Do We Have An Emigration Problem?

Tired of dealing with intrusive US tax laws and complicated tax filings. Well, it turns out that the Star Wars strategy of moving to a place far far away no longer works as a method of getting out of paying your taxes or from stopping the harassment in general. In fact, tax laws are getting so stringent that last year 3,000 U.S. Citizens, over triple the number of the average for the past 5 years, lined up at embassies around the world to renounce their citizenship.

 Some of the rush may be caused by Americans hoping to avoid the new disclosure requirements. Allowing them to stay in the shadows for good reason. Others living abroad with perfectly legal bundles of cash in the banks are saying they are giving up their US passport because they are tired of dealing with overly complicated tax filings, trying to determine what estates and capital are subject to tax, and all the effort that goes into planning two tax day celebrations. It's especially frustrating when you are having to file such a volume and complexity of taxes without having a representative of persons living abroad to represent you in Congress. I think there was once a slogan that summarized the frustration these citizens are going through.

This aggressive practice was first demonstrated in 2008, when federal prosecutors accused the Swiss bank UBS of helping wealthy Americans hide their money tax-free in overseas accounts. It was a big case, leading to indictments, fines and prison time.

The U.S. Congress wanted to make sure these 'shadow' accounts shielding assets from taxation stopped. During the economic recession, lawmakers saw a chance to bring in massive sums of money and stop tax cheats at the same time, and as has been the case too often in our history, we can't allow a good revenue generation opportunity go to waste.

The measure, approved by Congress in 2010, is aimed at recouping some of the hundreds of billions the government says it loses each year in unpaid taxes with that pesky loophole of the money not being anywhere close to our shores.

Admittedly, a lot of the money being targeted should be subject to some level of taxation, usually because it's earned or invested in the US, but as with many things we seem to lock our targets on, there has been an alarming amount of collateral damage. The victims here being US citizens now living under two sets of tax laws and subjigating banks that would do business with them to another set of laws, again, without any representation. The solution for many, to paraphrase the old saying, when in Rome, file your taxes in Latin.

The first wave of renunciations in 2010 coincided with a part of the law that requires individuals to report foreign assets worth as little as $50,000, causing the first wave of banks to start to drop US clients and putting many people in the difficult position of choosing between a passport and a checking account. That was in addition to a separate provision that forces Americans to disclose foreign bank holdings larger than $10,000.

Renunciations dipped in 2012, but now another part of the law is kicking in. The new provision requires financial institutions to report all foreign accounts held by Americans.

These regulations come on the heels of additional regulations that are being imposed on foreign banks operating in the US. The law has prompted some banks to begin kicking out their American clients rather than comply. Penalties can be high if banks make a mistake reporting US-held accounts, even if they are basic checking and savings accounts, leaving American citizens who live abroad incapable of finding a bank who will take their business.

One can hardly blame them, the choice a bank is faced with of either disenfranchising a sliver of their clientele or face the wrath of policy being imposed on them by a foreign power, I'm sure we here in the states would allow the same thing to happen to us.

In summary, once you pay your taxes and have a big old stack of money, what you do with it is still subject to rules and regulations of the US, even if you take your legitimate money as far away from out shores as possible. Piling on burdens of citizenship, more tax revenue for the government, and zero new benefits by being a citizen.

Drive the Debate Back to Obamacare

The debate in Washington carries on. Although a deal on the debt ceiling may be fast approaching, word is that it is meant only as a deal that buys more time for the continuing resolution and funding for the American Care Act to continue. The debate needs to be swung back from the terrible side effects of a government shut down and returned to the reason for it, attempting to repeal the American Care Act. To this end, I present this essay as an argument to why having stringent criteria for the insurance industry renders the industry inept and incapable of solving the original problem America had with healthcare, the cost.

Many reports say that young, healthy people must enroll in the American Care Act (ACA) health exchanges to cover the cost of insuring people that are disproportionately sicker. It’s the corner stone of how insurance works. Charge everyone roughly the same rate for access to basically the same product. The people who use it less will subsidize the people who use it more.

The problem with the ACA or Obamacare is that the application of this perfect world scenario, as with many policies that look good on paper, is entirely impractical in practice.

