Hospitals Crushed Under Medicaid Late Payments : Maine Suffers

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This would be humorous but for the fact so many people will be hurting if the hospitals dump Medicaid patients. Maine has been Democrat for decades, which means the state has been governed by corruption and fraud. Little wonder then why they are so far in debt and begging for a hand out from the taxpayers, just like California and Illinois, as well as just about any other state run by Democrats and under the crush of huge debt.

Now that a Republican is governor, everyone expects miracles to happen and happen over night. When the Democrats were giving away the store, it was all fun and games, it was the gravy train that was always at the station ready to take on more passengers for free. Don't worry about paying for a ticket, someone else is suppose to take care of that. Hallelujah - it's free ride - The Democrats really deliver. Vote for more Democrats.

How does the saying go, 'as Maine goes, so goes the country'?

Delays in Medicaid Pay Vex Hospitals
January 30, 2013
Source: Jennifer Levitz and Louise Radnofsky, "Delays in Medicaid Pay Vex Hospitals," Wall Street Journal, January 15, 2013.

Hospitals in Maine, fearful of additional federal cuts in Medicaid funding as the deficit-reduction negotiations continue, are demanding hundreds of millions of dollars owed to them by the state for treatment of Medicaid patients. Hospitals everywhere are fearful that budget deficits in many states will causes the length of time for reimbursement to grow, says the Wall Street Journal.

• Other states have months-long delays, according to Bruce Siegel who heads the National Association of Public Hospitals and Health Systems.
• Maine's delay is three years and totals $484 million.
• The coalition of hospitals says that late Medicaid payments restrict their ability to cover bills, which forces their credit rating down, keeps them from making pay raises and delays major building projects.

To publicize the situation, the Maine hospitals have launched a radio and newspaper campaign to press the state to cover the bills. Since Congress already agreed to a $25 billion cut in Medicaid and Medicare spending at the beginning of the year, the hospitals are unsure whether they risk not being paid in the current environment. Maine is undergoing a budget deficit that continues to rattle the hospitals' nerves.

• A spokesman for the Illinois Hospital Association has fears that a similar problem will occur in Illinois, which currently has an eight month delay.
• Maine Governor Paul LePage (R) has submitted legislation that raises the money owed to hospitals through a bond that will be paid off by future liquor sales.
• Maine's Medicaid debt is large because the state expanded its Medicaid eligibility before the economic downturn. Consequently, Maine now has one of the higher percentages of residents receiving Medicaid benefits.

Of the $484 million bill, Maine says that the federal government will reimburse $300 million, a statement confirmed by the U.S. Department of Health and Human Services. With more than a $100 million deficit in the current fiscal year, hospitals will continue to worry until Maine figures out where the money will come from.

Prosperity Found in Right-To-Work States : Who Knew?

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Goodness - given this article is true, and I have no reason to believe it isn't, why would anyone want to live in a 'no right to work' state? Reality, the voters might wake up to see the error of their ways and vote with their feet.

On the other hand, there is good reason to believe a majority of the population is ready to be enslaved, demand more stuff for free and vote accordingly. If this last scenario is correct then, we as a nation, are lost. Free stuff being more important then personal freedom and liberty means we do not care any longer about pride or self reliance.

The problem that will result is when the population that believes free stuff is paramount suddenly tires of doing nothing and become unhappey with what they are getting, they will gather in the streets to demand ever more free stuff from fewer people willing to pay for the free stuff. What happens when all the free stuff stops, as the money is gone, will be a catastrophic event.

Right-to-Work States Have Higher Incomes
February 5, 2013
Source: James Hohman, "Right-to-Work States Have Higher Incomes," Mackinac Center for Public Policy, January 25, 2013.

Adjusted for cost-of-living, workers in right-to-work states have higher incomes than workers in non-right-to-work states. After adjusting for per-capita personal income (PCPI) -- a measure of a state's wealth -- the larger paychecks in non-right-to-work states have an equal amount of purchasing power as states with the union-limiting laws, says James M. Hohman, assistant director of fiscal policy at the Mackinac Center for Public Policy.

Hohman compares Michigan, a new right-to-work state, with Connecticut, a non-right-to-work state, and finds that prices for consumer goods are higher in Connecticut. Connecticut also levies more sales and gas taxes and the cost of the average home in Connecticut is three times as much as in Michigan. This means that a dollar in Michigan gets an individual a lot further than a dollar in Connecticut.

• Right-to-work states have 4.1 percent higher PCPIs than non-right-to-work states.
• After adjusting for cost-of-living, Wyoming becomes the second-wealthiest state and Texas, Virginia and Florida enter the top 10.
• Only three right-to-work states, Mississippi, Utah and Idaho, were in the bottom of the cost-of-living adjusted list.

