Happy Income Tax Deadline Day

April 15, Tax Day, has come and is about to end for 2025.  Having worked for the post office here in Gainesville for 37 years before last year's retirement, I am well acquainted with the extraordinary measures they would take on this day, with SW 34th Street traffic backed up from the main processing plant's entrance as folks would wait to the last minute to file their taxes, and then dump off their returns at night to get them postmarked "in time" before midnight.  Nowadays, of course, we have software to do most of the tedious work and calculations while payments can come electronically out of our bank accounts or refunds likewise deposited into them.  Melissa and I, because of the tragic circumstances in 2024 with our family, had more difficulty than usual with our filing, but we somehow managed to get it all finished with several days to spare.  I remember back in Trump's first term when he was pushing his own vision of tax "reform" through Congress and Ted Cruz opined that filing one's income tax should be simple enough to do on the back of a postcard.  To which I would offer one of my rare "thumbs up" to the junior senator from Texas.  In any event, it's over for another year...

Tuesday's List: Ten Leading Causes of Bankruptcy

I was watching the U.S. Senate floor proceedings on C-Span2 this morning when Senator Dick Durbin (D, IL) spoke about the proposed Republican tax reform bill...specifically its provision eliminating deductions for medical expenses.  Durbin pointed out that many households have large accrued medical expenses and need this deduction to keep themselves afloat...he said there were more than 300,000 in his home state of Illinois alone.  This is nothing minor: as the senator stated, medical expenses account for the number one cause of bankruptcies in this country...and it's not even close.  Well, Durbin's speech made me wonder exactly what are the primary causes for bankruptcy, so afterward I did a search and quickly came across Clear Bankruptcy, which seems to be designed to help people in tough financial straits: good for them, I suppose...there are other sites that have similar lists.  On their webpage they listed the top ten causes of bankruptcy, which I've listed below:

1 MEDICAL EXPENSES (42%)
2 JOB LOSS (22%)
3 UNCONTROLLED SPENDING (15%)
4 DIVORCE (8%)
5 UNEXPECTED DISASTER (7%)
6 AVOIDING FORECLOSURE (1.5%)
7 POOR FINANCIAL PLANNING (1.5%)
8 PREVENTING LOSS OF UTILITIES (1%)
9 STUDENT LOANS (1%)
10 PREVENTING REPOSSESSION (1%)

Now I believe that for many of the bankruptcy cases the causes are probably a mixture of different factors coming together for a "perfect financial storm", but it is inarguable that medical expenses present a very big problem for Americans, regardless how well they plan their finances and handle their money. And it's because of our health care system here that, Obamacare notwithstanding, still regards medical treatment more as a privilege than a right.  It is almost academic that as people age their health will decline and more and more serious medical problems will present themselves.  And with the improvement of the medical community's means to handle those problems with often very expensive treatments comes a drastic increase in the costs, which can devastate people's finances, often just as they are either preparing for retirement or already there.  And now one of our political parties apparently wants to aggravate the problem by eliminating medical tax deductions. If this provision of the tax reform bill becomes law, expect that "42%" figure to get higher (other sources already have it as high as 62%)...

Tuesday's List: Ted Cruz's Seven Tax Reform Goals

If you are a political conservative, Ted Cruz should be someone you pay close attention to, as his take on the various issues is almost always in line with that philosophy.  Tax reform, which Congress is now taking up, is no exception and the junior Texas senator last September laid out seven elements of what he sees as constructive, effective tax reform...I heard him just last week restate it all on the Senate floor.  In making this list, he emphasizes that his guiding principles are growth, simplicity, and fairness.  For Democrats and others more on the left of the political spectrum, that last one...fairness...seems to be by far the most important, and they have long accused the Republicans, Senator Cruz included, of being very, very unfair with their legislative proposals.  And I agree with them to an extent, especially in the way most of the G.O.P. was willing to wreck health care insurance protections for millions just to score a political victory.  But many on the left have a problem recognizing growth as an essential element in a healthy economy...an element that touches upon all of us...and see things in a more static framework, and in terms of the "haves" and "have-nots".  I think that growth is paramount to improving our standard of living and pushes employment and wages upward.  And our national tax policy discourages it to the extent that its corporate tax rate is highest in the world...and Cruz points out a couple of other areas that need change to enable our companies to stay home along with their money.  That's not to say that I don't see a bit of hypocrisy in what Ted Cruz is saying.  For one, pointing out that because other countries levy lower corporate taxes, we should follow their example while at the same time disregarding the fact that most of these also have successful universal health care systems is a bit disingenuous.  For another, when Obama and the Democrats were running things a few years ago, Cruz's one big overriding issue was to reduce the national debt...where is that consideration in his proposals other than a vague implication that overall growth will compensate for lower rates and increase net tax revenues?  That aside, I'm listing his seven ideas for tax reform, some of which I'm inclined to agree with and others that I admittedly don't understand very well.  So, without further ado, here they are, as Rachel del Guidice reported on the conservative The Daily Signal website:

