Wednesday, November 2, 2016

Tax Prom!

To my great surprise, I recently learned that there is an annual "Tax Prom" for members of the "tax community," held at the Ritz Carlton Hotel in Washington DC.

Who is the "tax community," I wondered.

Apparently, ordinary American taxpayers are not members of the "tax community," since tickets are $500 per person (of which $288 "may be tax-deductible to the fullest extent of the law," according to the event's 501c3 nonprofit sponsor, The Tax Foundation), placing it out of the reach of most American households.

Opportunities with additional perks for the extra generous are available at various levels from bronze ($6,500) through diamond ($40,000).  Noteworthy sponsors include soda companies (Coca Cola and Pepsi), a tobacco company (Altria), and alcohol and beer trade groups.  Amazon and Walmart as well as other large corporations are also represented, along with H&R Block, Intuit, and various accounting firms.

The website boasts that last year's prom broke all records for the number of Congressional representatives and staff attending.  (It is unclear what, if any, price they are asked to pay for their attendance.)

The invitation page states:  "Engage with more than 500 of the tax community's most influential executive branch officials, congressional staffers, members of Congress, sponsors, and non-profits. Establish yourself or your organization as a critical voice in the tax reform debate."

The website is here:

Thursday, June 2, 2016

Friday, January 9, 2015

Insurance policies that do NOT qualify as Minimum Essential Coverage under ACA

In general, NON-qualifying policies tend to be restricted scope narrow insurance polices as described in the list below.  Note that the programs highlighted in yellow and marked with an asterisk below qualify for special relief as described in the footnote at the end of this post.  Plans highlighted in red do NOT have minimum essential coverage (MEC) and do NOT qualify for any special relief treatment.

Source:  IRS

Certain coverage that may provide limited benefits:
  • Coverage consisting solely of excepted benefits, such as:
    • Stand-alone dental and vision insurance
    • Accident or disability income insurance
    • Workers' compensation insurance
  • Medicaid providing only family planning services*
  • Medicaid providing only tuberculosis-related services*
  • Medicaid providing only coverage limited to treatment of emergency medical conditions*
  • Pregnancy-related Medicaid coverage*
  • Medicaid coverage for the medically needy*
  • Section 1115 Medicaid demonstration projects*
  • Space available TRICARE coverage provided under chapter 55 of title 10 of the United States Code for individuals who are not eligible for TRICARE coverage for health services from private sector providers*
  • Line of duty TRICARE coverage provided under chapter 55 of title 10 of the United States Code*
  • AmeriCorps coverage for those serving in programs receiving AmeriCorps State and National grants
  • AfterCorps coverage purchased by returning members of the PeaceCorps
*In Notice 2014-10, the IRS announced relief from the individual shared responsibility payment for months in 2014 in which individuals are covered under one of the programs highlighted in yellow above and marked with an asterisk above. Information will be made available later about how to claim an exemption for one of these programs on your income tax return.

List of insurance plans that qualify as "Minimum Essential Coverage" under ACA

The plans highlighted in green below qualify as Minimum Essential Coverage (MEC) under the Affordable Care Act (ACA).  Most reasonably comprehensive insurance available for purchase in 2014 qualified as MEC.   Taxpayers who have coverage under the plans highlighted in green below will not be subject to Shared Responsibility Payments (i.e., tax penalties) under the ACA.

Qualifies As Minimum Essential Coverage
Employer-sponsored coverage:
·       Employee coverage (including self-insured plans)
·       COBRA coverage
·       Retiree coverage
Individual health coverage:
·       Health insurance you purchase from an insurance company directly
·       Health insurance you purchase through the Health Insurance Marketplace
·       Health insurance provided through a student health plan
·       Health coverage provided through a student health plan that is self-funded by a university (only for a plan year beginning on or before December 31, 2014, unless recognized as minimum essential coverage by HHS)

Coverage under government-sponsored programs:
·       Medicare Part A coverage
·       Medicare Advantage plans
·       Most Medicaid coverage (see here for exceptions)
·       Children’s Health Insurance Program (CHIP)
·       Most types of TRICARE coverage under chapter 55, title 10 of the United States Code (see here for exceptions)
·       Comprehensive health care programs offered by the Department of Veterans Affairs
·       State high-risk health insurance pools (only for a plan year beginning on or before December 31, 2014, unless recognized as minimum essential coverage by HHS)
·       Health coverage provided to Peace Corps volunteers
·       Department of Defense Nonappropriated Fund Health Benefits Program
·       Refugee Medical Assistance

Source: IRS link

Friday, January 31, 2014

putting financial stress into perspective: stress vs. STRESS

Last week, a story appeared in the Wall Street Journal discussing the stress I felt last year when faced with the decision of when to sell some shares of Tesla bought by my late husband.   As author Jason Zweig reports, I felt a good deal of relief after I had sold off all the shares, realizing that I had never been cut out to be a stock speculator in the first place, since I had neither the time nor the inclination to spend much energy following the vicissitudes of any one particular company's fortunes.  Reallocating the proceeds of that Tesla investment into well diversified mutual funds with low costs--and giving thoughtful consideration to future charitable donations based on that unexpected windfall--have allowed me to sleep much better since then.

