Welcome to tax season, now prepare to give your #Obamacare subsidy back

February 2, 2015
"Obamacare has arrived"

“Obamacare has arrived”

This item has been sitting in my files for a while (1), but, since we’re deep into tax season, it’s still relevant — especially so for people relying on that federal subsidy to help pay for their “affordable” health care:

As many as 3.4 million people who received Obamacare subsidies may owe refunds to the federal government, according to an estimate by a tax preparation firm.

H&R Block is estimating that as many as half of the 6.8 million people who received insurance premium subsidies under the Affordable Care Act benefited from subsidies that were too large, the Wall Street Journal reported Thursday.

“The ACA is going to result in more confusion for existing clients, and many taxpayers may well be very disappointed by getting less money and possibly even owing money,” the president of a tax preparation and education school told the Journal.

While the Affordable Care Act fines those who don’t have health insurance, it also provides subsidies for people making up to four times the federal poverty line ($46,680).

But the subsidies are based on past tax returns, so many people may be receiving too much, according to Vanderbilt University assistant professor John Graves, who projects the average subsidy is $208 too high, the Journal reports.

If, like a lot of people, you’re used to getting some sort of a refund, you probably already have an idea of how much you expect and how you plan to spend it. Imagine then how happy these many millions of people will be when they’re told they’re either getting less of a refund, or that they in fact owe money. And, on top of that, their subsidy for the next year will almost certainly be lower, so even more of their money will go to the insurance companies by force of law for coverage that probably isn’t as good as they had before, or at least isn’t what was promised.

That, my friends, is a recipe for angry voters. And, oh, there’s a presidential election warming up, too. Fancy that.

If anything good comes of this fiasco, it will probably be the hard-learned lesson that government is poorly equipped to do more than a certain few tasks and running a huge, massively complicated healthcare system isn’t among them.

Call it another “teachable moment.”

Footnote:
(1) Ancient by Internet standards — a whole month!

(Crossposted at Sister Toldjah)


Prediction: Gridlock for the Next Two Years, but that’s Better than the Alternative of Expanding Government

January 28, 2015

Phineas Fahrquar:

If Congress and the administration can’t agree to do anything good, then doing nothing is the next best solution. Or, as Reagan (I think) once said, “Don’t just do something, stand there!”

Originally posted on International Liberty:

There’s a lot of navel-gazing analysis in Washington about whether to expect some sort of bipartisanship over the next two years.

I find such discussions very irritating because they assume that you automatically get good results when Republicans and Democrats both agree on a policy. My reaction, to put it mildly, is “these people are f@*&#^@g crazy!!!”

Was it progress when Republicans and Democrats conspired to bail out their contributors on Wall Streetwith TARP?

Was it progress when Republicans and Democrats joined hands to impose Bush’s no-bureaucrat-left-behind education scheme?

Was it progress when the first President Bush broke his read-my-lips promise and sided with Democrats to boost taxes and spending in 1990?

So you can see why I instinctively like gridlock. Simply stated, it’s better to do nothing if the alternative is to have more bad laws that expand the burden of government.

But perhaps I’m being too…

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The IRS wants to tax your frequent flyer miles and hotel points

May 27, 2014

taxes IRS shakedown

It’s as if the agency was worried it wasn’t hated enough.

Writing at Reason, Ira Stoll reports that the Internal Revenue Service is looking at taxing rewards points offered by airlines and hotel chains:

Just in time for your summer vacation, the IRS is getting ready to toughen the tax treatment on frequent flyer miles and hotel loyalty reward programs.

The IRS announced in 2002 that it wouldn’t try to go after individuals for income taxes on frequent flyer miles or hotel loyalty points earned on company-paid business trips. Yet the temptation to wring some tax revenue out of the vast non-dollar economy of Starwood Preferred Guest Starpoints, Marriott Rewards points, American Airlines AAdvantage miles, Delta Skymiles, and so on is apparently so great that that the government just cannot resist.

Sure enough, the Tax Foundation, a research group that tracks tax issues, flags a recent post on the View From the Wing blog that runs under the provocative headline, “The IRS Looks To Be on the Verge of Imposing a Big Tax Burden on Loyalty Points.”

The IRS’s plans are vague, but they have airlines and hotel owners concerned enough about the issue that they reportedly sent a letter to Treasury Secretary Jacob Lew. “The IRS’ proposal to alter the tax treatment of loyalty programs will impose a significant new tax on existing and future loyalty points that travel customers enjoy and rely upon,” said the letter, according to a report in Politico. “Any change or clarification of loyalty program accounting should be made through the legislative process, not IRS promulgation.”

