House health reform bill includes surtax on high-income-earners

On July 14, the House Democratic leadership released the text of the ”America’s Affordable Health Choices Act of 2009,” which is slated to be taken up by the House Ways & Means Committee on July 16. Title IV of the Act would make numerous tax changes to pay for the projected $1 trillion price tag of comprehensive national health care reform.

Title IV of the bill includes the following changes to the Code:

  • High income individuals married filing a joint return or surviving spouses would face a surtax equal to: 1% of modified adjusted gross income (AGI) over $350,000 but not over $500,000; 1.5% of modified AGI over $500,000 but not over $1 million; and 5.4% of modified AGI over $1 million. The dollar amounts for separate filers would be half of the joint filer amounts; for other filers the amounts would be 80% of the joint filer amounts. The surtax for modified AGI over $350,000 but not over $1 million would rise for post-2012 tax years unless federal health reform savings hit a predetermined target level.
  • A tax on individuals who don’t have acceptable health benefit plan coverage (as defined by the bill). In general, the tax would equal 2.5% of modified AGI in excess of the taxpayer’s exemption amount, but not more than the “national average premium” for that year. A number of exceptions would apply (e.g., for dependents, objectors on religious grounds).
  • Health insurers would be required to file information returns for the individuals they cover.
  • Employers that fail to satisfy the bill’s health coverage participation requirements would face a tax of $100 per day per each non-covered employee.
  • Employers electing not to provide health benefits for employees would pay an excise tax equal to 8% of wages (the excise tax would be less for small employers).
  • Small businesses would get an employee health coverage tax credit.
  • The application of the worldwide allocation of interest would be delayed (until the first tax year beginning after 2019) and as a anti-tax-avoidance measure, there would be new limitations on treaty benefits for certain deductible payments.
  • The economic substance doctrine would be codified. An accuracy related penalty would apply for underpayments due to transactions lacking economic substance, and a stiff penalty would apply for nondisclosure of “noneconomic substance transactions.”

Protest Those Property Tax Appraisals

From the Texas Comptroller’s email:

A new slide show on the Texas Comptroller’s Web site can help homeowners who are protesting their property tax appraisals.  County appraisal districts establish the taxable value for residences, but in most counties, homeowners have until June 1 to file a protest.

How to Present Your Case at an Appraisal Review Board Hearing: A Guide for Homeowners makes the property tax process more transparent by providing easy-to-understand information about what to expect at a property appraisal protest hearing.

“Homeowners are empowered by understanding the protest process, knowing what information to present to the local Appraisal Review Board and how to present it,” Texas Comptroller Susan Combs said. “It helps homeowners make convincing appeals and helps the review boards make better decisions.”

Appraisal review boards generally hear property appraisal protests between May 15 and July 25, except in major urban areas with extended protest periods.

Harris County Appraisal District Chief Deputy Sands Stiefer said the slide presentation is a welcome new resource for property taxpayers.

“We plan to link our Web site to the Comptroller’s video, and we are considering running the video in the waiting room at our ARB hearings,” Stiefer said.

To view the narrated slide show and read much more information about the property tax appraisal and appeal process, visit the Comptroller’s Web site at www.window.state.tx.us/taxinfo/proptax/index.html. 

Fool’s Gold

Journalist Gillian Tett warned about the problems in the financial industry long before many of her colleagues. In her new book, Fool’s Gold, Tett examines the role J.P. Morgan played in creating and marketing risky and complex financial products.  Interestingly, in her interview with Terry Gross on Fresh Air, Tett responded that her training as an anthropologist allowed her observe what the financial industry was not talking about.  This is how she spotted the problems in the derivatives market.  Listen to the interview here.

Banker Think

John Kozy, a frequent contributor to Global Research,  is a retired professor of philosophy and logic who blogs on social, political, and economic issues. After serving in the U.S. Army during the Korean War, he spent 20 years as a university professor and another 20 years working as a writer. He has published a textbook in formal logic commercially, in academic journals and a small number of commercial magazines, and has written a number of guest editorials for newspapers. His on-line pieces can be found on http://www.jkozy.com/ and he can be emailed from that site’s homepage.  His essay on bankers,   A Banker’s Economy, is disturbing in that it was published in August 2008, before most of the  worst news about our banks had been disclosed.

Biographical information from Global Research.

Vehicle Sales Tax Deduction

The American Recovery and Reinvestment Act of 2009 included a new income tax deduction for state or local sales or excise taxes paid on qualifying 2009 motor vehicle purchases.  This deduction is limited to taxes on the first $49,500 of the cost of the vehicle.  Conversations with the IRS National Media Relations office verified that the deduction is limited to the first $49,500 of cost but is available for two or more vehicles.

Vehicles included are passenger autos, light trucks and motorcycles and motor homes.  However, these vehicles must be new and their original use must begin with the taxpayer.

The deduction is available to itemizers and in addition to the standard deduction for those that do not itemize.  This is the second itemized deduction that is allowed to non-itemizers for 2009.  The other is a real property tax deduction that is treated as an increase in the standard deduction of $500 ($1000 for married filing joint status).

IRS reminds taxpayers about special tax break available for new car purchases this year [IR 2009-30]:

The Internal Revenue Service has announced that taxpayers who buy a new passenger vehicle this year may be entitled to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns next year. “For those thinking about buying a new car this year, this deduction may give them a little more drive to make their purchase this year,” said IRS Commissioner Doug Shulman. “This deduction enables taxpayers to buy now and get cash back later on their tax returns.” The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle. The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers. IRS also alerted taxpayers that the vehicle must be purchased after Feb. 16, 2009, and before Jan. 1, 2010, to qualify for the deduction. The special deduction is available regardless of whether a taxpayer itemizes deductions on their return. The IRS reminded taxpayers the deduction may not be taken on 2008 tax returns. 

Subprime lenders are being investigated by SEC for accounting fraud

The SEC’s investigation into the subprime mortgage mess now includes examinations of the financial statements of the mortgage lenders who are generally blamed for creating the disaster that has swamped the global economy. Lenders suspected of misstating loss reserves, asset values, or the prices on foreclosed properties are going to be pursued by the SEC, according to commissioner Elisse Walter. If a lender’s disclosures about loan quality, credit risks, rates of default, mortgage delinquency, and exposures to the subprime market were inaccurate, then chances are, its executives are going to be paid a visit from the SEC’s enforcement staff. Walter was testifying during a March 20, 2009, House Financial Services Committee hearing on investor protection and enforcement during the subprime meltdown. 

So far, the agency’s enforcement division has filed nine cases involving subprime issues, and it has many other subprime matters under active investigation, Walter told lawmakers. 

The subjects of the investigations to date are primarily subprime lenders, credit rating agencies, home builders, and companies that provided mortgages to investors to enable them to finance securities purchases. The agency is also looking at the investment banks that bundled the mortgages into securities and then sold them into the secondary market. 

Source:  WG&L Accounting & Compliance Alert Checkpoint 3/23/09

Shape up your budget

Did you know?

The average american family spends $1.22 for every $1 earned.  Get on the financial scales and determine your current financial situation.  What do you own and what do you owe (your net worth)? How much money do you make and how do you spend it?  How much of it is used for things you absolutely need, such as rent, insurance premiums and credit card payments (fixed expenses)?  How much do you spend for pleasure, on things like a new cell phone, pet care, clothing or vacations (variable expenses)?

 

A free budgeting worksheet is available at www.ValueYourMoney.org.