How to battle against the "Blogger's tax"

GO, BLOGGERS, GO.

An uproar on a so-called "blogger's tax" went a little viral earlier this week, when some bloggers got letters from the city asking for $300 to cover a business-privilege license.

The item became the subject of many other blogs, including libertarians and those on the far right who are using this as a way to promote the evils of big government.

We'd like to use the uproar, too, as a way to promote the idea of long-overdue reforms to the city's tax code, especially as it relates to business.

The fee in question is not a tax on bloggers; it's a fee for the privilege of doing business in the city, and it applies to all businesses no matter how much money they make. The problem is, if you make $100 from your blog, you're considered a business, and must have a license.

After that, it gets even worse.

The city will also impose a tax on any money your blog makes. That's because the city not only taxes profits, but also gross receipts. So it doesn't matter what you spend to make your blog viable. Whatever nickels and dimes you generate from advertising or other arrangements will also be taxed.

More than one proposal that could address this is rattling around. A 2009 mayoral task force recommended the city carry on its course to eliminate the gross-receipts portion of the business- privilege tax. But that won't happen for 15 years.

Meanwhile, Council members Maria Quinones- Sanchez and Bill Greene have their own proposal, which would actually increase the tax on business receipts but establish criteria that would exempt the first $100,000 of those receipts.

Both proposals deserve scrutiny. And we hope the latest howls from the blogging community will get people to focus attention on tax reform, especially since it's the first to fall off the table when serious fiscal problems hit. The city should have a regular mechanism for reviewing the tax code.

As the bloggers' outcry demonstrates, "business" is no longer limited to bricks and mortar enterprises; in fact, the idea of business is no longer always about making a sustainable living. Blogging in particular often combines commerce with free expression. Should such enterprises have their own tax category? Should we consider all revenue to be equal, whether it comes from a hard-goods manufacturer, service provider, or information technician? We encourage bloggers to keep this alive and get Council and Mayor Nutter to review these issues regularly.

Sliced Bagels, Taxes on Top

What's the tax on a bagel? It depends how you slice it—or in the case of New York, if you slice it.




In New York, the sale of whole bagels isn't subject to sales tax. But the tax does apply to "sliced or prepared bagels (with cream cheese or other toppings)," according to the state Department of Taxation and Finance. And if the bagel is eaten in the store, even if it's never been touched by a knife, it's also taxed.

Tax cut rollback proven to help

Yes, if you make more than $250,000, according to the Democratic proposal your taxes will go back to where they were before the Bush tax cut. If not, they will not change.

The writer said, "We all know what happened when Clinton won the election." Yes, he restored the tax rates close to what they were before Reagan lowered them, and the Republicans screeched that it would cause a recession. What we got was seven years of the best economy, and lowest unemployment, in my 60 years.

We then got Republican control of everything, a huge tax cut for the wealthy, and a war in Iraq, all of which added $3.3 trillion to the debit. Did anyone complain about the debit? Put a Democrat in the White House, and it's a problem. Now that these cuts will expire, which could help the debit problem, no you can't do that, it might cause recession. Same thing they said in 1993. Did it happen? No. Check the history.

All of this doesn't really shock me. The wealthy and powerful control the Republican Party. The same party that gave us deregulation of the banks. Isn't that what got us in this clutter? They did it once before with the Savings & Loans -- remember that mess? Now these same people want back in charge. They say it's all Obama's fault, but the economy going into the ditch is why they are out of power. Why would someone be so gullible to believe the same lies over and over? Let's roll back the tax cut for the wealthiest 2 percent and see what happens.

Treasury Secretary Timothy Geithner argued on Bush tax cuts

Extending tax cuts for the wealthiest Americans would imperil the fragile economic recovery, Treasury Secretary Timothy Geithner said, as the Obama administration pushes to let the Bush-era policies expire at the end of the year. The tax cuts should be extended for almost everyone. The exception is for married couples making more than $250,000 or a single person making $125,000 or more.

Geithner was justifying the administration's proposal to extend the George W. Bush tax cuts except for those making more than $200,000 a year. The Bush tax cuts for the middle class need to be extended, according to Geithner, to maintain incomes. However, long-term economic prospects require a signal that the federal government will get serious about its debt, so the rich need to pay more. Taking more from the rich won't be economically damaging, according to Geithner, because they are less likely to spend the difference.

The tax on dividends, for example, is currently 15%, but it could increase to as high as 39.6% if the 2001 and 2003 tax cuts expire. On top of this, a new 3.8% tax on investment incomes for high-income earners begins in 2013 to help pay for ObamaCare. The administration's arguments for higher taxes on capital center on fairness and the need for deficit reduction. Mr. Geithner argued that the wealthy tend to save more of their tax breaks than do other groups, so in letting their taxes rise; there would be minimal impact on economic activity.

