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89% of Venetians Vote for Independence

89% of Venetians Vote for Independence

Inspired by Scotland’s hopes for independence and hot on the heels of Crime’a 95% preference for accession to Russia, 89% of the citizens of Venice voted for their own sovereign state in a ‘referendum’ on independence from Italy. As The Daily Mail reports, the proposed ‘Repubblica Veneta’ includes the five million inhabitants of the Veneto region and has been largely driven by the wealthy ‘who are tired of supporting the poor and crime-ridden south’ (Venice pays EUR71bn in taxes and receives only EUR21bn in services and investment). The ballot appointed a committee of ten who immediately declared independence from Italy. Venice may now start withholding taxes from RomeWonder why the US, Europe, and Japan have not announced the referendum “illegal” and announced sanctions yet?

Via The Daily Mail,

Venetians have voted overwhelmingly for their own sovereign state in a ‘referendum’ on independence from Italy.

Inspired by Scotland’s separatist ambitions, 89 per cent of the residents of the lagoon city and its surrounding area, opted to break away from Italy in an unofficial ballot.

The proposed ‘Repubblica Veneta’ would include the five million inhabitants of the Veneto region and could later expand to include parts of Lombardy, Trentino and Friuli-Venezia Giulia

Wealthy Venetians, under mounting financial pressure in the economic crisis, have rallied in their thousands, after growing tired of supporting Italy’s poor and crime ridden Mezzogiorno south, through high taxation.

Campaigners say that the Rome government receives around 71 billion euros  each year in tax from Venice – some 21 billion euros less than it gets back in investment and services.

The ballot also appointed a committee of ten who immediately declared independence from Italy. Venice may now start withholding taxes from Rome.

Campaigner Paolo Bernardini, professor of European history at the University of Insubria in Como, northern Italy, said it was ‘high time’ for Venice to become an autonomous state once again.

‘Although history never repeats itself, we are now experiencing a strong return of little nations, small and prosperous countries, able to interact among each other in the global world.’

‘The Venetian people realized that we are a nation (worthy of) self-rule and openly oppressed, and the entire world is moving towards fragmentation – a positive fragmentation – where local traditions mingle with global exchanges.’

‘We are only at the Big Bang of the movement – but revolutions are born of hunger and we are now hungry. Venice can now escape.’

So how long will it before Barosso, Van Rompuy, Obama, Abe and th rest declare this referendum “illegal” and seek sanctions against the people of Venice…

IMF’s Property Tax Hike Proposal Comes True With UK Imposing “Mansion Tax” As Soon As This Year | Zero Hedge

IMF’s Property Tax Hike Proposal Comes True With UK Imposing “Mansion Tax” As Soon As This Year | Zero Hedge.

One could see this one coming from a mile away.

It was a week ago that we highlighted the latest implied IMF proposal on how to reduce income inequality, quietly highlighted in its paper titled “Fiscal Policy and Income Inequality“. The key fragment in the paper said the following:

Some taxes levied on wealth, especially on immovable property, are also an option for economies seeking more progressive taxation. Wealth taxes, of various kinds, target the same underlying base as capital income taxes, namely assets. They could thus be considered as a potential source of progressive taxation, especially where taxes on capital incomes (including on real estate) are low or largely evaded. There are different types of wealth taxes, such as recurrent taxes on property or net wealth, transaction taxes, and inheritance and gift taxes. Over the past decades, revenue from these taxes has not kept up with the surge in wealth as a share of GDP (see earlier section) and, as a result, the effective tax rate has dropped from an average of around 0.9 percent in 1970 to approximately 0.5 percent today. The prospect of raising additional revenue from the various types of wealth taxation was recently discussed in IMF (2013b) and their role in reducing inequality can be summarized as follows.

  • Property taxes are equitable and efficient, but underutilized in many economies. The average yield of property taxes in 65 economies (for which data are available) in the 2000s was around 1 percent of GDP, but in developing economies it averages only half of that (Bahl and Martínez-Vázquez, 2008). There is considerable scope to exploit this tax more fully, both as a revenue source and as a redistributive instrument, although effective implementation will require a sizable investment in administrative infrastructure, particularly in developing economies (Norregaard, 2013).

We summed this up as follows: “if you are buying a house, enjoy the low mortgage (for now… and don’t forget – if and when the time comes to sell, the buyer better be able to afford your selling price and the monthly mortgage payment should the 30 Year mortgage rise from the current 4.2% to 6%, 7% or much higher, which all those who forecast an improving economy hope happens), but what will really determine the affordability of that piece of property you have your eyes set on, are the property taxes. Because they are about to skyrocket.

Sure enough, a week later the Telegraph reports that UK Treasury officials have begun work on a mansion tax that could be levied as soon as next year, citing  a Cabinet minister.

“Danny Alexander, the Liberal Democrat Chief Secretary to the Treasury, told The Telegraph that officials had done “a lot of work” on the best way to impose the charge. The preparatory work would mean that a Government elected next year might be able to introduce the charge soon after taking office.  Mr Alexander said there was growing political support for a tax on expensive houses, saying owners should pay more to help balance the books.

