Sunday, July 09, 2017

Health Care Reform - Tax-Based Changes

Part of the GOP is currently making a last ditch effort to get a repeal and replace healthcare bill passed, while some factions are insisting on a full repeal and others insist on keeping a great deal of Medicaid expansion in place.

While my family and I benefit from some provisions of the ACA, I cannot fully disagree with stepping away from Obamacare. Using the US tax code to help taxpayers cover their health care expenses seems to be a good place to make concessions that could make Trump-care more palatable.

Health Insurance Adjustment for ALL Taxpayers

In Donald Trump's campaign promises regarding health care, he mentioned making health insurance "fully deductible". Currently, the tax code allows for health insurance provided by employers and health insurance for the self employed as adjustments to gross income. However, anyone who is employed and buys health insurance on their own gets the 10% of adjusted gross income limit shaved off of their deduction. This is one example of a glaringly inequitable result in the tax system - especially under Obamacare. If health insurance is an adjustment from income for those who have employer provided coverage and for those that are self-employed - it should be an adjustment for all taxpayers.

Remove the 10% Limit For Certain Medical Expenses

When my boys were diagnosed with Autism, the most effective medical treatment for the disease was not covered by a vast majority of health insurance plans. The cost is high enough that it was impossible for families with incomes under 50,000 dollars to afford. These factor's led my wife and I to pursue her graduate education. We needed to raise our income in order to pay for these major expenses out of pocket.

Unfortunately, when you raise your income your raise your tax debt as well. While we have more money to pay for medical therapies, the IRS eats up a substantial portion without realistic allowances for additional financial costs associated with special needs children.

There are many situations where families that care for special needs or ill family members end up with a major tax bill that they cannot pay because medical expenses devour all available savings and investments. These people either get in deeper debt to pay the IRS, or they pay tax professionals (more debt) to help them request installment arrangements or request offers in compromise (offer's to settle tax debt for less than the amount owed).

If the 10% limitation was removed for catastrophic medical expenses (medical expenses from a single event that exceed 5,000 dollars or more) and medical expenses of the uninsurable chronically ill and/or disabled individuals, these families would be paying taxes on amounts that are more reflective of their actually financial position.

If we are going to get rid of Obamacare, let's provide some real incentives for people to be able to take care of their own medical issues. Taxing people on income with a health insurance adjustment would make health insurance a less painful expenditure. Allowing full medical deductions for those who have to pay medical expenses out of pocket, would make being self-sufficient a much easier pill to swallow for families with disabilities, pre-existing conditions, and other chronic medical problems.

Saturday, June 24, 2017

Health Care Reform

As we stand on the brink of the GOP repealing the ACA and replacing it with there own version, I am forced to grapple with the personal and societal impact of government involvement in health care. When Obama was elected, me and my family was relatively healthy, I considered myself far more conservative than I am now, and I believed that the ACA was something that would grow government to an unsustainable size. As the ACA is about to be repealed, my perspective has been broadened due to health issues of my children and my own health problems. However, I still see the problem of government health care - it increases the size of government and gives Uncle Sam more of a hand in your personal life. The biggest thing that the ACA has done for my family is requiring insurers (including Medicaid) to cover treatments for Autism like Applied Behavior Analysis (ABA). Conversely, the ACA has stretched the budgets of American families that have either paid more for health insurance than they need, or have incurred tax penalties because they did not comply with the ACA mandate. What is the optimal solution for allowing all American's the right to healthcare, or is it a even a right at all? The one thing that is patently clear is that unilateral reform initiatives will leave American's in limbo as power will continue to change hands every 4-8 years.

Tale of Two Brothers

To illustrate the difference of being with and without affordable coverage that covers all our healthcare needs, I would like share my sons' story.

