2017 Politics open thread, April 16-22

Any Easter Sunday political thoughts?

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53 thoughts on “2017 Politics open thread, April 16-22

  1. Last Week Tonight with John Oliver did a segment on Gerrymandering during the April 9th episode. I caught the rerun last night. It was pretty funny but since he is a cable show it comes with the language and graphics you’d expect.

  2. A “simple” flat tax rate (which is what Forbes advocates, as opposed to what I consider a true flat tax of $X levied against each person regardless of circumstances) doesn’t really simplify tax calculations very much.

    Calculating taxable income is what takes the lion’s share of the time and effort of doing taxes. Once there, it’s very easy to calculate tax due, whether using the tax tables or the tax computation worksheet.

    I will give him that taxing dividends and capital gains at the same rate as all other income will simplify tax calculations, as would taxing them at the same rate for everyone. OTOH, calculating capital gains can be a real PITA, especially if the asset in question has been through multiple splits and spinoffs since purchase, or if the original cost basis information is buried somewhere in a bunch of inherited boxes.

  3. Oh yeah, getting rid of the AMT would also simplify tax calculations. If he’s advocating elimination of all deductions and credits, then yeah, that would also simplify taxes.

  4. Finn, usually when people talk about a flat tax, they mean getting rid of all the deductions and such.

  5. We have a very large tax bill this year – new accountant who is better (we think), plus some of the things we thought were business expenses weren’t actually deductible. :(

  6. Finn,

    Per what DD said. The goal (if simple was your goal) would be to increase the personal and dependent deduction to the point where it was revenue neutral after the eliminating the deductions for student loan interest, mortgage interest, charitable giving, etc. With that, all the info needed to complete your return would be on your W-4 and W-2. The IRS could send you an e-mail like Social Security does with a summary and you could file a return if something was amiss. But, America’s regular W-2 employees would almost never have to file a return.

  7. @ L – what kinds of things did you think were business expenses but turned out not to be?

    Because of my business structure, we pay quarterly taxes. I love it. There are no surprises, we never under pay, and if we overpay it’s only a minimal amount.

  8. Last year was brutal tax-wise, because we didn’t have many deductions, and we had moved some money around (per the TIAA financial planner’s suggestions) resulting in cap gains, and DH did really well (yay?). This year we have the mortgage and taxes on the California house, DH’s income was down slightly, and no sudden cap gains. So the first quarterly estimated payment is covered by the refund. I know that means we overpaid but, like most Americans, I like not having to write a check in April.

  9. Lark – we are building a garage on the timber property to house equipment, and we didn’t know that buildings have different rules than all the other equipment-associated expenses, like tractors and cars and lumber machinery etc.

  10. Rhett — How would the simplified system work for self-employed people? I actually wouldn’t mind a system where every quarter, I report my business’ gross earnings to the IRS, as well as its expenses (categorized, if they want), and then the IRS tells me how much income tax and social security tax I owe for the quarter. Essentially this would mean that I would be handing over my bookkeeping chores to the IRS, which I would gladly do.

    I got a bigger-than-expected refund this year, because I had forgotten to report on my 1040 an estimated payment that I had made earlier in the year. The IRS caught my mistake very quickly and promptly issued me a refund for precisely the correct amount. I was actually very impressed with their accuracy and efficiency. Apparently they are better at doing my bookkeeping than I am.

  11. I actually wouldn’t mind a system where every quarter, I report my business’ gross earnings to the IRS, as well as its expenses

    Isn’t that what you do now? Or do you mean they would calculate the amount due? As in you’d go to IRS.gov and enter 100k in Q2 revenue and $32,500 in expenses and the system would say you owe $22,500 in taxes/FICA?

