Sunday, March 25, 2012

How my married colleagues cash in on health care

My employer, like many, subsidizes health insurance for full-time employees. The company pays 85% of the cost, leaving each of us to pay 15%. In my case, that amounts to about $8,000 a year that the company pays so that I am more financially secure. Very generous. Thank you.

But in the case of my married colleagues, the company comes up with twice that. Not because they contribute any more or have more valuable skills. Only because they are married and want their spouses (and in some cases, their children) to come along for the ride. 

The financial security of my married colleagues in the plan is subsidized to the tune of $15,000 a year; those with children receive a subsidy of more than $22,000 a year. That's a lot of extra security accorded to some, denied others.

To balance the equation, my company could provide single employees with an equivalent benefit--say a contribution to a 403b account (one potential advantage of working for a non-profit) that is equal to the "excess" subsidy. 

Or, the company could make coverage for an employee's spouse or child/ren available but let the employee pay their way.  All possible, all proposed, all denied.

Yes, I tried to convince my employer how patently unfair this practice is for single employees. No matter how widespread or entrenched, investing more in married employees is simply unjust, I argued. 

My well-supported proposal for any one of several equitable plans needed due-diligence review by the higher-ups. Fair enough. 

Eight moths later, yes, all my calculations were correct. Yes, my alternative plans were feasible. But they were all deep-sixed on the basis that any change would be unfair to married staff. 

What the...?

We have a new CEO on the way soon and I plan to re-make my case later in the year. I'll let you know how it goes. 

In the meantime, as I have been when I first read Lawrence Ferlinghetti's awesome "Coney Island, I remain "perpetually awaiting a rebirth of wonder." You can listen to "Coney Island" read by A.M. Homes, courtesy of PEN.

Why employers should be nervous about tax reform

If Representative Paul Ryan (R-WIS), chairman of the House Budget Committee, is able to sell his approach to tax reform, the dirty little secret about employer-subsidized health care will soon be out of the closet. And single employees will be very unhappy.

Ryan's tax reform plan, deftly reported by Floyd Norris in the March 23, 2012 New York Times, calls for the elimination of any number of what he terms tax preferences: income that is excluded from income under current tax law. According to a nifty chart that Mr. Norris provides and credits to the Joint Committee on Taxation, employer contributions for health insurance is the biggest of these preferences, worth $147.8 billion in untaxed income--about twice the value of Medicare benefits. 

If you've never had to foot the bill for your health insurance--or your employees' health insurance--you likely have little awareness of just how much money we're talking about even at the household level. And what employers pay at the household level is the dirty little secret few employees are aware of. 

In a nutshell. married employees get a double dose of ancillary financial security on top of regular wages, just for showing up with a spouse. And it's more than just a few bucks.

I'll tell you how it works at my company in my next post.

Paying one's fair share...part 2

Why do some taxpayers with the same taxable income (and equivalent itemized deductions) get breaks that others don't?

Yesterday I asked why Sara should pay more in taxes as head of household than Chris and Christa pay as a married couple filing jointly. I could make a case for giving Sara a lower tax rate in consideration of her financial (not to mention emotional) investment in raising Adam. But why should Chris and Christa with the potential for two incomes and no children get the better deal...or any deal at all? 

Carol, introduced yesterday as a single person with no dependents, is asked to pay more. Using 2011 federal tax tables, I went through four different scenarios comparing Carol's tax bill to Chris and Christa's at the same taxable income for each of the two households. Every time, Carol pays more. 
  •  At $40,583 in taxable income, single taxpayers like Carol pay $1,008 more; at $60,875, $3,063 more; $81,165, $3,875 more; at $121,748, $5,019 more; and so on.
Plus, because Chris and Christa qualify for two personal exemptions to Carol's one, they and other married couples are able to earn (and pocket) $3,700 more at the same taxable income level. 

I know it's been this way a long time...but why?

Saturday, March 24, 2012

Paying one's fair share of taxes: who decides?

Less than a month to go before taxes are due. I got my return on its way yesterday, once again asking myself why some folks' fair share seems fairer than others.
My expertise in this arena is limited to my experience paying taxes as an individual wage earner (single, then married, now single again) and, for a time, as a small business owner. So, I’m coming at this as a layperson operating strictly off 2011 IRS tax tables, without the creativity available to wealthy persons assisted by tax attorneys.

Still, why should married persons qualify for lower tax rates?

High to low, here’s the hierarchy: married filing separately; single; head of household; married filing jointly. Hmm.

Having your wedding cake and eating it, too.

Married persons filing separately pay the highest rates, presumably as a gamer’s penalty for working the system to pay less and adding unnecessarily to the stack of returns in need of processing. That said, the difference doesn’t amount to much until you get into six figures.

Here’s an example for Chris, married filing separately, and Carol who is single.

·      At an arbitrary taxable income (IRS line 43) of $40,583, the table says Chris pays $6,269—$25 more than Carol who pays $6,244.

·      Up the income ladder, with taxable income of $121,748 Chris pays $28,904—$1,198 more than Carol who pays $27, 706. And the spread widens as earnings rise further.

I get all that. But check this out.

Marriage tax discount: why?

Married persons filing jointly—whether or not they have children—pay less than a single parent with children filing as head of household. Here’s the math using the same two arbitrary taxable incomes as above for Sara, single parent of Adam, and Chris and Christa, married and child-free.

·      With $40,583 on line 43, Sarah supporting her son Adam pays $5,479—$243 more than Chris and Christa who pay $5,236

·      With $121,748 on line 43, Sarah pays $25,275—$2,588 more than Chris and Christa who pay $22,687.

Does this make any sense to you?

Saturday, March 17, 2012

What "Going Solo" says about marriage

Among other things, Eric Klinenberg’s hot new book, Going Solo: The Extraordinary Rise and Surprising Appeal of Living Alone, calls attention to the continued free fall of marriage around the world. 

The corollary to Klinenberg telling us that the number of people living alone today is the highest it’s ever been (and that only 1 percent of married persons do so) is that marriage is in a nose dive. Government figures agree. Statistics collected by the Centers for Disease Control and Prevention show that the marriage rate has dropped every year but one since at least 1990 and in 2010, the most recent year yet reported, is at its lowest ever—6.8 persons per thousand—for the second year. 

Fewer U.S. couples tying the knot.
That being the case, the array of privileges accorded to married persons (higher incomes, richer employee benefits, and lots more) are being doled out to a shrinking population with no apparent means testing or accountability. Simply put, on what basis do married people deserve the goodies showered on them? 

Setting aside the bearing and raising of children, a compelling but entirely separate topic, what exactly do married couples contribute that, presumably, unmarried couples and single persons do not?  

I’m all ears.