The proposed nationalization of America’s health is in serious trouble with public support shrinking and Congressmen running fir cover, so what do you suppose the Chosen One has in mind for his next major political initiative?

James Pethokoukis thinks he has identified the objective of the Obama Administration’s next major offensive: an American VAT.

There have been serious proposals from sensible people that the US should eliminate the Income Tax and replace it with a VAT. No need to worry about that replacement idea with Obama. He’ll be looking for both.

Does President Obama have a secret plan to raise taxes on middle-class Americans — and,well, pretty much everybody else — with a European-style, value-added tax? Actually, it’s not such a big secret. Connect the dots:

1) The joint statement from the just-concluded G20 Summit in Pittsburgh called for balanced global growth — which means Americans must spend less and save more and reduce its budget deficit.

2) That same weekend, John Podesta, co-chairman of Obama’s presidential transition team and an outside White House adviser, tells a Bloomberg reporter that a value-added tax is “more plausible today” than ever, adding that “there’s going to have to be revenue in this budget.” A VAT is a kind of consumption tax.

3) Yesterday, the Center for American Progress, the liberal think tank with close White House ties, holds a conference on the rising national debt. While speaker after speaker — Paul Krugman, Roger Altman, CAP President Podesta (again), Laura Tyson — admits entitlement spending must be reduced, they also agree that taxes must be raised. Altman suggests $400 billion in new tax revenue is needed almost immediately to calm financial market fears, and a VAT would be a great way of doing it. That’s $400 billion a year, by the way, not over ten years.

4) Also, yesterday was the first meeting of President Obama’s tax reform panel led by former Federal Reserve Chairman Paul Volcker. In a two-part interview with Charlie Rose airing yesterday and today, Volcker says that if Washington can’t get spending under control, either a VAT or a carbon tax would be effective revenue raisers. “Those are two big ones,” he says.

5) As they used to say in the Soviet Union, “It’s no coincidence.” This is also the conclusion of one Washington insider with ties to the White House economic team: “Does this all add up to a trial balloon? Of course, it’s a trial balloon. And I expect the administration will propose major tax reform, including a VAT.”

Obama’s campaign promise to not raise taxes on households making less than $250,000 a year was always considered a joke here inside the Beltway. It’s the economic “consensus” — and this was true even before the financial meltdown and recession — that rising entitlement costs would eventually mean a higher tax burden for the American people.

Maybe it was a joke inside the campaign, too. Since being elected, Obama has raised cigarette taxes and has advocated raising healthcare taxes, energy and small business taxes, in addition to corporate taxes. What’s more, economic advisers like Larry Summers seem eager to get rid of all the Bush tax cuts, not just those on so-called wealthy Americans.

And it’s also no secret that economists love the idea of a VAT. It promotes savings over consumption, and its hidden nature may mean it has less behavioral impact on taxpayers. Conservative economist Bruce Bartlet puts it this way, “As a broad-based tax on consumption, it creates less economic distortion per dollar of revenue than any other tax–certainly much less than the income tax.” Indeed, a VAT is part of cash-strapped California’s newly proposed tax reform.

Liberals love the idea of a VAT because it’s, well, so European — also because it does raise tons of revenue to expand government. And that is what Obama wants: more revenue to pay for bigger government. Is a VAT better than the soak-the-rich approach favored by Democrats such as Nancy Pelosi and Charlie Rangel? Sure. Of course, the concern is that a VAT would be in addition to new soak-the-rich taxes.

Over the barbed wire!

David Bain reports that some wealthy Americans now subjected to new forms of international scrutiny by the Obama-era IRS operating under new orders to revenue hunt are taking the dramatic step of renouncing citizenship.

Private client lawyers and relocation specialists are reporting a surge in wealthy Americans living abroad who are prepared to give up their citizenship to avoid the scrutiny of US tax authorities.

Although such a move means they have to pay an exit tax, lawyers say this is a price people have become more willing to pay this year, now the fall in asset values has reduced the size of the imposition.

Jay Krause, a partner at private-client specialist law firm Withers, said: “The number of inquiries from US citizens wanting to expatriate from their citizenship has increased rapidly in the last year.”

The level of interest is set to increase following the tax disclosure deal between the US Government and UBS of Switzerland, involving the names of 5,000 alleged US tax evaders being handed over to the authorities. The UK concluded a tax deal with Liechtenstein last week.

