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New From the GAO

December 19, 2014 Comments off

New GAO Reports
Source: Government Accountability Office

1. Fair Labor Standards Act: Extending Protections to Home Care Workers. GAO-15-12, December 17.
http://www.gao.gov/products/GAO-15-12
Highlights – http://www.gao.gov/assets/670/667603.pdf

2. Federal Emergency Management Agency: Opportunities Exist to Strengthen Oversight of Administrative Costs for Major Disasters. GAO-15-65, December 17.
http://www.gao.gov/products/GAO-15-65
Highlights – http://www.gao.gov/assets/670/667607.pdf

3. Department of Homeland Security: Continued Action Needed to Strengthen Management of Administratively Uncontrollable Overtime. GAO-15-95, December 17.
http://www.gao.gov/products/GAO-15-95
Highlights – http://www.gao.gov/assets/670/667618.pdf

4. Tax-Exempt Organizations: Better Compliance Indicators and Data, and More Collaboration with State Regulators Would Strengthen Oversight of Charitable Organizations. GAO-15-164, December 17.
http://www.gao.gov/products/GAO-15-164
Highlights – http://www.gao.gov/assets/670/667596.pdf

5.   State and Local Governments’ Fiscal Outlook: 2014 Update. GAO-15-224SP, December 17.
http://www.gao.gov/products/GAO-15-224SP
Podcast: http://www.gao.gov/multimedia/podcasts/667597

6.   Dodd-Frank Regulations: Regulators’ Analytical and Coordination Efforts. GAO-15-81, December 18.
http://www.gao.gov/products/GAO-15-81
Highlights – http://www.gao.gov/assets/670/667634.pdf

7.   Electronic Submissions in Federal Procurement: Implementation by the Army Corps of Engineers and Department of the Interior’s Bureau of Reclamation. GAO-15-253R, December 18.
http://www.gao.gov/products/GAO-15-253R

8.   Federal Food Safety Oversight: Additional Actions Needed to Improve Planning and Collaboration. GAO-15-180, December 18.
http://www.gao.gov/products/GAO-15-180
Highlights –  http://www.gao.gov/assets/670/667657.pdf

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New Report Proposes Better Outcomes, Lower Costs for State and Local Governments Through User Fees

December 19, 2014 Comments off

New Report Proposes Better Outcomes, Lower Costs for State and Local Governments Through User Fees
Source: Cascade Policy Institute

A new report released by Cascade Policy Institute suggests numerous ways state and local governments can lower the costs of public services through judicious, targeted use of “user fees,” rather than relying on general taxation. Resurrecting User Fees in Public Finance: A Prescription for Lowering the Cost and Improving the Fairness of Public Services was authored by Randall Pozdena, Ph.D. Pozdena is president of QuantEcon, Inc., an Oregon-based consultancy.

The share of personal income collected as revenue by state and local governments has doubled since 1945. Oregon and other U.S. state governments obtain approximately 75 percent of this revenue through broad-based taxation and 25 percent from fees levied on the beneficiary of the service.

This report details the theoretical and practical advantages of reducing reliance on broad-based taxation in favor of user charges. It reviews the economic philosophy of reliance on user charges versus broad-based finance and the findings of the public finance literature.

New From the GAO

December 17, 2014 Comments off

New GAO Reports
Source: Government Accountability Office

1. Hanford Cleanup: Condition of Tanks May Further Limit DOE’s Ability to Respond to Leaks and Intrusions. GAO-15-40, November 25.
http://www.gao.gov/products/GAO-15-40
Highlights – http://www.gao.gov/assets/670/667191.pdf

2. Nuclear Regulatory Commission: NRC Needs to Improve Its Cost Estimates by Incorporating More Best Practices. GAO-15-98, December 12.
http://www.gao.gov/products/GAO-15-98
Highlights – http://www.gao.gov/assets/670/667500.pdf

3. Defense Infrastructure: Risk Assessment Needed to Identify If Foreign Encroachment Threatens Test and Training Ranges. GAO-15-149, December 16.
http://www.gao.gov/products/GAO-15-149
Highlights – http://www.gao.gov/assets/670/667551.pdf

4. Higher Education: State Funding Trends and Policies on Affordability. GAO-15-151, December 16.
http://www.gao.gov/products/GAO-15-151
Highlights – http://www.gao.gov/assets/670/667558.pdf
Podcast – http://www.gao.gov/multimedia/podcasts/667387

5. Tax Filing Season: 2014 Performance Highlights the Need to Better Manage Taxpayer Service and Future Risks. GAO-15-163, December 16.
http://www.gao.gov/products/GAO-15-163
Highlights –  http://www.gao.gov/assets/670/667562.pdf

TIGTA — IRS Needs to Do More to Reduce Risk of Improper Payments of EITC and ACTC

December 12, 2014 Comments off

IRS Needs to Do More to Reduce Risk of Improper Payments of EITC and ACTC
Source: Treasury Inspector General for Tax Administration

Although the Internal Revenue Service (IRS) is required by law to quantify or identify and take actions to address the root causes of improper payments in Federal programs identified as being at high risk, it has only acknowledged one program – the Earned Income Tax Credit program – as being at high risk for improper payments.

