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  1. #1
    Super Moderator Newmexican's Avatar
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    Wealthy pro athletes, musicians exploit tax loopholes to drive up rates for the rest

    Wealthy pro athletes, musicians exploit tax loopholes to drive up rates for the rest of us

    Watchdog senator’s report raises questions about Kanye West, Lady Gaga tax-exempt foundations

    The tax code is so peppered with special giveaways that companies such as Facebook end up getting refunds, and high-profile athletes and artists use their tax-free foundations to give friends jobs while avoiding taxes — all leading to higher income tax rates for the rest of us, Sen. Tom Coburncharges in a new report being released Tuesday.

    Baseball owners are able to claim their players “depreciate” over time, the same way farms are able to claim their tractors depreciate, thus entitling the already wealthy sports team owners to tax breaks that can offset much of the cost of operating a team. Meanwhile, sports leagues such as the NFL, a billion-dollar enterprise, are formed as tax-exempt organizations.

    Mr. Coburn, Oklahoma Republican, is unveiling the report even as his colleagues are pushing to quickly pass a package of breaks for everything from wind turbines to subway ridership to tuna canneries.

    “If you support making the tax code fairer and flatter, voting to revive expired tax giveaways for special interests has the exact opposite consequence,” Mr. Coburn said in a statement Monday, just ahead of the release of his report, entitled “Tax Decoder.”
    The senator, who is retiring at the end of this year, said he hoped the report, which runs to more than 300 pages detailing hundreds of tax breaks, would serve as a blueprint for his colleagues to revamp the tax code after he’s gone.
    But the appetite seems slim for now.

    The bill to extend nearly four dozen special breaks for another year cleared the House easily last week, 378-46, and is headed for a similar drama-free vote in the Senate this week. It comes at a total cost of $81.4 billion in lost revenue in 2015.

    Revamping the tax code and slicing out special interest breaks is a favorite rallying cry for political leaders on both sides of the aisle, and everyone from President Obama to House Speaker John A. Boehner had said a deal should be possible. But what’s a valuable tax break to Mr. Boehner is a corporate giveaway to Mr. Obama, and vice versa, leaving little room for compromise.

    Senate Democrats and House Republicans had thought they’d reached agreement on a smaller deal making many of the business breaks permanent so that Congress wouldn’t have to revisit them every year, as it’s doing once again in a year-end crush of legislating.
    But a veto threat from Mr. Obama scuttled the deal and left bad feelings on both sides.

    “How often do you hear a president threaten a veto of negotiations? And how often do you find that extraordinary threat ratified by people who’ve been involved in the negotiations?” said Sen. Orrin G. Hatch, the Utah Republican who will assume the chairmanship of the Senate Committee on Finance next year.

    Meanwhile, even as they call for a flatter tax code, House Republicans last week congratulated themselves for passing a new tax break for disabled Americans, allowing them to save money tax-free to use for schooling, medical expenses or special transportation needs.
    It’s similar to flexible savings accounts, or FSAs — a program Mr. Coburntakes aim at in his new report. At a cost of nearly $35 billion last year, FSAs are one of the big-ticket health care breaks. But Mr. Coburn said there’s evidence that rather than encouraging consumers to shop around, the breaks serve as an incentive to pay more. In one case pulled from news reports, a man said the break allowed him to buy Dolce & Gabbana eyeglasses rather than the “no-name glasses” that were covered by his insurance.

    Mr. Coburn didn’t dislike all tax breaks. He said health savings accounts, or HSAs, which are similar to FSAs but strictly regulated to apply to approved medical expenses, are a key incentive to encourage Americans to take control of their health spending.
    “Congress should continue to monitor the effectiveness of HSAs going forward, but there appears to be little need for reform at this time,” he concluded.

    Programs he did want to ax include:

    The “parsonage housing allowance,” which he said enabled clergy to build million-dollar homes for themselves while double dipping on tax breaks, collecting housing stipends as tax-free income and then getting the extra parsonage break.
    Sports team owners who can claim a depreciation tax credit on their players, arguing that, just like equipment, the players’ worth decreases over time.
    Athletes and Hollywood stars who form tax-exempt organizations that they then use as tax shelters, throwing parties or paying employees’ salaries from the tax-exempt accounts while dedicating almost no money to charitable works.

    Mr. Coburn, citing news investigations, said singer Kanye West’s foundation spent more than $1 million in 2009 and 2010 but “gave virtually nothing” to charity. Fellow performer Lady Gaga’s Born This Way Foundation raised $2.6 million but only gave away $5,000 in grants, Mr. Coburn’s report says. She defended her foundation after the reports surfaced, saying her foundation runs its own projects rather than paying grants to other organizations to do good works.

