REPUBLICANS UNDER PRESSURE TAX CUT DEADLINE SLIPS

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By Naomi Jagoda

With the deadline for tax reform slipping, some prominent conservatives are pressing President Trump and congressional Republicans to change course.

Trump and the GOP have been pushing forward with efforts to make tax changes to both the individual and corporate tax systems in a single bill, with a goal of enacting them by August.

But the late summer target looks increasingly unlikely, with Treasury Secretary Steven Mnuchin admitting this week that the timeline has become “highly aggressive to not realistic.”

With Republicans are desperate to notch a big legislative win under Trump, several voices in the conservative world are pushing for a new approach.

In a New York Times op-ed on Wednesday, Steve Forbes, Larry Kudlow, Arthur Laffer and Stephen Moore — cofounders of the Committee to Unleash Prosperity and advisers to Trump’s campaign — argued that a business-only tax cut bill would be the easiest way for Trump to score a legislative achievement early in his presidency.

They said that Trump shouldn’t tackle comprehensive tax reform in one pass. Instead, Republicans should first work on a bill that makes tax changes for businesses and includes infrastructure funding to make it attractive to Democrats. They then could tackle individual income tax reform in 2018.

“Republicans need to act with some degree of urgency. The financial markets and American businesses are starting to get jittery over the prospect that a tax cut won’t get done this year,” the campaign advisers wrote. “A failure here would be negative for the economy and the stock market and could stall out the ‘Trump bounce’ we have seen since the president’s election.”

The influential conservatives have been making the case for Trump to start with business tax cuts for a while. But their op-ed in the Times is their most high-profile effort to date and could catch Trump’s attention as he seeks to get his agenda back on track after the failure of healthcare legislation last month.

In an interview with The Hill, Moore said that one purpose of the op-ed was to “focus the White House on what we can get done.” 

Moore said that Democrats don’t have much interest in signing onto a comprehensive tax-reform bill, and “it’s almost impossible to do broad-based tax reform with just one party signing on to it,” since there will be pushback from interest groups.

Laffer told The Hill that cutting the corporate tax rate “would stimulate the economy enormously.” While tax changes for individuals will take a while to negotiate, “this corporate thing can be done in minutes,” he said.

Moore said that he’s discussed his ideas with the White House and lawmakers and received mixed feedback. The White House isn’t on board yet, but some lawmakers think that perhaps “the narrow focus gets you the most votes,” he said.

Trump and leading congressional Republicans have sought to pass a comprehensive tax bill. House Republicans are working on a comprehensive tax-reform bill based off a plan they released in June, and the White House is planning to release its own tax reform plan to benefit both businesses and the middle class.

House Ways and Means Committee Chairman Kevin Brady (R-Texas), the point man for tax legislation in the House, this week said he hopes Congress doesn’t begin by only cutting taxes for businesses.

“There’s growth on the family and individual side as well,” he said on Fox News Tuesday.

Brady added that the American public has a great interest in a simpler, fairer tax code and that tax changes for individuals “can help us move the tax cuts and reforms forward on the business side.” 

But the House GOP plan faces significant hurdles, since one of its central elements — a border-adjustment proposal to tax imports and exempt exports — has encountered opposition from retailers and many senators.

Forbes, Kudlow, Laffer and Moore said House Republicans need to abandon border adjustability because it’s too controversial.

“It divides the very business groups that the party needs to rally behind tax reform,” they wrote in the Times.

They also argued, in contrast to congressional GOP leaders, that tax changes don’t need to be revenue-neutral. But there are procedural challenges to passing tax cuts that increase the deficit.

Congressional Republicans have expressed interest in passing tax-reform legislation through budget reconciliation, which would allow the bill to pass the Senate with only Republican votes. However, bills passed through reconciliation cannot increase the deficit outside of the 10-year budget window.

A bill that did not offset the cost of the tax cuts would have to expire after 10 years, unless Republicans could win the support of at least eight Senate Democrats — a difficult task that could prove impossible.

Moore said that including infrastructure funding in a corporate tax bill would be a way to get Democrats on board, though he’s not sure the bill could get support from eight Democratic senators. That would depend on whether Democrats simply want to reject anything that Trump wants to do, he said.

Moore also said that he would prefer permanent tax cuts to cuts that expire, but “a 10-year tax cut would stimulate the economy a lot” and it would be “very unlikely” that Congress would let the current 35 percent corporate tax rate return after 10 years.

Leaders of the House Republicans’ tax-reform effort have argued that tax changes should be permanent. Speaker Paul Ryan (R-Wis.) said in a February interview with “PBS NewsHour” that a temporary business tax cut “produces a lot of uncertainty for businesses.”

Alan Cole, an economist at the Tax Foundation, said that a temporary cut to the corporate tax rate would do little to encourage businesses to make long-term investments in the U.S.

“If the higher rate is still there in the future, you don’t have that incentive to embark in a long-term project,” he said.

