Sunday Poll: How Should Illinois Increase Revenue To Fund Road Maintenance?

Due to budget issues Illinois has been delaying road maintenance for many years, an issue in the current race for Governor.  The following, from a 2016 article, explains the options as outlined by the Metropolitan Planning Council (MPC):

GAS TAX
The MPC argues the state will need to raise $2.7 billion a year, half to spend and half to go towards bonds:

This is equivalent to a $0.30/gal increase in state motor fuel taxes and a 50 percent increase in vehicle registration fees. The tax and fees should be indexed to the consumer price index to keep pace with inflation. MPC recommends the state constitution be amended to create a transportation trust fund to protect this revenue. To acknowledge the effect of these increases on lower- and middle-income Illinoisans, the state earned income tax credit should double to 20 percent of the federal amount.

Because the state’s motor fuel tax has been unchanged for so long, Illinoisans are paying far less for road maintenance today when inflation is calculated:

The Illinois Senate has used the MPC’s estimates to draft legislation that would raise the gas tax by 30 cents, making it the highest gas tax in the nation.

Of course, not everyone is happy with that proposal. The Illinois Chamber of Commerce says Illinois needs to look into other options to fix roads. The Chamber’s recommendation includes an increased state income tax and a lower wholesale gas tax, while getting rid of some tax exemptions for goods like food and medicine.

MILEAGE TAX

Senate President John Cullerton has proposed a different way to get around a gas tax hike; a mileage tax. Illinoisans would pay 1.5 cents per mile in one of three payment options. From the Daily Herald:

Drivers could have a device that tracks the miles through geolocation technology, charging only for the miles driven on public highways and roads.

Alternatively, they could have an odometer tracker, which reports only number of miles driven, not where. The downside to this, notes Susan Martinovich of CH2M, an environmental and engineering consulting firms, is that drivers would be charged for miles driven out of state.

Finally, Illinoisans could opt out of installing any devices and pay a flat mileage tax of 1.5 cents per mile for 30,000 miles.

A mileage tax would also help the state raise revenue even as gas usage declines, thanks to better fuel efficiency and electric cars. The MPC’s plan also recommended Illinois stop raising funds tied to gas purchases eventually. It pushed for a mileage tax system by 2025. (GovTech.com)

So the question is how should Illinois proceed? Today’s poll includes the options listed above along with an option for “do nothing” and “unsure”. The poll’s options are presented in random order.

This poll will close at 8pm tonight.

— Steve Patterson

Free Options For Filing Your Taxes

The question in the recent non-scientific Sunday Poll was a bit of a trick. Let’s see the results and then I’ll explain:

Q: How will you file your 2017 taxes?

• Free File via online software 5 [20%]
• Free File via fillable forms 0 [0%]
• Manually on printed forms 1 [4%]
• Software 7 [28%]
• Accountant 6 [24%]
• Service like H&R Block, Liberty Tax Service, etc 5 [20%]
• N/A — don’t need to file 1 [4%]
• Unsure/No Answer 0 0%

The IRS’ “Free File” page is largely a listing of 12 different online software sites that offer, to those who qualify, a free option. The criteria varies, for those with an adjusted gross income over $66,000 the IRS offers free fillable forms.

In the poll those who selected “software” are likely using one of the 12 listed by the IRS, though their incomes may disqualify from using them for free.

The following are the 12 Free File Software Offers:

Free Tax Returns.com
Receive a free Federal return if:

• Your Adjusted Gross Income is $66,000 or less, AND
• Your age is 70 or younger, AND
• Live in any state, except: FL, NV, TN, TX, WA or WY
• Same criteria apply for free state return(s) for some states

FreeTaxUSA® Totally Free SM
Receive a free Federal return if:

• Your Adjusted Gross Income is $51,000 or less, AND your age is between 17 and 61
• Same criteria apply for free state return(s) for any state

1040NOW.NET
Receive a free Federal return if:

• If your Adjusted Gross Income (AGI) is $66,000 or less
• You live in one of the following states: AL, AR, AZ, CA, GA, IA, ID, IN, KY, MI, MN, MO, MS, NC, ND, NY, OK, OR, RI, SC, VA, VT or WV

OR

• Your AGI is $66,000 or less and you are 60 or younger and
• You live in one of the following states: CO, CT, DC, DE, HI, IL, KS, LA, MA, MD, ME, MT, NE, NJ, NM, OH, PA, UT or WI
• Same criteria apply when filing with a foreign address

H&R Block’s Free File
Receive a free Federal return if:

• Your Adjusted Gross Income is $66,000 or less, AND your age is between 17 and 50, OR
• Same criteria apply when filing with a foreign address
• Same criteria apply for free state return(s) for any state

eSmart Free File Edition
Receive a free Federal return if:

• Your Adjusted Gross Income is $66,000 or less, AND your age is 54 or younger

Online Taxes at OLT.com
Receive a free Federal return if:

• Your Adjusted Gross Income is between $14,000 and $66,000
• All Ages
• Same criteria apply when filing with a foreign address
• Same criteria apply for free state return(s) for any state

1040.com Free File Edition
Receive a free Federal return if:

• Your Adjusted Gross Income is $60,000 or less, AND your age is 52 or younger, OR
• You are eligible for the Earned Income Tax Credit
• Same criteria apply when filing with a foreign address
• Same criteria apply for free state return(s) for any state listed above

TaxSlayer
Receive a free Federal return if:

• Your Adjusted Gross Income is $66,000 or less AND your age is 52 or younger
• Same criteria apply when filing with a foreign address
• Same criteria apply for a free GA state return

TaxAct®Free File
Receive a free Federal return if:

• Your Adjusted Gross Income is $53,000 or less AND your age is 56 or younger, OR
• You are eligible for the Earned Income Tax Credit
• Same criteria apply when filing with a foreign address
• Same criteria apply for free state return(s) for any state

FileYourTaxes.com
Receive a free Federal return if:

• Adjusted Gross Income is between $9,000 and $66,000 or less, AND your age is between 15 and 65
• Same criteria apply when filing with a foreign address
• Same criteria apply for free state return(s) for some states

ezTaxReturn.com
Receive a free Federal return if:

• Your Adjusted Gross Income is $66,000 or less, AND you live in any of these states: AL, AR, AZ, CA, CO, GA, IL, LA, MA, MD, MI, MO, MS, NC, NJ, NY, OH, PA, SC, VA or WI
• All Ages

TurboTax ® All Free SM
Receive a free Federal return if:

• Your Adjusted Gross Income is $33,000 or less, OR
• You are eligible for the Earned Income Tax Credit
• All Ages
• Same criteria apply when filing with a foreign address
• Same criteria apply for free state return(s) for any state

I personally use TurboTax ®, but another might work best for you. Too many choices? The IRS has a tool to help you decide. Out of curiosity I put in our info and it showed me 6 software sites with free federal & state returns, and listed the remaining 6 with free federal only.

With the possibility of another government shutdown next week and scammers filing fraudulent returns I wouldn’t delay.

— Steve Patterson

Sunday Poll: How Will You File Your Taxes?

The federal government is reopened. at least temporarily, so the IRS will be anticipating your 2017 tax return. The tax season begins tomorrow:

Although the IRS will begin accepting both electronic and paper tax returns on January 29, 2018, paper tax returns will be processed later, in mid-February, as system updates continue. The IRS strongly encourages people to file their tax returns electronically for faster refunds

The filing deadline to submit 2017 tax returns is April 17, 2018.  That’s because April 15 falls on a Sunday in 2018. That would normally result in a move to the following Monday (April 16, 2018). However, Emancipation Day falls on Monday, April 16 this year. Since that’s a legal holiday in the District of Columbia, the tax filing deadline will be pushed ahead for all individual taxpayers to Tuesday, April 17, 2018. (Forbes)

In years past I’ve had to file extensions, now I file as soon as I get all our W-2s & 1099s. Today’s poll isn’t about when you’ll file — but how you’ll file. The options are numerous:

The answers above are presented in a random order. this poll will close at 8pm tonight.

— Steve Patterson

Opinion: Tax Bill Xmas Gift a Lump of Coal for Many

The recent non-scientific Sunday Poll asked about the Fair Tax Act of 2017. I made it the Xmas-eve poll topic because of the president characterizing it as a gift.

It’s a gift alright…for the wealthy. For the rest of us it appears like a gift…but within a decade it turns to coal.

In trying to justify the Republican tax bill, conservatives are quoting Bernie Sanders, of all people. The problem is that they’re taking the Vermont senator out of context.

In an interview last week, CNN’s Jake Tapper asked Sanders, “Next year, 91 percent of middle-income Americans will receive a tax cut. Isn’t that a good thing?”

“Yeah, it is a very good thing, and that’s why we should have made the tax breaks for the middle class permanent,” Bernie replied. “But what the Republicans did is make the tax breaks for corporations permanent, the tax cuts for the middle class temporary.”  (Conservatives take Bernie Sanders out of context to justify their tax bill | Salon)

Yes, those cuts designed to thrill Trump’s base are minor and temporary. He’ll be out of office before they realize what happened..if they realize it even then.

