Posted on 06/22/2010 11:02:05 AM PDT by Nachum
Income is taxed, thus compensation for lack of income is taxed.
Compensation for a loss or damage of something you have (say the oil screwed up his boat and BP paid to have it fixed), or for pain and suffering, is not taxed.
IT is INCOME!
This is income in place of your not being able to pursue your normal work.
Anyone thinking this is not INCOME is just plain stupid.
They all want replacement money for that which they lost, but it is definately taxable.
“A wash in net income.”
But not a wash in net taxes. Given the corporate tax rate is 35% and that most affected workers likely are in a 15% tax bracket, even when SS taxes are added on top, the net haul by the tax man actually will be lower. Of course, if the $20B comes out of profits that had been beyond the reach of Uncle Sam, then any taxes collected will be pure gravy.
That's called tax evasion. Subject to criminal prosecution.
I don't believe that is exclusively the case. It should also compensate for lost rent (condo owners) and lost revenue (small business owners).
“Current $20B fund is to compensate for lost wages.”
Agreed, but it sort of depends on how the amount of compensation was determined. To make a worker “whole” technically only requires replacement of after-tax income rather than gross income. So if I’m making payments from a limited fund, my incentive is to pay the lowest amount that would make the individual whole. The purpose of the fund is to assist workers, not help bankroll Obama’s profligate spending.
The point is, if the worker only got an amount to cover after-tax lost wages, he has a legitimate beef about having to pay taxes on this, especially if the situation was not explained to him.
In the future, these folks need to put aside, from their checks, the equivalent of what was withheld from their paychecks, from a similar amount in the past, or a portion of what they paid in previous years for their taxes.
The issue is the same. If the payments are determined to be replacing other income that would have been earned, the income is reportable on the appropriate form . . . same as the original income would have been.
Will this 20 billion be put into an account that will draw intrest?
“The purpose of the fund is to assist workers, not help bankroll Obama’s profligate spending.”
I’m not sure you can leap to that conclusion. I wouldn’t/don’t.
Of course it’s taxable. Why wouldn’t it be?
Vast majority of these guys who fish don’t pay taxes. Probably the first time they will have too. Too bad.
LOL
When BP was running the payout you had to show “Demonstrated damages” which meant showing your last 3 years of tax returns. People be howling mad as they were (seemingly) cheating on the FedGov reporting...
Came back to bite ‘em./
You have to report your unemployment check.
“They all want replacement money for that which they lost”
They didn’t lose any money. You can’t lose what you never had. Losing money is when you have $3,000 in cash in your cookie jar and someone breaks into your house and steals it. You lost it, because first you had it and then you didn’t.
What they lost was the opportunity to go to work and earn taxable income. So the government is giving them the income without them doing the work to earn it (through no fault of their own), and taxing them on it, as if they had done the work to earn it. Pretty simple.
“I’m not sure you can leap to that conclusion.”
It’s hard to see how a fund that will be dispersed in dribs and drabs can be diverted to the federal treasury. For a guy who thinks in trillions, $20B would be far less than rounding error in Obama’s world. I do think this slush fund will be diverted to illicitly bankroll ACORN or similar groups. For them, even the diversion of 5% of the fund would represent a massive infusion of resources. Indeed, they’ll probably double dip: Obama will figure out a way to use the fund to pay former ACORN members to administer claims payments from it AND these same members will work with other ex-members to approve their fraudulent claims whose payments can also be laundered into “community organizing.”
You and I do not differ as to either the ultimate aim or the mechanics of distribution of this (slush) fund. I’m very sure plenty of it will go to claimants. I’m very sure plenty of it will be doled as political payoffs. There’s a hella lot of “plenty” inside $20 billion. Only the most naive would imagine otherwise.
We’re probably also in the same camp as far as the whole notion of establishing the fund being illegal and unconstitutional. Down the road, this would never have been agrred to by BP if there wasn’t some element of liability limitation in there, as well. I wonder if BP actually trusts whomever made them that promise.
http://market-ticker.org/archives/2436-Uh-Huh-So-It-IS-A-Liability-Limiting-Thing.html
“I wonder if BP actually trusts whomever made them that promise.”
My guess is that the insurance companies and docs who cut a deal with Obama not to oppose the health reform plan may be regretting their decision to place their trust in this administration.
The same might be said of families under $200,000 who believed Obama’s promise that their taxes would not go up by one dime.
Or Democrats who believed Obama’s reassurances that a vote for health reform would improve their electoral prospects this fall.
If BP put any faith in promises made by this administration, it will serve them right if they get burned.
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