Money Affairs

When it comes to paying taxes, most Americans think the wealthy do not pay their fair share.

There is a sharp divide, however, between Republicans and Democrats when it comes to taxing the rich, who provide most of the cash for political campaigns.

All the Republican tax proposals, in fact, cut taxes for the wealthiest Americans. Democrats, on the other hand, are prepared to raise taxes at the top, though they have not been very specific about how they would do so.

“Right now, the wealthy pay too little,” Hillary Rodham Clinton said at this week’s Democratic debate in Las Vegas, “and the middle class pays too much.”

But what could a tax-the-rich plan actually achieve? As it turns out, quite a lot, experts say. Given the gains that have flowed to those at the tip of the income pyramid in recent decades, several economists have been making the case that the government could raise large amounts of revenue exclusively from this small group, while still allowing them to take home a majority of their income.

It is “absurd” to argue that most wealth at the top is already highly taxed or that there isn’t much more revenue to be had by raising taxes on the 1 percent, says the economist Joseph E. Stiglitz, winner of the Nobel in economic science, who has written extensively about inequality. “The only upside of the concentration of the wealth at the top is that they have more money to pay in taxes,” he said.

The top 1 percent on average already pay roughly a third of their incomes to the federal government, according to a Treasury Department analysis that takes into account the entire menu of taxes — including income tax, payroll taxes that fund Medicare and Social Security, estate and gift taxes, excise and custom duties as well as investors’ share of corporate taxes. The tax bite on the top 0.1 percent is a bit higher. Most of those taxpayers insist they are already paying more than enough.

By comparison, the band of taxpayers right below them, in the 95th to 99th percentile, pay on average about $1 out of every $4. Those in the bottom half pay less than $1 out of every $10.

Higher Incomes, Higher Taxes

Taking all federal taxes into account, the richest taxpayers contribute, on average, about a third of their income to the government. But they still enjoy after-tax incomes far higher than those of other Americans.

Presidential candidate Bernie Sanders has made headlines several times over the past week as more and more people question how the country could ever afford his plan. On Friday, Bill Maher pushed and prodded a flummoxed Sanders over the untenable costs of his platform. Now, liberal media darling, George Stephanopoulos has finally gotten Sanders to say the truth: he plans on raising everyone’s taxes.

The Vermont senator appeared on This Week with George Stephanopoulos where he pressed on the what his plan would actually costs Americans. After some back and forth Bernie admits he will be raising everyone’s taxes– not just the rich, as many of his supporters believe.

“I think if you’re looking about guaranteeing paid family and medical leave, which virtually every other major country has… that will require a small increase in the payroll tax,” Sanders said.

“That’s going to hit everybody,” the host remarked.

“That would– yeah, that would,” Bernie acknowledges.

Of course, when you’re calling for $18 trillion in new spending (around $2 trillion more than the nation’s entire GDP), you are going to get inventive with how to pay for it. Bernie will raise taxes on everyone and that’s just the kicker. If Sanders were to become president, he would severely devalue our dollar to enable spending, the results of which would be inflation and a higher cost of living for everybody.

Bernie! You’re supposed to promise them free things– now you’ve spilled the beans that people will have to pay for these things. Think of how disillusioned you supporters will be when they find out you want to tax them more…

The very richest are able to quietly shape tax policy that will allow them to shield billions in income.

WASHINGTON — The hedge fund magnates Daniel S. Loeb, Louis Moore Bacon and Steven A. Cohen have much in common. They have managed billions of dollars in capital, earning vast fortunes. They have invested large sums in art — and millions more in political candidates.

Moreover, each has exploited an esoteric tax loophole that saved them millions in taxes. The trick? Route the money to Bermuda and back.

With inequality at its highest levels in nearly a century and public debate rising over whether the government should respond to it through higher taxes on the wealthy, the very richest Americans have financed a sophisticated and astonishingly effective apparatus for shielding their fortunes. Some call it the “income defense industry,” consisting of a high-priced phalanx of lawyers, estate planners, lobbyists and anti-tax activists who exploit and defend a dizzying array of tax maneuvers, virtually none of them available to taxpayers of more modest means.

In recent years, this apparatus has become one of the most powerful avenues of influence for wealthy Americans of all political stripes, including Mr. Loeb and Mr. Cohen, who give heavily to Republicans, and the liberal billionaire George Soros, who has called for higher levies on the rich while at the same time using tax loopholes to bolster his own fortune.

All are among a small group providing much of the early cash for the 2016 presidential campaign.

