Health coverage.

insurance

So, I am in a situation where I am currently without health coverage.  I don’t get too worried because I am generally healthy but it’s not ideal and I would like to be covered.  Unfortunately, I can’t get covered through my current employer and after talking to a representative for my home state, it’s become quite clear that there is no affordable coverage option.  The mid-level “silver” plan would be over$2000 a year with a $2000 deductible and many of the services I would need wouldn’t be part of the amount counted toward meeting the deductible.  On top of that, it would only be health coverage, not vision or dental which I really do need as well.  That would be even more money and not offered through the exchanges.

At that amount, I’m be better off paying out of pocket and eating the fine I’ll get at the end of next tax season because it will be cheaper than paying the premiums and the out-of-pockets toward reaching my deductible.

I truly do believe that public health should be mandatory but the average citizen is being given an “unfunded mandate” much like NCLB.  The tax deduction the government is offering me to offset the monthly premium is a joke.  I don’t see an affordable option with adequate coverage being offered.  Expand Medicare for all and take the for-profit angle out of the health coverage equation to offer a universal and affordable system to cover everyone. 

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Stupid finance articles that don’t provide an accurate picture of what is really going on in America.

uncle-sam-taxes

I saw this in a Yahoo News article this morning:

http://finance.yahoo.com/news/10-worst-states-taxes-2014-110000784.html

It was talking about the worst states for taxes and of course, New York topped the list.  The figures they quoted were:

Top State Income Tax Rate: 8.82 percent
Sales tax: 4 percent
Property taxes per capita: $2,280

These numbers are completely misleading.  Yes the state sales tax may be 4% but when combined with the city sales tax, it’s significantly higher.  For New York City, there’s a website that breaks it down and talks about how different consumer goods are taxed.

http://www.nyc.gov/html/dof/html/business/nys_sales_tax.shtml

Take a look at these samples of city sales tax:

New York City– 8.875%

Buffalo – 8.75%

Congers – 8.375%

Ithaca – 8%

Liberty – 8%

Lake Placid – 8%

Greenburgh – 7.375%

Saratoga Springs– 7%

From this sampling and looking through lists of sales tax by city at this website, http://www.sale-tax.com it’s plain to see that most of New York State is hovering around 8% sales tax.

http://www.tax.ny.gov/pdf/current_forms/it/it201i_nys_tax_table.pdf

Looking at New York State income tax rates for someone making $40,000 as a single filer, the taxed owed is $2,256.  Assuming all $40K is taxable income, that would give a rate of 5.64%  This seems like an awfully high percentage for someone making a less-than-middleclass salary (and yes, I understand that tax is calculated in brackets and the higher percentage rates only apply to the amount of income over the lower bracket).

lego home

Now on to property taxes.  Oh boy.  As a resident of New York, I know for a fact exactly what some of my neighbors are paying in property taxes.  Most are average middle class people with reasonably sized homes (no McMansions) who are pay between $8000 and $10,000 a year in property taxes for a moderately-sized  family home on 1 acre of land (2-3 bedrooms with parents and two children).  What is even harder to believe is that this amount is considered LOW for the area we live in.  When taking to the local assessor’s office, many of them have been told to suck it up and forget about a tax grievance because “Have you seen what your neighbor with the newly constructed McMansion is paying?!?!?  Stop complaining.”  I’ve heard that new construction in the area is often upwards of $15,000 a year in property taxes.

It really frustrates me that no one is reporting the facts of just how much people are losing from their hard-won salaries to try to keep a roof over their heads and food on the table.  What also bothers me is all the reports about the numbers of unemployed.  My parents always told me: whatever the reported percentage of unemployment or number of jobless, DOUBLE that number.  The jobless rates reported are only taken from the people receiving unemployment benefits so it will never capture people who are unemployed but no longer eligible for unemployment benefits, people who were in jobs that didn’t qualify them for unemployment when the job ended, or they are working but so under-employed (a day or two a week, working sporadically) that their income is negligible.

