Ted Cruz's False Narrative Regarding Eliminating the IRS

Throughout his campaign, Ted Cruz has continued to say that he will abolish the IRS by having a simple flat tax where you need only file a return in the form of a postcard.  But, what about that "postcard"? Who is going to verify that what you put on it is the truth?  Cruz seems to forget that the administrative task of verification of income is one of the primary functions of the agency.  A flat tax may reduce paperwork, and, as such, reduce some IRS personnel; but some number of people are still going to be needed to process the 236 million postcards that the agency would expect to receive each year. 

Also, the IRS is tasked with collecting all the money. Apparently, Cruz thinks that processing the $2.7 trillion dollars a year, will somehow, magically, be taken care of.  To  say he will abolish the IRS is a bunch of political B.S. from Cruz the "B.S.-er"; or as Trump would say: "Lying Ted".

References:

'We will abolish the IRS': Ted Cruz wins crowd in Camp Hill: http://www.pennlive.com/news/2016/04/we_will_abolish_the_irs_ted_cr.html

Abolish the IRS! - CNN Money: http://money.cnn.com/2015/11/04/pf/taxes/abolish-the-irs/

Number of Tax Returns Processed by the IRS: https://www.google.com/search?q=number+of+tax+returns+a+year&ie=utf-8&oe=utf-8

Why The Tax Code Must Be Streamlined

Several GOP contenders for the Presidency have said that they would simplify this country's bloated tax code if they were elected.  But, no one really explains "why" we need to do something about it.

As of April 15th of this year, there were more than 74,600 pages of federal tax code to wade through.  In 1913, when income tax was adopted, it was just 4 pages long. In 2011, General Electric (GE) filed a 57,000 page tax return for their 2010 taxes. Using every tax break available to them in those 74,600 pages, GE managed to pay zero taxes on $14 billion dollars in profits.  And, I suspect that a legion of IRS agents were needed for months to insure that GE's 57,000 page tax return was completely legal.

If we had a simplified tax code without a bunch of tax breaks, GE would not have been able to avoid paying any taxes in 2011.  Also, Americans wouldn't spend 6.1 billion man hours preparing their returns each year. 

Let's put the most hated of Federal Agencies -- the IRS -- out of business by reducing our tax code to what it was in 1913.

References:

Look at how many pages are in the federal tax code: http://www.washingtonexaminer.com/look-at-how-many-pages-are-in-the-federal-tax-code/article/2563032

GE Filed 57,000-Page Tax Return, Paid No Taxes on $14 Billion in Profits: http://www.weeklystandard.com/blogs/ge-filed-57000-page-tax-return-paid-no-taxes-14-billion-profits_609137.html

It takes Americans 6.1 billion hours to prepare their taxes: http://www.politifact.com/truth-o-meter/statements/2014/apr/15/virginia-foxx/it-takes-americans-61-billion-hours-prepare-their-/

Have You or Your Tax Preparer Read All 70,000 Pages of the Federal Tax Code Yet?

Last year, about 170 million Americans had to file a tax return at a cost of 1.35 billion (billion with a "b") man hours in preparing those returns.  On average, that's about 8 hours per person or the equivalent of one long business day per filer spent putting numbers in little boxes, adding them up, and checking off things he or she may not understand.  Then, at the end, you sign and date the thing swearing that its totally correct or you may be subject under penalty of law.

Up until ObamaCare, only those who reasonably made any income had to file tax returns.   But, this year, because of the new healthcare law, even those, who in the past, made too little to pay taxes  must file a return anyway in order to prove they have official ObamaCare approved health insurance and avoid paying a penalty.  According to the nation's leading tax service, H and R Block, only about 1 in 4 low income families even knows this; leaving 3 out of 4 in violation of IRS rules and regulations by not filing the up to 3 forms associated with proof of insurance.  Of course, the friendly IRS has whipped up a handy 21-page single-spaced guide to help you understand how to fill out those three forms.  Unfortunately, for most people reading the guide, it will seem like it was written by some alien being; especially for low income families with limited education.  Of course, this means millions more tax returns and it also means thousands of new IRS agents to handle all that new paperwork.

In 1989, when the tax code was about 30,000 pages long, the LA Times found that the IRS help line was 30.8% wrong in the advice they gave someone with regard to their tax preparation. Today, with more than 70,000 pages of tax code, it's anyone's guess how accurate (or inaccurate) the help line is.  But, this we do know.  The IRS has already said that it will only be able to handle half the calls to its help line and 87% of those who do get connected will have to wait 2-1/2 hours for the call to be answered.