Operating largely out of public view — in tax court, through arcane legislative provisions and in private negotiations with the Internal Revenue Service — the wealthy have used their influence to steadily whittle away at the government’s ability to tax them. The effect has been to create a kind of private tax system, catering to only several thousand Americans.

The impact on their own fortunes has been stark. Two decades ago, when Bill Clinton was elected president, the 400 highest-earning taxpayers in America paid nearly 27 percent of their income in federal taxes, according to I.R.S. data. By 2012, when President Obama was re-elected, that figure had fallen to less than 17 percent, which is just slightly more than the typical family making $100,000 annually, when payroll taxes are included for both groups.

The ultra-wealthy “literally pay millions of dollars for these services,” said Jeffrey A. Winters, a political scientist at Northwestern University who studies economic elites, “and save in the tens or hundreds of millions in taxes.”

Some of the biggest current tax battles are being waged by some of the most generous supporters of 2016 candidates. They include the families of the hedge fund investors Robert Mercer, who gives to Republicans, and James Simons, who gives to Democrats; as well as the options trader Jeffrey Yass, a libertarian-leaning donor to Republicans.

Mr. Yass’s firm is litigating what the agency deemed to be tens of millions of dollars in underpaid taxes. Renaissance Technologies, the hedge fund Mr. Simons founded and which Mr. Mercer helps run, is currently under review by the I.R.S. over a loophole that saved their fund an estimated $6.8 billion in taxes over roughly a decade, according to a Senate investigation. Some of these same families have also contributed hundreds of thousands of dollars to conservative groups that have attacked virtually any effort to raises taxes on the wealthy.

In the heat of the presidential race, the influence of wealthy donors is being tested. At stake is the Obama administration’s 2013 tax increase on high earners — the first substantial increase in two decades — and an I.R.S. initiative to ensure that, in effect, the higher rates stick by cracking down on tax avoidance by the wealthy.

While Democrats like Bernie Sanders and Hillary Clinton have pledged to raise taxes on these voters, virtually every Republican has advanced policies that would vastly reduce their tax bills, sometimes to as little as 10 percent of their income.

At the same time, most Republican candidates favor eliminating the inheritance tax, a move that would allow the new rich, and the old, to bequeath their fortunes intact, solidifying the wealth gap far into the future. And several have proposed a substantial reduction — or even elimination — in the already deeply discounted tax rates on investment gains, a foundation of the most lucrative tax strategies.

“There’s this notion that the wealthy use their money to buy politicians; more accurately, it’s that they can buy policy, and specifically, tax policy,” said Jared Bernstein, a senior fellow at the left-leaning Center on Budget and Policy Priorities who served as chief economic adviser to Vice President Joseph R. Biden Jr. “That’s why these egregious loopholes exist, and why it’s so hard to close them.”

The Family Office

Each of the top 400 earners took home, on average, about $336 million in 2012, the latest year for which data is available. If the bulk of that money had been paid out as salary or wages, as it is for the typical American, the tax obligations of those wealthy taxpayers could have more than doubled.

Instead, much of their income came from convoluted partnerships and high-end investment funds. Other earnings accrued in opaque family trusts and foreign shell corporations, beyond the reach of the tax authorities.

The well-paid technicians who devise these arrangements toil away at white-shoe law firms and elite investment banks, as well as a variety of obscure boutiques. But at the fulcrum of the strategizing over how to minimize taxes are so-called family offices, the customized wealth management departments of Americans with hundreds of millions or billions of dollars in assets.

Family offices have existed since the late 19th century, when the Rockefellers pioneered the institution, and gained popularity in the 1980s. But they have proliferated rapidly over the last decade, as the ranks of the super-rich, and the size of their fortunes, swelled to record proportions.

“We have so much wealth being created, significant wealth, that it creates a need for the family office structure now,” said Sree Arimilli, an industry recruiting consultant.

Family offices, many of which are dedicated to managing and protecting the wealth of a single family, oversee everything from investment strategy to philanthropy. But tax planning is a core function. While the specific techniques these advisers employ to minimize taxes can be mind-numbingly complex, they generally follow a few simple principles, like converting one type of income into another type that’s taxed at a lower rate.

Mr. Loeb, for example, has invested in a Bermuda-based reinsurer — an insurer to insurance companies — that turns around and invests the money in his hedge fund. That maneuver transforms his profits from short-term bets in the market, which the government taxes at roughly 40 percent, into long-term profits, known as capital gains, which are taxed at roughly half that rate. It has had the added advantage of letting Mr. Loeb defer taxes on this income indefinitely, allowing his wealth to compound and grow more quickly.

