Major US Retailers Warn: Lower-Income Consumers Are In Trouble
President Biden and his top advisers have been adamant that the consumer is exceptionally strong this summer despite the economy slumping into a technical recession. Well, maybe in aggregate, the consumer appears healthy, but numerous retailers pointed out that less-affluent ones are tapped out.
Earlier this summer, we saw the first signs of consumer cracking as people maxed out their credit cards and depleted savings amid 16 months of tumbling real wages due to the highest inflation in forty years.
Companies from McDonald’s Corp. to Costco Wholesale Corporation to Burlington Stores, Inc. to Nordstrom, Inc. to Macy’s to Advance Auto Parts, Inc. to AT&T Inc. to even Dollar Tree, Inc. have all echoed a very alarming message that low-tier consumers are scaling back purchases as inflation bites.
In July, McDonald’s offered a grim warning about the consumer’s state: Customers traded down for less expensive menu items. Lower-tier customers ditched combo meals for value offerings.
Also, in July, Costco CEO Craig Jelinek said, overall, “the consumer isn’t doing bad,” but also mentioned, “a lot of people, right now, they’re in a recession because they’re just trying to survive by just buying gas and making house and rent payments.”
Sounds confusing, right? But it’s not. With some clarification, Jelinek said wealthier households still have “discretionary income to buy goods,” which means the lower tier consumers are perhaps tapped out.
Clothing retailer Burlington Stores this week offered even more insight into the state of the consumer. Michael O’Sullivan, the CEO, stated:
“We believe that the external factors – economic pressure on lower-to-moderate income shoppers, and very high levels of promotional activity – will continue well into the second half of the year. Accordingly, we are taking down our full-year sales and earnings outlook.”
Another retailer Nordstrom outlined the impacts on inflation between affluent and less-affluent consumers, which was also echoed by Macy’s.
Then car-repair retailer Advanced Auto Parts said that soaring fuel prices and elevated inflation led to declines in do-it-yourself demand.
Retailers are having a tough time as low-tier consumers appear exhausted. Even Dollar Tree slashed its full-year profit outlook, citing a higher cost of living and inventory woes due to economic pressure on low-tier consumers.
Remember that Walmart had already cut its profit outlook as consumers purchased less-profitable groceries.
Also from the summer was AT&T when CEO John Stankey said customers are starting to put off paying their phone bills.
And then there’s the figure of at least 20 million households — or about 1 in 6 American homes — are behind on their power bills.
Retailers warning about the souring state of less-affluent consumers is troubling, despite Biden and his senior aides reaffirming every week that everything is wonderful ahead of the midterm elections in November.
The Democrats’ new reconciliation bill isn’t just going to be the largest-ever expansion of a government agency. It’s going to be the largest expansion of the domestic police state in American history. Only a statist could believe that a federal government, which already collects $4.1 trillion every year—or $12,300 for every citizen—supposedly needs 80 battalions of new IRS cops.
The average American has less reason to be concerned about cops with guns—though the IRS is looking for special agents who can “carry a firearm and be willing to use deadly force, if necessary”—than they do bureaucrats armed with pens who are authorized to sift through their lives. If you pay your taxes you have nothing to worry about, Democrats claim. But most law-abiding citizens know they have something to fear from a state agency that doesn’t concern itself with your due process, has no regard for your privacy, and is empowered to target anyone it wants without any genuine oversight.
And, please, spare us this nonsense about the IRS expansion focusing exclusively on “high earners.” White House press secretary Karine Jean-Pierre promised that the IRS wouldn’t engage in new audits of anyone making under $400,000—a claim she has no authority to make and could not possibly predict even if she did. Connecticut Sen. Chris Murphy also said that the bill was passed to stop an “epidemic of tax cheating amongst the millionaires and billionaires” and promised that “audit rates won’t increase for anyone making under $400K.”
This is a lie. Nothing in the bill that Democrats passed through the Senate limits audits. Murphy, along with every other Democrat in the Senate, voted against a Republican amendment that would have prevented new agents from auditing individuals and small businesses with less than $400,000 of taxable income. Not long ago, Democrats passed the American Rescue Plan Act—which had as much to do with rescuing as the Inflation Reduction Act has to do with reducing inflation—and changed tax code so that mobile payment apps like Venmo and Cash App were now required to report transactions totaling $600 or more per year to the IRS. Does that sound like a party aiming fire exclusively at high-earning Americans?