My purpose in explaining all this is to say that the current tax code is beyond human comprehension.  It would be like remembering page-by-page every book you ever read plus all future rewrites.

Simply, the tax code needs to be abolished and a simplified system installed in its place.  After all, the original income tax was a flat tax.  Then, it morphed into a progressive tax in which the more money you made the higher your taxes were.  Ever since then, each political party has attempted to curry favor by modifying the code to give special exemptions to garner votes.  Taxes have become both punishing and incentivizing; always with the voter in mind. No one should have to wait 2-1/2 hours to get an answer about trying to pay their taxes without the threat of fines or jail time.

References:

The Cost of Tax Compliance: http://taxfoundation.org/blog/cost-tax-compliance

H&R Block: ‘No One Can Understand’ New Obamacare Tax Code: http://dailycaller.com/2015/01/19/hr-block-no-one-can-understand-new-obamacare-tax-code/

IRS seeks 4,000 agents, $303 million for Obamacare: http://www.washingtonexaminer.com/irs-seeks-4000-agents-303-million-for-obamacare/article/416051

IRS Help Line Has Error Rate of 30.8% - Los Angeles Times:  http://articles.latimes.com/1989-03-11/business/fi-777_1_irs-employees

The IRS will answer less than half your calls this filing season: http://www.washingtonpost.com/blogs/wonkblog/wp/2015/01/14/the-irs-will-answer-less-than-half-your-calls-this-filing-season/

Harry Reid's Disingenuous Comments On The DC Court's Ruling On ObamaCare Subsidies

After two separate, but equal, federal courts ruled at odds with each other over the expansion of the ObamaCare subsidies to include those states that refused to establish their own exchanges, Senate Majority Leader Harry Reid felt obliged to go to the microphones and admonish the DC court which had just ruled against the expansion.   Reid, arguing that the DC ruling was a partisan effort by two "activist" Republican judges, seemed to be blind to the fact that one could argue that the very same activism took place in the Virginia court where 3 Democrat Judges (Davis, Gregory, and Thacker) unanimously sided with the Obama Administration over the expansion of subsidies.

Reid also continued his admonishment by declaring that ObamaCare was lawfully passed by Congress and upheld by the Supreme Court.  However, what he is completely ignoring is the fact that the the constitutionality or the legality of the ObamaCare law was never at issue in those two court rulings.  What is at issue is whether or not the IRS had the right to re-write the law and, thereby, expand subsidies to those 36 states who elected not to provide their own exchanges.  Section 36b of ObamaCare clearly mandates that, in order to receive a subsidy, you must enroll “through an Exchange established by the State under 1311.”  The words "established by the State" obviously doesn't imply any exchange established by the Federal government like "healthcare.gov".  Otherwise, why even be so specific by using such wording?  And the reason for the IRS re-write is simple.  Too many states had refused to set up their own exchanges; leaving millions of the enrolled ineligible for subsidies.  In fact, only 14 actually did create their own exchanges. So, the Obama Administration knew the law would die on its own if millions avoided signing up for healthcare without those subsidies. Once again, it is the lawlessness of the Obama Administration that is really at issue here. 

Sadly, these opposing decisions by our courts does expose political activism in our judicial system.  If there wasn't, at least one of the 4 Democrat judges involved in these two decisions crossed party lines and would have ruled differently in what is an obvious wording intent of the law.  And, that activism is the very reason that Reid went "nuclear" in the Senate; thus, allowing federal judges and other political candidates to be appointed with a simple majority and not the previously required two-thirds vote.  This way Harry, with a majority control of the Senate, could load up our legal system with as many far-left, activist justices as he and the President could see fit. So, if Reid wants to make claims of political activism in our courts, he need only look in a mirror.