I have two boys that are severely Autistic. Quinn was born in 2006, 4 years before the ACA was passed. Milo was born in 2009, 1 year before the ACA was passed. ABA has been the prescribed treatment for the entire period from Quinn's initial diagnosis in 2008. The problem then was that ABA was not covered by any insurance companies  and it cost more than 30,000 dollars per year. On salary of a Bachelor degreed accountant, that sum would take nearly 75% of my annual salary. In the meantime, I was diagnosed with an autoimmune disease that required a financially painful medication regimen and my second son was also diagnosed with Autism a few years later.

My wife and I decided to change our situation the best we could. Since my long-term health had come into question, we determined that we should invest in my wife's education with the intent that she can be the breadwinner. This took 6 years, but we sacrificed and got my wife through her masters degree. She is now the breadwinner with a good health insurance plan.

Luckily, a few things happened toward the tail end of her education. State law required insurance companies and court rulings related to the ACA required Medicaid to cover ABA. My boys finally started getting therapy in 2016. This is almost 8 years after Quinn was diagnosed, and 5 years after Milo was diagnosed.

Sadly, time is your enemy with Autism. The older a child gets, the more difficult it becomes to treat them with ABA. By the time my wife finished her education, Quinn was almost 10 years old and Milo was 7 years old. The ages 2 to 5 are the most impactful years for Autism treatment. 

The differences in the boys' progress is striking. 

Milo has improved immensely. He is able to participate in mainstream classes at school, makes some eye contact, speaks clearly, is a great problem solver, and can take care of almost all of his functional needs. 

Quinn has also improved as well, but his improvement has not been nearly as drastic. While he is now partially potty trained (a feat that I greatly appreciate) he is still very much trapped in his own world. He still doesn't speak clearly, he requires assistance with most of his functional needs, he makes no eye contact, and spends almost zero time in mainstream classes.

Autism treatment is most valuable at younger ages. From Autism Speaks:

In the study, researchers at The New England Center for Children enrolled 83 toddlers diagnosed with autism in the school’s Early Intensive Behavioral Intervention program. The program, based on the principles of Applied Behavior Analysis (ABA), provided 20 to 30 hours of one-on-one therapy each week. The children were between 1 and 3 years old at the time they began therapy....
While all age groups showed improvements, a much larger percentage of the youngest participants made significant gains in skills during the year of therapy.
* Among the toddlers who entered the therapy program before their second birthday, 90 percent (11 out of 12 children) made significant gains.
* This was true of 70 percent (26 of 36) of those who began therapy between 24 and 29 months of age.
* By contrast, only 30 percent of the children who entered therapy after 30 months of age (11 out of 35) made significant gains across the year. 
Prior to ACA, poorer Autistic kids were generally out of luck because of a lack of services and affordability. In Utah, there was both a lack of services in our home town and the available services were unaffordable until the past few years. Since the ACA and the court ruling that required state Medicaid cover ABA, more children are receiving therapy than ever.

I have concerns that the GOP ACA will make treatment unaffordable and unattainable for many other families of autistic children during the formative developmental years when treatment has the best chance of providing the Autistic child with a normal life.

Big Brother

Socialized healthcare has been a bogeyman in the US since the Cold War. In the fight against the ACA, the right used the popular image of Orwellian death panels that would be tasked with coldly allocating healthcare to only the most important members of society. Other images that socialized healthcare conjures are DMV styled hospitals, where patients are dying in inefficient and poorly managed lines by uncaring bureaucrats.

The ACA definitely has some majorly intrusive requirements for individuals. For a family of six to buy minimum coverage under the ACA, you may be forced to spend between 1,000 and 2,000 dollars per month or face a penalty of 2,128 dollars for 2016 (for income of 100,000 dollars). High earners were required to pay an additional medicare tax on their wages and investment income to help subsidize health care costs.

Worse still, is the fact that health premiums rose drastically each year for almost all Americans and insurance companies are starting to drop out of the ACA Marketplace because it has not been profitable insuring people with pre-existing conditions.