  12. Rhett – Yes, I’m thinking about a system where the IRS would tell me what my quarterly payment should be, instead of me having to estimate it on my own. They (presumably) would have my info linked to DH’s W-2 info, so they could tell me to pay at the appropriate marginal rate. They could calculate the right deduction amounts for things that have special deduction rules (e.g. office equipment). They could calculate my net FICA obligation. Right now I have an accountant help me with my taxes, and I still always seem to overpay on our federal return and underpay on my MA return. I would love it if the authorities could just give me a number so that I can pay it and be done.

  13. If someone has a sch c business and needs equipment repair or graphics or legal advice, the right person is found to perform the service and the invoice paid. Why should figuring tax payments be DIY. Are CPAs chopped liver? If estimated payments are a pita, the tax law provides safe harbors to avoid penalty..

  14. Are none of you concerned about what is happening with North Korea? Trump seems to be daring them to do something. I have this recollection that during the election, one of the arguments people were making for Trump was that he would be less likely to take us to war. Does anyone still believe that?
    https://www.washingtonpost.com/news/the-fix/wp/2017/04/17/trumps-foreign-policy-speak-very-loudly-and-carry-a-big-stick/?hpid=hp_hp-top-table-main_fix-trumpforeign-847am%3Ahomepage%2Fstory&utm_term=.5584f9e76d98#comments

  15. “The goal (if simple was your goal) would be to increase the personal and dependent deduction to the point where it was revenue neutral after the eliminating the deductions for student loan interest, mortgage interest, charitable giving, etc. With that, all the info needed to complete your return would be on your W-4 and W-2.”

    No 1099s?

  16. MM – it is very concerning. But like all things Trump, he is a nut and what can we do?

  17. MM, if DPRK can hit anywhere in the US it would be here and yes, it makes me nervous. Existentially nervous. I was happy to see their missile test flop.

  18. I think we should have handled North Korea more aggressively under Obama. The incrementalism of their capability is what worries me. I’m all for a fairly aggressive stance here.

  19. what would an aggrrssive approach entail? My understanding is that we don’t have a lot of leverage short of attacking them. And that brings China into play. China is petrified that North Korea might fall in a messy way. That would mean lots of refugees pouring over the border into China, into a part of China that has historically been tied to Korea.

  20. I like NoB’s idea. I’d love to see the IRS develop, or contract the development of, a tax spreadsheet. Since they already receive copies of our W-2s and 1099s, they could pre-populate all those fields for us, and send us a copy of the pre-populated spreadsheet with all the calculations done. We’d then have the option to edit the spreadsheet, e.g., add things like charitable contributions, or cost basis information for stock sales, then submit.

    I imagine there’d be millions of people who wouldn’t have to make any changes, and that number would go up a lot if more people took the standard deduction. As discussed here before, that doesn’t necessarily require explicit elimination of deductions; raising the standard deduction would effectively eliminate deductions for some.

  21. DD, would the progressive brackets remain, or would it truly be flat?

    It would be totally flat. Everyone pays X% after a standard deduction.

  22. DD – how would X% flat tax help low income or true middle class. 5% of 100k is more manageable than 5% of 50k. I’m not quite sure how to explain but on a spending level 5% of 50k will be missed more than 5% of 100k.

    I just know that when my family made 50k we felt the loss of 2500 more than I miss 5000 now that we make 100k.

    I love the idea of a flat tax but with a sliding scale to account for lower and higher income earners.

    Maybe I misunderstood the conversation and my concerns were addressed…

  23. @Rhode – most flat taxers have a substantial personal exemption built in – like maybe equal to the federal poverty line.

    So, family of 4 gets 10k per person = 40k.

    Tax on 50k = 50k-40k = 10k x 9% = $900
    Tax on 100k = 60k x 9% = $5400
    Tax on 500k = 460k x 9% = $42,000

    If single, the numbers would be: $3600, $8100, $45,000

  24. I’m not a proponent of the flat tax, just explaining it, because Finn interpreted the idea extremely literally and assumed the idea only would affect the rates, not the deductions. I’ve never heard it proposed with the intention of helping the lower and middle classes, just with the intention of simplifying the tax code.

    I love the idea of a flat tax but with a sliding scale to account for lower and higher income earners.