In our present economic state, not only are many young people (and proportionately healthier) either unemployed or underemployed, the Consumer Financial Protection Bureau estimates that people under 40 owe 67% of the roughly $1.4 trillion that Americans owe on school loans. That’s on top of an average of several thousand dollars of credit card debt. The ACA is predicated on people who can scarcely afford the extra cost to subsidize care for small percentage of people that can neither afford insurance but also require large sums of money for their care.

In the present insurance system, younger, healthier people can purchase insurance for cheap, very cheap, and that money in premiums which rarely goes directly to healthcare for the insured can then be transferred to the populace that needs, helping subsidize their expenses so that premiums can be held below what the market would otherwise dictate. In a truly free market, people who do not need a lot of health care coverage would not be willing to spend a lot on health care coverage. The presented solution in the ADA? Force them to spend a lot.

Thus enters the government and the exchanges, forcing the disparity of premiums paid for by a healthy person and an unhealthy person to shrink to next to nothing. The trade off for the healthy is that they are now covered for a plethora of expensive drugs, services and procedures (i.e. birth control) that do very little to curb human behavior but pass more of the expense to people who would otherwise not need these services. Again, the government is dictating the conditions of which these 'markets' work.

This makes the health exchanges entirely non-progressive. The people in the equation that are spending much more now then they have in the past, people who can't afford more coverage and people that don't need more coverage. A 40% 'Cadillac' plan taxes and other provisions will help people who spend more money on health care coverage spend less. Even though in the current system that is money they freely hand over into the system.

The Government solution? Tax the rich more through a progressive tax code, then subsidize the poor who can't afford their new plans. Creating the criteria and ground work for an insurance industry that offers basically the same coverage, excludes no one, and allows money to walk from the wealthy down to the poor.

Many people, such as Jon Stewart, would look at this and cheer. Now insurance is little more then a middle man from the organization who is controlling the flow of money and dictates the criteria of care. Why not drop the failing insurance aspect of healthcare and convert to a single payer system? We'd save 10-15% and I'm sure the million or so employees of the industry would find new work in no time. Perhaps not a nightmare scenario if you have no problem handing over an entire industry to congress and whomever is in the White House at the time. Insurance is only a good deal when it actually works like insurance. Using insurance to pay for routine care and predictable healthcare needs makes it no longer insurance, but cost pooling. And once we change to a single payer system, it is almost impossible to go back.

Another flaw is that, by design, the ACA uses insurance to pay for routine healthcare services and distorts price signals and increases costs through layers of administration. ObamaCare’s requirements that insurance pay for even more routine care, especially for those who don't need it, than before codifies the fundamental flaw in the “insurance” (actually cost-pooling) “market” that we have today.

Instead, ObamaCare exacerbates and mandates everything that’s wrong with our current system while attempting to transfer costs in the exact wrong direction, from old and rich to young and poor. This is both extremely inefficient and completely unfair. The only thing that would make this worse is if Congress attempted to raise the fines for opting out enough to actually cover the enormous shortfall young people opting out in droves would create. Adding another dimension to the great scale that must find balance for an optimal and well funded healthcare system. 

In any of these scenarios though, there is one key element that is missing. None of these issues actually do anything to lower the overall cost of healthcare, the ACA simply transfers the burden of deciding who pays how much for what level of care out of the hands of the people and free markets, and fully into the hands of the government. And anyone who thinks that government efficiency can drive the cost down, I ask you to look at local property tax rates now and 100 years ago, states sales taxes now and then, federal income taxes. Government does not find the cheapest way to do anything, they are experts in finding new things that we can't live without, usually something that has such little demand that it can't exist as a private enterprise, and then charging everyone for it, regardless of who it benefits. The savings of removing insurance from the equation will be replaced with and expansion of the IRS, and premiums will simply become another tax. 

Imaging it, every hospital, every doctors office, every medical researcher at the behest of one government, there would be no profit in medicine, and without profit, the desire to create a new drug, a new life saving device, falls to those altruistic few. It's not that the government does not give dollars to research and development of new medical technologies, but we would forfeit almost all the sources of advancements that aren't funded by the government. You think that the lack of research occurring during a shutdown is frightening, In a shutdown occurring in a single payer system, all research would cease. 

Meanwhile, payouts for Medicare are dropping, funding for Medicaid is being pushed on the states who can't afford it. Hospitals and doctors offices can't afford to take too many patients with government coverage. Fewer doctors are becoming available as the number of people with coverage increase.

