The Journal News | LoHud.com
Income-tax fraud cases on the rise locally
The Journal News | LoHud.com
Complaints by local taxpayers that their personal information is being stolen and used in phony federal tax filings are on the rise. The IRS and FBI are investigating more than 50 income tax fraud complaints made to the state police in Cortlandt during ...
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St. George Daily Spectrum
The story of federal income tax
St. George Daily Spectrum
So, when you want to blame the IRS, you should actually blame Congress for establishing the IRS in the first place. However, it wasn't until the 16th Amendment to the Constitution in 1913 that income tax was permanently established as a “way of life ...
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Tax day is a day away and this time of year there are always questions about who pays how much in taxes.
A recent poll by Pew Research Center found that “the feeling that some wealthy people don’t pay their fair share,” bothered 79 percent of respondents some or a lot. Recent analysis by the Joint Committee on Taxation shows that these respondents can rest easy.
When it comes to individual income taxation in the United States, the average tax rate paid increases as we move up the income scale (chart below). As a group, taxpayers who make over $1,000,000 pay an average tax rate of 27.4 percent. At the bottom of the income scale, taxpayers who earn less than $10,000 pay an average tax rate of -7.1 percent, which means they receive money back from the government, in the form of refundable tax credits. The next income group up has an even lower negative tax rate at 11 percent.
These results are as expected. The U.S. income tax system is progressive, with marginal tax rates increasing as incomes increase and a large number of tax credits (refundable and nonrefundable) that limit the tax burden for lower incomes.
Many would argue, however, that people pay more federal taxes that just individual income taxes. They are correct. People also pay social insurance taxes (for Social Security, Medicare, Unemployment Insurance, etc.), business taxes, and excise taxes.
But even when we consider these taxes, the tax code is still progressive. The Joint Committee on taxation report finds that the average combined marginal income and social insurance tax increases substantially as income increases. The average combined marginal tax rate is 7.7 percent for those who make under $10,000 and 44.6 percent for those who make over $1,000,000.
We see that this progressivity remains when we look at average tax rates that combine income and payroll taxes with business and excise taxes as well (chart below). The average tax rate for taxpayers who earn over $1,000,000 is 33.1 percent. For those who make between $10,000 and $20,000 the average total tax rate is 0.4 percent. (The average tax rate for those in the lowest income tax bracket is 10.6 percent, higher than each group between $10,000 and $40,000. This is likely because the amount of refundable tax credits is much smaller for the income group that makes under $10,000.)
Whether this level of progressivity is the correct amount requires a larger discussion, but it’s important to note that progressive taxes come with an economic cost.
The evidence shows that progressive taxes limit economic growth. In a report from 2012, the OECD stated that moving away from progressive taxes would raise living standards. Our own economic model (TAG) finds that a cut in the top marginal income tax rate would boost the economy by 0.4 percent and that refundable tax credits have little impact on economic growth.
When we determine the type of tax system we want to have and who should pay how much, we should evaluate these types of trade-offs with the greatest amount of information possible.
Don't make checks out to 'IRS' for federal taxes, or your payment could get stolen
... easier for thieves -- even thieves who might be working for the IRS -- to change the "IRS" to "MRS." If you add a last name after MRS., then bingo. You're in the money. The IRS asks you to send checks or money orders payable to the "United States ...
Two years after new stormwater remediation taxes rained down on Marylanders, a deluge of legislators—184 of them across both chambers, with one opposed—voted to pull the plug on the state’s Rain Tax mandate, though not necessarily on the tax itself.
As late as mid-March, the fate of any proposal to scale back the rain tax was uncertain, with House Speaker Michael Busch (D) seen as a potential obstacle to passage. The Speaker had previously vowed to “stand firm” against Rain Tax repeal, although the bill that passed on Monday fell short of actual repeal—as floated by Governor Larry Hogan (R) during his campaign—instead eliminating the tax mandate imposed on large localities. In retrospect, the Rain Tax mandate had been circling the drain ever since the unanimous Senate vote on March 20th. But now, with the bill headed to the Governor’s desk, it’s worth taking a step back to see what the legislation really does.
In 2013, Maryland enacted legislation requiring the ten largest jurisdictions in the state to impose “stormwater management fees” to generate revenue to fund remedial measures to limit the amount of pollutants entering the Chesapeake Bay. The legislation was designed as a response to an Environmental Protection Agency (EPA) mandate for the entire watershed—all or part of Maryland, New York, Pennsylvania, Virginia, West Virginia, and the District of Columbia—stipulating reductions in nitrogen, phosphorous, and sediment runoff into the Bay through regulations for stormwater runoff. Each jurisdiction has flexibility in methods and funding mechanisms adopted to remain under these limits, known as the Total Maximum Daily Load (TMDL).
(Interestingly, in 2013 a federal district court ruled that stormwater does not meet the definition of a pollutant for TMDL regulation under the Clean Water Act, thus greatly limiting the requirements actually imposed on state and local jurisdictions. The EPA declined to appeal.)
