Obamacare and Taxes - Curtis Dubay on Willis Report

Recorded on November 25, 2012

Senior Policy Analyst Curtis Dubay discusses how Obamacare and taxes are fueling our struggling economy on Willis Report.

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Exxon’s Duck-Killing Pipeline Doesn’t Pay Taxes To Oil Spill Cleanup Fund

A technicality has spared Exxon from having to pay any money into the fund that will be covering most of the clean up costs of its Arkansas pipeline spill.

The cleanup efforts themselves took a sobering turn as crews found injured and dead ducks covered in oil.

The environmental impacts of an oil spill in central Arkansas began to come into focus Monday as officials said a couple of dead ducks and 10 live oily birds were found after an ExxonMobil Corp. pipeline ruptured last week.

“I’m an animal lover, a wildlife lover, as probably most of the people here are,” Faulkner County Judge Allen Dodson told reporters. ”We don’t like to see that. No one does.”

Exxon has confirmed that the pipeline was carrying “low-quality Wabasca Heavy crude oil from Alberta.” This oil comes from the region of Alberta where the controversial tar sands are located. Heavy crude is strip mined or boiled loose from dense underground formations that often contain a large amount of bitumen. This oil is very thick and needs to be diluted with lighter fluids in order to flow through pipelines. Reports have stated that at least 12,000 barrels of oil and water spilled into the town.

A 1980 law ensures that diluted bitumen is not classified as oil, and companies transporting it in pipelines do not have to pay into the federal Oil Spill Liability Trust Fund. Other conventional crude producers pay 8 cents a barrel to ensure the fund has resources to help clean up some of the 54,000 barrels of pipeline oil that spilled 364 times last year.

As Oil Change International said in a statement today:

“The great irony of this tragic spill in Arkansas is that the transport of tar sands oil through pipelines in the US is exempt from payments into the Oil Spill Liability Trust Fund. Exxon, like all companies shipping toxic tar sands, doesn’t have to pay into the fund that will cover most of the clean up costs for the pipeline’s inevitable spills.”

Whatever you call it, as Judge Dodson says, “Crude oil is crude oil. None of it is real good to touch.”

The smell of the spilled oil (similar to asphalt) has reached residents five miles out in the country, and will likely keep residents of 22 nearby homes evacuated for several days.
Surreal video:

The Enbridge tar sands pipeline spill in Michigan happened in 2010 and parents are still concerned about the long-term health effects of having such toxic substances seep into areas where children play.

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Two-Thirds Of Louisianans Oppose Gov. Jindal’s Plan To Cut Taxes For The Rich, Raise Them On The Poor

Louisiana Gov. Bobby Jindal (R) is among the Republican governors pushing an overhaul of his state’s tax code that would abolish the state income tax and replace it instead with increased sales taxes. Such plans are inherently regressive, and Jindal’s is no exception: one analysis found that it would raise taxes on 80 percent of the state’s residents while giving large tax cuts to the richest.

Perhaps its no surprise, then, that a recent poll from Southern Media Opinion & Research found that Jindal’s plan is “particularly unpopular” with Louisianans:

Gov. Jindal’s proposed tax reform plan was particularly unpopular. Sixty three percent opposed the plan to abolish personal and corporate income taxes and raise state sales taxes, while only 27 percent supported it.

Louisiana’s tax system is already regressive, and Jindal’s plan would raise taxes by an average of $395 on the poorest 20 percent of the state’s residents; the richest 1 percent, meanwhile, would see a tax cut totaling more than $25,000. And while Jindal is pushing the plan as a way to boost the state’s economy, evidence suggests the plan wouldn’t do much to help. The Center for Budget and Policy Priorities examined states that cut taxes in the mid-1990s and found that their resulting economic and job growth was slower during the next economic cycle than it was in states that did not cut taxes.

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GOP Bill Slams Healthcare Reform Taxes

A new GOP bill would require health insurance companies to describe their tax burden under healthcare reform to consumers in annual statements.

Rep. Greg Walden (R-Ore.), a critic of the Affordable Care Act, said the measure would inform patients about the law's "nearly trillion dollars in taxes" and how they might affect premiums.

