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Chronicle of the Conspiracy
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Saturday, January 21, 2006
A TAX WORTH AVOIDING Here's my SmartMoney.com column from yesterday.Want to save some money on your taxes? It turns out there's a tax you may be able to simply stop paying. And if you don't want to be that aggressive about it, just be patient — the tax is arguably illegal, and someday you'll probably get a refund as part of one of the largest class-action suits in history.
The tax I'm talking about is the federal excise tax on long-distance telephone calls. Under Section 4251 of the Internal Revenue Code, you now pay a tax of 3% on all your long-distance charges, month in and month out. The tax applies to your home phone, business phone and cellphone.
This tax was first imposed in 1898 as part of the War Revenue Act to pay for the Spanish-American War. That war ended in the same year, but the "temporary" tax hung around until 1902. Then it came back a dozen years later to raise money for World War I — and it's been in place pretty much ever since. Today, the federal government collects $6 billion a year from it.
But something very interesting has happened over the 108 years the tax has been around. Technology has changed the way consumers pay for phone services. Today, especially with cellphones, customers pay by the minute for phone calls, without regard to whether the call is across the street or across the country. But the way the 1965 law that enables the current version of the tax is written, the government can impose it only on calls charged on the basis of both time and distance.
The IRS has gone on collecting the tax on all calls, though, arguing that it doesn't have to follow the exact letter of the law, but rather what it sees as "the purpose and intent of the statute."
Over the last several years, in a gradually building movement that has remarkably gotten almost no publicity, an increasing number of taxpayers are refusing to pay the tax, or suing the IRS for refunds of past taxes. Let's see how they're doing it, and see how you can get a piece of the action.
The unlikely vanguard of the antitax movement is antiwar activists who see not paying the tax as one way to cut off the money that pays for the war in Iraq. They're not too worried about being dragged off to jail for nonpayment, either. They see what they're doing as a classic act of civil disobedience. According to the National War Tax Resistance Coordinating Committee, nonpayment is "relatively risk-free because the amounts are small."
The Committee also says your phone company isn't likely to cut off your service if you don't pay the tax portion of your bill. They claim, "IRS regulations...clearly state that the phone company is supposed to collect the tax, but has no power to enforce collection... Some companies have established special billing accommodations for war tax resisters and will provide you with a form."
Of course you don't have to be a war protestor to want to save a few bucks on taxes every month. So maybe you should just call your phone company and tell them you're not going to pay the excise tax anymore. Your phone company may be very happy to help.
According to the San Francisco Examiner, AT&T says "we believe this is an illegal tax." Ask them in writing to remove the tax from your bill, and they'll do it. "We'll go into our system and make an adjustment," AT&T says. But, they warn, "we will have to report you to the government."
If that makes you a bit too nervous, there are other approaches. Some companies, whose telephone tax bills add up to millions of dollars, have continued to pay, but have sued the IRS to get their money back. So far the IRS has lost no fewer than 10 of these lawsuits — but they just keep filing appeals and refuse to pay the refunds. However, the IRS is running out of appeals. At this point there's no place left to go but the Supreme Court.
Two weeks ago a class-action suit was filed by the prestigious law firm Baker & McKenzie, on behalf of RadioShack and an unnamed class of corporate and individual taxpayers. The suit seeks up to $9 billion for an enormous class of taxpayers including any individual or company who has paid the tax, regardless of whether or not they have filed refund claims.
The reason why the suit isn't seeking even more is that there is a three-year statute of limitations on IRS refund claims. According to attorney Jim Glass, whose blog has been providing the best ongoing coverage of this story, you can stop the clock on the statute of limitations by filing a "protective refund claim" for the past three years of taxes you've paid. Your tax preparer can help you do that easily.
It may be worth it, because my guess is it's only a matter of time before the IRS has to write a lot of people a lot of refund checks. After years of quiet protests and litigation that have received no publicity, suddenly this story is beginning to get some real attention.
This week, New York's Senator Charles Schumer publicly called for the IRS to make refunds to all cellphone users. In a press conference last Monday, Schumer said, "The courts have now made it crystal clear that this tax is illegal, and yet the IRS continues to put it on everybody's cellphone bill."
Liberal Democrat Schumer isn't normally a friend of tax cuts. But for this one, an open-and-shut IRS abuse which hits so many consumers right in the pocket book, he's making an exception. "The IRS asks all of us not to violate the law," Schumer said. "Well, now we're asking them the same."
Who knew? Liberals supporting tax cuts! War protesters hand-in-hand with big business! Apparently there's one thing that can still unite Americans — outrage over an unfair and illegal tax. This could be the Boston Tea Party all over again.
Just don't throw your cellphone in the water.
Update... An interesting letter from a reader:
I thought you might like to know that there are bills in both houses of Congress to repeal this tax - H.R. 1898 (1898, get it?) in the House, and S. 1321 in the Senate, sponsored by Rep. Gary Miller (R-CA) and Sen. Rick Santorum (R-PA) respectively. Americans for Tax Reform has been extremely active on this issue - in fact we consider it a major priority for this year. We currently have 181 cosponsors in the House and 14 in the Senate.
As far as Sen. Schumer goes, I'm glad he's on board with calling the IRS on its most likely illegal insistence on continuing to collect this tax on cell phone and long distance services in spite of numerous court rulings to the contrary, but he has not signed on as a cosponsor of repeal of the tax, nor do I expect him to do so.
Tom Readmond
Federal Affairs Manager
Americans for Tax Reform
Posted by Donald L. Luskin at 11:21 AM | link
Friday, January 20, 2006
DENIAL OF SERVICE ATTACK MASQUERADING AS FREE SPEECH Here's an example of the kind of lynch mob tactics imposed on the media by leftist pressure groups. Ever wonder why the liberal media considers itself "moderate"? This is your answer. From E&P:Jim Brady, executive editor of The Washington Post's Web site, who took down a popular reader blog Thursday after it overflowed with harsh messages about Ombudsman Deborah Howell, said the blog would likely return in the future..."We got about 1,000 posts and at least 150 to 200 were using either profanity, hate speech or personal attacks," Brady said about the responses to Howell's controversial column last Sunday, in which she stated that indicted lobbyist Jack Abramoff gave money to both political parties, when most research shows he only gave directly to Republicans...When Howell posted a follow-up note on the site today, saying she should have written that Abramoff "directed” money to both parties (in the Democrats' case, via Indian tribes), Brady said the responses to the blog returned at an even faster rate...
Posted by Donald L. Luskin at 1:47 PM | link
HOW ON EARTH? Another excellent dose of economic truth-telling from Alan Reynolds, this time blasting the recent New York Times Magazine piece celebrating the minimum wage.
"What Is a Living Wage?" Jon Gertner's overstuffed cover story in The New York Times Magazine, offers a guess that, "Probably only around 3 percent of those in the workforce are actually paid $5.15 an hour or less." The last two words -- "or less" -- are absolutely critical, yet totally ignored as usual.Thanks to reader Jameson Campaigne for the link.The Internet leaves no excuse for guessing about what is "probably" true. Just type "Statistical Abstract" into Google, and then click on Section 12, Table 636: "Workers Paid Hourly Rates."
Table 636 reveals that only 520,000 were paid the $5.15 federal minimum wage in 2004. That was merely four-tenths of one percent (0.4 percent) of total non-farm civilian employment -- far short of Gertner's 3 percent adventure in probability. Nearly three times as many U.S. workers (1,483,000) were paid less than the minimum wage. Among full-time workers, only 177,000 earned the $5.15 minimum wage in 2004, while 3.3 times as many (583,000) earned less than $5.15. As I mentioned, the words "or less" after $5.15 are there for a reason.
Whenever the minimum wage has been increased, the most obvious result was an increase in the number earning less than the minimum.
If we ignore the 45 percent of full-time U.S. employees who earn salaries rather than wages, it might almost be true that "around 3 percent" of those paid by the hour are actually paid $5.15 an hour or less. But that is only because 2 percent of those paid by the hour earn less than $5.15 an hour. And that raises an obvious question: How on earth is an increase in the minimum wage supposed to help the nearly 1.5 million people who are not earning that much in the first place?
Update... From reader Dale Knapp (with reader Dennis Beezley making a related point:
I found your note on Alan Reynolds' comment about the New York Times and the minimum wage interesting. As a researcher with a masters degree in economics, I work with the Bureau of Labor Statistics data quite often and thought I would look at the figures myself. What you find is that you can get yourself in trouble if you just use the data without thinking about what it means.I went to the BLS site and looked at the latest tables on the minimum wage (here and here). If you just take the top number, you get the 3% and you might draw some conclusions. However, the minimum wage law does not apply to everyone. For example, employees of seasonal and recreational enterprises may be exempt. More important, the minimum wage for tipped employees (waiters, waitresses, etc.) is $2.13 per hour.
