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Biden Has Great News: He States We Have These Tariffs! The Tariffs Are Taxes! And Higher Tariffs Means Higher Taxes!

This week Peter’s back to discuss new economic data, Powell’s recent remarks in the Netherlands, and the Biden administration’s new tariffs. More and more signs point to economic stagflation, but Biden, Powell, and their cronies continue to deflect the blame and increase everyday Americans’ taxes.

The Dow may have traded above 40,000 this week, but that doesn’t necessarily mean Americans are wealthier:

“Inflation creates an illusion of prosperity, an illusion of wealth. That’s another reason that government loves inflation so much. They’re really partners. The government derives all sorts of hidden benefits from inflation, but it never wants to admit this. It never wants to say this out loud. But everything the government does is supported by inflation. … They kind of worship inflation, but they never speak its name— not in the context of what they’re using it for, right? And so when the public gets upset that prices are rising a lot and their living standards are falling, then the government will talk about inflation. But it’ll talk about it as if it’s this exogenous event that is completely beyond their control.”

Contrary to what progressives believe, inflation is not a result of capitalism:

“Everything is more expensive because of the government debasement of our money. That’s why we have inflation. It’s not an accident, and it’s not a natural byproduct of capitalism. Capitalism does the reverse! I’ve pointed this out, but the CPI from 1800 to 1900 lost 50% of its value. Prices fell for a hundred years! That’s what capitalism does. Now in the following hundred years, prices skyrocketed. That’s what socialism does. That’s what government does. That’s what central banking does.”

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IRS Shifting More Attention Onto High Income Earners, Partnerships And Large Corporations Following Passage Of Inflation Reduction Act Funding

IRS Shifting More Attention Onto High Income Earners, Partnerships And Large Corporations Following Passage Of Inflation Reduction Act Funding

Learn How To Protect Your Clients With This Invitation To A Complimentary Partnership Tax Planning Strategy Session 

Capitalizing on Inflation Reduction Act funding and following a top-to-bottom review of enforcement efforts, the Internal Revenue Service announced the start of a sweeping, historic effort to restore fairness in tax compliance by shifting more attention onto high-income earners, partnerships, large corporations, and promoters abusing the nation’s tax laws.

The effort, building off work following last August’s IRA funding, will center on adding more attention on wealthy, partnerships and other high earners that have seen sharp drops in audit rates for these taxpayer segments during the past decade. The changes will be driven with the help of improved technology as well as Artificial Intelligence that will help IRS compliance teams better detect tax cheating, identify emerging compliance threats, and improve case selection tools to avoid burdening taxpayers with needless “no-change” audits.

The Inflation Reduction Act Funding Increases scrutiny on high-income, partnerships and corporations. The IRS states it will shift attention to wealthy from working class taxpayers; key changes coming to reduce burden on average taxpayers while using artificial intelligence and improved technology to identify sophisticated schemes to avoid taxes.

“This new compliance push makes good on the promise of the Inflation Reduction Act to ensure the IRS holds our wealthiest filers accountable to pay the full amount of what they owe,” said IRS Commissioner Danny Werfel.

Major Expansion In high-Income/High Wealth And Partnership Compliance Work

Prioritization of high-income cases. In the High Wealth, High Balance Due Taxpayer Field Initiative, the IRS will intensify work on taxpayers with total positive income above $1 million that have more than $250,000 in recognized tax debt. Building off earlier successes that collected $38 million from more than 175 high-income earners, the IRS will have dozens of Revenue Officers focusing on these high-end collection cases in FY 2024. The IRS is working to expand this effort, contacting about 1,600 taxpayers in this category that owe hundreds of millions of dollars in taxes.

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Bidens Proposed Tax Increases

If you are wondering if President Biden is proposing tax increases, look no further than the General Explanations of the Administration’s Fiscal Year 2025 Revenue Proposals.

According to PWC “President Joe Biden on March 11 sent Congress a fiscal year (FY) 2025 budget that proposes to increase taxes by nearly $5 trillion for corporations and for individuals with incomes above $400,000.  Many of the president’s tax proposals — including a proposal to increase the corporate tax rate to 28% and impose a 25% minimum tax on certain high-income individuals – were included in President Biden’s previous budgets.  New tax proposals in the FY 2025 budget include measures to increase the recently enacted corporate alternative minimum tax rate from 15% to 21% and to deny business deductions for employee compensation above $1 million.”

Look no further than the Table Of Contents of the Biden Administration Revenue Proposals to see a number of tax increase proposals that include:

  • Raise the Corporate Income Tax Rate To 28%
  • Increase The Corporate Alternative Minimum Tax Rate To 21%
  • Increase The Excise Tax Rate On Repurchase Of Corporate Stock
  • Tax Corporate Distributions As Dividends
  • Limit Tax Avoidance Through Inappropriate Leveraging Of Parties To Divisive Reorganizations
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California Wants To Reveal Your Income To Your Utility Company To Raise Your Rates
California wants to impose a new “charge” on your utility bill that you have to pay regardless of whether you use any energy that month and the rate will now be based on your income. Reform California opposes the charge and calls it an illegal tax and a violation of privacy. If you make over $180,000 annually you must pay an additional utility fee of $128 per month or $1536 per year more on your utility fees. While those making under $28,000 annually will pay an extra utility fee of $24 per month or $288 annually.