    By definition that’s not a flat tax :)

  25. Rhode — right, the big objection to a flat tax is that it’s regressive. It hits the poor harder than the rich.

  26. RMS, do you know whether Medicare for all would increase or decrease the percentage of GDP devoted to healthcare? How would hospitals/doctors compensate for the decrease in overall revenue?

    If I understood the financial trade-offs, I could support Medicare for all. I believe it would be a spiral to the bottom, like Medicaid. I would be delighted to be proven wrong.

  27. How would hospitals/doctors compensate for the decrease in overall revenue?

    Why would there be a decrease in revenue? Medicare reimburses well. It’s Medicaid that has low reimbursements.

  28. Denver Dad, because Medicare-for-all would replace private insurance, which reimburses at higher rates than Medicare.

  29. Here’s a list of specific estimates of effects on doctors if Medicare rates (80% of private insurance payment rates on average) were implemented. I would be OK with current Medicare rates being paid, but I’m not convinced government would manage its finances well enough to maintain that level of payment over time. That’s why I’m a fan of the healthcare-as-public-utility model, where the costs of providing services plus a small x% profit over time are regulated by a government agency(ies) which also regulates what care is government funded and for whom.

    http://www.drsforamerica.org/blog/what-if-doctors-got-paid-only-medicare-rates

  30. WCE – that citation doesn’t take into account the large number of no-pay that some providers see. Under a medicare-for-all model, all patients would have some insurance. I have worked in places where 1/3 of my patients don’t pay for services (though I was still paying $7 for the privilege of seeing them and having malpractice coverage). So, for some private specialists that refuse to see patients who cannot pay (as is their legal right), medicare-for-all might decrease their collections. Medicare is a much better payor than medicaid, so that would be a boon to some practices.

    All this conjecture leaves out the fact that it would be unlikely that private insurance would go away. If there is a supplement, there will be payors that still pay more than Medicare. Or people who pay out of pocket for services.

  31. “Medicare reimburses well.”

    I’ve heard that locally, medicare patients often have difficulty finding physicians to see them, because many physicians limit the number of medicare patients they see due to poor reimbursement rates, in some cases lower than the cost of care.

  32. Ada, under a Medicare-for-all model with current Medicare funding levels, would we then pay more of our GDP for healthcare? I agree that we could probably avoid hard choices in healthcare if we maintain/increase funding levels- that would transfer the hard choices to areas like bridge maintenance and public schools.

    My general point is that regardless of model (utility model, Medicare model, Medicaid model, private insurance model), if you put less money into the system, you will not get something you have today. I happen to think the value of population level preventative care is overrated (largely because the number needed to treat is so high) but I’m kind of like the 18 year old in RMS’s article. “The value of preventative care” is a vague statement with unclear goals and tons of exceptions. We aren’t sure if the goal of the healthcare system is to maximize life expectancy, to maximize quality of life, to minimize cost, to ensure equality or some combination thereof.

    From Ada’s previous comments, I believe that there are very good VA hospitals, but it also appears there are very bad ones, and government is not very good at identifying and fixing what’s broken within those.

  33. WCE – I think that there are several issues with trying to analyze the financial sustainability of a Medicare for all model. 1. The amount of uncompensated (I do not say undercompensated) care would go from its current fairly high levels to nearly zero for all legal residents and (probably) all minor children regardless of legal status. That could result in zero financial hit for most doctors and hospitals. 2. It is impossible to quantify how much of the current cost in the system is attributable to lack of funds/insurance coverage and how much to other barriers. Appropriate and timely care is usually less expensive than emergency or after the fact care. 3. Insurance companies would become smaller, but would adapt. Almost Everyone would be in a Medicare advantage/Kaiser type plan. Fee for service would probably disappear except as private add on plans.