The Bermuda insurer Mr. Loeb helped set up went public in 2013 and is active in the insurance business, not merely a tax dodge. Mr. Cohen and Mr. Bacon abandoned similar insurance-based strategies in recent years. “Our investment in Max Re was not a tax-driven scheme, but rather a sound investment response to investor interest in a more dynamically managed portfolio akin to Warren Buffett’s Berkshire Hathaway,” said Mr. Bacon, who leads Moore Capital Management. “Hedge funds were a minority of the investment portfolio, and Moore Capital’s products a much smaller subset of this alternative portfolio.” Mr. Loeb and Mr. Cohen declined to comment.

Organizing one’s business as a partnership can be lucrative in its own right. Some of the partnerships from which the wealthy derive their income are allowed to sell shares to the public, making it easy to cash out a chunk of the business while retaining control. But unlike publicly traded corporations, they pay no corporate income tax; the partners pay taxes as individuals. And the income taxes are often reduced by large deductions, such as for depreciation.

For large private partnerships, meanwhile, the I.R.S. often struggles “to determine whether a tax shelter exists, an abusive tax transaction is being used,” according to a recent report by the Government Accountability Office. The agency is not allowed to collect underpaid taxes directly from these partnerships, even those with several hundred partners. Instead, it must collect from each individual partner, requiring the agency to commit significant time and manpower.

The wealthy can also avail themselves of a range of esoteric and customized tax deductions that go far beyond writing off a home office or dinner with a client. One aggressive strategy is to place income in a type of charitable trust, generating a deduction that offsets the income tax. The trust then purchases what’s known as a private placement life insurance policy, which invests the money on a tax-free basis, frequently in a number of hedge funds. The person’s heirs can inherit, also tax-free, whatever money is left after the trust pays out a percentage each year to charity, often a considerable sum.

Many of these maneuvers are well established, and wealthy taxpayers say they are well within their rights to exploit them. Others exist in a legal gray area, its boundaries defined by the willingness of taxpayers to defend their strategies against the I.R.S. Almost all are outside the price range of the average taxpayer.

Among tax lawyers and accountants, “the best and brightest get a high from figuring out how to do tricky little deals,” said Karen L. Hawkins, who until recently headed the I.R.S. office that oversees tax practitioners. “Frankly, it is almost beyond the intellectual and resource capacity of the Internal Revenue Service to catch.”

The combination of cost and complexity has had a profound effect, tax experts said. Whatever tax rates Congress sets, the actual rates paid by the ultra-wealthy tend to fall over time as they exploit their numerous advantages.

From Mr. Obama’s inauguration through the end of 2012, federal income tax rates on individuals did not change (excluding payroll taxes). But the highest-earning one-thousandth of Americans went from paying an average of 20.9 percent to 17.6 percent. By contrast, the top 1 percent, excluding the very wealthy, went from paying just under 24 percent on average to just over that level.

“We do have two different tax systems, one for normal wage-earners and another for those who can afford sophisticated tax advice,” said Victor Fleischer, a law professor at the University of San Diego who studies the intersection of tax policy and inequality. “At the very top of the income distribution, the effective rate of tax goes down, contrary to the principles of a progressive income tax system.”

A Very Quiet Defense

Having helped foster an alternative tax system, wealthy Americans have been aggressive in defending it.

Trade groups representing the Bermuda-based insurance company Mr. Loeb helped set up, for example, have spent the last several months pleading with the I.R.S. that its proposed rules tightening the hedge fund insurance loophole are too onerous.

The major industry group representing private equity funds spends hundreds of thousands of dollars each year lobbying on such issues as “carried interest,” the granddaddy of Wall Street tax loopholes, which makes it possible for fund managers to pay the capital gains rate rather than the higher standard tax rate on a substantial share of their income for running the fund.

The budget deal that Congress approved in October allows the I.R.S. to collect underpaid taxes from large partnerships at the firm level for the first time — which is far easier for the agency — thanks to a provision that lawmakers slipped into the deal at the last minute, before many lobbyists could mobilize. But the new rules are relatively weak — firms can still choose to have partners pay the taxes — and don’t take effect until 2018, giving the wealthy plenty of time to weaken them further.

Shortly after the provision passed, the Managed Funds Association, an industry group that represents prominent hedge funds like D. E. Shaw, Renaissance Technologies, Tiger Management and Third Point, began meeting with members of Congress to discuss a wish list of adjustments. The founders of these funds have all donated at least $500,000 to 2016 presidential candidates. During the Obama presidency, the association itself has risen to become one of the most powerful trade groups in Washington, spending over $4 million a year on lobbying.