"If the federal government is going to play such a big role in our healthcare going forward, we have the right to know just how much it costs us," Walden said in a statement.

Republicans argue that health insurance premiums will spike as a result of the Affordable Care Act. Democrats say the law will slow premium growth and ensure more care for every dollar.

Walden's bill would add several lines to insurers' annual benefit summaries.

Each plan would have to report the amount paid under each of the Affordable Care Act's taxes, including its exchange fees and risk-adjustment charges.

The bill would also require the U.S. Comptroller General to study the law's impact on premiums, specifically its non-discrimination provisions and its essential benefits mandate.

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Republicans: Obama wants higher taxes

With less than a week before deep spending cuts kick in, Republicans in their weekly address accused President Obama of being ready to plunge the economy into a tailspin to extract higher taxes.

“The fact is: Republicans in Congress, right now, will provide the flexibility to make the necessary spending reductions and address our deficit and debt, instead of going through the sequester. In fact, House Republicans have already passed two bills to replace the President’s sequester,” said Sen. John Hoeven (R-N.D.). “So the question is: Why won’t he work with us? And the answer, quite simply, is because he wants higher taxes.”

Obama has been traveling the country to create momentum for legislation that would replace the automatic, across-the-board cuts with a mix of tax hikes on the rich and specific cuts. He is expected to travel to Virginia next week to continue pressing his message even as Republicans have sought to pin the blame for the sequester on him.

"Hope springs eternal,” Obama said Friday. “And I will just keep on making my case, not only to Congress but more importantly the American people."

Hoeven repeated Saturday that the idea for the sequester originated in the White House, even if Republicans voted for it in the House and Senate. He said it's the president's whole approach – not just his tax policy – that's failing.

"The right way to address our deficit and debt, and get past the sequester, is not higher taxes or just better spending control,” he said. “It’s by creating jobs, growing the economy, and expanding the tax base.”

“Above all, you have to get the economy growing. That creates jobs and revenue from economic growth, not higher taxes. President Obama, however, not only wants higher taxes; he’s actually preventing economic growth and private-sector job creation. He is blocking it with more regulation, red tape, and bureaucracy.”

Hoeven, a former governor of North Dakota, went on to excoriate Obama for failing to approve the Keystone XL Pipeline that would allow Canadian crude – and oil from Hoeven's own state – to flow to refineries in the southern United States. The project, which faces stiff opposition from environmentalists, needs approval from the State Department to move forward.

“The Keystone XL project will carry 830,000 barrels of oil a day to U.S. refineries,” he said. “That includes not only oil from Alberta, Canada, but also 100,000 barrels per day of light, sweet crude from the U.S. Bakken region in Montana and my home state of North Dakota.”

He said polls show widespread public support for the project.

“Why, Mr. President, are you blocking a project that the American people support overwhelmingly? Clearly, it appears to be because of special interest groups,” he said. “It’s time to do things differently, Mr. President. It’s time to turn our country around with the right approach, and we stand ready to work with you to do it."

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Scott Walker Proposes Budget That Cuts Taxes While Reducing Funding For Public Schools

Governor Scott Walker (R-WI) is proposing a budget that would fund a variety of right-wing priorities by slashing support for public services and local communities, according to an outline of the plan given in Walker’s “State of the State” address Wednesday night. Walker, who had already cut taxes significantly in his first term, proposed an additional $630 million in cuts (about half of which come from income taxes):

With this in mind, I am pleased to announce an income tax cut of $343 million. You, the hardworking taxpayers of this state helped to create the budget surplus, so it is only right that we put more money back into your hands. Over the next decade, this will lower income taxes $1.7 billion…Overall, our budget includes more than $630 million in tax cuts.

Walker touted the tax cuts as a way to boost Wisconsin’s economy, but they give relatively little money back to middle-class families, limiting their stimulative effect. A four-person family with a total yearly income of $80,000 would only see an extra $8 per month under Walker’s plans. But even tax cuts with limited effects cost the government money — $1.7 billion over the next decade, according to Walker. And while he says it will be paid for a projected surplus, that’s the same thing former President George W. Bush said about his budget busting tax cuts.

