Should I be worried?

May 8, 2008 — buckeyerino

LOL! RINO’s are being hunted! Should I duck for cover?

The Wall Street Journal has an op/ed piece by Pat Toomey of the Club for Growth PAC titled, “In Defense of RINO Hunting.” Michelle Malkin read it, and added her two cents.

And I’m the Buckeye RINO.

If you can’t tell from reading the right-hand sidebar, I don’t think of myself as RINO. I think of myself as Republican.

I think I’m actually more conservative than many pro-business PAC’s. I think some of those pro-business PAC’s are blind to some of their own liberal tendencies.

In Ohio, one of the pro-business PAC’s is the Ohio Chamber of Commerce. They send a questionnaire each even-numbered election year to all the state legislative candidates. I never got their endorsement in my two campaigns for state rep.

Some of the positions they advocated for would have reduced accountability and transparency, and I’m not talking about reduced accountability and transparency in government, I’m talking about reduced accountability and transparency in business. Business has a double standard . . . expecting increased governmental accountability and transparency, but letting themselves off the hook. Being conservative, I want accountability and transparency in government AND business.

Another double standard is that businesses want government to cut its spending, yet they line their own businesses up like swine at the trough eager to land government contracts. They’ll even ask questions to determine whether, as a legislator, you’d support appropriating money for such-and-such. As a conservative, I want to cut government spending, and that includes cutting outsourcing to the private sector.

Yet one more double standard is that businesses plead for deregulation, saying that it’s dragging down their costs. Nevertheless, lobbyists of certain industries push for legislation that directly benefits them, creating a playing field that is not level, thus creating a marketplace that is not truly competitive. As a conservative, I don’t want to place an unnecessarily heavy regulatory burden on business, but I wouldn’t give certain businesses special treatment that favors them over competitors in the marketplace either. I despise pay-to-play legislation, which some PAC’s have resorted to for securing an advantage for themselves, but overall, has ruined the economy of the state.

I’m not suggesting that the Club for Growth PAC is as warped in their rationale as the Ohio Chamber of Commerce PAC. I’m just pointing out that there are wolves in sheep’s clothing, so be vigilant.

The RINO moniker that I have adopted is an attempt at tongue-in-cheek humor, poking fun at the way the term “RINO” is bandied about so freely, often by those who have no business calling someone else a RINO.

So I’m not worried about Pat Toomey or Michelle Malkin. I’m not the real RINO they’re hunting for.

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Sub-prime lender as tax evader

May 8, 2008 — buckeyerino

Someone I know very well sold a house as it was being foreclosed upon. The sale price of the house nearly equaled what was owed on the mortgage. The predatory mortgage lender who’d been charging sub-prime rates agreed to accept the sale price as payment-in-full for the mortgage. That was 2006.

Now it’s 2008. The seller of the home gets a notice from the IRS asking for several thousand dollars more in taxes for calendar year 2006. The seller only had W-2 income that year, so had filed form 1040-EZ. The IRS says that the seller’s income didn’t match the records on file. What the IRS had on file is a form W-2 . . . AND . . . a form 1099.

The seller never received any 1099. No 1099 ever arrived in the mail. The seller never had any knowledge of the 1099.

The 1099 was sent to the IRS from the mortgage lender. The mortgage lender is telling the IRS that they charged off HALF THE BALANCE OF THE MORTGAGE!!!!!

When creditors charge off bad debts, they are permitted to write it off on their taxes and report the amount written off as income imputed to the debtor. But, in this case, when the sale on the house closed, the mortgage lender acknowledged that the debt was paid in full, and the lender was not taking a loss.

Had the seller received a 1099 in January of 2007, the seller would have taken immediate action to dispute the information appearing on the 1099, and probably could have resolved the issue without needing to consult a lawyer or accountant. The seller is undertaking the dispute now, but is much more inconvenienced as the seller has to dig through papers to gather relevant documentation, and will most likely need to consult with both a lawyer and an accountant, costing perhaps hundreds, but it’s cheaper than paying the thousands that the IRS wants.

What would you think if half the amount of your mortgage were added to your income? Think about the tax bracket it would put you in, and then ask yourself, would you be able to cough up the taxes owed? In the seller’s case, even with the tax bill broken down into monthly installments that the IRS will permit, the 2006 tax payments would become the largest single expenditure in the seller’s monthly budget.

The IRS has notified state and local tax agencies of the income discrepancy, so guess who else will come calling with their hands out?

After looking through the seller’s documentation, I have to wonder, how widespread is this practice of creditors claiming losses that don’t exist simply to reduce their own tax burden?

And while these greedy sub-prime lenders have contributed to bursting the bubble of housing markets which is leaving the nation’s economy teetering on the edge of collapse, this particular sub-prime lender is also back-stabbing the nation by evading payment of their full share of taxes by fraudulently imputing the income to someone else. And even if the debtors pay the tax that’s been deceitfully shifted on to them, the IRS is still getting less, because the lender is probably in a much higher tax bracket than the debtors.

That whole industry sector of predatory lenders are now quaking in fear that legislation being contemplated now will alter their business practices so much that it may not be lucrative enough to keep the doors to their businesses open. My response is: You had your day in the sun. Count your blessings that you were able to get away with what you got away with. Now that it’s raining on your parade, I’m not shedding any tears.

Rev. Wright might say: Your chickens are coming home to roost.

****The sequel with more details****

Posted in National Politics. Tags: . 11 Comments »