And while the lobbying clout of the wealthy is most often deployed through industry trade associations and lawyers, some rich families have locked arms to advance their interests more directly.

The inheritance tax has been a primary target. In the early 1990s, a California family office executive named Patricia Soldano began lobbying on behalf of wealthy families to repeal the tax, which would not only save them money, but also make it easier to preserve their business empires from one generation to the next. The idea struck many hardened operatives as unrealistic at the time, given that the tax affected only the wealthiest Americans. But Ms. Soldano’s efforts — funded in part by the Mars and Koch families — laid the groundwork for a one-year elimination in 2010.

The tax has been restored, but currently applies only to couples leaving roughly $11 million or more to their heirs, up from those leaving more than $1.2 million when Ms. Soldano started her campaign. It affected fewer than 5,200 families last year.

“If anyone would have told me we’d be where we are today, I would never have guessed it,” Ms. Soldano said in an interview.

Some of the most profound victories are barely known outside the insular world of the wealthy and their financial managers.

In 2009, Congress set out to require that investment partnerships like hedge funds register with the Securities and Exchange Commission, partly so that regulators would have a better grasp on the risks they posed to the financial system.

The early legislative language would have required single-family offices to register as well, exposing the highly secretive institutions to scrutiny that their clients were eager to avoid. Some of the I.R.S.’s cases against the wealthy originate with tips from the S.E.C., which is often better positioned to spot tax evasion.

By the summer of 2009, several family office executives had formed a lobbying group called the Private Investor Coalition to push back against the proposal. The coalition won an exemption in the 2010 Dodd-Frank financial reform bill, then spent much of the next year persuading the S.E.C. to largely adopt its preferred definition of “family office.”

So expansive was the resulting loophole that Mr. Soros’s $24.5 billion hedge fund took advantage of it, converting to a family office after returning capital to its remaining outside investors. The hedge fund manager Stanley Druckenmiller, a former business partner of Mr. Soros, took the same step.

The Soros family, which generally supports Democrats, has committed at least $1 million to the 2016 presidential campaign; Mr. Druckenmiller, who favors Republicans, has put slightly more than $300,000 behind three different G.O.P. presidential candidates.

A slide presentation from the Private Investor Coalition’s 2013 annual meeting credited the success to multiple meetings with members of the Senate Banking Committee, the House Financial Services Committee, congressional staff and S.E.C. staff. “All with a low profile,” the document noted. “We got most of what we wanted AND a few extras we didn’t request.”

A Hobbled Monitor

After all the loopholes and all the lobbying, what remains of the government’s ability to collect taxes from the wealthy runs up against one final hurdle: the crisis facing the I.R.S.

President Obama has made fighting tax evasion by the rich a priority. In 2010, he signed legislation making it easier to identify Americans who squirreled away assets in Swiss bank accounts and Cayman Islands shelters.

His I.R.S. convened a Global High Wealth Industry Group, known colloquially as “the wealth squad,” to scrutinize the returns of Americans with incomes of at least $10 million a year.

But while these measures have helped the government retrieve billions, the agency’s efforts have flagged in the face of scandal, political pressure and budget cuts. Between 2010, the year before Republicans took control of the House of Representatives, and 2014, the I.R.S. budget dropped by almost $2 billion in real terms, or nearly 15 percent. That has forced it to shed about 5,000 high-level enforcement positions out of about 23,000, according to the agency.

Audit rates for the $10 million-plus club spiked in the first few years of the Global High Wealth program, but have plummeted since then.

The marijuana legalization experiments underway in Colorado, Oregon, Alaska, and Washington have attracted a lot of attention around the country as test sites for the effects of legalization and exploring pot’s potential as a source of tax revenue. The first numbers are in, and they point to a resounding success: the state of Colorado’s Department of Revenue announced that legal marijuana pulled in some $70 million in taxes last year- almost double the amount made from alcohol taxes ($42 million)! This has led to a massive budget surplus in the state- $257 million, the majority of which is going to the state’s public schools.

It’s been so successful that the state has declared a tax holiday on marijuana products. “Marijuana taxes have been incredibly productive over the past year, so this tax holiday is a much-deserved day off,” says Mason Tvert, director of communications for the Marijuana Policy Project. “This will be the one day out of the year when the state won’t generate significant revenue. Over the other 364 days, it will bring in tens of millions of dollars that will be reinvested in our state.”

Marijuana users tend to smoke habitually and are willing to spend far more on their vice of choice than alcohol or tobacco users- on average, $1800 a year. Tvert remarked that it was “crazy how much revenue our state used to flush down the drain by forcing marijuana sales into the underground market. It’s even crazier that so many states are still doing it. Tax revenue is just one of many good reasons to replace marijuana prohibition with a system of regulation.

