Thanks to a decades-old law targeting drug runners, entrepreneurs in the nascent medical marijuana industry face a unique burden: an effective federal income tax rate that can soar as high as 75%.
The hefty levy is the result of a 1982 provision to the tax code, known as 280E, that stemmed from a successful attempt by a convicted drug trafficker to claim his yacht, weapons and bribes as businesses expenses, according to 280E Reform, a group working to overturn the statute.
Enacted in the wake of that PR debacle, the rule bars those selling illegal substances from deducting related expenses on their federal income taxes.
It may have been effective against cocaine dealers and smugglers of other hard drugs, but the law now means purveyors of medical marijuana in the 18 states that have legalized the drug can’t can’t take typical things like rent or payroll as a business expense. That’s taking a heavy toll on this new field.
MANY PUNDITS have either already expressed shock over Romney’s “47 percent” talk or elected to defend him as a yacht club straight-talker. From my vantage point as a Republican committeeman, it seems as if they are missing the true reasons for why this moment is so important in the long run and how it may impact the Republican Party here and now.
Our kids and grandkids will probably be reading about the leaked video of Romney talking to a bunch of well-heeled donors about the slothful, unwashed masses comprising the American electorate. I believe historians will recall this as Romney’s nadir, helping put the proverbial nail in his political coffin.
Romney’s comment is worth repeating for contextual purposes:
“There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that’s an entitlement. And the government should give it to them. And they will vote for this president no matter what… . These are people who pay no income tax.”
It gets worse. Romney also noted that “my job is not to worry about those people. I’ll never convince them they should take personal responsibility and care for their lives.”
Before considering the politics of the situation, we must reflect on the actual data. According to the Tax Policy Center, in 2011 46.4 percent of American households did not pay federal income taxes. Among these households, 28.3 percent still paid payroll taxes. This leaves 18.1 percent who paid no federal payroll or income taxes that year, of which 10.3 percent were elderly and 6.9 percent made less than $20,000.
Now that we know who constitutes the 18.1 percent who paid no federal taxes last year, we can understand who the villains are in Romney World: our senior citizens and grandparents, our neighbors, college students, our co-workers, military veterans, our friends, the working poor and our own loved ones.
Romney - the man who wants to be president of 100 percent of the country - made a malicious statement about many of the people he desires to lead. If you are the recipient of student loans, Medicare, public education, government job training, incentives for homeownership or food stamps for those who may have fallen on tough times, President Romney won’t be worrying about you.
According to Mitt’s own words we shouldn’t elect him if he isn’t smart enough to take every deduction allowed him to pay the lowest minimum tax allowed by law. Which Mitt do we believe or disbelieve?
Democrats say Mitt Romney manipulated his deductions to keep his overall 2011 federal income tax rate below a certain level for political purposes. The Republican presidential nominee is certain to face new questions about his finances.
Romney and his wife, Ann, donated roughly $4 million to charities last year, but they only claimed a deduction of $2.25 million on their tax return, filed with the Internal Revenue Service on Friday.
Romney made $13.7 million last year and paid $1.94 million in federal income taxes, giving him an effective tax rate of 14.1 percent. That was a bit above the 13.9 percent rate paid on 2010 income.
More precisely, the returns showed that the couple paid $1,935,708 in taxes on income of $13,696,951.
Democrats quickly leaped on the documents, saying Romney had claimed fewer deductions than he was entitled to just to keep his rate at such a level. Romney told reporters in August he had never paid below 13 percent in taxes in any given year over the past 20. Had he taken the full charitable deduction, it would have pushed his tax liability below 13 percent.
“The information released today reveals that Mitt Romney manipulated one of the only two years of tax returns he’s seen fit to show the American people - and then only to ‘conform’ with his public statements. That raises the question: What else in those returns has Romney manipulated?” said Senate Majority Leader Harry Reid, D-Nev.
Mitt Romney painted an inaccurate portrait of the “47 percent of Americans [who] pay no income tax” when he spoke — and was secretly videotaped — at a May fund-raiser depicting almost half the country as Obama-loving “victims” who feel entitled to government handouts.
Romney’s statistic accurately approximates the percentage of US households that do not pay federal income taxes. But he went on to suggest that this 47 percent relies on government help and refuses to “take personal responsibility” — an assertion that ignores the fact that most of these households pay payroll taxes for Social Security and Medicare and some are service members in combat zones.
Almost every American adult pays some combination of excise, property, sales, and state or local income taxes.
And contrary to Romney’s assertion that these are “people who will vote for the president no matter what,” many Americans who pay no federal income taxes are members of important Republican voting blocs — including seniors and residents of the Bible Belt.
“It’s empirically not accurate,” said John G. Geer, a political science professor at Vanderbilt University. “There are plenty of people who don’t pay federal income taxes who will support him, but he was trying to appeal to the folks in the room.”
Romney was filmed without his knowledge during a $50,000-per-plate dinner in Boca Raton, Fla., on May 17. The liberal magazine Mother Jones obtained footage of the event, posted excerpts and part of the video on its website on Monday, and released the full video of Romney’s remarks on Tuesday.
