Archive for Taxes

Many Unhappy Returns!

About a million of ‘em!

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.

The tax error disclosed Friday is a self-inflicted injury that comes on the heels of what President Barack Obama had touted as a successful enrollment season, with about 11.4 million people signed up.

California, which is running its own insurance market, just announced a similar problem affecting about 100,000 people in that state.

The errors mean that nearly 1 million people may have to wait longer to get their tax refunds this year.

Another 50,000 or so who already filed may have to resubmit their returns.

That’s not even counting those who will have their refunds seized to pay any penalties they might owe under this obscene Act.

I think this deserves the full guffaw. Haw-haw-haw!!

Maybe CNN is right about the right-wing extremists (see post below), just a little early. The revolution will commence after April 15th.

Haw-haw-haw!!

PS: Spoke too soon, Mr. President!

“The Affordable Care Act is working,” the President said. “And I’ll tell you, everywhere I go around the country, I’m meeting individuals who come up and thank me. How passionate they are about the difference its made in their lives, it really reminds me why we do all of this.”

You don’t know from passionate!

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Schooling the Teacher

When he’s not trying to find gainful employment for decapitators and immolators, Obama spares a few words for soaking the rich.

This guy never mentions Obama by name, but if the president were in his classroom, he’d be sitting in the corner wearing a dunce cap:

A few points to highlight:

Nearly everyone assumes that a person who is among the top ten percent of all income earners qualifies as rich.

But according to 2011 data, a top ten percent household makes around $150,000 or above in gross annual income — that’s income before deductions and taxes. Now, $150,000 is a nice living, but it certainly doesn’t make you rich.

OK, then. What about the top 5%?

You get into this percentile if your household makes around $190,000 or above. That’s a nice bump. But it hardly puts you in the rich category.

I don’t have to tell a lot of our urban readers that 150-190k hardly qualifies as rich in Boston, New York, San Francisco, etc. Professor Ohanian is right that the people we can all agree are rich are few and far between.

But thank God for them:

Now, let’s talk about fair.

Fair would seem be that the group of taxpayers who earn 10% of the country’s income would pay 10% of the country’s taxes; the group who earned 20% would pay 20% of the taxes and so on.

But what If I told you that, according to IRS data, the top 10% of all earners — the people making $150,000 and above — pay 71% of all federal income tax while earning only 43% of all income.

If anything, the top ten percent pay more than their fair share.

So, as it happens, do the much reviled top 1%. They earn 17 percent of all income, but pay 37% of all federal income taxes.

That’s an apples-to-apples comparison—income to income tax. You rarely hear those numbers in this discussion. Doubtless because they undermine Obama’s argument.

As does this:

Ah, but what about payroll taxes — the money we pay to fund Social Security and Medicare? That takes a bigger bite of the paycheck of lower earners than higher earners. Isn’t that unfair?

[T]he benefits we receive from Social Security are capped, no matter how much we have paid in. This means that the payroll taxes of high earners actually help subsidize the social security and Medicare benefits that low earners receive at retirement.

But there’s one group Professor Ohanian does finger for freeloading:

And what about those at the other end of the income scale, the lower earners? Are we squeezing them? Hardly. Those who make $45,000 or less, 47% of all earners, pay little and often no income taxes.

Pay up, pauper. It’s only fair.

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Obama Administration Has Found New Technique To Punish Folks Without Health Insurance

Those folks don’t get their refund checks any time soon

Deana Ard wants her tax refund as soon as possible. She says she files her return in mid-January every year and receives her refund within two weeks.

This year, Ard said her refund is taking longer — and she’s blaming Obamacare.

Ard, who went without health insurance last year, doesn’t mind having to pay a $160 Obamacare penalty as part of her 2014 tax return. But she says her $7,124 refund is on hold, and the IRS won’t tell her why.

Ard is not alone. Scores of readers have written CNNMoney that they too were subject to the Obamacare penalty and that their refunds are taking longer than usual. Ard has rallied more than 1,000 people to a Facebook page devoted to those in a similar situation.