References:

Video: Harry Reid Admonishes DC Court Decision: https://www.youtube.com/watch?v=HMsOvOgxzoA

The statutory text of Obamacare and the Halbig and King cases: http://lawprofessors.typepad.com/law_econ/2014/07/the-statutory-text-of-obamacare-and-the-halbig-and-king-cases.html

U.S. Appeals Courts Issue Conflicting Decisions On Obamacare Subsidies: http://www.npr.org/blogs/thetwo-way/2014/07/22/334034284/u-s-appeals-court-deals-blow-to-obamas-health-law

Judge Andre M. Davis: http://en.wikipedia.org/wiki/Andre_M._Davis

Judge Roger L. Gregory: http://en.wikipedia.org/wiki/Roger_Gregory

Judge Stephanie Thacker: http://en.wikipedia.org/wiki/Stephanie_Thacker

Upholding ObamaCare—as Written An appeals court's remedial civics lesson: Laws mean what they say: http://online.wsj.com/articles/upholding-obamacareas-written-1406070280

Why the Halbig Decision Should Be Taken Seriously: http://www.realclearpolitics.com/articles/2014/07/23/why_the_halbig_decision_should_be_taken_seriously_123421.html

Senate Nuclear Option: http://en.wikipedia.org/wiki/Nuclear_option

The IRS: The Very Embodiment of Record Keeping, Loses Lois Lerner's Emails?

For two years now, the IRS has stonewalled Congress in providing access to any records and communications related to the scandal over that agency's blocking of conservative groups from gaining 501(c) tax-free status.  Lois Lerner, a D.C.-based IRS employee, appears to be at the heart of it, and may in fact, have ties to the White House.  However, she has clammed up; refusing to answer any of Congress' questions by citing her 5th Amendment right not to incriminate herself.

Now, conveniently, the IRS -- the Agency that maintains so many detailed records on almost every American -- has managed to lose any and all emails either to and from Lois Lerner because her hard drive crashed.  Well, what about backup files?  Or, too, what about everyone who sent or received a Lerner email? They should also have a copy of those files on their hard drives.   Does anyone really find this "hard drive crash excuse" to be believable?  If anything, it just shows that those emails must contain damaging information and that they needed to be purged.  Obviously, there is an effort, here, to protect some high ranking people at either the IRS or the White House.  Does anyone smell a rat like the 18-1/2 minute gap in those famous Nixon Watergate tapes?  It's not looking too good for Obama's claim that the IRS scandal is a phony one.


Oh, by the way. The next time you get audited, try telling the IRS that you "lost" the supporting documentation for your deductions.  My guess is that you'll pay through the nose for that comment.

References:

IRS lost Lois Lerner's emails in tea party probe: http://www.cbsnews.com/news/irs-lost-lois-lerners-emails-in-tea-party-probe/

Did The IRS Really Lose Lois Lerner's Emails? Let a Special Prosecutor Find Them Obama needs to address this 'phony scandal' and the public trust with real transparency: http://www.nationaljournal.com/white-house/did-the-irs-really-lose-lois-lerner-s-emails-let-a-special-prosecutor-find-them-20140613

The ObamaCare Indiviual Mandate Tax Penalty Explained

One of the most incorrectly stated details of ObamaCare is the tax penalty for not buying health insurance.  Many think that if you don't buy insurance, there is simply a $95 penalty.  That's true for some but not for all; and, only this year.  Then, there are those that who say the penalty is $95 or one percent of income; whichever is higher.  Now, that may be closer to the truth but, understand the ObamaCare penalty is an IRS tax collection program and no IRS system of taxation is ever that simple in its execution.

First of all, Health and Human Services (HHS) states that if you are an individual making less than $10,100 or a married couple making less than $20,200, you are not eligible for a penalty.  The only reason these amounts are even in the law is because these are the thresholds for not having to file a 2014 tax return.  Thus, if you don't have to file a tax return, the IRS has no mechanism to collect the penalty.

But here's where the insanity of ObamaCare really shows up.

If you are an individual making less than $11,490, you are eligible for Medicaid (free healthcare) in all 50 states.  That's because HHS says you are in poverty.  So, if your income is between $10,100 and $11,490, the penalty literally becomes a stupidity tax for you not signing up for Medicaid.  If you live in a state that agreed to the expansion of Medicaid under the new health care law, the stupidity tax is raised for those individuals making less than $15,282.  Now, here's some further insanity.  If you and your wife have a combined income above $15,510, HHS says that you are above the poverty threshold and you must buy insurance through the exchanges.  The IRS says, not so fast.  We don't collect until you make $20,200.  So, in essence there is a nearly $4,500 "hole" where no penalty can ever be applied.

Now to the true application of the penalty.  If you are an individual making less than $19,150 or a family with a combined income of  under $35,500 the tax penalty is fixed. For 2014, the fixed penalty will be $95 per adult and one-half of that or $47.50 for each child; with a family cap of 300% of the basic adult penalty or $285.  In 2015, the penalty is raised to $325 per adult with a cap of  $975.  By 2016, the respective numbers are $695 and $2085.  In both 2015 and 2016, the child penalty is one-half the adult tax.

