Saturday, April 12, 2014

Two on taxes from today's FB input. Just to make you feel bad before the 15th!

Robert Reich posted something interesting on Facebook. The post included the pie chart above, and a text, from which I quote:
(C)onsider that four of the largest tax expenditures in the tax code – the preferential rate on capital gains, the home mortgage interest deduction, the deduction for property taxes, and employer-provided health care -- overwhelmingly benefit the richest 1 percent, who receive nearly a third of these benefits. Middle and low-income households get less than 5 percent of them. Last year, people making more than $1 million saved $96,000 on their taxes because of them. The poorest fifth of income earners saved less than $5. 
Capping these tax breaks at what the typical family saves from them would generate several hundred billion dollars a year -- which could be used for education, infrastructure, and reducing the public debt. Why won’t Republicans accept this? Why aren’t Democrats pushing for it?
I have long thought that there should be a cap on many kinds of deductions. Why is it good public policy to encourage people to take on huge debts to buy mansions? While I think it makes sense to consider the current value of past investments while calculating capital gains, I don't see why it is good public policy to provide incentives for taking profits from investments after a year or two.

A Washington Post article was shared on Facebook today, dealing with a new plan by which the federal government will "reclaim" old debts by impounding income tax refunds.
Across the nation, hundreds of thousands of taxpayers who are expecting refunds this month are instead getting letters.........informing them that because of a debt they never knew about — often a debt incurred by their parents — the government has confiscated their check. 
The Treasury Department has intercepted $1.9 billion in tax refunds already this year — $75 million of that on debts delinquent for more than 10 years, said Jeffrey Schramek, assistant commissioner of the department’s debt management service. The aggressive effort to collect old debts started three years ago — the result of a single sentence tucked into the farm bill lifting the 10-year statute of limitations on old debts to Uncle Sam.
In theory, the government should be able to prove that such a debt existed, and that the person from whom they collected the debt was indeed liable for it. The government position seems to be "possession is nine-tenths of the law" and we have the money. Apparently money is being collected in payment of debts that the government can not document. It is being collected from children of the persons who are claimed to have incurred the debts, without proof that the children in fact benefited from the funds. The feds are impounding the tax returns without prior notification. In one case described in the article, more was impounded than was owed by the tax payer's parent.

Taxes are due by Tuesday, April 15th. Enjoy the weekend! 

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