IRS is denying this, natch.

Jessica Johnson is one of those caught in limbo with a TC 570 after paying a $281 penalty. The married mother of three, whose return was accepted on Jan. 20, is waiting for a $9,450 refund from the IRS to pay credit card bills and add to her savings. Last year, she said she got her refund in less than 10 days.

Johnson, who now has insurance under her husband’s plan, has called the IRS nine times.

“I’m frustrated,” said Johnson, who lives in Savannah, Ga. “I just want to know what’s going on. It’s ridiculous that I am being penalized again for being honest about not having healthcare.”

Here’s the best one:

For Daniel Flowers, an $8,153 refund means being able to keep the lights on and his car running. The Cincinnati, Ohio, resident was counting on having the funds in a week, which is how long it usually takes. He’s called the IRS, but they say they can’t tell him anything until after 21 days has passed.

Flowers, who works in a hotel and paid $190 for not having insurance, may not have that kind of time. He’s gotten his landlord and others to give him some extensions, but the lights will go off next week.

“I need this refund. I worked hard for this,” said Flowers, who takes care of his two young nieces. “I can’t access my own money.”

Yes, Daniel, that is what liberalism is all about. They want your money, they need your money, they take your money. What a nasty, vindictive crew this administration is.

– Aggie

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What Does Al Sharpton Have in Common With…

Chuck Berry, Lauryn Hill, Ron Isley, Richard Hatch, Leona Helmsely, and Pete Rose?

Not a damn thing!

Serial tax avoidance appears to be a hallmark of Al Sharpton’s operations. But there’s a warning here: Others have gone to prison for lesser amounts. The list includes rock legend Chuck Berry, Grammy winner Lauryn Hill, Ron Isley of the Isley Brothers, Survivor reality star Richard Hatch, hotel queen Leona Helmsely, and baseball’s Pete Rose.

According to a New York Times’ review of government records last fall, the MSNBC host and civil rights activist personally faces federal tax liens for more than $3 million in back taxes owed, and state tax liens of $777,657. So in total, Sharpton reportedly owes more than $3.7 million in back taxes. His other two for-profit businesses, Raw Talent and Revals Communications, (both now defunct) owe anywhere from $717,000 to more than $800,000, based on state and federal tax liens, reports from the Times and National Review indicate. Revals Communications also either didn’t file its tax returns, or underpaid its tax bills from 1999 to 2002.

Sharpton’s National Action Network also owed more than $813,000 in federal back taxes as of December of 2012, according to the nonprofit’s recent filings. At one point, the National Action Network’s tax liability more than doubled last decade, jumping from $900,000 in 2003 to almost $1.9 milion in 2006. In 1993, Sharpton also had entered a guilty plea for the misdemeanor of failing to file his New York State income-tax return. Sharpton has also said the National Action Network had once given him a loan to pay for his daughters’ tuition, which is a violation of the law.

You know what they say, Al. Orange is the new black.

Leona Helmsley was quoted as saying “only little people pay taxes”. Al Sharpton has shrunk in size in recent years, but the littler Al Sharpton still doesn’t pay taxes.

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Hey, O-Bots! You Didn’t Want Your Inheritance Anyway, Did You?

Because even mom and dad’s (or grandma’s house) will be taxed at the current value.

I know that liberals are dumb, so I’ll type slow. What this means is that instead of inheriting the family home on the “step up basis”, meaning no taxes on the appreciation over the decades, you now get to pay taxes on the full amount. Whether you have the money or not.

The Obama budget calls for a stealth increase in the death tax rate from 40% to nearly 60%. Here’s how it works:

Under current law, when you inherit an asset your basis in the asset is the higher of the fair market value at the time of death or the descendant’s original basis. Almost always, the fair market value is higher.

Under the Obama proposal, when you inherit an asset your basis will simply be the descendant’s original basis.