Hohman notes that many right-to-work states have lower incomes than non-right-to-work states and vice versa. PCPI in right-to-work states only overtook non-right-to-work states in 2003, which explains why many people are not aware of this discrepancy.

• Right-to-work states have added 1.7 million jobs to their payrolls since 2001.
• During the same time, non-right-to-work states lost 2.1 million jobs from their payrolls.
• The unemployment rate in right-to-work states is a full 1 percent lower than in non-right-to-work states over the past decade, despite harsh economic conditions.
• Right-to-work states also attract more workers from non-right-to-work states. Over the past two years 400,000 people moved to right-to-work states.

If workers in right-to-work states earn higher incomes when adjusted for costs-of-living and enjoy lower unemployment rates, workers in non-right-to-work states may continue to flock to opportunity.

Tax and Revenue Chart Speaks Volumes : 1981 thru 2012

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I won't take any more of your time as this chart and the accompanying note speaks for them selves. This is from the National Center for Policy Analysis.


White House budget proposal. By law, the President is required to submit a budget proposal to Congress by today, February 4. The President will miss today's deadline (he has only met the deadline once), in part because of the last-minute fiscal cliff deal that didn't pass until January 1, leaving little time for the White House to calculate their 10-year budget proposal. When the President finally submits a budget proposal, all eyes will focus on his plans to control spending and raise taxes. The President is unlikely to propose a balanced budget, just as he hasn't in past years. Anticipating this, the House will consider legislation this week called the Require a PLAN Act. It requires the President to estimate what year, at the earliest, he plans to balance the budget.

This is the season for a little background on the federal budget process: Traditionally, the President lays out his vision and priorities during the State of the Union address. A few days after that, the President submits his budget proposal containing several volumes of detail, resembling a telephone directory. It includes a detailed proposal about how much taxpayer money should be collected and spent. It justifies spending for each federal program and includes tax and spending projections for the next 10 years. Knowing the President's vision, Congress is then required to pass a budget before April 15. The Senate has not passed a budget in almost 4 years, although that may change this year (see below). The Congressional budget, as opposed to the President's proposal, directs Congressional spending decisions. It provides a blueprint for Congressional appropriations bills, which allocate taxpayer money to the various departments and programs of government.

Get ready for the new year with January's Tax Due Date Reminders!

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The staff at Holdsworth & Co. joins you in saying goodbye to 2011 and ringing in a healthy and prosperous 2012!  

Thanks for visiting our recently launched blogsite.  As we begin the new year, we want to help keep you on course with a list of tax due date reminders for January.  We're happy to answer any of your questions and are just a phone call away. 

January 10	Employees - who work for tips. If you received $20 or more in tips during December, report them to your employer. You can use Form 4070, Employee's Report of Tips to Employer.
January 17	Employers - Social Security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments in December 2011.Individuals - Make a payment of your estimated tax for 2011 if you did not pay your income tax for the year through withholding (or did not pay in enough tax that way). Use Form 1040-ES. This is the final installment date for 2011 estimated tax. However, you do not have to make this payment if you file your 2011 return (Form 1040) and pay any tax due by January 31, 2012.Employers - Nonpayroll Withholding. If the monthly deposit rule applies, deposit the tax for payments in December 2011.Farmers and Fishermen - Pay your estimated tax for 2011 using Form 1040-ES. You have until April 17 to file your 2011 income tax return (Form 1040). If you do not pay your estimated tax by January 17, you must file your 2011 return and pay any tax due by March 1, 2012, to avoid an estimated tax penalty.
January 31	Employers - Give your employees their copies of Form W-2 for 2011 by January 31, 2012. If an employee agreed to receive Form W-2 electronically, post it on a website accessible to the employee and notify the employee of the posting by January 31.Businesses - Give annual information statements to recipients of 1099 payments made during 2011.Employers - Federal unemployment tax. File Form 940 for 2011. If your undeposited tax is $500 or less, you can either pay it with your return or deposit it. If it is more than $500, you must deposit it. However, if you already deposited the tax for the year in full and on time, you have until February 10 to file the return.Employers - Social Security, Medicare, and withheld income tax. File Form 941 for the fourth quarter of 2011. Deposit any undeposited tax. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the quarter in full and on time, you have until February 10 to file the return.Employers - Nonpayroll taxes. File Form 945 to report income tax withheld for 2011 on all nonpayroll items, including backup withholding and withholding on pensions, annuities, IRAs, gambling winnings, and payments of Indian gaming profits to tribal members. Deposit any undeposited tax. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the year in full and on time, you have until February 10 to file the return.Individuals - who must make estimated tax payments. If you did not pay your last installment of estimated tax by January 17, you may choose (but are not required) to file your income tax return (Form 1040) for 2011. Filing your return and paying any tax due by January 31 prevents any penalty for late payment of last installment.Payers of Gambling Winnings - If you either paid reportable gambling winnings or withheld income tax from gambling winnings, give the winners their copies of Form W-2G.Certain Small Employers - File Form 944 to report Social Security and Medicare taxes and withheld income tax for 2011. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is $2,500 or more from 2011 but less than $2,500 for the fourth quarter, deposit any undeposited tax or pay it in full with a timely filed return.

