Tag: taxes

Full Extent of COVID Fraud Will ‘Never Be Known With Certainty’

A couple claiming to run a farm that employed dozens of people used fake employee records to get more than $1 million in COVID-19 relief payments when they actually employed no one on a farm that did not exist.

A social media influencer created fake documents to score more than $400,000 in COVID-19 funds meant to help small businesses, then used the money to buy cryptocurrency and gifts for his girlfriend.

A state employee whose job was to stop unemployment benefits fraud helped other fraudsters navigate around fraud prevention systems so they could steal more than $1 million, including federal tax dollars made available to states during the pandemic.

Only now, nearly four years after the federal government approved an unprecedented amount of emergency spending in response to the COVID-19 pandemic, are investigators getting a full picture of all the ways that schemers and thieves raided programs. Congress approved about $4.6 trillion in COVID-19 emergency spending, and so much of it was stolen that auditors now say we’ll likely never have a full accounting of it all.

“When the federal government provides emergency assistance, the risk of payment errors—including those attributable to fraud—may increase because the need to provide this assistance quickly can lead agencies to relax or forego effective safeguards,” the Government Accountability Office (GAO) explained in a new report summing up efforts to recoup stolen funds. “Because not all fraud will be identified, investigated, and adjudicated through judicial or other systems, the full extent of fraud associated with the COVID-19 relief funds will never be known with certainty.”

As Reason has previously reported, auditors believe that about $200 billion was fraudulently disbursed from two programs run by the Small Business Administration (SBA) during the pandemic. That’s about one-sixth of all spending run through the SBA’s Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program. Additionally, the GAO believes that between $100 billion and $135 billion in federal unemployment funds—provided to states on a temporary basis during the pandemic—were lost to fraud.

One former U.S. attorney has called it “the biggest fraud in a generation.”

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Michigan Lawmakers Signed Nondisclosure Agreements, Can’t Discuss Corporate Welfare Scheme

When a state gives away tax money to a private company in an attempt to sway its business decisions, the least that a taxpayer can hope for is some openness in the process.

Unfortunately, the state of Michigan’s economic development agency is actively preventing transparency, leaving questions on how the state plans to spend billions of taxpayer dollars unanswered.

In December 2021, Michigan Gov. Gretchen Whitmer, a Democrat, signed legislation establishing the Strategic Outreach and Attraction Reserve (SOAR) program, intended “to ensure the state can compete for billions of dollars in investment and attract tens of thousands of jobs to bolster our economy.” SOAR funds would be disbursed with approval from the state Senate Appropriations Committee and would benefit companies that chose to do business in the Great Lake State.

As Reason reported in May, SOAR disbursed $1.4 billion in its first 18 months, all to benefit companies making electric vehicles, batteries, or battery components.

This week, Beth LeBlanc of The Detroit News reported that since its founding, “at least 163 individuals or entities have signed non-disclosure agreements” (NDAs) related to SOAR projects. The agreements were required by the Michigan Economic Development Corporation (MEDC), which manages the SOAR program.

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Michigan Marijuana Tax Revenue Grew By 49% Over The Past Year, Surpassing Alcohol Earnings

Sales of legal marijuana in Michigan contributed $266.2 million in tax revenue to the government during the most recent fiscal year, according to a new report from the legislature’s nonpartisan House Fiscal Agency. That’s more than the state made from the sale of beer, wine and liquor combined.

Tax from sales of adult-use cannabis were up 49.1 percent in fiscal year 2022–23, which ended in October, compared to $178.6 million collected the year before. That amounted to an additional $87.6 million in state revenue from cannabis sales compared to the prior 12 months.

Of all the major tax revenues itemized in the House Fiscal Agency report published last week, none grew at a faster rate than cannabis revenue.

Adult-use marijuana products are subject to a 10 percent state excise tax, which accounts for the $266.2 million. Products also incur the state’s standard 6 percent sales tax, which works out to an additional $159.7 million in revenue from legal marijuana transactions.

