Freedom Line Blog

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez. 

View more of Michael Ramirez’s cartoons on CFIF’s website here.

Former U.S. Rep. Artur Davis has done a smart, well-reasoned analysis of the underlying meaning(s) of Barack Obama’s week of scandals. He rightly notes that “Obama’s administration struggles mightily with the threshold concept of accountability.”

And:

The emerging argument, which seems to be that the Obama White House was detached enough to rely on the expertise of its department heads to resolve the dilemmas around each event in the current spotlight, would sound strained even if it came during a presidency that was famously disengaged….

More fundamentally, the “we left it to our division heads defense” would not excuse any executive leadership in the public or private sector from the imperative of setting values and standards of conduct for decisions made inside the organization’s own walls, and policing the extent to which those standards survive.

It is hard to escape the conclusion that at a minimum, if you credit its defense, that this government seems more rudderless than could have been imagined eleven days ago.

Also of great note, Davis rightly focuses on a supremely important facet of the Benghazi scandal that the establishment media seems to have willfully ignored, even though it is one of the most despicable aspects of the administration’s longer-term response to the attack:

Even if one buys the rationalization that Benghazi was only so much internecine backbiting between two old rivals, the State Department and CIA, that rationalization entirely omits the evidence that a career diplomat was punished for raising internal questions about security in advance of the Libyan attack, as well as about the unofficial chronicle, or “talking points”, regarding what led to the assault. What kind of leadership is oblivious to the immediate fortunes of a reasonably high ranking whistleblower?

Of course, this is hardly the first time that this administration has tried to bully whistleblowers. They did it to Justice Department whistleblowers J. Christian Adams and Christopher Coates; they did it to five (!) different Inspectors General; and they at the very least undermined a whistleblower in the St. Paul, Minnesota case that has so badly (and rightly) harmed the confirmation prospects for Labor Secretary nominee Thomas Perez.

Anyway, Davis has a lot of other insights well worth reading in his post.

Jay Sekulow, chief counsel for the American Center for Law and Justice, says the group is readying a federal lawsuit to be filed next week on behalf of at least 25 conservative groups targeted by the IRS, in an interview with National Review.

On its website, ACLJ provides a list of sample questions the IRS asked various conservative applicants, showing clear instances of intrusion into out-of-bounds issues.

This likely will be the first of many, many lawsuits against the IRS.

A friend who wishes to remain nameless, somebody without known connection to the stories herein, first  identified the two “canards” I discuss below.

The background is this: In addition to deliberately targeting conservative groups to keep them from receiving tax-exempt status, the IRS also — according to an increasing number of reports — was also increasingly harassing existing conservative groups with invasive, expensive audits, no matter how thin (or non-existent) the reasons for suddenly claiming an audit was appropriate. It turns out that the good folks at the venerable Leadership Institute were among those targeted for such an audit, as LI reports here.

What the IRS asked the Leadership Institute

Copies of applications for internships and summer programs; to include: lists of those selected for internships and students in 2008.
– In regards to such internships, please provide information regarding where the interns physically worked and how the placement was arranged.
– After completing internships and courses, where were the students and interns employed?……

This is just one of the examples LI gives in its report of the obnoxious and irrelevant data demanded by the IRS. It’s also chilling: What was the IRS planning to do with its list of names?

Quote from LI founder and president Morton Blackwell: ”

“The IRS’ indefensible behavior is worse than we first thought, as it targeted both new and existing conservative groups in politically motivated attacks,” said Morton Blackwell, president of the Leadership Institute. “Fortunately my Leadership Institute had the resources to stand up to the government’s bullying and intimidation. Other groups, including grassroots and tea party groups we’ve helped train, did not.  Defending ourselves from the harassing audit cost my organization more than $50,000 in legal fees alone.”

This is inexcusable. Anybody who has ever dealt with Morton Blackwell knows just how fastidiously he has observed all relevant regulations for the more than three decades LI has been in operation. He will not discuss partisan political organizing on his LI email. As the longtime Republican National Committeeman from Virginia, Blackwell is well known for leaving LI’s offices to go use a phone elsewhere in order to avoid using LI phone lines when on RNC calls. Again and again and again, Blackwell has made clear to everybody at LI, and all those who deal with him while he is in LI offices, that certain rules prohibit LI from direct partisan or overtly political activity. After thirty years of this, surely the IRS should have known this about the IRS.