Discover Your Pot o' Gold...in Your Tax Deductible Vacation!

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Dublin, Ireland 


Tim, who owns his own business, decided he wanted to take a two-week trip around the US. So he did--and was able to legally deduct every dime that he spent on his "vacation". Here's how he did it.

1. Make all your business appointments before you leave for your trip.
Most people believe that they can go on vacation and simply hand out their business cards in order to make the trip deductible.
Wrong.
You must have at least one business appointment before you leave in order to establish the "prior set business purpose" required by the IRS. Keeping this in mind, before he left for his trip, Tim set up appointments with business colleagues in the various cities that he planned to visit.
Let's say Tim is a manufacturer of green office products looking to expand his business and distribute more product. One possible way to establish business contacts--if he doesn't already have them--is to place advertisements looking for distributors in newspapers in each location he plans to visit. He could then interview those who respond when he gets to the business destination.

Example: Tim wants to vacation in Hawaii. If he places several advertisements for distributors, or contacts some of his downline distributors to perform a presentation, then the IRS would accept his trip for business.

Tip: It would be vital for Tim to document this business purpose by keeping a copy of the advertisement and all correspondence along with noting what appointments he will have in his diary.

2. Make Sure your Trip is All "Business Travel."
In order to deduct all of your on-the-road business expenses, you must be traveling on business. The IRS states that travel expenses are 100% deductible as long as your trip is business related and you are traveling away from your regular place of business longer than an ordinary day's work and you need to sleep or rest to meet the demands of your work while away from home.

Example: Tim wanted to go to a regional meeting in Boston, which is only a one-hour drive from his home. If he were to sleep in the hotel where the meeting will be held (in order to avoid possible automobile and traffic problems), his overnight stay qualifies as business travel in the eyes of the IRS.

Tip: Remember: You don't need to live far away to be on business travel. If you have a good reason for sleeping at your destination, you could live a couple of miles away and still be on travel status.

3. Make sure that you deduct all of your on-the-road -expenses for each day you're away.
For every day you are on business travel, you can deduct 100% of lodging, tips, car rentals, and 50% of your food. Tim spends three days meeting with potential distributors. If he spends $50 a day for food, he can deduct 50% of this amount, or $25.

Tip:The IRS doesn't require receipts for travel expense under $75 per expense--except for lodging.

Example: If Tim pays $6 for drinks an the plane, $6.95 for breakfast, $12.00 for lunch, $50 for dinner, he does not need receipts for anything since each item was under $75.

Tip: He would, however, need to document these items in your diary. A good tax diary is essential in order to audit-proof your records. Adequate documentation shall consist of amount, date, place and business reason for the expense.

Example: If, however, Tim stays in the Bates Motel and spends $22 on lodging, will he need a receipt? The answer is yes. You need receipts for all paid lodging.

Tip: Not only are your on-the-road expenses deductible from your trip, but also all laundry, shoe shines, manicures, and dry-cleaning costs for clothes worn on the trip. Thus, your first dry cleaning bill that you incur when you get home will be fully deductible. Make sure that you keep the dry cleaning receipt and have your clothing dry cleaned within a day or two of getting home.

4. Sandwich weekends between business days.
If you have a business day on Friday and another one on Monday, you can deduct all on-the-road expenses during the weekend.

Example: Tim makes business appointments in Florida on Friday and one on the following Monday. Even though he has no business on Saturday and Sunday, he may deduct on-the-road business expenses incurred during the weekend.

5. Make the majority of your trip days business days.
The IRS says that you can deduct transportation expenses if business is the primary purpose of the trip. A majority of days in the trip must be for business activities, otherwise, you cannot make any transportation deductions.

Example: Tim spends six days in San Diego. He leaves early on Thursday morning. He had a seminar on Friday and meets with distributors on Monday and flies home on Tuesday, taking the last flight of the day home after playing a complete round of golf. How many days are considered business days?