After all it’s only fair. It is also only fair, for now, to only tax the uber-rich, who are so defined merely in the eye of the populist beholder. However, said definition tends to be fluid, and what will be a tax on, i.e., £2  million properties tomorrow, will be lowered to £1  million, £500,000 and so on, in 2, 3, etc, years.

And in a world which as Zero Hedge first defined years ago as shaped by the “fairness doctrine“, the one word that was so far missing from this article, can be found momentarily:

“There’s a consensus among the public that a modest additional levy on higher value properties is a fair and reasonable thing to do in the context of further deficit reduction,” he said. “It’s important that the burden is shared.”

There you have it: “fair.” Because there is nothing quite like shaping fiscal (and monetary) policy based on what the du jour definition of fair is to 1 person… or a billion. Especially if that billion has a vote in the “democratic” process.

It gets betters:

Mr Alexander said the new tax would not be “punitive” and insisted that the Lib Dems remained in favour of wealth creation.

So if it’s not “punitive” it must be… rewarding? And how long until the definition of fair, far short of the projected tax windfall, is expanded to include more and more, until those who were previously for the “fair” tax, suddenly become ensnared by it? As for wealth creation, perhaps in addition to the fairness doctrine it is time to be honest about what socialism really means: “wealth redistribution.”

Telegraph continues:

That may be a seen as a challenge to Vince Cable, the Business Secretary, who first called for the mansion tax and has criticised high earners.

 

The Lib Dems and Labour are both in favour of a tax on expensive houses. Labour says the money raised could fund a new lower 10p rate of income tax.

 

The Lib Dems have suggested that the tax should fall on houses valued at £2  million and more.

 

The Treasury last year estimated that about 55,000 homes are in that range, though the Lib Dems say the figure is closer to 70,000.

To be sure not everyone is for the tax:

David Cameron has opposed a mansion tax but George Osborne, the Chancellor, is said to be more open to the idea. Most of the homes that might be affected are in London and the south-east of England.

 

Boris Johnson, the Tory Mayor of London, promised last week to oppose any move towards the tax, which he described as “brutally unfair on people who happen to be living in family homes”.

 

Some critics have questioned the practicality of the policy, asking how the State would arrive at valuations for houses.

Well, they will simply draw a redline above any number they deem “unfair”, duh. As for the London housing bubble, it may have finally popped, now that all those who bought mansions in London will “suddenly” find themselves at the “fair tax” mercy of yet another wealth redistributionist government.

Unfortunately, for the UK, the “mansion tax” idea, , gloriously populist as it may be, may be too little too late.

As we reported late last week in “The Music Just Ended: “Wealthy” Chinese Are Liquidating Offshore Luxury Homes In Scramble For Cash“, the Chinese offshore real estate buying juggernaut has now ended courtesy of what appears to be China’s credit bubble bursting. So if the liquidation wave truly picks up, and since there is no greater fool left (you can forget about sanctioned Russian oligarchs investing more cash in the City in a world where asset freezes and confiscations are all too real), very soon London may find that there is nobody in the “fair” real estate taxation category left to tax.

But that’s ok – because that’s when one simply expands the definition of what is fair to include the not so wealthy… and then again…. and again.

Finally, if anyone is still confused, the IMF-proposed “mansion tax” is most certainly coming to the US, and every other insolvent “developed world” nation, next.

IMF's Property Tax Hike Proposal Comes True With UK Imposing "Mansion Tax" As Soon As This Year | Zero Hedge

IMF’s Property Tax Hike Proposal Comes True With UK Imposing “Mansion Tax” As Soon As This Year | Zero Hedge.

One could see this one coming from a mile away.

It was a week ago that we highlighted the latest implied IMF proposal on how to reduce income inequality, quietly highlighted in its paper titled “Fiscal Policy and Income Inequality“. The key fragment in the paper said the following:

Some taxes levied on wealth, especially on immovable property, are also an option for economies seeking more progressive taxation. Wealth taxes, of various kinds, target the same underlying base as capital income taxes, namely assets. They could thus be considered as a potential source of progressive taxation, especially where taxes on capital incomes (including on real estate) are low or largely evaded. There are different types of wealth taxes, such as recurrent taxes on property or net wealth, transaction taxes, and inheritance and gift taxes. Over the past decades, revenue from these taxes has not kept up with the surge in wealth as a share of GDP (see earlier section) and, as a result, the effective tax rate has dropped from an average of around 0.9 percent in 1970 to approximately 0.5 percent today. The prospect of raising additional revenue from the various types of wealth taxation was recently discussed in IMF (2013b) and their role in reducing inequality can be summarized as follows.

  • Property taxes are equitable and efficient, but underutilized in many economies. The average yield of property taxes in 65 economies (for which data are available) in the 2000s was around 1 percent of GDP, but in developing economies it averages only half of that (Bahl and Martínez-Vázquez, 2008). There is considerable scope to exploit this tax more fully, both as a revenue source and as a redistributive instrument, although effective implementation will require a sizable investment in administrative infrastructure, particularly in developing economies (Norregaard, 2013).