Californians are still suffering under some of the highest utility rates in the country, and many can barely afford to pay their bills.

Now California Democrat politicians want to impose a new “flat fee” on all utility bills based on each household’s income for the year. That means many residents will pay a charge of $128 per month – while low income and other “favored” groups pay just $24 for the SAME SERVICE.

Opponents say California Democrats are just playing class warfare and the “fee” is really an illegal tax on most Californians to subsidize the bills of lower-income residents.

The fixed rates are required under Assembly Bill 205 (AB 205), which was signed by Governor Gavin Newsom (D) in 2022. The bill states that “the commission may authorize fixed charges [for utilities] … The fixed charge shall be established on an income-graduated basis.”

The specific rates in this “flat fee” scheme is now being voted on by the California Public Utilities Commission (CPUC). The proposal would charge customers of Southern California Edison, Pacific Gas & Electric, and San Diego Gas & Electric fixed rates based on income. For San Diego Gas & Electric customers, the rates would be as follows:

  • Income of under $28,000: $24/month
  • Income of $28,000-69,000: $34/month
  • Income of $69,000-180,000: $73/month
  • Income of over $180,000: $128/month

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TEXAS VS US

With the standoff between the Federal Government and the States regarding immigration, the cost to taxpayers is increasing in many ways.  While all of this is going on we need to pay closer attention and watch the tax increases coming through new tax legislation.  It is time for tax professionals to operate at the top of the profession in protecting taxpayers from the tax increases coming to pay for all of this illegal immigration at the taxpayers expense.

According to an article on Reuters, the U.S. Internal Revenue Service plans to hire nearly 20,000 new employees and deploy new technology over the next two years as it ramps up an $80 billion investment plan to improve tax enforcement and customer service.

You should watch this video so you understand what is actually happening so you are wide awake and work together to help taxpayers. This video is a stunner wake up call for us all!

https://www.infowars.com/posts/watch-former-green-beret-commander-gives-critical-analysis-of-border-invasion-announces-major-convoy/

Be part of the solution and share this article and video above.  Thank God we have men like this in the USA you meet in this video!

If you are a tax professional and support small and medium size U.S. businesses, please join us at https://www.taxconnections.com/membership/sign-up.

We have taxpayers calling us for help and referrals constantly. If your professional profile does not appear on our site, they cannot find you!

More Taxes, More Spending, Higher Prices, And An Army of IRS Agents

Washington, D.C.–U.S. Senator Mike Crapo (R-Idaho), Ranking Member of the Senate Finance Committee, delivered remarks on the Democrats’ reckless tax-and-spending bill, outlining what Americans can expect from the mislabeled Inflation Reduction Act of 2022: more taxes, more spending, higher prices, and an army of IRS auditors.

“It’s too many taxes, too much spending, too big of a burden on American people across all income categories.” 

To watch Crapo’s full remarks, click HERE or the image above. 

On the state of the economy:  

The nonpartisan Penn Wharton Budget Model says the “Inflation Reduction Act” will, if anything, raise inflation in the first few years, with a small and insignificant negative effect later in this decade. That same model concludes that there is “low confidence that the legislation will have any impact on inflation.” 

But it does have an impact on all of us and our economy.  

The bill does nothing to bring the economy out of stagnation and recession.  Rather, the “Inflation Reduction Act of 2022” gives us higher taxes, more spending, higher prices, and an army of IRS agents.  

On tax hikes:  

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How Governments Are Taxing You

The Tax Foundation is a great place to find research on a wide range of tax issues. How are people around the world being taxed personally and on business operations? With tax revenues taking a hit due to the pandemic, governments globally are looking at more ways to tax their citizens. No one seems to be talking about anything but tax hikes these days, so it is a good idea to understand how government tax policies affect taxpayers today and into the future.

According to the chart found on the Tax Foundation on OECD countries Denmark, Australia and the United States have citizens and businesses paying the highest taxes around the world. Although the chart is dated 2020, it is an eye-opener to look at what countries are carrying the heaviest tax burden. View Chart Here.

It is also worth looking at another chart in indicating that in the United States Individual Taxes are the most important source of tax revenue in the United States.

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Tax Increase

According to an article in the Federal News Network written by Jory Heckman the U.S. wants to spend 1.5 TRILLION DOLLARS of your tax dollars.

“Congress, nearly halfway through the fiscal year, is unveiling a $1.5 trillion comprehensive spending deal for the rest of fiscal 2022.

The House and Senate appropriations committees released the FY 2022 spending package Wednesday. The House passed the package — after a separate vote that modified it to add funding for defense assistance to Ukraine and reduced funding to combat COVID-19 — on Thursday night. The measure now goes to the Senate.

Congress passed several stopgap CRs this fiscal year to avoid a government shutdown, and lawmakers haven’t passed a budget deal on time in many years.

