Posts tagged with: taxation

How-to-Understand-Federal-Tax-FormsAfter almost three decades of filling out increasing complex tax forms, you’d think I’d be used to it (or at least resigned to the onerous task). But every tax season I complain even more than I did the year before. Why do I have to do this?

Perhaps the problem, notes Daniel J. Hurst, is that I’m forgetting that it’s part of my responsibility as a Christian. “While we may have grumbled when filing our taxes this year,” says Hurst, “did we pause to think that giving the government part of our income is a way we honor the Lord and express our trust in his grand design?”

As news of the Panama Papers scandal continues to break, Acton Institute Director of Research Samuel Gregg has been making the media rounds to help people understand what appears to have happened and why. Sam made two appearances on radio yesterday, first on Relevant Radio’s The Drew Mariani Show, speaking with guest host Ed Morrissey of; later in the afternoon he spoke with Al Kresta on Ave Maria Radio’s Kresta in the Afternoon. The audio of both interviews is posted below.

Blog author: jcarter
Monday, November 30, 2015

PoorTaxImagine you’re a single mom with one child who receives $19,300 a year in government benefits. A local business offers to hire you full-time at an hourly rate of $15 an hour. At 2,000 hours a year (40 hours for 50 weeks) you would earn $30,000. Should you take the job or stay on the government dole?

The additional $10,700 a year certainly sounds enticing. But because you would lose your benefits and have to pay taxes, your disposable income would be about 31 percent less, around $20,700. By working full-time you’d only earn $1,400 a year more than when you were on welfare. That means you are working full-time to earn an additional 70 cents more an hour than when you were unemployed. Why bother?

That 31 percent is the effective marginal tax rate for low- and moderate-income workers will face, on average, in 2016. The marginal tax rate is the percentage of an additional dollar of earnings that is unavailable to an individual because it is paid in taxes or offset by reduced benefits from government programs. As the Congressional Budget Office points out in a statement of the obvious, that rate affects people’s incentives to work: “In particular, when marginal tax rates are high, people tend to respond to the smaller financial gain from employment by working fewer hours, altering the intensity of their work, or not working at all.”

As Robert VerBruggen notes, that marginal rate remains high well above the poverty line:

detroitDetroit home owners are being put out of their homes, but it’s not because of bankers. Then by who?

It’s the Detroit city government seeking to collect back real estate taxes. There are always tax foreclosures, but foreclosures are growing from 20,000 in 2012 to an expected 62,000 in 2015. Who is putting poor people on the streets in Detroit? The government.

There is a twist here based on the fact that Detroit homes have an old (and therefore way too high) assessed valuation that the taxes are based on. So for the homeowners, it’s easier to let the property go into a tax foreclosure and then buy it back at a tax sale than it is to pay the overdue taxes based on assessed property values that have fallen 70% in recent years. People follow incentives.

We have a narrative in America stating that all financial evils come from the banks. Even Scott Burns used his space to hammer the banks for the 2008 collapse. His proof: The fines that large banks have paid to the government. (more…)

parsonage (1)A federal court of appeals has rejected an atheist group’s lawsuit seeking to strike down a 60-year-old tax provision protecting ministers, notes the Becket Fund. The ruling allows ministers of all faiths to continue receiving housing allowances. “This is a great victory for separation of church and state,” said Luke Goodrich, Deputy General Counsel of the Becket Fund of Religious Liberty. “When a group of atheists tries to cajole the IRS into raising taxes on churches, it’s bound to raise some eyebrows. The court was right to send them packing.”

Aside from the question of constitutionality, the clergy exemption raises a question that many people — whether religious or not — are likely to be wondering: Why exactly do ministers receive a tax exemption for their housing allowance?

To answer the question we must first consider how taxation of church property, including clergy housing, has historically been considered.

rosie with babyOn Friday, President Obama was speaking at Rhode Island College. There was a lot of press given to his remarks about women who choose to stay at home to raise their children (it was a doofus remark), but I believe his entire speech was one in which he underestimates Americans.

I know that many of you are working while you go to school.  Some of you are helping support your parents or siblings.

Well, yes, Mr. President, that’s what we do. Many of us choose to support our families, our parents, our siblings. We choose not to rely on the government, but to work hard not only for ourselves but for those we love. We believe it is our responsibility. (more…)

Thomas-Piketty-014Thomas Piketty’s new book, Capital in the Twenty-First Century, has created quite the stir, and with its overwhelming size (700 pages) and corresponding array of commentaries and critiques, it’s tough to know where to start.

Cutting through such noise, Russ Roberts provides his usual service on EconTalk, chatting one-on-one with Piketty about the key themes, strengths, and weaknesses of the book. The interview is just over an hour, and I encourage you to listen to the whole thing.

Piketty lays out his argument quite concisely in the beginning, followed by a fruitful back-and-forth led by Roberts. For those who aren’t aware, the book chronicles a recent rise in economic inequality, wherein, by Piketty’s account, wealthy elites sit on their stashes while those at the bottom increasingly struggle to keep pace. His solution: Tax, baby, tax.

In response to such an approach, there are many areas to poke and prod, but Roberts zeroes in on one of the more fundamental and overarching questions: What about those who accumulate their wealth by helping those at “the bottom”?  (more…)