Month: April 2012

A reader asks, "Who doesn't love stupidity at 2500 FPS?"

A reader writes:

You say that our current tax system "generates profound cynicism about government".  Actually, it's far worse than that.  It generates profound cynicism about the rule of law. Why?  Simply this: our tax code has become so complex that it is essentially impossible to comply with the law.  At best, you can spend a lot of money for someone else to do your taxes.  That way, they are on the hook when (not if) mistakes are made – and even experts can count on making mistakes.  Alternatively, you wade through the myriad forms, hope you have found all the right ones, and hope that the directions you follow don't result in you breaching the law anyway.  Or, at least that you don't "win" the random audit lottery.

What happens when you know that, no matter what you do, you will be violating some law that you never even heard of until it lands on you?  You don't just get cynical about government; you have a huge incentive to ignore the law whenever it's inconvenient.  After all, if you are going to get in trouble anyway, why worry about breaking a few more laws?

Another writes:

Tax lawyer here.  Two points: first, you suggest "a complete abandonment of all taxbreaks, except for charity."  Why the special treatment for charity? 

Because charitable giving is an activity we want to promote?  That’s no different from the rationale for every other tax incentive.  Moreover, the deduction means that when you give to a charity of your choice, I – and all other taxpayers – are effectively being forced to contribute along with you (whether we like your charity or not).  That seems illiberal to me. 

It also could be argued that one of the primary effects of the charitable deduction has been to funnel massive amounts of money into pools such as university endowments.  Harvard and Yale are sitting on billions of dollars – do they need a government subsidy in order to increase the pile? 

Finally, the charitable deduction can be seen as shifting some spending from government-run social programs to individually chosen charities.  I know that government programs come in for a lot of abuse, but Medicare, for one, is actually quite efficient.  Do the multitude of individual charities actually make more effective use of the money?

My answer would be that because the government is going to have to curtail the welfare state, its support for charitable efforts might be seen as a fair balance. But I'm not wedded to that. If getting rid of every single tax expenditure is necessary to get tax reform, I'd get rid of all of them. Another:

I'm going to keep calling bullshit on your obsession with tax breaks and the complexity of the tax law until I get published.

I am a corporate tax lawyer with 25 years' experience. I can't prove it, but in my experience the vast majority of the complexity of the tax law has nothing to do with tax breaks. It has to do with providing precise rules to deal with an infinite variety of structures and transactions, in the face of taxpayers and their tax counsel who are determined to minimize their tax bill. Rules relating to tax breaks are insignificant in volume compared to the rules relating to consolidated tax returns, corporate reorganizations, foreign tax credits, taxation of the foreign subsidiaries of U.S. corporations (Subpart F) and hundreds of other things.

The Cato Institute article you link to is filled with lies and half-truths (which is about what I would expect from a Cato Institute article on taxes). The "tax rules" do not span 73,608 pages and do not cover nine feet of shelf space. The standard CCH edition of the Code is 5,500 pages long, but that is highly misleading. That volume is targeted at tax practitioners and includes old statutory provisions that have been repealed or revised. Because of the obscure way that the regs are paginated, it is not easy to tell how many pages they are, but I would estimate it at about 30,000 pages, which includes proposed regs and the preambles to regulations. The entire set of Code and regs takes up about 18 inches on my shelf. To give you an idea about how much the Code and regs have expanded over the years, my set from 1987 takes up around 10 inches.

The volume that Chris Edwards describes in the Cato article probably refers to the bound CCH Standard Federal Tax Reporter, which may indeed cover nine feet and contain 73,608 pages. However, that volume is exclusively designed for practitioners and includes not only the Code and regs, but also commentary written by CCH and annotations from case law.

I also take issue with Edwards' claim that changes to the tax regulations undermine financial planning, business investment and other decision-making in the economy. I would say it is more like the exact opposite. Every tax advisor I know is constantly begging the Treasury to release new guidance, because more guidance creates more certainty. Lack of guidance creates more uncertainty.

