Tax Day Round-Up

 

As we all know, today marks one of the clearest-cut deadlines of the year: Our Federal income taxes are due. (And, if you didn’t know, you’ve got until midnight.) Yes, the IRS does grant extensions, making it more generous than many teachers I know. But, for most of us, today is it.

According to Virginia Senator Mark Warner, “Our taxpayers deserve to know how their federal funds are spent–dollar for dollar–and it is the government’s obligation to share that information in a clear, accessible way.” Acting on this conviction, Senator Warner has sponsored the Senate’s Digital Accountability and Transparency (DATA) Act along with Republican Ohio Senator Rob Portman. According to the Committee on Oversight & Government Reform, this bi-partisan bill “[allows] taxpayers to trace every dollar spent by federal agencies and help lawmakers more easily identify fraud, waste and abuse to create a more efficient government.”

A previous version of this bill passed the House with strong bipartisan support in November, and an amended version was unanimously passed by the Senate on April 10. It is projected that this updated bill will soon pass through the House, and come to the president later this spring for his approval or veto.

Under the DATA Act, taxpayers will be able to access checkbook-level data on Federal payments. Big Data–a phrase likely to conjure concerns over privacy, and often misunderstood–can help as we attempt to hold our government to higher standards of accountability.

On a day like Tax Day, though, there are plenty of other fun ways to use data, and data visualizations, to understand more about one of the two certainties in life. Here are some online resources on taxes in the US:

Why Virginia Needs a New Poverty Measure

How many of us are poor?

Answering that question is not as easy as one may think.  Yes, we do have an official poverty statistic that is produced by the U.S. Census Bureau, but nobody likes it.  Many on the Left think it is too low, failing to capture the full array of expenses that families face.  Folks on the Right think it is too high because it does not account for the effects of many anti-poverty programs and tax credits on family budgets.

Even the Census Bureau is not entirely satisfied with current poverty statistics.  As they continue to produce the official measure, they have recently been releasing alternative statistics through the “Supplemental Poverty Measure” (SPM) program.  These new numbers reflect a more nuanced look into poverty, and are widely believed by researchers and the media to better capture the actual financial circumstances of American families.

But the SPM has its limitations.  Primary among them is that the new measure is designed for the national level.  State estimates are only available as three-year averages, and local-level estimates are not available at all.

This is unfortunate for a state like Virginia, which has wide regional inequalities in terms of economics, education, and even basic demographics.  Because of this, official poverty statistics don’t make sense in Virginia.  A one-size-fits-all measure that defines poverty in Northern Virginia the same as it does in coal country does not work and belies our commonsense understanding of the actual resources and costs families face across regions.  A better method is needed.

Today, the Cooper Center is releasing its work on a new “Virginia Poverty Measure” (VPM) that will provide SPM-like estimates for Virginia and its local regions.

…And now the “96 percent”

Yesterday’s post ended with an allusion to the “Hidden Welfare State” and the world of tax expenditures.  Households across all income categories are the beneficiaries of government assistance programs, and the oft-reported 49 percent who receive some type of government benefit is true only in a narrow sense.  So, in the end, how many of us actually receive government benefits?

“47 percent” and other statistics

Last week’s release of the now infamous Mother Jones video of Romney’s comments  on the “47 percent” of Americans who don’t pay income taxes has everyone talking about the U.S. tax system.  Despite this election cycle’s relative dearth of substantive, detailed policy discourse, the campaigns and the media have indeed provided the public with a lot of useful information on the way taxes work in this country.  The terms “Capital Gains” and “carried interest” have entered the common vernacular and it seems that everyone now knows about the “Buffet Rule” and the tax rates for certain types of income.

If any good has come out of Romney’s comments on the “47 percent,” it is that the public now has a better understanding of those folks who have been labeled by some on the right as “lucky duckies.”  The left has been quick to argue that these lucky duckies are actually not so lucky; and by now many of us have seen or heard the statistics complied by the non-partisan Tax Policy Center:

Refund anticipation loans ending in 2012

This year marks the end of bank-provided tax refund anticipation loans.  Refund anticipation loans (RALs) are short-term loans with high interest and fees that are based on a filer’s expected tax refund (minus tax preparation fees, loan fees, and interest).  RALs provide access to tax refund money about 7-9 days earlier than if the filer received a direct deposit from the IRS.

Like other short-term, high-cost loans, RALs can pose serious threats to the economic well-being of individuals and families.  Of concern to both policy makers and the broader public is that RALs undermine tax assistance for the working poor.  In Virginia in 2008, 7 percent of Virginians receiving tax refunds (nearly 200,000 filers) requested RALs.  Nearly two-thirds of RAL applicants received the Earned Income Tax Credit (EITC), a federal anti-poverty program targeted at low-income households that work.  Chi Chi Wu and Jean Ann Fox of the National Consumer Law Center estimate that nationwide RALs drained $255 million from the federal EITC program in 2010.