Also, in 2014, if you make more than the fixed rate thresholds, the penalty is calculated at 1% of gross income after subtracting the IRS filing threshold of $10,100 for singles or $20,200 for marrieds.  The cap for this tax group is based on the national average of the cost of an ObamaCare bronze plan.  Also, for each income level, there are deductions that lower the penalty for those who are either married or married with children.  For example, an individual making $50,000 would pay a tax (penalty) of $402.  If married with no children, the penalty drops to $305.  Add a child and the penalty is only $267.  That's why if you want to know what your particular penalty is, use the calculator below.

In 2015, the 1% penalty will be increased to 2%.  By 2016, it will hit 2.5% and, then, increased each year thereafter by the rate of inflation.

Now, any decent Democrat-minded law wouldn't be complete without exemptions from the tax penalty and here they are:

• You’re uninsured for less than 3 months of the year
• The lowest-priced coverage available to you would cost more than 8% of your household income
• You don’t have to file a tax return because your income is too low (Learn about the filing limit.)
• You’re a member of a federally recognized tribe or eligible for services through an Indian Health Services provider
• You’re a member of a recognized health care sharing ministry
• You’re a member of a recognized religious sect with religious objections to insurance, including Social Security and Medicare
• You’re incarcerated, and not awaiting the disposition of charges against you
• You’re not lawfully present in the U.S.

But, on top of that, there are a bunch of so-called hardship exemptions available to you that may make all the tax penalties null and void.  Especially the newest one that says "Your individual insurance plan was cancelled and you believe other Marketplace plans are unaffordable."  Here's that list:

1. You were homeless.
2. You were evicted in the past 6 months or were facing eviction or foreclosure.
3. You received a shut-off notice from a utility company.
4. You recently experienced domestic violence.
5. You recently experienced the death of a close family member.
6. You experienced a fire, flood, or other natural or human-caused disaster that caused substantial damage to your property.
7. You filed for bankruptcy in the last 6 months.
8. You had medical expenses you couldn’t pay in the last 24 months.
9. You experienced unexpected increases in necessary expenses due to caring for an ill, disabled, or aging family member.
10. You expect to claim a child as a tax dependent who’s been denied coverage in Medicaid and CHIP, and another person is required by court order to give medical support to the child. In this case, you do not have to pay the penalty for the child.
11. As a result of an eligibility appeals decision, you’re eligible for enrollment in a qualified health plan (QHP) through the Marketplace, lower costs on your monthly premiums, or cost-sharing reductions for a time period when you weren’t enrolled in a QHP through the Marketplace.
12. You were determined ineligible for Medicaid because your state didn’t expand eligibility for Medicaid under the Affordable Care Act.
13. Your individual insurance plan was cancelled and you believe other Marketplace plans are unaffordable.
14. You experienced another hardship in obtaining health insurance.

The last one sounds like the ultimate hardship was having to sign up for ObamaCare on their failing websites. Anyway, that's it.  Not nearly as simple as the $95 penalty that keeps getting bandied about. 


References:

ObamaCare Penalty Calculator (note: Accurate but does not apply the IRS limits): http://www.healthinsurance.org/learn/obamacare-penalty-calculator/

Federal Poverty Levels: http://obamacarefacts.com/federal-poverty-level.php

What if someone doesn't have health care coverage in 2014?: https://www.healthcare.gov/what-if-someone-doesnt-have-health-coverage-in-2014/

How do I qualify for an exemption from the fee for not having health coverage?: https://www.healthcare.gov/exemptions/

The New Police State Of Health Care In America

If what the Democrats of Congress posted on the Internet yesterday becomes law, that legislation will add 16,500 new IRS agents. That's the equivalent of adding the population of a small city to the IRS.

This fact, alone, tells you what health care reform is all about. It is a law that would mandate that companies -- large and small -- be fined for not providing health insurance to their employees. It is a law that says that you and I will be fined for not buying health insurance. And, it is law that will go after insurance companies and doctors for not meeting all the other ridiculous mandates as outlined under their so-called reform.

The IRS will be the Gestapo organization that will used to bust heads over not complying with what the Democrats seem to think health care in should be. Sadly, the health care system in America will become a police state. It will no longer be about quality of care. Instead, it will be all about the bottom line and the growth of government's control over our lives. And, it is this massive addition of IRS agents that clearly points those facts out.