President Obama’s Budget Would Make Expansion an Even Better Deal
The budget bill introduced this week by President Obama would make the expansion of Medicaid an even better deal for states like Wisconsin that have not yet taken up the option. If Wisconsin expanded BadgerCare eligibility in January 2017, the president’s recommendations would increase the savings for Wisconsin taxpayers by $252 million by the end of fiscal year 2021.
The president’s proposal calls for reimbursing each state for the full cost of newly-eligible adults for the first three years after expanding coverage, regardless of when the expansion begins. As a result, states that expand coverage of adults this year or any time in the future would get the same enhanced federal funding as the states that expanded coverage in 2014. Read more
This week is national Sunshine Week, which is a time to celebrate openness and transparency in government. That seems rather ironic after the House Budget Committee Chairman offered a plan for the federal budget that fails basic standards of transparency. As Robert Greenstein of the Center on Budget and Policy Priorities wrote on Wednesday:
“The plan proposes a whopping $1.1 trillion in essentially unspecified cuts in mandatory (i.e., entitlement) programs outside health care and Social Security, which reflects an exceptional if not unprecedented lack of transparency.” Read more
Holiday shoppers are increasingly turning to the internet to make their purchases, but Congress has yet to close a loophole that gives online only retailers an advantage over their bricks and mortar counterparts.
Currently, online retailers that do not have a physical presence in a particular state are not required to charge sales tax to residents of that state. That doesn’t mean that these purchases are tax free, though: purchasers are still legally required to pay the sales tax, by declaring it on their income tax form. Few do.
When online-only retailers do not charge consumers sales tax – even though sales tax is owed on the purchases – those retailers have a competitive advantage over other retailers that are required to collect sales tax.
Ideally, Congress would step in to level the playing field between different types of retailers, by passing legislation that would allow states to require all retailers to collect sales tax. Read more
Congress is on the verge of passing a tax cut plan that would prioritize tax breaks for corporations over middle-income and low-wage working parents, while significantly increasing the federal deficit. As the New York Times reported this morning, President Obama has threatened to veto the bill if it reaches him in its current form.
The bill in question is referred to as “tax extender” legislation, which comes up on a regular basis as the start of the next tax year approaches. In his On the Economy blog today, Jared Bernstein describes this annual process as follows:
“Tax extenders are a series of allegedly temporary tax breaks that are conventionally extended, unpaid for, year after year. These include tax credits for research and development, expensing deductions for small businesses, deductions for state and local sales taxes, and more. To put them in the annual budgets that Congress and the President construct each year would mean they’d either have to be paid for with higher taxes or spending cuts elsewhere or added to the deficit. Read more
Today’s Circuit Court Ruling Reinforces the Inconsistencies in State Lawmakers’ Reasoning
Should state lawmakers turn down federal funds whenever there’s a risk that the funding in question could be cut in future years? If so, why is Wisconsin proceeding with major highway and bridge construction plans at a time when Congress is using short-term gimmicks to keep the Highway Trust Fund from becoming insolvent? And why did Wisconsin cut BadgerCare eligibility in half for parents, based on reliance on federal funding to subsidize the federal health insurance Marketplace?
That last question has gotten little attention over the past year, but it will be raised more often following a ruling today by a subset of the DC Circuit Court of Appeals. Two of the three judges participating in that ruling concluded that federal subsidies for the health insurance Marketplace can only go to people in states that set up their own Marketplaces. Read more
Report Released Today Recommends State and Federal Reforms to Close Offshore Tax Havens
Maine legislators recently gave preliminary approval to a bill that could make it the third state to pass legislation to crack down on corporate tax avoidance in off-shore tax havens. The proposed legislation would close the so-called “water’s edge” loophole by requiring corporations to report income from a list of 38 known offshore tax havens. Passage of the bill would generate an estimated $10 million per year (in a state less than a quarter of the size of Wisconsin).
Oregon and Montana have already enacted such legislation. In 2010, Montana recovered $7.2 million, and state analysts expect Oregon to recover $18 million this year. The problem costs states about $1 billion, according to a report by US PIRG report. You can read more about the bills in these three states in an April 3 Washington Post blog post. Read more
A broad range of Wisconsin organizations sent a letter to state senators today in opposition to the resolution (AJR 81) calling for a Constitutional Convention on a balanced budget amendment. The letter raises substantive concerns about putting a balanced budget amendment into the U.S. Constitution and procedural concerns about the risks of holding a convention to amend the Constitution for the first time in over 225 years. It cites the trepidations expressed by Constitutional experts regarding the unpredictability of what might emerge from a Constitutional amendments convention.
The substantive concerns about a balanced budget requirement include the following:
- It would deepen and lengthen recessions by making it extremely difficult for federal lawmakers to increase spending when it is most needed for counter-cyclical safety net programs, such as food stamps, unemployment insurance, and Medicaid. “Since tax revenue typically falls as the need for those programs rises, a balanced budget would require either making cuts to these safety net programs and other areas of spending at the worst possible time, or increasing taxes at a bad time for the economy.”
- “…Depending on how it is written, a balanced budget amendment might also make it very difficult for Congress to respond to national disasters and other emergencies.