We summed this up as follows: “if you are buying a house, enjoy the low mortgage (for now… and don’t forget – if and when the time comes to sell, the buyer better be able to afford your selling price and the monthly mortgage payment should the 30 Year mortgage rise from the current 4.2% to 6%, 7% or much higher, which all those who forecast an improving economy hope happens), but what will really determine the affordability of that piece of property you have your eyes set on, are the property taxes. Because they are about to skyrocket.

Sure enough, a week later the Telegraph reports that UK Treasury officials have begun work on a mansion tax that could be levied as soon as next year, citing  a Cabinet minister.

“Danny Alexander, the Liberal Democrat Chief Secretary to the Treasury, told The Telegraph that officials had done “a lot of work” on the best way to impose the charge. The preparatory work would mean that a Government elected next year might be able to introduce the charge soon after taking office.  Mr Alexander said there was growing political support for a tax on expensive houses, saying owners should pay more to help balance the books.

After all it’s only fair. It is also only fair, for now, to only tax the uber-rich, who are so defined merely in the eye of the populist beholder. However, said definition tends to be fluid, and what will be a tax on, i.e., £2  million properties tomorrow, will be lowered to £1  million, £500,000 and so on, in 2, 3, etc, years.

And in a world which as Zero Hedge first defined years ago as shaped by the “fairness doctrine“, the one word that was so far missing from this article, can be found momentarily:

“There’s a consensus among the public that a modest additional levy on higher value properties is a fair and reasonable thing to do in the context of further deficit reduction,” he said. “It’s important that the burden is shared.”

There you have it: “fair.” Because there is nothing quite like shaping fiscal (and monetary) policy based on what the du jour definition of fair is to 1 person… or a billion. Especially if that billion has a vote in the “democratic” process.

It gets betters:

Mr Alexander said the new tax would not be “punitive” and insisted that the Lib Dems remained in favour of wealth creation.

So if it’s not “punitive” it must be… rewarding? And how long until the definition of fair, far short of the projected tax windfall, is expanded to include more and more, until those who were previously for the “fair” tax, suddenly become ensnared by it? As for wealth creation, perhaps in addition to the fairness doctrine it is time to be honest about what socialism really means: “wealth redistribution.”

Telegraph continues:

That may be a seen as a challenge to Vince Cable, the Business Secretary, who first called for the mansion tax and has criticised high earners.

 

The Lib Dems and Labour are both in favour of a tax on expensive houses. Labour says the money raised could fund a new lower 10p rate of income tax.

 

The Lib Dems have suggested that the tax should fall on houses valued at £2  million and more.

 

The Treasury last year estimated that about 55,000 homes are in that range, though the Lib Dems say the figure is closer to 70,000.

To be sure not everyone is for the tax:

David Cameron has opposed a mansion tax but George Osborne, the Chancellor, is said to be more open to the idea. Most of the homes that might be affected are in London and the south-east of England.

 

Boris Johnson, the Tory Mayor of London, promised last week to oppose any move towards the tax, which he described as “brutally unfair on people who happen to be living in family homes”.

 

Some critics have questioned the practicality of the policy, asking how the State would arrive at valuations for houses.

Well, they will simply draw a redline above any number they deem “unfair”, duh. As for the London housing bubble, it may have finally popped, now that all those who bought mansions in London will “suddenly” find themselves at the “fair tax” mercy of yet another wealth redistributionist government.

Unfortunately, for the UK, the “mansion tax” idea, , gloriously populist as it may be, may be too little too late.

As we reported late last week in “The Music Just Ended: “Wealthy” Chinese Are Liquidating Offshore Luxury Homes In Scramble For Cash“, the Chinese offshore real estate buying juggernaut has now ended courtesy of what appears to be China’s credit bubble bursting. So if the liquidation wave truly picks up, and since there is no greater fool left (you can forget about sanctioned Russian oligarchs investing more cash in the City in a world where asset freezes and confiscations are all too real), very soon London may find that there is nobody in the “fair” real estate taxation category left to tax.

But that’s ok – because that’s when one simply expands the definition of what is fair to include the not so wealthy… and then again…. and again.

Finally, if anyone is still confused, the IMF-proposed “mansion tax” is most certainly coming to the US, and every other insolvent “developed world” nation, next.

British tax authorities just out-mafia’d the IRS

British tax authorities just out-mafia’d the IRS.

hm-revenue-customs

A few months ago, I told you about a bold reportpublished within the IRS that absolutely blasted the agency’s mafia tactics.

In its 2013 annual report to Congress, the Office of the Taxpayer Advocate wrote that the IRS shows “disrespect for the law and a disregard for taxpayer rights.”

Further, the report says that the current system “disproportionately burdens those who [make] honest mistakes,” and that “tax requirements have become so confusing and the compliance burden so great that taxpayers are giving up their U.S. citizenship in record numbers.”