Nonetheless, the audit came. And it was unlawfully invasive. Indeed, so obsessed was the IRS with LI that it even demanded the following from The Hawaii Tea Party in a January 26, 2012 letter: “Provide details regarding your relationship with the Leadership Institute. Provide copies of their training material.”

Huh? Why is a Hawaii Tea Party being asked about connections with LI, as if LI is some nefarious organization? This is sickening.

NOW, HERE’S THE RUB: There have been two excuses offered by hardened lefties for why (they say) the IRS scandal isn’t really much of a scandal at all. First is the idea that the poor overworked IRS employees were just trying to figure how to deal with such a huge surge in 501(c)(4) applications and that it was all these new requests that caused the problem. But… the audits of LI and others (granted, the audits came from a different division, but that means there should be ANOTHER investigation, of those) had nothing to do with new applications. And, as this story shows, even the new applications weren’t rising. So this whole excuse completely falls apart.

Secondly, to quote my aforementioned friend: “LI is a 501c3. The other lefty narrative has been that this is about 501c4s, these legal structures that have a new life since Citizens United. Lefty legal people say ‘501c3 law is SO WELL UNDERSTOOD and NO ONE UNDERSTANDS 501c4 law.’ So the Citizens United thing is a canard. This is just about using the IRS to intimidate enemies.”

I hope that makes sense. In other words, the argument that the IRS officials were confused because they were dealing with different regs (the c4 ones) than they were accustomed to (the c3 ones) is absurd, at least as far as the audits of LI and others were concerned — because LI was a c3!

Finally, it’s worth noting that the 501(c)(4) spending was not, despite Obama’s and others’ complaints, driven by the famous Citizens United case that Obama loves to castigate; instead, even according to the left’sown favorite election-related lawyer, Rick Hasen, that spending rose as a result of the Wisconsin Right to Life case from two years earlier.

In all, there remains no excuse for the targeting of Tea Parties, of other conservative organizations, or the auditing of conservative organizations and individuals. All the excuses offered so far are as thin as gossamer, and not even as strong.

So the IRS singled out conservative citizens and organizations for persecution, while giving liberal counterparts a “pass,” in the words of USA Today.

As we note this week in our commentary “The IRS, Campaign Finance and Freedom of Association,” the scandal proves the inherent danger of federal micromanagement of American citizens’ private political activity.  As the Supreme Court observed in NAACP v. Alabama (1958), revelation of an organization’s members or supporters exposes them to reprisal, harassment and threat.  We now have a perfect illustration.

According to many liberals, however, the problem isn’t too little citizen privacy but too much.  Already during today’s House Ways and Means Committee hearing on the IRS practices, liberals such as Richard Neal (D – Massachusetts) and Charlie Rangel (D – New York) have asserted that Citizens United is the real problem.  Apparently, forcing citizens to disclose even more of their First Amendment activity to government will transform abusive IRS bureaucrats from perpetrators into saints.

Their agenda is wholly irrational, but all too predictable.   We must fully investigate and expose the IRS abuse, but we must also ensure that the longer-term takeaway is more individual freedom for American citizens, not less.

In the second update today on items I wrote about last week, it turns out that what I described as the “heroic organization True the Vote” was one of those conservative groups targeted by the IRS. The Washington Post, in an eye-opening report co-written by my old friend Juliet Eilperin (yes, conservatives can have liberal friends), confirmed the apparent abuse of True the Vote  while showing the IRS scandal extends well beyond “low level IRS employees in Cincinnati.”

True the Vote is dedicated to careful and fair application of voting laws. It should be praised, not targeted for abuse by rogue bureaucrats (or by the administration that employs them).

Sally Pipes identifies an “escape hatch” for small businesses trying to avoid the costly employer mandates threatening employers with costly insurance premiums or fines:

A RAND analysis found that a fifth of firms with 50-200 workers had self-insured by 2010, the year Obamacare became law — up from 14 percent of such companies in 2006.

A survey by Munich Health North America found that 82 percent of health insurance executives report seeing growing interest in self-funded coverage among employers. A California-based benefits consulting firm that helps companies self-insure told Kaiser Health News that its business has doubled in the past six months. And Cigna says that it saw self-coverage for small businesses grow by a fifth last year.

Companies with younger, healthier workforces are leading the way. After all, with their population of low-risk employees, they have the most to gain. And that’s bad news for Obamacare’s exchanges.

The problem for ObamaCare is that the only way health insurance premiums will be (theoretically) affordable is if legions of young, healthy people join the exchanges’ insurance pools. That’s because they are needed to pay into the system so that older and sicker people can draw down the benefits.