Because of this, many ultra-wealthy individuals who have chosen to become stateless now cruise outside coastal waters in their mega-yachts in the belief that if they stay on the move, tax authorities will not be able to catch up with them. One analyst who did not want to be named, has estimated the number of stateless tax evaders amounted to a few thousand.

This implies the quantity of money outside the grasp of global tax authorities could be trillions of dollars.

Under US tax laws, the worldwide income of any US citizen or resident is subject to tax. The US is the only country in the world that requires its citizens to stump up, no matter where they live.

Krause said current economic conditions are making it more conducive for Americans to contemplate paying exit tax demands from the US Internal Revenue Service. “The mark-to-market provision in the Exit Tax from the IRS is a big incentive,” he said.

In the final months of the Bush administration, the US Government introduced a package of tax reforms that included an amendment to the exit tax on US citizens and long-term green card holders who expatriate the US.

The tax allows US citizens and permanent residents wanting to renounce citizenship or permanent residency to pay a one-off income tax on gains over $600,000 (€420,000). All assets beyond this amount are valued at mark-to-market.

The exit tax allows a clean break from the US tax system from the date of expatriation without imposing the previous 10-year period after expatriation where tax rules used to apply – another big incentive, say lawyers. ...

Kälin said citizenships of the Caribbean Islands and western European countries prove to be the most popular for ex-American passport holders.

He said: “St Kitts and Nevis is the favourite alternative citizenship option for US citizens. Many will also be looking at Austrian citizenship, but it costs the most.”

St Kitts and Nevis is favoured for its perceived security, while Austria is one of the few European countries where it is possible to purchase citizenship.

Typically, it will cost $400,000 to secure a St Kitts and Nevis passport, whereas Austrian citizenship might run into several million euros.

Easier for me!

How silly of them! They should just take the same exit money and citizenship fees and run for Congress as democrats from an inner-city district. Look how well it worked for Charles Rangel.

Rangel not only didn’t have to renounce his citizenship. He not only gets to keep his Rules Committee Chairmanship, but also four New York City rent-stabilized apartments (each one of which is required to be his primary residence), while using another home in Washington, D.C as his primary residence for tax purposes.

When any small group of fringy leftwing kooks and nutcases protests anything, the leftwing punditocracy gravely stroke its collective chin and warns of the rising tide of popular indignation. But when thousands and thousands of Americans participate in more than 600 protests against taxes and federal spending in cities all across the nation, the left sneers at the symbolism and dismisses the protests as unrepresentative and contrived.

Marc Ambinder was the rare exception in the liberal punditocracy who questioned the official party-line.

The… tea-party enthusiasm on the American right has provoked a fairly typical reaction from the organized American left. It’s a fake. It involves tea bags and (a) Dick Armey. It’s got the consistency of astroturf, not natural grass. ...

In the age of hyperconnectivity, just what would an organic grassroots movement look like, anyway? Are people who’ve organized on behalf of causes before forbidden from joining? Can the movement not accept help and money from outside players?

Ambinder’s right, of course. And the scale of yesterday’s protests ought to be considered far more significant in the light of the consideration that protests and street theater are not really our thing. Conservatives write angry letters to the editorial page and argue with liberal friends. We don’t typically march around in public waving signs.

Conservatives tend to be busy and productive people with responsibilities. It’s a lot harder to assemble a mob of mortgage-paying adults with jobs they need to be at than to get yourself a gang of students and urban slackers ready for a lark. The thousands seen yesterday obviously constituted only the smallest tip of a much larger iceberg, an iceberg which does reliably vote.

Tax Preparation tips from the Onion.

The Wall Street Journal admires the democrat part double-standard that worked for Tim Geithner and which also seems to be working for Tom Daschle.

So Tom Daschle, the erstwhile prairie populist and scourge of multiple Presidential nominees, failed to disclose and pay taxes on hundreds of thousands of dollars of income. He also waited months to pay up and told the Obama transition team about his tax oversights only days before his Senate confirmation hearing to become Secretary of Health and Human Services.

