Smart. Sharp. Funny. Fearless.

Monday, December 09, 2019 {{ new Date().getDay() }}

Tag:

How Trump Exploited The Legal Infrastructure To Advance Fascism In America

This article was produced by the Independent Media Institute.

The debate over whether Donald Trump is a fascist is no longer confined to a narrow segment of the far left. It is now out in the open. Even mainstream columnists like the New York Times' Michelle Goldberg and the Washington Post's Ishaan Tharoor and influential Democratic politicians, such as Oregon Senator Ron Wyden, have come to use the "F" word to describe our 45th commander in chief.

Although it is an emotionally loaded and often misused term, fascism is as real today as a political and cultural force, a set of core beliefs, and a mode of governance as it was when Benito Mussolini founded the Italian Fascist Party in 1919 and declared himself dictator six years later.

Read Now Show less

D​emocratic Lawmakers Seek Probe Of Postmaster General Over 'Threat To Mail-In Ballots'


A group of House and Senate Democrats wrote a letter to the U.S. Postal Service inspector general on Friday asking for an investigation into the Trump administration's changes to the mail delivery agency that have "led to slower and less reliable delivery."

The letter, signed by nine congressional Democrats, states the changes to staffing and other policies within USPS "pose a potential threat to mail-in ballots and the 2020 general election."

"The Postal Service has served Americans since before the founding of the Republic, and any actions by President Trump or Postmaster General [Louis] DeJoy that damage the Postal Service's ability to quickly and reliably deliver the mail would represent a significant breach of their responsibilities," the lawmakers wrote in the letter. The call for an investigation follows DeJoy's announcement in July of USPS cutbacks, which are causing delays in mail delivery.

Unlike the past — when USPS delivery workers would make multiple trips and work overtime hours to ensure mail was delivered in a timely fashion — DeJoy announced that delivery workers should now leave mail in distribution centers if they cannot process it within certain hours of the day, the Washington Post reported.

Such delays could have an impact on the 2020 election, as the USPS could be overwhelmed by thousands of mail ballots that must be delivered by a certain time period in order to be counted.

The investigation demand also comes as Donald Trump has been attacking the practice of voting by mail — which many states are expanding in 2020 thanks to the COVID-19 pandemic and fears of virus transmission at in-person polling sites.

Democrats on Thursday met with DeJoy — who was a major Trump donor before his appointment — to try to force him to repeal the changes.

"We pushed it. It's gotta be 100%, not 94%, not 97%," Senate Minority Leader Chuck Schumer (D-NY) told CNN on Thursday of Democrats' meeting with DeJoy. "We don't fully trust them — with everything Trump has said about the Post Office — and they're Trump appointees."

The members of Congress who wrote the letter include Sens. Elizabeth Warren of Massachusetts, Gary Peters of Michigan, Tom Carper of Delaware, Ron Wyden of Oregon, and Tina Smith of Minnesota, as well as Reps. Carolyn Maloney of New York, Stephen Lynch of Massachusetts, Gerry Connolly of Virginia, and Brenda Lawrence of Michigan.

Published with permission of The American Independent Foundation.

IRS Audits Poor Taxpayers At Same Rate As Richest One Percent

Every year, the IRS, starved of funds after years of budget cuts, loses hundreds more agents to retirement. And every year, the news gets better for the rich — especially those prone to go bold on their taxes. According to data released by the IRS last week, millionaires in 2018 were about 80 percent less likely to be audited than they were in 2011.

But poor taxpayers continue to bear the brunt of the IRS’ remaining force. As we reported last year, Americans who receive the earned income tax credit, one of the country’s largest anti-poverty programs, are audited at a higher rate than all but the richest taxpayers. The new data shows that the trend has only grown stronger.

Audits of the rich continue to plunge while those of the poor hold steady, and the two audit rates are converging. Last year, the top one percent of taxpayers by income were audited at a rate of 1.56 percent. EITC recipients, who typically have annual income under $20,000, were audited at 1.41 percent.

Part of the reason is ease. Audits of EITC recipients are largely automated and far less complicated.

“While the wealthy now have an open invitation to cheat, low-income taxpayers are receiving heightened scrutiny because they can be audited far more easily. All it takes is a letter instead of a team of investigators and lawyers,” said Sen. Ron Wyden, D-Ore., the ranking member of the Senate Finance Committee.

“We have two tax systems in this country,” he said, “and nothing illustrates that better than the IRS ignoring wealthy tax cheats while penalizing low-income workers over small mistakes.”

In a statement, IRS spokesman Dean Patterson acknowledged that the sharp decline in audits of the wealthy is due to the agency having lost so many skilled auditors. And he didn’t dispute that pursuing the poor is just easier.