The reopening of our Union College Volunteer Income Tax Assistance (VITA) site this week reminds me once again how much any stress I might feel about anything financial pales in comparison to circumstances facing the low-income working families and senior citizens we serve.  If I felt "stress", they feel "STRESS."

Confidentiality rules prevent me from sharing details about our taxpayers but a recent article* published by Sara Sternberg Greene in the NYU Law Review,  "The Broken Safety Net: A Study of Earned Income Tax Credit Recipients and a Proposal for Repair" paints a vivid picture.  What keeps the vulnerable population served by VITA sites like ours awake at night are far more pressing concerns than my own:  worrying about how they are going to keep the heat on, keep their cars running so they can get to work, pay for their prescription medicine copays and deductibles, or pay their astronomical property tax bills (Schenectady County has among the highest property tax bills in the country).

I am grateful that my students and I are able to relieve a little bit of their immediate financial stress by helping them to file accurate tax returns.  I am hopeful that improvements in educational opportunities (including initiatives in mathematics and problem solving dear to my heart) and better designed tax policies will produce even greater long term stress relief in the future.

[*Hat tip to Professors Francine Lipman and David Gamage on the TaxProf list for calling my attention to the Broken Safety Net article.]

Monday, December 2, 2013

Egregious misinformation on TurboTax website

Sigh!  Tax law is complicated enough for taxpayers to get right.  I am disappointed in TurboTax for making such a prominent FALSE statement on its website.

The first sentence in the TurboTax post in the screenshot above (captured on 12/2/2013) reads:  "If you're currently unmarried and don't have children, your filing status has to be single."

I don't know who at Intuit wrote such an egregiously incorrect statement, or what editing/proofreading process let it slip through, but anyone who thinks that statement is true should not be preparing even the most basic VITA returns, let alone be giving "tips" on the Internet site of the leading publisher of tax software.

Let's examine why this statement is false.

1) An unmarried person without children can sometimes qualify for a filing status other than "Single". For example, a childless bachelor who supports an elderly parent or another close relative who lives with him may qualify for Head of Household filing status.

2) Whether you are "currently" unmarried is completely irrelevant to your filing status.  What is generally relevant--in many cases--is your marital status on December 31 of the tax year.  (For a recent widow like myself, it is more complicated, but again--my *current* marital status at the time I file my 2013 return has nothing to do with my filing status on that return.  I will be filing a 2013 joint return with my late husband so my filing status will be "Married Filing Jointly" even though I will be "currently unmarried" at the time I file the return.)

Full disclosure:  I have used TurboTax software myself for years and have generally found it to be pretty reliable (though I always cross-check it with at least one other software product AND also do a line-by-line readthrough to double-check the logic and mathematics.)

I am very disappointed.

Monday, October 7, 2013

A time when Republicans and Democrats worked *together* to create public value

Prologue:  Mitt Romney attended the Harvard Business School, where the motto was:  "Create value."  I taught across the river at Harvard's Kennedy School of Government, where our motto was a bit different, a slight twist:  "Create *public* value.  Despite our many differences, I believe we both believe in creating public value.

The Affordable Care Act (also known as "Obamacare"), like all legislation, indeed all things created by humans, is not perfect or ideal, but it has the potential to represent a big improvement over the status quo.  As it happens, my personal preference would have been something more like the Canadian model of Medicare for all ages, but that is not on the table here (and also not perfect either), so I am hopeful that the Affordable Care Act will succeed as well nationally as it did in Massachusetts.

As it happens, the textbook I have been using in my public finance class since the first edition came out in 2005, Public Finance & Public Policy, is written by MIT Professor Jon Gruber, who also happens to be the author of both RomneyCare and ObamaCare.

There is an intriguing PBS interview with him in which he describes how it was that he came to invent this model.

