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Posts Tagged ‘tax’
April 29th, 2022 at 9:30 am
Image of the Day: High Cost of “Green” Energy Explains Leftist Calls for Carbon Tax
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In our Liberty Update this week, CFIF highlights a bizarre new crony capitalist idea to introduce a carbon tax that some entrenched interests in Washington, D.C., have begun to advocate.  Even more bizarrely, they sell their proposal to begin taxing energy as a way to reduce energy costs.  You can’t make this up.

Courtesy of economist Stephen Moore, we have an illustration that helps explain their motivation.  Namely, “green” energy is far more expensive than more efficient fuel sources.  Accordingly, they need to tax those more efficient fuel sources in order to make their “green” energy boondoggles more acceptable by comparison:

Why Climate Activists Want a New Carbon Tax

Why Climate Extremists Want a New Carbon Tax

January 18th, 2019 at 6:52 pm
Image of the Day: Higher Top Income Tax Rates Don’t Mean Increased Revenues
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In our Liberty Update this week, we highlight how history refutes the idea that returning to top income tax rates of 70% or higher, offered by new faces on the political left like Alexandria Ocasio-Cortez, will somehow pay for all of the new entitlement spending they advocate.  Wealthier taxpayers actually carried a smaller share of the nation’s income tax payments before the top marginal rate was cut.  And, as illustrated nicely by Veronique de Rugy and the great folks at the Mercatus Center, it won’t unleash some wellspring of new tax revenues that leftists might hope in any event:

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Sorry, Leftists

 

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April 27th, 2017 at 3:01 pm
Image of the Day: Americans Pay More On Taxes Than Food, Housing & Clothing Combined
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Today’s eye-opening Image of the Day, courtesy of the Tax Foundation:

Americans Tax Burden

Americans' Tax Burden

April 24th, 2017 at 1:38 pm
Tax Reform: Allow Choice Between Immediate Expensing and Interest Deductibility
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Last November, Americans delivered a clear and important message to Washington, D.C.:  Create more American jobs and increase investment in America’s aging infrastructure.

While roads, bridges and other public works projects are obviously important, President Trump has wisely recognized that a successful infrastructure policy must also include steps to stimulate private-sector infrastructure investment and job creation.  Accordingly, as President Trump and Congress take steps to modify and reform the tax code, it is important that any changes being considered not undermine these private infrastructure initiatives.

Specifically, many American businesses currently rely on debt to fund infrastructure investments and create new jobs.  Companies of all sizes in a variety of industries, including energy, internet broadband, telecommunications, manufacturing, transportation, retail and agriculture, routinely use debt to fund new technologies, build out and maintain infrastructure and hire and train American workers.  Like other business expenses, interest paid on debt is an ordinary and necessary cost of doing business and has been tax deductible for over 100 years.

Unfortunately, some tax reform proposals seek to eliminate interest deductibility for businesses in favor of 100 percent expensing — allowing businesses to deduct the full value of capital expenditures in one year rather then spread out over many years.

Eliminating interest deductibility could immediately hinder many businesses’ ability to borrow, thereby impeding infrastructure improvement and expansion, as well as job growth.  Small businesses, which create two out of three American private sector jobs and rely on debt financing, would be particularly hurt by any tax plan that eliminates interest deductibility, because they possess limited or no access to equity capital.  Similarly, large businesses would need to delay investment to account for a larger tax liability over time.

While 100 percent expensing is a good idea that would help spark economic growth, one idea doesn’t need to be sacrificed in favor of the other.  President Trump’s campaign tax proposal offered a wise compromise alternative.

Under his plan, businesses could chose either immediate expensing or interest deductibility, depending upon their particular needs.  That would support economic investment and job growth by giving companies at least the choice between interest deductibility and 100 percent expensing.  The Tax Foundation has determined that allowing companies to choose between the two options would contribute approximately $120 billion to our economy over ten years.

Going back to the infrastructure issue referenced above, electability between the two options also supports the President’s $1 trillion infrastructure plan, which relies on public-private partnerships, and Congressional leaders’ similar proposals, which include anticipated leverage ratios of up to five-to-one.  Limiting interest deductibility could undermine those plans.

Perhaps most importantly, allowing companies themselves to choose between the two options facilitates passage of tax reform because proponents of either option need not be foes in the process.