Unilateral Healthcare Reform

The ACA and now the AHCA were both crafted unilaterally. The GOP complained for nearly eight years that they were not given a voice in regards to Obamacare, and in a "tit for tat" move they are doing the exact same thing.

It is this "tit-for-tat" politics regarding health care that is most disturbing. One doesn't need a crystal ball to see that the Democrat's will reinstate Obamacare (possibly a far more left leaning version) as soon as they regain power (which is almost assured to happen with Trump's popularity). This leaves the American people in limbo in regards to healthcare every 4-8 years wondering how will something as important as healthcare change.

Healthcare should not be used as a political pawn.

Making Healthcare Affordable

Principle not politics needs to guide the discussion of healthcare, and until that happens the American people are getting the raw deal.

Personally, I think there must be a better way to help people get healthcare than handing the reins to the Federal government.

As tax professional, government can subsidize healthcare in a less intrusive and more cost efficient manner. If I had the power to enact regulation, I would move to use charitable giving and medical expense deductions to make health care more affordable to more people.

Special status could be given to certain 501(c)(3) organizations that provide financial assistance for the healthcare expenses of the poor. For contributions to these organizations, a taxpayer could be given a generous credit (without income limits) instead of a deduction. Making the credit available for contributions up until the filing deadline (like with the IRA) would allow tax payers to make contributions based on their tax situation (the time when people are most interested in saving tax dollars). This way more healthcare would be subsidized outside of entitlement programs.

Necessary medical expenses should be fully deductible, and health insurance should be an adjustment from income for all taxpayers (not just the self-employed). This would alleviate the burden that people face when they have high medical bills and a tax bill in the same year.

Tuesday, May 16, 2017

Student Loan Repayment and Education Costs - Tax Benefit Approach to Encouraging Loan Repayment

As student loan debt reaches unprecedented levels, it will become important that government officials find methods to reduce the cost of a college education, encourage repayment, and allow debtors a way out if repayment is simply impossible. While reducing the cost of a college education and allowing debtors a way to receive a discharge of student load debt are issues that are beyond the scope of my expertise, utilizing the US tax code to encourage borrowers to repay their loans could be a powerful and beneficial tool to get student loan debt repaid.

There are a couple of misguided principles that currently rule how the tax code encourages American's to get a college education. First, education credits currently end up benefiting parents who  (in many cases) may not pay a dime of the student's educational expenses, or they are only available to the student in years where they have no income. Second is that student loan interest is the only benefit available to student's who are making their loan payments. Unfortunately, the student loan interest deduction is limited to a paltry 2,500 dollars and the deduction is completely eliminated if your income is more that 80,000 dollars (160,000 for taxpayers filing married joint returns). The first principle wastes tax benefits for the student who is going repay the debt, and the second principle doesn't provide a strong enough incentive for students to diligently repay their student loan debt.

Tax Credits for Graduates

Education tax credits would be better utilized if they were carried forward, usable by the student borrower only, and only allowable after graduation from a bachelor or graduate program. This would reduce the number of tax credits that are taken each year by making graduation a prerequisite for claiming the tax benefit. It may also reduce the number of students that attend college each year who lack the direction and intention of graduating with their degrees.

This would also provide new graduates with an income cushion that would make loan repayment a less stressful proposition in the early years of their new careers while their income is lower.

Unlimited Student Loan Interest Deduction

The student loan interest deduction could be made fully deductible. Doing so would provide incentive for repaying the loans and increase the repayment percentages. The deduction could also be tiered between borrowers who finish their degrees and those that do not graduate. If the borrower graduated, the interest deduction could remain a adjustment from income. Borrowers who do not graduate would be eligible for an itemized student loan interest deduction.

