Comments on: Newt and the NEWT Act http://blogs.reuters.com/david-cay-johnston/2012/02/03/newt-and-the-newt-act/ Sat, 23 Mar 2013 13:49:31 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: David123456789 http://blogs.reuters.com/david-cay-johnston/2012/02/03/newt-and-the-newt-act/#comment-1090 Mon, 06 Feb 2012 19:55:22 +0000 http://blogs.reuters.com/david-cay-johnston/?p=287#comment-1090 After reading some of the comments I do believe that some of you realize that the republicans rhetoric is nothing but brainwashing on a very large scale and I am sure they will keep it up until the election. Is there another candidate out there somewhere that has the American ideals and can placate the republicans to the extent that they will actually want the best for our country. We will see.

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By: Dobe http://blogs.reuters.com/david-cay-johnston/2012/02/03/newt-and-the-newt-act/#comment-1088 Mon, 06 Feb 2012 15:57:56 +0000 http://blogs.reuters.com/david-cay-johnston/?p=287#comment-1088 Good piece David, though many commenters seem to run off-point. Can you provide the citation to the Watson case. It strikes me as ridiculous that the judge ruled what a reasonable salary was at all in the case if this was a wholly owned S corporation where service income was the only income: all the income should be classified as ordinary income subject to FICA and FUTA.

There is a similar scam used by hedge funds (and lawyers) where the hedge fund managers claim that as limited partners, they are not subject to FICA and FUTA. This was wiped out by the IRS also:

http://www.ustaxcourt.gov/InOpHistoric/r enkemeyer.TC.WPD.pdf

Ironically, the defendant in this case, Renkemeyer, seems to have been a tax lawyer and was earning serious amounts of money during the years in question: I wonder what he was doing??!

These schemes do not work, but the IRS’s problem is finding them and auditing them. The IRS wins all these cases but the amounts involved may not justify a full-blown litigation. Whether legislation will solve this is another question: as written it would be easy to avoid by dropping other investment assets into the S corp. or limited partnership, I suggest.

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By: spall78 http://blogs.reuters.com/david-cay-johnston/2012/02/03/newt-and-the-newt-act/#comment-1086 Mon, 06 Feb 2012 14:53:44 +0000 http://blogs.reuters.com/david-cay-johnston/?p=287#comment-1086 Why isn’t there a piece somewhere on Reuters with a headline “Gingrich tax proposal would lower his own taxes by over 90%”? It seem to be pretty relevant, especially in the context of a record breaking negative campaign where the tax rates of the candidates are suddenly a hot topic. If nothing else, Romney should be using this to bludgeon Newt in some of his ads…

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By: DavidCayJ http://blogs.reuters.com/david-cay-johnston/2012/02/03/newt-and-the-newt-act/#comment-1083 Sun, 05 Feb 2012 23:38:08 +0000 http://blogs.reuters.com/david-cay-johnston/?p=287#comment-1083 @ SanPa, your premise about Romney is not correct.

As explained earlier by me in my columns and in broadcast appearances, he has carried interest payments from the Caymans and the like because foreign investors and also American tax exempt investors (public pension funds, charitable endowments) use offshore corporations to invest in partnerships like those Bain established. Otherwise the foreigners would be subject to filing an American tax return and the tax exempts would pay income tax on investment gains from borrowing.

Romney reports this income from the offshore investment corporation and pays tax on it. See my earlier columns for the tax benefits he does get.

Gingrich paid income tax, as the column makes clear, but not the Medicare tax.

@Btitn, you would find my 2003 book Perfectly Legal on point.