This one is going to be fascinating to watch, less for what it says about Mr. Daschle than what it will reveal about Democratic standards. Every Republican in America knows that if Mr. Daschle were a Reagan or Bush nominee he’d now be headed back to private life faster than you can say John Tower. That’s the way Democrats have treated GOP nominees who were accused of far lesser transgressions than Mr. Daschle’s tax, er, avoidance. ...

Mr. Daschle failed to report some $255,000 in income from 2005 through 2007 for a car and driver supplied to him for personal use. The chauffeur service was provided by Leo Hindery, a big Democratic donor who also made Mr. Daschle a bundle by making him a limited partner in InterMedia Partners, a private equity shop.

As a legal tax matter, this isn’t even a close call. Mr. Daschle says he used the car service about 80% for personal use, and 20% for business. But his spokeswoman says it only dawned on the Senator last June that this might be taxable income. Mr. Daschle’s excuse? According to a Journal report Friday, “he told committee staff he had grown used to having a car and driver as majority leader and did not think to report the perk on his taxes, according to staff members.” How’s that for a Leona Helmsley moment: Doesn’t everyone have a car and chauffeur, dear?

Tom Daschle, Barack Obama’s nominee for Secretary of Health and Human Services, who is also intended to become Czar in Charge of Nationalizing America’s Health Care, has decided it would be prudent to pay some overdue back taxes.

Former Senate Democratic Leader Tom Daschle paid $140,000 in back taxes and interest in recent weeks – much of it due to a car and driver loaned to him for free by a friend and Democratic fundraiser.

That back-tax bill on Friday threw a stumbling block in front of his nomination as Barack Obama’s health and human services secretary.

Daschle used the Cadillac and driver around Washington while working as a consultant to a New York City private equity firm, InterMedia Advisors. He used the limo 80 percent for personal use – resulting in unreported income of more than $255,000 for the three years, Senate Finance Committee documents show.

InterMedia paid Daschle consulting fees at a rate of $1 million a year – or $83,333 a month. Daschle’s financial disclosure forms put his income from InterMedia at more than $2 million since 2005.

Tom Daschle, under fire for not paying taxes, made nearly $5.3 million in the last two years, records released Friday show.

Daschle, the former Senate Democratic leader who President Obama has tapped to overhaul the nation’s healthcare system, was paid $220,000 to give speeches to outfits that have a vested interest in the result the work he would do once confirmed as Secretary of Health and Human Services.

Among the companies and groups paying thousands of dollars a pop to book Daschle were some that stand to gain or lose the most depending on the results of Obama’s efforts to enact universal health.

The mainstream media treated Joe the Plumber having a tax lien as a matter of national interest. But, as Jim Lindgren points out at Volokh Conspiracy, obvious ethics violations by a certain former Illinois state legislator are considered unworthy of attention.

The Illinois Governmental Ethics Act (apparently last changed in 1995) provides:

(5 ILCS 420/2-110)

Sec. 2-110. Honoraria.

(a) No member of the General Assembly shall accept any honorarium.

(b) As used in this Section:

“Honorarium” means a payment of money to a member of the General Assembly for an appearance or speech.

and

But State Senator Obama reported accepting honoraria on his 2000 and 2002 tax returns:

2000: On his 2000 Schedule C-EZ, Barack reported that he received $16,500 as a “Foundation director/Educational speaker.”

2002: On his 2002 Schedule C, Barack reported $34,491 for “LEGAL SERVCES / SPEAKING FEES.”

Learned Hand 1872-1961

Judge Learned Hand: Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.

-Helvering v. Gregory, 69 F.2d 809, 810-11 (2d Cir. 1934)

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Hat tip to John Brewer.

New York Post:

Today, Americans finally will start working for themselves rather than for their government masters. This milestone arrives two days later than in 2007, clearly proving that the era of big government is back with a vengeance. May 19 is Friedman Day, when the American Institute for Economic Research calculates that citizens finally will have toiled long enough to fund local, state and federal spending.

I recently got my home’s tax appraisal reduced, so did Larry Ellison. I argued that my appraisal was higher than the price we paid for the house and was then increased, although average county house prices had declined 12.5%. Larry made somewhat different arguments.