“It is unquestionably in the interest of the American people that the House and the Senate act quickly to pass this bill and send it to the president,” Senate Appropriations Committee Chairman Patrick Leahy (D-Vt.) said in a statement Wednesday.”

View The Bill Here

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Certain Tax Increases And Fixes Needed For Equity And Fairness
Tax reform discussions in Congress for the week of October 17 have included possibly not including tax increases. Are taxes too high already? Perhaps. But they are also quite uneven in their application.  Here are a few examples:

 

  • Vastly different rates exist for capital gain versus ordinary income for very high income individuals. A wage earner with over $400,000 of earned income will enter a 37% marginal rate today (39.6% after 2025). In contrast, a person with capital gain and dividend income will be in a marginal rate of 23.8%. This is a frequent question I get from both students and practitioners – why are capital gains taxed lower than ordinary income. There are reasons, but I don’t think it supports a difference once income passes the $500,000 level.* Tax it all the same after some high level such as $400,000 or more.  And that high income wage earner will have 2.9% Medicare tax on income above $147,000 (figure for 2022) and an additional 0.9% on income above $200,000 ($250,000 if MFJ).  So a capital gain rate of 37% (or 39.6% once AGI exceeds $1 million as President Biden proposes (see page 8 of this table)), causes the high wage earner and high capital gain recipient to both be at a marginal rate of 43.4%. Note that I am only talking about very high income individuals (less than half of the top 1% of individuals).
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Congress Readies New Round of Tax Increases

Background

The House Committee of Ways and Means (the “House”) has been busy the last few days.  Indeed, the House continues to mark up and work through potential revenue raisers (i.e., tax increases) to help pay for recent legislative proposals.  Although these proposals are not yet law, tax professionals should keep a careful eye on the proposals to ensure that they do not potentially interfere with their client’s tax planning.  At a very minimum, tax professionals should be knowledgeable enough to discuss the proposals with their clients and how such proposals (if eventually enacted into law) would impact their clients’ overall goals and objectives.

Income Tax Rates

Increasing income tax rates is generally the easiest way to raise additional revenue for the government.  And, the proposals are no different in proposing additional income tax increases.  These potential increases are discussed below.

Individual Income Tax Rates

Individual income tax rates are currently housed in section 1 of the Internal Revenue Code of 1986, as amended (the “Code”).  The Tax Cuts and Jobs Act of 2017, Pub. L. No. 115-97 (the “TCJA”) reduced income tax rates for individuals. Under the TCJA, the top income tax rates for tax years 2018 through 2025 were reduced from 39.6 percent to 37 percent. However, the reduced rates were not permanent and were set to sunset in 2026, i.e., the top rates were set to revert back to 39.6%.

The House proposal seeks to increase these reduced rates from 37 percent to 39.6 percent for the 2022 and later tax years.  In addition, the proposal seeks to bring more high-income earners into the higher marginal tax rate of 39.6 percent through a reduction of income subject to the higher rate.  For example, under existing law, taxable income of over $538,475 for a single individual is taxed at 37 percent.  Under the proposal, taxable income over $501,250 would be taxed at 39.6 percent for a single individual.

Corporate Income Tax Rates

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Biden's 'Death Tax' Will Harm Middle-Class Families Making Far Less Than $400K A Year

TaxConnections thanks the Westerm Journal for their permission to post this article written by Eric Nanneman.

For many moderate Americans who were afraid of voting for a traditional tax-and-spend Democrat, this assurance may have tipped the balance to win their vote.

But as Biden unveiled his American Families Plan — which promises two years of free community college education, 12 weeks of paid family and medical leave, expanded unemployment benefits and more — there was an ugly truth hidden near the bottom.

Death Tax’ Greatly Expanded

Currently, the estate tax exemption stands at $11.7 million, meaning that when an owner of an estate passes away, the heirs are only taxed on the amount exceeding $11.7 million, or $23.4 million for couples. So, if an unmarried son inherits a $20 million estate, he would pay taxes on $8.3 million.

Biden’s drastic plan cuts the $11.7 million exemption all the way down to $1 million.

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U.S. Treasury Green Book

During the Memorial Holiday weekend, the U.S. Department of Treasury released the Biden Administration’s Fiscal Year 2022 Budget and what is called the Green Book making proposals for 2021 tax reform. One of Biden’s proposals for 2021 is a retroactive Capital Gains tax increase to 37% for combined household incomes of 1M or more. The proposals include tax increases in capital gains, corporate taxes, adding a 15% tax rate on corporations with more than 2B of book income, double the global GILTI tax rate on foreign sourced income, increase in taxes on high income earners, eliminating like-kind exchanges, increase individual taxes to 39.6% ($452,700, $509,300 for joint filers), increases in estate taxes, and the list goes on.

We know the tax community will take a deep dive into these tax increase proposals and we appreciate all the feedback and commentary on them. As lawyers, CPAs, EAs, and financial services professionals, you see the impact to taxpayers up front and personal. Your comments and valuable insight on these proposed tax hikes are extraordinarily important to taxpayers worldwide.

You can view and download the U.S. Treasury Green Book here.

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