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By: JBltn http://blogs.reuters.com/david-cay-johnston/2012/02/03/newt-and-the-newt-act/#comment-1082 Sun, 05 Feb 2012 20:49:21 +0000 http://blogs.reuters.com/david-cay-johnston/?p=287#comment-1082 The current Greek financial FUBAR is a apropos example of a failed taxation paradigm. The two overriding caveats of a government taxation structure are; 1. It must be perceived by a overriding majority of those being taxed as equitable; i.e.like income streams are treated as a class and the tax liabilities are assessed based on the volume amount of money; 2. It must be easily collectable or reported/paid voluntarily. That being said our national tax structure was deliberately designed to be progressive; those with higher income streams are judged to use more of societal structural components and therefore pay higher fees for use.

Our current tax paradigm was very effective until Congress [collectively] began carving out tax giveaways to corporate America and began giving government subsidy to private enterprise, election campaign donors and special interest groups. These Congressional tax giveaways grew geometrically in the last 25 years and unfortunately were also accompanied by sequential contingent tax liability reductions again by Congress fiat which has caused the US to become a debtor nation. According to a recent C.B.O. report,”the Bush tax cuts reduced revenue by at least $2.9 trillion below what it otherwise would have been between 2001 and 2011. These tax giveaways to the super wealthy and corporate America will continue to decrease tax revenues and reduce the SS Trust Fund; Al Gore was right, put the Social Security revenue in a lock box and keep politician’s hands off it.

A company, corporation or government can’t reduce enough expenses and still meet its’ current obligations or grow to meet new demands or maintain infrastructure; IT CANNOT; 20 years of hospital management experience taught me that a income stream must increase over time!

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By: flashrooster http://blogs.reuters.com/david-cay-johnston/2012/02/03/newt-and-the-newt-act/#comment-1081 Sun, 05 Feb 2012 17:29:47 +0000 http://blogs.reuters.com/david-cay-johnston/?p=287#comment-1081 Something has to change and I can’t think of a realistic scenario of how that change would come from inside our government. Anyone threatening change is either constrained or removed. I do think Obama had, and still has, good intentions. But there was no way possible for him to implement the change we so desire. In fact, had he fought tooth and nail to bring about the kind of change we need, not only would he have failed, but his adversaries, the GOP and ruling plutocrats, would have successfully defined him as a radical outsider threatening our traditional American way of life and he would have lost his bid for reelection in a landslide. Romney and the Republicans are trying this tact anyway, something they have been working on since the last Presidential election. The only problem is that Obama has given them very little to work with. He’s been a mainstream moderate.

Make no mistake, our government has been hijacked. It’s not BEING hijacked; it’s been accomplished. As I said, the fact that Romney is running neck and neck with Obama in the polls speaks volumes, and it’s not a coincidence that this has come about as Wall Street, whose markets have come roaring back like few could possibly have imagined 4 years ago, pumps Romney’s campaign coffers full of cash over what they donate to Obama, who had much of their support in the past. Why? It’s simple. Romney is one of them. He has vowed to cut their taxes and repeal the Dodd-Frank financial reform law. By contrast, Obama wants to raise their taxes and keep Dodd-Frank. Never mind what is best for the country. Wall Street is looking out for their own personal interests. That’s capitalism, right? The rest of us are not afforded the same influence as the folks on Wall Street. In fact, we HAVE no influence.

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By: flashrooster http://blogs.reuters.com/david-cay-johnston/2012/02/03/newt-and-the-newt-act/#comment-1080 Sun, 05 Feb 2012 17:29:13 +0000 http://blogs.reuters.com/david-cay-johnston/?p=287#comment-1080 But as I stated, the plutocrats can work with either Party. Money is the lifeblood of politics and with our current disparity of wealth it is nearly impossible for the bulk of the American people, those being referred to as the 99%, to thwart the wishes of the plutocrats. The Democrats game plan is to try to appease both their monied sponsors AND their constituents. Instead of passing legislation that pleases their constituents, Republicans just focus on pleasing whoever has the most money and deal with their voting constituency by convincing them that everything they are doing is in keeping with being a patriotic Christian American and that everything the Democrats are trying to do is anti-Christian, anti-American, and moving us toward socialism. Love us, hate the Democrats; that is their message, and they pump that message across America 24/7, and it’s proven to be very effective. How else could they possibly hope to get someone like Mitt Romney elected to the Presidency just after our economic collapse that almost landed us in a depression caused primarily by a small group of people of which Mitt Romney is one and few of the rest of us are a part of? A large majority of Americans are upset about having to spend a trillion dollars bailing out the financial industry barons of which Romney is one, and what do we do? We consider putting one of their small number in the White House just as our economy is beginning to mend. It’s all the work of money, lots of money.

