Tag: "tax"

Headlines I Wish I Hadn’t Seen

Lying With Statistics?

Scot Winship reviews Thomas Piketty’s book, Capital in Twenty-First Century:

The Piketty and Saez data for the U.S. indicate that between 1979 and 2012, the bottom 90 percent’s income dropped by over $3,000.

But this ignores transfer income, such as Social Security. It ignores employer benefits, such as health insurance. And it ignores charges in household size over time.

When I incorporate these improvements using the Census Bureau data, I find that median post-tax and -transfer income rose by nearly $26,000 for a household of four ($13,000 for a household of one) between 1979 and 2012.

Twofer: Ryan’s Medicare Plan Saves Taxpayers $20 Billion and Reduces Seniors’ Premiums

Paul Ryan keeps making his Medicare reform proposal more politically palatable, while still saving money all around:

08Ryan’s plan has gone through several versions, but all of them have been based on the old bipartisan idea of “premium support.” The idea was that instead of paying for senior citizens’ medical services directly, the federal government would help them purchase private coverage plans.

The CBO still projects savings for the federal government — $15 billion — but it shows that beneficiaries will pay less, too.

(Ramesh Ponnuru, Bloomberg View)

Did You Fill Out Your Tax Return Correctly?

Toy Businessman on a Pile of MoneyThe results for the EITC are not pretty. The Internal Revenue Services estimates that 21 to 25 percent of EITC payments were issued incorrectly during the fiscal year 2012, totaling from $11.6 to $13.6 billion in too much money being paid out to taxpayers. As a result, the Office of Management and Budget has labeled the EITC a “high-error” government program. Projections by the government show that the rate of error is expected to remain stubbornly high.

…[T]he IRS estimates that 21 percent of those who are eligible do not claim the credit at all. And so the EITC cuts both ways: both too much being handed out to taxpayers and too little.

Jia Lynn Yang.

Headlines I Wish I Hadn’t Seen

Bobby Jindal’s Health Reform

The plan begins by repealing ObamaCare. It would also “guarantee access” to people with pre-existing conditions, through a “high-risk pool, reinsurance, or some other method ensuring those with chronic conditions can obtain needed care.”

Like the Republican Study Committee’s plan, Jindal’s proposal replaces the current exclusion of employer-based tax benefits with a standard tax deduction. The problems:

  • It is regressive, giving more tax relief, the higher your income tax bracket.
  • It is not helpful to the half of the population that does not pay income tax.

Now that ObamaCare has handed out tax credits to millions of people in the health-insurance exchanges, the total effect of the plan would likely be to take insurance away from a large proportion of the people insured through the exchanges, as well as all the people covered by ObamaCare’s Medicaid expansion. By election day, it would probably un-insure ten million people.

Headlines I Wish I Hadn’t Seen

Work Over-Time or Get a Bonus and You Could Owe the IRS $10,000

…[I]ndividuals who enroll in the ObamaCare exchange will run the risk of having to pay back a significant portion of the tax credit if their life circumstances change…

The result will be surprise bills from the IRS in the mail come tax time 2015, in the order of a couple hundred dollars all the way up to full value of any subsidy received if a family crosses the 400% FPL threshold. (This could be $10,000-$12,000 for a family of four, as an example.) Just a few dollars of extra income could result in thousands of back taxes to be paid.

Josh Archambault.

Goodman’s Law: If You Tax Something You Will Get Less of It

From 2001 to 2011, the number of nonprofits in the United States grew 25 percent while the number of for-profit businesses rose by half of 1 percent, according to the most recent figures compiled by the Urban Institute.

There are still considerably more businesses than nonprofits, of course, about four times as many. But over that period, nonprofits also outpaced businesses in their percentage growth in hiring, wages and contribution to the gross domestic product, according to the Urban Institute. (NYT)

Almost Anyone Can Claim ObamaCare Tax Credits

What to make of the Center for Medicare & Medicaid Services’ notice that it will pay out retroactive ObamaCare premium tax credits and cost-reducing subsidies to people who have not yet signed up for ObamaCare?

The media have reported that these payments will be dished out to people who bought qualifying health insurance outside an ObamaCare exchange because the exchanges have not been working. According to the New York Times, the new policy is a result of the heroic lobbying of Oregon Governor John Kitzhaber, whose exchange has failed to enroll almost anybody. According to Professor Sara Rosenbaum of George Washington University Law School: “People could have gone to court to obtain benefits denied without due process of law, because of a breakdown in government eligibility systems, and a judge would probably have ordered retroactive relief. The federal government is voluntarily providing equitable relief that a court would have given.”

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