Cole also said that it would be tricky to cut taxes for “pass through” businesses whose income is taxed through the individual tax code without making other changes to the individual code.

“It’s really awkward to separate pass-through businesses from the rest of the individual income tax,” he said.

Illegal Immigrants Filing Tax Returns Dropping under Trump

by LANA SHADWICK17 Apr 2017Washington, D.C.

While Americans are scrambling to meet the 2016 tax filing deadline, the number of illegal immigrants submitting their returns in the present climate are reportedly down significantly. Also, a Treasury Inspector General for Tax Administration (TIGTA) report exposing significant refund fraud has “most certainly contributed to it,” says the taxpayer advocate department within the IRS.

The Internal Revenue Service stated that millions of people who do not have Social Security numbers (SSN), most of these illegal aliens, filed federal tax returns last year, reported NPR the day before the tax deadline. Many of those who are ineligible for SSN use “ITIN,” or Individual Taxpayer Identification Numbers when filing.

The Taxpayer Advocate Service, an independent organization within the IRSreports that “Without ITINs, approximately 4.6 million taxpayers would not be able to comply with their annual tax filing and payment obligations, or receive tax benefits to which they are legally entitled.”

The advocate service states that ITIN applications and “associated return filings” “have dropped precipitously, down 58 percent between 2011 and 2014.” They write that the “general economic climate and immigration trends” explain part of this drop, but the “IRS ITIN procedures have most certainly contributed to it.”

After the TIGTA report “alleging significant refund fraud connected to ITINS,” in 2012 the IRS made what its independent advocacy service calls “sweeping changes that require applicants to submit original identification documents (subject to a few alternatives).”

The IRS has also continued its policy of requiring applicants to apply for an ITIN with a paper tax return.

The new requirements led to delays for the ITIN applicants and associated large backlogs, the Taxpayer Advocate Services says. The independent arm charges that “While concerns about refund fraud are legitimate, the IRS’s solutions do not effectively target the fraud nor do they balance the anti-fraud regime with the taxpayer’s need for a process no more intrusive than necessary, part of a taxpayer’s right to privacy.”

Moreover, NPR reported that tax preparers in the sanctuary city San Francisco area told them there is approximately a 20 percent decline in the number of people filing with ITIN numbers. A tax law professor at the University of Nevada said that tax preparers in other parts of the United States are making similar claims.

“Sending in a tax return with your current address and information is very unnerving to a population that wants to comply with the law and is actually leaving significant refunds on the table by not filing tax returns,” educator Francine Lipman said.

The IRS is barred from giving information it has obtained to other United States agencies, including the Department of Homeland Security. They may share information only under “limited circumstances” NPR reported. The professor says that those bearing ITIN numbers must decide “whether to trust that firewall.”

“Many of our clients are telling us that in years past they felt more hope and more of ability to have a pathway toward citizenship and lately there’s a lot less hope,” Max Moy-Borgen, the head of a tax program at the Mission Economic Development Agency told NPR.

Judicial Watch obtained 695 Pages of Obama IRS scandal Documents

The conservative think tank, Judicial Watch, has obtained and released nearly 700 pages of Obama IRS Scandal documents that show officials used “inappropriate political labels” to screen applications from conservative tax-exempt organizations.

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The documents were made available following a Freedom of Information Act (FOIA) request lawsuit filed by Judicial Watch in 2015.

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The FOIA request was made following a scandal in 2013, that revealed the US Internal Revenue Service had selected political groups applying for tax-exempt status for intensive scrutiny based on their names or political themes. The revelation led to wide condemnation of the agency and prompted several investigation, including an FBI order by the US Attorney General Eric Holder.

Initial reports described the selection as nearly exclusively targeting conservative groups with terms such as “Tea Party” in their names but later it was found that some liberal groups were also selected for additional review.

In January 2014, the FBI told Fox News that its investigation had found no evidence so far warranting the filing of federal criminal charges in connection with the controversy, as it had not found any evidence of “enemy hunting”, and that the investigation continued. On October 23, 2015, the Justice Department declared that no criminal charges would be filed.

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Of the 695 pages of documents released by the IRS, 61 percent were withheld in their entirety. Among the new materials is a June 20, 2013 memo from Karen Schiller, then acting-director suspending the use of the controversial Be on the Lookout (BOLO) and Touch and Go (TAG) lists that was used for identifying terms conservative and liberal groups.

Another document is an August 8, 2013 memo, where Schiller admits the IRS used political labels in targeting groups for special scrutiny and possible audit and directing the organization in the future to screen organization based only on their activities “not words” or “labels of any kind.”

Included in the documents is a “Dear [Applicant]” letter that offers applicants an “expedited process” for 501( c) (4)s in exchange for restriction on their activities.