Indeed, poor and middle-class Americans are far more likely to do their own taxes, and thus more prone to making mistakes. In 2021, those making $25,000 or less (often the young and elderly) were audited at a rate five times higher than everyone else. The wealthier you are the more likely it is that you can hire lawyers and accountants to work within the system. There aren’t enough millionaires and billionaires in the world to keep a potential new 87,000 IRS employees busy.
There are other overlooked aspects of the Democrats’ IRS expansion. The bill, for instance, strengthens the federal public-sector union monopoly that funds Democrats’ political aspirations. IRS and Treasury Department employees spent 353,820 hours engaged in union activism—their PAC gives every cent to the Democrats—in 2019. One can imagine what another 87,000 employees would do for that effort. In the real world, laundering taxpayer funds through unions and using them on political campaigns is called racketeering.
None of this is to say that everyone who works for IRS is corrupt or power-hungry or an ideologue. The unassailable rules of giant bureaucracies, however, are that they always experience mission creep, they always do enough to justify their funding, and sooner or later, their leaders become political operatives.
With that said, it’s worth remembering that the IRS doesn’t simply collect taxes. It enforces speech codes. This is what empowered former IRS official Lois Lerner to target conservative groups—“crazies” and “a–holes”—who used words like “Tea Party” or “patriots” in their names. But, even at the time, leftists at The New York Times editorial board praised the IRS for going after conservative groups because they did not “primarily” engage in “social welfare,” and so did not deserve an exemption under Section 501(c)(4) of the tax code. Has anything in the evolution of the Democratic Party given you confidence that such power would not be abused or that an engorged IRS would be immune from political pressure?
Wrestling with an insanely complex tax code—nearly 8 million words—costs Americans billions every year. Rather than flattening and simplifying this astonishingly convoluted code, which not only would have saved citizens but the government money, Democrats decided we needed up to another 87,000 people to enforce it.
Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times or Zero Hedge
California Votes To Ban New Gas Vehicles By 2035 In Push For EV-Utopia
The California Air Resources Board (CARB) voted Thursday on a groundbreaking measure to approve a ban on new vehicle sales with internal combustion engines. It’s a move by the progressive state to combat climate change. By 2035, the state would only allow EVs – electric vehicle sales.
The plan is heralded as a major acceleration toward EV adoption to tackle what many leftist lawmakers in the state believe the world is rapidly descending into a climate disaster because of increasing carbon emissions:
“It’s ambitious, it’s pioneering, it’s what we must do if we’re going to leave this planet better for future generations,” Lauren Sanchez, senior climate adviser to Gavin Newsom, the governor of California, said Wednesday on a conference call.
California appears to be leading the rest of the US (and possibly the world) in the quest for EV-utopia:
“California will now be the only government in the world that mandates zero-emission vehicles. It is unique,” said Margo Oge, an electric vehicles expert who headed the Environmental Protection Agency’s transportation emissions program under Presidents Bill Clinton, George W. Bush, and Barack Obama.
CARB’s new rule is expected to require all new vehicles sold in the state by 2035 to be 100% electric. Currently, sales are about 12%. By 2026, the rule would require the state to have at least 35% of new passenger vehicles produce zero emissions and then 68% in 2030.
“The climate crisis is solvable if we focus on the big, bold steps necessary to stem the tide of carbon pollution,” Newsom said in a statement.
The goal to increase the US’ largest EV market from 12% of all new sales to 100% looks pretty ambitious, considering China controls all the battery-making rare earth metals. Also, global supply chains are being rejiggered in a multi-polar world as US companies pull out of China and shift operations to friendlier countries.
Autotrader analyst Michelle Krebs told Axios that CARB’s new rule doesn’t sound “realistic” given “there are some hurdles:”
“Whether or not these requirements are realistic or achievable is directly linked to external factors like inflation, charging and fuel infrastructure, supply chains, labor, critical mineral availability and pricing, and the ongoing semiconductor shortage.
“These are complex, intertwined and global issues well beyond the control of either CARB or the auto industry,” John Bozzella, CEO of the Alliance for Automotive Innovation, which represents the major automakers on policy issues, said in a statement.