We all know the stories. The IRS has nearly infinite power to do whatever it wants, including freezing you out of your own bank account without so much as a phone call, let alone due process.

In the Land of the Free, people think they’re innocent until proven guilty. This is total BS. If you are only suspected of wrongdoing, you can be locked out of your entire savings.

This is an incredible amount of authority to wield.

But the British government has just gone even further.

Buried in its most recent budget package is a curt little paragraph that reads “The Government will modernise and strengthen [the tax agency’s] debt collection powers to recover financial assets from the bank accounts of debtors who owe over £1,000 of tax.”

Read that one more time just to let it sink in.

The British government is setting an absurdly low threshold at £1,000… about $1,650 in back taxes.

And they’re saying that if the tax authorities believe you owe even just a minor tax debt, they will not only FREEZE your assets, they’ll dip into your bank account and TAKE whatever they want.

Judge, jury, and executioner. They get to decide in their sole discretion if you owe them money, and they get to take as much as they want to satisfy the debt.

It’s unbelievable.

I can’t even begin to imagine why any Brit in his/her right mind would continue to hold a substantial amount of savings in UK banks.

You are practically begging for the government to relieve you of your hard-earned savings.

Even if you haven’t done anything wrong, and have paid up everything that you owe, the slightest clerical error could have them plunging their filthy hands into your account.

These issues are worldwide. Whether you’re in the US, UK, France, Cyprus, etc., when governments go bankrupt, these are precisely the sorts of tactics they resort to.

Rational, thinking people need to be aware of this trend. And it behooves absolutely everyone to come up with a plan B. Because at the rate things are going, Plan B may very soon become Plan A.

by Simon Black

Simon Black is an international investor, entrepreneur, permanent traveler, free man, and founder of Sovereign Man. His free daily e-letter and crash course is about using the experiences from his life and travels to help you achieve more freedom.

A respectful disagreement with Warren Buffett

A respectful disagreement with Warren Buffett.

March 4, 2014
Sovereign Valley Farm, Chile

Warren Buffet sees a different America than I do. I would wager he sees a different America than untold millions of people do too.

And with due respect to the kind-hearted Mr. Buffet, who is undoubtedly an accomplished and savvy investor, the man has been a major beneficiary of the greatest monetary fraud ever pulled in the history of the world.

In his most recent annual report just released yesterday, Mr. Buffet lauds the United States of America, writing:

“Indeed, who has ever benefited during the past 237 years by betting against America? If you compare our country’s present condition to that existing in 1776, you have to rub your eyes in wonder. And the dynamism embedded in our market economy will continue to work its magic. America’s best days lie ahead.”

Such language is typical for Mr. Buffett, he is one of America’s biggest cheerleaders. Again, with good reason.

For one, the unprecedented monetary expansion over the last decades has created a major boon for Mr. Buffet and his net worth.

His company Berkshire Hathaway has a balance sheet worth $485 billion. 25% of that is simply invested in the stock market with big chunks of Coca Cola and American Express.

These stock prices have boomed in an era of unprecedented money printing, adding billions to Mr. Buffett’s net worth.

Second, it’s important to note that over 75% of Berkshire’s revenue comes from highly regulated, absurdly profitable, tax advantageous businesses that are simply not accessible to the average guy.

For example, Mr. Buffett gleefully writes about the $77 billion ‘float’ from his insurance businesses.

This is money that is collected from insurance customers. And while he might have to pay out insurance claims someday, for now he gets to borrow from that kitty at 0% and generate higher returns elsewhere.

On top of this, Mr. Buffett has been able to defer a full $57 billion in tax, indefinitely kicking the can down the road on his IRS bill thanks to industry-specific tax rules.

Again, you and I couldn’t do this because we don’t have access to these special privileges. Warren Buffett does.

Warren Buffett also has special access to lawmakers in the US who clamor to be in his favor.

During the early days of the financial crisis in 2008, for example, Buffett was getting desperate phone calls from the Treasury begging him to make investments in the financial system.

And as a result, he was able to arrange sweetheart deals, brokered by the US government.

It also may just be a wild coincidence that the US government has rejected the Keystone XL pipeline… and Mr. Buffett’s railways just -happen- to be among the prime beneficiaries.

Yes, I think if we all had the special privilege, access, and benefit that Warren Buffett enjoys, we too would all be jumping for joy about America.

But Uncle Warren lives in a different America– the America of the past.

With due deference to his investment acumen, Mr. Buffett should know that no nation in history has been able to -permanently- stand atop the world’s economic mountain.

Like human beings ourselves, nations also rise, peak, and decline. It is their own life cycle.

And the America that Mr. Buffett doesn’t acknowledge is the one that is in debt past its eyeballs.

It is the America that spies on its citizens and threatens people with imprisonment for victimless crimes and administrative transgressions.

It is the America that conjures trillions of paper dollars out of thin air in total desperation, sending the labor force participation rate to multi-decade lows.

It is the new America that exists for a tiny elite at the expense of everyone else.