The findings are a vindication for marijuana activists and convincing evidence that the benefits of legalizing the drug far outweigh the cons. Lifting the burden of dealing with minor drug offenses from both users and law enforcement would be a great boon for both groups, and would start alleviating some of the devastating effects of the failed “War On Drugs”, which disproportionately fall on African Americans- who are three times more likely to be arrested for marijuana possession than whites. Enforcing marijuana laws also costs our nation $3.6 billion dollars a year, for little to no results. It’s far past time we stopped wasting our time on busting pot-smoking teenagers and focus on the real problems affecting this country.

The liberal media has been going absolutely berserk over Donald Trump’s remarks on immigration. However, they are ignoring his stances on other issues, some of which are very insightful.

In his book, “Time to Get Tough: Making America #1 Again,” published in 2011, Donald Trump laid out a plan to transform America’s tax code, and it is beautiful.

Trump’s code, which he calls the “1-5-10-15 income tax plan,” is a simplistic way to fix our nation’s broken taxation system, without putting the strain on any particular group of people.

Under Trump’s tax plan, those making up to…

• $30,000 per year will pay 1 percent in federal income taxes
• $30,000 to $100,000 will pay 5 percent
• $100,000 to $1 million will pay 10 percent
• $1 million or above will pay 15 percent

“It’s clear and fair,” wrote Trump on his tax plan. “Best of all, it can be filled out on the back of a postcard and will save Americans big bucks on accountants and massive amounts of time wasted attempting to decipher the tax code.”

Trump also wrote, “Imagine your paycheck was 40 percent higher than it currently is. What could you do with 40 percent more wealth? How many jobs and opportunities for others could you create?”

“The longer you really think about it the madder you will get,” he wrote, “especially when you consider the waste, fraud, and abuse the federal government traffics in as it inflicts its self-defeating policies on hard-working Americans.”

Trump’s rhetoric on taxes continues to this day. On CBS’ “Face the Nation,” Trump stated that he tries to pay as little tax as possible.

“I fight like hell to pay as little as possible, for two reasons. Number one, I am a businessman, and that’s the way you are supposed to do it. And you put the money back in your company and employees and all of that.”

He also added, “But the other reason is that I hate the way our government spends our taxes. I hate the way they waste our money, trillions and trillions of dollars of waste and abuse. And I hate it.”

Trump’s proposed tax plan is fair and shows real promise at fixing what has arguably become America’s biggest headache. It doesn’t tax the poor to the point of bankruptcy, and it doesn’t punish the rich for being successful.

Share this on Facebook and Twitter so others can read about Donald Trump’s amazing tax plan.

Last week, 80 CEOs jointly published a letter in the Wall Street Journal calling for austerity spending cuts to deal with the deficit, in a new effort to “starve the beast” and slice funds away from public programs, especially Medicare and Medicaid, reducing their effectiveness to make their calls for privatization more effective. It’s the same old game that corporations and Republicans across the country have played time and time again, one that has the American people losing.

Senator Bernie Sanders, champion of the middle class and economic justice, published his own response- a scathing condemnation of their hypocrisy and blatant opportunism:

“There really is no shame. The Wall Street leaders whose recklessness and illegal behavior caused this terrible recession are now lecturing the American people on the need for courage to deal with the nation’s finances and deficit crisis. Before telling us why we should cut Social Security, Medicare and other vitally important programs, these CEOs might want to take a hard look at their responsibility for causing the deficit and this terrible recession.

Our Wall Street friends might also want to show some courage of their own by suggesting that the wealthiest people in this country, like them, start paying their fair share of taxes. They might work to end the outrageous corporate loopholes, tax havens and outsourcing provisions that their lobbyists have littered throughout the tax code – contributing greatly to our deficit.

Many of the CEO’s who signed the deficit-reduction letter run corporations that evaded at least $34.5 billion in taxes by setting up more than 600 subsidiaries in the Cayman Islands and other offshore tax havens since 2008. As a result, at least a dozen of the companies avoided paying any federal income taxes in recent years, and even received more than $6.4 billion in tax refunds from the IRS since 2008.

Several of the companies received a total taxpayer bailout of more than $2.5 trillion from the Federal Reserve and the Treasury Department.

Many of the companies also have outsourced hundreds of thousands of American jobs to China and other low wage countries, forcing their workers to receive unemployment insurance and other federal benefits. In other words, these are some of the same people who have significantly caused the deficit to explode over the last four years.”