Another issue is cost — as The Epoch Times explained, only “the top tier of society” can afford new electric vehicles. As The Verge reported:
“One of the major barriers to mass adoption of electric vehicles is cost. EVs are just way too expensive, with the average price hitting an all-time high earlier this summer of $66,000. That’s disappointing because the auto industry has always promised that prices would come down as EV battery packs became more efficient to manufacture.
“But even more disappointing is the rate that EV prices are increasing as compared to their gas equivalents. According to a recent analysis by car shopping database iSeeCars, electric car prices saw a year-over-year increase of 54.3 percent while gas-powered cars were up just 10.1 percent.”
And so, what does that mean for the bottom tier of society who can’t afford new, expensive EVs? Well, as Epoch’s John Seiler opined:
The Bottom Tier of car owners will be those who can’t afford new EVs, or even EVs a couple of years old. They will be forced to buy much older EVs at high prices, with mechanical problems that will strain family budgets even more.
Or they will be forced to keep old, gas-powered flivvers running much longer than expected.
One can only imagine what the power demand situation in the state would look like with millions of new EVs on the road, requiring daily charges — if lawmakers in the state fail to beef up the already fragile grid with clean nuclear power generation to ensure the transition to a low-carbon economy, then the reliance on unreliable solar and wind could derail Newsom’s future EV-utopia.
A medical Army officer who discovered a sudden increase in disease coinciding with reports of side effects alongside COVID-19 vaccines—which the Army has dismissed as a data glitch—said he faces involuntary separation after being convicted but not punished for disobeying COVID-19 protocol.
In January 2022, First Lt. Mark Bashaw, a preventive medicine officer at the Army, started noticing some “alarming signals” within the defense epidemiological database.
The Defense Medical Epidemiology Database (DMED), which tracks disease and injuries of 1.3 million active component service members, showed during the pandemic a significant increase in reports of cancers, myocarditis, and pericarditis; as well as some other diseases like male infertility, tumors, a lung disease caused by blood clots, and HIV, Bashaw said.
All these illnesses are listed in FDA documentation as potential adverse reactions associated with COVID-19 vaccines, Bashaw told EpochTV’s “Crossroads” program in an interview on Aug. 1.
Seeing increases in cases of these illnesses as high as 50 percent or 100 percent in some situations, Bashaw stepped forward as a whistleblower to raise concerns about his findings.
Bashaw’s whistleblower declaration, submitted to Sen. Ron Johnson (R-Wis.) who is facilitating the sharing of information from early investigations of COVID-19 products with Congress, said he saw the increasing incidence of these disorders observed in DMED as “very troubling.”
Specifically, the number of cancer cases among active service members in 2021 nearly tripled in comparison with the average number of cancer instances per year from 2016 to 2020, Bashaw said in his declaration.
Bashaw’s responsibilities as a preventive medicine officer, with a specialty in entomology, include “participating in fact-finding inquiries and investigations to determine potential public health risk to DoD [Department of Defense] personnel from diseases caused by insects and other non-battle related injuries.”
Glitch in DMED
A week after this information was brought out in January in a “COVID-19: Second Opinion” roundtable organized by Johnson, the data in DMED changed, Bashaw said, and all of these troubling spikes in diseases and injuries “seemed to have disappeared and been realigned with previous years.”
Curiously, the glitch didn’t affect the data from 2021, which remained the same. Instead, the corrected data saw the data for prior years increased, which made the 2021 data look normal and in line with the running average, Bashaw explained.
In response to the whistleblower claims, spokesperson for the health agency of the Department of Defense Peter Graves told PolitiFact that the data in DMED “was incorrect for the years 2016-2020,” so the system was taken offline to correct the root cause of the data corruption, which didn’t impact data from 2021.
After the roundtable, Johnson sent three letters to the Department of Defense (DoD) requesting an explanation of the sudden increase in medical diagnosis and the changes in the DMED data.
“The concern is that these increases may be related to the COVID-19 vaccines that our servicemen and women have been mandated to take,” Johnson said in one of his letters.
The senator also sent a letter to the technology company that manages DMED asking for clarification of all data integrity issues uncovered in the database.
Although Johnson received some responses from the tech company, there has not been still a “solid, rational explanation” as to why a glitch occurred in the database and what it was, Bashaw said.
