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Entries in Taxpayers (12)

Thursday
Aug162012

Taxpayers Subsidize CEO Pay, Report Says

Justin Sullivan/Getty Images(WASHINGTON) -- The Institute for Policy Studies, a self-described “progressive multi-issue think tank,” analyzed the link between tax loopholes and excessive executive compensation and concluded that the loopholes created an “uneven playing field” between large companies and small businesses and led to lost tax revenue.

The latest edition of the institute’s annual Executive Excess compensation study found that in 2011, 26 CEOs received more in compensation than their companies paid in taxes, and that the four major tax loopholes contributing to excessive executive pay cost taxpayers about $14.4 billion a year.

“The report is timely at a time when the tax debate is so intense in this country,” Sarah Anderson, the institute’s global economy project director and the report’s co-author, told ABC News.  "Some leaders are saying we need to reduce the corporate tax burden even more while major companies are taking advantage of loopholes to lower their tax bill."

The report critiqued the major tax loopholes, including the preferential treatment of “carried interest” income for hedge fund managers.  "Carried interest" income can be taxed as capital gains -- at 15 percent tops -- instead of at 35 percent, the top income tax rate. The Congressional Budget Office's projected estimate for “carried interest” income -- revenue from investment income or dividends -- for 2012 to 2021 was $21.4 billion.

Companies can deduct executive pay as a business expense, just as they do inventory and appreciation. Because of a tax rule enacted in the early 1990s that limited the amount of cash that could be deducted to $1 million, corporations have increasingly paid executives in stock options. Corporations can exempt stock option compensation, and other performance-based pay, from taxation.

William McBride, chief economist with the Tax Foundation, a conservative-leaning nonpartisan think tank, said this makes sense, because stock options are speculative compensation.

“They’re worth nothing unless they’re in the money,” McBride told ABC News. “It wouldn’t be fair to tax someone for getting paid an option that doesn’t have any real value until it has been exercised.”

Steven Balsam, an accounting professor at the Fox School of Business at Temple University, said from a business viewpoint, “it’s an expense, just like any other person’s salary.”

Others defend performance-based compensation for high-performing executives who have overseen companies with increasing earnings and stock prices.

Balsam said it was unlikely that boards would limit executive pay even if their pay was not tax deductible.

Anderson, who co-wrote the report, said that company boards that might choose to forfeit the deduction and continue paying high compensation packages “are stacked with executives from other firms that have a vested interest in maintaining the status quo.  

“However, we need to keep chipping away at the myth that massive payouts are necessary to attract talented managers,” she said. "Having a meaningful deductibility cap would send the right message, and at least taxpayers wouldn’t have to continue to subsidize excessive pay.”

The report points to the largest beneficiaries of the tax loopholes, saying they benefit the most from the unlimited tax deductibility of executive pay because their compensation has the largest proportion of deductible, performanced-based pay.

Oracle’s Larry Ellison, the sixth richest person in the world with a net worth of $36 billion, according to Forbes, tops the list, and is followed by Discovery Communications’ David Zaslav; Viacom’s Philippe Dauman; Motorola Mobility Holdings’ Sanjay Jha; and CBS Corp.’s  Leslie Moonves.

Neither Oracle, Discovery Communications, Viacom and Motorola Mobility Holdings returned calls requesting comment. A spokeswoman for CBS Corp. and a spokeswoman for Discovery declined to comment.

Copyright 2012 ABC News Radio

Wednesday
Jul252012

Health Care Ruling Will Affect Cost of Law, Number of Those Covered

iStockphoto/Thinkstock(WASHINGTON) -- Last month's Supreme Court ruling on the Affordable Care Act has both good and bad news for Americans.

According to an analysis by the nonpartisan Congressional Budget Office, about three million people on the lower rung of the income scale won't have access to free medical coverage as originally dictated by the law.

However, the ruling also means that taxpayers won't be on the hook for an additional $84 billion since the high court ruled that states have the option of not taking part in a major expansion of the government Medicaid insurance program for the poor.

In spite of these changes, the CBO says the Affordable Care Act, which presumptive GOP nominee Mitt Romney says he will repeal if he wins the presidency, will remain mostly intact.

Should Obama be reelected, it would likely mean that 30 million people currently without health insurance will get covered by 2022.

Furthermore, the costs of additional coverage will be offset by new taxes and federal spending cuts that would help to lower the federal deficit, the CBO said.