Looking at the cannabis excise tax alone, marijuana was responsible for nearly 0.8 percent of total state revenue recorded in the annual report. Including sales tax, the share works out to about 1.3 percent of total revenue.

The marijuana excise tax brought in more money for the state last fiscal year than alcohol taxes, which contributed about $192.6 million total—$46.6 million from beer and wine and $146 million from liquor That’s a shift from fiscal 2021–22, when combined alcohol taxes brought in roughly $12.9 million more revenue than cannabis.

By contrast, marijuana revenue amounted to less than half of the $722.2 million Michigan made from tobacco taxes in the most recent fiscal year.

In October 2023 alone, the marijuana excise tax produced $52.4 million in tax revenue—more than any other single source aside from sales and use taxes, income taxes, insurance taxes and tobacco taxes.

Michigan voters approved adult-use marijuana legalization in 2018, with legal sales beginning the next year.

The state has set sales records even as the average cost of marijuana has remained at record lows, with the price of an ounce for adult-use cannabis now hovering around $98 just a few months ago. In December 2021, by contrast, the cost of an ounce was about $180.

Last month, Michigan Gov. Gretchen Whitmer (D) signed a pair of bills into law to allow state-licensed marijuana businesses to conduct trade with tribal cannabis entities. Both took effect immediately.

“The bills are intended to allow for the sale of product between the two types of businesses while maintaining a level playing field by requiring tribal businesses to pay the same tax rate as other businesses,” according to an analysis prepared by House staff.

Michigan is one of several states where cannabis tax has earned more revenue than taxes on alcohol.

During the most recent fiscal year in Illinois, for example, legal cannabis brought in $451.9 million—about $135.6 million more than alcohol.

Colorado last year state generated more income from marijuana than alcohol or cigarettes—and nearly as much as alcohol and tobacco combined.

Similar milestones have been seen in Arizona and Washington State.

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The Abundance Agenda Promises Everything to Everyone All at Once

In summer 2023, American progressivism was spending big and riding high. Despite razor-thin majorities in Congress, Democrats had spent the last two years enacting hundreds of billions of dollars in new subsidies—for green energy, public transportation, domestic manufacturing, scientific research, and more. This progressive pork was now in the hands of Democratic President Joe Biden to distribute as his administration saw fit.

Yet when California Gov. Gavin Newsom looked upon the piles of fresh federal cash, all he could do was despair.

“We’re going to lose billions and billions of dollars in the status quo,” he complained to New York Times columnist Ezra Klein in June. “The beneficiaries of a lot of these dollars are red states that don’t give a damn about these issues, and they’re getting the projects.”

Newsom was right about the distribution of the funds: More than 80 percent of the new federal funding for clean energy and semiconductors was headed for GOP districts, according to the Financial Times. His outburst spoke to the anxiety of much of liberal America.

Despite a string of progressive policy victories at the federal level, a Democratic Party under the grip of progressives, and ironclad Democratic control over some of the country’s largest and wealthiest cities and states, blue America just wasn’t delivering what its boosters said the country needed.

“We need to build more homes, trains, clean energy, research centers, disease surveillance. And we need to do it faster and cheaper,” Klein himself had written a few weeks before his Newsom interview was published. Yet “in New York or California or Oregon…it is too slow and too costly to build even where Republicans are weak—perhaps especially where they are weak.”

The blue strongholds’ failure to build had added countervailing losses to all their wins.

These states aren’t just losing federal grants. They’re losing residents to states where housing construction is easier. They’re losing companies to places where the regulatory burden is lighter. They’re losing voters, tax dollars, congressional seats, and more to places that build the things people want. If the trend keeps up, the progressive vision for America may be lost as well.

This threat has provoked some surprising self-reflection from liberal wonks, writers, and officials.

America, and particularly blue America, has consciously wrapped itself in red tape, regulations, and special-interest carve-outs, to the point that it has become nearly impossible to convert either government subsidies or private capital into needed physical things.

As Newsom said to Klein, “We’re not getting the money because our rules are getting in the way.”

