Central Perk: Mish's Global Economic Trend Analysis

sâmbătă, 3 septembrie 2011

Mish's Global Economic Trend Analysis

Individuals Who Are Not Authorized to Work in the United States Were Paid $4.2 Billion in Refundable IRS Credits
Two-Thirds of Germans Oppose Expanding EFSF, Believe Merkel has "Lost Grip" on Euro Crisis; To Hell with Taxpayers, Merkel Worried about Her Legacy
CNN Poll Says 8 in 10 Think US is in Recession; Obama Full-Month Approval in August Falls to Lowest of His Presidency

Individuals Who Are Not Authorized to Work in the United States Were Paid $4.2 Billion in Refundable IRS Credits

Posted: 03 Sep 2011 06:05 PM PDT

According to a Treasury Inspector General audit, Individuals Who Are Not Authorized to Work in the United States Were Paid $4.2 Billion in Refundable Credits

Redaction Legend:
1. Tax Return/Return Information
2(f). Risk circumvention of agency Regulations or Statutes

IMPACT ON TAXPAYERS

Many individuals who are not authorized to work in the United States, and thus not eligible to obtain a Social Security Number (SSN) for employment, earn income in the United States. The Internal Revenue Service (IRS) provides such individuals with an Individual Taxpayer Identification Number (ITIN) to facilitate their filing of tax returns. Although the law prohibits aliens residing without authorization in the United States from receiving most Federal public benefits, an increasing number of these individuals are filing tax returns claiming the Additional Child Tax Credit (ACTC), a refundable tax credit intended for working families. The payment of Federal funds through this tax benefit appears to provide an additional incentive for aliens to enter, reside, and work in the United States without authorization, which contradicts Federal law and policy to remove such incentives.

WHAT TIGTA FOUND

Claims for the ACTC by ITIN filers have increased from $924 million in Processing Year 2005 (the calendar year in which the tax return was processed) to $4.2 billion in Processing Year 2010. Clarification to the law is needed to address whether or not refundable tax credits such as the ACTC may be paid to those who are not authorized to work in the United States. *********************2(f)*********************************** Also, employees in the Accounts Management Taxpayer Assurance Program are not taking steps to notify taxpayers when it is obvious their SSNs and names have been compromised.

TIGTA also found that a feature on tax preparation software programs which automatically takes the taxpayer identification number and enters it as the identifying number for the taxpayer's Wage and Tax Statements ******************2(f)*************************************.

WHAT TIGTA RECOMMENDED

TIGTA recommended that the IRS work with the Department of the Treasury to seek clarification on whether or not refundable tax credits may be paid to individuals who are not authorized to work in the United States. TIGTA also recommended the IRS require individuals filing with ITINs and claiming the ACTC to provide specific verifiable documentation to support that their dependents meet the qualifications for the credit, including residency, and that questionable Child Tax Credit (CTC) and ACTC claims on ITIN returns **********2(f)*******************************. The IRS should also notify taxpayers when their SSNs are compromised and ensure that software packages do not auto-populate an ITIN onto Wage and Tax Statements.

IRS management agreed to discuss with the Department of the Treasury the issue of ITIN filers' ACTC eligibility. The IRS did not agree to require additional documentation to support CTC and ACTC claims on ITIN returns ********************2(f)*********************************** The IRS is exploring options to alert taxpayers whose SSNs have been compromised and plans to address software that auto-populates an ITIN onto Wage and Tax Statements and take sanctions for noncompliance.

American Recovery and Reinvestment Act of 2009 Made Fraud Easier

The Washington Post commented on the fraud in Undocumented workers got billions from IRS in tax credits, audit finds

Sen. Orrin Hatch (R-Utah), ranking member of the Senate Finance Committee, On Friday announced plans to examine the refunds.

"The disconcerting findings in this report demand immediate attention and action from Congress and the Obama Administration," Hatch said in a statement.. "With our debt standing at over $14.5 trillion and counting, it's outrageous that the IRS is handing out refundable tax credits...to those who aren't even eligible to work in this country."

Wage earners who do not have Social Security numbers and are not authorized to work in the United States can use what the IRS calls individual taxpayer identification numbers. Often these result in fraudulent claims on tax returns, auditors found.

Their data showed that 72 percent of returns filed with taxpayer identification numbers claimed the child tax credit.

Changes to tax law are partly to blame for the explosion in refunds for additional child tax credits in recent years, auditors found. Before 2001, filers needed to have three or more children to qualify — and to owe more Social Security taxes than earned income credits.

But those requirements have been eliminated and the allowable refund for each child doubled. The American Recovery and Reinvestment Act of 2009 also made the refund easier to get, auditors found.

Fraud and government programs go hand-in-hand.