The Tax Cuts and Jobs Act of 2017 has nothing to do with economics. It is pure politics. Economists struggling to understand the unwieldy legislation are like biochemists attempting to explain contemporary ballet. Nobody seriously believes that the bill will boost growth. Everybody knows that it will massively increase the deficit; the only argument is whether it will be by $1.5 trillion, or just $1 trillion. The legislation has been drafted at breakneck pace, with few opportunities for costings or analysis: a recipe for errors. Senator Elizabeth Warren joked that she spent more time choosing her new refrigerator than the Senate managed for tax reform.  (The new tax plan is the worst Christmas present for the middle class | Brookings)

But it’ll help the middle class…

There are elements of the bill that help middle-class Americans. It nearly doubles the standard deduction—the amount taxpayers can deduct from the annual income figure on which they’re taxed—to $24,000 for families and $12,000 for individuals. At the behest of Sen. Marco Rubio (R-FL), the final version of the bill hikes the child tax credit, allowing parents to subtract $2,000 per child from your tax bill. (Both changes are temporary, set to expire along with the individual tax cuts in 2025.)

But ultimately this is a bill for businesses and the people who own them. “The most important part of this tax reform is the corporate tax reform,” says Dr. Wayne Winegarden, an economist with the Pacific Research Institute, a free-market think tank. “How each individual is going to fare will depend on their unique circumstances.”

Many small businesses in the United States known as “pass-through” companies—after the way income “passes through” to their owners—are currently taxed as individuals. The tax bill will grant these businesses a 20% deduction. But the jury is out on whether the windfall for businesses will contribute to significant economic growth as Republicans claim, or whether corporations will pump their profits into hiring more employees.

In other words, the new bill will be a test of trickle-down economics, the Reagan-era economic policy that many experts now consider a flawed theory. Even some Reaganites are unimpressed by the legislation.
(The GOP Tax Bill Isn’t for the Middle Class. And It Was Never Meant to Be | Time)

Many know trickle-down doesn’t work…just look at Kansas for a recent example:

For five years, Kansas’s Republican governor, Sam Brownback, conducted the nation’s most radical exercise in trickle-down economics — a “real-live experiment,” he called it. He and the GOP-controlled legislature slashed the state’s already-low tax rates, eliminated state income tax for most owner-operated businesses and sharply reduced vital government services. These measures were supposed to deliver “a shot of adrenaline into the heart of the Kansas economy,” Brownback said.

It ended up being a shot of poison. Growth rates lagged behind those in neighboring states and the nation as a whole. Deficits mounted to unsustainable levels. Services withered. Brownback had set in motion a vicious cycle, not a virtuous one. 

Last week, finally, the legislature — still controlled by Republicans — overrode Brownback’s veto of legislation restoring taxation to sane levels. The nightmare experiment is coming to an end.
(Trickle-down economics is a nightmare. Kansas proved it. | The Washington Post)

The poll results:

Q: Agree or disagree: the massive federal tax cuts “will be an incredible Christmas gift for hard-working Americans.”

• Strongly agree 4 [12.9%]
• Agree 2 [6.45%]
• Somewhat agree 2 [6.45%]
• Neither agree or disagree 2 [6.45%]
• Somewhat disagree 1 [3.23%]
• Disagree 3 [9.68%]
• Strongly disagree 16 [51.61%]
• Unsure/No Answer 1 [3.23%]

This tax code change will be a disaster for those of us not in the top income brackets.

— Steve Patterson

Sunday Poll: Tax Cuts Bill a Great Xmas Gift for the Middle Class?

On Friday President Trump signed a bill making major changes to our tax code.

The bill reduces the corporate tax rate to 21 percent from 35 percent and supporters argue that will make U.S. business more competitive overseas. Many pass-through businesses also receive a 20 percent deduction. 

It lowers individual tax rates, including trimming the top bracket to 37 percent from 39.6, while doubling the standard deduction and replacing personal exemptions with a $2,000 partly refundable child tax credit. The law eliminates various deductions while limiting others on state and local taxes and mortgage interest. (NBC News)

Earlier last week Trump had this to say about the bill:

“They’re going to start seeing the results in February. This bill means more take-home pay. It will be an incredible Christmas gift for hard-working Americans. I said I wanted to have it done before Christmas. We got it done,” Trump said. (ABC News)

With Christmas tomorrow I thought I’d ask readers their view of the bill.

This non-scientific poll will close at 8pm.

— Steve Patterson