But if small businesses opt to self-insure – especially if they are newer businesses more likely to employ younger and healthier workers – then that will drain the ObamaCare pools of the very people who will make them (barely) affordable.

With this in mind, don’t be surprised to see an IRS or HHS rule come down that prohibits self-insurance to prop up ObamaCare’s exchange pools.

As with the so-called “family glitch,” it’s a ploy the Obama administration will be ready to use if its slapdash law continues to produce embarrassing unintended consequences.

Tim’s column on corporate tax rates is superb. But I’d go even farther.

Before I explain, I’d like to highlight this part of Tim’s column, which is right on target:

At one point Lew stated that any reform must bring in more revenue to feed out-of-control federal spending, and suggested that although America’s official tax rate is too high, the actual effective rate is “much lower.”  Senator Portman helpfully instructed him that even the U.S. effective rate far exceeds the industrialized world average.

We must also beware Lew’s other caveat above.  Liberals will attempt to exploit corporate tax reform as a source of new revenue for the federal government.  Our budgetary problem, however, is not insufficient revenues but extravagant spending, as illustrated by the fact that if we simply returned to 2005 spending levels we would have enjoyed a $100 billion surplus last year.

The deficit problem clearly is caused by over-spending. But one thing I would emphasize is that cutting corporate rates probably would not add anything to the deficit; indeed, the sort of parallel tax cut, that of cutting capital gains tax rates, has consistently resulted in greater total revenues from capital gains actually coming into federal coffers. The added economic activity really has “paid for itself,” and then some.

But, as I said, I would go farther. As I’ve written here and elsewhere before, I would completely eliminate corporate income taxes. Gone. Kaput. Finis. Nada. And, obviously, if the rate is zero, there would be zero revenues from that particular tax, so of course the “more than paid for itself” argument would go out the window.

But that doesn’t mean eliminating the tax would cost much or any revenue, total, to the feds. Indeed, it was a left-leaning, former Democratic Capitol Hill budget staffer who first suggested to me the idea of completely eliminating this tax, and he, as a number cruncher, explained that he thought it would be almost revenue neutral. Some of the “lost” taxes would be recouped immediately via higher receipts from capital gains taxes and dividend taxes (because corporate profits obviously would be expected to rise), and some would be recouped through substantially higher economic growth, and some would be recouped due to a huge rush of companies repatriating their business operations. And so on, as I’ve explained elsewhere — including some savings on the spending side due to cutbacks in no-longer-needed IRS enforcement.

If I were a politician rather than a journalist, I would make this proposal part of my platform — and dare any demagogue to criticize me for it as long as it the criticism was done in open debate.

Finally, it’s worth noting that other very smart people have pushed the same idea, including Megan McArdle, formerly of The Atlantic and now apparently of The Daily Beast.

Last week Byron York highlighted two important Nanny-state features of Obamacare when it gets fully implemented in 2014:

Administration officials and Democrats in Congress have stressed that Obamacare does not permit the IRS to garnish wages or seize cash and assets from taxpayers.

What they mention less frequently is that the IRS has another way to get the money. About three-quarters of U.S. taxpayers receive refunds after filing their returns each year, with the average refund nearly $3,000. After 2014, those people will discover the IRS can take the penalty out of their refunds.

…

The IRS will also determine who is eligible for taxpayer-financed subsidies to purchase health care on the exchanges that will be set up in every state. Anytime anyone’s situation changes — a raise, a new job, a move to another state — that person will be required to report it to the IRS for the purpose of recalculating their eligibility.

This is not a small group. Obamacare will give tax credits for the purchase of health coverage to people who make up to four times the poverty level — at the moment, that’s $44,100 a year for an individual and $88,200 for a family of four. Those millions of Americans had better keep the IRS informed of their status every step of the way.

So, failure to buy a product that the feds approve of can get your tax refund wiped out, while failure to update your status with the IRS like it was Facebook can get you fined?

These are the kinds of details that need to be hammered home in the upcoming debates by Romney and Ryan so that voters can know what a vote for Obama – and Obamacare – really means.

It’s no secret that Chief Justice John Roberts’ opinion in the ObamaCare case last week is already helping President Barack Obama on the campaign trail by giving the unpopular law constitutional legitimacy.

But Fox News reports that Roberts’s opinion may also help the President make another boast: ObamaCare is a job creator.

Much bigger than the mandate itself are the insurance exchanges that will administer $681 billion in subsidies over 10 years, which will require a lot of new federal workers at the IRS and health department.

