Archive for the ‘Politics’ Category

A few thoughts

So we’ve electioneered. And some things have happened. Unsolicited thoughts below the jump.

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Flat ain’t simple

Long time no blog, eh? There’s been a lot of politicking going on lately, what with the presidential campaigns and debates and all, and lots of talk about tax plans. A favorite talking point about a tax plan is the argument that a flat tax will make taxes simpler. A flat tax is many things, first and foremost a great way to give the wealthiest in this country huge tax breaks, but making taxes simpler ain’t it. To illustrate, I’ll use the much-loved 1040 form. The first form is a quick and dirty attempt to show all the ways in which your income and taxes are adjusted through various schedules, deductions, credits, and so forth. These forms and adjustments are what make taxes so complicated and time-consuming. As you can see, it’s a lot!

TaxAdjustments

A flat tax, on the other hand, would make one change: it would alter the number you put on one line, namely the tax you owe (and if your income is really high, then that number is going to go way, way down):

FlatTax

I’m all for tax simplification. If you are honestly for it, though, that means you have to be willing to give up deductions and adjustments like the mortgage interest deduction, student loan deduction, and a lot of other popular things. Switching to a flat tax doesn’t make anybody’s taxes simpler, it just makes a lot of people’s taxes lower. A lot of particularly wealthy campaign donor’s taxes, to be precise.

  • Current Mood: Cold

Minnesota Tax Incidence 2015

The 2015 Minnesota Tax Incidence study is out. Since I last posted about this two years ago, not much has changed. Details below:

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We know better than you

Let’s review the tortured verbiage that passes for logic in today’s majority opinion in the “Hobby Lobby” case, shall we?

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  • Current Mood: Disgusted

Tax Brackets

I’m with Atrios here (warning: profanity). The easiest part of computing your taxes is the calculation of tax from Adjusted Gross Income (AGI) facilitated by the tax tables. You could have one bracket, ten brackets, a hundred brackets, or an elliptic curve; the lookup tables make that computation simple, and the fact that most people use computers to e-file means that it takes a fraction of a second to compute even the most complex of tax brackets. Even my most favorite calculation in all of government, Minnesota’s transportation sparsity formula, is a cinch to calculate in no time:

image

No, the complexity of the tax code comes from all the random deductions and credits that exist. Those are the million questions that are asked of your when you use a computer program to fill out your taxes; those are questions 8 through 61 on your friendly 1040 form; those are the countless other forms you need to fill out to calculate your true AGI. That’s the real time-sink, and if you eliminate all those adjustments, deductions, and credits, you will save real time and make the tax code much simpler.

So why don’t we get rid of all that extra stuff? Well, for one thing, most of those deductions are credits are very popular: the 401(k) exclusion, the mortgage interest deduction, student loan interest deduction, capital gains exclusion on the sale of homes, charitable contribution deduction, local tax deduction…lots of people (including me) take advantage of them. Plus, you have an asymmetry of incentives here: if a tax loophole that I can’t take advantage of ultimately costs the vast majority of American’s only $1 but enriches a select few to the tune of $1,000 a year, who is going to be more vocal in terms of deciding that deduction’s fate?

Of all the reasons to reduce the number of tax brackets in our tax code, simplification is not a legitimate one.

Healthcare Agonistes Redux

It’s been a few months since the launch of the health care exchange, one of the biggest remaining pieces of Obamacare. It’s been rocky, but the numbers are not too far off from projections. As the exchanges and the other pieces of the law become status quo, however, that has not stopped the doom and gloom stories. Obamacare will cut two million jobs (or maybe not)! Obamacare is the cause of AOL’s decision to cut 401(k) benefits for its workers! As much as people try to blame Obamacare for the latest business decision or news story, it’s true that the law has started changing our economy. However, these changes are for the better.

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MVP

How good would you feel about an IRS website that promised you 90% of your income tax refund if you used it? Or a DMV website that allowed you to have a pretty good shot of renewing your license tabs, but if your birthday was in December you’d find that your purchase couldn’t be completed? Would it be acceptable to use government services that make a “best effort” to follow the law, or would you expect more? Odds are, you’d expect compliance. If you fell in that minority for whom it didn’t work, you probably wouldn’t be okay with that “best effort”. This is the environment that healthcare.gov lives in, and you can’t forget it.

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Rollout

So it’s been a month since the rollout of the health insurance exchanges created by the ACA, and it hasn’t exactly been a fantastic rollout. It also isn’t that unexpected, nor is it the worst rollout of all time. It certainly doesn’t mean that Obamacare is doomed to failure. But there are a lot of lessons to be learned from this.

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  • Current Mood: Sunday

How to manufacture a controversy

There’s a whole lot of stupid involved with the government shutdown, but the story that just blows me away is the Vitter Amendment and the so-called “special treatment” that Congress is supposedly getting with regards to health insurance. If you want to hear a small part of why we are in the situation we are in, let’s go down the rabbit hole and try to figure this one out…

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  • Current Mood: Outraged

Bravely tilting at windmills

There’s hardly much more to be said about the all-too-likely government shutdown, or the possibility of an even more terrifying default on our debt obligations. But even so, I firmly believe it’s a good idea to repeat this as often as possible so everybody understands it: Republicans in Congress are drawing their line in the sand, throwing thousands of government works temporarily out of work and threatening the entire world economy, not over a fiendish Democratic plan to confiscate all guns in the country, or to raise income tax rates to where they were in the 1960s, or to get involved in another costly war, or even a plan by President Obama to become dictator for life. No, they are fighting to the death over a plan to give poor people better access to health insurance.

And they are using the words of real heroes in the most offensive way possible to do it.

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