July 6th, 2016 at 6:33 pm
Image of the Day: While Other Countries Reduce Corporate Tax Rates, U.S. Maintains Developed World’s Highest
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A rare bipartisan consensus agrees that the U.S. corporate tax rate, which remains the developed world’s highest, is in desperate need of reduction and simplification.  Today brings an illustration of the problem, courtesy of the Tax Foundation:

Corporate Tax Rates

Corporate Tax Rates

May 14th, 2015 at 9:54 am
Bipartisan Support Growing to Repeal ObamaCare Medical Device Tax

A group of 18 House Democrats sent a letter recently to Speaker John Boehner (R-OH) and Minority Leader Nancy Pelosi (D-CA) requesting “timely passage” of a bill to repeal perhaps the most unpopular ObamaCare tax.

The medical device tax levies a 2.3 percent fee on medical devices, and is credited with causing increased prices and a decline in jobs within the manufacturing industry. Much of the Democratic support for repeal comes from members representing states with large device making companies in Minnesota and Indiana.

In a divided Congress, repealing the medical device tax may be the best way demonstrate bipartisan opposition to ObamaCare. Last year, 79 Senators voted to repeal this tax though then Majority Leader Harry Reid (D-NV) refused to bring it to a floor vote. With Republicans in control of the chamber, a vote is likely to occur.

Even if President Barack Obama vetoes the measure – which the White House has promised he will do unless Congress imposes another tax to offset the revenue loss – the mounting pressure to get rid of the medical device tax indicates that there are political victories to be had, if congressional leaders will push for them.

April 10th, 2015 at 2:57 pm
Beware ObamaCare as Tax Day Approaches

Nearly every American that received an ObamaCare subsidy to help pay for health insurance last year got the wrong amount.

“Only 4 percent of the people who signed up for ObamaCare got the correct subsidy, so a whopping 96 percent will see their tax bill adjusted, some up and others down,” writes Betsy McCaughey. “Who would design a system that’s right only 4 percent of the time?”

The main reason for the discrepancy is that a person must estimate – i.e. guess – their entire taxable income for the next year in order to find out how much of a subsidy they qualify for under ObamaCare during enrollment season. A raise or switch to a higher paying job could be zeroed out because the government gets to “clawback” the difference. Losing a job means a fatter refund.

You can see which direction ObamaCare’s incentives point to, which provides a partial answer to McCaughey’s rhetorical question – people who penalize moving up the income ladder.

March 19th, 2015 at 5:18 pm
Large Numbers of Americans Not Prepared for ObamaCare Penalty

If you didn’t have health insurance last year, could afford it (according to ObamaCare), and don’t have a waiver from the individual or employer mandate, you will be getting a notice from the IRS this year that you owe Uncle Sam some money.

Apparently, this will be a surprise to a lot of people.

“A Kaiser Family Foundation poll released Thursday found that while slightly more than half of respondents were aware the penalty kicks in this year, one in five think it goes into effect next year, roughly one in six say they don’t know when it goes into effect, and one in 10 believe it was rolled out last year,” reports the Washington Examiner.

Look for ObamaCare’s unpopularity to increase even more after Tax Day.

February 20th, 2015 at 2:36 pm
Feds Send Out 800,000 Incorrect ObamaCare Tax Forms

First Uncle Bear, now Uncle Sam.

“The Obama administration says it sent about 800,000 HealthCare.gov customers the wrong tax information, and officials are asking those consumers to delay filing their 2014 taxes,” reports CNBC.

The massive blunder comes on the heels of a similar admission by California officials that the state sent out approximately 100,000 error-laden tax forms to residents using the state’s ObamaCare exchange, Covered California.

No timeline was apparent on when revised forms would be sent out, or whether early tax filers would be penalized by the Internal Revenue Service for submitting unknowingly false information.

Another item in the CNBC report may foreshadow the next move. Due to concerns that some people will be angered for being penalized for not buying insurance to comply with ObamaCare’s coverage mandate, the Obama administration is creating another sign-up extension.

Perhaps the IRS will get similar instructions from on high and bump back the filing deadline.

If so, expect to hear the millions of non-ObamaCare customers clamor, “Me too!”

February 13th, 2015 at 6:05 pm
The ObamaCare Tax Even Democrats Want to Repeal

Nice things cost money, and so too does so-called affordable health insurance.

“More than one-third of all House members have signed onto legislation that would repeal ObamaCare’s tax on insurance companies, which even some Democrats agree is leading to high insurance costs for millions of American families,” reports The Blaze.