“They are asking for several hundred new employees,” Dorn said. “You have rules you need to write and you need lawyers, so there are lots of things you need to do when you are standing up a new enterprise.”

For some, though, the bottom line is clear and troubling: The federal government is about to assume massive new powers.

According to James Capretta of the Ethics and Public Policy Center, federal powers will include designing insurance plans, telling people where they can go for coverage and how much insurers are allowed to charge.

“Really, how doctors and hospitals are supposed to practice medicine,” he said.

The health department is still writing regulations, which can be controversial in and of themselves. One already written, for instance, requires insurance plans to cover contraception. It has been legally challenged by Catholic groups in a case likely to end up in the Supreme Court.

So, there are likely to be many more chapters to go in the saga of Obama’s health care law

And none of it would be possible without the Chief Justice.

Remember when the Obama Administration proposed thousands of new Internal Revenue Service (IRS) agents to enforce ObamaCare’s mandate that American businesses file 1099 tax forms every single time they spent over $600 with any supplier?  The resulting uproar was loud and justified.

Unfortunately, reports suggest that Obama’s Department of Education (DOE) similarly seeks to snoop through private IRS records to enforce its destructive “Gainful Employment Rule” against for-profit career colleges.

We at CFIF have chronicled the Obama Administration’s ongoing effort to cripple for-profit colleges via that rule, which would limit financial aid to students attending career colleges based upon arbitrary income data.  Along the way, we reported allegations of collusion between DOE personnel and short-sellers who had wagered that for-profit college stocks would decline.  Those allegations were sufficiently grave to trigger investigation by Senators Tom Coburn (R – Oklahoma) and Richard Burr (R – North Carolina).  Then, the GovernmentAccountability Office (GAO) withdrew, then revised and republished a defective study originally released last summer involving undercover “students” sent to capture information on for-profit colleges.  The GAO’s revisions all slanted in one direction – the original report inaccurately cast career colleges in an unfavorable light, while the revisions indicate that the GAO’s undercover students may have intended to entrap career college admissions personnel.  According to the GAO’s own estimate, only 1 percent of reports require correction, and the statistical likelihood that all of its flaws skewed in the same direction (unfavorably toward for-profit colleges) was 1 in 65,536.  Tellingly, the stock value of for-profit colleges reportedly fell 14%, or $4.2 billion, following the GAO report.

Now, instead of simply using aggregated, readily-available Bureau of Labor Statistics (BLS) data to enforce their Gainful Employment Rule, the DOE seeks to access private, individualized IRS records.  Not only does this intrude upon individual citizens’ private information, it serves to deter Americans from exercising free will in choosing the colleges that best fits their needs.  Additionally, as noted by Cesar Conda in The Washington Times, the Obama DOE’s effort constitutes a new get-rich scheme for the trial lawyer lobby:

The Department of Education should admit that it is using the Internal Revenue Service to send a not-too-subtle message to prospective students:  Attend a for-profit college, and risk that your private financial data may be analyzed to ensure that all your financial transactions are accounted for and allowed.  Thus, the Department of Education, rather than putting the interest of students first, is forcing hardworking adults to go through yet another hurdle to pursue upward mobility.  In their war against individual freedom and personal choice, the nanny bureaucrats never rest; they also roll out the red carpet for the trial lawyers. Clearly, the actual impact of such tracking of student incomes by the IRS will create a new business opportunity for class-action law firms, which will use these new student financial statistics, assembled and provided the Department of Education, to justify billion-dollar litigation.”

So in addition to crippling private career colleges that it considers politically unfavorable, the Obama Administration apparently wants to pore through students’ confidential IRS individual data.  Congress must maintain its current effort to defund this Obama Administration abuse, and Americans must support that effort and maintain its resolve.

Never underestimate the power of positive thinking.  With a level of spin only a well-heeled campaign operative could rival the IRS is trying to allay small business owners’ fears of an “avalanche” of new1099 reporting requirements that life under the new rules won’t be so bad.

With an assist from CNN, here’s IRS Commissioner Douglas Shulman’s attempt to slather lipstick on a pig:

The IRS will have broad leeway to interpret the rules — and it’s already showing signs that it will look for ways to staunch the paperwork flood.

In a late May speech before the two payroll industry trade group, IRS Commissioner Douglas Shulman announced a major exception to the new rules: The IRS plans to exempt transactions made through credit and debit cards. A separate reporting requirement kicks in next year that will cover card transactions and help the IRS spot unreported payments made through those channels, “so there is no need for businesses to report them as well,” Shulman said. “Whenever a business uses a credit or debit card, there will be no new burden under the new law.”