The reality is so much grimmer than is even being discussed and I can’t believe that articles like this pass for factual news.

unemployment

A close look at federal income tax rates.

While filling out some financial paperwork today, I was asked to state my federal tax bracket.  I found a handy dandy little tool from Bankrate.com (though there are many others available as well, so no specific endorsement here).

I did a little work with this calculator to find out how much, on average, people at different income levels are (in theory) paying in taxes.  I know that there are differences based on itemized deductions, dependents, etc.  For arguments sake and keeping it “apples to apples” we’ll ignore that for now.

If you are a single person with no dependents making $50,000 (a decent salary in many areas of our country), your tax rate  is 12.5%, and with the standard deduction you will pay $6,250 in federal taxes.
At this income level, if you are married and file jointly, your tax rate drops 4.9 points to 7.6%, making your taxes $3,800.  By the way, I think it’s inappropriate for the government to financially incentivize marriage and procreation, but that’s another topic.
To give more comparisons:

Annual Income

Tax Rate

Tax Rate

Income Taxes Paid

single

MFJ

single

MFJ

30,000

8.83%

3.67%

$2,650

$1,100

100,000

18.96

12.5%

$18,975

$12,500

500,000

29.8%

27.64%

$148,989

$138,222

1,000,000

32.4%

31.32%

$323,989

$313,222

10,000,000

34.74%

34.63%

$3,473,989

$3,463,222

If you’ll notice, the income tax rates begin rather high and ratchet up quickly until you get to the seven-figure mark where they level off.  Now, I know that for many Americans, $30,000 is not a particularly low or uncommon a salary, but it also is pretty hard to live on that amount of money in many of the most desirable cities.  I don’t live in a big city and I sure as shit couldn’t pay rent, utilities, and still afford to eat on that salary.  Where I am, $1,400 a month isn’t a crazy amount for rent.  Assuming I would pay $2,650 in income taxes, that would leave me with a little less than $900 a month for everything else (state income taxes, healthcare, bills, food, auto, savings, etc.).

Now, when you look at how much people making over a million pay in taxes, it’s not a small amount of money by any stretch.  I know that many wealthy Americans view a high income tax rate as incredibly unfair; as if they were being punished for being financially successful.

I would argue that while it may feel like an unfair burden to the top 5% earners of the nation to have to pay more in taxes, they are the only ones who can afford to keep this country running, and because of their abilities and good fortune,  it’s their civic duty to do so.  When America is operating with enough money to fund free, high-quality preK through college education, free or low-cost high-quality healthcare, and enough money to maintain, improve and build new infrastructure, they, their employees, their customers and ultimately their businesses will benefit as the entire nation is healthier, better educated, and has more disposable income to spend.  It will give America back its competitive edge in the world market, bring back jobs and manufacturing to American soil, and put our country back on top.

The fact is, even when someone making $10 million “loses” $3.5 million to federal taxes, they’re still taking home $6,536,778.  That’s more than enough to cover the bills and live like a king.  The sad truth is that when you make that much, you can afford to pay a team of lawyers and accountants to help find ways to create deductions and losses to lower your effective tax rate and pay less than your share.  Aside from that, most of the ultra-rich make a good portion of their income from capital gains which isn’t taxed the way that wages/salaries are (there are also online calculators to show tax rates for capital gains).  At that level, you also have the political power to change tax laws in your favor to keep more money in your pockets.

But the wealthy aren’t the only ones with political power.  When people get together in large numbers with a common goal, it becomes a movement that is very hard for government to ignore.  America needs to take a good mathematical look at our current tax rates and work to make them more equitable.  Check out Berkeley’s Robert Reich in his video about the topic of wealth inequality, made back in 2005:

How Unequal Can America Get?

http://www.senate.gov/reference/common/faq/How_to_contact_senators.htm

http://www.house.gov/representatives/find/