All of them. Thursday is a business day, since it includes traveling - even if the rest of the day is spent at the beach. Friday is a business day because he had a seminar. Monday is a business day because he met with prospects and distributors in pre-arranged appointments. Saturday and Sunday are sandwiched between business days, so they count, and Tuesday is a travel day.
Since Tim accrued six business days, he could spend another five days having fun and still deduct all his transportation to San Diego. The reason is that the majority of the days were business days (six out of eleven). However, he can only deduct six days worth of lodging, dry cleaning, shoe shines, and tips. The important point is that Tim would be spending money on lodging, airfare, and food, but now most of his expenses will become deductible.
Consult us before you plan your next trip. We'll show you the right way to legally deduct your vacation when you combine it with business. Bon Voyage!
Tim, who owns his own business, decided he wanted to take a two-week trip around the US. So he did--and was able to legally deduct every dime that he spent on his "vacation". Here's how he did it.

1. Make all your business appointments before you leave for your trip.
Most people believe that they can go on vacation and simply hand out their business cards in order to make the trip deductible.
Wrong.
You must have at least one business appointment before you leave in order to establish the "prior set business purpose" required by the IRS. Keeping this in mind, before he left for his trip, Tim set up appointments with business colleagues in the various cities that he planned to visit.
Let's say Tim is a manufacturer of green office products looking to expand his business and distribute more product. One possible way to establish business contacts--if he doesn't already have them--is to place advertisements looking for distributors in newspapers in each location he plans to visit. He could then interview those who respond when he gets to the business destination.

Example: Tim wants to vacation in Hawaii. If he places several advertisements for distributors, or contacts some of his downline distributors to perform a presentation, then the IRS would accept his trip for business.

Tip: It would be vital for Tim to document this business purpose by keeping a copy of the advertisement and all correspondence along with noting what appointments he will have in his diary.

2. Make Sure your Trip is All "Business Travel."
In order to deduct all of your on-the-road business expenses, you must be traveling on business. The IRS states that travel expenses are 100% deductible as long as your trip is business related and you are traveling away from your regular place of business longer than an ordinary day's work and you need to sleep or rest to meet the demands of your work while away from home.

Example: Tim wanted to go to a regional meeting in Boston, which is only a one-hour drive from his home. If he were to sleep in the hotel where the meeting will be held (in order to avoid possible automobile and traffic problems), his overnight stay qualifies as business travel in the eyes of the IRS.

Tip: Remember: You don't need to live far away to be on business travel. If you have a good reason for sleeping at your destination, you could live a couple of miles away and still be on travel status.

3. Make sure that you deduct all of your on-the-road -expenses for each day you're away.
For every day you are on business travel, you can deduct 100% of lodging, tips, car rentals, and 50% of your food. Tim spends three days meeting with potential distributors. If he spends $50 a day for food, he can deduct 50% of this amount, or $25.

Tip:The IRS doesn't require receipts for travel expense under $75 per expense--except for lodging.

Example: If Tim pays $6 for drinks an the plane, $6.95 for breakfast, $12.00 for lunch, $50 for dinner, he does not need receipts for anything since each item was under $75.

Tip: He would, however, need to document these items in your diary. A good tax diary is essential in order to audit-proof your records. Adequate documentation shall consist of amount, date, place and business reason for the expense.

Example: If, however, Tim stays in the Bates Motel and spends $22 on lodging, will he need a receipt? The answer is yes. You need receipts for all paid lodging.

Tip: Not only are your on-the-road expenses deductible from your trip, but also all laundry, shoe shines, manicures, and dry-cleaning costs for clothes worn on the trip. Thus, your first dry cleaning bill that you incur when you get home will be fully deductible. Make sure that you keep the dry cleaning receipt and have your clothing dry cleaned within a day or two of getting home.

4. Sandwich weekends between business days.
If you have a business day on Friday and another one on Monday, you can deduct all on-the-road expenses during the weekend.

Example: Tim makes business appointments in Florida on Friday and one on the following Monday. Even though he has no business on Saturday and Sunday, he may deduct on-the-road business expenses incurred during the weekend.

5. Make the majority of your trip days business days.
The IRS says that you can deduct transportation expenses if business is the primary purpose of the trip. A majority of days in the trip must be for business activities, otherwise, you cannot make any transportation deductions.

Example: Tim spends six days in San Diego. He leaves early on Thursday morning. He had a seminar on Friday and meets with distributors on Monday and flies home on Tuesday, taking the last flight of the day home after playing a complete round of golf. How many days are considered business days?