Moreover, Walker’s budget proposes several dangerous changes and cuts to critical public services that could hurt the economy. Despite the fact that “a decade of research has shown no academic benefit from sending students to voucher schools,” Walker proposes a significant expansion of voucher funding, which will come at the expense of public schools. He also plans to freeze state financial support for municipal and city level programs. A similar move in Ohio caused problems for localities when it came to funding fire and police departments.

Walker also doubled down on his refusal to accept Obamacare Medicaid support, a move too irresponsible even for Florida’s hard-right Governor Rick Scott. Walker’s proposed budget also contains provisions requiring “non-elderly, able-bodied adults” on food stamps to attend job training programs in order to get food support.

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Wealthy Professional Boxer Refuses To Fight In U.S. Because He’d Have To Pay Taxes

Manny Pacquiao, the Filipino boxing champion who regularly pulls in guaranteed purses north of $20 million a fight, is now refusing to hold his next bout in Las Vegas because the United States insists on taxing the income of people who make money inside its borders.

The fight, Pacquiao’s fifth against rival Juan Manuel Marquez, would guarantee him a $25 million purse if it’s fought in Las Vegas. But American taxes would eat a significant chunk of that, while fighting it in either Singapore or Macau wouldn’t tax his earnings, the fight’s promoter said. That’s a major concern for Pacquaio, who needs to hoard as much money as he can before his career ends, his manager told Yahoo:

“We were talking only this morning about where and when and against who he would fight next,” Koncz told Yahoo! Sports. “One thing we agreed on is that the taxes make Vegas a no-go. You’re a fighter up there risking your life in the ring, so you have to maximize what you are going to get out of it.

“I know, Manny knows, that he only has a certain number of fights left, maybe one, maybe three. We don’t know. So that means the priorities change a little bit at this point.”

Pacquiao isn’t the only professional athlete to complain about American taxes recently. Professional golfer Phil Mickelson, who made more than $40 million last year, threatened to move from California and even give up golf because of high tax rates in his home state. Anti-tax groups have trumpeted both Mickelson and Pacquiao as examples of high taxes hurting the U.S., even if the rich are still paying historically low tax rates amid budget cuts to programs that benefit people who don’t have the luxury of making millions of dollars to hit a golf ball or box for a living.

These athletes, of course, have the right to perform their craft wherever someone will pay them to do it. But it’s hard to feel sympathy for Pacquiao, who would still clear $15 million — an amount that would take the average American household 284 years to equal — if the fight were held in the United States.

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Kansas Governor’s Tax Plan Will Cost Hundreds Of Millions Of Dollars, Despite Raising Taxes On The Poor

Kansas Gov. Sam Brownback (R), like Republican governors all across the country, aims to implement a regressive tax plan that involves cutting income taxes for the rich while, in his case, maintaining a sales tax hike that primarily hurts the poor. The sales tax increase was supposed to be temporary when it was adopted in 2010, but Brownback now wants to make permanent.

Sales taxes disproportionately impact the poor, who are more likely to spend all or most of their income. According to an analysis by the Institute on Taxation and Economic Policy, Brownback’s plan will raise taxes on the poorest Kansans, but still lose hundreds of millions of dollars in revenue due to huge tax cuts for the rich:

– The poorest 20 percent of Kansas taxpayers would pay 0.2 percent more of their income in taxes each year, or an average increase of $22.

– The middle 20 percent of Kansas taxpayers would pay 0.2 percent less of their income in taxes each year, or an average cut of $104.

– Upper-income families, by contrast, reap the greatest benefit with the richest one percent of Kansans, those with an average income of over a million dollars, saving an average of $6,528 a year.

The plan would cost the state $340 million in revenue, despite hiking taxes the poor. And Kansas already has a regressive tax system, with the poorest residents paying a rate more than twice as high as the richest 1 percent.

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Rep. Cantor: You Will Not See Higher Taxes

 Highlight transcript below to create clipTranscript:  Print  |  Email Go  Click text to jump within videoThu 24 Jan 13 | 04:28 PM ET Rep. Eric Cantor (R-VA) discusses the debt ceiling, tax reform and how the U.S. can balance its budget, with CNBC's Maria Bartiromo.