Revenue Neutrality

In order to keep this proposal revenue neutral, limits that have been in place against student loan interest (at different levels possibly) should be made to apply against the mortgage interest deduction. The mortgage interest deduction has been a special interest loophole for the mortgage industry and realtors for several years. Unfortunately, it has been a contributing justification for unsustainable increases in home prices across the country for the past 10-15 years and ballooning debt. If we take a utilitarian approach to providing individual income tax benefits, it is clear that providing more tax relief to college graduates is of more value to society than rewarding mortgage debtors. The cost of a completed college education benefits the country with a more competitive workforce and taxpayers with a high earning capacity, while bloated mortgages benefit big banks and the bottom line of realtors that make thousands of dollars on every sales transaction that they close.

Student loan defaults are a major problem facing our nation's budget. Congress must find better answers to encourage loan repayment, and this issue needs to be solved sooner than later. Current student loan default rates are at 11%, but the true rate of non-repayment is far higher if the number of borrowers on reduced or income based repayment plans are taken into account.

Saturday, December 24, 2016

Mormon Tabernacle Choir and the Inauguration

The church has accepted an invitation to sing at Donald Trump's inauguration. The church has a long standing policy of singing at the inauguration of any president that offers an invitiation. There has been 10 inauguration performances since their very first invitation from Howard Taft. The presidents that have offered invites include, Taft, LBJ, Nixon,  Reagan, Bush I, and Bush II. However, many critical of the move feel that Trump's rhetoric and arguably racist policy proposals should have led the church to reject the invitation as a sign of disapproval of the incoming president despite a nearly century old policy of accepting all invitations. Such an arbitrary snub would be a mistake, and there are many reasons why.

Political bans for charities and the LDS church - Policies are like bricks in a wall: As a charitable organization, the church is strictly banned from being involved in political activity for or in behalf of any candidate or either political party. However, the church may be involved in political activity in regards to public policy proposals and issues. There is a clear dividing line. The Church of Jesus Christ of Latter Day Saints follows this mandate and they have policies to make sure lines are not crossed and they do not take risks in regards to their charitable status. Policies build a wall against legal challenges that keep the church safe from scrutiny and from losing their ability to function as a charity in the US. If policies are followed, the wall is strong and legal challenges against their charitable status are thrown out as being without merit. If policies are followed and ignored arbitrarily, the wall is weakened and legal challenges may begin to look like they have merit.

For example, during the course of the presidential campaign and other immigration debates in the past, the church openly condemned Trump's anti-Muslim proposals and they have condemned harsh immigration proposals that pursued merciless deportation of aliens without consideration of the damage that such harsh proposals can inflict on families. These political statements are within the parameters of the law and the policies of the church. However, the church annually disclaims political affiliation to its members and to the public and they avoid the appear of endorsing candidates to the best of their ability.

The church regularly faces accusations of political violations because of their involvement in anti-gay marriage campaigns. As a whole these accusations have been rejected by Federal courts as meritless and frivolous for one main reason. The church consistently applies policies of engaging in public policy debates that involve issues that are important to the church, and avoiding the appearance of being involved in political activities for or against candidates or political parties.

Arbitrarily saying no to Donald Trump's invite would arguably be making a political statement. Since he is a candidate, this would also arguably be in violation of the political ban in IRC 501(c)(3). Given the evangelical right wing's embrace of Trump and their everlasting disdain for Mormons, I would venture to bet that there would be a lawsuit (one with merit) if the decision to arbitrarily rescind their agreement to sing at Trump's inauguration was to happen. The once strong brick wall of consistent policy adherence begins to erode and the church would risk more scrutiny on this issue and possibly even risk their charitable status.

I have heard the argument that the church needs to say "they don't like Trump, but they are only singing to keep right with the law". This would still be a statement that violates the church's neutrality policy, and arguably violates the statute. 

Making friends and influencing people (and more importantly influencing policy: Donald Trump is not an ideal president. The man has character flaws that shine as bright as the sun. I wish there was someone else being inaugurated next month with all of my heart. However, he will be the president. There is nothing short of a military coup that can keep him from being inaugurated. 