Example: Dad buys a house for $10,000. He dies and leaves it to you. The fair market value on the date of death is $100,000. You sell it for $120,000. Under current law, you have a capital gain of $20,000 (sales price of $120,000 less step up in basis of $100,000). Under the Obama plan, you have a capital gain of $110,000 (sales price of $120,000 less original basis of $10,000).

There are exemptions for most households, but this misses the larger point: the whole reason we have step up in basis is because we have a death tax. If you are going to hold an estate liable for tax, you can’t then hold the estate liable for tax again when the inheritor sells it. This adds yet another redundant layer of tax on savings and investment. It’s a huge tax hike on family farms and small businesses.

Uh, here’s the deal. Family farmers and small business owners don’t typically vote for the dems. They are not important to this administration. Why not just confiscate the farm once dad dies? Wouldn’t that be simpler? And force the kids to keep it running so we continue to have food? Doesn’t that seem like a good idea? Because how many family farms can pay the taxes, millions of dollars of taxes, when dad kicks? Or maybe we should just confiscate the farms, give them to big corporations.. no Wait.. give them to the government directly. Why should anyone hold private property? Dad didn’t build that farm, the government did.

– Aggie

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President Pickpocket

With one of the highest corporate tax rates in the world, the US has forced many international companies to shelter their profits overseas. That’s not treason, it’s business. Many have called for the US to cut the tax rate even just to the global average, and give those companies incentive to “repatriate” those profits.

Yet again, we learn how Barack Obama is not most people (those he’s no different from most socialists):

Obama will propose a six-year, $478 billion public-works program for highway, bridge and transit upgrades, with half of it to be financed with a one-time, 14 percent tax on U.S. companies’ overseas profits.

The tax would be due immediately. Under current law, those profits are subject only to federal taxes if they are returned, or repatriated, to the U.S., where they face a top rate of 35 percent. Many companies avoid U.S. taxes on those earnings by simply leaving them overseas.

Oh, come on, B-Huss, last time you asked for almost a trillion for “infrastructure”. You pi**ed it away on filling potholes, and now you can’t even hit half of that? Go big or go home, Mr. President—actually, just go home.

But this is all show. Obama talks big, but can’t do anything. Obloviator proposes, Congress disposes. People may think we’re seeing his true colors, and they may be right. But it’s everything from pathetic to hilarious that True Obama has finally emerged only when he’s become Irrelevant Obama. Soak the rich as a political philosophy? Good luck with that.

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But Do They Regret the Error?

So, when Bloomberg quoted Jeff Greene as saying “”America’s lifestyle expectations are far too high and need to be adjusted so we have less things and a smaller, better existence”—which was a bit rich from a near-billionaire—he didn’t?

Then, what did he say?

“Let me clear this up. I never said this. It was completely misquoted,” he insists.

“What I said was, ‘the global equalization of wages and technology, which is growing at an exponential pace, has killed so many millions of jobs in America and other Western economies, and it’s going to kill them at an even faster pace going forward,'” he tells CNBC.

“I said, ‘we have our work cut out if we want to build a real economy, an inclusive economy that I grew up in, that I want to see for all Americans.'” Americans don’t have to shift their expectations downward, he maintains.

That’s hardly the same thing.

But then he said this, so he can go [bleep] himself:

The entrepreneur also said he would support higher taxes on the wealthy.

“We absolutely-unfortunately for wealthy people-need to have higher taxes, and I’m certainly prepared to pay higher taxes and I hope that other wealthy people are,” he said.

Those taxes would help provide lifelong educational opportunities, which would help build a stronger middle class, he added.

Anyone who flatly argues for higher taxes—without a thought toward spending reforms, smaller government, inefficiency, corruption, and the nationalization of the individual property—is excused from the conversation. Money doesn’t belong to the government; it belongs to the people. You don’t take it away from them without a damn good reason, and boilerplate palaver about “education” and “infrastructure” is just a diversion for lifting wallets. We don’t need to spend more on education, just smarter. And Obama lost me on infrastructure when he admitted his near-trillion dollar stimulus was pi**ed away because there were no shovel-ready jobs.