1. A LOW, FLAT RATE.
2. THE ABILITY TO FILE TAXES ON A POSTCARD.
3. IMMEDIATE EXPENSING.
4. A LOW CORPORATE RATE.
5. ENCORAGE REPATRIATION.
6. ABOLISH THE DEATH TAX (ALSO CALLED THE ESTATE TAX).
7. END THE ALTERNATIVE MINIMUM TAX.

Of the above, I strongly believe Cruz is right on #2, #4, and #7.  Our income tax process is way too complicated for the average American and needs simplification.  I've already expressed that I feel we need to bring our corporate tax rate to the same level as that in competing nations.  And the alternative minimum tax discourages hard-working Americans from making "too much" money to avoid falling into this dreaded category, a cruel joke in our tax code. I doubt that getting #1 to ever become law is a moot point as too many people would regard it as being very unfair to those with lower incomes.  As for #6, when you hear the two sides of this argument debating, it almost sounds as if they are speaking about two separate issues, but I'm inclined to see Cruz's argument: for those passing down less than $5.49 million in assets the tax doesn't apply anyway, but many farms and small family-owned businesses are affected by this tax, which threatens their very enterprises should a death occur.  And that leaves #3 and #5: the way Cruz argues for them makes sense, but I need to study the subject and hear the other side to form a reasonable opinion.  In any event, I put Ted Cruz's proposals on this blog not to endorse them, but rather to try and get people thinking more in terms of issues and less of personalities.  We can all easy idolize or despise a public figure, but it takes a bit more mental finesse and discipline to listen to what they are saying without automatically accepting or rejecting everything wholesale just because of which "side" they are on... 

Corporations...and People

In the controversial 2010 Citizens United vs. Federal Election Commission United States Supreme Court decision, the Court's majority decided with the plaintiff and in so doing, overturned more than a century of precedent law that distinguishes corporations from individuals when it comes to the expression of speech.  Justice Anthony Kennedy, in his majority opinion, justified his position by stating that associations of people were just as protected by the First Amendment as were individuals and offered his own precedents for this view...opening the way for just about any shadow organization to now anonymously funnel millions of dollars into political advertising for targeted elections...thus in the eyes of the decision's critics, unduly influencing...even corrupting...the election process.  What I think is important here is the equating...in the minds of the conservative justices rendering the majority decision...of corporations with individual people...

That was 2010...fast forward to now, in early 2017.  The Trump administration says it wants to reform our tax code, in great part because the American corporate tax rate, at 38% when including average state and local corporate taxes, is the highest in the world and discourages our businesses from remaining here and encourages them to relocate abroad.  But liberal critics of any plan to lower the corporate tax rate to bring it more in line with other countries like Canada, the United Kingdom, or Germany...all of which have drastically lower corporate rates...invariably refer to this endeavor as trying to give tax breaks to rich people.  About which they're right, in a meaningful way, but in making this argument these liberals are in essence doing what they complain that the conservative justices did in Citizens United: equating corporations with individual people...

Of course, a corporation is not a person...else they'd be allowed to vote as well as run for public office.  Justice Stevens, in his dissenting opinion in Citizens United, emphasized the important longstanding legal separations between corporations and humans while also questioning the rationale of exactly who it is that a corporation is "speaking" for: its shareholders, CEOs...who?  And I'll add: if the shareholders are not American citizens, then does a corporation's "free speech", through its political spending, pose the danger of foreign interference in our elections?   Well, I guess you can see that a whole can of worms has been opened up with the decision from seven years back...but it would also behoove those arguing against our new president's tax goals to clearly distinguish between corporate and individual tax rates when making those arguments...