People familiar with the logic of doing business understand that private firms don’t pay taxes, people do. So when ObamaCare imposes a tax on health insurance providers, that amount gets passed on to consumers as higher premiums.

With ObamaCare’s second enrollment cycle about to end, many people are experiencing this economic rule up-close-and-personal.

“I hear every day from individuals, families, and businesses in Arizona about the cost of health care,” Rep. Kyrsten Sinema (D-AZ) is quoted as saying. “This common sense fix [i.e. repeal] will help lower out of pocket costs for hardworking Arizonans. By working together, we can provide relief for individuals, families, and employers while increasing access to quality affordable health care.”

That’s highly unlikely because ObamaCare’s regulations increase the cost of providing health care, and its complex web of subsidies is designed to hide some of that increase. Repealing a source for subsidies without also repealing the regulations that make them necessary leaves the elevated cost without a means to pay for it.

Still, it’s good to see at least some Democrats in Congress supporting the repeal of at least some part of ObamaCare. Remove enough supports, and eventually the whole architecture crumbles.

January 29th, 2015 at 6:20 pm
Health Insurance Penalty Obama Decried in 2008 Coming Due in 2015

Add another bullet point to ObamaCare’s litany of broken promises.

The U.S. Treasury announced this week that on Tax Day this year, “Some 3 million to 6 million Americans will have to pay an ObamaCare tax penalty for not having health insurance last year,” reports CNN Money.

Since the penalty is the greater of $95 or 1 percent of income, the bill could bigger than expected.

To calculate possible amounts, go here.

Though it’s been awhile, some may recall that in 2008 a certain presidential candidate attacked Hillary Clinton for being open to garnishing workers’ wages if they failed to buy health insurance under her reform proposal. True to form, Barack Obama promised no such penalty if he was elected president.

Now we know the truth.

January 15th, 2015 at 8:07 pm
Paul Ryan Says No to Raising Gas Tax

With oil prices at record lows some Members of Congress have floated the idea of raising the federal gas tax to make up for lost revenue.

Today, Paul Ryan put the kibosh on the proposal.

“We won’t pass the gas tax,” Ryan, a Wisconsin Republican, said to members of the media outside a GOP policy retreat in Hershey, PA.

Ryan’s pronouncement likely quashes the idea that Congress will pass legislation during his tenure as chairman of the tax-writing Ways & Means Committee.

This won’t make the social engineering crowd happy.

According to a piece at Newsweek in support of imposing a higher gas tax, “Whenever you impose a new and unanticipated tax, some part of the existing capital stock becomes less valuable than it was before.” “Adding, say, 50 cents to a gallon of gasoline makes preexisting gas guzzlers, homes in the suburbs and oil-based home heating systems worth less than before.”

“Conversely, when oil prices fall, fuel-efficient cars, homes in city centers and public transit investments all drop in value. This can lead to economic waste: under-used automobiles, unrented homes and empty subways,” complains the author.

Note that the compacted urban lifestyle preferred by liberal social planners is the vision that suffers from low gas prices, while the middle class lifestyle experienced by millions of Americans benefits.

Raising taxes to force people to become public transit-riding renters instead of car-driving homeowners isn’t very popular when put in these terms.

Kudos to Chairman Ryan for putting this idea to rest.

January 7th, 2015 at 11:02 am
IRS Tax Refunds Could be Much Smaller Under ObamaCare This Year

Anyone still looking for a fundamental change to the federal tax code need look no further than ObamaCare.

H&R Block, one of the nation’s largest tax preparation companies, is promoting its free “ACA Tax Impact Analysis” on January 8, 2015, in order help taxpayers understand the true cost of ObamaCare.

Reporting by The Hill quotes an H&R Block executive as saying that the controversial health law is “the biggest tax code change” in two decades. Its passage “has made health care a tax issue and is going to make filing taxes more complicated this year.”

Perhaps the biggest surprise coming to millions of taxpayers is the penalty amount to be assessed for not complying with the law’s individual mandate. Most people know that the IRS can levy a $95 fine for being uninsured this year (which rises every subsequent year). But many do not realize that’s only one option. ObamaCare authorizes fines up to 1% of annual income (which also rises every year), if that amount is greater than $95.