How many times are we expected to fall for this nonsense? Please, tell me. It would make my life so much easier.

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NY Times Defines Merely Affluent

Anyone who has a 529 plan

This is quite an amusing article. According to the NY Times, if you have a 529 plan for your kids, you’re kinda rich and need to pay more in taxes. The the rich meanies rebelled at the suggestion, even the ones who read their newspaper! So poor old Obama had to pull it off the table.

The first rule of modern tax policy is raise taxes only on the rich. The second rule is that your family isn’t rich, even if you make a lot of money.

President Obama’s State of the Union proposal to end the tax benefits for college savings accounts ran afoul of these rules, which is why he abandoned it, under intense pressure from both political parties, within a week.

Tax-free college savings accounts, like the mortgage interest deduction and the state and local tax deduction, principally benefit people who range from affluent to wealthy. In pushing its proposal, the White House pointed to Federal Reserve data showing that 70 percent of balances in the college accounts were held by families making at least $200,000 a year. In theory, tax reform is supposed to be built around cutting back preferences like these, in order to pay for some combination of lower tax rates and tax preferences aimed at people with lower incomes.

But in practice, politicians from both parties have made a point of holding the group you might call the “merely affluent” harmless from tax increases. If you make $150,000 to $225,000, you make about two to three times the national median income for a married couple. The list of occupations that can get you into this income bracket — government official, academic, lobbyist, journalist — can sometimes make it hard for people in political circles to remember that 92 percent of American married couples make less than $200,000 a year.

They keep hammering away at this, and disdainfully mention this article by economist Megan McArdle.

…There’s a reason for that. Americans like to hear that rich people are going to be forced to pay their fair share. They would probably be considerably less excited to hear that Obama wants to tax the earnings on educational savings accounts, or that any assets they inherit from their parents would be subject to a capital gains tax. To be fair, there are generous exemptions. But there are a lot of affluent-but-hardly-wealthy folks in blue states who would be very unhappy to hear that that nice Westchester home Mom and Dad bought for $15,000 in 1952 is going to be subject to a capital gains tax — at the same time they’re suddenly paying income taxes on the capital gains and dividends in little Sally’s college account.

In some ways, this is a measure of how difficult the American fiscal picture is. Estates get what’s known as a “stepped-up basis” on assets — meaning that when you inherit a house from Mom and Dad and later sell it, you’re taxed on the difference between the value at the time you inherited it (your basis) and the value at the time you sell it. Obama proposes to use the price your parents paid as the basis, though the first $200,000 is exempted, and there’s an additional $500,000 exemption for homes.

The people this hits will be a small group, but again, it’s a group that includes a lot of fervent Obama supporters in blue states. Moreover, there’s good reason to step up the basis, because over the decades, records are lost and it can be hard to determine what price Mom and Dad paid, especially for assets that aren’t homes. Taxing the earnings on college savings accounts is even stranger, both because this hits the middle class, and because if you tax the earnings, there’s not all that much point to having the account; essentially, Obama is taxing college savings accounts in order to fund universal community college. This is scraping the bottom of the barrel, and what it tells you is that Obama has already run through most of the practical and politically palatable ways to tax the affluent.

And she makes this brilliant point:

Of course, these are never-never proposals; the new Republican Congress is not going to open its career by taxing America’s college savings. But in a way, that makes it even stranger; since you can’t get it done anyway, why bring it up?

The answer is that this gives him an imaginary revenue source he can attach to his equally imaginary plans to subsidize community college and child care. The real benefit of these proposals is that they’re complicated and hard to explain. Republicans have been understandably reluctant to attack these policies directly, and for good reason.

Heading back to the disappointment at the NY Times:

A lot of people in this category don’t think of themselves as rich, and they benefit from tax provisions like college savings accounts.

So when he first ran for president, President Obama repeatedly promised not to raise taxes on families making less than $250,000 a year. The flat thud his college proposal landed with emphasizes why that promise resonated so.