Taxing The Rich Not A Drag On Economic Growth: IMF Paper

Taxing The Rich Not A Drag On Economic Growth: IMF Paper.

CP  |  By Julian Beltrame, The Canadian PressPosted: 02/26/2014 10:33 am EST  |  Updated: 02/26/2014 3:59 pm EST

 

OTTAWA – A new paper by researchers at the International Monetary Fund appears to debunk a tenet of conservative economic ideology — that taxing the rich to give to the poor is bad for the economy.

The paper by IMF researchers Jonathan Ostry, Andrew Berg and Charalambos Tsangarides will be applauded by politicians and economists who regard high levels of income inequality as not only a moral stain on society but also economically unsound.

Labelled as the first study to incorporate recently compiled figures comparing pre- and post-tax data from a large number of countries, the authors say there is convincing evidence that lower net inequality is good economics, boosting growth and leading to longer-lasting periods of expansion.

In the most controversial finding, the study concludes that redistributing wealth, largely through taxation, does not significantly impact growth unless the intervention is extreme.

In fact, because redistributing wealth through taxation has the positive impact of reducing inequality, the overall affect on the economy is to boost growth, the researchers conclude.

“We find that higher inequality seems to lower growth. Redistribution, in contrast, has a tiny and statistically insignificant (slightly negative) effect,” the paper states.

“This implies that, rather than a trade-off, the average result across the sample is a win-win situation, in which redistribution has an overall pro-growth effect.”

While the paper is heavy on the economics, there is no mistaking the political implications in the findings.

In Canada, the Liberal party led by Justin Trudeau is set to make supporting the middle class a key plank in the upcoming election and the NDP has also stressed the importance of tackling income inequality.

Stephen Harper’s Conservatives have boasted that tax cuts, particularly deep reductions in corporate taxation, are at least partly responsible for why the Canadian economy outperformed other G7 countries both during and after the 2008-09 recession.

In the Commons on Tuesday, Employment Minister Jason Kenney said the many tax cuts his government has introduced since 2006, including a two-percentage-point trim of the GST, has helped most Canadians.

Speaking on a Statistics Canada report showing net median family wealth had increased by 44.5 per cent since 2005, he added:

“It is no coincidence because, with the more than 160 tax cuts by this government, Canadian families, on average, have seen their after-tax disposable income increase by 10 per cent across all income categories. We are continuing to lead the world on economic growth and opportunity for working families.”

The authors concede that their conclusions tend to contradict some well-accepted orthodoxy, which holds that taxation is a job killer.

But they say that many previous studies failed to make a distinction between pre-tax inequality and post-tax inequality, hence often compared apples to oranges, among other shotcomings.

The data they looked at showed almost no negative impact from redistribution policies and that economies where incomes are more equally distributed tend to grow faster and have growth cycles that last longer.

Meanwhile, they say the data is not crystal clear that even large redistributions have a direct negative impact, although “from history and first principles … after some point redistribution will be destructive of growth.”

Still, they also stop short of saying their conclusions definitively settle the issue, acknowledging that it is a complex area of economic theory with many variables at play and a scarcity of hard data.

Instead, they urge more rigorous study and say their findings “highlight the urgency of this agenda.”

The Washington-based institution released the study Wednesday morning but, perhaps due to the controversial nature of the conclusions, calls it a “staff discussion note” that does “not necessarily” represent the IMF views or policy. It was authorized for distribution by Olivier Blanchard, the IMF’s chief economist.

Obama Administration Preps ‘Weaponized’ IRS For Deployment Against Conservatives In 2014 : Personal Liberty™

Obama Administration Preps ‘Weaponized’ IRS For Deployment Against Conservatives In 2014 : Personal Liberty™.

Last week, reports began circulating that President Barack Obama was readying a new series of regulatory recommendations that, if approved, would essentially equip the Internal Revenue Service with sufficient power to choke conservative grass-roots organizations out of effectiveness in time for the 2014 midterm elections.

The new rules, of course, would apply equally to nonprofits of all ideological persuasions — in theory. But thanks to the specific areas of operation the Obama Administration seeks to empower the IRS to scrutinize, it’s clear they were tailor-made to hobble conservatives. On top of that, the Obama Administration has set a precedent for picking and choosing which fish it wants to shoot out of the partisan barrel.

There’s no better phrasing to explain that well-established fact than that delivered by Tea Party Patriots member Ernest Istook, whose column in The Washington Times last week condemned Obama even as it lamented how little is likely to change:

The power to tax is the power to destroy. Its new powers will let the IRS destroy certain groups, especially those connected to the Tea Party, by imposing a tax on their work and messages during campaign seasons.

[T]he Obama Administration is notorious for selective enforcement, meaning it could choose to give a pass to friendly groups while it puts conservatives out of business. They could use this in efforts to shut down groups like the Faith and Freedom Coalition, Club for Growth, Americans for Prosperity and the National Rifle Association, while ignoring People for the American Way, American Civil Liberties Union, USAction and the Democratic Leadership Council.