Because EITC audits are largely conducted through the mail by lower-level employees from a central location, they are “less burdensome for taxpayers than in-person audits as they mail in their documentation and don’t have to take time out of the workday,” Patterson said.

“Correspondence audits are also the most efficient use of IRS’ limited examination resources.”

In April, Wyden, citing ProPublica’s reporting, asked IRS Commissioner Charles Rettig to deliver a plan to address the agency’s disproportionate focus on auditing the poor. The deadline has passed, but Wyden’s office said the senator still expects a response. The IRS did not comment on the delay.

The agency audited 382,000 recipients of the EITC in 2018, accounting for 43 percent of all audits of individuals last year. When we mapped the estimated audit rates for every county in America, the counties with the highest audit rates were poor, rural, mostly African American and in the South, a reflection of the high number of EITC claims there.

Natassia Smick and her husband were among those unlucky 382,000 households. We wrote about them last year. They live outside Los Angeles and saw their entire refund frozen in February 2018. For a couple who earned about $33,000 in 2017, that $7,300 refund was big money ($2,000 of it stemmed from the EITC). When it didn’t come, Smick said she had to abandon plans for catching up with her credit card debt.

After Smick sent in all her supporting documents, it took until this May to get a final answer from the IRS. Fourteen months after it all started, the IRS said it agreed Smick and her husband were due about $7,000, she said. But the agency disagreed on the remaining $350, because it couldn’t verify her husband’s employment for part of the year. Smick said the IRS was wrong to hold back the $350, but she couldn’t afford to contest it and further delay the $7,000.

“I’m not going to fight anymore,” she said. “We have already waited too long, and we are not in a financial position to wait another three months to appeal.”

A new study by academic and government researchers shows that there has been a big cost to these audits: They’ve discouraged hundreds of thousands of families who might qualify for the credit from claiming it in future years.

For poor taxpayers, the worst part of the EITC audits is usually the beginning. That’s because they almost always begin with the shock of the refund being held.

But the audits also hardly ever end well. According to data in the new study, most end without the taxpayer responding at all, and the poorer the audit target, the more likely that is to happen. Those with wage income under $10,000 per year, for instance, didn’t respond at all in 64 percent of the EITC audits. For those with income over $40,000 per year, that rate dipped to 35 percent.

The diminished response rate of the poorest taxpayers in part reflects that they are harder to reach: In 15 percent of those audits, the mail couldn’t be delivered. But earlier studies have also shown that many poor taxpayers don’t understand they are being audited or have trouble deciphering what the IRS is asking in its letters.

The EITC is aimed mainly at low-income workers with children. Last year, 26 million households received an average credit of about $2,500. Most EITC audits require taxpayers to dig up documents to show that a child meets the legal threshold of a “qualifying child,” a status that’s distinct from a dependent. The IRS has long blamed the law’s complexity as the main reason taxpayers may incorrectly claim the credit.

Smick was among the rare audit veterans who prevailed. Taxpayers rarely win against the IRS regardless of how likely they are to qualify for the credit, according to the new study, which was done by Day Manoli, an assistant professor of economics at the University of Texas at Austin, and researchers with the IRS and Treasury Department.

The authors sliced the population of EITC recipients into categories. At one end of the spectrum were tax returns with red flags that made it almost certain they would be audited. On the other end were returns very unlikely to be audited. But, looking over time, the outcomes of those audits weren’t all that different. When those returns with red flags were audited, the taxpayers prevailed seven percent of the time. The taxpayers at the other end of the spectrum — the group seemingly most likely to qualify for the credit — only prevailed 10% of the time.

The audits have a long-term impact on the lives of those who go through them, the study found. In the years after they were audited, wage earners were 68 percent less likely to claim the credit compared with similar taxpayers who had not been audited. They were even 14 percent less likely to file taxes at all.

These taxpayers surrender “benefits from potentially legitimate EITC claims,” the study authors write, and, when they fail to file taxes at all, leave money on the table in the form of other credits and withholdings.

Because the IRS conducts so many EITC audits — between 380,000 and 600,000 per year over the past decade — at the very least, hundreds of thousands of taxpayers have likely avoided claiming the credit in response to having it denied through an audit. By discouraging people from claiming the credit, the audits clash with an avowed goal of the IRS: to encourage people to claim it. About a fifth of those eligible for the credit don’t claim it, and the IRS runs education campaigns to increase uptake.

EITC recipients are audited at such a high rate in part because Republicans in Congress have long pressured the IRS to reduce incorrect payments of the credit.