The bottom line is that the complexity of the Code and regs is the price we pay for a rules-based self-assessment system where every taxpayer knows more or less exactly what the tax consequences are going to be of every conceivable thing that he could do. The alternative is more like what exists in Europe or, God forbid, Asia. For example, the Swiss tax law could probably fit in my back pocket, but the determination of how much tax a Swiss company pays is largely a function of the company's personal relationship with the taxing authority. It is quite typical for non-U.S. companies to get together with their respective taxing authorities and reach an agreement on how much tax they're going to pay. Until you want to base your tax system on cronyism rather than on the rule of law, you are stuck with what you have in the U.S.

Veterinarian Holly Cheever reflects on a case when a cow hid one of her twin calves from farm owners who had demonstrated a pattern of taking them away after birth:

Think for a moment of the complex reasoning this mama exhibited: first, she had  memory — memory of her four previous losses, in which bringing her new calf to the barn resulted in her never seeing him/her again (heartbreaking for any mammalian mother). Second, she could formulate and then execute a plan: if bringing a calf to the farmer meant that she would inevitably lose him/her, then she would keep her calf hidden, as deer do, by keeping her baby in the woods lying still till she returned. Third — and I do not know what to make of this myself — instead of hiding both, which would have aroused the farmer’s suspicion (pregnant cow leaves the barn in the evening, unpregnant cow comes back the next morning without offspring), she gave him one and kept one herself. I cannot tell you how she knew to do this—it would seem more likely that a desperate mother would hide both.

(Photo: A cow and its calf are pictured during the 25th 'Space', the international livestock trade fair (SPACE) on September 13, 2011, in the French western city of Rennes. By Damien Meyer/AFP/Getty Images.)

China is still catching up:

Although the population of China is four times that of the United States, it will be decades before China can construct an infrastructure comparable in scope to our own. For instance, while the United States has more than 15,000 airports, China has a mere 502.

The U.S. railway system is three times the length of China’s, despite the fact that rail remains the dominant way for its citizenry to travel long distances. The length of U.S. oil and gas pipelines are an order of magnitude larger than what is found in China, which means that much more of their liquid fuels have to be transported over land, taxing their relative paucity of roads. Other important indicators, such as electricity production and the amount of paved roads, reveal similar disparities …

"The conservative movement doesn't understand anti-racism as a value, only as a rhetorical pose. This is how you end up tarring the oldest integrationist group in the country (the NAACP) as racist. The slur has no real moral content to them. It's all a game of who can embarrass who. If you don't think racism is an actual force in the country, then you can only understand its invocation as a tactic," – Ta-Nehisi Coates.

Already:

Four recent polls — by Pew Research, Gallup Daily (Monday's release), CNN/ORC International and Fox News — all show both Obama and Romney receiving an average of 88 to 90 percent support from members of their own parties. As George Washington University political scientist John Sides points out, these results demonstrate that the two party bases are now "basically unified." 

Kornacki takes a closer look at the GOP's support of Romney.

How will the rise of single-living affect senior care?

This decade will deliver the first cohort of senior citizens who reached adulthood after the liberalizations of the sixties—the baby boomers are collecting Social Security. As a consequence, we’re starting to encounter a group of old folks for whom aloneness is a choice, an identity, an exercise of freedom. And the ethics of senior care will change as a result. If Mom has lived alone, successfully and proudly, for four decades, is it socially responsible to move her to a home when she stops remembering to pay her gas bill? Or is it an offense against the person she has spent adulthood laboring to be?

"Is it any wonder this country is suffering from an ethical identity crisis? This is what comes of an administration that systematically destroys the moral foundations of our military, government service, and public schools. On one hand, the administration has tried to force our military to embrace homosexuality by making unnatural and immoral sex legal–and on the other, it's outraged that its military is engaging in another form of legal but immoral sex. (Prostitution is permissible in Colombia's "tolerated zones.") Both behaviors are inappropriate, unhealthy, and destructive. Yet only one seems to incense government officials.