Suppose we subtract out "food preparation and serving related occupations" from the totals? Now, some of these employees are subject to the $5.15 minimum wage, but most are likely subject to the $2.13. When you discount these employees, you find only 0.55% of workers earn at the minimum and 0.66% earn below (total 1.2% which is less than half the 3% Times figure).
Interestingly, the BLS figures also report private sector employees. If we take the total and subtract the private sector we are left with the public sector (government). What you find is that 1.2% of government employees earn at or below the minimum wage!!!
Posted by Donald L. Luskin at 11:36 AM | link
TOO BIG TO SUCCEED Microsoft, Wal-Mart, any company that achieves true distinctive leadership in its field, becomes a target of public suspicion. Now Google -- just a few short years ago an endearing and scrappy upstart -- is starting to get marked for public destruction. It starts out with jokes. In a couple years, it'll be an antitrust pogrom. At least, in the meantime, the jokes are funny. From the "Google Robot" FAQ:
Does the Google Robot respect my privacy?Thanks to Irwin Chusid for the link.Yes! In fact, privacy (and copyright) was our main focus when originally developing the Google Robot. The Google Robot will not record information such as:
- Private chatter (even when taking place on a public place, such as a mall)
- Diaries, letters or other records as found in the trash (even though the copyright law of some countries permits this, it is our philosophy to not make copies of such data)
- Telephone calls
- Private messages you send through the Google Mail, Google Talk, or Google Adult
- VirtualConnect service, unless you subscribed to the My Public Life™ program
- Information that can be seen by looking through a window, into a house's garden, etc.
- Any other information law deems private ...I've seen a Google Robot in a DVD shop staring at the backside of a DVD for half a minute, then putting it back in the shelf. Why?
Our Google Robots try to record as much information as possible, and this includes movies. As you may know, Google Robots have a micro laser to read from storage devices such as DVDs, CD-ROMs, or even exotic devices from the 1980s (people at that time used so-called "floppy discs," "music tapes," or "gramophone records"). Additionally, a Google Robot may visit the cinema, watch TV, go to a concert, or attend a public reading.
Posted by Donald L. Luskin at 12:05 AM | link
Thursday, January 19, 2006
EMINENT ROBBERY This is one of those legal horror stories so, well, horrible that one has to wonder if it's even true. Here a property owner is forced by a judge to sell 105 acres of real estate for $1 -- seemingly in punishment for contesting its eminent domain seizure. Read this and tell me what I'm missing. I just can't bring myself to believe this (after all, it's not in an authoratative source like the New York Times, so...). Thanks to Perry Eidelbus for the link.Posted by Donald L. Luskin at 10:59 PM | link
Wednesday, January 18, 2006
SENSORY DEPRIVATION CHAMBER ON W. 43RD STREET Mickey Kaus has the story:The Bubble TightensAccording to E&P, he [sic] New York Times hasThanks to our "public editor" Irwin Chusid for the link.decided that only TimesSelect subscribers should be allowed to e-mail Paul Krugman, Maureen Dowd, David Brooks, et al.Not only do you have be a paid ($49.95 for non-print-subscribers) TimesSelect purchaser, butinstead of being able to put an address in a mail program and fire it off at your leisure, TimesSelect subscribers now have to fill out an online form similar to the generic feedback forms found on many Web sites.Previous TimesSelect experiments deprived the paper's columnists of having their voices heard. This one threatens to deprive them of having interesting things to say in the first place. Not just bad business. Bad journalism. Columnists get tips over email! They get interesting information from like-minded souls, and interesting information from readers who despise them. The Times would give up this Webby power for a mess of Pinch pottage! Now columnists will only hear from those who've paid to be inside the paper's mainly-liberal New York-centric cocoon.As a result of the disastrous TimesSelect experiment, the paper has begun to formally, technically cut itself off from the world of non-Times readers. (The analogy is imprecise, but imagine what the Times would say if the Bush White House decided to only take emails from citizens who'd registered at, say, a Republican-leaning Web site.)
Posted by Donald L. Luskin at 11:19 PM | link
THE TIMES'S STATEMENT OF POLICY ON TRUTH AND FACT-CHECKING The New York Times's astonishing statement in response to the revelation that James Frey's book A Million Little Pieces contained fabricated material:
...there's a difference, even in publishing, between the lies we tell about ourselves and the lies we tell about others. It is a rare publisher that troubles to fact-check an author's claims, especially in times when proofreading can seem like too much trouble.Update... Check out this madness at the Times. If you can figure out what this is about you're a better man than I. Thanks to Jameson Campaigne.
