April 2008 No. 16Table of Contents |
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Pay up. Now that everyone has sent in their 2007 federal and state income tax reports (if you’re not on some atypical filing schedule) and checks if you didn’t withhold enough, you’ll probably be grumpy to learn that one-fifth of us won’t pay up as we should. The difference between what Americans legally owed and what they actually paid amounted to $290 Billion last year, according to the IRS Oversight Board. States also got shorted $60 Billion, with more than 10% of that by Californians. Why?
Divorce, gambling, and business troubles are the most likely reasons that people shortchange the government—and the people it serves. Some complain that delinquent tax penalties and interest on unpaid taxes digs their hole even deeper. Yet, the IRS is patient, or perhaps understaffed. It took only 1,400 to court last year. It uses automation to garnish wages, seize bank accounts, and file tax liens on property.
Fifteen states are starting to publish names of people who have amassed large outstanding tax delinquencies. Wisconsin collected $8 Million after warning delinquents their names would be posted on the Internet. Indiana Governor Daniels brags that his “amnesty” program brought in three times as much as the $65 Million the legislature budgeted.
Federal tax rebates. All but the wealthiest 1% of Americans will probably get a “stimulus rebate” in the months ahead once their 2007 tax return is filed. The amounts will vary depending on household income, number of children, single or married, topping out at $1,200 per couple plus $300 per child under age 17. What will they do with the estimated $106 Billion in rebates? Here’s the breakdown, based on an AARP survey:
| Choice Under 50 50-plus | ||
| Spend it all | 29% | 41% |
| Spend some, save some | 57% | 41% |
| Save it all | 14% | 18% |
| If spending some/all, what on? | ||
| Personal necessities | 70% | 58% |
| Energy bills | 47% | 46% |
| Housing expenses | 52% | 46% |
| Vacation/dining out | 45% | 41% |
| Medical needs | 36% | 40% |
| Consumer debt | 49% | 35% |
| Luxury goods | 34% | 21% |
| Tuition | 28% | 14% |
| Other | 9% | 8% |
H&R Block found 45% said they will use the money to pay bills, 18% will invest it, 21% buy necessities such as groceries, and 16% use it for non-necessities like vacations. The National Retail Federation found consumers will spend 41%, adding $43B to the economy, with 28% ($30B) going to pay down debt and 19% ($20B) going into savings. Either "charitable gifts" wasn’t one of the choices given or it fell in the “other” category.
After months of reviews, the IRS released the latest draft of a new Form 990 which charities will use to report their 2008 tax-exempt revenue and expenses. The 11-page document is for all charities to complete, accompanied by 16 schedules for various purposes. It gives a sharper focus to executive compensation. Public comment is again invited by e-mailing the IRS at Form990revision@irs.gov.
On June 23, Gail J. McGovern will become the fifth president of the American Red Cross in the past nine years. She’s most recently a Harvard Business School professor and formerly an executive at AT&T and Fidelity Investments. Fortune magazine named her twice to annual lists of “most influential women in corporate America.” She has fundraising experience with Boston’s children’s hospital, the Dana-Farber Cancer Institute, Johns Hopkins University, and the United Way of Boston.
McGovern will take the helm of an agency battered by resignations, layoffs, budget deficits, personnel scandals, and public criticism for its response to Hurricane Katrina. We wish her well!
A variety of hospital services are now being monitored, and patient-satisfaction surveys are producing national averages against which local health leaders can gauge how they’re doing. Some topics being studied are physician communications, hospital staff explanations about medicines, room/bathroom cleanliness, quietness at night, and post-hospital recovery regimen for home.
How often do agencies and programs supported by your United Way conduct this type of “consumer satisfaction” evaluation?
IN revenues. State monthly revenue in March topped projections for the first time since September 2007. Gaming taxes continue to show annual declines, though year-end reports show riverboat casinos generated $2.6 Billion in calendar 2007, up nearly 2%, while Hoosier Lottery profits were their second highest ever at $216 Million, earning retailers $55 Million. Corporate income taxes are down 12%. With only 3 months left in the state’s 2008 fiscal year, total revenue is up $263 Million over last year but lags the latest forecast by $44 Million and the budget plan by $12M.
Indiana is not the only state taking a hit from the recession. Across America, total state revenues dropped 4.3% in the last quarter of 2007, after adjusting for inflation and factoring in states’ tax changes. “That’s the lowest in nearly five year,” reports Stateline.org.
UI. The state’s Unemployment Insurance Trust Fund is shrinking…fast. In 2000, its balance was $1.6 Billion. It takes about $740 Million to cover a year’s worth of unemployment benefits, now that the state raised benefits and reduced employer taxes in the early 2000s. The fund’s balance is one-fifth of that now. Every laid-off worker gets $300 to $400 on average. In late March, Indiana was likely the top state for increases in unemployment insurance claims. If its balance gets down to $35 Million, it can borrow from the federal government. Who wants to do that?
Capital projects. IN lags behind all its neighbors in the total number of “New Corporate Facilities and Expansions,” reports Site Selection magazine. OH is #1 in our neighborhood, followed by IL, both with twice as much new investment. KY is slightly ahead of IN.
Health. Some 460 working-age Hoosiers die each year because they don’t have health insurance, estimates Families USA. That is nearly 14% of those aged 25 to 64. A hospital medical director of managed care services agrees that “people do fail to get early care because they don’t feel they can afford it.”
Only Kansas spends less federal and state funds per capita than IN on certain health programs. At $13.69 per Hoosier, IN beat Kansas by a nickel in securing competitive grants and formula funding from the U.S. Centers for Disease Control and Prevention (CDC) in 2007, according to a Robert Wood Johnson Foundation report. IN ranked last in CDC grants in 2004. The Midwest received the least funding of any region.
A bipartisan group of US Senators introduced a bill in early April that allows small businesses to join together to provide employee health insurance. The “Small Business Health Operations Program” (SHOP) also provides businesses with tax credits up to $1,000 per employee ($2,000/family) if they pay 60% of the employee’s health care premiums. Most studies find that many uninsured are not unemployed; small business just can’t afford it without being in a larger worker risk-pool. Stay tuned.
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