Copyright 2012 ABC News Radio

Tuesday
Jan312012

Tax Refunds Delayed for Early Filers This Year

Ryan McVay/Photodisc/Thinkstock(WASHINGTON) -- If you're one of the people who already filed your tax returns in the hopes of getting a refund back fast, Uncle Sam has some disappointing news for you.

The Internal Revenue Service says some taxpayers may have to wait a week longer than initially projected to get their money back as it works on tweaking its computer systems to prevent refund fraud.

"The one-week delay for some refunds relates to fine-tuning IRS systems to adjust for new safeguards put in place this tax season to provide stronger protection against refund fraud.  The IRS is providing additional screening for fraud this year before issuing refunds, but the vast majority of taxpayers can still continue to expect to receive their refunds in a timely fashion," the IRS said in an alert.

The delay affects taxpayers who filed returns before Jan. 26, IRS spokeswoman Michelle Eldridge told USA Today.

Copyright 2012 ABC News Radio

Wednesday
Dec212011

'Stupid Projects' Cost Taxpayers $6.5 Billion Last Year

Ryan McVay/Photodisc/Thinkstock(WASHINGTON) -- Most Americans don't have a clue as to where most of their tax dollars are going.  If you're one of them, a new report by Sen. Tom Coburn is bound to make you feel a little ill -- or more than a little furious.

The Oklahoma Republican claims that $6.5 billion was wasted on so-called "questionable initiatives" during the 2011 fiscal year ending last Sept. 30.

Coburn says his study, "details 100 of the countless unnecessary, duplicative, or just plain stupid projects spread throughout the federal government and paid for with your tax dollars this year that highlight the out-of- control and shortsighted spending excesses in Washington."

According to the lawmaker, post-death improper payments are among the most egregious instances of waste that have totaled over $600 million during the past five years. Coburn points to the example of one former government worker's son who cashed his dead dad's checks for 37 years, stealing more than a half a million dollars from taxpayers.

The study also lists a $113,000 federal grant to preserve the history of video games and another $130,000 for robot "dragons" to help preschoolers learn language skills.

Through it all, Coburn points to the real culprit, stating, "There was no bigger waste of the taxpayers’ money in 2011 than Congress itself. The dismal nine percent approval rating, the lowest ever recorded, would indicate the vast majority of Americans would agree."

Copyright 2011 ABC News Radio

Wednesday
Nov302011

IRS Seeks 99,123 Taxpayers for Unclaimed Money

Comstock Images/Thinkstock(WASHINGTON) -- The Internal Revenue Service says it is looking for 99,123 taxpayers to deliver $153.3 million in unclaimed tax refund checks due to mailing address errors.

In an annual reminder to taxpayers on Wednesday, the IRS said the undelivered refund checks average $1,547 this year.

Those who believe they have yet to receive their refund can use the IRS’ online tool, Where’s My Refund? or call the telephone version at 1-800-829-1954 for the status of their tax refunds.

The IRS suggests taxpayers file their tax returns electronically, or at least choose direct deposit through their banks to receive refunds when they file paper or electronic tax returns. Nearly eight out of 10 taxpayers chose to file their returns electronically through e-file last year.

The federal agency said more than 78.4 million taxpayers chose to receive their refund through direct deposit. Taxpayers who receive refunds can split them into two or three financial accounts or buy a U.S. savings bond.

About 45,000 Americans have saved $11 million in U.S. Savings Bonds at tax time with a portion of their tax refund, with an average of $244 per family, according to the Doorways to Dreams (D2D) Fund. The nonprofit, based in Allston, Mass., makes financial products for low and moderate income consumers and raised awareness to encourage Americans to invest a part of their return through The Tax Time Savings Bond Campaign.

Timothy Flacke, executive director of the D2D Fund, said it is likely a large number of the 99,123 taxpayers who are missing their tax refunds are more financially vulnerable — either “unbanked,” those without a bank account, or “underbanked,” those who rely on alternative financial institutions like check cashiers for banking needs.

In testing pilot programs with lower income households in the range of $0 to $45,000,  Flacke found turnover in addresses in that population is very high.

According to the D2D Fund, 73 percent of the 2011 users of the tax time savings bond policy had household incomes, or adjusted gross income, below $50,000.

The tax time savings bond plan was announced by President Obama in September 2009.

Copyright 2011 ABC News Radio

Thursday
Aug182011

AIG Continues to Pay Down TARP Debt

Adam Gault/Thinkstock(WASHINGTON) -- The U.S. Treasury Department Thursday announced that American International Group (AIG) has taken another step to reduce its debt to American taxpayers.  AIG on Thursday submitted a $2.15 billion payment to the Treasury towards a debt that once totaled $180 billion during the country's financial crisis.  Today, AIG's outstanding balance totals $51 billion.

