Obamacare Bites

I've been doing a good job at keeping myself at arm's length from politics this year because I'm a bit weary of it. It's silly season, and we have an election in less than three weeks.

But sometimes politics comes to bite you from under the table like a rabid dog in any case. I've just been informed by my 5000+ person company that they are cancelling my preferred insurance plan for 2014.

I'm a little salty about it.

"Regrettably, the Gold Plan -- for many years considered our "premier" level medical plan -- will not be available in 2014. The 2014 costs incurred under this plan rose to an unprecedented high. In addition, this type of plan will be subject to a "Cadillac Tax", under the rules and regulations of the Patient Protection and Affordable Care Act [Obamacare] excise tax."

I've got a large family with a lot of ongoing medical issues. The plan that I rely on to keep my medical costs affordable has just been made un-affordable and un-available.  Instead, I have the option of paying more to get a lesser plan with higher deductibles, higher out-of-pocket limits, lower covered percentages, and fewer options.

So much for "keeping the insurance you like". Empty promises, broken dreams. And will that increased cost be offset by higher wages or subsidies? Not a chance. The company is also taking it on the chin. Medical costs continue to rise and with them insurance premiums. Obamacare does nothing to lower real medical costs and seemingly nothing to lower insurance rates for those that have it.

So let's review: higher costs, canceled coverage, real medical costs increasing, and a shuffling of the chairs on the Insurance Titanic.

Does anybody know of anybody anywhere whose insurance rates went down for the same product?

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After Death, There's Taxes

This has been bugging me for a while, but I haven't found time to talk about it. I still don't have time to talk about it, but let's just forge ahead anyway.

So many things that might seem disconnected or trifling are really more connected and of greater import than they first seem. This is because they stem from foundational principles, philosophies, and underlying value systems. We are at war about ideas, because ideas have consequences. That is why oppressors of every stripe move to silence opinions that differ from theirs -- schools, churches, media. These are things that are worth fighting for and about, and sometimes even dying for.

Since death is assured and well taken care of by Christ, that leaves taxes to talk about.

There are a few main ideas about taxes and the role of government in society. Two of the biggest and opposing schools of thought can be stereotyped as

1. More taxes so that government can take care of more things for more people, and
   
2. Less taxes so that individuals can take personal responsibility for themselves and their society.

The ideal probably lies somewhere in between.

Both extremes are subject to abuse. Unrestricted government leads to mass oppression and stifling economy. Unfettered individuality leads to greed and huge inequities of goods and services.

We have a way in America and it's democracy and capitalism; Europe has its way and it's parlimentarianism and soft socialism. There are those in each who prefer the way of the other, but it behooves one to look under the hood before buying. Some say that the current administration wants America to be more like Europe.

What's Europe offering? Let's see what the first EU Council President, Herman Van Rompuy, thinks in his book Vernieuwing in hoofd en hart : een tegendraadse visie (Renovation in Head and Heart: a contrary vision, 1998):

If we don’t want to let the global level of taxation sink away, we will have to consciously levy certain new taxes at the European level or harmonise some of these, for example in the field of environment, mobility, income from capital... Every time it will be a movement upwards." [source]

Sorry, not my cup of tea.

Clunker In The Trunk

Lots of people tried to rush out and get some free money this weekend: up to $4500 worth to be precise.

Congress passed an auto-subsidy bill with (only!) $1 billion behind it. The Cash For Clunkers bill was supposed to get older polluting cars off the road and stimulate flat-lined auto sales during the recession: green all the way around, so to speak.

It was too much and too little all at the same time. It was too little because the program will only replace around .1 percent of cars on the road - a statistical blip. The program ran out of money almost immediately as the gold rush was announced. Now Congress is under big pressure to throw another $2 billion at it -- and they'll get it. Nobody likes to be the killjoy that stopped the gravy train. Whee! Free Money!

Only it's not free, it came out of our pockets to begin with: specifically, whoever did NOT go out and buy a car helped subsidize those who did. They're called taxes. It's too much, because a) they already need more money, and b) there is a better way to spend (or not spend!) a billion dollars, or two, or three during a global recession.

Although the bill was "instantly popular", there are a few naysayers. One of the unrealized drawbacks of the Clunker program is that the old car must be destroyed, not just broken up for parts. Uh oh. The availability of used cars and replacement parts just went down which hurts small businesses and repair shops as well as lower income families.

Overall the program won't be a big impact on the environment, and with a limited war chest it won't be a big impact on the flagging American auto industry either. In the final analysis, I think it pretty irresponsible thing to do when we've got a trillion dollar deficit.

Bread and circuses.

Scanning Headlines

Sometimes you can get a better story by just reading the headlines.

Case in point:

• Obama: Health Care Reform Will 'Absolutely' Be Passed This Year

• Obama Leaves Door Open to Tax on Health Benefits

• Obama's Plan to Disband Bioethics Council Draws Criticism

• Obama Discusses Cutting Deathbed Measures to Save Costs

Death or taxes: your choice.

Tax Returns

We recently had a conversation about tithing and charitable giving over yonder. Since it's tax season the topic is relevant. Also, public figures usually have public tax disclosures. Hence:

Vice President Joseph Biden and his wife earned $269,256 last year. They gave $1885 to charity (0.7%).

Dude. I know a lot of people who gave more than that, and they aren't sporting that kind of income.

Tax Day No Party

Today is April 15th, commonly referred to as Tax Day: the last day that individuals can submit their Federal taxes without incurring late penalties. Many are scrambling to find the last open branch of the Post Office to get their tax returns postmarked before midnight.