Those that suggest the church should squander an opportunity to build a positive relationship with the man that (unfortunately) will run public policy in the US and (arguably) the free world are ignoring the political price of such a petty snub. 

Presidents have traditionally asked for the input of religious leaders on policy proposals that can have an effect on families, cultures, and religious groups. The church has built up a reasonable amount of clout in the US as one of the largest centralized Christian churches in the world. 

Of the many publicly discernible character flaws of Donald Trump, his tendency to engage in petty feuds is one of the most visible. He has been known to engage in petty feuds with anyone who criticizes him for decades. His past enemies include celebrities like Rosie O'Donnell and Alec Baldwin, and politicians like Mitt Romney, Marc Rubio, and Utahn Evan McMullin. McMullin ran a barely noticeable independent presidential campaign that was heavily critical of Trump, and McMullin still draws Trump's pettiness to this day (he recently called McMullin, McMuffin at a "thank you" rally).  

Given the fact that Trump will be making major policy changes, I would rather that the LDS Church be one of the religious groups that this buffoon turns to when making decisions like whether or not to go ahead with Muslim registries or deport 12 million individuals.

If the church engages in petty snubs with Trump, we can all guarantee that they will receive petty snubs in return.

Not to mention the fact that pettiness flies in the face of church doctrine. From LDS scripture D&C 121:43, "reproving betimes with sharpness, when moved upon by the Holy Ghost; and then showing forth afterwards an increase of love toward him whom thou hast reproved, lest he esteem thee to be his enemy".  The church has already reproved this world leader and engaging in a petty snub would lead to being esteemed an enemy - not a wise squandering of political capital.

One of the biggest problem in US politics, is that we have become far to willing to be swayed by passions and act rashly in anger and less willing to consider issues dispassionately with reason and wisdom. Assuming the Russian hacking allegations are correct, this is exactly the flaw in the American people that the Russians played upon to help get Trump elected.  I believe my church leaders are being wise by being guided by and in following long standing policies and church doctrines rather than the angers and passions of short-sighted members and the public.

Sunday, November 27, 2016

Romney v Trump

It appears that Conway has been chosen as the voice regarding Trump's true feelings on Mitt Romney and the fabricated consideration for Secretary of State. For a week now, she has been on the airways discussing how the base views Romney, "People feel betrayed to think that … Romney, who went out of his way to question the character and the intellect and the integrity of Donald Trump … would be given the most significant Cabinet post of all,”  

This is disappointing, but not at all surprising. When the idea of Romney as Secretary of State was floated a few weeks ago, I was skeptical. However, I felt like this may be a moment where Donald Trump might prove me wrong. "Maybe, just maybe, he is not the small handed Napoleon that I took him to be." 

Romney would have been a wise choice. In the 2012 debate, he forecasted the current situation with Russia and Putin better than the Obama administration in any of the succeeding 4 years that they remained in office. Comparatively, he is well liked abroad and in the US. Most importantly, this was an opportunity missed to show some capability on the part of the impending POTUS to handle differing points of view (something he seemed incapable of during the campaign on even the GOP side of the isle). He could have taken this opportunity to make GOP #neverTrump people step back and take another look at him as a leader and a POTUS.

Unfortunately, Trump is predictable. He may through one or two critics in the cabinet, but as a whole he will fill the cabinet with yes-men, cronies, and cheerleaders of him and whatever policies he pursues. This coming administration will come with a heavy price for the GOP and conservative politics for many years to come.

