Archive for the ‘State & local taxes’ Category

Update: Taxing Biden’s election year loan forgiveness gambit…

August 30, 2022

When Biden’s plan was announced I calculated:

An average student loan holder will see their monthly student loan payment go down a whopping $55 … adding about 2 bucks-a-day to their disposable income … about a Starbucks frappe every week.

Enough to matter?

You decide.

For details see: Dumb and dumber looks even dumber when you dig into the details

I also asked a question that I hadn’t heard or read anywhere: What about the income tax implications?

You see, according to the IRS:

IF you have cancellation of debt income because your debt is canceled, forgiven, or discharged for less than the amount you must pay, the amount of the canceled debt is taxable and you must report the canceled debt on your tax return for the year the cancellation occurs.

So, at a 15% income tax rate (the lowest bracket), a Biden loan forgiveness recipient might be getting a $1,500 tax liability … for the 2022 tax year.

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A couple of loyal readers reminded me that:

Last year, the American Rescue Plan precluded any federal taxation of student-loan cancellation through 2025.

Nuts!

But, I was on the right track.

A WSJ op-ed advises that state lawmakers can tax the windfall.

New York, for one, is choosing to tax student-loan forgiveness. All in all, it appears 13 states are primed to follow NY’s lead on taxing debt relief.

  • Arkansas
  • Hawaii
  • Idaho
  • Kentucky
  • Massachusetts
  • Minnesota
  • Mississippi
  • Pennsylvania
  • South Carolina
  • Virginia
  • West Virginia
  • Wisconsin

The author points out that the above states “could mitigate some of Biden’s unfair stimulus by using the revenue (from taxing the forgiven loans) to give one-time tax rebates to residents who didn’t attend college or paid off their student loans.”

Not a full loaf, but better than nothing ….

Is $3 trillion statistically different from zero?

December 13, 2021

Dems say the social spending bill is free, but the CBO now disagrees.
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Biden’s selling proposition for his social spending program: It won’t cost a dime.

Manchin says that he’ll vote against it if it costs more than $1.75 trillion.

The bill that Congress passed is loaded with accounting gimmicks … mostly pretending that expensive programs will be terminated after one or two years … rather than becoming permanent spending fixtures.

Well, end of last week, the CBO released an estimate that de-gimmicks the BBB bill to estimate the real cost of the program.

Budgetary Effects of Making Specified Policies in the Build Back Better Act Permanent (cbo.gov)

And the answer is: $3 trillion … which certainly doesn’t qualify as rounding error … or statistical insignificance.

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According to the CBO analysis, three line items alone account for over $2.5 trillion in spending:

Pretending that the child tax credit and child care programs terminate in 2022 and 2027, respectively … and, raising the State & Local Tax Deduction limit from $10,000 to $80,000.

In total, the top 7 line items account for over $3.3 trillion in spending … up $2.5 trillion from the gimmicky bill, as passed by Congress.

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As the WSJ points out:

All of this gives Mr. Manchin, and other Democrats hiding behind his skepticism, ample ammunition to call the whole thing off.

If this bill passes, they’ll own all of the deficits, debt and inflation that result.

That said, I’m betting under on Manchin having the ‘nads to vote no on BBB.

It’s official: my tax refund is bigger this year…

February 27, 2019

But, to my dismay, my taxes increased
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These days, all the publicity is about people who are getting smaller tax refunds this year … clear evidence, they say, that Trump lied about cutting middle class taxes.

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Not really.

People seem to easily confuse “refunds” with “taxes paid”.

Of course, the relevant measure is “taxes paid” … and, most middle-classers are paying less in taxes.

But, behavioral economics and psychology kick in … and, people wrongly focus on their refunds.

If I did that, I’d be feeling great today

Last year, I had to write a check to the government.  Ouch.  This year, I’m getting a statistically insignificant refund.

Good news, right?

Nope … because my taxes went up.

My income stayed about the same … so the increase was due to the tax law changes.

When I drilled down on the causes & effects, I got a few surprises….

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Trump’s next headache: ‘Unrecognized’ tax-cut benefits.

February 12, 2019

We warned about this  a year ago in the post

Will 143 million households notice that their taxes have been cut?

Regrettably, our prediction seems to be coming to fruition.

There have been a flurry articles citing tax preparers who are warning that,  tax refunds will be smaller this year … lower in average, with fewer people getting refunds.

Most recent IRS data support that claim: average refunds are down 8.4% from this time last year.

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That’s a big deal … and, will be a big headache for President Trump.

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On the move: “We’re outta here” …

January 12, 2016

Each year, United Van LinesUnited Van Lines published a report indicating the number of net moves made into and out of states.

Here’s the summary …

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And, here are the details re: states with the highest outflows and inflows …

(more…)


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