After the glitch, Bashaw pulled out data from the Vaccine Adverse Event Reporting System (VAERS) for injuries related to viral vaccines to compare to his findings on DMED. He compared the average of the last 24 years to data for 2021 and found an eleven-fold increase in the number of suspected adverse incidents reported in 2021.
“I compared it to the average of the last 24 years, it’s a 1,100 percent increase in 2021. And the only difference we had in 2021 was the rollout of these experimental emergency use authorized COVID-19 vaccines,” Bashaw said.
VAERS is managed by agencies of the Department of Health and Human Services (HHS) and serves as “a national early warning system to detect possible safety problems in U.S.-licensed vaccines,” according to HHS’s website.
Though reporting to VAERS is voluntary for individuals, “healthcare professionals are required to report certain adverse events, and vaccine manufacturers are required to report all adverse events that come to their attention,” the website says. However, non-professionals are also able to make entries.
Bashaw tried to raise his concerns regarding COVID-19 vaccines to his leadership at the army through the proper channels, recommending that it change its risk communication strategy for the vaccine from ”safe and effective “ to “there might be some problems.”
However, his concerns were not addressed, Bashaw said. “And then, later, I was targeted due to my own [COVID-19] vaccination status.”
Bashaw said he was “forced into an experimental emergency use authorized testing protocol, which was only for the unvaccinated.”
He questioned the policy, saying that forcing unvaccinated individuals into such a testing regimen seems “coercive” and “kind of punitive.”
Bashaw invoked the provisions of the United States Code, which gives liability protection for epidemic products authorized for emergency use to manufacturers and distributors of the product, the government, and medical personnel who administer the product.
However, the perspective of the individual who chooses to use these products or to whom the product is administered is not considered by this law despite their taking on all the burden of risk. “For this reason, [they should have] the ability to accept or refuse these products,” Bashaw said.
“It’s my job as a medical officer in general, to warn individuals, or at least try to communicate [to them] what they might be getting themselves into with these products.”
Bashaw pointed out that the individual’s right to accept or refuse administration of these products and to informed consent has also been written down in the United States Code, specifically 21 U.S. Code § 360bbb–3.
Individuals to whom the product is authorized for emergency use should be informed “of the significant known and potential benefits and risks of such use, and of the extent to which such benefits and risks are unknown,” the said law stipulates.
This applies not only to the experimental vaccines but also to COVID-19 testing procedures and the wearing of masks, Bashaw said.
Targeted for Disobeying COVID-19 Rules
Bashaw has been court-martialed for disobeying the mandated COVID-19 protocol. He challenged the accusation saying that the order to follow the protocol disregarded the individual’s right to informed consent guaranteed by U.S. law.
The court convicted Bashaw, but the judge did not hand down any punishment and recommended to the commanding general to drop the conviction, Bashaw said, but the general upheld the conviction.
After the conviction, the Army initiated Bashaw’s involuntary separation from service after 17 years of honorable service. His expected promotion to captain was also withheld, the officer said.
The justification for his discharge was that the army lost trust in his “capabilities as an officer over the past seven months,” Bashaw explained.
Bashaw filed a rebuttal, hoping to reverse its course.
In addition, Bashaw filed a whistleblower complaint at DoD, but the decision was made that there was no retaliation against him, and the case was closed out. He said that he then filed another complaint which exercises his right guaranteed by the code of military justice to challenge such decisions.
Big Banks Build Loophole To Avoid Biden’s Share-Buyback Tax
Share repurchases have been the backbone of the stock market’s rise over the last few years – and simultaneously, and purely coincidentally, the rise in C-Suite remunerations.
Companies in the S&P 500 spent $281bn on share repurchases in the first three months of 2022, according to S&P Global, setting a new record high for the third consecutive quarter.
Traders on the Goldman Sachs trading desk responsible for executing buybacks estimated companies have authorized $856bn worth of repurchases so far this year.
That spendfest – helping stakeholders and not workers – has been an easy-win talking point for Democrats for years, and so, one of the main revenue generators in President Biden’s climate and health package is a tax on share buybacks sending millions of dollars from corporate coffers into the much-smarter and optimally-allocated arms of Washington bureaucrats.
