8:31 AM, Mar 25, 2014 • By JERYL BIER
When the Affordable Care Act was passed in 2010, one provision was a new 3.8 percent Net Investment Tax effective in 2013. Although the tax will generally hit high-end taxpayers (threshold is $250,000 for married and $200,000 for single), because of the way many parents choose to report their children's investment income, the tax will likely hit many other children as well.
While the basic application of this tax has been known since passage, the specific effects have become more apparent recently as the IRS issued its final rules, forms, and instructions. Last Friday, the IRS published a tip on its website entitled "Tax Rules for Children with Investment Income." Included is this note regarding the Net Investment Tax [emphasis added]:
Starting in 2013, a child whose tax is figured on Form 8615 may be subject to the Net Investment Income Tax. NIIT is a 3.8% tax on the lesser of either net investment income or the excess of the child's modified adjusted gross income that is over a threshold amount...
The new tax paid on children's income will be part of a so-called "kiddie tax" that stems from 1980s tax reform when Congress sought to recover taxes that were being lost on income from assets transferred from parents to children ("child" is defined as under age 19, or under age 24 if a full-time student.) Investment income over $2,000 is taxed at the parents' highest rate instead of the rate used for regular income for the child. And if the parents' income exceeds the NIIT threshold, the child's investment income is also subject to the additional 3.8 percent tax.
The above scenario represents the simplest application of the regulations; individual situations can be more complex and will vary from person to person. But according to a tax accountant interviewed by THE WEEKLY STANDARD for this story, "The bottom line: you will get a lot of upper-middle-class taxpayers paying an additional NIIT if they have shifted enough income-producing assets to their children via gift." So while the tax was aimed at high-income taxpayers, it turns out Obamacare will hit some low age taxpayers as well.
1:28 PM, Mar 5, 2014 • By GEOFFREY NORMAN
When you spend in the trillions and run deficits in the (many) billions, then you look for the millions where you can find them.
Tax the gross receipts of multinational companies in each of the countries in which they are earned.12:00 AM, Feb 22, 2014 • By IRWIN M. STELZER
Some three hundred years ago Sir Walter Scott asked, “Breathes there a man with soul so dead who never to himself hath said, This is my own, my native land.” Well, in America corporations are legally deemed “persons,” so the answer to Scott’s question is “Yes,” at least when it comes to tax payments. In this globalized world corporations are “multi-national,” run by executives who may never have set foot in the lands they declare to be “home” for tax purposes. Nothing illegal about it all: These firms play by the rules written for them by the governments in which they do most of their business. And their executives do have a fiduciary obligation to the owners of the business, their shareholders, to minimize their tax payments to the greatest extent possible within the law. Moreover, to some extent their continued search for benign tax regimes puts something of a limit on the ambitions of national tax collectors, witness the unhappiness of France with the low taxes on offer in Ireland, which is coming out of the recession in which over-taxed France remains mired.
3:20 PM, Feb 21, 2014 • By GEOFFREY NORMAN
The movies folks responsible for the making of House of Cards seem to have been reading their own reviews or taking a page out of their own (ludicrous) scripts. Or something. As Jenna Johnson of the Washington Post reports:
8:03 AM, Feb 11, 2014 • By JERYL BIER
New IRS commissioner John Koskinen is beginning his tenure with some blunt words: If you need IRS help on the telephone, be prepared to wait -- a long time. The IRS posted a YouTube video of the commissioner's message to taxpayers as the pace of the 2014 filing season picks up.
A better approach to poverty.Feb 10, 2014, Vol. 19, No. 21 • By ELI LEHRER and LORI SANDERS
President Obama’s State of the Union speech brimmed with ideas to increase upward mobility and spur job creation—most of which have been tried previously, without good results. From calling on Congress to raise the minimum wage to announcing the creation of six new “high-tech manufacturing hubs” centered around research universities, too many of these ideas flow from misplaced confidence in the ability of top-down government policy to steer the economy and lift the circumstances of those in poverty.
3:17 PM, Jan 26, 2014 • By DANIEL HALPER
The boss reported this morning on CBS that Republicans will unveil an alternative to Obamacare tomorrow in the Senate:
Said host Bob Schieffer, "Bill, you actually have some news, I understand, because you've learned that the Republicans are going to, what, present an alternative to Obamacare?"
11:27 AM, Dec 27, 2013 • By GEOFFREY NORMAN
Seems that New York is about to be overtaken by Florida as the nation’s third most populous state. As Jesse McKinley of the New York Times reports, this is:
10:56 AM, Nov 7, 2013 • By GEOFFREY NORMAN
Their betters from both coasts spent big to enlighten the people of Colorado which, east of the Hudson, is considered one of those square states full of primitives who don’t know what is good for them.
9:45 AM, Nov 7, 2013 • By JERYL BIER
A report issued in September and released this week by the IRS's Treasury Inspector General for Tax Administration (TIGTA) found continuing problems with the agency's Volunteer Program, which provides free tax preparation and electronic filing for "low- and moderate-income, elderly, disabled, and limited-English-proficient taxpayers."
5:22 PM, Oct 24, 2013 • By DANIEL HALPER
Senate majority leader Harry Reid says that "Everybody" is "willing to pay more" taxes. He said so in an interview with a Nevada Public Radio host.
In reducing the role of government in the economy, the U.S. is a laggard. Oct 14, 2013, Vol. 19, No. 06 • By IKE BRANNON
For much of the last century the United States was the world’s beacon for capitalism, but these days we’re far from such a lofty perch. Since the end of the Cold War, countries on both sides of the Iron Curtain have moved to reduce the role of government in the economy by changing the tax code as well as by privatizing government activities.
9:17 AM, Sep 10, 2013 • By DANIEL HALPER
A Grand Rapids, Michigan report on a company that had to lay off over 1,000 people due to the Obamacare medical device tax: