The Taxman Always Dings Vice

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The Taxman Always Dings Vice

Caroline Kennedy recently withdrew her name from the running for New York’s open Senate seat, in a manner that was peculiar, to say the least:

There was incredulity in Democratic circles Thursday afternoon after the governor?s camp engaged in a ferocious public back-and-forth with Ms. Kennedy?s side, reaching out to numerous news organizations early Thursday afternoon to disparage her qualifications; one person close to the governor said that her candidacy had been derailed by problems involving taxes and a household employee, but declined to provide details.

Taxes and a household employee? The New York Times has more:

Ms. Kennedy?s only tax issue on the public record appeared to be a $615 city tax lien that she settled in

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Tax Q&A: Is Last Year’s Stimulus Taken Out of This Year’s Taxes?

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Tax Q&A: Is Last Year’s Stimulus Taken Out of This Year’s Taxes?

It’s a common question in online tax forums: was last year’s stimulus check a gift? Or was it a loan? When the stimulus was passed, the economic situation looked bad. Now, it looks catastrophic. Getting an extra $600 then was a nice boost, but paying back $300 now (or more, with interest) could be awful.

The good news is that nobody is going to ask you to return your stimulus payment, and the cost of it won’t be deducted from your next tax refund. But that’s only because of how fungible money is, sometimes: the cost — $300 per taxpayer, plus $300 per dependent, less some exceptions for high-income earners, but plus some other tax incentives — comes out to… Read more…

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What’s Wrong With IOUs?

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What’s Wrong With IOUs?

The other day, California put its tax refunds on hold. Given their financial straits, that’s not such a bad idea — it was either that, or bouncing some checks, apparently.

But California isn’t the only one with bills to pay. What about people who were counting on a tax refund? There’s a big difference between $100 in hand and a $100 check that’s not in the mail now and won’t be for some time.

What’s odd is that usually, we have a simple way of dealing with this problem: California has made plenty of promises to pay billions of dollars in the future to fund spending it wants now — those promises are bonds. That’s simpler than just… Read more…

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A Tax on Trading is a Gift to Grifters

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A Tax on Trading is a Gift to Grifters

A recent New York Times editorial recently made the case for a trading tax. Superficially, it’s tempting: if we have a way to make counterproductive gamblers pay up for their vices, why not use it? There are several problems with the proposal:

  • As Christine Hurt at Conglomerate points out, this tax could hurt the traders who do the worst anyway: “We like to say that the “buy-and-hold” people come out on top, so then isn’t the tax regressive — taxing the silly speculators who don’t understand investing, just like lotteries are regressive taxes on poor people who are bad at math?”
  • It’s a tax on liquidity, and we really need liquidity right now. One of

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Fat Tax? Fat Chance!

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Fat Tax? Fat Chance!

New Yorkers collectively groaned in outrage when the proposed ‘fat tax’ got closer to passing with the help of a survey of health care experts. But is it really such a great plan? And are the experts really experts?

The argument behind the ‘fat tax’ is pretty simple: people who drink non-diet soda (for example) weigh more, are less healthy, and thus end up costing more taxpayer money in medical expenses and lost tax revenue. Simple dollars and cents — and yet common sense seems to be absent from the debate.

Why not look into what actually happens when you substitute diet drinks for the regular kind? The results aren’t pretty: if one study is any guide, New… Read more…

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Swamped: An Unstable Tax Code is Worse Than High Taxes

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Swamped: An Unstable Tax Code is Worse Than High Taxes

MauledAgain has a great article on how just one set of tax rules for small business — section 179 — has changed during the last few decades. He points out that the level of expenses small businesses can easily write off has fluctuated from $5000 (1983) to $125,000 (2007-11) except for when it’s $250,000 (2008), and may be kept at the same $250,000 level in the future.

There are good and sensible reasons to think that an easy deduction like this would do some good. The paperwork (and plain vanilla work) on depreciating $25,000 worth of expenses is a nightmare compared to that of figuring out $25,000 more on a $500,000 budget, so this does reduce the bureaucratic… Read more…

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Obama’s Shocking Tax-Cut Plan

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Obama’s Shocking Tax-Cut Plan

It’s startling to hear about a giant, $300 billion tax cut from the tax-and-spend party (which beat the spend-and-spend-and-spend party in a hotly contested election). Incredibly, after months of childish bickering on both sides, this new tax plan treats the average taxpayer like an adult. How?

It’s a cut in withholdings, rather than a refund check. If you get $300 back in one lump-sum, you can spend it all on something really fantastic — and at the end of your evening, you’ll feel like you got dinner and a concert on Obama’s dime. But turn that $300 into weekly payments of $6, and what do you get? An extra Obama-tizer at TGIF? Paying this money out in a… Read more…

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