Townhall
Finance...
Dems: Greed is Good
as a Tax Credit
By John Ransom
The Democrats’ predilection for “stimulating” the economy with tax
credits that redistribute wealth, instead of tax cuts that preserve
wealth, has created conditions of rampant fraud amongst government
agencies including the IRS, government sponsored corporations, like
General Motors (aka Government Motors), and individual tax filers
according to several recent reports from the federal government and
government watchdog groups.
And a new report may indicate that the trend is spreading to new
markets.
Last week, Townhall Finance detailed a report from the Treasury’s
Inspector General (IG) that told the story of widespread abuse in the
application of the first-time home buyer credit, earned-income tax
credits and home energy tax credits for residential wind and solar
power devices.
The IG estimates that “one-quarter of payments of the earned income tax
credit” alone, for example, “are issued to people who are ineligible
for them, which cost the government more than $11 billion in fiscal
2009, according to the Treasury’s inspector general for tax
administration,” according to Bloomberg.
Now a former Saturn auto dealer and an associate with the National
Legal Policy Center (NLPC) is charging that the $7500 tax credits for
the purchase of the Chevy Volt are being claimed by auto dealers who
first title the cars to collect the tax credit, and then sell them as
used at the Manufacturer’s Suggested Retail Price.
The Chevy Volt is a hybrid gas-electric vehicle manufactured by General
Motors. According to the automaker the company has sold about 1,700
Volts through April 2011, which is apparently all the cars from the
Volt channel that GM has been able to manufacture.
Mark Modica, with the NLPC, set out to find out if Chevy Volts were
really selling so fast that it was hard to keep them in stock. What he
found out instead was that dealers are allegedly “gaming” the system in
order to keep the tax credits that were intended for consumers.
“Many Volts with practically no miles on them are being sold as used
vehicles,” writes Modica “enabling the dealerships to benefit from the
$7,500 credit supplied by the American taxpayers on each car. The
process of titling the Volts technically makes the dealerships the
first owners of the vehicles, which gives them the ability to claim the
subsidies. The cars are then offered to retail customers as used
vehicles.”
Modica says that he became suspicious because despite reports that say
GM can’t meet demand for the Chevy Volt, he found at least 6 in stock
within 70 miles of his location just by going online.
After talking to several dealers he discovered that some of the used
vehicles being advertised had only 10 to 30 miles on them. One dealer
admitted that the dealership was titling the vehicle in order to claim
the tax credits.
“When I asked if I was eligible for the $7500 tax credit” on the car
says Modica, “I was told that I probably wasn’t since the dealership
was applying for the subsidy.”
Considering that reports from the IG’s office suggest that others are
gaming the tax credit system as well, perhaps it’s time to have a House
investigation into the uses an abuses of tax credit
schemes.
“Under the 2008 program,” wrote columnist Ken Harney last week on
Townhall Finance about abuses in home purchase tax credits, “auditors
identified 1,326 individuals who claimed more than $10 million in
credits for home purchases that occurred after the claimant’s recorded
date of death. More than 900 of the claimants had been dead for at
least half a year.”
Last week, Townhall Finance’s Bob Beauprez also detailed widespread
fraud at the IRS itself.
“Not surprisingly,” wrote Beauprez “scores of fraudulent claims [for
the first-time home-buyer credit] were filed …including from more than
100 IRS agents that the IG says falsely filed for the credit
themselves,” according to a report filed by the IRS.
So far the IRS has not charged any of the employees involved with a
crime.
“It is incomprehensible that this many IRS employees improperly claimed
the homebuyer tax credit,” said Sen. Orrin G. Hatch of Utah, the top
Republican on the Senate Finance Committee, according to the Washington
Times. “These are the very people who are supposed to fairly enforce
our tax laws, but seem to instead be taking advantage of that expertise
for their own personal benefit.”
That’s the problem when you mix cash economic incentives with
government’s ability to tax. It’s a recipe for fraud, waste and abuse
with little or no accountability. And it’s one of the very best
arguments against ever bailing out any private industry including
automakers and banks.
Unfortunately the IRS isn’t the only government enterprise now that has
the expertise and the means to take advantage of taxpayers in this
manner.
Thanks to Obama’s activist government, we’ve just seen another example
of how car dealers, banks, healthcare providers, insurance companies,
mortgage servicers and whole host of quasi-governmental bodies can now
rip off taxpayers with the same efficiency as the IRS agents who
defrauded us.
Greed is good, say the Democrats, as long as it comes in the form of a
tax credit.
Read it at Townhall Finance
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