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U.S. WEAPONS TRANSFERS TO ISRAEL SHROUDED IN SECRECY — BUT NOT UKRAINE

ONE MONTH SINCE Hamas’s surprise attack, little is known about the weapons the U.S. has provided to Israel. Whereas the Biden administration released a three-page itemized list of weapons provided to Ukraine, down to the exact number of rounds, the information released about weapons sent to Israel could fit in a single sentence.

National Security Council spokesperson John Kirby acknowledged the secrecy in an October 23 press briefing, saying that while U.S. security assistance flows to Israel “on a near-daily basis,” he continued, “We’re being careful not to quantify or get into too much detail about what they’re getting — for their own operational security purposes, of course.”

The argument that transparency would imperil Israel’s operational security — somehow not a concern with Ukraine — is misleading, experts told The Intercept.

“The notion that it would in any way harm the Israeli military’s operational security to provide more information is a cover story for efforts to reduce information on the types of weapons being supplied to Israel and how they are being used,” William Hartung, a fellow at the Quincy Institute for Responsible Statecraft and expert on weapons sales, told The Intercept. “I think the purposeful lack of transparency over what weapons the U.S. is supplying to Israel ‘on a daily basis’ is tied to the larger administration policy of downplaying the extent to which Israel will use those weapons to commit war crimes and kill civilians in Gaza.”

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Congressional Researchers Warn That High Federal Marijuana Taxes Could Inhibit Industry’s Economic Potential

As the Biden administration’s marijuana scheduling review continues, the Congressional Research Service (CRS) has released a report cautioning that if cannabis is eventually legalized, lawmakers should consider the potential unintended consequences of imposing high federal taxes on marijuana products.

The non-partisan research body isn’t necessarily suggesting that federal legalization is imminent, but it pointed out that there are a number of comprehensive reform proposals that Congress may consider as the Drug Enforcement Administration (DEA) completes its scheduling review and decides whether to follow the recommendation of the U.S. Department of Health and Human Services (HHS) by moving marijuana to Schedule III of the Controlled Substances Act (CSA).

As it argued in another recent report, CRS said it’s “likely that DEA will reschedule marijuana according to HHS’s recommendation,” based on past precedent. Meanwhile, lawmakers have put forward several federal legalization proposals that could expand on that incremental change, including legislation that would tax and regulate cannabis.

“Recreational marijuana’s potential economic effects may be a factor in any congressional actions on the substance,” the report says, caveating that federal data on the topic is limited given the ongoing prohibition of cannabis. Congress could collect additional data if it moved to require agencies like the Bureau of Labor Statistics (BLS) and Bureau of Economic Analysis (BEA) to start gathering such material, it said.

While federal data is generally limited, the U.S. Census Bureau did recently release its first report on state-level marijuana tax revenue following what the agency calls “a complete canvass of all state agencies” going back to July 2021.

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Watchdog: Afghanistan Has Received $11 Billion In Aid From US Since Withdrawal

A new watchdog report reveals that the country of Afghanistan has received a staggering $11 billion in foreign aid from the United States since the country’s collapse in August of 2021.

As Breitbart reports, the Special Inspector General for Afghanistan Reconstruction (SIGAR), John Sopko, issued his report on Monday.

Sopko says that the U.S. and its allies have been sending “cash shipments” of about $80 million to Afghanistan “every 10-14 days” since the Taliban took over the country shortly before the withdrawal of all American forces.

Sopko said that the United Nations has assured him that all of the money has been “placed in designated U.N. accounts in a private bank,” and is not being “deposited in the central bank or provided to the Taliban.”

The U.N. Assistance Mission in Afghanistan (UNAMA) similarly claimed that all of the cash shipments are being “carefully monitored, audited, inspected, and vetted in accordance with U.N. financial rules and processes.”