The savings plans debacle illustrates a problem for both the president and Congress: If you can’t go after tax provisions for the merely affluent, you are exempting almost everyone from tax increases. And if you can’t broaden the tax base, then you are very limited in how much you can finance tax reform.

And by reform, the NY Times means redistribute income from the middle class (they deny that the middle class is using the 529 plan, I call bs) to the poor. Because there just isn’t enough money among the rich to pay for everything that the Left wants to pay for. By the way, the comments at the end of the NY Times article are just priceless. Their readers are furious that Obama would take away their favorite tax break.

– Aggie

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Hey, You Six Million!

How do you like him now?

As many as 6 million people will have to pay a penalty under ObamaCare for going without health insurance in 2014, federal officials suggested in projections released Wednesday.

That means between 2 percent and 4 percent of all taxpayers lacked medical coverage for all or part of the year and do not qualify for an exemption under the individual mandate, according to the Treasury Department.

Another 10 to 20 percent of taxpayers — or 15 million to 30 million people — were uninsured but will qualify for an exemption from the mandate, shielding them from paying $95 or 1 percent of household income when they file their taxes.

What did we just learn the other day? That ObamaCare will end up costing $2,000,000,000,000 and still leave almost 30,000,000 uninsured? (I just busted my 0 key.)

The best-case scenario described by the CBO would result in ‘between 24 million and 27 million’ fewer Americans being uninsured in 2025, compared to the year before the Affordable Care Act took effect.

Pulling that off will cost Uncle Sam about $1.35 trillion – or $50,000 per head.

The numbers are daunting: It will take $1.993 trillion, a number that looks like $1,993,000,000,000, to provide insurance subsidies to poor and middle-class Americans, and to pay for a massive expansion of Medicaid and CHIP (Children’s Health Insurance Program) costs.

Offsetting that massive outlay will be $643 billion in new taxes, penalties and fees related to the Obamacare law.

So, all this wasn’t about controlling costs or covering the sick. It was about power. By that metric, it has been a raging success.

Who has the last laugh?

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529 Fiasco

The dumbest administration evah continues its unbroken track record of dumbness…

Here’s my favorite line of the year, so far:

Well, that must have polled badly.

I guess the middle class wasn’t too impressed with the idea of free community college in trade for losing their tax-advantaged college savings plan, huh?

The White House on Tuesday dropped its proposal to tax 529 education savings accounts, a week after President Obama floated the idea in the State of Union. This is a cut-their-losses move, but we wish the idea had rotted in the sun for a few more months. It would have been instructive to the same middle-class taxpayers Mr. Obama claims to serve.

Mr. Obama wanted to tax 529 plans to finance a more targeted college subsidy program that politicians could better control. The 529 plans put the power in the hands of parents. The political problem is that 529s have become popular with, well, the middle class; there were some 11.8 million accounts and the average balance was $20,671 as of last June.

You can see the appeal. All that juicy tax money, squirreled away in the brats’ college accounts, instead of being used for good stuff.. like maybe more money for (you’re favorite goofy program here). Because let’s face it, the only real money to be had is in all those middle-class bank accounts, in just about every neighborhood in the USA.

House Speaker John Boehner had called on Mr. Obama to withdraw the proposal, and the Ways and Means Committee was already rolling out legislation to force Democrats to go on record for the 529 tax increase. “Given it has become such a distraction, we’re not going to ask Congress to pass the 529 provision,” a White House official told the Journal, in a a classic of political rationalization.

It’s a shame there won’t be a vote, because the 529 tax increase is a rare example of the President’s policy sincerity. Liberals sooner or later must raise taxes on the middle class because taxing the rich alone can’t possibly finance all of the Democratic Party’s entitlement schemes. The middle class is where the real money is. So while taxing 529s may die for now, it’s only a matter of time before liberals are back with a carbon tax or value-added tax or something. That’s the real meaning of “middle-class economics.”

Yep. And given the fact that he did win two elections, the middle-class deserves what’s coming. And come it will, because the debt keeps growing.

– Aggie

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At Last!