I’m neither envious of the wealthy nor do I resent people of wealth. In fact, I greatly admire those who work hard, play by the rules, and succeed. But what really gets my blood boiling are those who use their money to usurp our government, my government, and effectively cut me out of my right as a tax paying, voting member of our Republic to have any influence in how I am governed. People should remember that the Boston Tea Party wasn’t a protest against being taxed. It was a protest against being taxed without any representation. Well, here we are again, and we know how that ended up the first time.

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By: flashrooster http://blogs.reuters.com/david-cay-johnston/2012/02/03/newt-and-the-newt-act/#comment-1079 Sun, 05 Feb 2012 17:28:23 +0000 http://blogs.reuters.com/david-cay-johnston/?p=287#comment-1079 Don’t get me wrong, Mr. Johnston, you are one of my favorite editorial writers, but I think you’ll understand where I’m coming from when I say I’m getting so sick and tired of hearing about the endless ways the the very rich can take advantage of the system they designed and how they continue to exert their influence on how we are governed. It’s beginning to feel like we’re being ruled by an invisible, authoritarian regime that chooses our “elected” officials as a governing front.

Think about it. Is Mitt Romney a fair representative of the American people or a fair representative of Wall Street? My take is that the power elite, our modern feudal rulers, can work with either Party–all candidates need lots of campaign cash–but prefer the Republicans. That is why the Republicans have contributed more in determining our nation’s direction during the last 3 decades than Democrats. The GOP has wielded more power during this time than probably any other time in our nation’s history.

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By: SanPa http://blogs.reuters.com/david-cay-johnston/2012/02/03/newt-and-the-newt-act/#comment-1078 Sun, 05 Feb 2012 14:20:06 +0000 http://blogs.reuters.com/david-cay-johnston/?p=287#comment-1078 Aren’t dividends taxed at 15%, where ordinary income … in this case significant, gets taxed at the highest tax table rate?

Newt and wife at least paid their legally required taxes for US reported income. His major opponent, Gov. Cayman Caiman paid only on monies earned in the US, avoid payments on significant sums of income.

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By: LVTfan http://blogs.reuters.com/david-cay-johnston/2012/02/03/newt-and-the-newt-act/#comment-1076 Sun, 05 Feb 2012 02:54:52 +0000 http://blogs.reuters.com/david-cay-johnston/?p=287#comment-1076 Seems to me that it is time for us to extract ourselves from thinking inside the income tax box, and start thinking about what we really ought to be taxing, and what ought not to be taxed at all, or, if we need the revenue, taxed but lightly.

What ought we to tax? Not labor, or production, but that which nature provides or the community creates. The classical economists classified it as “land” as opposed to “labor” and “capital.” It has suited the powers-that-be — and their well-aid advocates both in Washington and in our universities — to subsume land under capital and pretend that they’re identical.

We can’t know whether collecting for public purposes the annual economic value of all the things that are rightly categorized as “land” — economic rent — will be sufficient to meet the revenue needs of all levels of government today. It may well not. But it ought to be our FIRST tax base, supplemented, if necessary, by taxes on production if we absolutely must.

My own guess is that, were we to collect the lion’s share of economic rent, we might find that a lot of other supposedly intractable problems would be well on their way to be being solved, and the revenue required by government would drop significantly. Can’t prove it, but the hypothesis makes sense.

In any case, we ought to be thinking outside the income tax box we seem to have accepted as the limit of our tax debate.

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