If President Obama is interested in promoting growth now and in the future, he should commit to retaining the low tax rates Congress passed in 2003. A Treasury estimate shows the 10-year cost of extending the middle-class tax breaks is about $3 trillion. Extension of the breaks for higher earners adds $679.6 billion to the tab.

Sales Tax Holiday Blooms Shopping Season

Local shopping centers are gearing up for coming annual “Back to School” sales tax holiday a weekend as big as during the holiday shopping season.

The Missouri state sales tax of 4.225 percent will be dropped on clothes, computers and school supplies starting at midnight Aug. 6 and lasting through Aug. 8. Many municipalities also are dropping their local sales taxes for the weekend, letting customers buy qualified items tax-free.

For seven days in August, Maryland shoppers can purchase certain clothing items costing less than $100 without paying the state's 6 percent sales tax.

The Mississippi sales tax holiday weekend is July 30 and 31st. It's back to school shopping made easier in Mississippi, but retailers hope it's not just school shoppers cashing in. Clothing and shoes will be exempt from the state's sales tax; retailers say it's a time for customers to buy.

A 2007 law established Aug. 8-16 of this year as a "sales-tax holiday" because legislators thought that by now the state would have a budget surplus and could afford the revenue loss. But tough economic times have lasted longer than anyone expected, to the point where what the state is really doing now is giving up money it doesn't have.

The tax holiday is expected to cost the state treasury about $9 million in lost revenues. That's enough to provide 1,000 families with emergency housing assistance, or state college scholarships for 4,500 students. And it comes as the state is about to grapple with how to fill an expected $1.5 billion revenue hole resulting from lower revenues brought on by the recession.

Job Creation Tax Credit Causes and Effect

Whether the job creation tax credit signed in law last March is having any effect, Treasury Department officials reported. Though it took some time for a clear picture to develop, we're pleased to learn that the tax incentives the state grants companies to create jobs.

The Treasury study compared responses from the Labor Department's Current Population Survey the basis for the government's labor force data and the unemployment rate for three consecutive months to May. This tax program, part of the Hire Act of 2010, is intended to encourage businesses to add workers who have been out of a job for at least 60 days by making it cheaper to employ them.

Usually, the federal government collects Social Security payroll taxes on salaries, amounting to 12.4 percent of every employee’s wages (up to $106,800; any wages over that amount are not subject to Social Security taxes). Half of this payroll tax, or 6.2 percent, comes from the employee, and the other half, or another 6.2 percent, is collected from the employer. For the average wage of the 4.5 million workers cited by Treasury, employers could see up to $3,500 in tax savings for each, however that smaller firms may not be as aware of the credit as larger firms with larger human resources departments.

Under the Hire Act, businesses that hire the long-term unemployed do not have to pay this 6.2 percent tax on each worker for the remainder of 2010. Additionally, if these new employees stay on for a year, the employer gets another tax credit of $1,000. The challenge, of course, is making sure that the tax credit actually induces hiring, rather than just being claimed for people who would have gotten jobs anyway.

The Treasury Department is now trying to assess how well the program is working, and is finding it a challenging task. The Obama administration is trying to extend the act, which expires at the end of the year, in the hopes that it will still be around by the time word actually spreads.

Long Beach Tax on Medical Marijuana

Long Beach is joining the cities of Berkeley and Sacramento in considering a tax on medical marijuana collectives to help close their budget gaps. Proposed ballot measure would levy a 5% tax on medical pot collectives and another tax of 10% if recreational pot is legalized. But it would require a special election costing up to $450,000.

When Long Beach voters join other Californians in November to decide whether to legalize recreational marijuana, they may also get the chance to decide if it should be taxed. The City Council took a step toward putting a marijuana tax measure on the ballot that would levy a 15 percent tax bumped up from a proposed 10 percent on the recreational drug and a 5 percent tax on medical marijuana. City officials don't know how revenue the tax would raise, but they're looking for every penny to help eliminate an estimated $18.5 million budget deficit in the next fiscal year.

The Los Angeles suburb with a population of almost 500,000 scheduled a public hearing on the drug levy for Aug. 3. If the council later approves the wording, a ballot initiative establishing a 5 percent tax on the city’s 35 dispensaries could go to voters in November, according to Lori Ann Farrell, Long Beach’s director of financial management.

Long Beach joins California cities including the state capital, Sacramento, weighing marijuana taxes to bridge falling revenue from the worst recession since the 1930s. The nation’s largest state by population saw an explosion in the number of marijuana dispensaries after voters approved a 1996 referendum legalizing pot for medicinal use.

Discussion of the tax comes as the state prepares to vote on Proposition 19, a referendum on the November ballot. If approved, the measure would make it legal for anyone age 21 or older to possess one ounce or less of marijuana, and allow local governments to regulate and tax sales. The medical marijuana tax is modeled after one by the City of Oakland, which expects to collect $1 million a year in revenue from its four authorized dispensaries.