Despite these claims, Sopko’s report noted that the Taliban has stolen foreign aid before, and has also been able to prevent the poorest elements of a foreign population from receiving aid that has been designated for them; some of the Taliban’s methods for stealing foreign aid include “siphoning cash from U.N. shipments, or collecting royalties, or charging fees on cash shipments.”

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US to Transfer $320 Million in Precision Bombs to Israel

The Wall Street Journal reported on Monday that the Biden administration is planning a $320 million transfer of precision-guided bombs to Israel, a show of support for the Israeli onslaught despite the growing civilian death toll.

The report said the administration notified congressional leaders on October 31 that it intended to transfer Spice Family Gliding Bomb Assemblies, precision-guided air-to-surface munitions that can be fired by Israeli warplanes.

The bombs will be transferred from weapons manufacturer Rafael USA to its Israeli parent company, Rafael Advanced Defense Systems. It’s unclear what funds will be used for the transfer.

Israel receives $3.8 billion in annual military aid from the US, and the Biden administration is looking to provide another $14 billion to support the Gaza campaign. In the wake of the October 7 Hamas attack on southern Israel, the US began immediately shipping new military equipment to Israel.

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Tennessee to Pay $125,000 to Settle Lawsuit by Man Arrested for Posting Meme Mocking Dead Cop

The state of Tennessee will pay $125,000 to settle a First Amendment lawsuit filed by a man who was arrested and jailed for nearly two weeks for posting a meme mocking a dead police officer.

Joshua Garton, 29, was arrested in January of 2021 and charged with harassment following a Tennessee Bureau of Investigation (TBI) probe into a pseudonymous Facebook post that appeared to show two men urinating on the tombstone of an officer who was shot and killed in 2018. A judge dismissed the charges a month later, and Garton filed a federal civil rights lawsuit alleging malicious prosecution, false arrest, and First Amendment retaliation.

In a settlement agreement filed earlier this month, two TBI agents and 23rd District Attorney General Ray Crouch did not admit any guilt, but they agreed to pay Garton to avoid further litigation costs.

“First Amendment retaliation is illegal, and law enforcement officials who arrest people for offending them will pay heavy consequences,” Daniel Horwitz, Garton’s lead attorney, said in a press release issued Monday. “Misbehaving government officials apologize with money, and Mr. Garton considers more than $10,000 per day that he was illegally incarcerated to be an acceptable apology.”

The TBI, Tennessee’s lead investigative law enforcement agency, launched an investigation into the offending Facebook post at the request of 23rd District Attorney Ray Crouch. Agents visited the officer’s gravesite and quickly surmised that the picture Garton posted was fake. It was in fact a doctored photo of the cover of “Pissing on Your Grave,” a single by The Rites, which originally depicted two men urinating on the tombstone of punk legend GG Allin.

Despite knowing that no one had physically desecrated the grave, the TBI continued its investigation, soliciting tips on Twitter about Garton’s identity. When it finally nabbed Garton, TBI put out a press release, complete with mugshot, announcing his arrest for “manufacturing and disseminating a harassing photograph on social media.”

As Reason wrote when Garton was first arrested, it was unclear how a dead person could be criminally harassed under Tennessee law, which requires that the subject be “frightened, intimidated or emotionally distressed.”

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Cities Are Spending Absurd Sums on Modular Bathrooms

Philadelphia recently installed two Portland Loos: modular, stand-alone public restrooms first commissioned by Portland, Oregon. The single-stall metal structures are easy to keep clean and feature rounded walls to deter graffiti and walls that are louvered at the top and bottom to deter mischief inside stalls. However, despite these supposed benefits, cities regularly spend absurd amounts of taxpayer funds to purchase and install the bathrooms.

Philly plans to install six Loos over the next five years as part of the city’s public restroom pilot, which Philadelphia Health and Human Services launched in January 2021. The city has budgeted $1.8 million for six units, or $300,000 per unit, including installation costs.

According to a Portland Loo spokesperson who spoke with Reason, the total cost is around $200,000: up to $155,000 for the unit, including shipping, and between $30,000 and $80,000 for installation. Maintenance is about $14,000 annually.

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