut, particularly income taxes on capital gains and dividends. Yet when all was said and done and the policies advanced by the tax cutters played out, the nation ended up in what may be the worst economic catastrophe it has faced. While wages barely kept pace with inflation, and in some instances fell, while jobs were outsourced, while the quality of products and services suffered, while health care became less affordable and less available, while resources allocated to education continued to be insufficient, the percentage of wealth owned by the wealthy increased. Because the sales pitch worked in the past, they expected it to work again, but to their surprise, the track record of the don't-tax-but-spend crowd has turned out to be no better than, and in most respects worse than, the track record of the tax-and-spend crowd. With that taking the wind out of their economic policy sails, they turned their focus on a broader question, using terminology designed to spread their fear throughout the electorate.

The answer to Joe the Plumber's question was honest. It might not be something with which people agree, but at least it's not the misleading promise that cutting taxes will make everyone economically secure. And underneath this trumpeting of the "socialism" warning cry is an unarticulated lack of faith in America, a notion that somehow citizens will sit back and do nothing if it attempts to fix the economic mess turn too sharply to what genuinely is socialism rather than returning the country to the path which uses economic policy to promote fairness, affordable health care, improvement in children's education, and the other characteristics of high quality of life that were promised but not delivered by the merchants of tax cuts for high income taxpayers. I don't see the appeal in continuing to do what has been done, when what has been done is what brought us to where we are.

State Revenues Drop

According to the Center on Budget and Policy Priorities, states across the country are beginning to report their revenue data for the July through September quarter and things are not looking good. In addition to large revenue drops the following problems are also developing.

Of 15 mostly large and mid-sized states that have published complete data for this period, the majority collected less total tax revenue in July-September 2008 than was collected in the same period in 2007. (See Table 1.) After adjustment for inflation, total revenue collections are below 2007 levels in 14 of the 15 states. (See Table 2.)

Although state revenue collections have been slowing for at least a year, the new figures are the first to show steep declines in revenue across a variety of types of taxes across a range of states from all regions of the country. Of the 15 states surveyed here, the median state experienced a 5.5 percent decline in total tax revenue after adjustment for inflation. Only Michigan, which enacted a major tax increase, experienced revenue growth; revenues in all others declined.

Sales tax revenue has been particularly hard hit. Revenues are down in every one of those 15 states, with a median decline of 7.3 percent after adjustment for inflation. Although many states have been experiencing declining or flat sales tax revenues for some time, these figures are worse than in previous quarters.

Personal income tax revenues are also down sharply from previous quarters. Until recently, the personal income tax was growing in most states. Now it has declined 2 percent in the July-September period in the median state after adjustment for inflation. Each of the surveyed states except Michigan (due to the enacted tax increase) and Minnesota experienced declines.

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Tax-refund checks await recipients

From Sign On San Diego.com:

If you don't have your economic-stimulus or federal tax-refund check yet, it may be because the IRS doesn't know where you are.

The Internal Revenue Service has more than 15,300 tax-refund checks or economic-stimulus checks belonging to Southern Californians that were never delivered because of incorrect addresses.

About 5,000 of those checks, worth $3.5 million, are owed to San Diego County residents. The average check is $684.

To receive the check, a taxpayer needs to update his or her address with the IRS.

Federal law requires that all stimulus checks be delivered by Dec. 31. Those who are owed a check must update their address by Nov. 28, an IRS spokesman said.

There are two ways to see if you are owed a check and, if necessary, to update your address. Those with Internet access can go to the IRS Web site at irs.gov and click on either “Where's My Refund?” or “Where's My Stimulus Payment?”

Those without Internet access can call (800) 829-1954 to check on the status of their refund check or (866) 234-2942 to check on their payment.

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