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How Yahoo Used Tax Havens To Cut Its Taxes By $42.8 Million

Tech companies are some of the most notorious tax dodgers, as their business is easily shifted from place to place and their revenues easily hidden in tax havens. Case in point, Yahoo has funneled hundreds of millions of dollars into low-tax countries, saving it tens of millions of dollars in taxes, as Bloomberg News reported:

Yahoo has taken advantage of the law to quietly funnel hundreds of millions of dollars in global profits to island subsidiaries, cutting its worldwide tax bill. [...]

Yahoo’s offshore operations cut its taxes by $42.8 million in 2011, U.S. securities filings show. Last February, the company reported a dispute with the U.S. Internal Revenue Service regarding its overseas arrangements. It didn’t disclose the amount at stake.

Kimberly Clausing, an economics professor at Reed College, estimates that “Profit shifting into tax havens by corporations costs the U.S. $90 billion a year.” That cost then gets shifted onto other businesses and individuals in the form of higher taxes or decreased government services.

Across the globe, corporate tax rates have plummeted in recent years, which one major bank admits “lend[s] and argument to those calling for hikes“:

The Wall Street Journal reported today that much of the money that U.S. corporations claim is offshore, and thus exempt from taxation, is actually right here in America. As the Wall Street Journal put it, this fact “undermines a central argument made by companies seeking tax relief to bring home money they have earned abroad.”

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Phil Tees Off on Taxes

 Highlight transcript below to create clipTranscript:  Print  |  Email Go  Click text to jump within videoTue 22 Jan 13 | 02:22 PM ET Golf legend Phil Mickelson now owes an estimated $8.2 million in taxes under California's new 13.3 percent tax code, according to Sports Illustrated, with CNBC's Jane Wells and Robert Frank.

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18 new taxes and penalties totaling $836 billion

Slide 8 | Obamacare in Pictures

To pay for new government spending under Obamacare, the law includes 18 new taxes and penalties that will affect every American, costing taxpayers $836 billion through 2022.

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New Taxes to Take Effect to Fund Health Care Law

The new levies, which take effect in January, include an increase in the payroll tax on wages and a tax on investment income, including interest, dividends and capital gains. The Obama administration proposed rules to enforce both last week.

Affluent people are much more likely than low-income people to have health insurance, and now they will, in effect, help pay for coverage for many lower-income families. Among the most affluent fifth of households, those affected will see tax increases averaging $6,000 next year, economists estimate.

To help finance Medicare, employees and employers each now pay a hospital insurance tax equal to 1.45 percent on all wages. Starting in January, the health care law will require workers to pay an additional tax equal to 0.9 percent of any wages over $200,000 for single taxpayers and $250,000 for married couples filing jointly.

The new taxes on wages and investment income are expected to raise $318 billion over 10 years, or about half of all the new revenue collected under the health care law.

Ruth M. Wimer, a tax lawyer at McDermott Will & Emery, said the taxes came with “a shockingly inequitable marriage penalty.” If a single man and a single woman each earn $200,000, she said, neither would owe any additional Medicare payroll tax. But, she said, if they are married, they would owe $1,350. The extra tax is 0.9 percent of their earnings over the $250,000 threshold.

Since the creation of Social Security in the 1930s, payroll taxes have been levied on the wages of each worker as an individual. The new Medicare payroll is different. It will be imposed on the combined earnings of a married couple.

Employers are required to withhold Social Security and Medicare payroll taxes from wages paid to employees. But employers do not necessarily know how much a worker’s spouse earns and may not withhold enough to cover a couple’s Medicare tax liability. Indeed, the new rules say employers may disregard a spouse’s earnings in calculating how much to withhold.

Workers may thus owe more than the amounts withheld by their employers and may have to make up the difference when they file tax returns in April 2014. If they expect to owe additional tax, the government says, they should make estimated tax payments, starting in April 2013, or ask their employers to increase the amount withheld from each paycheck.

