Posts Tagged ‘Jack Hatch’

Tax Roundup, 2/13/14: Hatching a tax boost. And: spring training!

Thursday, February 13th, 2014 by Joe Kristan


hatch
Jack Hatch, Candidate for Governor,
yesterday introduced legislative text for his tax plan (SF 2164), which would result in a big tax increase for a lot of voters.

First the good points:  It would increase the minimum income subject to tax from the current $9,000 level to $20,000 for single taxpayers, and to $24,500 from $13,500 for heads of household and surviving  spouses.  It reduces the number of tax brackets from nine to four.  And it eliminates the deduction for federal taxes.  It increases the depended credit to $500, from $40.

Unfortunately, the way he adjusts the brackets will result in a big tax increase for taxpayers at not very high income levels.  His 6.2% bracket would kick it at taxable income of $42,091.  Under current law, 6.2% is roughly the highest Iowa effective rate when you take the deduction for federal taxes into account.  Under current law, that starts at $67,230 for 2014.  With a top rate of 8.8%, the Hatch plan means about a 25% increase in the top rate at the highest brackets — and his top rate begins at taxable income of only $88,822.

I did some quick computations on four very simplified taxpayers — single filers with one item of ordinary income.  The results are below:

 

hatch2014

The result is a small tax cut at the lower brackets, but some big increases in higher brackets.  Remember that much of the income taxed at higher brackets is pass-through business income.  That makes it a big tax increase on employers.  It’s hard to see how this will sell.

 

20121120-2Megan McArdle, Latest Obamacare Delay Is Probably Illegal:

That doesn’t mean that the courts are going to step in. Courts don’t just swoop down and body-check the executive branch or Congress every time one of them oversteps its constitutional powers. They wait for someone to sue. And in order to sue, you need to have legal standing, which, Adler points out, no one seems to. It’s not enough to say that your taxes will be higher, or your government measurably less constitutional, because of the government’s actions. You need to prove that you have been substantially harmed, and it’s not clear that anyone can.

Unlike Megan, I think a successful lawsuit is a real possibility.   There are surely employers just over the 100-employee limit who will be at a disadvantage compared to those who are just under, and who therefore don’t have to comply with the mandate.  While I am not a lawyer and far from a specialist in “standing,” that seems like somebody who would have it.

 

TaxGrrrl, The IRS, The Refund Process and That Pesky 1121 Code.  It appears earned income credit refunds are getting held up.  Considering the level of fraud and error in the program, it’s hard to fault the IRS here.

Jason Dinesen, Iowa Charitable “Checkoffs”

Something that a lot of taxpayers (and tax preparers — including me) in Iowa often overlook is the “charitable checkoffs” a taxpayer can make on their Iowa tax return. Taxpayers can choose to donate money on their Iowa return to these causes:

  1. Fish and Wildlife: donations made here go towards Iowa’s Wildlife Diversity Program, which monitor’s the state’s “non-game” wildlife.

  2. Iowa State Fair Foundation: donations made here help fund improvements to the Iowa State Fairgrounds.

  3. Firefighters/Veterans Trust Fund: donations made here are split 50/50 between helping volunteer fire departments with training and helping veterans with things such as job training.

I like the wildlife one best.

 

Paul Neiffer ponders IRS Data by Zip Code and County.  It’s full of interesting stuff, and I hope to post about our local zip codes and their 2011 tax data.

Kay Bell, IRS options after losing tax preparer regulation appeal. Um, do their job, and don’t try to revive the failed power grab?

William Perez looks at the Percentage of Tax Returns Claiming Itemized Deductions.

 

Andrew Lundeen, The Economics of Senator Wyden’s Tax Reform Plan (Tax Policy Blog):

Though the plan does simplify the individual side of the tax code, the most important measure of tax reform plans should be the growth it produces. On that measure, this plan falls short predominately due to its treatment of capital.

It does go the wrong way.

 

Jack Townsend, Article Analyzes Counter-Intuitive Effects of IRS Offshore Penalty Structure.  ”As the authors note, ‘the GAO Report indicates [that] taxpayers with little or no criminal or civil fraud exposure were punished proportionately in higher amounts than those who participated and had true criminal tax exposure.’”

Of course.  You have to shoot the jaywalkers so you can be nice to the real crooks.