According to a report released publicly today by the Treasury Inspector General for Tax Administration (TIGTA), another tax credit program, the Additional Child Tax Credit, is also at high risk of improper payments, although the IRS has not identified it as such.

The Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC) are refundable credits designed to help low-income individuals reduce their tax burden. The IRS estimated that it paid $63 billion in refundable EITCs and $26.6 billion in refundable ACTCs for Tax Year 2012. The IRS also estimated that 24 percent of all EITC payments made in Fiscal Year 2013, or $14.5 billion, were paid in error.

While the IRS has developed processes to identify improper EITC payments and their root causes, it has not developed processes to quantify or identify the root causes of improper ACTC payments, according to TIGTA’s report. The EITC is used to offset the impact of Social Security taxes on low-income families and to encourage them to seek employment. The ACTC is used to adjust the individual income tax structure to reflect a family’s reduced ability to pay taxes as family size increases.

This audit was initiated because the IRS is required to identify and take actions to address the root causes of improper payments in Federal programs identified as being at high risk for improper payments. Under the Improper Payments Elimination and Recovery Act of 2010, a program is defined as having significant improper payments when improper payments exceed both 2.5 percent of program outlays and $10 million of all program payments made during the fiscal year. The overall objective of this review was to assess the IRS’s efforts to identify and address the root causes of erroneous EITC and ACTC payments.

Using IRS data, TIGTA estimates the potential ACTC improper payment rate for Fiscal Year 2013 is between 25.2 percent and 30.5 percent, with potential ACTC improper payments totaling between $5.9 billion and $7.1 billion. In addition, IRS enforcement data show the root causes of improper ACTC payments are similar to those of the EITC.

10 U.S. Counties with the Highest Mortgage Interest Deduction Claim Rate

December 11, 2014 Comments off

10 U.S. Counties with the Highest Mortgage Interest Deduction Claim Rate
Source: Brookings Institution

The mortgage interest deduction (MID) is one of the nation’s largest federal tax expenditures, allowing taxpayers whose total itemized deductions exceed the standard deduction to deduct interest on their primary residence or secondary home up to certain limits. Using zip-code level data on taxes and demographics, Benjamin Harris—a fellow in Economic Studies—and Research Assistant Lucie Parker examine characteristics of the MID in a new Urban-Brookings Tax Policy Center paper. Their findings include:

• Twenty percent of zip codes claim roughly half of the aggregate MIDs
• Zip codes with high claiming rates tend to have disproportionately white, middle-aged, and married taxpayer
• Counties west of the Mississippi River and on the East Coast disproportionately benefit from the MID

Many People Who Auto-Enroll in Federal Marketplace Health Coverage for 2015 Could Pay More Than They Should

December 10, 2014 Comments off

Many People Who Auto-Enroll in Federal Marketplace Health Coverage for 2015 Could Pay More Than They Should
Source: Center on Budget and Policy Priorities

People in 34 states[1] who enrolled in health coverage for 2014 through the Federally Facilitated Marketplace (FFM) will be automatically re-enrolled in the same plan in 2015 unless they choose a new plan through the FFM during the open enrollment season, which began November 15 (see Figure 1).[2] While auto-renewal is an important backstop to avoid loss of coverage, it could leave many people paying more for health care than the Affordable Care Act envisions — and more than they will pay if they go back to the Marketplace.

Unless people provide updated information and have their eligibility re-determined, most who received subsidies for marketplace coverage in 2014 will automatically receive the same dollar level of subsidies in 2015. (These subsidies consist of advance payments of premium tax credits, which are paid to insurers on enrollees’ behalf to help cover the enrollees’ premiums.) But since many factors that affect the level of people’s subsidies change from year to year, a high percentage of people who auto-renew will receive advance premium credits that turn out to be too low or too high. To avert such problems, consumers need to return to the FFM (rather than auto-renewing) to receive an updated eligibility determination. That is the only way to ensure they receive the correct level of benefits.

CBO — The Economic and Budgetary Effects of Producing Oil and Natural Gas From Shale

December 10, 2014 Comments off

The Economic and Budgetary Effects of Producing Oil and Natural Gas From Shale
Source: Congressional Budget Office

Recent advances in combining two drilling techniques, hydraulic fracturing and horizontal drilling, have allowed access to large deposits of shale resources—that is, crude oil and natural gas trapped in shale and certain other dense rock formations. As a result, the cost of that “tight oil” and “shale gas” has become competitive with the cost of oil and gas extracted from other sources. Virtually nonexistent a decade ago, the development of shale resources has boomed in the United States, producing about 3.5 million barrels of tight oil per day and about 9.5 trillion cubic feet (Tcf) of shale gas per year. Those amounts equal about 30 percent of U.S. production of liquid fuels (which include crude oil, biofuels, and natural gas liquids) and 40 percent of U.S. production of natural gas. Shale development has also affected the federal budget, chiefly by increasing tax revenues.

The production of tight oil and shale gas will continue to grow over the next 10 years—by about 30 percent and about 60 percent, respectively, according to a recent projection by the Energy Information Administration (EIA). Another EIA estimate shows that the amount of tight oil and shale gas in the United States that could be extracted with today’s technology would satisfy domestic oil consumption at current rates for approximately 8 years and domestic gas consumption for 25.

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