The new rules would institute a litany of new no-nos to cover both 501(c)(4) nonprofits and, if the Administration wishes to strictly enforce the rules, 501(c)(3)s as well.

But how do the new changes manage to target conservatives if, technically, they apply generally to nonprofits of every stripe? Because the proposal specifically exempts the left’s grass-roots bread and butter: labor unions and trade groups.

Here’s a sampling of what conservative groups — now a year removed from the same IRS scandal that was supposed to put a stop to further discrimination — will face in 2014 (H/T:Matt Barber for WND):

In an explosive [2013] scandal that continues to grow, the Obama IRS was caught — smoking gun in hand — intentionally targeting conservative and Christian organizations and individuals for harassment, intimidation and, ultimately, for political destruction.

…Not only has Obama faced zero accountability for these arguably impeachable offenses, he has since doubled down. With jaw-dropping gall, his administration has now moved to officially weaponize the IRS against conservatives once and for all.

…Specifically, here’s what the proposed regulations would do to conservative groups and their leaders:

  • Prohibit using words like “oppose,” “vote,” “support,” “defeat,” and “reject.”
  • Prohibit mentioning, on its website or on any communication (email, letter, etc.) that would reach 500 people or more, the name of a candidate for office, 30 days before a primary election and 60 days before a general election.
  • Prohibit mentioning the name of a political party, 30 days before a primary election and 60 days before a general election, if that party has a candidate running for office.
  • Prohibit voter registration drives or conducting a non-partisan “get-out-the-vote drive.”
  • Prohibit creating or distributing voter guides outlining how incumbents voted on particular bills.
  • Prohibit hosting candidates for office at any event, including debates and charitable fundraisers, 30 days before a primary election or 60 days before the general election, if the candidate is part of the event’s program.
  • Restrict employees of such organizations from volunteering for campaigns.
  • Prohibit distributing any materials prepared on behalf a candidate for office.
  • Restrict the ability of officers and leaders of such organizations to publicly speak about incumbents, legislation, and/or voting records.
  • Restrict the ability of officers and leaders of such organizations to make public statements regarding the nomination of judges.
  • Create a 90-day blackout period, on an election year, that restricts the speech of 501(c)(4) organizations.
  • Declare political activity as contrary to the promotion of social welfare.
  • Protect labor unions and trade associations by exempting them from the proposed regulations.

These regulations are timed to coincide with the onset of election season. And a new set of discriminatory rules isn’t the only enforcement tactic the IRS is ready to deploy. The New York Times reported Wednesday on Friends of Abe, a conservative group composed of mostly anonymous Hollywood types, that’s found itself in the agency’s crosshairs after applying for tax-exempt status under the existing guidelines:

Last week, federal tax authorities presented the group with a 10-point request for detailed information about its meetings with politicians like Paul D. Ryan, Thaddeus McCotter and Herman Cain, among other matters, according to people briefed on the inquiry.

The people spoke on the condition of anonymity because of the organization’s confidentiality strictures, and to avoid complicating discussions with the I.R.S.

…Friends of Abe — the name refers to Abraham Lincoln — has strongly discouraged the naming of its members. That policy even prohibits the use of cameras at group events, to avoid the unwilling identification of all but a few associates — the actors Gary Sinise, Jon Voight and Kelsey Grammer, or the writer-producer Lionel Chetwynd, for instance — who have spoken openly about their conservative political views.

Tellingly, the IRS has been after the group for two years. Even in the wake of last year’s scandal (which a very friendly Department of Justice is supposedly investigating), the IRS remains emboldened in targeting conservatives under the very rules it has admitted it selectively applied.

Remember that bit earlier about the Obama Administration picking and choosing whether to target 501(c)(3)s based on the political benefits? That’s exactly what’s happening with Friends of Abe.

“[U]nlike most of [last year’s targeted] groups, which had sought I.R.S. approval for a mix of election campaigning and nonpartisan issue advocacy, Friends of Abe is seeking a far more restrictive tax status, known as 501(c)(3), that would let donors claim a tax deduction, but strictly prohibits any form of partisan activity,” The Times reported.

So the Tea Party’s concern isn’t merely academic.

You can file a public comment on the proposals until Feb. 27, and you can sign a petitionsponsored by Liberty Counsel Action (another targeted conservative group) imploring the Senate Committee on Finance: Taxation and IRS Oversight “to ensure all 501(c)(4) organizations formed to promote conservative values will be treated fairly by the IRS.”

Europe’s Future: Inflation and Wealth Taxes – Ludwig von Mises Institute Canada

Europe’s Future: Inflation and Wealth Taxes – Ludwig von Mises Institute Canada.

Tax burdens are so high that it might not be possible to pay off the high levels of indebtedness in most of the Western world. At least, that is the conclusion of a new IMF paper from Carmen Reinhart and Kenneth Rogoff.

Reinhart and Rogoff gained recent fame for their book “This Time It’s Different”, in whichthey argued that high levels of public debt have historically been associated with reduced growth opportunities.

