Today, on Tax Day, we are reminded while our country continues to evolve in its views towards gay and lesbian couples, our tax code lags. Married same-sex couples must continue to cope with financial hurdles other married couples don’t have to deal with.
Businesses now routinely offer family health care benefits to domestic partners and same-sex couples who are allowed to marry under state laws, but federal tax law punishes both the businesses that offer these benefits and the employees who use them. It treats the value of these benefits as income, forcing the employer and the employee to pay extra taxes that would not apply to other couples.
Not only does this cost more for everyone, it is convoluted to administer, because businesses must keep a separate set of books for employees with a same-sex partner in order to calculate these added taxes—including payroll taxes.
Simply changing the tax code to put health coverage for domestic partners on the same footing as coverage of other family members would remove this headache for employers and ensure that all employees are treated equally and can receive the protections they deserve.
Paid your taxes to Uncle Sam yet? Want a receipt with that? We believe that the Internal Revenue Service should issue personalized receipts to every individual taxpayer. In this article, we explain how and why our proposal should become reality.
I think I’m going to start labeling certain posts WBI, for Wonky But Important. I’ll try to make these posts relatively brief, but they’ll all elucidate a policy point that I think we all should know in order to have an intelligent conversation.
Our first WBI is built around a March 8 CBO report brought to my attention this morning by Congressman Chris van Hollen—my very own Montgomery County Md. representative, I am happy to say—finding that half of this year’s expected budget deficit of around $800 billion—half!—can be laid at the door of the struggling economy.
In other words: When the economy is revved up, it reduces the deficit, because there are more tax revenues from all those employed people and businesses working to capacity (and, concomitantly, fewer government expenditures—there’s no need for stimulus spending or lots of unemployment benefits during a humming economy). They measure this in terms of what they call “automatic stabilizers”—the reductions in revenues and increases in outlays that are the result of the weak economy.
“As an analysis by Third Way demonstrated, even if we threw every semiplausible tax increase at the rich, the national debt would still double over the next three decades.”
- David Brooks of The New York Times in his column today
President Obama and his Republican dining companions showed last week that bipartisan schmoozing is back. Whether bipartisan deal-making will follow is anyone’s guess. But if it does, there are reasons to believe tax reform will be on the menu.
The most visible movement on tax reform is in the House of Representatives. Speaker John Boehner (R-OH) last week announced that the bill name “H.R. 1” would be reserved for tax reform. Traditionally, House speakers have given that title to bills that are among their top priorities. Consider some of the recent bills with that name: the stimulus package of 2009 and the Medicare prescription drug law of 2003.
The H.R. 1 designation signals the end of an internal Republican dispute over whether to proceed with tax reform. Majority Leader Eric Cantor (R-OH) previously advised the party to avoid the issue, because its progress could require votes on controversial topics like the mortgage and charitable deductions. But now, with Boehner’s blessing, House Ways and Means Committee Chairman Dave Camp (R-MI) has a green light to pursue his priority issue.
Law-abiding taxpayers could shoulder the brunt of the blow when the sequester hits the Internal Revenue Service Friday — and tax cheats might find it easier to rig the system.
It’s a little-discussed risk of the automatic budget cuts — and yet, another smack to the already battered 2012 tax filing season.
Absent a last-minute deal, the 8.2 percent funding cut facing the cash-strapped IRS will most likely translate to fewer specialists on hand to help taxpayers with their returns and to root out fraud — two tasks that watchdog groups say need more, not fewer, hands.
And while the sequester isn’t great for any federal agency, it amounts to particularly bad timing for the IRS. That’s because, depending on union negotiations, furloughs could come just as millions of Americans are trying to pay their income taxes.
“At a minimum, it’s probably going to take longer for people to get through on the phone; it’s going to take longer for refunds to be processed,” said Floyd Williams, a senior tax counsel at Public Strategies Washington.
Williams, who worked for the IRS for nearly two decades and directed the agency’s legislative affairs office for 16 years, says the sequester could also be a boon to those who purposely commit fraud or accidentally fill out returns incorrectly.
“In the next few weeks, we’ll presumably learn more about the new tax rates on income, capital gains, dividends and estates. A solution may come in stages, with a temporary patch now and the promise of a longer-term deal later.
But this is only the beginning, and if you want to read the Stephen King version of our collective fiscal story, there are a few sources to consult. You could start with the radical centrists at Third Way, a research group, who are the best splashers of cold water that I’ve read on the topic of the federal budget. They present some truly scary data while trying to persuade Democrats to accept cuts to Medicare and other programs.”
“If Democrats play their cards right, a combination of political and demographic forces, and dangerous precipitating events, could create a tipping-point moment, when they can advance their priorities not just on taxes, but also on guns, marriage for gays and lesbians, immigration, and even climate change.”
Third Way co-founders Jon Cowan & Matt Bennett write in The Washington Post that 2013 offers opportunity, but on gun control, taxes, and other issues, Democrats Must Seize The Moment.
“If Democrats and their progressive allies are to achieve real gains during Obama’s second term, they must understand how we got here, and they must be willing to challenge some of their most cherished ideas and messages. If they do not, this historic opportunity could easily be squandered.”
“News flash: Paul Krugman, [voters] want [The President] to take on and solve the big issues, but they want him to do it in a pragmatic way and they trust him to compromise.”
Lanae Erickson Hatalsky, director of Third Way’s social policy and politics program, firing a rhetorical shot at the liberal Princeton economist who uses his New York Times column to agitate for more federal spending.