In the Affordable Care Act, the new tax on investment income is called an “unearned income Medicare contribution.” However, the law does not provide for the money to be deposited in a specific trust fund. It is added to the government’s general tax revenues and can be used for education, law enforcement, farm subsidies or other purposes.

Donald B. Marron Jr., the director of the Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution, said the burden of this tax would be borne by the most affluent taxpayers, with about 85 percent of the revenue coming from 1 percent of taxpayers. By contrast, the biggest potential beneficiaries of the law include people with modest incomes who will receive Medicaid coverage or federal subsidies to buy private insurance.

Wealthy people and their tax advisers are already looking for ways to minimize the impact of the investment tax — for example, by selling stocks and bonds this year to avoid the higher tax rates in 2013.

The new 3.8 percent tax applies to the net investment income of certain high-income taxpayers, those with modified adjusted gross incomes above $200,000 for single taxpayers and $250,000 for couples filing jointly.

David J. Kautter, the director of the Kogod Tax Center at American University, offered this example. In 2013, John earns $160,000, and his wife, Jane, earns $200,000. They have some investments, earn $5,000 in dividends and sell some long-held stock for a gain of $40,000, so their investment income is $45,000. They owe 3.8 percent of that amount, or $1,710, in the new investment tax. And they owe $990 in additional payroll tax.

The new tax on unearned income would come on top of other tax increases that might occur automatically next year if President Obama and Congress cannot reach an agreement in talks on the federal deficit and debt. If Congress does nothing, the tax rate on long-term capital gains, now 15 percent, will rise to 20 percent in January. Dividends will be treated as ordinary income and taxed at a maximum rate of 39.6 percent, up from the current 15 percent rate for most dividends.

Under another provision of the health care law, consumers may find it more difficult to obtain a tax break for medical expenses.

Taxpayers now can take an itemized deduction for unreimbursed medical expenses, to the extent that they exceed 7.5 percent of adjusted gross income. The health care law will increase the threshold for most taxpayers to 10 percent next year. The increase is delayed to 2017 for people 65 and older.

In addition, workers face a new $2,500 limit on the amount they can contribute to flexible spending accounts used to pay medical expenses. Such accounts can benefit workers by allowing them to pay out-of-pocket expenses with pretax money.

Taken together, this provision and the change in the medical expense deduction are expected to raise more than $40 billion of revenue over 10 years.

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Merry Christmas: a (partial) list of Obamacare taxes, fees

Starting in 2014, President Barack Obama’s health care law will expand coverage to some 30 million uninsured people. At the same time, insurers no longer will be allowed to turn away those in poor health, and virtually every American will be required to have health insurance — through an employer or a government program or by buying it on their own.

For the vast majority of people, the health care law won’t mean sending more money to the Internal Revenue Service. But the wealthiest 2 percent of Americans will take the biggest hit, starting next year.

And roughly 20 million people eventually will benefit from tax credits that start in 2014 to help them pay insurance premiums.

A look at some of the major taxes and fees, estimated to total nearly $700 billion over 10 years.

— Upper-income households. Starting Jan. 1, individuals making more than $200,000 per year, and couples making more than $250,000 will face a 0.9 percent Medicare tax increase on wages above those threshold amounts. They’ll also face an additional 3.8 percent tax on investment income. Together these are the biggest tax increase in the health care law.

— Employer penalties. Starting in 2014, companies with 50 or more employees that do not offer coverage will face penalties if at least one of their employees receives government-subsidized coverage. The penalty is $2,000 per employee, but a company’s first 30 workers don’t count toward the total.

— Health care industries. Insurers, drug companies and medical device manufacturers face new fees and taxes. Companies that make medical equipment sold chiefly through doctors and hospitals, such as pacemakers, artificial hips and coronary stents, will pay a 2.3 percent excise tax on their sales, expected to total $1.7 billion in its first year, 2013. They’re trying to get it repealed.

The insurance industry faces an annual fee that starts at $8 billion in its first year, 2014.

Pharmaceutical companies that make or import brand-name drugs are already paying fees; they totaled $2.5 billion in 2011, their first year.

— People who don’t get health insurance. Nearly 6 million people who don’t get health insurance will face tax penalties starting in 2014. The fines are estimated to raise $6.9 billion in 2016. Average penalty in that year: about $1,200.