 

Peter Reilly, Pilot To Black Panther To Pastor Calls For Financial Transparency In Churches.

TaxProf, The IRS Scandal, Day 280

 

Career Corner.  If No One Will Hire You, Maybe It’s Because Your Parents Aren’t Offering to Pay Them   (Going Concern).  Probably not, though.

Bleacher Nation, Chicago Cubs Pitchers and Catchers: REPORT!!!  Let’s do this.

 

Share

Tax Roundup, 11/15/2013: Trains, Zeppelins and Fertilizer edition.

Friday, November 15th, 2013 by Joe Kristan

 

20121226-1What, no zeppelin port?   A candidate for Iowa governor proposes a gas tax increase for, well, a bunch of stuff, reports QCTimes.com:

Democratic gubernatorial hopeful state Sen. Jack Hatch is proposing to phase in a 10-cent gas tax increase to pay for overdue road and bridge improvements, build passenger rail links, construct flood protection, reduce the backlog of school construction projects and expand broadband service in rural Iowa.

The increase would amount to less than $50 a year for most Iowans, he said.

Infrastructure, in all of its forms, is one of the most basic parts of state and local government, Hatch said Thursday in announcing his Building a Better Iowa infrastructure plan.

The idea of a continuing “infrastructure crisis” is a standard political assertion, even though it isn’t true.   If it were, though, you’d stop the list of crisis projects after “bridge and road improvements.”   The idea that blowing millions to construct an unneeded and money-losing passenger rail system is an infrastructure priority is laughable.  Local school districts can finance improvements whenever their voters think they’re worth a bond issue.  And rural broadband, supplied by the government?  Because satellites don’t cover rural Iowa?

 

20120906-1

Using your wife’s money to buy drinks for your new girlfriends.  Sen. Hatch wants to run against Governor Branstad next November, who has some economic issues of his own.  These are spotlighted by the Governor’s selection as “Politician of the Year” by Site Selection Magazine.

Based on its website, Site Selection Magazine seems to be the trade journal of the little industry of fixers and middlemen who harvest taxpayer money for clients choosing to relocate or expand. Governor Branstad was “honored” for giving over $80 million of tax credits to the Orascom fertilizer plant in Southeast Iowa to build a plant they were probably going to put there anyway.  The credits add up to around $500,000 per “permanent” job.

These sorts of giveaways are great for the companies that can play the system to milk the fisc, but they aren’t so great for the rest of us who pay for them.  They are the government equivalent of the guy who takes his wife’s bar to the bar to buy drinks for the girls.  He may think he’s doing great things, but it’s neither impressive to the girls nor helpful to the wife.

Somebody out there is saying, “but what about the jobs?”  Even if you assume that the spending is responsible for the jobs — a stretch — that money wasn’t just conjured up.  It comes from the rest of us, who would have used it to create jobs through spending or investing.  If you think the state can wisely allocate investment capital, I have a nice film credit program to discuss with you.  You shouldn’t talk about the jobs you attract by giving away money without talking about the jobs that you lost.

 

Arnold Kling, It’s Implementation, Stupid:

The problems with implementation are under-rated and always have been. The Obama Administration has spent 3 years bulldozing the individual market in health insurance. Now, they expect the health insurance companies to rebuild it in 30 days.

This will not end well.  But while I expect enormous changes in the ACA law, given its evident failure, I don’t expect repeal of the new 3.8% net investment income tax or .9% additional medicare tax to happen.  Clearing the wreckage will be expensive.

Des Moines Register,  136 Iowans buy private health plans through online marketplace.  Not looking good.

Why not just kill me now?  Why Not Use Tax Preparers as a Portal to Health Exchanges?  (Howard Gleckman, TaxVox)

 

TaxProf, Number of Taxpayers Who Renounced U.S. Citizenship Skyrockets to All-Time Record High.  This doesn’t strike me as a good thing.

 

Kay Bell,  EITC claim issues prompt IRS letters, visits to tax pros.  If you prepare a lot of EITC claims, your documentation needs to be meticulous.

Jack Townsend, IRS Indian Initiative for Persons Outside OVDP; Also on Quiet Disclosures

Linda Beale, IRS will issue summonses for offshore bank account info

William Perez,  How Much Government Do People Get Compared to How Much Taxes They Pay?