Frequent flyer mile fanatics got a wake-up call on the issue back in 2012 when Citibank sent IRS Forms 1099, documenting “miscellaneous income,” at a rate of 2.5 cents a mile, to customers who had signed up for an American Airlines-branded credit card and gotten 40,000 AAdvantage miles as a bonus. It was an unpleasant surprise to cardholders who thought they were getting a free trip, not an unwanted extra tax bill.

I’ll say. I rarely rack up enough points for a free flight or hotel night, but I know plenty of people who fly a lot and who rely on those points to help cover the occasional vacation. Suddenly taxing them not only diminishes their value as a customer-retention tool, but also burdens the consumer by imposing a monetary cost for a non-monetary reward. (Sure, the points have “value,” but it’s not like real income. Just try paying for a meal with airline points…)

Stoll covers several problems with this plan, but I’ll add one of my own: this is another example of the gradual bureaucratic usurpation of legislative power that’s grown to be such a problem since the Progressive Era. Congress writes laws that allow regulatory agencies to create rules for their implementation, but agencies, like bureaucracies everywhere, constantly push the bounds of that authority to accumulate ever-greater power to themselves, to the point whereat they’re no longer writing rules, but actually making law in place of the elected legislature. Which, for progressive ideology, is a feature, not a bug. (1)

Although, perhaps “usurpation” is too strong a word. After all, congresses dominated by both Democrats and Republicans have gone along with this, even if they didn’t agree with progressive ideology, passing vague legislation and letting agencies “fill in the blanks.” It’s a tempting bit of laziness: as Washington accumulated more power to itself, Congress had to deal with more and more, until it became expedient to let someone else deal with the details. And it gives them political cover: It wasn’t your congressman who decided to tax your airline miles, it was the IRS. Left unsaid is how generations of congressmen and senators have enabled this.

Of the many reforms our government needs, congress reclaiming its power to make laws and reining in the bureaucracy –especially the IRS!– is high on the list.

Footnote:
(1) The basic idea is that democratically-elected legislatures are too prone to public passions, too full of unqualified people, to be trusted with governance. Progressives prefer unelected, dispassionate boards of technocrats who would practice scientific management of public affairs. They may be right about the problems of legislatures, but I think the last century has shown their solution is even worse.

(Crossposted at Sister Toldjah)


Repeal the Gas Tax…and Get Rid of the Department of Transportation

May 9, 2014

Phineas Fahrquar:

It’s a good start. The way to end cronyist corruption in DC is to take the money away.

Originally posted on International Liberty:

More than three years ago, I wrote that the Department of Transportation should be dismantled for the simple reason that we’ll get better roads at lower cost with the federalist approach of returning responsibility to state and local governments.

I echoed those sentiments in this CNBC interview.

Since there’s only an opportunity to exchange soundbites in these interviews, let me elaborate on some of the reasons why transportation should be a state and local responsibility.

1. Washington involvement is a recipe for pork and corruption. Lawmakers in Congress – including Republicans – get on the Transportation Committees precisely because they can buy votes and raise campaign cash by diverting taxpayer money to friends and cronies.

mitchells-first-theorem-of-government2. Washington involvement in transportation is just the tip of the iceberg. As I said in the interview, the federal budget is mostly a scam where endless streams of money are shifted back and…

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North Korea: the nightmare of living under a god

April 11, 2014

North Korea Yeonmi Park

There’s an interesting and frightening interview posted to Business Insider today with Yeonmi Park, a woman who escaped from North Korea with her family as a teenager, but needed years to get over the brainwashing she endured there. An indoctrination so intense, she believed the late Kim Jong Il could read her mind:

Yeonmi Park grew up in North Korea, under the watchful eye of then-leader Kim Jong-il.

Though she escaped with her family when she was 15, it took her years to get over the intense brainwashing she experienced. In a recent interview with Australian public broadcasting channel SBS, Park went into unbelievable detail about growing up in the totalitarian state.

Growing up in North Korea, according to Park, was like “living in hell.” She describes constant power outages, no transportation, and watching classmates and friends disappear without a trace. While that may be unsurprising, the most interesting part of Park’s experience is her admission that she believed Kim Jong-il to be “a god” who could literally read her mind.

