IRS, Foreclosures, etc.

by Chris Sturr | May 23, 2013

Protest Potatoes

Protest Potatoes

(1) David Cay Johnston on IRS “Scandal”:  There was a very good Salon.com piece about this, The real IRS scandal: Targeting by class, quoting David Cay Johnston. Here are key nuggets:

It’s pretty simple, then, to figure out what took place. The IRS, faced with the enormous task of dealing with a surge of 501(c)(4) groups taking advantage of an often contradictory law, performed triage by taking the path of least resistance – going after the most obvious targets, who didn’t have the resources to artfully stay within the tax laws, or to fight back against invasive reviews. They shied away from the heavily lawyered-up big-money groups, and instead focused on battles they thought they could win.

This has precedent within other parts of the IRS. According to data from the Transactional Records Access Clearinghouse at Syracuse University, IRS audits of the largest and richest corporations have steadily declined since 2005, down 22 percent in the ensuing four years and even more from 2011-2013. In the same period, the agency accelerated its scrutiny of small and midsize corporations. Since 2000, the IRS has been more likely to audit the working poor, individuals and families making under $25,000 a year, than those making over $100,000 annually. The middle class received disproportionately more audits throughout the past decade as well. An IRS unit formed in 2009 called the Global High Wealth Industry Group, designed to give special attention to tax compliance of high-wealth individuals, performed exactly two audits in 2010 and 11 in 2011.

Salon asked David Cay Johnston, author of many of the above-linked reports, whether it was fair to assess the IRS fixing its attention on more vulnerable populations as a pattern. “We know broadly that when government takes enforcement actions, it tends to go after the little guy,” he replied. Johnston gave the example of so-called financial fraud prosecutions that target penny-ante operators instead of the largest Wall Street institutions. And just as the Justice Department tends to avoid suspects with more clever lawyers, the IRS could shy away from more fearsome individuals and groups as well.

The rest is worth reading.  And here is David Cay Johnston on Democracy Now!.

The other big tax news, of course, is the spectacle of Apple’s Tim Cook getting hauled before a Senate subcommittee about Apple’s tax evasion and lecturing them on how the corporate tax code should be changed. So corporations shape the tax code to the point where they can legally avoid paying taxes on billions, and when criticized for this they demand that they be able to further dictate the tax code.  Anyhow, I haven’t seen anything great on this–suggestions would be appreciated.  (I heard a kind of crappy interview with Carl Levin on Marketplace–Kai Risdall kept getting Levin to admit that he was responsible for Apple’s sins, because he’s been a senator for so many years.)

(2) Voices of Foreclosure Fraud:  I keep meaning to post a link to the incredible Naked Capitalism post from a week or so ago, Voices of the Harmed Borrowers on Rust Consulting.  It’s really moving.  Rust Consulting is the firm that is supposed to send out settlement checks from the botched Independent Foreclosure Review.  They are giving people the runaround bigtime, and people have found an outlet in Naked Capitalism for their stories.

For good news on this front, check this out:  500 people from a group called the Home Defenders League protested “too big to jail” at the Department of Justice, with 27 arrested.  Let’s have more of this, please.

(3) Tim DeChristopher Released:  Climate activist and former University of Utah econ major (and probably D&S textbook user) Tim DeChristopher was released after 21 months in federal prison.  (Info about him from the last time I posted about him, here.) Here’s an interview with him on the Real News Network. We hear he’s coming to our neck of the woods, as a student at Harvard Divinity School.  And there’s a new documentary out about him, Bidder 70.

(4) Monsanto Targets Scientific Journals:  Another great piece from sometime D&S author Jonathan Latham (he wrote our March/April 2012 cover story, Way Beyond Greenwashing) of Independent Science News, on how Monsanto is suppressing scientific research by placing sympathetic scientists on a journal’s editorial board. The piece (co-authored by Latham and Claire Robinson)  is called The Goodman Affair: Monsanto Targets the Heart of Science, and it is well worth reading.  The piece mentions an earlier hair-raising case of big pharma company Merck getting scientific publisher Elsevier to publish a fake journal, including reprints of articles from other Elsevier journals, just so it could include Merck-friendly (and non-refereed) articles. The fake journal was called the Australasian Journal of Bone and Joint Medicine. Who would have suspected?

It all reminds me of the Rogaine & Braveheart–er, I mean the Rogoff & Reinhart affair, where elites’ handpicked economists plant a data-challenged non-refereed article in a leading journal and thereby influence policy.  Except that economics never really had much claim to being a science.  Speaking of which…

(5) More Heterodox Grad Students Pile onto R&R:  Some grad students from the University of Missouri at Kansas City (another of the great heterodox economics departments, and adopter of D&S textbooks), Matthew Berg and Brian Hartley, have found further flaws in Rogoff and Reinhart’s paper, in a post the the New Economic Perspectives site entitled Debt-to-GDP Ratios and Growth: Country Heterogeneity and Reverse Causation, the Case of Japan (Ultra Wonky).  Read if you dare.  (Actually, though it’s harder-going than the Herndon-Ash-Pollin paper, I could get the main points, and apparently in some ways it’s more devastating, from what I gather from the comments section.)

(6) More Retro Reports:  I mentioned that my friend Harry Hanbury is now with a great new project/organization called Retro Report, which looks back at how the news media screwed up media frenzies way back when.  They have two more short videos out, both of which are great:  The Legacy of Tailhook, and Crack Babies: A Tale from the Drug Wars.

That’s it for now.

–Chris Sturr

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