Posted by Donald L. Luskin at 3:20 PM | link
ANOTHER ZOGBY DECEPTION According to Zogby:
WASHINGTON, D.C. — By a margin of 52 to 43 percent, citizens want Congress to impeach President Bush if he wiretapped American citizens without a judge's approval, according to a new poll commissioned by AfterDowningStreet.org , a grassroots coalition that supports a Congressional investigation of Pres. Bush's decision to invade Iraq in 2003.But here's the text of the actual poll question:
"If President Bush wiretapped American citizens without the approval of a judge, do you agree or disagree that Congress should consider holding him accountable through impeachment."Compare the emphasized words -- and note the difference between the inflammatory lead and the bland reality. Thanks to reader Alex Ogan for the link.
Update... Reader Adrian Nicolici says,
I wonder what the poll numbers would have been if the wording had been changed to:Update 2 [1/19/2006]... Reader Rick Gaber adds,"If President Bush wiretapped American citizens with connections to Al Qaeda without the approval of a judge, do you agree or disagree that Congress should consider holding him accountable through impeachment."
More accurately:Cheers, Rick"If President Bush authorized the warrantless electronic eavesdropping on stateside foreigners, American citizens and others with terrorist connections, would you want Congress to impeach him for it?"Here's some actual perspective from Rasmussen:Sixty-four percent (64%) of Americans believe the National Security Agency (NSA) should be allowed to intercept telephone conversations between terrorism suspects in other countries and people living in the United States. A Rasmussen Reports survey found that just 23% disagree.
Posted by Donald L. Luskin at 1:12 PM | link
GORE SIGHTING -- CORRUPTING THE YOUTH OF SILICON VALLEY Al Gore addressed a high school audience near my home in Silicon Valley last night. Young attendees reported to me that after showing up more than an hour late for his speech, Gore began by saying, "I'm Vice President Al Gore, the guy who was supposed to be President." That got a big laugh from the audience, but apparently Gore hadn't intended it as a gag. "That's not funny," he said. But that got a big laugh, too. Gore finally realized he was better off pretending it had been a joke, and forced himself to smile. Later in the speech he added discovery of the theory of continental drift to his many accomplishments (right alongside inventing the Internet). Sadly, his doubting professor snubbed his discovery -- and, Gore said snidely, that professor now works for the Bush administration as a science advisor.
Posted by Donald L. Luskin at 1:17 AM | link
Tuesday, January 17, 2006
REACHING OUT WITHOUT GIVING IN My Washington lawyer/lobbyist friend, as always insisting on anonymity, reflects on John Boehner's op-ed in the Wall Street Journal this morning, and the fact that the edit page's gurus would ideally prefer the purer spending hawk John Shadegg to be the new House majority leader:Even the Wall Street Journal edit page (and National Review) sometimes make the mistake of thinking that bad policy comes from impure leaders or good leaders not trying hard enough. Instead, it comes from losing important issues to liberals. Competence and conviction decide success on issues in a legislative body. Stridency is often a liability.Important economic policy achievements -- such as the Bush tax cuts in capital gains and dividends -- come from careful steps in the right direction. Winning on important issues beats going down-in-flames every time.
Tough agenda this year. Budget, tax, health care, spending levels, defense and foreign policy.
Let's look at the tax cuts: preserving the tax reductions in capital gains and dividends just might be decided by the race for House majority leader. Since all three candidates -- Boehner, Blunt and Shadegg -- support tax cuts, the right question is which one has the skill to win?
What better proof can anyone need than the recent fact that Boehner passed a reform of pension laws with most Republicans plus 70 Democrats voting aye? This was a bill Roy Blunt thought was such a loser that he kept it off the House schedule before Boehner proved he had the votes.
To a large extent, the conservative press is a little lost. Long ago, National Review was big for Goldwater. Goldwater lost big; so big, in fact, he doomed his party to marginal status. I guess Goldwater gets some conservatives misty-eyed.
In the real world, his loss psyched-out the Republican party from backing a true conservative for 20 years. Reagan, we should remember, was more pragmatic than most of his critics ever acknowledged and far more so than some of his backers ever knew. Reagan's first term was a success because he attracted Democratic votes in the House of Representatives. Of the three candidates for House majority leader, only Boehner can reach out without giving in -- or losing.
Posted by Donald L. Luskin at 1:53 PM | link
HOW MANY TIMES HAVE YOU SAID THIS TO YOURSELF? So click here and buy the bumper-sticker --
-- or the t-shirt! Thanks to our correspondent "Irrational Exuberance" for the idea!