That is what is lost in the current battle in Washington, while pictures of war vets going through barricades and park rangers closing, well, everything. The topic that Ted Cruz spent 20 of his 21 hours addressing has been lost, and unless we can find a way to dictate the debate and steer it back to this topic then the goal of preventing the transfer of our entire healthcare system over to one entity will be lost.

8 Taxes under Obama

First: The Individual Mandate Tax (formerly known as a penalty). This provision will require a couple to pay the higher of wither a base tax of $1,360 per year, or 2.5% of adjusted their growth income starting with lower base tax and rising to this level by 2016. Individuals will see a base tax of $695 and families a base tax of $2,085 per year by 2016.

Second: Medicine Cabinet Tax that already took effect in 2011. This tax is directed to those who deduct their pharmaceutical expenses while filing, as this tax prohibits reimbursement of expenses for over-the-counter medicine, with the lone exception of insulin, from an employee’s pre-tax dollar funded Health Saving Account (HSA), Flexible Spending Account (FSA) or Health Reimbursement Account (HRA). This provision hurts middle class earners particularly hard since they earn enough to actually pay federal taxes, but not enough to make this restriction negligible.

Third: The Flexible Spending Account (FSA) Cap, which begin this year, is perhaps the most hurtful provision to the middle class. This part of the law imposes a cap of $2,500 per year (previously it was unlimited) on the amount of pre-tax dollars that could be deposited into these accounts. A particularly hurtful example of this harming a middle class family is a case of funds in these accounts being used to pay for special needs education for children. Tuition rates for this type of special education can easily exceed $14,000 per year and the use of pre-tax dollars has helped many middle income families.

Fourth: Medical Itemized Deduction Minimum, which is currently 7.5% of adjusted gross income. This is the hurdle that must be met before medical expenses over this hurdle can be taken as a deduction on federal income taxes. Obamacare raises this hurdle to 10% of adjusted gross income beginning in 2013. Consider the middle class family with $80,000 of adjusted gross income and $8,000 of medical expenses. Currently, that family can get some relief from being able to take a $2,000 deduction (7.5% X $80,000 = $6,000; $8,000 –$6,000 = $2,000). An increase to 10% would eliminate the deduction in this example and if that family was paying a 25% federal tax rate, the real cost of that lost deduction would be $500.

Fifth: Health Savings Account (HSA) Withdrawal Tax Hike. Continuing the trend of undoing all the benefits given to people trying to control their health costs over the past 10 years using a Health Savings Account, this provision increases the additional tax on non-medical early withdrawals from an HSA from 10% currently to 20% beginning in 2013. This provision actually sets these accounts apart from Investment Retirement Accounts (IRAs) and other tax advantaged accounts, all of which remain with a 10% early withdrawal tax.

Sixth: Indoor Tanning Services Tax, this tax began in 2010, and it places a 10% excise tax on people using tanning salons. While some may regard this as insignificant, the broader implication is that this act of taxation is a blatant move by the federal government to control the behavior of citizens. This provision, as does the Individual Mandate and as Justice Kennedy said during the oral arguments on the constitutionality of the law said, “….fundamentally changes the relationship between the federal government and the citizen.”

Seventh: Excise Tax on Comprehensive Health Insurance Plans or the “Cadillac” Health Insurance Plan Tax. These are plans that provide extensive coverage and that are generally fully paid for, or largely paid for, by employers. This provision imposes a 40% excise tax on the employer-paid premium on taxpayers who are covered by such plans, beginning in 2018. The reason it begins in 2018 is because most unionized workers are covered by plans that fall under this definition and a deferral was made to spare union members from this tax for at least a period of time.

Eighth: Payroll Tax Holiday Over, In late 2010, Congress passed a law stating that the Social Security portion of your payroll taxes went from 6.2% to 4.2%, a 2% reduction. As of January 1st, that 'holiday' was over, and the fiscal cliff deal did not extend it.

