One way or another, Spring is tax time. This year could be like no other in our country’s history. More taxes will become effective—more taxes to be paid, than at any other time since George Washington was inaugurated.
You won’t hear about it from the MSM, nor from any mainstream news outlet. You won’t know the extent of these taxes until it comes time for them to be paid. And, pay you will.
The first item is, unsurprisingly, Obamacare. This is the first time you will pay your Obamacare tax. If you don’t have health care, you will have to pay a penalty. If you do have health care, your employer will have to pay a tax to support Obamacare. If you’re self-employed, your tax will be the increased cost of individual healthcare. Regardless of your circumstances, you will pay more.
Obamacare penalty may come as shock at tax time
– The Washington Times – Sunday, January 18, 2015
Those Americans who didn’t get health insurance last year could be in for a rude awakening when the IRS asks them to fork over their Obamacare penalty — and it could be a lot more than the $95 many of them may be expecting.
The Affordable Care Act requires those who didn’t have insurance last year and didn’t qualify for one of the exemptions to pay a tax penalty, which was widely cited as $95 the first year. But the $95 is actually a minimum, and middle- and upper-income families will actually end up paying 1 percent of their household income as their penalty.
TurboTax, an online tax service, estimated that the average penalty for lacking health insurance in 2014 will be $301.
“People would hear the $95, quit listening, and make an assumption that that was what their penalty was going to be,” said Chuck Lovelace, vice president of affordable care for Liberty Tax Service. “I think that a lot of people will be surprised when they get in there and find out that their penalty is [based] on their household income.”
The penalty is designed to prod Americans to buy insurance and the penalty for not having it is scheduled to rise considerably: to a $325 minimum or 2 percent of income in 2015, and to a $695 minimum or 2.5 percent of income in 2016. (The column continues on to a 2nd page at the Washington Times website.)
It may not have been in the forefront of everyone’s mind about Obamacare taxes (note: that’s plural,) we did know they were coming. Other taxes, or tax proposals are more recent.
With the dropping price of gasoline at the pump, a by-product of the Oil War between the US and OPEC, the Congress is considering raising the gas tax for the first time since 1993. The belief in Washington is that people will have more disposable income due to the lowering cost of gas at the pump so they can afford to pay a higher tax.
Corker calls for federal gas tax hike
WASHINGTON – Low gas prices have rekindled talk on Capitol Hill about raising the federal gas tax to eliminate huge annual deficits in the federal Highway Trust Fund that pays for road and bridge work around the country.
While some top Republicans remain adamant a tax hike is not the answer, there are signs that the idea, including one from Sen. Bob Corker of Tennessee, is at least getting a fresh look.
Corker and Sen. Chris Murphy, D-Conn., have proposed raising the federal gas tax by 12 cents over two years and indexing it to inflation. To make the concept more palatable to fiscal conservatives, the measure would lower other taxes.
The 18.4-cent-per-gallon gas tax hasn’t been raised since 1993. As vehicles have become more efficient, the revenue generated by the tax has dropped. Current stopgap funding for the Highway Trust Fund expires in May, and transportation officials in Tennessee and other states are holding back projects until uncertainty about the federal money is addressed.
Sen. John Thune, R-S.D., chairman of the Senate Commerce, Science and Transportation Committee, said this week a gas tax increase could not be ruled out. Republican Sen. Jim Inhofe of Oklahoma, chairman of the Senate Environment and Public Works Committee, agreed. (Read more at the website.)
The feds aren’t the only ones eying consumers’ wallets, a number of states are covetously thinking the same as the feds. As usual, the excuse is the crumbling transportation infrastructure and dwindling Highway Trust Fund. The root cause isn’t insufficient taxes, the root cause is that, like the Social Security Trust Fund, the Feds have been robbing the Highway Trust fund to pay for more welfare.
The highway crumbling infrastructure isn’t due to a lack of taxes, it’s due to redirecting the money to other non-transportation projects. Cut those other projects, stop robbing the trust funds, and there would be plenty of funding to rebuild the highways and bridges.
The same reasoning applies to the states.
States look at hiking gas tax as fuel prices plunge
With gas prices dipping to their lowest level in years, lawmakers in state capitals throughout the USA are increasingly open to the idea of raising fuel taxes to help rebuild crumbling roadways and bridges.
The movement at the state level comes as House Speaker John Boehner, R-Ohio, said last week that he’s doubtful that there will be enough backing for a bi-partisan push to raise the federal gas tax, which has stood at 18.4 cents per gallon since 1993.
The Obama administration has also declined to endorse raising the federal gas tax to finance road funding, but says it will take a look at anything Congress comes up with.
State legislators and governors, however, aren’t waiting for Washington.
Republican leaders who typically find talk of raising taxes a non-starter are making the issue a priority in 2015, even though polling consistently has shown broad opposition among Americans to fuel tax hikes.
“The states have shown that they are more likely to act on the gas tax than the federal government is,” said Carl Davis, a senior policy analyst at the Institute on Taxation and Economic Policy, a research group in Washington. “The states have to balance their budgets. If they see, their roads are in bad shape or their bridges are literally falling down—in some cases—they need to come up with a way to pay to improve that. And there’s a limited number of things you can do at the state level.” (Read more here.)
The column notes that a number of states have raised gas taxes in recent years. I also note that most of those states are in the liberal north-east, the area commonly known as the rust belt for good reason—tax flight by businesses.
The final example of taxes for this post comes from Missouri. At least one bill has been filed to convert the state to the ‘Fair Tax.’ I’m of two minds on this. I don’t like consumption taxes, sales taxes. Sales taxes have many unintended consequences, the least of which is to drive consumers to buy large ticket items out-of-state where taxes may be lower. On the other hand, I wouldn’t mind seeing Missouri’s Department of Revenue taken down a very large peg.
A bill has been filed for the 2015 Missouri session that would reduce Missouri’s income tax by 25% per year until it is eliminated. It also proposes an increase of the current 4% sales tax to 7% sales tax on “retail sales of new tangible personal property and taxable services.” It idea is that the sales tax would be gradually increased as the income tax is decreased to make the scheme, “revenue neutral.” Frankly, I’ve never seen a bill work as it was envisioned. Something always goes wrong. It is the unintended consequences that make our lives harder and they are never fully corrected.
Be that as it may, we must be eternally vigilant on taxes. I’ve yet to meet a tax I liked. Every tax I’ve ever seen failed to meet its original purpose.