In my opinion we should kill this ridiculous program entirely. The next best alternative is to not grant any credits to anyone who does not have a social security number and is not a US citizen.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Two-Thirds of Germans Oppose Expanding EFSF, Believe Merkel has "Lost Grip" on Euro Crisis; To Hell with Taxpayers, Merkel Worried about Her Legacy

Posted: 03 Sep 2011 04:50 PM PDT

Against the wishes of two-thirds of German citizens, Merkel is hell-bent on ramming through a massive expansion of the European Financial Stability Facility (EFSF).

Please consider Germans oppose bailout boost, critical of Merkel

Center-right Chancellor Merkel is trying to face down a threatened revolt in her own bloc in parliament over a September 29 vote to ratify more money and powers for the euro rescue fund.

She was also publicly criticized by her ex-mentor Kohl, Germany's longest-serving post-war chancellor and architect of German reunification, over policy on Europe, the United States and Libya, saying Berlin had "no view or idea" about where it was going.

An opinion poll by Infratest dimap for public broadcaster ARD suggested 68 percent of Germans agree with Kohl's comments published in a magazine last week, while 66 percent think the Merkel government has "lost its grip" on the euro crisis.

Two thirds said they were opposed to giving more funds for the European Financial Stability Facility (EFSF) and over half were against introducing common euro-zone bonds -- a proposal the German government has energetically rejected so far.

At the same time, 64 percent believed European countries should coordinate policy more closely, suggesting most Germans are reluctant to fund more bailouts but are not "eurosceptic" in the broader sense.

Coordinating policy and "eurosceptic" are not opposites. For example, the US could coordinate trade policies with Canada and that would neither imply or deny "Loonie Skepticism".

To Hell with Taxpayers, Merkel Worried about Her Legacy

The important take-away is German taxpayers are clearly fed up with bailouts, yet Merkel does not care one iota what they think. After all, she has a legacy to preserve. At this stage, enduring legacy is even more important to Merkel than reelection.

She does not want the Euro to go down on her watch. Nothing else matters to her, and that is why she repeatedly gives in to demands of ECB president Jean-Claude Trichet and wishes of French President Nicolas Sarkozy.

Just to show you how wishy-washy Merkel is regarding the EFSF, on August 17 Bloomberg reported "German Chancellor Angela Merkel and French President Nicolas Sarkozy rejected an expansion of the 440 billion-euro ($633 billion) rescue fund".

Now she is in favor of it. So is Sarkozy. What happened?

This ......

Greek One-Year Yield Soars to 72%

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

CNN Poll Says 8 in 10 Think US is in Recession; Obama Full-Month Approval in August Falls to Lowest of His Presidency

Posted: 03 Sep 2011 11:05 AM PDT

President Obama's approval index rating is -21, the lowest ever. Obama's sinking numbers can be explained by a CNN Poll: 8 in 10 think we're in a recession

Economic fears are not diminishing. More than eight in 10 Americans think the economy is in another recession, according to a new CNN/ORC poll. One-third of those surveyed think it's serious.

While the country isn't technically in a recession because the economy hasn't experienced two straight quarters of negative growth, the poll's results highlight the importance of President Barack Obama's jobs speech next Thursday night.

Don't expect Republicans to stop demanding more budget cuts though. Almost half of GOPers surveyed say deficit reduction is just as important as creating more jobs, including those who identify themselves as tea party supporters.

Democrats strongly disagree. Eighty-three percent want the president to focus more on job growth, and two-thirds of independents say the same.

This could hint at the president's economic plan as he campaigns for re-election. With only 34% of Americans approving of the way he is handling the economy, according to a CNN/ORC Poll released earlier this week, job creation could help the president solidify his party's eroding support, while bringing in key independent voters.

Definition of Recession

It's disappointing to see CNN spreading nonsense that it takes two quarters of negative growth to call a recession. Two quarters is certainly a sufficient condition, it is not a necessary condition.

Recessions are called by the NBER and nearly all them start while the economy is still growing.

Poll Results

35% say the recession is serious, 34% moderate, 13% mild. Only 18% say the country is not is recession. Click here for complete CNN poll results.

I suggest the average person has it correct.

Obama Full-Month Approval in August Falls to Lowest of His Presidency

Please consider Obama Approval Index Month-by-Month

When tracking President Obama's job approval on a daily basis, people sometimes get so caught up in the day-to-day fluctuations that they miss the bigger picture. To look at the longer-term trends, Rasmussen Reports compiles the numbers on a full-month basis, and the results can be seen in the graphics below.

In August, the number who Strongly Approve of Obama's job performance was at 21%. That's down three points from 24% in July and the lowest level measured during Obama's entire presidency. The previous low was 23% reached in both April and June of this year.

Since July 2009, the number who Strongly Approved of the president's performance has now ranged from a low of 21% to a high of 31%. By comparison, 43% Strongly Approved of Obama's performance in January 2009.

The number of voters who Strongly Disapprove of the president's performance increased a point from July to 42% in August. The number of voters who Strongly Disapproved has ranged from 37% to 44% since July 2009.