As they now note, “The size of the problem suggests that restructurings will be needed, for example, in the periphery of Europe, far beyond anything discussed in public to this point.” Up to this point in the Eurocrisis the primary tools used to rescue profligate countries have included increased taxes, EU and IMF bailouts, and haircuts on government debt.

These bailouts have largely exacerbated the debt problems that existed five short years ago. Indeed, as Reinhart and Rogoff well note, the once fiscally sound North of Europe is now increasingly unable to continue shouldering the debts of its Southern neighbours.

 

General government debt (% GDP) Source: Eurostat (2012)

General government debt (% GDP)
Source: Eurostat (2012)

Six European countries currently have a government debt to GDP ratio – a metric popularlised by Reinhart and Rogoff to signal reduced growth prospects – of over 90%. Countries that were relatively debt-free just five short years ago are now encumbered by the debt repayments necessitated by bailouts. Ireland is a case in point – as recently as 2007 its government debt to GDP ratio was below 25%. Six years later that figure stands north of 120%! “Fiscally secure” Scandinavia should keep in mind that fortunes can change quickly, as happened to the luck of the Irish.

The debt crisis to date has been mitigated in large part by tax increases and transfers from the wealthy “core” of Europe to the periphery. The problem with tax increases is that they cannot continue unabated.

Total government tax revenue (% GDP) Source: Eurostat (2012)

Total government tax revenue (% GDP)
Source: Eurostat (2012)

Already in Europe there are seven countries where tax revenues are greater than 48% of GDP. There once was a time when only Scandinavia was chided for its high tax regimes and large public sectors. Today both Austria and France have more than half of their economies involved in the public sector and financed through taxes. (Note also that as they both run government budget deficits the actual size of their governments is greater yet.)

With high unemployment in Europe (and especially in its periphery), governments cannot raise much revenue by raising taxes – who would pay it? With already high levels of debt it is questionable how much revenue can be raised by further debt issuances, at least without increasing interest rates and imperiling already fragile government finances with higher interest charges.

Instead, Reinhart and Rogoff see two facts of life for Europe’s future: financial repression through higher inflation rates and taxes levied on savings and wealth. This time is no different than other cases of highly indebted countries in Europe’s history – just look to the post-War examples as similar cases in point. Don’t say you haven’t been warned.

David Howden is Chair of the Department of Business and Economics, and professor of economics at St. Louis University, at its Madrid Campus, Academic Vice President of the Ludwig von Mises Institute of Canada, and winner of the Mises Institute’s Douglas E. French Prize. Send him mail.

U.S. FATCA tax law catches unsuspecting Canadians in its crosshairs – Canada – CBC News

U.S. FATCA tax law catches unsuspecting Canadians in its crosshairs – Canada – CBC News.

Calgary mom Carol Tapanila is worried about losing the savings she's put aside for her adult son, who is developmentally disabled.Calgary mom Carol Tapanila is worried about losing the savings she’s put aside for her adult son, who is developmentally disabled. (CBC)

A Calgary woman’s developmentally disabled son is caught in a U.S. tax quagmire that she fears may cost him the money she spent years setting aside for his financial future.

“He’s entrapped,” said Carol Tapanila, the 70-year-old mother. “There’s no way out. He is entrapped into U.S. citizenship.”

Her 40-year-old son was born in a Calgary hospital, but automatically received U.S. citizenship because both his parents were American. That simple fact may soon create financial woes for the Tapanila family.

Starting in July, a new U.S. tax law, the Foreign Account Tax Compliance Act (FATCA), goes into effect. It requires banks around the world to sift through client accounts to find anyone with U.S. connections and send that information to the U.S. Internal Revenue Service.

The law is aimed at Americans who are hiding offshore accounts, but the information sharing is likely to unearth many unsuspecting Canadians with U.S. citizenship, like Tapanila’s son, who didn’t realize they were required to file U.S. taxes.

Tax law expert Allison Christians calls the Tapanila case “ridiculous” and a “classic example of why the law is unjust.”

marion-wrobel-cbaCanadian Bankers Association’s Marion Wrobel says that FATCA is expensive and does nothing to make banking safer or more sound. (CBC)

The law “was intended to find rich American tax cheats hiding out in Switzerland,” said Christians, who teaches tax law at McGill University, but it “will now punish poor, disabled Americans living in other countries, who are only American by birth.”

These so-called “accidental Americans” also include an Ottawa woman who was born in the U.S. to Canadian parents and moved back north at one year of age.

This woman, who asked to remain anonymous, said her husband is livid that their joint account information will soon be shared with U.S. tax authorities.

Both fear that FATCA will reveal her U.S. citizenship and saddle them with hefty penalties for failing to file U.S. tax returns that will eat into their retirement savings.

“It’s stressful. I think about this every day,” said the woman. “It’s like a big weight over your head that never really goes away, and I’m starting to wonder when and if it’s ever going to go away?”

Info-sharing deals

In advance of the law taking effect, more than a dozen countries have inked intergovernmental information-sharing agreements with the U.S.