No fear. I filed mine weeks ago. (Unlike some, I pay my taxes.)

Unlike this workaday, many people, like my fellow blogger, Paul, took off from their jobs (without pay) to protest what they see as profligate spending and misuse of the American people's tax dollars by the Congress and White House. The Tea Parties were grass-roots nation-wide protests of the Government's tax policies and spending -- meant to recall the famous Boston Tea Party (no taxation without representation). Many people held up TEA signs (Taxed Enough Already) or similar slogans at the rallies despite inclement weather in several locations.

[Washington Post] The White House countered yesterday with President Obama saying the government has passed a sweeping reduction in taxes for 95 percent of U.S. workers. Obama said it was "the most progressive tax cut in American history" and would help create a half-million jobs.

The problem with this statement is that it is misleading (in more ways than one). The multi-trillion dollar deficits being racked up by the current Federal budget and various (so-called) stimulus plans is betting the farm for several generation to come.

Only this time, the 95% tax cut and putting "more money back into the pockets of hardworking Americans" means that the hucksters are giving away shiny new $20 bills to the plow-boy in the foreground while foreclosing on the farm in the background. "Jeepers, Mister! Thanks!"

Deja News Redux

In other news, Politico reports President Obama Cabinet pick Nancy Killefer, Tom Daschle, Tim Geithner, Ron Kirk, Kathleen Sebelius failed to pay back taxes ... almost $8,000 worth.

I know, it's getting to be old hat. Yawn.

Seriously, is there anyone on the Hill who actually does pay their taxes? And why have we ceased to care? Sebelius got asked ZERO questions on abortion and ONE question on her taxes in which the asker left before she had a chance to respond.

Deja News

In other news, the Associated Press reports President Obama Cabinet pick Nancy Killefer, Tom Daschle, Tim Geithner, Ron Kirk failed to pay back taxes ...

I know, it's getting to be old hat. Yawn.

Taxing The Poor To Help The Government

Surely you must be confused, dear blogger? The proper mantra is "taxing the rich to help the poor" or for the more romantically inclined it's "robbing from the rich to give to the poor" a la Robin Hood. No one in a democracy supports taxing the poor to help the Government, do they?

That's what the proposed Federal budget for 2010 seems to do in part. The Obama plan would reduce the benefit for charitable giving and mortgages for those making $250,000 or more from 35% to 28%.

A-ha! You see? That's taxing the rich, not the poor -- silly blogger!

But wait -- reducing the benefit for mortgage interest might put more tax dollars in the Fed's pocket because mortgages are incurred debts that have to be paid every month. Tax deductions for mortgage interest are designed to promote home ownership, and rich people already bought their properties. So far, that makes sense.

But charitable giving is not mandatory; if the benefit for charitable giving goes down (which has the same effect as taxing the activity), then the amount of that activity will go down. Period.

That's how tax breaks and taxes work: one is an incentive, the other is a dis-incentive. The ultimate "consumer" of charitable giving is the poor. Therefore, if the amount of charitable giving goes down, it hurts the poor -- and effectively this is a tax on the poor.

Rich people are in best position to help the poor simply because they have the most money. If the benefit is reduced for the rich, they will either keep more of the money in their own pocket or their ability to give will simply be diminished.

So how does this help the Fed? In two ways: first, if the benefit of charitable deductions is reduced, then the individual has a higher taxable income resulting in more taxes paid directly to the Federal government; second, if the overall charitable giving is reduced, and more tax dollars are going to the Government, then it is the Government who assumes the primary role of assisting the poor as the "source of beneficence" (already true to a large extent).

If your philosophy is that people should depend on big government to provide those needs, then this scheme allows you to control the money, the ways and means of distribution, and ultimately to shape or re-shape society to your own ideology.

But as Marc Ambinder of the Atlantic put it, "If wealthy people want to give money, then they should give, regardless of tax benefits." Suggesting that the wealthy should not use charities as a tax dodge, he added, "If tax reform down the line were to gut all deductions, would charitable contributions totally dry up?"

Ambinder and company have put up a straw man's argument. They argue that all charitable giving should be completely altruistic, which is unrealistic. Most people have mixed motives when giving, especially as the dollar amount climbs into the statistically significant category.

Yes, some people will continue to give regardless of personal benefit, but it sure makes it easier for the rest of us knowing you can deduct it on your taxes. (The Diocese of Arlington can rest easy knowing I already sent in my Bishop's Lenten Appeal contributions.)

The bottom line is: you use tax policy to get the society you want. If charitable giving is disincentivized by the Fed, then individuals will not be the source of giving to the poor -- your poor Uncle Sam will be.

Depreciating Kids

The kids are like used cars: their value depreciates (tax-wise) while the cost to maintain them goes up.

Mrs. Nod is working on the taxes; it seems that even though our withholdings remained constant from last year, the numbers have worked out less in our favor. Instead of getting a return on our taxes, we might owe slightly on the Federal side. (But since I under-withhold on the State side, it may still be net positive.)

One of the factors seems to be that the Bush tax cuts are dwindling. The initial plan doubled the traditional child credit from $500 to $1000 per child; now they are about $700, and should be back to $500 by 2011 (if I understand correctly).

Since the kids are our investment and their value is dropping precipitously, do they now qualify as a "troubled asset" a-la TARP?

Hey, can I get a bail-out over here?

Tax Broke