My Home About Me

A single un-named taxpayer has stepped forward under California's amnesty program for back taxes owed, and paid the state $200 million. The amnesty program effectively lowered the tax rate for those who owe back taxes by eliminating criminal consequences. So this is the Laffer Curve in action: lower the tax rate, and you get more tax revenues.

The payment is almost certainly related to a law signed by Mr Schwarzenegger in 2004 offering “taxpayer amnesty”, so that the very wealthy could set their taxes straight without risking fines or jail. The deadline for applying for amnesty was April 1, 2005, so any settlements would probably have been made this year and could cover several years of earnings...

Who is this astonishingly wealthy individual, who must have earned at least $2 billion to justify such a monster payment? Was it a Silicon Valley player such as Steve Jobs, of Apple Computer, or Sergey Brin, of Google; a reclusive billionaire such as David Geffen; or someone less obvious, such as Kirk Kerkorian, the corporate raider and California-based casino mogul?

A correct identification will be almost impossible. Last year, Forbes magazine’s ranking of the world’s 746 billionaires counted 91 living in California. Many others keep homes there, which could make them liable for taxation by the state Franchise Tax Board. Disclosing taxpayer records is an offence that can result in a prison sentence, so the state authorities will not answer perhaps the most intriguing question: was Taxpayer X coming clean after years of unpaid taxes, or was he (or she) simply an heir making a one-off payment on a family fortune? Gordon Getty, for example, or William Hearst III? ...

The authorities have at least confirmed that Taxpayer X is not a corporation. “This was a personal income tax matter,” Patrick Hill, a spokesman for the Franchise Tax Board, said.

Thanks to the Club For Growth blog for the link.

bailout   Basic Materials SPDR (XLB)   bond trading   bond yields   capitulation   climactic   commodities   credit crisis   Currency ETFs   day trading   Deron Wagner   DJIA chart   economic data   Emini's Nas 100   emini's S&P 500   emini's S&P 500e   ETFs (exchange trade funds)   ETFs (exchange traded funds)   Gold Miners ETF (GDX)   Japanese Yen ETF (FXY)