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• Taxing Trivia
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IN THE news

Offshore Tax Havens O.K.(?)
Should you worry if you have money in an offshore tax haven? The new Administration has recently decided to “reevaluate” the situation. Many of these tiny countries base their economies on low taxes and bank secrecy laws. Some even qualify for financial aid from the U.S.

Treasury Secretary Paul O’Neill deplores “tax cheating in any form” and doesn’t want to “undermine the confidence of the honest taxpayer.” This sounds as if action is forthcoming.

The government is going to lean on the tax havens, right? Wrong! Secretary O’Neill states he will not support efforts to dictate to any country what their tax rates should be. He also “has no interest in stifling the competition that forces governments like businesses to create efficiencies.” (Isn’t government efficiency an oxymoron?)
The effort by the mostly gutless Organization for Economic Cooperation and Development (OCED) to squeeze the havens just does not back-up the Secretary’s words.

The Administration sends a mixed message: yes, we deplore tax cheats, but if you have enough money, you can use tax havens and avoid paying some taxes. Congress could make a stand and close some loopholes, but the lobby for the wealthy isn’t going to let it happen.

Does the Right Hand Know What the Left’s Doing?
The use of hybrid vehicles (gasoline and battery powered) that can achieve forty plus miles per gallon would appear to warrant a tax credit to induce the consumer to buy such thrifty automobiles. Vice-president Dick Cheney released a plan recommending a $2000 tax credit for these vehicles.

New Jersey resident Bob Zubritsky orders a Toyota hybrid (the Prius) and receives an IRS form 8834 which provides a $4000 tax credit for automobiles powered primarily by an electric motor. Which credit will he get?

Ask the IRS and they aren’t sure. Other customers have been given form 8834 and there have been no complaints. The IRS doesn’t know if it has accepted or rejected the credits. (Sound familiar?) Someone could ask for a private-letter ruling, but this would involve detailed engineering questions that a customer would be unable to answer.

Confusion arises because the Energy Policy Act of 1992 did not envision hybrid vehicles, only fully rechargeable electric vehicles. The $2000 clean-vehicle deduction that can be claimed on form 1040 is scheduled to be phased out by 2005. Will hybrid vehicles be eligible for a large credit even if they are gas guzzlers? Claire Buchan, a White House spokeswoman, said the Bush administration’s energy proposal “clarifies and expands the current law.” (Want to bet?)

At this time, does anybody know what the tax credit will be? Mr. Mikrut of the Treasury has it correct when he said, “What, if anything, these vehicles qualify for under the present law is unclear.” Tune in next year to see if the fog clears.

Illegal Immigrants Pay Legal Taxes
Would you be surprised to learn that many illegal immigrants pay their income taxes? Some do this because they feel a moral obligation. Their conscience is tweaked because they use so many public services. Others realize that when they want to become citizens of the U.S., they will have to show proof that they paid their taxes. Many, however, never file and just forget the tax money listed on the W-2 forms because their fear of discovery overrides any desire for a refund.

The public may think of the illegals as standing on a street corner waiting for day work. Reality shows that they are working in a variety of industries. Their W-2 forms show monies going to both the IRS and the Social Security. The IRS just wants their money and cares little about where the money came from. The Social Security, however, would like to know to whom they should credit the money received.

Too many undocumented workers purchase phony social security numbers. Inspectors found 11,000 workers in the agriculture industry using numbers that did not exist. This makes it impossible to trace the contributor and leaves the SS with millions. In 1990 this amounted to 3.6 million items worth $1.2 billion that went into the “suspense file.” In 1998 it was twice as many items and nearly $4 billion. Over an eight-year period, the mystery workers were responsible for over $20 billion going to the SS coffers. However, the SS has rebuffed requests to work with US immigration to trace the unknowns.

Undocumented immigrants’ contributions add up to a significant amount. Donald Huddie, an economist at Rice University, estimated they paid $12.6 billion in 1996. No one really knows how many illegals there are; estimates run from 6 to 9 million.

There are those who believe that their use of government services outweighs their contribution. If an illegal acquires a valid SS number, then it’s time to send the IRS the amended forms for possible refund or payment of tax due.

The data would indicate that undocumented workers do make a significant contribution to the economy of the U.S. The critics who charge that they use more services than they pay for may be wrong.

You Have a Problem? President Bush has the Answer
Present any problem to Pres. Bush and he has the answer: TAX CUT. Recently, Pres. Bush was asked about the high price of gasoline and fuel oil. His answer: tax cut (so you could pay the higher prices).
Let’s follow his logic in this instance. The price of fuel is going up, so a tax cut will put money in our pockets to pay for this increase. We take our tax cut monies and use them to pay for gas and oil. The gas and oil companies now have sucked up our tax cut monies. Pres. Bush receives significant income from investments in the oil and gas industry; the more they make, the more he makes.

And they called Clinton “slick.”

Colorful Congressman Indicted for Tax Evasion
Rep. Jim Traficant (D-Ohio) was indicted May 4, 2001 on charges of tax evasion, bribery and obstruction of justice. Traficant is noted for having possibly the worst haircut in the Congress and for his colorful one minute speeches often ending with “Beam me up!”

Traficant is a nine-term congressman from Youngstown. Almost every morning, Traficant gives a brief but bizarre speech on the house floor. Gesturing grandly, he discourses on everything from China and the IRS (he hates both) to bras and beauty pageants.

On the IRS: “From the womb to the tomb, Madame Speaker, the Internal Rectal Service is one big enema. Think about it: they tax our income, they tax our savings, they tax our sex, they tax out property-sales profits, they even tax our income when we die. Is it any wonder America is taxed off? We happen to be suffering from a disease called Taxes Mortis Americanus. Beam me up!” (March 20, 2001)