All of them. Thursday is a business day, since it includes traveling - even if the rest of the day is spent at the beach. Friday is a business day because he had a seminar. Monday is a business day because he met with prospects and distributors in pre-arranged appointments. Saturday and Sunday are sandwiched between business days, so they count, and Tuesday is a travel day.
Since Tim accrued six business days, he could spend another five days having fun and still deduct all his transportation to San Diego. The reason is that the majority of the days were business days (six out of eleven). However, he can only deduct six days worth of lodging, dry cleaning, shoe shines, and tips. The important point is that Tim would be spending money on lodging, airfare, and food, but now most of his expenses will become deductible.
Consult us before you plan your next trip. We'll show you the right way to legally deduct your vacation when you combine it with business. Bon Voyage!

Transforming Student Loans from Taxes Back into Debt

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James Pethoukoukis notes the skyrocketing ratio of student loan debt to household income, the currently spiking default rate on student loans, and wonders if a new federal government bailout is in the works:

See where this is heading? When you take into account America’s burgeoning bailout culture and the rising political power of younger voters, it’s no surprise that Citigroup thinks taxpayers might end up riding to the rescue:

Taxpayers already (or will) indirectly subsidize both the housing and healthcare sectors by covering GSE losses and paying for a healthcare system that pays out more than it receives in revenues. If the continued misalignment of educational resources ultimately leads to government “forgiveness” of student loan debt, it will simply be one more example of fiscal subsidies for a narrow demographic.

Citigroup estimates that writing off defaulted student loans would cost $74 billion, though such a move might nudge other borrowers to strategically default in hopes of a bailout of their own.

We have a very easy solution for this scenario, which enterprising politicians might use to both ride to the rescue of distressed student loan borrowers while avoiding the moral hazard issue of encouraging other borrowers to strategically default on their student loans: restore the ability of distressed borrowers to have their student loan debt discharged in bankruptcy!

In one fell swoop, it would be possible to both relieve the genuine distress of the excessive debt held by these individuals in such a way that would stop other less-distressed but really opportunistic people from considering strategic defaults on their student loans, thanks to the restrictions and higher costs of future borrowing activity that would be placed upon them in bankruptcy proceedings.

Plus, this reform would have the unique benefit of forcing the undoing of one of the biggest political power grabs of recent years: the federal government's takeover of the student loan industry.

Here, the unspoken goal of President Obama's policy has been to fully exploit the restriction of borrowers from being able to discharge their student loan debts in bankruptcy court as a backdoor means by which he could increase the amount of money that the federal government collects from low and middle income earners. All, we might add, without having to go through the hassle of fighting the political battle that would come from attempting to directly increase their income tax rates.

Just in case you wondered why President Obama has always been so keen to push "cheap" student loans....

That's also why President Obama has been so focused on increasing the tax rates of just those with high incomes, while pushing to keep the Bush-era tax cuts in place for low and middle income earners, even though such a strategy will do very little to reduce the federal government's annual budget deficits or the national debt. Since most income in the United States is actually generated by people who earn much less than $200,000 (or $250,000 per household), the President is simply using the old deceptive magician's trick of distraction in an attempt to keep low and middle class earners from recognizing how much of their income they're really paying in total to the federal government.

It doesn't matter that it's called "debt". If you cannot discharge it in bankruptcy and you owe it to the federal government, which sets the size of your payments according to the amount of your annual income, then the money that you're paying to the government should more properly be called "taxes".

At the very least, the federal government should require student loan borrowers to write that number somewhere in the "taxes you paid" section of their tax returns....

Image Source: ZeroHedge.

Racing the Clock to Beat the Dividend Cliff, Part 2

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In Part 1, we pointed out that companies waited a little over a week after the re-election of Barack Obama on 6 November 2012 to begin responding to the guarantee of higher taxes on dividends that would take effect on 1 January 2013. In today's post, we're simply going to point out how much money they've have pulling into 2012 to avoid those higher taxes waiting in 2013 and from where:

As of the dividend futures data available for 10 December 2012, companies such as Walmart and numerous others have collectively pulled about 4.3% of the total amount of dividends that had been projected to be paid out in the first quarter of 2013 into the fourth quarter of 2012 instead.

While some companies like Oracle have simply pulled ahead the dividends that they had originally intended to pay out in the first, second and third quarters of 2013, at least 123 other companies at this writing have announced they will pay a special dividend before the end of 2012. One of those companies, Costco, has actually taken out a loan to pay a special dividend to its investors before the higher dividend tax rates of 2013 take effect.

These companies are rushing to take these actions because many of their largest shareholders fall into the income range that will be most negatively impacted by the higher taxes on dividends. We estimate that over two-thirds of all dividends go to these individuals, who are often the primary owners or founders of the companies that pay out dividends.