He then released a list of the eighteen CEOs who are responsible for triggering the recession, destroying the middle class, corrupting our politicians, underpaying their workers, and outsourcing jobs overseas.

These are the names of traitors who have forsaken their people and nation to worship at the altar of greed:

1) Bank of America CEO Brian Moynihan
Amount of federal income taxes paid in 2010? Zero. $1.9 billion tax refund.

Taxpayer Bailout from the Federal Reserve and the Treasury Department? Over $1.3 trillion.

Amount of federal income taxes Bank of America would have owed if offshore tax havens were eliminated? $2.6 billion.

2) Goldman Sachs CEO Lloyd Blankfein
Amount of federal income taxes paid in 2008? Zero. $278 million tax refund.

Taxpayer Bailout from the Federal Reserve and the Treasury Department? $824 billion.

Amount of federal income taxes Goldman Sachs would have owed if offshore tax havens were eliminated? $2.7 billion

3) JP Morgan Chase CEO James Dimon
Taxpayer Bailout from the Federal Reserve and the Treasury Department? $416 billion.

Amount of federal income taxes JP Morgan Chase would have owed if offshore tax havens were eliminated? $4.9 billion.

4) General Electric CEO Jeffrey Immelt
Amount of federal income taxes paid in 2010? Zero. $3.3 billion tax refund.

Taxpayer Bailout from the Federal Reserve? $16 billion.

Jobs Shipped Overseas? At least 25,000 since 2001.

5) Verizon CEO Lowell McAdam
Amount of federal income taxes paid in 2010? Zero. $705 million tax refund.

American Jobs Cut in 2010? In 2010, Verizon announced 13,000 job cuts, the third highest corporate layoff total that year.

6) Boeing CEO James McNerney, Jr.
Amount of federal income taxes paid in 2010? None. $124 million tax refund.

American Jobs Shipped overseas? Over 57,000.

Amount of Corporate Welfare? At least $58 billion.

7) Microsoft CEO Steve Ballmer
Amount of federal income taxes Microsoft would have owed if offshore tax havens were eliminated? $19.4 billion.

8) Honeywell International CEO David Cote
Amount of federal income taxes paid from 2008-2010? Zero. $34 million tax refund.

9) Corning CEO Wendell Weeks
Amount of federal income taxes paid from 2008-2010? Zero. $4 million tax refund.

10) Time Warner CEO Glenn Britt
Amount of federal income taxes paid in 2008? Zero. $74 million tax refund.

11). Merck CEO Kenneth Frazier
Amount of federal income taxes paid in 2009? Zero. $55 million tax refund.

12) Deere & Company CEO Samuel Allen
Amount of federal income taxes paid in 2009? Zero. $1 million tax refund.

13) Marsh & McLennan Companies CEO Brian Duperreault
Amount of federal income taxes paid in 2010? Zero. $90 million refund.

14) Qualcomm CEO Paul Jacobs
Amount of federal income taxes Qualcomm would have owed if offshore tax havens were eliminated? $4.7 billion.

15) Tenneco CEO Gregg Sherill
Amount of federal income taxes Tenneco would have owed if offshore tax havens were eliminated? $269 million.

16) Express Scripts CEO George Paz
Amount of federal income taxes Express Scripts would have owed if offshore tax havens were eliminated? $20 million.

17) Caesars Entertainment CEO Gary Loveman
Amount of federal income taxes Caesars Entertainment would have owed if offshore tax havens were eliminated? $9 million.

18). R.R. Donnelly & Sons CEO Thomas Quinlan III
Amount of federal income taxes paid in 2008? Zero. $49 million tax refund.

These are astonishing numbers. There are billions of dollars missing from the federal budget because huge multinational corporations don’t pay any taxes while crying for spending cuts and austerity measures placed on the backs of the American people. Bernie Sanders is the only candidate really confronting these issues, and we must hear his message. We cannot allow the proud heritage of American democracy to slide into the dark pit of oligarchy, where the worker becomes a serf and the mega-rich rule like lords.

DENVER (AP) — Colorado’s marijuana experiment was designed to raise revenue for the state and its schools, but a state law may put some of the tax money directly into residents’ pockets, causing quite a headache for lawmakers.

The state constitution limits how much tax money the state can take in before it has to give some back. That means Coloradans may each get their own cut of the $50 million in recreational pot taxes collected in the first year of legal weed. It’s a situation so bizarre that it’s gotten Republicans and Democrats, for once, to agree on a tax issue.

Even some pot shoppers are surprised Colorado may not keep the taxes that were promised to go toward school construction when voters legalized marijuana in 2012.

“I have no problem paying taxes if they’re going to schools,” said Maddy Beaumier, 25, who was visiting a dispensary near the Capitol.