Maryland, controversially, chose to require localities to levy a stormwater fee (really a tax), over the objections of some of the affected jurisdictions. These “fees,” as the Washington Post observes, can range “from $15 for a condo owner in Howard County to thousands of dollars for a business in Baltimore County.”
Frederick County chose to adopt a tax of 1 cent per year in protest. (Per state law, those demonstrating severe financial hardship may seek an exemption from the 1 cent levy.) Carroll County defied the requirement outright, refusing to impose the tax. After a protracted standoff, state authorities relented, whereupon Hartford County moved to repeal its own rain tax.
Repeal of the rain tax was a centerpiece of Hogan’s campaign, and the Governor unveiled repeal legislation two months ago. The bill headed to his desk, sponsored by Senate President Mike Miller (D), falls short of repeal, but it does eliminate the mandate, allowing each of the state’s large jurisdictions to decide whether or not to levy the tax.
The legislation does not relieve the state or its localities of the obligation to invest in stormwater remediation. It does, however, grant greater flexibility in meeting those obligations, which can be funded through general revenues.
As structured, the rain tax was far from neutral, imposed by state mandate in some counties but not in others. By making its imposition optional, the legislature has not ensured neutrality. Presumably some counties will continue to levy the tax. But now, pending the Governor’s signature, it will be a local decision—one for which local government officials are responsible to the voters—rather than an inconsistently applied state mandate.
More on Maryland here.
Quick, important tips if you haven't filed your income tax return yet
CLEVELAND, Ohio -- If you're among the one-third of taxpayers filing your income tax return right before the Wednesday night deadline, there are a few important things you need to know. If you're filing electronically for ... Or else you must call the ...
Yesterday, Senator Marco Rubio (R-FL) announced his plans to run for the Presidency. One thing that sets him apart from the others that have announced so far is that he has a comparatively detailed tax plan that he released with Senator Mike Lee (R-UT). One of the advantages of that is we can really analyze the effects of what a Rubio tax plan would have on the economy and taxpayers.
His tax plan would make quite a few changes to the current code, but it’s easy to think of it as having two pieces: business-side reforms and individual-side reforms.
On the business side, the tax plan fixes a lot of problems with the current code.It reduces the corporate income tax rate (and the tax rate for pass-through businesses) to 25 percent. Allows all businesses to fully deduct the cost of investments the year in which they incurred the expense. Fully integrates the individual and corporate tax code to eliminate the double-taxation of corporate income. Moves to a territorial tax system that would exempt active foreign income of U.S. corporations from domestic taxation Eliminates most business tax credits and many special deductions
On the individual side, the plan would cut taxes for just about everyoneReduces the number of tax brackets to two (15 percent and 35 percent) Eliminates nearly all itemized deductions Creates a new $2,500 child tax credit Replaces the standard deduction and personal exemption with a fully refundable personal credit
The business side of the plan would greatly reduce the cost of capital, which would lead to much higher levels of investment. Thus, Rubio-Lee’s tax plan would net a 15 percent higher GDP in the long term. This would lead to a 12.5 percent increase in the wage rate and around 2.6 million more full time equivalent jobs.
On the individual side, all taxpayers, regardless of income level, would benefit from the tax plan. At the top end, the top marginal tax rate would go from 39.6 percent to 35 percent, which would boost the after-tax income of the top 10 percent of earners by 10 percent. At the bottom end, the loss of the standard deduction, personal exemption, and 10 percent income tax bracket is more than made up for with the new $2,000 refundable personal credit. For the lowest income earners, that would mean an increase in after-tax income of more than 40 percent.
While the plan promises a significant amount of economic growth and would net higher after-tax income for all taxpayers, someone still loses. In the case of this tax plan, the government ends up losing. The Rubio-Lee tax plan would greatly reduce the amount of tax revenue that the U.S. government will collect.
According to our analysis, the plan will cost $414 billion each year on a static basis, or more than $4 trillion over the next decade. Even if you assume that the plan results in a large amount of economic growth and thus a reflow of revenue from the large economy, the plan will still increase the debt by 8 percent in the next decade. Only after ten years would the plan start to net additional revenue each year. It would likely take over 25 years to start reducing the debt from its current point. This assumes that no other spending or tax policies change over this long period of time.
For more information on the Rubio-Lee tax reform plan, see here.
How the IRS repeatedly rewrites Obamacare tax credit provisions
Combined with other instances of the IRS and HHS disregarding the PPACA's plain text, it appears the federal government has little regard for what the PPACA actually says. In his first two posts, Professor Grewall explains how IRS regulations disregard ...
Do You Need to File a Federal Tax Extension? Here's How
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Christie fails to report income, avoids $152000 in taxes
By not declaring the allowances on their joint returns, Christie and his wife, Mary Pat, avoided roughly $152,000 in federal income taxes over four years. Despite an ... As such, it is not required to appear on his income tax filings, consistent with ...