Posted by Donald L. Luskin at 12:01 AM | link
Monday, January 16, 2006
JOKE OF THE DAYPosted by Donald L. Luskin at 11:47 PM | link
YOU READ IT HERE LAST I'll bet you a dollar to a dog turd that the New York Times won't cover one word of this story -- unless and until it can find a lede that makes Republicans look bad:
WASHINGTON - A long-awaited report detailing an independent counsel investigation of a former secretary of housing and urban development, Henry Cisneros, outlines a coordinated effort by Clinton administration officials to first block and then limit the probe as a way of taking pressure off an administration that was already beset by scandals. The report, by independent counsel David Barrett, is scheduled for release on January 19...Thanks to reader Jameson Campaigne for the link.The report, excluding appendixes, runs to 428 pages. In it, Mr. Barrett is said to argue that Mr. Cisneros's mistress delayed the first half of the investigation by lying to a grand jury that was reviewing evidence in the case and that the second half was impeded by top Clinton administration officials.
Posted by Donald L. Luskin at 11:34 PM | link
"WE," LIBERAL MAN? Whatever the Bush administration proposes about health care will be wrong, so here is Paul Krugman's brilliant alternative. Focusing on diabetes, because it was the subject of a series of stories in the Times recently, he writes today:
Here's what we should be doing: since the rise in diabetes is closely linked to the rise in obesity, we should be getting Americans to lose weight and exercise more.Huh? Just how, exactly, are "we" supposed to "get" people to do that? The fatuity of this vague whim, pompously propounded as a policy recommendation, reveals the fabulist nature of liberal propaganda: the articulation of a noble-sounding ideal -- the more improbable the better! -- is offered as proof that the present administration is (choose all that apply) cruel, incompetent, stupid, cheap, etc. etc. ad nauseum. Look what happens when Democrats put out real policy proposals, such as Hillarycare -- they get shot down. So, naturally, they retreat into the realm of unaccountable B.S. designed to shame the other side without risking an actual proposal that would have to withstand the rigors of debate. Here's more.
Update... Reader Bob Ferguson says,
Paul Krugman has forgotten he is an economist. Isn’t the essence of economics tradeoffs? Doesn’t the right spot on the tradeoff curve of health versus food consumption depend on personal preferences? Frankly, mine are to enjoy a somewhat shorter life. Clearly, anyone whose utility maximization is simply to maximize expected life is a nut.Update 2... An economics student who prefers anonymity (because of fear of reprisals on his liberal-dominated campus) says,
What's even more galling about the liberal propaganda is the sheer hypocrisy. Krugman certainly has no solution himself. He once wrote, "I still have all my hair, but have so far fought a losing battle against my middle-aged paunch." In another colum he bragged of how he was hanging out at his "local greasy pizza place".Update 3 [1/17/2006]... Reader Gordon Haave notes,
Krugman's analysis that perhaps the government should get involved with encouraging healthy living is grounded in the general economic theory that the production of a good (in this case personal health) that has positive benefits on others (the reduced costs that we all pay for poor personal health) is often less than it should be might make sense except for one problem: it is the government that has created the situation that the costs of poor health (and thus the benefits of good health) accrue largely to others. It is the government that has created medicare and medicaid, forcing taxpayers to pay for the poor health decisions of others, and it is the over-regulation of the health insurance industry that prevents health plans from charging accurate risk-premiums to those who have poor nutrition habits.Rather than trying to bandage the outcome of a failure in government policy, one would think that a Princeton economist might address the cause of the problem in the first place.
Posted by Donald L. Luskin at 1:07 PM | link
JOKE OF THE DAY 2
Posted by Donald L. Luskin at 12:33 PM | link
JOKE OF THE DAY
Posted by Donald L. Luskin at 12:30 PM | link
ANATOMY OF A PHOTOGRAPHIC LIE The mainstream media is caught dead to rights cropping the context out of a photo of an antiwar protest -- designed to make the protest look cool and fashionable, by removing terrorist overtones, overt obscenity, and communist connections. Here's the expose. Thanks ot reader Jameson Campaigne for the link.
Update... Not sure I agree, but reader D. Keith Howington says,
...you characterize the Chronicle has having "cropped" the photo. That does not seem to be true, as the Zombietime exposé notes. Instead, they seem to have zoomed in to focus on the face, and ignore the context. The effect is the same, but the accusation is not quite supportable by the evidence.
Posted by Donald L. Luskin at 12:23 PM | link
THE NEW YORK TIMES GETS IT RIGHT ...well, by accident:
Thanks to reader Rich Hart for noticing.
Posted by Donald L. Luskin at 11:48 AM | link