Prof. Gruber, of course, hails from MIT, which is a school full of brilliant problem solvers with an engineering mindset.  Back in the late 1990s, when the government actually had a fiscal surplus rather than a deficit, the government decided to spend some of it on grants to help the state come up with plans for health care reform.  Prof. Gruber received some of that money and did a study in 2000, which--as he puts it--sat on the shelf gathering dust (as many studies do) for a few years.  After Mitt Romney became governor of Massachusetts, he apparently pulled the study off the shelf--because Mitt Romney (a Harvard B-School graduate) is also a kind of policy wonk too.  (By the way, even though I certainly don't see eye to eye with Mitt Romney, that phrase "policy wonk" is meant affectionately.  I am a Democrat and would consider myself a policy wonk also!  Prof. Gruber is also a Democrat and would probably be comfortable being described as a policy wonk too, I think.)  Anyway, Mitt really liked the plan because the numbers worked out (and so did his green-eyeshade guys, his financial advisers, even though his political advisers were leery.)

Prof. Gruber gives a vivid description of his encounter with Mitt Romney and his advisors:

  1. PBS: So when Romney hears that you've got this model that verifies that "Hey, this is a good idea," and you say it at the meeting, what's he like when he hears it?
    Gruber: Like a real wonk, just very excited: "Wow! Isn't this cool? We can cover the uninsured. We don't have to raise taxes. We can end the free-rider problem. Isn't this neat?" ... he was very much in management consultant mode, like: "Here is a problem. I can solve it. Isn't that neat?" -- sort of engineering almost mode.
    Engineering in what sense?
    Just in a sense of kind of, you know -- I teach at an engineering institute -- in the sense of kind of, that's what engineers do. They are faced with constraints; they try to solve a problem. He seemed excited that faced with the constraints he was facing, he could solve this problem.
    So you could imagine him sitting at Bain & Company and under other circumstances. This was not unfamiliar territory to him.
    Not at all.
    One of those guys who just --
    -- runs his hand down the thing and says, "Argh, I like that."
    You know, I was very impressed. I came out of that meeting. I went home and told my wife and said: "As a Democrat, I'm very scared. This guy could be president." He was really very smart, well-spoken, and just really seemed to know his stuff and was very impressive in person.
    Did they have good people around the table?
    That's what was very interesting. His financial people were wonderful. Tim Murphy is really the guy you should be talking to, sort of one of the unsung heroes of this. He was his main point person to make this happen. Amy Lischko -- I worked with terrific people.
    His political people were actually opposed. I mean, basically the meeting largely consisted of him arguing with his political advisers. His political adviser was saying, "We don't think this is such a smart thing to do," and Romney is saying: "No. Check it out. I can do this. Isn't this neat? I can make this work."
    So actually, I was not that impressed with his political advisers because I didn't like what they were saying, but he sort of shot them down.
    You keep saying this was "neat." Did he actually use the words, "This was neat"?
    I don't remember. No. But that was sort of -- he had a bit of a "Gee, golly gee" attitude about [it]. "Isn't this cool? We can make this work." ...
    There is a big moment where the bill is signed. Take me there. Describe the environment. I know you were there.
  2. I was there. I was very excited. I got to bring my wife. That was really neat. I was one of several people Romney actually thanked in his speech, which was really cool, a very proud moment for my wife. That was very exciting. It was this big podium and was all -- Ted Kennedy made a joke about hell freezes over. "I thought hell would freeze over before I would work with Mitt Romney." And Mitt Romney said, "I can't believe I'm working with Ted Kennedy." And they all laughed and hugged. And then they had a speaker from the conservative Heritage Foundation, which is a very conservative think tank, speak about what a wonderful validation of conservative principles this was. And it was all wonderful. And everyone was super-happy.
    Daniel Webster looked down upon it all.
    It was great. It was just an absolutely thrilling moment.
The contrast between the harmonious working together of problem solvers in both parties for the common vs. today's political chaos and polarization could not be more stark.  Professor Gruber is a Democrat, but Mitt Romney recognized him as a "fellow smart guy" and they worked together to develop a great solution for Massachusetts, and Ted Kennedy came on board too.  The conservative Heritage Foundation also weighed in positively.

I truly hope we can come together as a country the way Massachusetts problem solvers came together as a state almost a decade ago.

A personal note epilogue:  By the way, I bought an Affordable Care Act policy for myself and my young adult daughter this weekend.  Even without subsidies, it is a great deal better than our current coverage.  Because we are in good health and fortunate to be able to cover small routine expenses easily, I chose a high deductible bronze policy from a top-ranked local HMO we have known and used for many years.  (The health plan organization was #1 in the state rankings in Consumer Reports and in the top 20 out of 600 nationally ranked plans.)  The premium is less than half the best price currently available to us on the open market for individuals in New York State, and it is also a much better deal than COBRA coverage under my late husband's large group policy from his employer.  There was an array of great choices for us from several different providers that were ranked high in the lists published by Consumer Reports, based on the National Council on Quality Assurance, a nonprofit health plan accreditation organization.

If plenty of people in good health (like my daughter and myself) sign on to buy plans on the exchange, it will succeed and be viable.  I hope that it will create value for our family and many other families in the future.