Category: Taxes

The Huge Healthcare Subsidy Hiding in Plain Sight

EDWARD D. KLEINBARD, professor of law, USC Gould School of Law.

This op-ed originally appeared in the Washington Post on Oct. 15.

The political right has paralyzed government over the implementation of the Affordable Care Act, on the grounds that the ACA represents an unacceptable government intrusion into what today is the province of private markets. But the premise is fundamentally untrue.

Government’s hand has long shaped and subsidized health-care markets, for example, in Medicare and Medicaid (which dominate how medical care is organized and delivered in America, even for care that falls outside their reach), or the requirement that hospitals treat urgent care needs of indigents.

A Low Tax Burden — and Still Complaining

EDWARD D. KLEINBARD, professor of law, Gould School of Law.

This op-ed originally appeared April 22 at CNN.

Tax day may be over, but many Americans are still suffering from tax hangovers.

If it’s any consolation, here’s our country’s best-kept fiscal secret: According to the Organization for Economic Co-operation and Development, Americans in 2012 enjoyed the lowest tax burdens as a share of our national economy of any developed country in the world.

How can it be that we feel so much tax pain, but compared to other developed countries our tax burdens are so low?

There are three reasons.

Zuckerberg’s Tax Burden: $2 Billion and Done

EDWARD J. McCAFFERY, professor of law, Gould School of Law.

This op-ed originally appeared at CNN on April 9.

So, you think you have it bad this tax season. Have you heard that Facebook founder Mark Zuckerberg will pay between $1 billion and $2 billion in taxes? That sounds like a tough pill for anyone to swallow.

But it is premature to start a pity party for Zuckerberg. The twenty-something billionaire reaped large financial gains from exercising the stock options that triggered his tax bill, and he has benefited from favorable tax rules along the way. Even better, Zuckerberg will survive his encounter with the tax man in a position to never have to pay taxes again for the rest of his life.

Mickelson’s in a Tax Trap

EDWARD J. McCAFFERY, professor of law, economics and political science, USC’s Gould School of Law.

This op-ed originally appeared at CNN on Jan. 25.

Phil Mickelson, aka Lefty, is thinking of leaving California and perhaps America because, according to his own reckoning, he is facing tax rates of 62% or 63%. Mickelson, probably the second-most-famous professional golfer in the world after Tiger Woods, later backed off from his initial comments about making “drastic changes.”

Reports suggest that Mickelson earned more than $60 million in 2012. In that sense, he appears to be doing better than the Romneys, and perhaps you are not all that sympathetic to him.

A Ramp Away From the Fiscal Cliff

EDWARD D. KLEINBARD, professor of law, USC’s Gould School of Law.

This op-ed originally appeared at CNN on Nov. 30.

America’s fiscal policy faces an apparent Hobson’s choice. On the one hand, we need to tame federal deficit spending by imposing new across-the-board spending cuts and higher taxes. We are told that if we do not act on this soon, the debt markets will choke on the overabundance of government debt issued to fund those deficits, causing interest rates to climb. As a result, businesses and homeowners will be unable to borrow on reasonable terms, which will lead to a slowdown of the economy.

A Hail Mary to Save Proposition 30

DAN SCHNUR, director of USC’s Jesse Unruh Institute of Politics.

This op-ed originally appeared in the Los Angeles Times.

Since the day he took office, Gov. Jerry Brown has been on a crusade to convince Californians that he is not just fiscally responsible but downright stingy. During his first week as governor, he ordered thousands of state workers to give up their government-issued cellphones. Since then, he has negotiated to rein in pensions for public employees, initiated welfare reforms that were included in the last budget and bragged about his preference for flying Read more →

The Great Diversion: Romney’s Taxes

EDWARD J. McCAFFERY, professor of law, economics and political science, USC’s Gould School of Law.

This op-ed originally appeared at CNN.

By now, most of us have probably heard that Mitt and Ann Romney paid just under $2 million in taxes on income — virtually all from investments — of just under $14 million for 2011, an effective tax rate of 14.1%. This is a low tax rate, lower than the typical middle-class American worker pays, especially when one considers payroll taxes, the largest burden for most Americans. It should concern us that individuals of Romney’s wealth — analysis has put his personal fortune as high as $250 million, not counting some $100 million in trusts set up for his five children — pay so little as a percent in taxes.

Some Call It Tax Planning — Or Is It Tax Cheating?

EDWARD D. KLEINBARD, professor of law, USC Gould School of Law.

This op-ed originally appeared in the Los Angeles Times.

For citizens hoping for serious tax policy and budget debates, this has been a dispiriting election cycle. One party urges tax rates too low to support any plausible platform from which government can deliver the services we all expect.

Those are the Democrats.

The other party inhabits a realm of fantasy akin to Erewhon, the fictional land created by the 19th century satirist Samuel Butler. In Erewhon, Butler wrote, “If a man has made a fortune … they exempt him from all taxation, considering him as a work of art, and too precious to be meddled with; they say, ‘How very much he must have done for society before society could have been prevailed upon to give him so much money.'”

Profiles in Tax Avoidance

EDWARD D. KLEINBARD, professor, USC’s Gould School of Law, and Peter C. Canellos, former chair of the New York State Bar Association Tax Section.

This op-ed originally appeared at CNN.

Mitt Romney’s refusal to release tax returns in the critical years of his income accumulation has done little to dispel the legitimate concern that arises from hints buried in his scant disclosure to date: Did he augment his wealth through highly aggressive tax stratagems of questionable validity?

One relevant line of inquiry, largely ignored so far, is to examine what exists in the public record regarding his attitude toward tax compliance and tax avoidance. While this examination is hampered because his dealings through his private equity company, Bain Capital, are kept shrouded, there are other indicators.

Romney’s Tax Disclosure Forms Overdue

EDWARD D. KLEINBARD, professor of law, USC’s Gould School of Law, and PETER C. CANELLOS, former chair of the New York State Bar Association Tax Section.

This op-ed originally appeared at CNN.

By announcing that he will release no further tax returns beyond his 2010 and 2011 returns, Mitt Romney appears to have exempted himself from the proud bipartisan tradition of presidential nominees displaying genuine financial candor with the electorate.

What is more, his disclosure to date is in the wrong direction: It is the release of Romney’s past returns, not his current ones, that matters.