Paul L. Caron

Sunday, September 4, 2011

Maxine Waters Threatens to 'Tax Banks Out of Business'

ABC News reports this chilling tax threat from Democratic Congresswoman Maxine Waters:

If [banks] don't come up with loan modifications and keep people in their homes that they've worked so hard for, we're going to tax them out of business.

(Hat Tip: Tax Lawyer's Blog.)  This brings to mind President Obama's "joke" in a 2009 Arizona State commencement address about his planned retaliatory audit of the school for its refusal to award him an honorary degree:

As Glenn Reynolds (Tennessee) pointed out at the time in a Wall Street Journal op-ed, Tax Audits Are No Laughing Matter: A President Shouldn't Even Joke About Abusing IRS Power:

Just a joke about the power of the presidency. Made by Jay Leno it might have been funny. But as told by Mr. Obama, the actual president of the United States, it's hard to see the humor. Surely he's aware that other presidents, most notably Richard Nixon, have abused the power of the IRS to harass their political opponents. But that abuse generated a powerful backlash and with good reason. Should the IRS come to be seen as just a bunch of enforcers for whoever is in political power, the result would be an enormous loss of legitimacy for the tax system.

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i think that many of the older political leaders should be checked for the condition of alzheimer'a disease. today it seems that many of the policticans that have been in office for over three decades are starting to lose much of there commen sense. they are not making much sense in there vocie and what they say is to threaten others to get what they want for themsvles. I believe that they have and have always had a hidden agenda in there office. Thank You.

Posted by: tony | Sep 14, 2011 4:54:32 PM

hey y'all want more of that hope and change. guess what this man just don't get it and he never will!

Posted by: kwuteg | Sep 7, 2011 8:07:31 AM

I'm thankful for the assistance the Left/Moderate-Republican politicos have provided to me and countless others on how to tell a joke when we hear one. Always - ALWAYS - the moderate lefties tell us to calm the eff down when one of their camp says something incendiary because it's just a joke. But when a Tea Partier tells a joke...omg, look out! "Can we please change the discourse from its rhetorical worst towards ideas on how to create jobs, blah, blah, blah..." Again, thank you for your skilled advice, and I look forward to when you admit that Obama is also a joke. A very sad joke.

Posted by: Simon Danger | Sep 6, 2011 6:53:52 AM

Does no one in the Democrat party understand that banks borrow money from depositors to loan it out at higher rates? If the banks do the loan modifications that Representative Waters wants, they will jeopardize their ability to repay their depositors. Finally, the FDIC is on the hook to insure those depositors. Does Representative Waters want to break the banks, and therefore break the FDIC?

Posted by: Dave | Sep 6, 2011 6:34:33 AM

When the Fair Tax becomes law, there will be NO IRS!

Posted by: Woodrow Wilson | Sep 5, 2011 5:12:34 PM

Tax Guy, many IRS folks do fear losing their jobs for not being in full compliance on their personal taxes. The same goes for blowing a statute. Other than that, IRS employees cannot be fired. They are unionized employees, with one of the strongest unions in the world. Even if the IRS tries, the administrative process takes years. Many employees retire before the process ends. The one IRS employee who testified against the IRS in the RRA 98 hearings is a good example. The IRS has been on her ever since, yet she is still there.... She will retire soon.

Statutes and personal taxes have nothing to do with IRS employee abuse. Those who abuse are often admired, and highly regarded internally. They are often selected to be the OJIs, and offered the good policy jobs. That way they can spread their abuse to cases being worked by other employees.

And yes, many of them justify their abuse by finding a mandate from what congress or the president say--often by taking it out of context. That exact phrase is repeated often in some groups in the IRS.

Posted by: anon | Sep 5, 2011 3:08:42 PM

You sure it is a joke ? Clinton also used audits against anyone against him.

Posted by: hiway280z | Sep 5, 2011 12:53:04 PM

Is this a Flash Mob threat by Maxine Waters targeting banks?

Posted by: climp | Sep 5, 2011 10:11:38 AM

Anyone who thinks IRS employees aren't scared sh*tless about losing their jobs after the over the top RRA98 provisions pressing a hard thumb down against IRS employees (um, the 10 deadly sins; and 1 = auto job loss, if I recall one of them being a filing or payment 1 day late -- oops I forget to send it certified mail return receipt requested and the postmark is 4/16 = you lose your job).

I doubt any IRS employee, at any level, would be eager to risk their job in any way in this economic environment by doing something stupid let alone reckless enough to qualify as abusive per the RRA98 Hearings (not to mention, we all know that the RRA98 hearings were a dog and pony show by the late (?) Sen. Roth who was out to crucify the IRS and much of the testimony of the alleged abuses turned out to be false).

I am also hard pressed to see how anyone in the minority party in the House, the House, thinks that their party can dictate any sort of policy. Unless the republicans in the House want to do something, it doesn't make a damn bit of difference what 1 let alone all of the democratic members want.

Sadly, politicians -- democrat or republican, liberal or conservative, blue or red -- care about only one thing: getting re-elected. OK, two things: being re-elected or elected to a higher office. Wait, three things: being re-elected, elected to a higher office, or appointed to a higher office/sweet position. No, 4 things...I better start again.

Posted by: tax guy | Sep 5, 2011 7:47:58 AM

'As far as banks, I think litigating the big banks into the ground is a much better idea. I'm still waiting for a racketeering suit on the subprime CDOs. The suits last week are a start.' save_the_rustbelt

And you are a republican? The banks lent money to people that could not repay. They followed the bidding of our political masters via the Community Reinvestment Act.

To fix the consequences of that fabulous policy the federal reserve has confiscated the savings of millions to prop up the banks. The gov't used billions of taxpayer money to help recapitalize the banks. Now that same gov't is going to sue the banks. Now that is intelligent policy and certainly something you would expect from this administration.

But good luck on that economic growth with the banks preoccupied.

Posted by: Banker Frank Dodd | Sep 5, 2011 6:11:13 AM

Correction: I should have read one paragraph further into the Wikipedia entry for Karl Hess, it does accurately represent what he's said on the subject.

Posted by: Lina Inverse | Sep 5, 2011 5:32:36 AM

Actual political audits at the direction of a President didn't happen until the Clinton administration.

From what I've read they go back at least to LBJ, targeting Goldwater campaign workers such as speechwriter Karl Hess (contrary to the sanitized Wikipedia entry if you read his actual words it was a clearly political audit that triggered his alienation etc. after the election). I suspect the history goes back further, people like JFK and FDR who were willing to imprison their opponents wouldn't hesitate to use lessor methods like this if they were effective.

Posted by: Lina Inverse | Sep 5, 2011 5:25:29 AM

"i mean, serious, there is so much more wrong in america that needs fixing that wasting time on petty points like this..."

Taxing companies out of business because they refuse to execute a business plan built on a particular ideology is very serious matter. Such an attitude held by those in position to influence tax policy is not acceptable and must not be ignored. Further, most of what is wrong in America stems from government policy and behavior developed from such an attitude.

Posted by: willis | Sep 5, 2011 4:16:25 AM

The other message this sends, is that it is acceptable for heavy-handed behavior by the IRS. IRS employees pick up on this and use it as a justification for inappropriate conduct. It would be interesting to see if this correlates with increased IRS abuses. I suspect it does and will. Which means we should see another RRA 98 in a few years, to clean up the abuses.

Posted by: anon | Sep 5, 2011 1:47:20 AM

The most corrupt member of the House forgot to add, "Except for banks my husband invests in.

Posted by: Ken Hahn | Sep 4, 2011 6:53:44 PM

"Surely he's aware that other presidents, most notably Richard Nixon, have abused the power of the IRS to harass their political opponents."

I may be wrong about this, but it's my recollection that Nixon *threatened* to use the IRS to harass his political opponents, but he was the one who got audited. Actual political audits at the direction of a President didn't happen until the Clinton administration. (Numerous conservative organizations spent those years in non-stop IRS audits.