“This optional expedited process is currently available only to applicants for 501(c)(4) status with applications pending for more than 120 days as of May 28, 2013, that indicate the organization may be involved in political campaign intervention”.

Judicial Watch had previously argued the lists used to identify conservative organizations applying for tax exempt status was used by the Obama administration in advance of the 2012 presidential election.

“No wonder the Obama IRS has been hiding these records. The new smoking-gun documents contain admissions by the Obama IRS that is inappropriately targeted conservative groups,” said Judicial Watch President, Tom Fitton. “But the records also show that the abuse continued – as the Obama IRS tried to force conservative applications to give up their First Amendment rights in order to finally get their applications granted.”

Between 2010 and 2012, the number of applications the IRS received each year seeking 501(c)(4) certification doubled. During this period, budget cuts and personnel cuts reduced the IRS’s ability to adequately perform its core duties.

When the Obama administration requested in 2011 that Congress increase the IRS’s $12.1 billion budget by $1 billion to allow the agency to hire 5,100 additional agents, Congress instead reduced the IRS budget to $11.8 billion, and the IRS offered buyouts to 5,400 of its 95,000 employees.

 

‘Merely a thankful beggar’: Philadelphia DA indicted on 23 counts of bribery, extortion & fraud

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A federal grand jury has returned a 23-count indictment against Philadelphia District Attorney Rufus Seth Williams, charging him with taking bribes amounting to tens of thousands of dollars from two wealthy business owners.

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The charges were announced Tuesday by Acting New Jersey US Attorney William Fitzpatrick, who took over after the US Attorney for the Eastern District of Pennsylvania recused his office from the case.

The indictment accuses Williams of accepting cash bribes and other gifts including 16 round-trip airline tickets, an all-inclusive vacation to the Dominican Republic and a Jaguar convertible.

The indictment alleges that as District Attorney, Mr. Williams compromised himself and his elected office by standing ready to help those who were willing to pay him with money, trips, and cars, Fitzpatrick said, according to the Justice Department.

Mr. Williams’ alleged willingness to compromise his position of public trust in exchange for private financial gain is all the more unfortunate given that he was elected to protect the interests of the people of Philadelphia as their chief law enforcement officer, he added.

In exchange for the gifts he received, the indictment alleges that Williams asked a Philadelphia police officer to assist a business owner to get through security screenings at the Philadelphia International Airport on several occasions. Williams also allegedly offered to write official letters for the business owner to help them avoid screenings.

That same business owner also allegedly asked Williams to assist them in obtaining a more favorable plea offer for an unnamed third person who was being charged in a criminal case that Williams’ office was conducting.

The business owner paid for Williams and his girlfriend to take a vacation to Punta Cana in the Dominican Republic, where the two stayed in a presidential suite with access to a private beach and a personal butler. During the trip, the businessman requested Williams to help a person charged in a criminal case, saying, the guy pleaded guilty, he will take any punishment but he just doesn’t wanna do jail!

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In response, Williams texted the business owner about a second vacation to the Dominican Republic he was planning: I am merely a thankful beggar and don’t want to overstep my bounds in asking… but we will gladly go.

Later, the business owner texted Williams about the case, and Williams responded that he would see what he could do to make it a county sentence.

Williams also allegedly took bribes from another business owner, in exchange for appointing them as special advisor to the Philadelphia District Attorney’s office in November 2012. At the time, the business owner was on federal probation for a tax conviction.

The business owner asked Williams to send a letter to the California Department of Alcoholic Beverage Control before a hearing that could revoke their liquor license.

The business owner also texted, Can I be a greeter or celebrity bartender to work off my debt to you?

The indictment additionally charges Williams with stealing more than $20,000 from a family member’s Social Security payments and pension income to pay for his own personal expenses.

In order to conceal the bribes, Williams filed false personal financial statements from 2012 to 2015. When Williams learned of the case against him, he filed $160,050 in gifts for that period.

In a statement issued after he filed, Williams said: I believe that it is very important to provide the citizens of Philadelphia with a greater foundation of trust in their elected officials, according to the Philadelphia Inquirer.

Williams took home a salary of $175,000 for his job and was the 11th highest paid employee in the city of Philadelphia in 2012, according to Philadelphia Magazine.

The charges against him cast a shadow on the District Attorney’s Office, our legal community and the entire city of Philadelphia, Gross said, according to the Philadelphia Inquirer.

The indictment is the product of nearly two years of investigation into Williams’ financial affairs conducted by the FBI and IRS.

The alleged misconduct, as specifically laid out in this indictment, is brazen and wide-ranging, as is the idea that a District Attorney would so cavalierly trade on elected office for financial gain, said Michael Harpster, the FBI special agent in charge of the investigations, according to the Justice Department.

“When elected or appointed officials stray from their sworn oaths, they must be held accountable. Combating public corruption remains the FBI’s top criminal priority,” Harpster added.

Williams is scheduled to be arraigned Wednesday afternoon.

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