Simply put, a lot of people who passed on ObamaCare’s costly version of “affordable” insurance thinking they would only have to write a $95 check may be missing a much bigger chunk of their IRS refund this year.

November 13th, 2014 at 7:12 pm
Repeal of ObamaCare’s Medical Device Tax Coming Soon?

Repealing ObamaCare’s medical device tax is one of the ways to deprive the controversial health law of $30 billion in funding, so it’s no wonder Republicans in Congress are getting ready to do just that.

Unlike other features of ObamaCare – such as the individual and employer mandates – the medical device tax has bipartisan opposition because it threatens up to 43,000 jobs. So, even though President Barack Obama would likely veto any repeal bills that land on his desk, a measure killing the medical device tax might be able to attract enough votes to override him.

If successful, repealing the medical device tax might convince Democrats in Congress that ObamaCare isn’t sacrosanct. Maybe then they’ll be open to trying something else.

October 21st, 2014 at 1:50 pm
Report: Without Subsidies, ObamaCare Enrollment in Death Spiral

“Without [ObamaCare’s] premium support, premiums rise by nearly 45 percent, and enrollment falls by nearly 70 percent,” says a report by RAND Health.

The analysis is part of an evaluation commissioned by the federal Department of Health and Human Services (HHS), the agency in charge of ObamaCare implementation.

The report’s publication follows on news that a federal district judge in Oklahoma ruled ObamaCare’s premium support (i.e. subsidies) mechanism is not available in states that use Healthcare.gov, the federal ObamaCare exchange. According to the text of the law, eligibility for subsidies depends on a citizen’s state operating its own exchange. If the law’s plain meaning is followed, RAND’s analysis will apply to citizens in more than half of the states.

The RAND Health report confirms a simple truth about ObamaCare – if people must pay the full freight of its “affordable” insurance, they will refuse.

H/T: The Daily Caller

July 2nd, 2014 at 6:22 pm
An Energy Policy that Creates Jobs and Prestige

“By boosting our energy production, the U.S. could restore its diminishing influence in the world without expending blood and treasure – in fact, we would reap major economic benefits,” writes Rep. Devin Nunes (R-CA).

Nunes is an up-and-coming member of the House Ways and Means Committee and is known for thinking big on how to use tax reform as a means to reestablish American leadership in the global economy.

Rationalizing our energy policy would go a long way too.

Thanks to improvements in technology large, untapped domestic oil and natural gas reservoirs are now reachable. States like North Dakota, Texas and Oklahoma are moving to capitalize, while huge potential awaits enterprising politicians and businesses in California and Colorado.

The benefits are many. More energy production means more jobs in extracting, refining and shipping. For example, an entry-level rig worker in North Dakota averages about $66,000 a year, while the average oil industry job in the state was $112,462 as of 2012. That also means more jobs for people serving workers flush with disposal income.

There’s also a national security angle. With Iraq’s oil fields under siege by Islamic militants, Venezuela constantly swayed by demagogic collectivists and Russia threatening to cut off natural gas shipments, it’s time for the United States to take the steps necessary to ensure greater energy independence.

Unsurprisingly, Nunes wants President Barack Obama to approve the Keystone XL pipeline, as well as implement other measures to put the nation in a game-changing position. Of course, that isn’t happening unless Obama adopts Bill Clinton’s triangulation strategy.

Don’t hold your breath.

Still, Nunes makes a compelling case for using national energy policy as a way to improve both our domestic economy and global prestige.

It’s an angle that economically recessed, war-weary Americans might soon embrace.

March 31st, 2014 at 6:20 pm
IRS Compliance Nightmare Looms as ObamaCare Site Crashes Ahead of Deadline

This morning Healthcare.gov – the federal ObamaCare website serving citizens in 34 states – went down for four hours, stymieing customers from accessing or completing their applications for insurance.

NBC News reports that people unable to log onto the website were put in a “queue,” meaning they would be notified by email when they could resume the enrollment process.

But with the deadline to begin an application (supposedly) ending at midnight, what will happen to people unable to return to their computer screens after the lengthy delay? Last week’s extension to mid-April only covers people who start the process for enrolling by the end of March. If other commitments – say family or work responsibilities – don’t allow an applicant to return, what then? How will federal regulators distinguish between people who never tried to use Healthcare.gov and those that did, but for various reasons beyond their control couldn’t finish?