John Murrell explain:

You don’t get to be one of the richest men in the world by being a pushover, so it was no surprise to see Oracle CEO Larry Ellison bring his boardroom combativeness to bear when he felt the property tax assessment was too high on his 23-acre Japanese-style compound in Woodside. Ellison’s aptly named Octopus Holdings bought the property in 1995 for $12 million, and over the next nine years Ellison built it up in the style of a Japanese emperor’s 16th century country residence. The estate consists of a nearly 8,000-square-foot main house, a guest house, three cottages and a gym. The landscaping includes a 5-acre man-made lake, two waterfalls, two bridges and hundreds of cherry and maple trees, redwoods, pines and oaks. It’s the kind of place where a Zen monk would feel comfortable, assuming he won the Powerball.

Including the cost of delays, overruns and change orders, Ellison put about $200 million into the compound. Based on the reproduction cost — without those added expenses — the San Mateo County assessor’s office listed the value at $166.3 million in January 2005, and that’s where it’s stayed. Octopus Holdings, however, had the estate on the books at $64.7 million, and took its case to the appeals board, claiming the property’s unique nature would put it at a disadvantage on the open market. The appeals panel agreed — given the limited market for luxury homes, particularly in the 16th century Japanese style, the “overimprovements,” and the expense of keeping up the “excessive” landscaping, the board said the property is suffering from “significant functional obsolescence.” The board knocked $100 million off the valuation for the last three years and will pay Ellison a refund of about $3 million.

Unfortunately, Ellison’s gain is the rest of the community’s loss. Almost half of the refund comes out of Portola Valley School District funds, and the property’s lower valuation means the district will be short $250,000 to $300,000 in annual revenue starting next fiscal year. “It’s a significant chunk,” said Assistant Superintendent Tim Hanretty. “It’s a permanent, ongoing reduction.” Other losers are the county general fund and assorted cities and redevelopment agencies.

Hat tip to Karen Myers.

Peggy Noonan rightly identifies the skepticism of ordinary Americans as a key obstacle to Hillary’s 2008 ambitions.

For a few years now I’ve thought the problem for the Democrats in general but for Mrs. Clinton in particular is not that America is against tax increases. They’ve seen eight years of big spending, of wars, of spiraling entitlements. They’ve driven by the mansions of the megarich and have no sympathy for hedge fund/movie producer/cosmetics empire heirs. They sense the system is rigged toward the heavily protected. They sense this because they’re not stupid.

The problem for Mrs. Clinton is not that people sense she will raise taxes. It’s that they don’t think she’ll raise them on the real and truly rich. The rich are her friends. They contribute to her, dine with her, have access to her. They have an army of accountants. They’re protected even from her.

But she can stick it to others, and in the way of modern liberalism for roughly half a century now, one suspects she’ll define affluence down. That she would hike taxes on people who make $150,000 a year.

But those “rich”—people who make $200,000 and have two kids and a mortgage and pay local and state taxes in, say, New Jersey—they don’t see themselves as rich. Because they’re not. They’re already carrying too much of the freight.

Followup: The Financial Times observes the even the democrats have begun to recognize the truth. Though democrats love class warfare, they’re really shooting at themselves.

A legislative proposal that was once on the fast track is suddenly dead. The Senate will not consider a plan to extract billions in extra taxes from megamillionaire hedge fund managers.

The decision by Senate majority leader Harry Reid, the Nevada Democrat, surprised many Washington insiders, who saw the plan as appealing to the spirit of class warfare that infuses the Democratic party. Liberal disappointment in Mr Reid was palpable at media outlets such as USA Today, where an editorial chastised: “The Democrats, who control Congress and claim to represent the middle and lower classes, ought to be embarrassed.”

Far from embarrassing, this episode may reflect a dawning Democratic awareness of whom they really represent. For the demographic reality is that, in America, the Democratic party is the new “party of the rich”. More and more Democrats represent areas with a high concentration of wealthy households. Using Internal Revenue Service data, the Heritage Foundation identified two categories of taxpayers – single filers with incomes of more than $100,000 and married filers with incomes of more than $200,000 – and combined them to discern where the wealthiest Americans live and who represents them.

Democrats now control the majority of the nation’s wealthiest congressional jurisdictions. More than half of the wealthiest households are concentrated in the 18 states where Democrats control both Senate seats.

Bizzyblog notes:

US Tax Revenues Up 9.7% through four months, Deficit Down 57%; US Media Outlets Mostly Ignore the News.

Treasury Report