Tax side roundup on the Build Back Inflation bill that just passed the senate.
Energy taxes on oil, gas, coal, as well as corporate taxes hitting wages and/or shareholder profits.
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The tax hike violates President Bidenâs tax pledge to any American making less than $400,000 per year. Biden administration officials have repeatedly admitted taxes that raise consumer energy prices are in violation of President Bidenâs $400,000 tax pledge.
It is remarkable the extent to which Democrats are attacking Americans least able to bear the burden of their policies. This latest is yet another regressive tax, just like Bidenâs inflation itself.
It is wrong purposefully to attack poorer Americans with these impossible tax burdens. Poor people still have to eat and shelter themselves, both becoming increasingly more difficult and challenging for them with each passing day.
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not only do they increase taxes on lower income taxpayers but they removed the only provision of the bill that truly did tax billionaires, stop the carried interest as capital gain loophole. This loophole benefits only Uber wealthy hedge fund managers.
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âThose migrants are hard workers, folks! Letâs make 'em tax collectors!â said Biden to aides. âGive those people a gun and an IRS badge and put them to work taking money from people! Poor kids can audit just as good as white kids. No joke!â
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Reason and common sense have never dissuaded the Democrats. They are hell-bent on forcing corporations to pay dividends, which as we all know are double taxed, first by corporate income tax and then by personal income tax for the recipients. I hope the tax lawyers are able to figure out some way to get around the tax.
Democrats want to impose another tax on top of all that, charging companies a 1 percent tax on the value of shares acquired through a stock buyback. That doesnât sound like very much, but it is, in fact, a relatively big bite: The current earnings yield for the S&P 500 is about 4.7 percent, and Goldman Sachs calculates that the new buyback tax could reduce earnings by as much as 0.5 percent per share. Put another way, that would mean about $10 billion a year in new taxes on investors, taxes that cannot be avoided even if those investors have placed their investment in a 401(k) or have offsetting capital losses â if , that is, the buyback tax doesnât reduce buybacks, which, of course, it probably will.
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Thatâs kind of spinning it the other way. The money being used for buybacks has already been taxed, whether it goes toward buybacks or dividends. So itâs attempting to divert the payments from buybacks, which indirectly yield additional capital gains taxes at some undefined later date, and towards paying dividends, for which the recipient is taxed immediately.
With the exception of the stepped up basis upon death, this tactic isnt increasing the tax being collected, itâs merely accelerating whatâs being collected.
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I do not agree with this because the company and the taxpayer have to jump through special hoops for the Dividends to be taxed at the capital gains rate. On my 1099âs qualified dividends are only a part of the dividends and the rest are unqualified and I have to pay ordinary income rate on those.
But assuming I accept your premise, the one percent additional tax imposed by the Democrats on buybacks is totally unjustified. Do you agree?
Yes, whether dividends are âdouble taxedâ is debatable, but this is clearly double-taxing corporate money. You could argue itâs actually triple-taxing it.
These are in mutual funds, right? For stocks that I own, the 1099s include all of the dividends as qualified.
Depends on the stocks they own as well as the holding. Not everything is qualified.
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Auditing every single taxpayer with annual income over $1 million would require only 25,000 new IRS enforcement agents, but Democratsâ bill calls for 87,000 new agents. What will all those extra agents be doing?
Despite the Biden administrationâs claims, itâs almost certain that households making less than $400,000 a year would face increased audits under Democratsâ bill.
And that seems to be the true intent of the IRS. According to a 2021 report from the Government Accountability Office, âFrom fiscal years 2010 to 2021, the majority of the additional taxes IRS recommended from audits came from taxpayers with incomes below $200,000.â
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It seems the premise of the article is the promise to not raise taxes for anyone making under $400,000, followed by the argument that the new agents are likely to audit returns for people who make under $400,000.
Should the promise to not raise taxes have included a caveat âas long as you donât cheatâ ??? Was that not obvious, or did I miss something else?
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Audit defense is an expensive and stressful tax on law abiding citizens, since the IRS isnât perfect in their ability to target tax cheats (as they clearly imagine they can find $200B more in revenues than they are finding presently). Thatâs the impact for the average (non cheating) taxpayer - more risk of time wasting hassles defending yourself.
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My hope is that these agents arenât placed on a quota system: you have to audit X number of returns per week. That would open the gates for little people being audited at great personal expense, even if they donât cheat in their taxes. If youâre audited, even if you keep complete records, you should get yourself an accountant and that costs money.
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I hope they are. It would mean a lot of âWhyâd you deduct that? Oh, ok. Audit over.â If theyâre just trying to meet quotas for audit counts, theyâre going to choose the ones that are really straightforward and simple to close.
Now being put on a quota system that requires them to collect $X in extra taxes each week, thatâd be another story.
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The RRA 98 that Congress passed 24 years ago literally forbids this. Internal Revenue Service Restructuring and Reform Act of 1998 - Wikipedia
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Thanks for the info, TJ.
Yeah, Iâm sure thatâs how it will go. Because when cops have quotas, they are based on number of traffic stops made, not number of citations given out. 
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