Windfall Tax

[imdamanz]

This is for informational puposes only. This is my opinion and I will not be responsible for any persons action based on the information below. Please follow up with your own research and/or seek advice from a financial professional:

While it is techniquically correct that the Government can not impliment a "specific" tax on a certain group of people, they can and have changed the tax laws to suite their own purposes. Most recently, Congress attempted to impose a 90% tax on all bonuses paid out by companies that received bail out money. These people that were set to receive the bonuses had contracts that guarenteed them. They were not going to tax every bonus handed out nationwide, but only this class of people. This same arguement was brought up during that debate. It is not outside the relm of possibility that they may choose to get their hands on a significant portion of any proceeds - even after the fact. They believe that it is their money first and "allow" us to keep some of it. Twisted logic, yes, but that is how they operate, in my opinion. Is it capitalism, absolutley not, but it has been years since our Government acted in a way that is remotely democratic.

My personal position is that I will set aside the maximum federal income tax rate on these earnings (currently 35% plus an additional 3.5% for Alt Min = 38.5%) plus another 15 - 20% for any recapture that they may try to impose. I do not think that we will be taxed at capital gain rates. My reading of the tax code indicates that these will be treated as regular income subject to the tax tables. Please remember that with the AMT, tax credits and many items that you were normally able to take as deductions will either be phased out or eliminated. I feel like it is going to be a stretch to get them to accept this as an investment activity. Worst case scenario is that I will have to cut them a bigger check, best case is that I will have kept available monies to use in future years.

One other note; it would be unpresidented if they were to change the laws in a tax year after the event had occured and impose additional taxes retroactively. Therefore, if we can get to January 1st of the year following the RV, there should not be any attempt to increase the tax on the distributions from prior years.

Jim

[LettheRVbegin]

This is the reason why I said I would go overseas and cash them. I plan to open safe deposit boxes among 3-5 different banks and store my dinars, take them out little by little until the rate reaches its peak.

[imdamanz]

This is the reason why I said I would go overseas and cash them. I plan to open safe deposit boxes among 3-5 different banks and store my dinars, take them out little by little until the rate reaches its peak.

The tax code has many provisions for capturing foreign sources of income. Most banks, including internationally, will report to the IRS any income that falls within their established guidelines. If you are required to file a US tax return, the income will still be reported to the IRS. You are ultimately responsible to repoert income from all sources or potentionally face charges for income tax evasion, subjecting you to a conviction including jail time, and penalties and interest - thus incurring a even higher net liability. It is a difficult postion to win from; it is how they took down Al Capone.

[DavisCapital]

Reference the Bill of Attainder in the US Constitution whereby the US government cannot single out one single group or person with a post facto Law. I think a good case for this could apply to this situation if the Gov't targeted our investment with an extraordinary tax.

http://www.techlawjournal.com/glossary/legal/attainder.htm

Bill of Attainder

Definition: A legislative act that singles out an individual or group for punishment without a trial.

The Constitution of the United States, Article I, Section 9, paragraph 3 provides that: "No Bill of Attainder or ex post facto Law will be passed."

"The Bill of Attainder Clause was intended not as a narrow, technical (and therefore soon to be outmoded) prohibition, but rather as an implementation of the separation of powers, a general safeguard against legislative exercise of the judicial function or more simply - trial by legislature." U.S. v. Brown, 381 U.S. 437, 440 (1965).

"These clauses of the Constitution are not of the broad, general nature of the Due Process Clause, but refer to rather precise legal terms which had a meaning under English law at the time the Constitution was adopted. A bill of attainder was a legislative act that singled out one or more persons and imposed punishment on them, without benefit of trial. Such actions were regarded as odious by the framers of the Constitution because it was the traditional role of a court, judging an individual case, to impose punishment." William H. Rehnquist, The Supreme Court, page 166.

"Bills of attainder, ex post facto laws, and laws impairing the obligations of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation. ... The sober people of America are weary of the fluctuating policy which has directed the public councils. They have seen with regret and indignation that sudden changes and legislative interferences, in cases affecting personal rights, become jobs in the hands of enterprising and influential speculators, and snares to the more-industrious and less-informed part of the community." James Madison, Federalist Number 44, 1788.

Supreme Court cases construing the Bill of Attainder clause include:

Ex Parte Garland, 4 Wallace 333 (1866).

Cummings v. Missouri, 4 Wallace 277 (1866).

U.S. v. Brown, 381 U.S. 437 (1965).

Nixon v. Administrator of General Services, 433 U.S.425 (1977).

Selective Service Administration v. Minnesota PIRG, 468 U.S. 841 (1984).

[imdamanz]

I understand the principle of attainder. I agree that it should apply. My concern is that our elected officials are masters of contoursionism that would make Houdini proud. They are capable of manipulating the wording so that it appears to be a general bill that applies across the board, but then enforce it on a targeted basis. Believe me, I hope that this is an issue that becomes a moot point. I just don't have the trust and faith in their ability to impart fairness unless it serves their interest(s) first.

A couple of quips to consider when thinking about:

The word politic comes from the ancient Greeks - poli meaning many, and tic meaning blood sucker.

If progress is considered to be moving forward, then why did they name it Congress?

[stu761]

I will cash in and take all my money out of the bank and bury it before I pay 70%

[hf328]

Thought the winfall tax was for Corp. not individuals. I don't think it would be of concern to us.

[Notso]

I will cash in and take all my money out of the bank and bury it before I pay 70%

I have some land and a shovel willing to help dig!!!