If this seems a bit muddled, that's because it is. But this culture of moral confusion is inevitable when American leaders push a radical social policy that arbitrarily gives sexual license to some and condemns it from others," – Tony Perkins.

So gay sex and gay relationships are now the equivalent of prostitution. And Perkins, like so many Christianists, is all about throwing the first stone.

Greenwald spotlights the trial of Tarek Mehanna (seen right):

In one of the most egregious violations of the First Amendment’s guarantee of free speech seen in quite some time, Tarek Mehanna, an American Muslim, was convicted this week in a federal court in Boston and then sentenced yesterday to 17 years in prison. He was found guilty of supporting Al Qaeda (by virtue of translating Terrorists’ documents into English and expressing "sympathetic views" to the group) as well as conspiring to "murder" U.S. soldiers in Iraq (i.e., to wage war against an invading army perpetrating an aggressive attack on a Muslim nation).

Zach Novetsky pushes back:

To begin with, Mehanna’s case implicated more than just the First Amendment.

He was convicted of conspiracy to provide material support or resources to a foreign terror organization, conspiracy to provide material support to terrorists, providing and attempting to provide material support to terrorists, conspiracy to kill in a foreign country, conspiracy to lie to federal investigators, and two counts of lying to federal investigators.

Next, Greenwald, and others, also highlighted and lauded Mehanna’s sentencing speech (where he proudly admits to supporting the mujahedeen, literally "people doing jihad", which of course does not faze Mehanna stalwarts) – a speech which, tellingly, does not mention any of the implicating facts of his case.

Ross Caputi stands with Mehanna:

[I]f Tarek Mehanna is guilty, so am I. I, too, support the right of Muslims to defend themselves against US troops, even if that means they have to kill them, and I try to give the Iraqi resistance a voice through my website. I have done everything that Tarek Mehanna has done, and there are only two possibilities as to why I am not sitting in a cell with him: first, the FBI is incompetent and hasn't been able to smoke me out; second, the US judicial system would never dream of violating my freedom of speech because I am white and I am a veteran of the occupation of Iraq.

… What I helped do to the city of Fallujah was terrorism, and I lost two dear friends in that operation, but I cannot hate or begrudge the resistance in Fallujah for killing them. They were only doing what I would have done had a foreign army been laying siege to my hometown.

Caputi captions the above image:

Muslim student Tarek Mehanna, right, at Ground Zero in 2005 or 2006, with associates Ali Aboubakr and Daniel Spaulding. Aboubakr testified at Mehanna's trial. Photograph: Prosecution exhibit

Larison fears so:

[W]e don’t have to guess at what a Romney foreign policy would be, we know that the vast majority of his advisers worked in the Bush administration or strongly supported administration policies, and we know the kind and the quality of foreign policy decisions that they helped to produce. On the whole, the Bush foreign policy record was one of incompetence, disaster, and failure. There were some notable successes, which included strengthening ties with India, but they were most notable for being so rare.

We're on the same page. My main concern in this election is foreign policy – because it's where the deadlocked domestic legislative machinery doesn't apply as easily. And because Romney and his party simply seem to have learned no lessons from Afghanistan, Iraq, Gitmo or the stain of torture. They remain in total denial. Jennifer Rubin is our guest this week, and you can see that she sees no reason whatever to doubt the wisdom of interventionism, still thinks the Iraq war was a good idea, and wants the US to declare war on Iran to maintain superpower status.

And one reason, by the way, that we're happy to bring voices like Rubin's to the Dish is to guard against epistemic closure, as well as to avoid denial about sincere Republican belief in unreconstructed Cold War policies of US global hegemony and interventionism. They have learned nothing.

Remember that during the primary debates, George W. Bush was mentioned not at all. The administration did not exist. And all its catastrophic legacy is Obama's fault.