 

TaxGrrrl, Braves New World? Taxpayer Funding Remains A Concern As Atlanta Rushes Towards New Stadium.  If I were an Atlanta taxpayer, I’d be concerned.

Tony Nitti, Did The Sale Of Stan Musial’s Memorabilia Give Rise To A Hefty Tax Bill?   

 

Kyle Pomerleau, Don’t Forget the Facts If You Want to Raise Taxes on the Rich (Tax Policy Blog)

20131030-2

Christopher Bergin, The IRS: A Greek Tragedy (Tax Analysts Blog)  ”I mostly also agree with Olson that much of the impairment at the IRS is caused by Congress continuing to force the agency to do more with less.”

TaxProf, The IRS Scandal, Day 190

Robert D. Flach has your Friday Buzz!

News from the Profession:  Perhaps Comparing the CPA Exam to Actual War Isn’t The Best Idea (Going Concern)

 

Share

Tax Roundup, 10/31/13: A scary Iowa tax proposal, just in time for Halloween!

Thursday, October 31st, 2013 by Joe Kristan

 

hatchJack Hatch’s income tax plan would raise taxes on all but very small businesses.  

It’s all in the spin.  My headline is just as accurate as the headline in the Des Moines Register on the tax plan announced by Senator Jack Hatch, a Democratic candidate for Iowa Governor.  The Register’s article, though, spins the way the candidate would like: “Jack Hatch’s income tax plan would give break to all but most wealthy Iowans.”  From the article:

Hatch’s plan would get rid of federal deductibility, which allows taxpayers to deduct federal taxes from their state return. His plan would also raise filing thresholds. It would raise the per-child tax credit from $40 to $500. Married couples who are both employed would get a new $1,000 a year tax credit.

And Iowa’s eight rates and brackets, which range from 0.36 percent to 8.98 percent, would be reduced to four.

The top rate would fall slightly to 8.8 percent, although the income at which that rate begins would be raised by 26 percent, according to an analysis of Hatch’s plan by the nonpartisan Legislative Services Agency. The lowest rate would be 3 percent.

Taxes would go up for Iowans who make an adjusted gross income above $200,000, the Legislative Services Agency analysis says. The wealthiest taxpayers would see a small drop in the highest marginal tax rate, but their taxes would go up because they’d lose federal deductibility.

There are two things I hate about this plan and the way it is covered.  First, it makes no mention that a tax on “the wealthy” is really a tax on business.  Most business income is now reported on individual returns:

Source: The Tax Foundation

Source: The Tax Foundation

 

And 72% of that is reported by taxpayers with AGI over $200,000:

20131031-2

Cutting through the soak-the-rich stuff, what he’s really proposing is a great big tax increase on business.  How that helps Iowa’s economy isn’t explained — I suppose because it doesn’t.

The other part I hate is the whole idea that hurting “the rich” on behalf of “the middle class” is presumed to be just fine.   Heck, let’s go shoplifting at Wal-Mart, they have plenty of money — and it’s for the middle class!

 

I suppose I couldn’t expect Sen. Hatch to embrace the Tax Update’s Quick and Dirty Iowa Tax Reform Plan.  I suspect it makes too much sense for any politician to embrace it.

 

This would be a good thing for Iowa: The Benefits of Independent Tax Tribunals (Cara Griffith, Tax Analysts Blog):

States are increasingly turning to independent tax tribunals. Most states now have either a judicial-branch tax court or an administrative-level tax tribunal that is independent of the state’s tax authority. Taxpayers and practitioners have pressed states for independent decision-making bodies for several reasons, including that the judges or administrative law judges who write decisions are impartial and knowledgeable in tax issues and that the opinions should more consistently and transparently apply the tax law because they will be published. 

Iowa, unfortunately, has only administrative tribunals and regular courts.  The judges know little about taxes, especially income taxes, and tend to defer to the State, even when it tortures law and logic.

 

The EITC as a poverty trap: phaseouts of the benefit impose stiff marginal tax rates on the working poor.

The EITC as a poverty trap: phaseouts of the benefit impose stiff marginal tax rates on the working poor.