Who doesn’t think they’re middle class? Bill Gates and Warren Buffett, who know they can’t get away with it, and the welfare cheats for whom stepping into the middle class would be a cut in pay—but who else?

So, Obama’s obsequious snake-oil palaver about the “middle class” in the State of the Union (seven mentions) was cynically meant to appeal to about 300 million Americans.

Just one question: what took him so long?

The plan is DOA, though we’ll address the merits anyway because it’s our job. But first observe the irony: The President has suddenly discovered that middle-class incomes have plunged on his watch, and he’s demanding that Congress address this with more of the same policies that have done so much to reduce middle-class incomes.

White House aides are saying their boss’s plan for $320 billion in new taxes on savings and investment to finance more transfer payments is a bid to be remembered as a Robin Hood. This would be accurate if our hero and his merry men had shaken down Sherwood Forest for the benefit of the Sheriff of Nottingham. Mr. Obama has spent six years trying to redistribute income, but all he’s done is make the income gap between rich and poor wider.

Untitled

For exactly how long are we to “blame Bush”? The recession officially ended in the second quarter of 2009, meaning we’re about to celebrate a sixth year of economic expansion. We should either credit Bush for the recovery (which began while Obama was still sleeping off his Inauguration hangover), or blame Obama for its feebleness. Or vice-versa, I don’t care.

The point is: how can Obama portray himself as Robin Hood when he’s been as hapless and useless as Batman’s sidekick, Robin?

Mr. Obama even wants to change the tax treatment of inherited assets and eliminate a provision known as “stepped-up basis.” When someone dies before realizing a capital gain, his heirs pay the top 40% inheritance tax rate on the value of the asset at that time, not when it was purchased. The reason the step-up basis exists is to compensate for the death tax on a lifetime of saving and investment.

Way back when, The West Wing featured an episode in which a proposed hike in the death tax was opposed by the Congressional Black Caucus. The president’s staff were incredulous until one of them realized that a generation of African Americans freed from the confines of Jim Crow had amassed estates that they wished to protect from the sticky fingers of the government. I always figured Aaron Sorkin’s show was based on actual occurrences. Now, it seems like he was tripping on peyote or mushrooms. They say a conservative is a liberal who’s been mugged by reality. A liberal must be a liberal who’s been mugged by another liberal.

Lastly, how often have we been told how smart Obama is, possessed of a first-class mind?

We beg to differ:

The President wants to double down on redistribution by nearly doubling the capital gains tax rate over its 2012 level to 28% for couples earning more than $500,000. The 2013 fiscal cliff deal boosted the top rate to 20% from 15%, plus the 3.8% ObamaCare surcharge on “unearned income.”

The White House is describing 28% as “the Reagan rate,” because that is where it stood after the Reagan-Rostenkowski tax reform of 1986. But that came in the context of reducing the top marginal rate on ordinary income to 28% from 50%. Today that is 39.6%, and even higher with surcharges.

Oh dear. How tedious this gets:

Obama getting schooled, six years ago, by Charlie Gibson of all people. With all his gray hair, maybe his memory’s going.

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Out: MD; In CPA

Whenever I want the complexities of modern health insurance explained to me, I go to H&R Block:

[M]illions of Americans who got subsidies under the law may find they are getting smaller-than-expected refunds or owe the IRS because credits they received to offset their insurance premiums were too large. As many as half of the roughly 6.8 million Americans who got subsidies may have to refund money to the government, based on one estimate by tax firm H&R Block Inc.

“The ACA is going to result in more confusion for existing clients and many taxpayers may well be very disappointed by getting less money and possibly even owing money,” said Charles McCabe, president of Peoples Income Tax and the Income Tax School, a Richmond, Va., provider of tax preparation and education. “The whole implementation of Obamacare will be frustrating for tax preparers.”

Why should they be spared? Everyone else has to eat this fecal focaccia.

Obama got hammered in the midterm elections largely on the lies and failures of ObamaCare. The next four months are going to be beautiful.

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