Fiscal Cliff Solved

Like a bully holding a child's favorite toy just out of reach during a school yard altercation, so too, this government holds the promise of lower taxes and responsible government hostage to the innocent middle classes. After decades of wealth being created by those who now mysteriously have wealth, while those who never had wealth continue to not create wealth, are doomed to suffer in a world where they still don't have wealth. Gone are the never existing days when a generation of middle-class families where not having to worry about paying bills or putting food on the table, after a historic recession that plunged our economy into a crisis from which, three years after technically being over, we are still fighting to recover from, it is time to construct an economy that is built to last longer then the three weeks the current one was designed to last for. To this end, I give you my proposal to put America back on the path that led to this problem in the first place... In the hopes that the laughable left and the ridiculous right will find some common ground to start from and fix this mess we are in.

The Fiscal Year 2013: Kurmudkin Budget Proposal.

The Budget Message of the President

In the Year 2008, this house of Cards we call an economy collapsed,  and  unlike a pole dancer who was under the stage lights too long and collapsed into a sweaty naked pile of well toned feminine flesh, this collapse was ugly, like an ugly pole dancer who collapsed after being under stage lights too long. In this budget, I hope to address everything from the rising cost of groceries to the rising cost of college tuition. This may come as a bit of a shock since at no point I propose any real plans to address tuition or groceries, but there is a line at the end of one of the pages, I forget which one, that talks about a $6,000,000,000.00 slush fund. Just assume that part of that will go to solving a lot of the problems with the country today. Thank you.

Building a Strong Economy

What is an economy? Webster defines it as " the management of household or private affairs and especially expenses". Who better to build up a strong economy then the government? 'nuff said.

"Tax" Reform, Reducing the Deficit, and Asking All to Pay Their Fair Share

After minutes of contemplation it occurred to me. Why are we wasting so much time trying to get money from rich people only to end up without their money and occurring all this debt? The answer seems clear. Rather then taking people's money, we are just going to start handing out the government's debt! Everyone look in your mailboxes for a stack of I.O.U.'s with uncle Sam's name scratched out and a space for you to fill out your name and phone number, and expect some calls from creditors soon. 

Investing in Our Future

Most Sci-Fi novelists agree, that in the future, we will be conquered by a super intelligent race of aliens that vaguely resemble giant slugs. In preparation for such a day, several new government bureaucracies will be developed, charged with the task of designing welcome signs for our soon to be alien overlords.

Budget Changes to Major Government Entities

Department of Agriculture - $60,000,000 in new spending to discover a weight loss diet that consists of cheeseburgers and pudding pops.

Department of Commerce - $100,000,000,000 in federal backed loans to Wal Mart, in the hopes of showing that the Federal Government can invest in a company that doesn't go bankrupt within a year.

Department of Defense - Cut by $4,000,000,000,000 and outsource all military operations to Canada. 

Department of Education - Increase funding by $5,000,000,000,000 from the defense budget savings and then outsource to Canada, also. (There are no typos in this line.)

Department of Energy - Pass new Auto regulations that will require all automobiles to run off the tears of children by 2023.

Department of Health and Human Services - Raise the funding to Medicare, Obama-care  Medicaid, Medicare Part D, SCHIP, Planned Parenthood, AARP, and Extreme Makeover: Wightloss Edition bu 7000%, then appoint a special panel that will figure out how to pay for the other half of these programs.

Department of Homeland Security - Funding for a research program to determine why this department exists in the first place.

Department of the Interior - Develop plans to move this department outdoors.

Department of Justice - Reduce Judicial staff by 80% as new laws do not require as many warrants to be signed. Use savings to allow Department of the Interior to purchase plants for their new location.

Department of Labor - Increase staff by 500,000 per month until unemployment goes down below 4%, with a 'trigger' that will fire them all unless incumbents are all re-elected.

Department of State - Grant one "Get out of a Political Debacle Free" card, then use said card. 

Department of Transportation - Develop plans for a super extensive luxury commuter line, then forbid anyone from using it HAHAHAHAHAHA!!!

Department of Treasury - Like we could actually tell these guys what to do.

Department of Veteran Affairs - $80,000,000,000 for a new administrative building, authorize the hiring of several new bureaucrats, then several more bureaucrats to address the needs of the ever expanding bureaucracy. Then outsource the task of determining why Vet's aren't getting the benefits they where promised.

In Summary

We're screwed.

There you have it, the new benchmark for negotiations. I suspect that it has has as good of a chance of being implemented as anything that comes out of Washington over the next few weeks. Thank you for reading, or as our to-be alien masters would say, "Ess-Karr-Go'h!"