But David Huff, a 50-year-old carpenter from Aurora, said taxes that add 30 percent or more to the price of pot, depending on the jurisdiction, are too steep.

“I don’t care if they write me a check, or refund it in my taxes, or just give me a free joint next time I come in. The taxes are too high, and they should give it back,” Huff said.

Legal weed has collided with the tax limitation movement because a 1992 voter-approved constitutional amendment called the Taxpayers’ Bill of Rights requires all new taxes to go before voters.

The amendment also requires Colorado to pay back taxpayers when the state collects more than what’s permitted by a formula based on inflation and population growth. Over the years, Colorado has issued refunds six times, totaling more than $3.3 billion.

Republicans and Democrats say there’s no good reason to put pot taxes back into people’s pockets, and state officials are scrambling to figure out how to avoid doling out the money. It may have to be settled by asking Colorado voters, for a third time, to cast a ballot on the issue and exempt pot taxes from the refund requirement.

Republicans concede that marijuana is throwing them off their usual position of wanting tax dollars returned to taxpayers. But they also tend to say that marijuana should pay for itself — that general taxes shouldn’t pay for things like increased drug education and better training for police officers to identify stoned drivers.

“I think it’s appropriate that we keep the money for marijuana that the voters said that we should,” said Republican Senate President Bill Cadman. His party opposes keeping other refunds based on the Taxpayers’ Bill of Rights but favors a special ballot question on pot taxes.

“This is a little bit of a different animal. There’s a struggle on this one,” said Sen. Kevin Grantham, one of the Republican budget writers.

After legalizing marijuana in 2012, Colorado voters returned to the polls the following year and approved a 15 percent excise tax on pot for the schools and an additional 10 percent sales tax for lawmakers to spend.

Voters were told those taxes would generate about $70 million in the first year. The state now believes it will rake in about $50 million.

But because the economy is improving and other tax collections are growing faster, Colorado is obligated to give back much of what it has collected. Final numbers aren’t ready, but the governor’s budget writers predict the pot refunds could amount to $30.5 million, or about $7.63 per adult in Colorado.

“It’s just absurd,” said Democratic state Sen. Pat Steadman, one of the Legislature’s budget writers.

The head-scratching extends to Colorado’s marijuana industry. Several industry groups actively campaigned for the pot taxes but aren’t taking a position on whether to refund them.

Mike Elliott of the Denver-based Marijuana Industry Group said it isn’t pushing for lower taxes, but that’s an option lawmakers don’t seem to be considering. State law doesn’t bar lawmakers from cutting taxes without a vote.

Lawmakers have a little time to figure out how to proceed. They’ll consider pot refunds and a separate refund to taxpayers of about $137 million after receiving final tax estimates that are due in March.

When they talk about pot refunds, they’ll have to figure out if the money would go to all taxpayers, or just those who bought pot. Previous refunds have generally been paid through income tax returns, but Colorado also has reduced motor vehicle fees or even reduced sales taxes on trucks.

Lawmakers seem confident that the refund mechanism won’t matter because voters would approve pot taxes a third time if asked.

“This is what the voters want, and if we’re going to have (pot), and the constitution says it’s legal, we damn well better tax it,” Steadman said.

Clarification: A Huffington Post headline has been amended to reflect that overall tax revenues, rather than a surfeit of marijuana-specific tax revenues, would trigger the refund under current law.

Pope Francis has a message for all the churches in the world who shirk their responsibility to do good works for those in society who need assistance: If you’re not willing to do anything to help the needy, you should be paying taxes like any other business. In an interview with Aura Miguel of Portugal’s Radio Renascença, Pope Francis urged Christians not to fall victim to the “God of money” as so many religious organizations do, but instead to do something to actually benefit society.

Many churches in Europe have developed the practice of renting out rooms to make money while exploiting tax loopholes to avoid actually contributing to society. The hunger for money among these religious institutions is so strong, the Pope points out, that they ignore the needs of refugees in favor of the almighty [insert currency here]. If churches choose to ignore his recent call to provide assistance to refugees, Pope Francis, says, that’s fine — as long as they are prepared to pay taxes just like any other business.