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Tax tips for those who wait for the last minute in Rock Hill
Those who haven't filed also are encouraged to seek free advice such as that offered by the Volunteer Income Tax Assistance Program. Certified federal tax preparers are at the center in the basement of Rock Hill's City Hall to assist. They plan to ...
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Tax filing deadline is Wednesday
Wednesday is the deadline for filing personal income tax returns for both federal and state governments. Done already? Waiting for a refund? There's an app for that at the Internal Revenue Service, which says it pays nine out of 10 refunds within 21 days.
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Taxes are time consuming and expensive for small businesses in the United States.
Nearly a quarter of small business owners in the United States spend over 120 hours each year dealing with their federal taxes, according to the most recent survey by the National Small Business Association. That’s three work weeks spent dealing with federal taxes. Additionally, over half of small business owners spend more than one work week (40 hours) on federal taxes each year, according to the most recent survey by the National Small Business Association.
According to the survey, these taxes come with a heavy cost as well, with over a quarter of businesses spending more than $10,000 each year on simply the administration of federal taxes. This does not include the actual tax burden, which 42 percent of respondents said creates the largest burden on their business.
Small business owners ranked payroll taxes and presenting the largest financial burden, followed by state and local tax compliance, income taxes, property taxes, and capital gains taxes. Nearly 70 percent of small business owners said that federal taxes have a moderate to significant impact on the day to day operations of their businesses.
The survey found that 70 percent of small business owners support tax reform that reduces corporate and individual tax rates and business and individual deductions.
Pass-through businesses make up the vast majority of businesses in the U.S. today (chart below). This makes it crucial that tax reform fix both the individual and the corporate tax system.
If you're among 34000 in N.J. due more than $30M from IRS, better hurry.
"Time is running out for people who didn't file a 2011 federal income tax return to claim their refund," said IRS Commissioner John Koskinen. "Some people may not have filed because they didn't make much money, but they may still be entitled to a refund.".
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Acton Institute (blog)
Just Render Unto Caesar Already: The IRS and Frivolous Tax Arguments
Acton Institute (blog)
Some individuals or groups claim that taxpayers may refuse to pay federal income taxes based on their religious or moral beliefs, or an objection to the use of taxes to fund certain government programs. These persons mistakenly invoke the First ...
Wall Street Journal
A Guide to IRS Rules on Property and Theft Losses
Wall Street Journal
About two-thirds of all federal income-tax returns typically claim the standard deduction, which is a dollar amount that reduces your taxable income. They choose that instead of “itemizing,” which means listing deductions (such as charitable donations ...
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Share “Oklahomans making six figures pay lion's...”
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Last Minute Dash: When, Where & How To File Those Last Minute Tax Returns ...
No matter how close to the wire you get, as long as your return is postmarked by April 15, the IRS considers your federal income tax return filed on time. But if you're not quite ready just yet and are skimming this article in the hopes that I'll offer ...
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At times I really struggle to understand the way taxes are covered on Wonkblog, but a post yesterday, listing government handouts for the rich, reached a new level.
Some of the items listed seem like poor examples. (Do rich people really take lots of deductions for their gambling losses?) But the one that really threw me for a loop was the estate tax, a tax levied on only the most valuable estates. It is literally the opposite of a handout for the rich.
The authors justify its inclusion like this:
“The Estate Tax is a tax on your right to transfer property at your death,” according to the IRS. Without the estate tax, super-wealthy families would be able to hoard that wealth in perpetuity, becoming ever more powerful in the process. The tax, as it currently exists, only kicks in on estates worth $5.4 million or more, affecting about the top 0.2 percent of households. For everyone else in the top 1 percent, congratulations! You can pass on your riches to your heirs tax-free.
The estate tax is actually a pretty simple tax in some ways: it is an ad valorem tax with an exemption up to a certain amount, for progressivity. The authors prefer a different exemption amount, such that the tax would be levied on the top 1% of estates rather than the top 0.2% of estates. In other words, they apparently would like the same basic structure, but with slightly different parameters. Fine. But the absence of one’s preferred tax policy isn’t a handout.
On a purely mathematical level, the problem with this argument is that anyone can make it at any time. To say that a tax should hit Y% of people, not X%, and that this is a “handout” for the (Y-X)% of people that go untaxed, is an argument with no limiting principle. It could just as easily be applied to an estate tax on the top 1 percent of estates, as Wonkblog apparently proposes, or a tax on the top 5 percent of estates, or a tax on any other number of estates. Ironically, the only tax structure that could avoid this argument would be one that does away with progressive exemptions altogether.
The word choice, though, is the more striking problem. A progressive tax is a handout for the rich? Wonkblog takes us deep into Through the Looking Glass territory, where words have no meaning and paradoxes abound. Taxes are handouts, progressivity is a benefit for the rich, dogs and cats live together, and so forth.
There are two reasons an article can have perplexing language. Sometimes it comes from rushed writing or poor editing. At other times – such as in this blog post – confusing language just clearly reflects the confused nature of the thought behind it.