    Mr. Coburn said he tried to find fellow senators who would sponsor a bill to halt tax breaks to sports leagues with income of more than $10 million a year, approaching more than a dozen colleagues. Just one, Sen. Angus S. King Jr., Maine independent, agreed to sign on, Mr. Coburn said.“When the office of a Democrat senator was asked to choose a tax credit we could target together, the senator’s staffer likened killing tax giveaways to ‘clubbing baby seals,’” Mr. Coburn said in the report.

    http://www.washingtontimes.com/news/...=all#pagebreak


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    Super Moderator Newmexican's Avatar
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    Tax Breaks for Celebrities, Luxury Goods, Gambling Losses Cost Gov Billions

    10:13 PM 12/09/2014
    PETER FRICKE
    Contributor

    Oklahoma Republican Sen. Tom Coburn released his latest report chronicling government waste on Tuesday, highlighting giveaways littered throughout the tax code.

    In a press release, Coburn said the report, titled “Tax Decoder,” reveals “more than 165 tax expenditures worth over $900 billion this year and more than $5 trillion over the next five years.”

    (RELATED: Coburn Identifies $345 Million in Corporate Subsidies)

    “As a result of all of these loopholes and giveaways,” Coburn says, “nearly half of American households pay no federal individual income tax, including over a thousand with an adjusted gross income of $1 million.”

    Among the giveaways identified in the report are deductions for gambling losses, credits for movie producers, shelters for the rich and famous and even deductions for sports team owners who claim their players’ skills depreciate as they age.

    “The real beneficiaries of many tax giveaways end up being not the intended recipients who need relief, but those who are already well-off,” Coburn says. “Taxes should not be determined by who has access to the craftiest accountants, lobbyists, and politicians.”
    “Ideally,” Coburn argues, “Congress would throw out the entire tax code and start over, but at the very least the code should be made simpler, fairer, and flatter,”just as members of both parties have been promising to do for years.

    Despite such rhetoric, Coburn asserts that Washington politicians tend to become hesitant when faced with cutting specific tax expenditures, because “the tax code has become a powerful and elaborate system of rewards and punishments used to coerce Americans and manipulate the economy.”

    (RELATED: Reagan Budget Chief: Crony Capitalism ‘Thoroughly Embedded’ in Washington)

    Should lawmakers decide to take serious action on tax reform by eliminating loopholes and lowering rates, though, Coburn says his report “provides a list of options for Congress to streamline and simplify the tax code to achieve that goal.”

    Some of the most egregious tax expenditures identified in the report, and therefore the lowest-hanging fruit for Congress, are those awarded to millionaires, businesses and celebrities.

    “From deductions for yachts and second homes to tax credits for purchasing luxury cars, and write-offs for gambling losses, the tax code is spending billions of dollars subsidizing the upscale lifestyles of the well-off,” Coburn claims.

    Deductions for gambling losses alone totaled $4.8 billion in 2009, while “nearly 9,000 millionaires claimed a total of $67.7 million in residential energy credits in 2012,” some of which were even used to upgrade vacation homes.

    Additionally, “of the approximately $1 trillion in tax expenditures in the code, an estimated $148 billion will be directed toward corporations in FY 2014,” even though the total corporate tax bill for 2014 is estimated to be only $321 billion.

    (RELATED: GAO: Corporations Saving $181 Billion Through Tax Breaks)

    Facebook, for example, “reported a combined $429 million refund from their federal and state tax filings” in 2012, allowing them to virtually eliminate their tax bill for that year. And while Facebook may be an extreme example, Coburn says that abuse of the business expense deduction is “rampant” throughout the corporate world.

    In one case cited in the report, an individual attempted to deduct the salary of his rental-property manager, who also happened to be his live-in girlfriend. In another, a couple tried to write off the cost of traveling to their rental condo aboard a private plane by saying they were “monitoring” the property.

    The report also claims that many celebrity-run charities give little to the causes they ostensibly represent while lining the pockets of their already-wealthy owners, citing the example of the Wyclef Jean Foundation, which “paid the singer $100,000 in 2006 to perform at his own benefit concert.”

    “The charitable deduction was intended to encourage generosity for causes like education and medical research,” Coburn points out, but “is instead subsidizing donations that support the lavish lifestyles of Hollywood elites at the expense of U.S. taxpayers.”

    http://dailycaller.com/2014/12/09/ta...-gov-billions/


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