“Some religious orders say ‘No, now that the convent is empty we are going to make a hotel and we can have guests, and support ourselves that way, or make money,’” Francis said on the eve of a trip to the United States, adding a strong condemnation of religious institutions that choose money over their mission:

Don’t miss these tax deductions and credits, which can add up to significant savings over the years.
Around the time I stopped fighting with my parents and began listening to them, my dad imparted some brilliant financial advice. He told me to become a scholar of the tax law. OK, perhaps he didn’t use those exact words, but the message was the same: Know the tax law and take every tax deduction to which you are entitled. This advice stuck with me, and I’m certain it has saved me thousands of dollars. The IRS website offers excellent resources to help you further understand the following tax deductions and credits. Study the credits well, as those benefits reduce your taxes dollar by dollar. In other words, if you owe $1,000 in taxes and receive a $150 tax credit, your taxes owed decrease to $850. That’s an extra $150 in your pocket. By spending a few hours each year keeping abreast of the tax law, you can save thousands on taxesover the years. In fact, keeping a tax-reduction mindset in your everyday life will serve your finances well. Here are 16 tips to reduce what you pay in taxes:

1. Retirement account contributions are a top tax-reduction tool, as they serve two purposes. Most contributions (except the Roth individual retirement account) allow you to deduct from your taxable income the amount paid into the retirement account. This reduces your total taxable income. These funds also grow tax-free until retirement. If you start early, this strategy alone can secure your retirement.

2. Contribute to a health savings account if you have a high-deductible medical plan. The contributions unused for medical expenses can roll over indefinitely and grow tax-free (similar to the assets in a retirement account).

3. Combine a vacation with a business trip, and reduce vacation costs by deducting the percent of the unreimbursed expenses spent on business from the total costs. This could include airfare and part of your hotel bill (proportionate to time spent on business activities).

4. If you work for yourself or have a side business, don’t be afraid to take the home office deduction. This allows you to deduct the percent of your home that is used for your business (on Schedule C, 1040). If the guest bedroom is used exclusively as a home office, and it constitutes one-fifth of your apartment’s living space, you can deduct one-fifth of rent and utility fees for your home office.

5. Self-employed individuals (either full time or part time) are eligible for scores of tax deductions. A few of those expenses include business-related vehicle mileage, shipping, advertising, website fees, percent of home Internet charges used for business, professional publications, dues, memberships, business-related travel, office supplies and any expenses incurred to run your business.

6. Self-employed individuals who pay 100 percent of their Social Security taxes owed (15.3 percent) can deduct 50 percent of the taxes paid. You don’t even need to itemize to claim this tax deduction.

7. Unreimbursed vehicle expenses are another frequently overlooked tax break. You can’t deduct commuting costs, but if you travel to satellite offices or drive your own vehicle for business and aren’t reimbursed, you can deduct mileage costs.

8. Tax credits are gold. They are deducted from the tax owed. The American Opportunity Tax Credit is available for all for years of college. You receive a tax credit on 100 percent of the first $2,000 spent on qualifying college expenses and 25 percent of the next $2,000 for a maximum of $2,500 per student. That’s $2,500 deducted from the amount of tax owed (as long as you meet certain income requirements regarding school courses that improve job skills).

9. The Lifetime Learning Credit is great for adults boosting their education and training. This credit is worth a maximum of $2,000 per year (up to 20 percent of up to $10,000 spent on post-high school education) and helps pay for college and educational expenses that improve your job skills.

10. The Earned Income Tax Credit lowers the overall tax bill for low- and moderate-income working families.

11. The state sales tax break gives itemizers the chance to either deduct state income or state sales taxes paid. This benefit is great if you live in a state without income taxes.

12. Investors: When calculating the cost basis after selling a financial asset, make sure to add in all of the reinvested dividends. That increases the cost basis and reduces your capital gain when you sell the investment.

13. Charitable deductions made with payroll deduction (such as the United Way), checks, cash and donations of goods and clothing are all deductible. These deductions add up and are often overlooked. Don’t forget to include the cash you give to the Salvation Army and the $20 you place in the collection plate at church each week.

14. If you are an adult child who is not claimed as a dependent by your parents, here is a possible tax break for you. If your parents pay back your student loans, the IRS assumes the money was given to the child, who then repaid the debt. Thus the young adult child can deduct up to $2,500 of student loan interest paid by his or her parents.

15. I remember tallying job hunting costs to deduct from my meager tax bill in the past. If you’re looking for a job in the same field, you can deduct all related expenses as miscellaneous expenses if you itemize (they must pass a 2 percent threshold). You can deduct these expenses even if you didn’t find a new job.

16. Are you in the military reserves, such as the National Guard? If you travel more than 100 miles from home and need to be away overnight, you can deduct lodging and half of the cost of meals while you are away. Of course, you can also deduct mileage costs.

Do not count on a tax preparer to know every deduction for which you are eligible. Be a smart consumer and know the tax benefits you can claim. Every additional deduction you claim increases your disposable income.