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: Continue reading
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: Continue reading
Pre-recession, the major narrative was that American households were spending too much and saving too little. Now, we’re saving again, and household debt burdens have declined to their lowest rates in over a decade. Well, pat ourselves on the back; we’re finally getting our fiscal cards in order and setting ourselves on the path to recovery, right?
Unfortunately, it’s not that simple. Our increased thriftiness is not necessarily a sign of changed attitudes and behaviors (although rising frugality has played a role), as much as changed circumstances. Defaults on mortgages and other loans in the aftermath of the recession have removed many debts from household balance sheets. The easy credit of the early 2000s—offering 18 year-olds free t-shirts and pizza in exchange for opening a credit card account, for example—has ended. And, unemployment and declining wages have reduced the creditworthiness of many households. While overspending used to draw calls for concern, now economists worry about consumer spending being too low to successfully spur a recovery.
According to a recent study, the average Canadian household’s net worth (total assets minus total liabilities) is, for the first time in recent history, higher than the average American household’s net worth; more than $40,000 higher, in fact. Is this a triumph of “hardheaded Canadian socialism”? Is it Barack Obama’s fault? (or George Bush’s, depending on the internet commenter’s political persuasion)? Does this even mean anything? Let’s consider a few things before jumping to conclusions…
Portfolio Composition Matters
Talking about net worth is inherently tricky because net worth alone does not tell us much about the relative financial position of a household. We also want to know about the underlying portfolio composition: is their wealth easy to access (liquid) or is it tied up in housing? What type of debts do they have? Take, for example, two households with the same net worth of $25,000. Household A owns a home valued at $100,000 and owes a mortgage of $75,000 on that home. Household B has $5,000 in a checking account; $15,000 in a retirement account; and owes $5,000 on a car that they could sell for $10,000. While A and B technically have the same net worth, A’s net worth is more vulnerable to external market changes as it is entirely tied to the housing market, and they are less able than household B to tap into wealth in the face of unexpected financial emergencies such as job loss, medical crisis, or home repairs.