Remember what I said back in April about Congress blatantly targeting unpopular constituencies for punitive taxation, and how disastrous it will be for the country if punitive taxation becomes the driving force in federal tax policy?  Consider this item, from Bloomberg News Service on June 16:

The House is considering imposing a $37 billion tax on drugmakers by denying deductions for prescription-drug advertising, Ways and Means Committee Chairman Charles Rangel said.

As lawmakers seek ways to pay for a health-care overhaul, “one thing that’s not off the table is you can pick up $37 billion knocking out the deduction for advertising” for prescription drugs, Rangel, a New York Democrat, told reporters today in Washington.

Rangel identified the proposal as one of a series of revenue-raising measures House Democrats may include in health- care bill this month. Members of his tax-writing committee are meeting daily this week to discuss how to pay for the legislation.

Rangel said he and other lawmakers believe it is wrong to let drug companies deduct their advertising costs for prescription drugs. “The whole thing is messy, but you can raise $37 billion,” Rangel said. “Which means you’re taxing somebody $37 billion, and they don’t like that.”

Rangel said it’s inappropriate for taxpayers to subsidize ads for pharmaceuticals because they encourage viewers to ask for drugs they may not need.

“I do it. I go to the doctor and say, ‘Did you ever think about ordering this for me?’” Rangel said. “If he says no, I don’t like him, because they promised me on TV that I have no problems at all.”

These statements came from the chief tax policy maker in the U. S. House of Representatives?  Does he think that the pharmaceutical industry is the only industry that produces advertising that tries to get people to buy things they don’t need?

More to the substance of this idiocy, Rep. Rangel’s exquisitely deceptive comments are predicated on his assumption that his audience is ignorant about how the federal government taxes businesses.  He makes it sound as if the pharmaceutical industry is getting a tax break that other businesses don’t get.  In fact, all businesses can deduct advertising expenses from their gross income.  If you’re going to punish disfavored industries by selectively raising their taxes, Rep. Rangel, I can think of a few others which, unlike the drug companies, don’t make products that also do something useful, like preventing death and curing disease.

The characterization of a tax deduction as a “subsidy” is another favorite trick of tax demagogues like Rep. Rangel.  The logical conclusion of that thinking amounts to this: since Congress could tax everything, then anytime they decide not to tax something, it amounts to a taxpayer ”subsidy” of the thing that isn’t taxed.  You might as well say that since Congress hasn’t yet imposed a tax on jogging, then taxpayers are subsidizing jogging.

And where does this brilliant reasoning stop?  Why not take away the deductibility of advertising from the beer makers, or the hamburger purveyors?  Their advertising is plenty irritating, and intended to get you to buy products that you don’t necessarily need.


This July 10, 2008, news release from the Internal Revenue Service (IR-2008-88) warns about emails from people who are trying to steal personal information:

The Internal Revenue Service cautions taxpayers to be on the lookout for a new wave of scams using the IRS name in identity theft e-mails, or phishing, that have circulated during the last two months.

In May and June alone, taxpayers reported almost 700 separate phishing incidents to the IRS. In 2008 so far, taxpayers have reported about 1,600 phishing incidents to the IRS.

“Taxpayers should take steps to keep their personal information out of the hands of identity thieves,” said IRS Commissioner Doug Shulman. “That includes not falling for any of the phony e-mails or faxes now in circulation pretending to come from the IRS.”

The most common scams involve tax refunds and, this year, economic stimulus payments.

Although most of these scams consist of e-mails requesting detailed personal information, the IRS generally does not send e-mails to taxpayers, does not discuss tax account matters with taxpayers in e-mails, and does not request security-related personal information, such as PIN numbers, from taxpayers.

 It sounds like the best course of action is to never respond to an email purporting to be from the IRS, although I’m not sure if the statement that “the IRS generally does not send e-mails to taxpayers” means that they never send emails to taxpayers or that they do send emails to taxpayers in special situations.  It should go without saying, however, that you should never respond to an email purportedly coming from the IRS that asks for personal information.

For suggestions on what to do if you receive a suspicious email, go to and click on “Report Phishing” in the “I Need To…” box on the right side of the screen.