And so in order to avoid those taxes, The FT reports that bankers and lawyers on Wall Street are hunting for ways to help companies:
At the center of their efforts is the use of accelerated share repurchase (ASR) programs, a commonly used mechanism allowing companies to complete buybacks that can be worth billions of dollars.
Although the programmes are recorded as having been executed on a single day, it often takes several months for banks to complete the trades.
The plans hinge on whether forthcoming Treasury guidance will count the day that the company forks over the cash and receives its shares as the date of the buyback, or whether they will have to wait until investment banks actually buy the stock in the open market.
The new tax will generate $74bn in revenues over the next decade, according to official estimates, but bankers warn the number could balloon if the 1 per cent level is the thin end of the wedge and ends up being set higher in subsequent years.
“The assumption, and it’s still pretty early… is that a 1 per cent tax in and of itself is not enough to significantly change behaviour,” said a New York-based banker who works on corporate share buybacks.
“One per cent now is not a big deal, but what if that 1 becomes 3 or 5 or 10 per cent to raise revenue or score political points?”
How does an ASR work?
In a simplified accelerated share repurchase programme, an investment bank agrees to buy a publicly traded company’s outstanding stock in the future as part of a forward contract.
The bank is paid upfront by the company to buy the stock.
It then borrows stock in the public market from security lenders, delivering the shares to the company.
The company can then treat those shares as retired, helping boost its earnings per share.
The bank, which is effectively short the stock, will spend several months buying back the shares in public markets, ultimately returning it to the security lenders.
As The FT concludes, equity trading desks have not yet seen a surge of interest in executing buybacks. However, bankers said they expected activity to increase in the final months of the year as companies planning buybacks in early 2023 move some purchases into 2022.
Bonds Have Rarely Been This Anxious About Jackson Hole
By Garfield Reynolds, Bloomberg markets live commentator and reporter
If you were thinking that this week’s Jackson Hole meeting may be one of the most pivotal the Federal Reserve has ever had, then the bond market looks to be agreeing with you.
That makes it more likely that the reactions from all assets after the event will be violent, and that the impact of the speeches from Powell and others will be large and sustained.
The MOVE index of implied bond volatility — at times seen as the Treasuries fear gauge — has rarely been this high in late August. In fact, the only other times it was around or above current levels at this time of the year was in 1990, 2002-03 and 2009. In 2008, it would later move a lot higher, of course, as the global financial crisis struck.
It is noticeable that those prior occasions came either during or just after the Fed cut rates rapidly, rather than in the middle of steep hikes as is now the case.
With the strongest inflation in 40 years and central banks’ policy response threatening to tip the world into recession, investors are right to be nervous. But that doesn’t mean that potential outcomes from Jackson Hole have been fully priced in.
Gov. Ron DeSantis made good on his promise to take action against the environmental, social and corporate governance movement (ESG), which he called an “alarming trend” and a threat to the American economy.
On Aug. 23 the governor, along with trustees of the State Board of Administration (SBA), passed a resolution directing Florida’s fund managers to make investments that do not involve the ideological agenda of the ESG.
“Corporate power has increasingly been utilized to impose an ideological agenda on the American people through the perversion of financial investment priorities under the euphemistic banners of environmental, social, and corporate governance and diversity, inclusion, and equity,” said DeSantis said in a written statement.
“With the resolution, we passed today, the tax dollars and proxy votes of the people of Florida will no longer be commandeered by Wall Street financial firms and used to implement policies through the board room that Floridians reject at the ballot box.”
At a July 27 press conference in Tampa, the governor said that most Americans were not aware of what ESG was and what the goal is of “leveraging corporate power to impose an ideological agenda on society.” He promised to do something about it.
Morgan Stanley Capital International (MSCI), an investment research firm in New York, described ESG as “investing as the consideration of environmental, social and governance factors alongside financial factors in the investment decision-making process.”
But some view the movement as a sinister force.
James Lindsay, the author of “Race Marxism,” described ESG as a “weapon in the hands of ‘social justice warriors’ to shake down corporations and a tool in the hands of those seeking to impose ‘one world government.’”
DeSantis’ resolution followed an action taken in December 2021 when he reclaimed the SBA’s proxy voting authority from “large financial firms,” and provided guidance to the SBA for proxy voting and investment decisions.