Assistant Secretary for Financial Stability Tim Massad called AIG's payment an "important milestone in [the company's] remarkable turnaround."  

"We continue to make progress in recovering the taxpayers' investment in AIG," Massad added.

Proceeds from AIG's sale of its Nan Shan life insurance subsidiary funded the payment to the Treasury.

To date, the Treasury Department says it has received more than 76 percent of the $412 billion disbursed through the government's TARP program.  Those payments total $313 billion.

Copyright 2011 ABC News Radio

Thursday
May192011

Chrysler Set to Repay US Taxpayers Early?

PRNewsFoto/Chrysler Group LLC, Jim Fets(DETROIT) -- After surviving a near-death experience, Chrysler could pay back its government “bailout” loans as early as next week -- six years ahead of schedule.

Automotive News reports that Chrysler Thursday wrapped up a Wall Street re-financing package that will allow the company to repay American taxpayers nearly $6 billion. The U.S. hopes to eventually recover most of its remaining investment -- around $2 billion -- by selling its ownership stake.

On the brink of collapse only two years ago, Chrysler last month reported its first quarterly profit since exiting bankruptcy.

Copyright 2011 ABC News Radio

Thursday
Mar312011

Treasury Officials Tout 'Success' of TARP, for the First Time Making a Profit

Jupiterimages/Thinkstock(WASHINGTON) -- The much-maligned TARP program moved into the black on Wednesday. On Thursday, Treasury officials touted the success of the program, for the first time making profit.
 
“We made the investments to prevent the collapse of the system,” Tim Massad, acting assistant secretary for Financial Stability, said while meeting with White House reporters in a pen-and-pad off-camera briefing Thursday. “The fact that the investments in the banks will yield a profit is a terrific benefit to shareholders.”

A total of $245 billion total was invested in the bank support program. The new repayments this week have brought the total to $251 billion returned to Treasury this week (plus some income).

“That means every further repayment we get increased the net gain to the taxpayer from the bank piece of the program,” Massad said.

And there’s still some money to get back -- still outstanding is $23 billion “face amount” of investments, mostly in smaller banks. The administration estimates overall profits on the bank program to be $20 billion, as they will continue to collect repayments.

The message to Americans? It was terrible but it won’t happen again.

“It’s terrible we had to do this,” Massad said, “it's never fair to have to use taxpayer dollars to rescue any institution. And that is why we have now reformed out regulatory system with the passage of Dodd-Frank. That gives us the tools to avoid ever having to do this again.”

Asked about former SIGTARP Neil Barofsky saying that TARP was actually a failure because it neglected to accomplish its original goal of helping homeowners on Main Street, Massad said they have more work to do.

“The message is we’re still committed to helping as many people as possible. We still have almost two years under which we can provide assistance under the HAMP program. And everyday we’re trying to help as many people as we can.”

Copyright 2011 ABC News Radio 

Wednesday
Feb092011

Tax Tip: Using Filing Software? Make Sure It's Up To Date

Photo Courtesy - Getty Images(NEW YORK) -- A growing number of taxpayers are becoming increasingly comfortable using computer software to file their returns.

“It’s going to guide you through it, help you find things that you might not have thought of on your own, and have all of the checks in there to make sure that your math is accurate,” said H&R Block’s Kathy Pickering.  “You’d be surprised how many people make simple math errors.”

Proponents of tax-filing software say it’s easy to file electronically.

“If you choose direct deposit as well, that’s when you can get your refund in as few as 10 days,” said Jodie Reynolds at the IRS.

A note of caution: because last year’s tax bill was passed so late, many software makers were forced to ship their products before all the tax code was written.  Make sure to update your software before filing your claim.

Copyright 2011 ABC News Radio

Tuesday
Jan252011

IRS Launches Smart Phone App to Check Tax Refunds

Photo Courtesy - Getty Images(WASHINGTON) -- The Internal Revenue Service introduced a new smart phone app Monday that allows taxpayers to check the status of their tax refunds.

Using the IRS2Go, taxpayers can track down their money by entering some personal information, including Social Security numbers, which the IRS insists will be encrypted for security purposes.

People who file their returns electronically have a distinct advantage because the refund function of the IRS2Go kicks in about 72 hours after the IRS confirms receipt of returns.  Those who file the old-fashioned way will need to wait up to a month for news about their refunds.

The app is available for iPhone and Android users free of charge.  Users will also have the option to receive tax tips and updates.

Copyright 2011 ABC News Radio







ABC News Radio