Taxes
Tax Time -- An Opportunity for Working Families to Build Assets
Although many people dread the April 15 deadline to file their taxes, for millions of working families, tax time represents a potential lucrative asset building opportunity. Families, who are eligible for the earned income and other tax credits, can receive a lump sum of several thousand dollars and there are a growing number of options to use this lump sum to build assets.
The Earned Income Tax Credit (EITC) represents the country's largest, most effective anti-poverty programs. Every year approximately 20 million workers claim about $30 billion through the program lifting five million of them above the poverty line. For many families, tax refunds are the single largest lump sum of cash received each year.
Many workers regard this lump sum as a forced savings strategy. The average income tax refund is approximately $2,000 and although many of these families need their refund to help pay for basic living expenses, the lump sum can also be used as an opportunity to save and build assets. The lump sum could be used to establish an emergency fund, to pay down consumer and other forms of debt, to fund the down payment of purchasing a home, or to build long-term savings.
WEDNESDAY ROUND-UP: There Will Be Blood
The best evidence of this is in Arkansas, where politicians of both parties are competing to raise the severance tax. Gov. Mike Beebe is using the threat of a ballot initiative -- his aides say he is drafting one -- to demand that the severance tax on natural gas be raised. He wants the funds used to fix state highways. (Under severance taxes, states typically tax the market value of natural gas or oil at the time of extraction).
Silver State Tax Fight
The Wall Street Journal devoted its lead op-ed last weekend (unfortunately, the link and story appear to have disappeared from the paper's subscription-based web site) to a battle between casino interests and its teachers’ union.
The Nevada State Education Assn. has drafted an initiative that would raise business taxes on the large casinos to 9.75 percent from 6.75 percent. If the measure makes the ballot, this would be the initiative equivalent of the heavyweight title fights that Vegas loves to host.
Teachers’ unions and gambling interests are the two of the biggest-spending entities in the country when it comes to direct democracy. And this battle could create problems for whomever emerges as the Democratic presidential nominee. The powerful Culinary Workers Union opposes the teachers on this measure, and both unions likely will pressure the Democrat to choose sides.
Loophole Heaven
Just as major league ballplayers were taking the field for the first spring training exhibitions on Feb. 28, Arnold Schwarzenegger was putting taxes in play in California's budget debate.
"I am a big believer that when we have a financial crisis like this, we all should chip in," California's governor said about his state's two-year, $16 billion budget shortfall. "This why I totally agree with the Legislative Analyst’s Office when she says we should look at tax loopholes.... We should go after those tax loopholes."
It won't be hard to find them. California is a big-league loophole-creating machine. It takes only a simple majority of California's Legislature to carve out a tax loophole, but it takes a two-thirds vote to close a loophole or pass a budget. That imbalance has created a ratchet effect in California's tax code.
Economic Stimulus: More Info
The congressional Joint Committee on Taxation released a report with information on past efforts to provide an economic stimulus including issuing tax rebate checks (a big task!). You can find it here.
The Senate Finance Committee is holding hearings on the topic on January 22 and 24.
Roundup: Week of October 8 - October 12
Hillary Clinton Includes Two New America Policy Proposals in Her Education Plan
Two New America policy proposals: required multi-year tuition levels and greater use of endowments to
Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.
Paging Dancing with the Stars: Federal Student Aid Needs Help
There's been discussion in Congress recently about how the tax code can be better used to encourage college attendance among low-income students. One proposal being considered by the Senate Finance Committee is to make higher education tax credits refundable - and thus available to people who now do not benefit…
Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.
Are Tax Deductions for College Athletics Worth the Price?
Last year, oil tycoon T. Boone Pickens broke the all-time record for gift-giving to a university athletics program when he donated $165 million to Oklahoma State University, his alma mater. Not only did OSU's sports program benefit, but Pickens himself received a large subsidy from the government because he was…
Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.
Late Night Irony
At 4:40 am Saturday morning, a lame duck Republican Congress passed its final piece of legislation -- a series of mainly middle class tax law extensions that will increase the deficit by $38 billion over the next five years, according to the Congressional Budget Office. The higher ed centerpiece of the under radar bill is…
Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.
Roundup: News You Need to Know, Wed., Dec. 6th
School in Michigan Proposes Controversial "Race-Neutral" Admissions Policy
A law school in Michigan has proposed a new admissions policy that it believes will preserve diversity without violating the state's new affirmative action ban. Wayne State University developed…
Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.
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