TaxProf, NY Times: The Marginal Tax Rate Mess.  Even the New York Times is noticing the high implicit marginal tax rates on means-tested welfare programs, like the earned income tax credit:

As a result of losing eligibility for means-tested benefits, low-income and middle-income families sometimes experience much higher marginal effective tax rates (sometimes exceeding 90 percent) than those at the top of the income distribution. Phase-outs for any one program may not be large, but participation in several programs creates a cumulative effect. 

They “help the poor,” as long as they stay that way.

 

 

 

 

59pdhyef59pdhyefJoseph Henchman, Remembering the Deceased Iowa Pumpkin Tax You Helped End (Tax Policy Blog).

59pdhyefTaxGrrrl,  Social Security Benefits Will Not Keep Pace With Tax Contributions In 2014 

59pdhyef

Jana Luttenegger, Social Security Benefits to Increase in 2014 (Davis Brown Tax Law Blog)

Robert D. Flach,  HAPPY HALLOWEEN – SOME TREATS FROM THE SOCIAL SECURITY ADMINISTRATION

Phil Hodgen, Chapter 3 – Paperwork for Expatriates and Covered Expatriates

Kay Bell, Colorado taxpayer group files lawsuit to overturn candy tax

Me, IRA is to startup funding as dynamite is to kindling.  My new post at IowaBiz.com, the Des Moines Business Record Business Professionals Blog.

 

Christopher Bergin, What’s a UDITPA? (Tax Analysts Blog)

Andrew Lundeen, Scott Hodge,  The Income Tax Code Is More Progressive than It Was 20 Years Ago (Tax policy Blog).  ”The top 1 percent of taxpayers pay a greater share of the income tax burden than the bottom 90 percent combined, which totals more than 120 million taxpayers. In 2010, the top 1 percent of taxpayers—which totals roughly 1.4 million taxpayers—paid about 37 percent of all income taxes.”

Tax Justice Blog, Bruce Bartlett Is Wrong: New Conclusions on the Corporate Income Tax Change Nothing.  Nothing ever changes at TJB!

Government officials defend increased funding for their agencies.  Iowa police chiefs defend traffic cameras (KWWL.com)

 

Share

Iowa Property Tax Reform: dead?

Wednesday, May 9th, 2012 by Joe Kristan

The attempts to pass property tax reform and get the Iowa legislature out of town stalled last night when the Iowa Senate failed to pass a reform bill.   The Senate rejected the Republican-supported House bill, but then two Democrats torpedoed their own party’s bill. From the Quad City Times:

Senate Republicans offered the House plan in amendment form during an animated floor debate late Tuesday, but the proposal was turned back by Senate Democrats 21-26. However, Sens. Rob Hogg, D-Cedar Rapids, and Jack Hatch, D-Des Moines, joined the GOP minority in taking down the majority party’s $350 million relief plan by a 24-23 margin, leaving the future of the issue in partisan limbo as the Legislature moved to end the 2012 session as early as today.

“They sunk their own bill,” said Sen. Randy Feenstra, R-Hull, who led the effort to win Senate support of the House-passed bill and criticized Democrats for walking away from an approach that won 71-26 bipartisan support among representatives.

Failure to pass the property tax reform would also doom efforts to increase the Iowa earned income credit. It’s possible that the legislative leaders and the Governor could still throw together a compromise bill, but time is running short, with adjournment possible as soon as today.

Other tax bills also look like they will die before adjournment include:

Good riddance.

Additional coverange of yesterday’s legislative session:

Jason Clayworth (Des Moines Register), Iowa Senate rejects property tax bill; doubts arise that any reform will pass this session

O. Kay Henderson, Democrats’ property tax plan defeated in Iowa Senate

 

Share

Low-income housing tax credits: the federal subsidy for well-connected developers

Monday, June 7th, 2010 by Joe Kristan

20100607-2.jpgRoxanne Conlin is likely to roll to an easy win tomorrow in her bid to be crushed by Chuck Grassley in November’s U.S. Senate race. On the way to her victory, though, she has had to deal with pesky questions about her husband’s tax credit-financed real estate development business. The Des Moines Register reports:

The Des Moines Register reported Friday that Conlin, who has campaigned against tax breaks that benefit wealthy Americans, is a part-owner of 27 low-income apartment complexes that were financed through the sale of millions of dollars in federal tax credits.
The rental developments, all located in the Des Moines metropolitan area, were built in the past 19 years using $64.2 million from federal low-income housing tax credits, the Register reported after a review of state and federal records.
Conlin, a Des Moines lawyer, told the Mason City audience: “I know people might think just from reading the headline that I took $65 million from the federal government, and nothing could be further from the truth.”