Posted by: Brett Bellmore | Sep 4, 2011 6:48:00 PM


Posted by: Rich | Sep 4, 2011 6:38:29 PM

.....and the Republicans, as well as Allan Greenspan (when at the Federal Reserve Bank) warned the (then) democrat congress about the potential for their bad law creating a financial crash and were ignored. Those warnings are on the record. You won't learn it from the dinosaur media.

Posted by: Werbaz Neutron | Sep 4, 2011 6:35:28 PM

I suspect President Palin will veto any such hairbrain legislation that made it to her desk.

Posted by: Douglas Fletcher | Sep 4, 2011 6:31:21 PM

But as told by Mr. Obama, the actual president of the United States ...

Begs the question, doesn't it?

Posted by: Jay Guevara | Sep 4, 2011 6:25:40 PM

The House Ways and Means committee ought to figure a way the her district receives the least possible amount of federal funding possible. A constituency that elects the likes of her deserves no less.

Posted by: cubanbob | Sep 4, 2011 6:21:32 PM

I am a Republican and don't care much for Obama or the IRS, but it was a joke. Good grief, all of the howling slobbering dittoheads should calm down.

As far as banks, I think litigating the big banks into the ground is a much better idea. I'm still waiting for a racketeering suit on the subprime CDOs. The suits last week are a start.

Posted by: save_the_rustbelt | Sep 4, 2011 5:32:18 PM

Obama said that he was going to tax the coal industry out of business, and Waters said that the government would "socialize" companies. Why should businesses risk expansions given the animosity of this administration to private enterprise?

Posted by: Woody | Sep 4, 2011 11:56:06 AM

I love stories like this because they expose taxation for what it is: oppression.

Posted by: anon | Sep 4, 2011 11:22:20 AM

Before anyone brings out "tax guy is a liberal/conservative wing nut" i am going to go on record saying that i don't care what any wing nut calls me.

i think the video was a tad over the top as it takes a 12 second statement and repeats it enough times until you feel bad for the dead horse. i think Mr. Reynold's statement above hits the point with a more appropriate tune, and measure of respect due to the Office of the President (even if you do not like who holds the office).

i think Mr. Reynold's, again, hits a good point that telling a joke (and humor in general) is about delivery, and this was not the right person to deliver the joke (even if the clip is taken way way way way way out of context). the reference to Nixon, albeit 40 or so years ago, is valid and should serve as a reminder to every President and elected official of the evil that is abuse of power.

you know you have said something wrong when you say "IRS" and all the attention is drawn to you and not to the IRS.

i am hopeful that a meaningless inquisition does not come from the republican held house to score brownie points for an election that is 14 months away. i mean, serious, there is so much more wrong in america that needs fixing that wasting time on petty points like this are why people hate congress. we are in a serious financial mess that the former administration and the republican controlled congress (for the first 6/8 years) created we need them to spend time digging us out rather than using that spade to jab one another.

unlike when the country was flourishing under President Clinton so much congress could spend an entire year or more impeaching him and trying him for whether or not he had sex with an intern (which was 4 steps removed from where the investigation began -- whitewater). we don't have the luxury of wasting that kind of time now. silly commissions and automatic fall backs so no one actually has to commit to anything is cowardice on the part of congress and the President. it is about time he used some muscle and behaved like an executive rather than a legislator. he never was a political executive, only a legislator, and that is why he often has so much trouble. he actually believed that negotiations in several instances would work (just as they did when he was in the legislature) so he stayed out of it and they have failed. he needs to learn how the chief executive functions/interacts with the legislature rather than leaving it up to them and signing what they give him.

well, at least i hope he has learned not to joke about things that he should leave to the late night comedians

Posted by: tax guy | Sep 4, 2011 6:43:28 AM

This is sounding more like Carter--or is it Nixon?--all the time. Very sad for a President who came in with such lofty aspirations. I wonder if it wouldn't be better if he didn't run again.

Posted by: mike livingston | Sep 4, 2011 5:52:44 AM