Geez, Doug, I can’t tell you how much better I feel knowing that no matter when and where I swipe my business card I don’t have to report it because you already know about it.  What a relief!  Now that you can spot every single transaction I make, I’m sure the helpful agents at the IRS won’t hold it against me if I forget to include one of those payments on my tax return; right?

I mean, you’re trying to help small business owners by relentlessly monitoring all of our electronic transactions; aren’t you?  After all, you’ve got “broad leeway” in interpreting your new powers…

Apparently, that’s the case since the current version of ObamaCare doesn’t allow the IRS to exercise its usual methods of coercing compliance, like imposing tax liens or levies, seizing property or seeking jail time against delinquent taxpayers.  But don’t rest too easy.  Since health care is now a federal “right,” you can bet on the good folks in Washington, D.C., conjuring up amendments to guarantee that you and every other American citizen will enjoy it to the fullest extent the law requires.

H/T: USA Today

It’s April 15th – the date that millions of Americans who waited till the last possible day to file their tax forms with the IRS can wait no longer to feed the insatiable appetite of federal (and state) tax coffers.  If you are like most of us, you try to struggle through the filing yourself — coffee and documentation at the ready — ultimately giving up and hiring an accountant, a tax-filing firm or downloading an online program.  In any event, it is an annual chore.  A monumental pain.  And an expensive one, at that — especially if you get it wrong and end up owing penalties.  Well, guess what, fellow tax-payers?  You are not alone!

The Hill newspaper reports that “few members of Congress prepare their annual tax returns, instead relying on professional preparers…”  The article details how even Ways and Means Committee members — the very ones responsible for writing the tax code — need professional help to file their annual taxes. Of the 28 respondents, only one — Got that? One — Member of Congress said he did his returns by himself (and he was an accountant for 12 years).

During an interview on C-SPAN’s “Newsmakers” program back in January, IRS Commissioner Douglas Shulman announced that he doesn’t prepare his own tax returns either.  Why?  Because, at least in part, he finds the tax code to be “too complex” to prepare them himself.

If that is not a case for tax reform, we defy you to find a better one.

Below is one of the latest cartoons from Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

Americans who love the IRS are giddy with excitement over the pending Sunday House vote on ObamaCare, because enforcement of its mandates will be delegated to the agency. 

Don’t have government-approved health insurance?  The IRS will help you get some.  Now. 

Not paying your fine for not having government-approved health insurance?  The IRS will take it.  Don’t have it?  Hey, the IRS knows how to seize assets and sell them.  What do you mean you “need your car to get to work?”

Not paying the additional taxes on capital gains imposed by the bill?  Who do you think you are,  Treasury Secretary Tim Geithner?

Can’t understand why you must pay the additional taxes now and only get those awesome promised benefits some years down the road?  Take it up with the President.  Maybe he’ll read your letter on TV.  The IRS is just the new national health care police force.  It just does what it’s told to do, not make policy.  You better do the same.

Think the IRS is not going to have the manpower and money to find you and fine you?  Think again, meathead.  Ten billion dollars in new funding and almost 17,000 in new enforcers will take care of that.

Think you can plead illness and hide out in the hospital?  Well, maybe yours will be one of the very few that can afford to take new patients.

Think it’ll help to take your meds before your visit with the IRS?  Might ought to get your prescription soon, because your doctor is leaving to practice in Indonesia.

In a public relations effort to build even greater support for its new duties, the IRS is considering a national public school contest to help design the imposing new uniforms it will need to make sure its authority is understood.  To simplify the contest, the uniform color has already been chosen:  brown.

Although no final decision has yet been made for the new IRS slogan, we are hearing that “resistance is futile” is the most popular choice at the moment.

The Commissioner of the IRS doesn’t even do his own taxes.   After all, the Tax Code is large, incomprehensible and it takes days to prepare a detailed return.

As IRS Commissioner Doug Shulman told C-SPAN this weekend, “I’ve used one [tax preparer] for years.  I find it convenient.  I find the tax code complex so I use a preparer.”

Thanks for those words of hope Commissioner Shulman.  If you can’t do your own taxes, maybe it’s time to hold off on the thousands of regulations that the IRS issues every year.

Not surprisingly, even members of the tax-writing House Ways and Means Committee use a “professional” to complete their tax returns.  Nobody in Washington, D.C. appears to know what’s going on with our Tax Code.  That’s not surprising at all.