Wednesday, November 16, 2016

Social Security - Changing the Way We Look At Things

So, social security is a big issue for me. With severely disabled kids, I realize that my sons may be extremely dependent on social assistance at some point in their life. Social security is a big resource for assistance to disabled individuals. Soon recipients will out number contributors. This is a disastrous set of circumstances for a retirement system that operates as a Ponzi scheme. The fact that we have not taken appropriate steps to make social security viable for retirees and the disabled is very concerning. Honestly, this should be the biggest domestic concern for all Americans.
This meme is (well) stupid. Social security is a legal Ponzi scheme (I understand, that wasn't the intent of the law when it was framed) but that's what it is. Americans need to get that fact.
Sadly, politicians keep punting this issue to the next generation with worse field position each time. President Trump seems determined to punt yet again, and sadly I fear that this punt will leave us pinned with our backs to the wall and no real way to escape a full collapse of the Social Security system.
We need to stop looking at Social Security as money in the bank and rather look at Social Security as money stolen from future generations. Heavy social security tax hikes or severe cuts are inevitable in order to avoid a real financial meltdown, and these things should be happening now.
I understand Social Security helps many American retirees and disabled individuals, but we need to be honest about Social Security. Social Security doesn't save anyone money, and it never has. It is a welfare program, falsely advertised as retirement savings. Benefits are paid from those that work to those that are not or no longer working. The longer we keep maintaining the status quo the larger the potential disaster becomes.

Tuesday, November 15, 2016

Trump and Hillary - The Election and Campaign of the Impeachables

During this election cycle,  people spent far too much time wringing there hands about voting for the lesser of two evils. The left is continuing to suffer needlessly. There is a simple fact that could have saved and can save alot of agony - both candidates were and are destined for scandal, possible impeachment, and/or single terms.

Hillary's email issues would have crippled her presidency with ever persistent hearings and innuendo of criminal charges. However, she wasn't elected and her demise is not at issue.

Trump has issues and they are plentiful. He is currently dealing with numerous lawsuits related to his companies and most importantly for Trump University fraud allegations. In his forming administration, there are numerous possible conflicts of interest, he doesn't seem to see problems with nepotism, and he has appointed an alleged anti-Semite to his administration. The problems continue. He was caught on tape admitting to what can only be described as sexual assault (or at least indiscretions) with the President-elect citing the fact that being a celebrity allows him to "do whatever he wants to women". He has further threatened to sue women who have alleged to have suffered his sexual advances. There are so many possible avenues of disgrace for the Democrats to lead him through.

The left should look at Donald Trump as a gift. If they play the hand they have been dealt properly, they can ensure the Democratic party several years of Congressional and Executive branch control of the Federal government.

Trump has been looked at as a businessman of questionable integrity for my entire life. From his use of eminent domain to take private property for his businesses, to bilking contractors, to bankruptcies, and so forth. He has been willing to attach his name to anything for the right price for years. Unfortunately, some of those things with his name attached are coming back to haunt him. Trump University sought to capitalize on the private university market of the past 10 to 20 years. However, like many private for profit universities, they took money and provided nothing of value in return. The degrees were useless, and now students are coming back for damages. This can be a huge black eye, and source of impeachable evidence against the Trump administration.

Trump is moving to have his three competent children made members of his administration, and he is planning to hand control of his businesses to these same children. There are two huge issues here. Nepotism, from what I understand, is pretty strictly prohibited in the federal government. The children having access to the president and sensitive data, and controlling the presidents businesses creates conflicts of interest as large as Mount Everest. This needs to be monitored very heavy for inappropriate use of privileged information, security information leaks, the qualifications of his children for high level positions in the administration, and mishandled conflicts of interest by the Trump kids. The possible problems here are massive and the potential for scandal is equally as massive.

Donald Trump has threatened to sue his victims. The left should do all they can to ensure that this happens. He has already confessed to being a serial sexual harasser - he even provided motive. The motive he provided is even chillingly similar to the motive many cite for rapists. Donald Trump felt like he could treat women like objects because his celebrity status gave him the power. The left should do all they can to make him end up in court facing these women.

I actually consider myself a conservative. However, we need to be honest. The GOP elected a time bomb waiting to explode. Any sensible Trump advisors will seek to dismantle these traps as quickly as possible. If the wounded left knows their game, they should and will seek to exploit these traps at every opportunity.