Health Care Reform Promises the Unexpected This Tax Season

With the Affordable Care Act’s individual mandate entering into force this year, National Journal looks at a number of possible scenarios of how tax season might play out.

“Almost 7 million people picked plans through the exchanges and were eligible for subsidies last year. Half of them will end up owing the government money… The reason for this is because income—which is tied to the size of subsidies—can be very difficult to predict ahead of time. Most people elect to receive these subsidies in advance, when they enroll in health coverage, forcing them to predict what they’ll make. If this prediction is off (as it often is), they’ll have to reconcile it with what they actually made when they file their taxes.”

“Another 45 percent of people enrolled on an exchange and receiving subsidies will have a more pleasant tax-season experience: They’ll get money from the government. These people overestimated their income and have been paying more than the government says they should for their health insurance.”

“There’s a smorgasbord of possibilities, a mix-and-match of expectations, subsidies, penalties, and reporting requirements. Some people will both get some money back and pay a fine… But for all the potential complexity, for three-quarters of taxpayers, filling out their tax forms will require very little headache, as long as they are insured. These people will only have to check a box saying they have health coverage.”

Red States Love the Gas Tax

“Don’t believe the axiom that Republicans reflexively oppose tax increases: Outside the Beltway, it just doesn’t hold up,” The Atlantic reports.

“States across the country are raising their fuel taxes to pay for the upkeep of deteriorating roads and bridges, and in a surprising number of those states, the governors and legislative leaders pushing those changes are Republicans, not Democrats. In Utah, GOP Governor Gary Herbert signed a law last week passed by the state’s Republican-controlled legislature that raises the gas tax by 5 cents and ties future increases to prices at the pump. A month ago, Iowa’s Republican governor, Terry Branstad, approved a gas-tax hike that sailed through the legislature in under two weeks. Top Republicans in Georgia, Michigan, and South Dakota have proposed similar increases, and as many as 12 states could raise fuel taxes in 2015 alone, after six did so in the last two years, according to an analysis by Carl Davis of the Institute on Taxation and Economic Policy.”

“The movement is a breakthrough for many states that have gone more than 20 years without touching the levy on gasoline, and it presents quite the contrast with the dynamics in Washington… The mere proposal of a tax hike in Washington sends lobbyists scrambling and conservative activists mobilizing in opposition. Yet the most fascinating part of the recent gas-tax debate in at least some of the states is the absence of any visible ideological fights.”

Will the US Impose a Consumption Tax?

“U.S. lawmakers on both sides of the aisle increasingly are finding appeal in an ambitious concept for overhauling the nation’s income-tax system: a tax based on consumption, a tool long used around the world,” according to The Wall Street Journal.

“The plans vary widely in their details. They include European-style value-added taxes, a type of sales tax that is collected along each stage of the production process; traditional sales taxes; and taxes on carbon-based pollution.”

“The discussions are in early stages. The likelihood that senators will agree on a consumption tax—or any major overhaul—in current negotiations remains slim. Introducing such a different tax system also brings the fear of the unknown. Still, the talks open up a possible new direction in slow-moving discussions about rewriting the U.S. tax system.”

Power Grid Faces Constant Stream of Attacks

A USA Today investigation finds that “More often than once a week, the physical and computerized security mechanisms intended to protect Americans from widespread power outages are affected by attacks, with less severe cyberattacks happening even more often.”

“Between 2011 and 2014, electric utilities reported 362 physical and cyberattacks that caused outages or other power disturbances to the U.S. Department of Energy. Of those, 14 were cyberattacks and the rest were physical in nature… Often, such incidents are shrugged off by the local police who initially investigate.”

“While the Department of Energy received only 14 reports of cyberattacks from utilities over the past four years, other reporting systems show rising cyberthreats. The branch of the Department of Homeland Security that monitors cyberthreats received reports of 151 ‘cyber incidents’ related to the energy industry in 2013—up from 111 in 2012 and 31 in 2011. It is uncertain whether the increase is due to more incidents or an increase in reporting.”