“This guidance will ensure that the decisions made by these civil servants on behalf of the people of Florida are in accordance with the voters’ values as expressed through the democratic process rather than blindly in lockstep with the ESG mania taking hold of Wall Street and Washington,” the governor’s office said in a prepared statement.
In the upcoming 2023 legislative session, the governor plans to propose laws that would amend Florida’s Deceptive and Unfair Trade Practices statute that would prohibit discriminatory practices by large financial institutions that incorporate the ESG social credit score metric.
Incoming Florida House Speaker Paul Renner said that ESG is “a global elite weaponizing American capitalism against us” making it a national security issue as well as a “pocketbook issue.”
China Angrily Denounces Joint US-India Drills Near Contested ‘Line of Actual Control’
China on Thursday expressed its anger over joint US-India military drills in a southern region of the Himalayas that Beijing officials say violates prior bilateral agreements regarding the contested border.
Beijing has slammed the drills as third party “meddling” along its border, citing that it previously inked agreements with India to not hold provocative military exercises near the Line of Actual Control (LAC). Despite over a dozen peace talks occurring since a June 2020 border clash between Indian and Chinese forces, which left over 20 Indian soldiers dead, tensions have continued to soar in the contested region.
China’s defense ministry issued a scathing denouncement of US military operators reportedly being near the LAC, saying, “We firmly oppose any third party to meddle in the China-India border issue in any form.”
The PLA spokesman was further questioned on another planed US-India joint exercise:
Senior Colonel Tan Kefei, a spokesperson for China’s Ministry of National Defence (MND), made the comments while replying to question about reports of special forces of the US and India recently holding a joint combat exercise in the southern foothills of the Himalayas and their plans to conduct a joint military exercise code-named “War Exercise” (Yudh Abhyas) in October close to the border.
He continued, “It is hoped that the Indian side will strictly abide by the important consensus reached by the leaders of the two countries and the relevant agreements, uphold its commitment to resolving border issues through bilateral channels, and maintain peace and tranquility in the border area with practical actions.”
India is a member of the “Quad” nations – a regional security pact also made up of Japan, the United States, and Australia. Last week India’s External Affairs Minister Subrahmanyam Jaishankar said it was the Chinese side that’s a frequent violator of Line of Actual Control truce agreements that stretch back to the 1990s.
“They (Chinese) have disregarded that. You know what happened in the Galwan Valley a few years ago. That problem has not been resolved and that is clearly casting a shadow,” Jaishankar said on Saturday.
Simultaneously, on the clear other side of China the US has been in a simmering standoff with the PLA Navy which has had heavy deployments surrounding Taiwan ever since Nancy Pelosi’s visit in early August.
Sen. Joni Ernst (R-Iowa) wants Treasury Inspector General for Tax Administration (TIGTA) J. Russell George to audit the staff hiring and re-hiring practices of the IRS as the federal tax agency moves to double its workforce with President Joe Biden’s blessing.
The Iowa Republican told George in an Aug. 24 letter that her request was prompted by the fact that “earlier this month, Congress passed and Biden signed legislation to double the size of the IRS workforce so the agency can more aggressively audit America’s taxpayers.
“The nonpartisan Congressional Budget Office (CBO) says with the supersized staff, the IRS audit rate ‘would rise for all taxpayers,’ regardless of income, which will ‘result in some audits of taxpayers who would later be determined not to owe additional taxes.’”
Among the results of adding 87,000 new IRS agents to the 80,000 the agency presently employs, Ernst said, could be that “innocent, hardworking Americans” will be “subjected to unfair and costly IRS audits when the agency is ignoring tax cheats on its own payroll.”
Ernst was referring to reports compiled and published by TIGTA investigators in 2017 and 2019 that found the IRS had hired and rehired thousands of employees who had not paid their taxes.
“In April 2019, TIGTA released a report, ‘Improvements Are Needed to Ensure That Employee Tax Compliance Cases Are Adjudicated Consistently,’ that found 1,250 IRS employees had not paid their tax bills in full or on time, including hundreds of whom, were willfully delinquent or repeat offenders, and that the tax collecting agency had done little to discipline these tax cheats on its own payroll,” Ernst told George.
The rehires included some who were fired or resigned for “willful failure to properly file their federal tax returns,” Ernst continued.
