Carbon tax might be offset by tax cuts

 
Australians earning less than $80,000 a year could be given two rounds of tax cuts as compensation for any price rises under the Gillard government's proposed carbon tax. But wealthier people "will pay a price" as the country moves to a low-carbon economy under a 10-year plan unveiled by Labor climate alter adviser Ross Garnaut.

Both sides of politics were fast to use the economist's final update to his landmark 2008 climate alter review to push their own barrow. Labor noted, properly, that the report was scornful of Tony Abbott's direct action policy because it would cost more than placing a price on carbon but not raise any revenue to compensate households with.

But the opposition leader held on another claim in the report. Prof Garnaut made clear on Tuesday that "Australian households will in due course bear the full cost of a carbon price". "So how can (the prime minister) continue to preserve that her tax only makes big polluters pay," Mr Abbott asked parliament.

"Who pays? Big polluters or households? The truth is households." A carbon price of $26 a tonne would raise about $11.5 billion in 2012/13. After the tax transitions to an release trading scheme in 2015 it could rake in much more - up to $16 billion by 2022/23.

Prof Garnaut wants 55 per cent of the revenue raised in the first three years to go to low and middle-income earners in the form of tax cuts and senior welfare payments. That could rise to 65 per cent by 2021/22. The rest of the revenue would be used to help business, drive innovation and stock up carbon in land systems.

Wealthier Australians would pick up the tab. That's because in the long run business will pass carbon costs from side to side to the users of their products. "High-income earners who don't get a tax cut or something else will experience a reduction in real incomes," Prof Garnaut told reporters.

"That's just the economics of it... people on high incomes will pay a cost." Most of the household assistance under Prof Garnaut's 10-year plan would be in the form of tax cuts, with the tax-free threshold raised to $25,000. That would result in 1.2 million Australians paying no tax.

Other rates would be rejigged to ensure people earning more than $80,000 a year wouldn't benefit. Prof Garnaut argued that as transitional aid to business declines there would be further opportunity for "a second round of tax cuts". Such a move wouldn't be bad politics, the adviser said. Ms Gillard seems to agree. She told parliament on Tuesday "tax cuts are a serious option".

The impact of a carbon price on petrol prices would be lessened by a one-off cut to the fuel excise. But business would get less under Prof Garnaut's plan than was on offer under Kevin Rudd's carbon pollution reduction scheme. Emissions-intensive, trade-exposed industries would get 30 per cent of the revenue pie for the first three years but that would decline by 1.5 percentage points annually after that.

Electricity generators would receive just three per cent until 2015 and then nothing. When it comes to pollution reduction targets, Prof Garnaut wants them determined by an independent committee. In 2014, it would review Australia's current pledge to cut emission by five per cent in 2020 relative to 2000 levels. The committee could advise much deeper reductions depending on international developments.

The world's developed countries have, on average, already vowed to cut emissions by between 10 and 16 per cent by 2020.

A Texas Attorney Is Disbarred from Practicing Before the IRS for Willful Failure to File Tax Returns

The Internal Revenue Service’s Office of Professional Responsibility (OPR) has prevailed in a Texas attorney’s appeal of an order for disbarment to practice before the IRS for willfully failing to file his federal tax returns, according to the Decision on Appeal.

The Treasury Secretary’s Delegate to hear appeals (Appellate Authority) has confirmed the basis for, and result of, the summary judgment granted by Administrative Law Judge (ALJ) Susan L. Biro in the case of Director, Office of Professional Responsibility vs. Donald J. Petrillo, according to the Decision on Appeal.

OPR alleged that Texas attorney Petrillo willfully failed to timely file his federal individual income tax returns for 2001 through 2006 and willfully failed to file his 2007 tax return. The untimely filings were from two to four years late. OPR further alleged that Petrillo willfully failed to pay the outstanding tax balances due on the late filed returns.

Petrillo did not deny the allegations but argued that his failures to file and pay were not the result of willful conduct but were due to personal circumstances beyond his control. Using the standard for “willfulness” set forth in previously published Circular 230 cases (“a voluntary, intentional violation of a known legal duty”), the ALJ found that the various explanations given by Petrillo for his failures to file did not negate his willfulness.

However, the ALJ explicitly declined to adopt OPR’s position that willful evasion of payment for purposes of Cir 230, sec 10.51(a)(6) should be analogous to Trust Fund Recovery penalty assessments. Finding that the failures to file were significant enough by themselves, the ALJ ordered disbarment without addressing the failures to pay.

In his appeal, Petrillo argued that (1) the ALJ applied a willful negligence standard rather than a willfulness standard; (2) the ALJ applied the wrong standard for willfulness; (3) material facts were in issue making summary judgment inappropriate; and (4) he was denied due process because the standards were changed from willfulness to willful negligence after the Complaint was filed.

The Appellate Authority determined that the ALJ had correctly and consistently applied the existing standard for willfulness to Petrillo’s conduct; that the ALJ had correctly determined from the deposition testimony and briefs that there were no material factual issues remaining to be heard; and that the ALJ’s findings of fact were well supported by the record and not clearly erroneous. Finding, during the periods in issue, that Petrillo was not mentally or physically incapacitated; was gainfully employed; prepared tax returns for others; engaged in legal work for clients; and conducted his own personal business, the Appellate Authority concurred in the ALJ’s decision to disbar, noting that Petrillo had been previously suspended by OPR from 1993 through 1997.

“This is yet another in a line of Final Agency Decisions in the past two years which reiterate that practitioners cannot expect to be excused for not filing or late filing their own tax returns when the record reflects their active engagement in other tax and business matters on behalf of paying clients, or active involvement with their own personal activities which belie any debilitation,” said OPR Director, Karen L. Hawkins.