The argument over Mitt Romney’s personal tax returns heated up Sunday, with Republicans calling Senate Majority Leader Harry Reid a liar for suggesting the GOP presidential candidate hadn’t paid taxes for a decade.
Mr. Reid, a Nevada Democrat, revived the debate last week when he said “an extremely credible source” had told him Mr. Romney didn’t pay taxes for 10 years. “It’s clear Romney is hiding something,” Mr. Reid said. On Sunday, the GOP launched a countercharge. “I am not going to respond to a dirty liar,” Republican National Committee Chairman Reince Preibus said on ABC’s “This Week.”
Sen. Lindsey Graham (R., S.C.), speaking on CNN’s “State of the Union,” said Mr. Reid is “lying” and “making things up” about the candidate’s taxes.
Mr. Reid hasn’t provided evidence to back up his claim and hasn’t disclosed his source. Instead, he said it is up to Mr. Romney to prove him wrong. “Let him prove that he has paid taxes, because he hasn’t,” Mr. Reid said on the Senate floor.
Other top Democrats didn’t endorse Mr. Reid’s contention in comments Sunday, but also didn’t shy away from using the moment to press Mr. Romney about disclosing his tax returns. Mr. Romney has released his federal tax returns for 2010 and an estimate for 2011. He has faced pressure from Democrats and some Republicans to release more information. The 2010 return shows he paid federal income taxes at a 13.9% rate on $21.6 million in income. Mr. Romney has said he will release his full 2011 return. For that year, he has released the headline numbers, which show him paying $3.23 million in federal tax on $20.9 million of total income.
The Republican challenger last week in Nevada said he has paid taxes “every year—and a lot of taxes.” He didn’t provide details, and reiterated he wouldn’t release more than two years’worthof returns. “Harry Reid really has to put up or shut up,” Mr. Romney told reporters last week after a campaign event in North Las Vegas. “So, Harry, who are your sources?”
Kansas Republicans, under the leadership of “compassionate conservative” Sam Brownback, are working hard to stick it to the poor:
A Kansas House tax committee passed a bill in which anyone making less than $25,000 a year — roughly half a million of the state’s 2.9 million residents — will pay an average of $72 more in taxes, while those making more than $250,000 — about 21,000 people — will see a $1,500 cut, according to Kansas Department of Revenue estimates cited by the Kansas City Star.
The hike would come from the elimination of tax credits typically benefiting the poor.
I can’t help but see this as a continuation of the conservative meme that its the poor who don’t pay their “fair share.” Last fall, as the Occupy movement gained steam, it became common for conservatives to complain about the 47 percent of Americans who “don’t pay taxes.” Presidential candidates like Michele Bachmann and Rick Perry complained about it in speeches and debate performances, while conservative activists (Redstate’s Erick Erickson comes to mind) touted it in response to the Occupy movement.
Of course, the claim was misleading to the extreme; all Americans pay something to the government—sales taxes, payroll taxes, and various state taxes—but only some make enough money to owe federal income taxes. Those that don’t, as Annie Lowrey explained for Slate, are either poor
These days, the U.S. Department of Justice and its investigators and prosecutors get accused of a lot of things by conspiracy-minded antigovernment extremists, but here’s a new one. A so-called “sovereign citizen” in the state of Washington, just sentenced to 40 months in prison, has filed suit accusing the government and its agents of using poor grammar and writing at a second-grade level.
David Russell Myrland filed the civil suit in U.S. District Court in Seattle with help from David Wynn Miller, another sovereign who claims he became the “king of Hawaii” in 1996 after turning that state’s name into a verb. (For the record, Miller prefers the “full-colon” spelling of his name, David-Wynn: Miller. Like many sovereigns who don’t recognize most state and federal laws, he claims the government uses grammar to enslave it citizens. By using hyphens and colons in their names, he claims, citizens can escape the grasp of government and its taxes.)
The “evidence” attached to the suit filed Jan. 23 is the federal criminal complaint filed by the Justice Department in January 2011 against Myrland, accusing him of threatening to kidnap and injure the mayor of Kirkland, Wash. Every word in the complaint is painstakingly footnoted as a “syntax-word-key meaning.”
Myrland, part of a sovereign group calling itself “Assemblies of the Counties,” pleaded guilty last August to threatening to use deadly force to arrest various government officials. The group has ties to Alaska militia leader Francis Schaeffer Cox, who faces charges of plotting to kidnap and kill judges and state police officers.
For the past 20 years, Myrland has been illegally practicing law and teaching others how to cheat on their federal income taxes, prosecutors said in court filings when he was sentenced in December.
Somewhere along the way, Myrland hooked up with Miller, who modestly claims he has an IQ of 200 and is a frequent speaker at antigovernment “Patriot” movement gatherings. Both men’s signatures (with hyphens and full colons, of course) are on the suit, along with Miller’s fingerprint atop his signature.