In a separate statement in which Ernst announced she is giving the IRS her latest Squeal Award, the Iowa Republican said that among the excuses the IRS tax cheats offered to investigators were not knowing how to use TurboTax to prepare a tax return and forgetting to report all of their income.
“We have a real problem if the IRS staff who enforce the tax law aren’t paying their own taxes and can’t even understand how to properly fill out the agency’s tax forms!” Ernst said in the statement. “I’ve heard enough of the excuses and these Washington double standards.
“The IRS needs to start living under its own rules and that’s why I am demanding that we audit the IRS!”
The statement said Ernst selected the “soon-to-be supersized IRS” for the award because she fears the tax agency will be “going after hardworking taxpayers while ignoring the tax cheats on their own payroll.”
A TIGTA spokesman declined to comment on the Ernst letter.
Biden’s plan to more than double the IRS workforce would likely be controversial at any time, but debate on it in Congress and the media was made even more intense because the agency has struggled in recent years to process paper tax returns efficiently and quickly.
National Taxpayer Advocate Erin Collins told Congress earlier this year that little progress has been made by the IRS in dealing with a mounting backlog of unprocessed tax returns.
This matter having been remanded for further consideration in light of the Supreme Court’s decision in New York State Rifle & Pistol Ass’n v. Bruen (2022), and upon consideration of the parties’ positions on whether it should in turn be remanded to the District Court for decision in the first instance under the standard announced in Bruen, it is hereby ORDERED that the matter is so remanded.
{We recognize that there are good arguments to be made for resolving this case now, on the record before us, and our dissenting colleague has ably articulated them. Even so, we are mindful that “we are a court of review, not of first view[.]” Cutter v. Wilkinson (2005). The Dissent rightly notes that, even prior to the Supreme Court’s latest Second Amendment decision, we have regularly “trace[d] the [Second Amendment’s] reach by studying the historical record”—the same approach recently endorsed and “made … more explicit” by the Court, N.Y. State Rifle & Pistol Ass’n, Inc. v. Bruen (2022). But the Court’s decision in Bruen also provided lower courts with new and significant guidance on the scope of the Second Amendment and the particular historical inquiry that courts must undertake when deciding Second Amendment claims.
In light of that guidance, the State has requested a remand for further record development, targeted at the legal and historical analysis required under Bruen. Given the additional guidance provided in Bruen—and given that our last decision in this case turned on law-of-the-case considerations that are no longer in play—it is appropriate to afford the State that opportunity, consistent with our prior practice.
Judge Paul Matey dissented:
Refreshing our recollection illustrates the problem with remand. In 2008, the Supreme Court held that the “18th-century meaning” of “arms” is “no different from the meaning today,” and the Second Amendment was not limited to “only those arms in existence in the 18th century.” Instead, Heller directed courts to apply a “methodology centered on constitutional text and history” to determine whether the challenged regulation touched upon protected conduct. Heller directed us to look backwards—not to new and novel claims of necessity by the government.
Even a glance is sufficient here. Repeating firearms grew in use throughout the 18th century, when early technical advances paved the way to Samuel Colt’s famous rotating cylinder revolver. By 1866, rifles holding more than ten rounds of ammunition were widely available, with handguns holding more than ten rounds appearing in stores by 1935. Both quickly proved popular, and Americans came to hold tens of millions of magazines holding over ten rounds.
Despite this popularity, regulations on magazine capacity arrived slowly. A few accompanied the Prohibition Era, all except one later repealed. Slower still, New Jersey did not limit magazine capacity to fifteen rounds until 1990. Or reduce that number to ten until 2018. All showing, as we summarized the record of the District Court’s three-day hearing, “that millions of magazines are owned, often come factory standard[,] … are typically possessed by law-abiding citizens[,] … and there is no longstanding history” of magazine regulation. And all revealing “a long gap between the development and commercial distribution of magazines, on the one hand, and limiting regulations, on the other.” Facts found and the law settled, deciding this case is appropriate….
Slow down, cries the State. Bruen, it argues, changed everything by announcing a “new legal test.” Deciding the case now would be unfair because “the State has not yet been given the opportunity to provide the historical evidence of weapons that were regulated at the Founding.” Neither point proves persuasive.
