Tuesday, August 25, 2015

Tuesday, August 25, 2015

Tax preparers lobby to complicate taxes; Racing commission shorted universities $15 million; Baton Rouge Area Chamber pushes budget reform; and The phantom fee


Tax preparers lobby to complicate taxes

The tax preparation companies H&R Block and Intuit (maker of TurboTax) have long lobbied against efforts to simplify tax preparation, including a recent proposal for automatic tax filing pushed by the Obama administration. However, in an even more egregious move, H&R Block’s most recent lobbying efforts could hurt the ability of low-income families to file for the Earned Income Tax Credit (EITC).  Dylan Matthews for Vox reports:


At the company’s instigation, the Senate Appropriations Committee has passed a funding bill covering the IRS whose accompanying report instructs the agency to at least quadruple the length of the form that taxpayers fill out to get the Earned Income Tax Credit. … It is hard to adequately express how despicable this is. The EITC is one of America’s premier anti-poverty programs. It targets poor families specifically, and because you have to work to get it, countless studies have found it encourages single mothers and other people without much connection to the labor market to enter the workforce. The Census Bureau estimates that it and the related Child Tax Credit keep 9.4 million people out of poverty every year, and recent research suggests that when you take into account the people the EITC brings into the workforce, the real number is probably twice that. If that weren’t enough, it also boosts test scores for kids in families receiving it and improves both parents’ and children’s health. … But because it offers refunds for people who otherwise don’t make enough to file taxes, the EITC expands the market for parasitic tax prep companies like H&R Block and Intuit. Currently, recipients only have to fill out a single-page form, and the IRS operates free tax preparation centers for low-income people having trouble completing their returns. But that hasn’t stopped commercial tax preparers from swooping in, and currently two-thirds of EITC claimants pay to have their returns prepared.


Racing commission shorted universities $15 million

The Legislative Auditor’s Office issued a report on Monday that found the Louisiana State Racing Commission failed to make more that $15 million in payments to the Board of Regents. This money would go to colleges and universities across the state. The Advocate’s Elizabeth Crisp reports:  


According to the Louisiana Legislative Auditor’s Office, the Louisiana State Racing Commission hasn’t been handing over the money it collects for higher education through fees charged on wagers at off-track betting facilities. “It is a debt that’s owed to the Board of Regents,” said state Rep. Joe Harrison, R-Napoleonville. “The law is very clear in this situation.”  The Racing Commission, in its response to the audit, has argued that the state has had no mechanism for it to send funds to the Board of Regents, and it doesn’t owe the back payment. “Not once in twenty-eight years has the Board of Regents sought to collect funds from the statute,” Racing Commission executive director Charles Gardiner II wrote in his objection to the audit’s findings. “And regrettably today, there is no mechanism in place, and no self-generated revenue to distribute.”


Baton Rouge Area Chamber pushes budget reform

The Advocate’s editorial board agrees with the Baton Rouge Area Chamber (BRAC) that tackling “statutory dedications”–spending outside the general fund –needs to be part of a long-term budget fix. Undoing dedications would give legislators more flexibility when building the budget, the Advocate says, but it will be politically challenging:


Getting rid of even some government programs is not easy, and it takes a concerted plan to do so. We think the Baton Rouge Area Chamber is right to put a new and constructive emphasis on a process to tackle appropriations that are now in the state budget on autopilot, renewed year after year without the scrutiny needed…The BRAC plan authored by Michael DiResto, a former state Division of Administration official, proposes that the new governor and Legislature embark on a process of identifying and trimming the so-called “statutory dedications” that drain money from the general fund. While the state budget has gone up, dedications have limited the government’s flexibility in allocating its money. “We’re spending more but prioritizing less,” DiResto’s report quips…Unfortunately, as Jindal’s team has found in recent years, most of the dedications reflect spending that the lawmakers and the folks back home are loath to give up. And no one benefiting from a state appropriation wants to have to fight for it year after year; they say their particular need, whether it’s state paychecks for local sheriff’s deputies or care for the aged and infirm, or anything else, is too important to be left to the “political” process.


The phantom fee
The tax credit that isn’t a tax credit to pay for the fee that isn’t a fee–otherwise known as the SAVE plan–dominated the debate in the final hours of the legislative session earlier this spring. The convoluted plan to fund higher education while being able to claim “revenue neutrality” was required by Gov. Jindal’s to please anti-government lobbyist Grover Norquist. As Mark Ballard writes in the Advocate, the whole thing has parents and students scratching their heads as school starts up again:


Like many parents, [Elaine] Harmon knew nothing about the fee. She had not kept up with the drama of Louisiana legislators trying to close a $1.6 billion deficit in a way that would not devastate higher education but still would allow Gov. Bobby Jindal to campaign for the Republican presidential nomination without a “tax and spend” moniker. The fee applies to all 200,000 or so Louisiana students now showing up at public colleges around the state. But it’s not actually listed on the bill. And no student actually pays it. In fact, Jason Droddy, LSU’s government relations guy, can’t say yet what the exact fee will be. Basically, the state is going to take $350 million — part of the money raised from a package of tax increases and tax break rollbacks — then divide by however many students enroll across the state. Then each institution will receive its share.


Number of the Day
9.4 million – Number of people pulled out of poverty every year by the Earned Income Tax Credit and Child Tax Credit (Source: Vox)