— Indoor tanning devotees. The 10 percent sales tax on indoor tanning sessions took effect in 2010. It’s expected to raise $1.5 billion over 10 years.

The 28 million people who visit tanning booths and beds each year — most of them are women under 30, according to the Journal of the American Academy of Dermatology — are already paying.

Tanning salons were singled out because of strong medical evidence that exposure to ultraviolet lights increases the risk of skin cancer.

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Tech at Night: Illegal Amazon Taxes fail, DeMint modernizing cable, thorny copyright issues

Monday night, as promised, we still have some catch up work to do. So let’s start with those Amazon Taxes, those Internet sales taxes of dubious Constitutionality. Colorado’s got tossed in federal court and Illinois’s didn’t raise any money. Obeying the Constitution counts, folks. Pass a true interstate compact through the Congress first.

Also as promised, there’s the matter of the Next Generation Television Marketplace Act. This is the one where ACU has come out against Jim DeMint, and that caught my attention. I have to side with the bill DeMint is sponsoring. I think ACU simply misunderstood what’s at stake here and had good intentions, but the excessive complexity of the regulations defeated them here.

The bill does not let cable providers become free riders, retransmitting others’ streams for free. It just stops the law from trying to dictate the parameters of the negotiations on retransmissions. I see no harm in that, and potentially much good.

Here we go again. Apparently we’re supposed to be unhappy with the CISPA information sharing bill by Mike Rogers and Dutch Ruppersberger because it potentially could be used against copyright infringement. And SOPA is invoked against that. SOPA wasn’t defeated because everyone hates copyright. It was a power grab. Take your anti-copyright anarchy battles home, Reddit kiddies. You and your Anontard buddies.

More cybersecurity still: We cannot and must not have DHS start regulating the Internet. Government can’t even secure itself yet and so has no standing to dictate to others. Information sharing in the private sector, without government gatekeepers, is far more useful for protecting our country’s Internet resources. Further, with the irrationality and secrecy of TSA and its regulations, how can we trust them at all?

Going back to SOPA, Comcast was apparently for it, which doesn’t surprise me. Comcast is an ISP particular vulnerable to Bittorrent users flooding the network with high volume copyright infringement dragging down service for everyone.

Is a problem with tech patents, including software patents, that the system isn’t scaling well? Size, not just speed?

Apparently all the fuss over FCC reform, using white spaces as an excuse to oppose all FCC reform out of the Congress, was resolved with white space use marching on. This could be interesting. We’ll have to watch and see how it works, or whether we just get a tragedy of the commons.

An interesting development in the Do Not Track saga: Radicals and businesses are interpreting them differently, but frankly, the interpretation of the radicals is stupid. There already is a way to not be tracked at all, and not just exclude third parties: Disable cookies, dummies. The radical agenda apparently to be promoted by the FTC is out of touch with the actual technologies involved.

Apparently the FTC folks don’t understand that if you don’t want tracked by, say, Amazon’s recommendations, then you simply shouldn’t log into Amazon all the time.

LightSquared may be on the verge of bankruptcy, but Chuck Grassley is still fighting tenaciously for FCC transparency with respect to LightSquared, and is going to maintain his holds on the new FCC appointees. Go Chuck Go!

Here’s a potentially huge deal in the tech/copyright nexus that I hadn’t heard about at all Google is under concerted attack by a number of copyright holders in a move that potentially risks undermining the whole DMCA safe harbor system. Google has taken many steps to curb copyright infringement on YouTube, but they’re being dogpiled upon anyway by firms going after those deep pockets. If being a rich and popular website that gets taken advantage of by copyright infringers is enough to knock down the Safe Harbor, then it seems to me that the entire Safe Harbor system of the DMCA is at risk. That’s not good, as that was a careful balancing of interests in that bill. We cannot let the scales get tilted one way.

If the Youtube case goes too far, new legislation may be needed, and that’s going to be a big old mess. Especially when the MPAA and RIAA interests will inevitably be comingled with legitimate international concerns of Chinese and other foreign firms ignoring US copyrights

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