It's Worse Than You Think

Since July 2010, when Catherine Engelbrecht applied to the IRS for tax-exempt status, she has received multiple inquiries from the IRS about the entities that applied for tax-exempt status.[1]  Fair enough, the IRS has a job to do.  However, the IRS then proceeded to audit both the business and personal income tax returns of Mrs. Engelbrecht.  Again, the IRS has a job to do, and audits are an important tool in administering our tax laws.  Just a coincidence, perhaps.  Even if conservative groups were targeted, it would be only outrageous, if they were targeted for political reasons.

In this case, however, the targeting appears to extend far beyond the IRS.  Since she applied for tax-exempt status, Mrs. Engelbrecht or her businesses have received six inquiries from the FBI, two audits from the Bureau of Alcohol, Tobacco, and Firearms (“ATF”), and an audit from the Occupational Safety and Health Administration (“OSHA”).  OK, the ATF and the IRS are both part of the Treasury Department, so it appears that there may have been some coordination between the bureaus within the Treasury Department.

However, the FBI resides within the Department of Justice, and OSHA resides within the Department of Labor.  So now it appears that the IRS disclosed information resulting from an application for tax-exempt status not only to higher-ups within the Treasury Department, but also to other agencies in the Department of Justice and the Department of Labor.  It defies credulity that these were random acts of governmental intrusion without input and coordination from senior levels within the Obama Administration.

We will find out who was coordinating the sharing of sensitive tax information among the various agencies of the federal government and why they pursued the actions they did.  When we do, the results will not be pretty.  It may not result in the impeachment of President Obama, but it will render the remainder of his second term, essentially impotent.

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[1] “A Battering Ram Becomes a Stonewall,” by Peggy Noonan, Wall Street Journal, May 25, 2013.

Why "Secure the Borders First!" Won't Solve the Problem

Those who insist on securing the borders first, are ignoring the source of almost half of the illegal immigrants.  An estimated 40% to 50% of the illegal immigrants in the U.S. come here legally and then overstay their visas.  Securing the border will do nothing to solve this problem.  Until we streamline deportation for those who come legally, but remain illegally, we will continue to have a serious problem with illegal immigrants.

The Economics of Bars and Restaurants

Oregon House Speaker Tina Kotek recently made news by proposing a change in the way bars and restaurants are allowed to sell lottery tickets.  Current law says that a bar/restaurant cannot generate more revenues from lottery sales than from food and beverage sales.  This has led some lottery outlets to sell massive amounts of cheap liquor to more than match their lottery ticket sales.  Tina thinks this is a terrible situation, so she has proposed a fix:  change the law so that more than half the profit of the bar/restaurant must be generated from food and beverage sales.

Tina obviously doesn't understand the economics of the bar and restaurant business in Oregon.  As a professional business appraiser, I have valued a number of bars/restuarants that sell lottery tickets.  What I, and other business appraisers have learned, is that the bars and restaurants that sell lottery tickets, are lucky to break even on their food and beverage sales.  Virtually all of their profits come from lottery ticket sales.  In reality, the lottery business is subsidizing the food and beverage business.

So the next time you visit your favorite corner tav, give a word of thanks to the fool playing the video poker machine for keeping your bar bill down.

You Can Thank Jack Bogdanski

Jack is, temporarily we hope, hanging up his blogging shingle.  He is the inspiration behind this blog.  More to come.  Check out www.bojack.org while there's still time.