Of course she didn’t take $65 million from the federal government. Her husband just distributed it, for a fee.
Low-income housing tax credits are supposed to be a way for the government to supply low-income housing to the poor. In real life they are a way for well-connected developers to obtain and distribute tax credits for investors needing some tax shelter — typically banks, insurance companies and wealthy individuals. Each state gets an allocation of credits from the U.S. Treasury, and the states pass the allocation to developers. The process favors insiders with connections who know how to pull the levers of the allocation bureaucracy: people like the Conlins and Senator Jack Hatch. There’s nothing illegal about this. They are playing the credit allocation system the way it is designed. But does this system make sense? Not surprisingly, Ms. Conlin is a fan:
“I’m very proud of what my husband and my family have done to house people and create jobs,” she said.
Since 1991 those projects have created about 2,400 jobs, mostly in construction, she said. The result was “very nice places where people can live safely and with dignity,” she said.

The center-left Tax Policy Institute is less enthused. They find that running subsidies through developers is less effective than providing direct vouchers to the needy:
If the supply of low-income housing is very elastic in the long run, then production of limited amounts of subsidized housing will simply replace other housing that would otherwise have been provided. Housing supplied or subsidized by the government might increase the average quality of housing available to low-income tenants, but it would have little lasting effect on the quantity or price of housing available to poor people. (See Weicher and Thibodeau 1988 for a discussion of the effects of subsidized housing on the housing market as a whole.) Moreover, because new and substantially rehabilitated housing is expensive to produce, it is likely to be worth far less to tenants than an equal cash supplement, such as housing vouchers. Furthermore, DiPasquale, Fricke, and Garcia-Diaz (2003) estimate that the average cost of producing a tax credit unit exceeds the cost of the average voucher unit by 19 percent.

But while vouchers help the poor, they do nothing for the fixer class. That’s where the tax credits come in:
Conlin said she opposes income tax cuts that benefit the top 1 percent of the wealthiest earners. In contrast, she supports tax credits that help small businesses, manufacturers and housing programs create jobs.

In other words, wants small business taxpayers to pay higher rates to subsidize her. Because that $75 million legal fee she won in the Microsoft litigation won’t last forever, you know. When she loses to Senator Grassley in November, as seems probable, she at least will have the consolation of losing to someone else who favors taking money from you and me and giving it to the well connected.
Reblog this post [with Zemanta]

Share

Tuesday Morning Film Credit Follies Roundup

Tuesday, September 22nd, 2009 by Joe Kristan

The Des Moines Register reports that careless drafting helped pave the way for the film credit feeding frenzy:

“There were enough loopholes in this legislation that allowed very clever people from Hollywood and elsewhere to drive a Mercedes-Benz and a Land Rover through it,” said Sen. Jack Hatch, D-Des Moines. “That’s what has to be tightened up. That’s not the intent.”

It wasn’t? Funny. It’s hard to see how it would have been run or written differently if that was the intent.
Register political columnist Kathie Obradovich says there’s plenty of blame to go around. She names names, but leaves out the star-struck media and its economically illiterate reporting on the program.
The Des Moines Register’s editorial board questions whether all “economic development” tax credits are wise. Ya think?
Dave Price reports on the press conference held by the looters lobby. They aren’t happy that looting has been suspended.
The center-left Iowa Fiscal Partnership gets it, sort of:
Those taking advantage of apparent lax management of the film-credits program may indeed be ruining it for other filmmakers who have not done so. Nevertheless, there is no justification for continuing this program while all the problems with it are being sorted out, and while education and fundamental human services are threatened with budget cuts.

But the blogger Coralville Courier really gets it:
Screw the tax credits, just let taxpayers keep more of their hard-earned money in the first place. Government officials need to quit making promises they can’t keep and manipulating budgets and taxpayer money in the process. We don’t need government officials making up programs that are doomed to fail. We don’t need well-intended but substance free programs and liberal pipe dreams, we need basic, functional, efficient government. What we have now ain’t cutting it.

Indeed.
Reblog this post [with Zemanta]

Share