The IRS estimates that there was about $18 billion in incorrect claims in 2018. In most contexts, $18 billion is a big number, but when compared with the full scope of unpaid taxes, which likely total more than $600 billion each year, it’s not so big.

And while that $18 billion number, which Republicans touted as a “big problem” in the April hearing, is often cast as a kind of government waste, the study shows things are far more complicated.

In the years following an audit, the study found, children who were claimed on one taxpayer’s return often were claimed on a different taxpayer’s return. In other words, the kids might have just been claimed on the wrong return, and if that’s the case, the money should have been paid out, just to someone else.

The authors distinguish between the $18 billion in “gross overpayments” of the credit, which would include such misdirected payments, and what they call “net overpayments,” money that shouldn’t have been paid out at all. The “net” number, they say, could be one-third to one-half smaller than the “gross” one.

The IRS, in its statement, said the study had focused on a sample of only one type of taxpayer (single and head-of-household filers), and so the estimate of “net overpayments” should not be generalized to the entire EITC-claiming population.

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.

IMAGE: U.S. Senator Ron Wyden (D-OR) speaks with reporters as he arrives for the weekly Democratic Caucus policy luncheon at the U.S. Capitol in Washington. REUTERS/Jonathan Ernst

Wyden Reaches Out To Republicans On Inversions Measure

By Kevin G. Hall, McClatchy Washington Bureau

WASHINGTON — The head of the Senate’s tax-writing panel issued a statement Tuesday offering Republicans a carrot to join Democrats in blocking the ability of some U.S. corporations to shift headquarters overseas to enjoy huge tax breaks called inversions.

“Following efforts in August, it’s clear there is an opportunity for bipartisan agreement on short-term legislation that will make inversions less attractive,” Senate Finance Committee Chairman Ron Wyden (D-OR) said.

Republicans have insisted that any effort to thwart inversions, which costs the U.S. treasury billions in lost tax revenues, should be done in the context of a broader revamp of the corporate tax system.

That’s a bigger lift, and Wyden is looking for a stopgap measure to block the most egregious examples of corporations moving their headquarters to tax-haven countries.

After meeting with the top Republican on the panel — Sen. Orrin Hatch of Utah — Wyden issued a statement offering to loosely link any effort to halt inversions to the broader, more ambitious desire to overhaul the corporate tax code.

“As we press ahead, we continue to believe that any legislation addressing inversions must bridge to comprehensive tax reform,” Wyden said. “This is not some abstract issue about corporate accounting. Without a bipartisan stopgap measure in place, we run the risk of having our business tax base eroded, leaving mainstream American companies and families holding the bill.”

Inversions have been around for decades, but have grown in number of the past two years, especially for companies in the health care and pharmaceutical sectors.

These cases often involve a U.S. corporation buying a smaller partner in places as diverse as Ireland, Holland, Canada, or Israel and then moving their headquarters there while otherwise retaining their large presence in the United States, the world’s richest and most robust consumer market. What had been headquarters then becomes a U.S. subsidiary of a foreign parent company.

Speaking in Los Angeles in late July, President Barack Obama accused corporations considering or already engaged in inversions — including household names such as Burger King and the Walgreen Co. drugstore chain — of being corporate deserters.

“I don’t care if it is legal. It is wrong,” said Obama.

A number of Democrat lawmakers are preparing bills aimed at arresting the most troubling inversions, which involve what’s called earnings stripping. That’s where a company avoids paying U.S. taxes through an accounting move in which they saddle their U.S. subsidiary with debt, paying an excessive amount of interest to a related party. In the case of inversions, the related party is the newly minted headquarters abroad in a country such as Ireland or Bermuda with lower corporate tax rates.

Conservative Democrats, especially those in close Senate races, have been wary of stand-alone measures to address the inversion problem, siding with Republicans who want a broader rethink of corporate taxes.

The Obama administration insists inversions will result in at least $17 billion in lost tax revenue over the next decade.

Companies that have recently sought inversions include drugmakers Mylan Inc. in Pennsylvania and Chicago’s AbbVie. Minnesota-based medical device manufacturer Medtronic Inc. would be the largest U.S. company do so, and it touched off a firestorm recently with its $42.9 billion acquisition of the Irish firm Covidien PLC.

The controversy surrounding inversions forced drug giant Pfizer Inc. to back off of its plans earlier this year to purchase the British firm AstraZeneca PLC, and Walgreen Co. last month also stepped back from its inversion plans to purchase a smaller Swiss company.

Photo: Center for Strategic & International Studies via Flickr

Interested in U.S. politics? Sign up for our daily email newsletter!