    I personally think that a truly universal plan of any design has to involve some coercion, dressed up as incentives. Medical providers could get govt support for education in exchange for significant rural service. Patients would find it impossible to get adequate covered care outside of HMO style groups. Medical facilities would get a higher reimbursement rate or some other incentive for having weekend or evening hours. Serving on medical vans on wheels going into underserved areas would be another tuition forgiveness method, plus a bonus to the affiliated hospital.. The schools would provide basic medical to all enrolled children, but only vaccinated or medically certified unvaccinated children (no religion, no “feelings”) could attend public school.

    Medicare works great in any area with adequate medical personnel, and I don’t mean fancy specialists or teaching hospitals. It works less well, as does medical care or education or any service for which choice and supply are limited, in areas where you can’t get good care nearby even if you had cash in your pocket to pay for it.

  34. Meme, agree. Trying to relate to your point, Loma Linda is known on the West Coast for its Seventh Day Adventist approach to medical services (medicine is an opportunity for service to the needy, not a way to become rich) and rural communities are generally delighted with its Loma Linda-trained providers.

    I remember trying to plan something with my Mom, and she couldn’t do it the proposed week because she had a dental cleaning appointment, and I said, “Just call and reschedule it,” and she said, “They won’t have an opening for another 6 months.”

    I now live in the land of dental competition, and her comment reminded me that I came from the land of no dental competition.

  35. “Are you sure that’s not Medicaid, Finn?”

    Yes. It’s even worse for medicaid patients.

    Many doctors cite, in addition to the low reimbursement rates relative to private insurance, the paperwork burdens of medicare and the costs associated with that.

  36. “Medicare works great in any area with adequate medical personnel, and I don’t mean fancy specialists or teaching hospitals. It works less well, as does medical care or education or any service for which choice and supply are limited, in areas where you can’t get good care nearby even if you had cash in your pocket to pay for it.”

    My concern with a medicare for all plan is that could exacerbate our shortage of physicians, especially PCPs. The low reimbursement rates and high overhead of medicare will make it a less attractive career option.

    OTOH, it might force a change in how care is provided, e.g., NPs and PAs replacing physicians as PCPs.

  37. Finn. Please provide data to show that medicare has higher overhead than other insurance plans. I have always heard the opposite. And just as my experience and my many many medicare aged friends’ experience is shaped positively by the medical resources in my area, yours may be shaped by your local situation.

  38. Many doctors cite, in addition to the low reimbursement rates relative to private insurance, the paperwork burdens of medicare and the costs associated with that.

    Finn, something does not add up right in your story. The administrative burdens of Medicare are significantly lower than most private third party payors.

  39. And “medicare for all” would lower the administrative costs because it’s much cheaper to only deal with one insurer than many insurers.

  40. Part of my job entails Medicare audit follow up. Then whole Medicare billing process is a nightmare.

  41. Mémé, note that I used the “locally” qualifier when I mentioned the low medicare reimbursement rates. Also note that I did not state that medicare has higher overhead, but rather that doctors complain about the administrative burden of medicare.

    Locally, the non-HMO medical insurance market is dominated by one company, so pretty much all non-HMO doctors need to deal with that company. Whether or not the administrative costs of medicare are higher, for practices that limit the number of medicare patients they accept, it could be that is it particularly burdensome to take on a whole other set of administrative requirements for a small number of patients, i.e., the burden per patient may be quite high, especially relative to the burden/patient for the company that insures most of their patients.

    This article mentions the complaints about dealing with medicare, which I’ve heard or read numerous times:

    https://crowncarehi.wordpress.com/2016/10/23/finding-a-primary-care-doctor-on-oahu/

    “For MDs still accepting Medicare patients, our data shows selective acceptance. 54 practices stated acceptance was conditional on the provider of Medicare and the most frequent denials were for Humana and United Health Care Medicare Advantage Plans. Providers cited administrative hurdles and delayed reimbursements by the insurers.

    Even providers who continue to accept Medicare grumbled about administrative burdens and low reimbursement rates. ”

    DD, that article also led me to believe that there is not a single provider of medicare insurance, e.g., the quote above.

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