If history is any guide, don’t expect the feds to make a distinction. More likely, the response sometime soon will be a blanket extension for enrollment that allows anyone – without precondition – to complete the process.

Then it will be the IRS whose head will spin. When it comes to enrolling on an ObamaCare exchange, the carrots are the subsidies and the sticks are the fines. Any adult that goes without health insurance for three consecutive months is subject to a fine of $95 or 1 percent of her annual income, whichever is higher. And since that fee gets levied at next year’s tax filing, it will be the IRS’ job to sort out who is subject to the penalty.

That is, as soon as the political operatives in the Obama administration decide when enrollment really, really – no really we’re serious this time! – ends.

March 3rd, 2014 at 1:42 pm
ObamaCare’s War on Work

Up to 38% of people who qualify for Obamacare exchange subsidies may have to pay some or all of the money back to the IRS. That’s because the amount of subsidy dispensed is based on a sliding scale. As income rises, the amount of subsidy decreases. In practice, many people who currently qualify for a subsidy could wind up paying back the amount if they earn just a little bit more in income.

“At biggest risk are people who annual household income put them near the thresholds where the Obamacare subsidies make steep declines,” explains AEI expert Scott Gottlieb. “These cliffs are steepest for those people who earn 150% of the federal poverty level (family of four earning $35,000 in annual household income); 250% (a family of four earning about $55,000 annually); and 400% (a family of four earning about $95,000 annually).”

The upshot of this is that people may become much more sensitive to family budgeting since their financial stability depends on which side of the subsidy wall they fall. The downside of course is that we’re likely to start seeing people decline job promotions and salary hikes to avoid becoming a net loser at tax time.

As I’ve noted before, Obamacare’s War on Work is just beginning.

February 4th, 2014 at 1:59 pm
CBO: ObamaCare Incentivizes More Welfare, Less Work

A new report by the non-partisan Congressional Budget Office predicts the Affordable Care Act (i.e. Obamacare) will cause up to 2 million lower-income workers to leave the labor force over the next decade because they will make more in government benefits than as a private employee.

“CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor – given the new taxes and other incentives they will face and the financial benefits some will receive,” the agency says in Appendix C, Labor Market Effects of the Affordable Care Act: Updated Estimates (pdf).

The incentive to drop out of the workforce is one’s eligibility for a government subsidy to help pay for an insurance plan bought through an Obamacare exchange. Since eligibility for a subsidy phases out as a person’s income rises, people who will receive subsidies will have to factor in whether to take a job that makes more money, but will likely reduce or eliminate eligibility. In this scenario, taking the job may actually result in a net loss of income as the person must now pay for the full cost of health insurance.

The disincentive to work also applies to those hanging between Medicaid and Obamacare subsidies. Eligibility for Medicaid means the cost to the beneficiary is nothing (at least not directly). In this scenario, qualifying for a subsidy increases one’s out-of-pocket expenses, making it financially smart (for the individual) to work less and stay on Medicaid.

It’s important to emphasize that deciding to work less to receive more in government benefits is a financially rational decision for individuals to make, and one that any economist would readily predict. My hunch is that at least some of Obamacare’s architects knew this and designed their programs accordingly.

The problem, of course, is that convincing millions of people not to work is not financially sustainable for the country as a whole.

December 26th, 2013 at 2:50 pm
Obamacare’s Christmas Hangover

As Americans awake from the annual Christmas spending spree, a new set of bills is coming due in January – Obamacare-related taxes and fees.

The New York Post offers a summary:

·    A 2 percent levy on every health plan, which is expected to net about $8 billion for the government in 2014 and increase to $14.3 billion in 2018

·    A $2 fee per policy that goes into a new medical research trust called the Patient Centered Outcomes Research Institute

·    Insurers pay a 3.5 percent user fee to sell medical plans on the HealthCare.gov website, which is passed onto consumers

·    A 2.3 percent medical device tax that will inflate the cost of items such as pacemakers, stents and prosthetic limbs

·    An added 0.9 percent Medicare surtax on top of the existing 1.45 percent Medicare payroll tax for families making over $200,000 and individuals making more than $250,000 annually

·    The same groups will also pay an extra 3.8 percent Medicare tax on unearned income, such as investment dividends, rental income and capital gains

The government Grinches even swiped the income tax deduction for medical expenses that exceed 7.5 percent of a person’s annual income. In 2014 it will jump to 10 percent.

‘Tis the season for a heavier tax burden.