“I had to be careful of my thoughts because I believed Kim Jong-il could read my mind. Every couple of days someone would disappear,” Park said.

Ms. Park’s story is part of a larger program on mind-control shown by SBS, the Australian public broadcaster.  The whole show is worth watching.

In an article at SBS, she tells more of her own story:

I lived in North Korea for the first 15 years of my life, believing Kim Jong-il was a God. I never doubted it because I didn’t know anything else. I could not even imagine life outside of the regime.

It was like living in hell. There were constant power outages, so everything was dark. There was no transportation – everyone had to walk everywhere. It was very dirty and no one could eat anything.

It was not the right conditions for human life, but you couldn’t think about it, let alone complain about it. Even though you were suffering, you had to worship the regime every day.

I had to be careful of my thoughts because I believed Kim Jong-il could read my mind. Every couple of days someone would disappear. A classmate’s mother was punished in a public execution that I was made to attend. I had no choice – there were spies in the neighbourhood.

George Orwell’s 1984 depicts the UK after an atomic war and a Socialist revolution. Big Brother is a de facto god to the people: his every word the undeniable truth, no matter how it contradicted what he might have said just the day before. Your innermost thoughts known to him, and he held the power to make you willing to accept your own death and the deaths of those close to you as just. His Animal Farm is a parable of a just revolution hijacked by an anti-democratic cadre, who maintain power by turning the other animals against each other and all into slaves. Both are taught as works of fiction, but Yeonmi Park’s story reminds us that they were more like docu-dramas and that the story hasn’t come to an end.

It reminds me of a saying of John Adams:

“It is weakness rather than wickedness which renders men unfit to be trusted with unlimited power”

Our second president was right, but left something out: it’s not just that Mankind is too morally weak for any one person to hold absolute power, but there is also the weakness that makes us willing to surrender our responsibilities as citizens and entrust a small group of people or a single person with unlimited power. It is dangerous because, eventually and inevitably, that power will fall into the hands of evil men.

And then what is to stop them from proclaiming themselves gods?

(Crossposted at Sister Toldjah)


North Korea: all men must now wear Kim Jong Un’s hairstyle?

March 26, 2014
x

Bah! You call that a “haircut?”

When you’re the boy god-king of the world’s largest prison camp masquerading as a nation, you can get away with weird, petty stuff like this:

If you are a man in North Korea, we sincerely hope you have a round face. It’s the shape that will work with your new haircut.

That new haircut is reportedly called the “Dear Leader Kim Jong Un,” modeled after—you guessed it—North Korean leader Kim Jong-un’s impenetrable block of black hair atop his chubby cheeks. The style reportedly became a state-mandated guideline about two weeks ago, though experts familiar with the country have said there’s no evidence a new hairstyle rule has gone into effect.

According to the article, this isn’t something new for North Korea: Kim’s father, the late, demented Kim Jong Il, launched a state campaign against long hair on the grounds that it sucked the nutrients from one’s brain.

Really.

Anyway, a TV campaign was launched and “journalists” would go to people’s homes to confront them about their overly lengthy locks. This being North Korea, I suppose they were lucky not to be shot or fed to the dogs.

Back to Kim III, and regardless of whether this is true, it’s another illustration of why limited, constitutional government is best; when there are no limits to the powers of the rulers, there are also no limits to what they will do the the ruled. North Korea is just the extreme example that clarifies the point.

(Crossposted at Sister Toldjah)


Time for a Free-Market Postal System

March 25, 2014

Phineas Fahrquar:

Revisiting one of my pet peeves: privatizing our hugely inefficient and money-losing postal service. In this case, Mitchell presents Britain’s success at doing just that.

Originally posted on International Liberty:

It’s not often that I agree with the Washington Post, but a government-run monopoly is not the best way to get mail delivered.

Moreover, it’s not often that I agree with the timid (and sometimes reprehensible) Tory-led government in the United Kingdom, but they just put the Royal Mail into the private sector. And that’s something deserving of loud applause.

Here’s a slice of the big news from the Financial Times.

The goal of privatising Royal Mail had defeated governments for 40 years. …Even prime minister Margaret Thatcher balked at the political risk of selling off a public service that carried the Queen’s head on its stamps. This time, the legislation went through parliament.

My Cato colleague, Chris Edwards, is suitably impressed.

Here’s some of what he wrote for Cato-at-Liberty.

Britain privatized its Royal Mail in 2013, proceeding with an initial public offering of shares that raised about…

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