These arrangements allow either for banks to hand over information directly to the Internal Revenue Service, or indirectly via their national tax agencies.

Canada is currently in negotiations with the U.S. The banking industry notes that FATCA will affect many Canadians indirectly because of the extra costs of industry compliance.

“We have to comply with FATCA,” said Marion Wrobel, vice-president of policy and operations at the Canadian Bankers Association. “While we don’t like it and we’ve lobbied against it, FATCA is going to be a reality.”

If banks refuse to comply, they face severe financial penalties — a 30 per cent withholding tax on all American-sourced income or sales of American-based assets.

But financial institutions also face costs to comply. Some estimate the manpower and administrative systems required to find clients with U.S. connections could cost up to $100 million per institution, said Wrobel.

“It is expensive, and as far as we see it, it adds nothing,” said Wrobel. “It doesn’t make the banks any safer or sounder.”

Thousands on legal advice

For Tapanila, the financial burden has already been costly. She spent thousands of dollars seeking legal advice on how to renounce her son’s U.S. citizenship. Under the law, a parent, guardian and trustee cannot renounce on someone’s behalf.

‘I wanted my son to have something when I was gone from this Earth.’– Carol Tapanila

She refuses to file U.S. taxes for her son, fearful that it would chip away at the funds she’s stashed in a Registered Disability Savings Plan (RDSP) and a Tax Free Savings Account (TFSA).

“I see no common sense in it,” she says. “Put me in jail. I don’t care. But I’m not going to do that.”

RDSPs as well as TFSAs are considered “offshore trusts” by U.S. tax authorities. That makes any gains from these plans — which include contributions from Tapanila and matching ones from the government — taxable by the IRS.

The CBA’s Wrobel said that, based on his talks with the federal government, he’s hopeful that the U.S.-Canada agreement will include exemptions for registered savings accounts.

That would provide some relief, but Tapanila notes that the cost of filing U.S. taxes every year could actually be the largest drain on her savings.

Accounting firms estimate that personal tax filings can cost from $500 to $5,000 a year because of the complexity of U.S. tax law.

“I wanted my son to have something when I was gone from this Earth and so I was a saver,” said Tapanila. “And now I don’t want the U.S. to take one penny that should go to my children.

“I want my hard-earned Canadian money that I’ve saved to go to my children, not to the U.S. or some compliance tax lawyers year after year after year after year.”

‘Natural Person’ Tax Evasion Theory Caused ‘Staggering Losses’ At CRA: Report

‘Natural Person’ Tax Evasion Theory Caused ‘Staggering Losses’ At CRA: Report.

If you come across claims that you don’t have to pay income taxes in Canada because you’re a “natural person,” you’d be well advised to ignore them, or Canada Revenue Agency may be coming after you.

Canada’s federal tax collector has suffered “staggering losses” due to an anti-tax campaign that claims only “legal persons” have to pay income taxes, while “natural persons” are exempt, according to documents obtained by by the subscription news site Blacklock’s Reporter.

“The Canada Revenue Agency is the victim of a widespread and continually growing scheme to defraud the federal government of millions of dollars in tax revenues,” the agency’s Enforcement and Disclosures Directorate said in the documents.

“Law-abiding taxpayers need to be reassured that fraud does not pay, or they will look to join the multitude of fraudsters.”

Though no estimates were provided for exactly how much money the feds are losing to “detaxers,” as the CRA calls them, the documents urge aggressive enforcement because “the number of participants is growing quickly.”

Since 2000, there have been at least 23 convictions of “natural persons” who argued they didn’t owe income taxes, the Langley Advance reports.

Websites such as Natural-Person.ca and DetaxCanada push the “natural person” theory and other similar theories attempting to find arguments against the requirement to pay taxes.

The principal argument goes like this: The “legal person” established by the government, complete with Social Insurance Number, has to pay income taxes. But the “natural person” behind that legal person is a separate entity. If you “transfer” your wealth from the legal person to the natural person, you don’t have to pay income tax.

The CRA neutrally describes these theories as “opinions,” but warns that “individuals who mistakenly confuse opinions with facts may expose themselves to serious financial and legal problems if this results in their failure to comply with the Income Tax Act and other tax laws.”

Some people who have followed the advice of “detaxer” groups have ended up paying the price in the justice system. An Ottawa-area dentist and her husband weresentenced last year to two-and-a-half and four years in prison, respectively, for following the advice of Paradigm Education Group, which lectures on the “natural persons” theory.

Paradigm Education Group, based out of B.C., was itself targeted for tax evasion. The group’s leader, Russ Porisky, was last year convicted of tax evasion and counselling others to commit tax fraud, and sentenced to four-and-a-half years.

“Remember also that many groups and individuals stand to profit considerably from the perpetuation of certain tax myths,” the CRA website states. “Don’t let them profit at your expense!”

Some critics of the government’s approach to tax evasion argue the feds spend too much time on relatively small tax evasion cases, such as the “natural person” cases, while not doing enough to go after larger tax cheats who take advantage of offshore tax havens.

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