For one thing, Bruen confirmed, rather than created, the historical inquiry informing the Second Amendment’s guarantee. A point we have repeatedly recognized in Second Amendment challenges. That is also the test we applied here, citing “17th century commentary on gun use in America that the possession of arms also implied the possession of ammunition.”
The State’s follow-on—that it missed the chance to provide historical evidence— fares no better. Round after round, in both the District Court and this Court, history took center stage. The State joined that discussion, arguing unsuccessfully that laws regulating ammunition capacity were longstanding. It strains credibility for New Jersey to now suggest it simply overlooked the focus on history and practice outlined in Heller, repeatedly applied by this Court, and vigorously advocated in this case. That the State decided not to press those points harder, whether as clever strategy or careless slip, is not relevant. We have been far less forgiving of that sort of waiver by far less sophisticated litigants.
With no new law to apply, and the historical record firm, there would seem no work remaining on remand. {Indeed, we have explained that “[w]e may decide a question not addressed by the District Court when the record has been sufficiently developed for us to resolve the legal issue.”}
But what is the harm, some might ask? Why the rush? A question rarely raised when other fundamental rights are at issue and answered, again, by the Supreme Court: bearing arms “is not a second-class right, subject to an entirely different body of rules than the other Bill of Rights guarantees.” As always, “[t]he basic guarantees of our Constitution are warrants for the here and now and, unless there is an overwhelmingly compelling reason, they are to be promptly fulfilled.” Watson v. City of Memphis (1963). And “[a]t its core, the Second Amendment recognizes the widely accepted principle at the Founding that the right to self-defense derived directly from the natural right to life, giving the people predictable protections for securing the ‘Blessings of Liberty.'” That balance tips easily toward decision, not further delay….
Finally, I note a bunker to avoid in future proceedings: the protean “large capacity magazine.” Throughout this case, exactly what is being regulated has not been clear. In 1990, New Jersey first prohibited a “large capacity ammunition magazine,” defined as “a box, drum, tube or other container which is capable of holding more than [fifteen] rounds of ammunition to be fed continuously and directly therefrom into a semi-automatic firearm.” In 2018, the State amended that definition by reducing the maximum capacity to ten rounds. The 2018 law is what Plaintiffs challenge. Any discussion of “large capacity magazines,” therefore, should refer only to the 2018 law.
That has not happened. The State and this Court have twice altered the definition. First, what began as an inquiry into whether “magazines” are constitutionally protected became a discussion over whether a specific kind of magazine fell outside the Second Amendment’s guarantee.
Second, the arguments and analysis soon sank into a survey of all magazine restrictions, then firearms with “combat-functional ends” capable of “rapidly” discharging ammunition, and finally fully automatic rifles. But those are not the same and each is subject to different regulations in New Jersey—not to mention other states and federal law. Blurring these lines improperly boosted the State’s claims of regulatory interest. Doing so again will hopelessly complicate the otherwise straightforward historical inquiry of Heller and Bruen, producing a search for an analogy to an object that did not exist at the founding, and does not exist today.
To avoid further confusion, there simply is no such thing as a “large capacity magazine.” It is a regulatory term created by the State, meaning no more than the maximum amount of ammunition the State has decided may be loaded into any firearm at one time. Sixteen rounds was large yesterday, eleven rounds is large today. The State is welcome to market its policy goals using catchy slogans, but the rights of our Republic are built on sturdier stuff. Stripping away the buzzwords reveals the real question: whether “the Second Amendment’s plain text” protects possession of a firearm magazine, in which case “the Constitution presumptively protects that conduct.” The only avenue around that presumption is proof—presented by the State—that its cap on magazine capacity “is part of the historical tradition that delimits the outer bounds of the right to keep and bear arms.”
Remand is unnecessary as both questions have already been answered. First, “[b]ecause magazines feed ammunition into certain guns, and ammunition is necessary for such a gun to function as intended, magazines [fall] within the meaning of the Second Amendment.” And second, “there is no longstanding history of” magazine capacity regulation. Another four years of proceedings to reach those conclusions again is not needed. Nor can the United States remain “a government of laws … if the laws furnish no remedy for the violation of a vested legal right.” …
For the earlier, pre-Bruen decision upholding the magazine limit under “intermediate scrutiny” (which is no longer the test after Bruen), see here; for Judge Matey’s detailed pre-Bruen dissent, see here. Thanks to Alida Kass for the pointer.
