NEW INCOME TAX PROPOSAL UNLIKELY TO BE ADOPTED NOW

From The New York Times:

The House’s leading Democratic tax writer will propose a sweeping overhaul of the tax code on Thursday that would increase taxes on many people with incomes above $200,000 but cut them for most others.

The bill, to be introduced by Representative Charles B. Rangel of New York, chairman of the Ways and Means Committee, would also overhaul corporate taxes by eliminating many major tax breaks and lowering overall tax rates.

Mr. Rangel has acknowledged that he does not expect to enact such a bill this year, and President Bush would almost certainly veto legislation that raises taxes on the wealthy.

The plan is probably most important as a preview of what Democrats are likely to pursue after the 2008 elections, especially in rolling back a good part of Mr. Bush’s tax cuts for people at the top of the income ladder.

NEW SCAM RIPS OFF ONLINE TAX FILERS OF REFUNDS

From ABC News:

Just before the deadline for personal income tax filings, the Internal Revenue Service is warning consumers of a scam that targets the majority of American taxpayers who file online.

The scheme is so new, the government has no idea how many taxpayers have been bilked. The scam takes advantage of the federal "Free File" program, in which the IRS partners with software makers to allow taxpayers who earn up to $52,000 in taxable income to file electronically for free.

It works like this: Internet grifters send e-mails, luring taxpayers to Web pages that look like IRS-approved sites where they can file their taxes electronically. The scam artists send in the tax returns after redirecting refunds to their own bank accounts instead of those of the taxpayers.

Steven Peisner runs a non-profit identity theft support organization called sellitSAFE.com. He said a 24-year-old Northern California woman contacted him recently after someone else pocketed her $4,000 refund.

"She's pretty much in shock," he said. "And I think that being April 15 is today, I think we have just scratched the surface. And this is just the first victim that I've come in contact with right now. I think in the next couple of months we are going to see hundreds, if not thousands, of victims start to surface. And I think it's going to be a much bigger problem in the next few months."

PRESIDENT BUSH UNVEILS HEALTH INSURANCE PLAN DETAILS IN STATE OF THE UNION ADDRESS

As expected, President Bush outlined some details of his controversial health insurance plan in last night's State of the Union Address. His plan calls for an end to tax-free premiums in employer-provided health insurance plans, making the premium paid taxable income. To offset some of the tax burden, all taxpayers who either have employer-provided health insurance or purchase their own insurance would receive a deduction of $15,000 for a family plan or $7,500 for an individual. Currently, the average cost of an employer-provided family plan is $11,500, while the average for individual plans is $4,300.

From USA Today:

"For a lot of people, it would be a bonanza," says Joe Antos of American Enterprise Institute. He and other supporters of the plan say it would encourage employers to offer less-generous insurance plans. They say generous plans drive up the cost of health care.

Paul Fronstin of the Employee Benefit Research Institute says the proposal might lead more employers to drop coverage. Some employers might also find that younger, healthier workers would opt out of company plans to buy their own insurance, leaving sicker, more expensive workers behind, he says.

PRESIDENT BUSH PROPOSES HEALTH INSURANCE TAX CHANGES

In his weekly radio address this morning, President Bush said that he wants to change tax codes to make insurance more affordable for the uninsured. From The Wall Street Journal:

"Rising health care costs are making insurance too expensive for millions of our citizens," Mr. Bush said Saturday in his weekly radio address. To remedy the situation without hiking taxes or creating a new entitlement program, he says the tax code can be rewritten to treat health insurance more like home ownership.

"The current tax code encourages home ownership by allowing you to deduct the interest on your mortgage from your taxes," Mr. Bush said. "We can reform the tax code, so that it provides a similar incentive for you to buy health insurance."

Mr. Bush didn't outline the nuts and bolts of his tax-code proposal, but it is expected to include capping some taxpayers' ability to exclude employer-based healthcare benefits from their income, subjecting them to federal income tax. Savings could go toward tax credits for lower-income people who buy health insurance or for state insurance pools.

Altering the tax benefits for employer-provided health care involve far-reaching changes to the tax code affecting millions of taxpayers and companies. Bush's Advisory Panel on Federal Tax Reform proposed in November 2005 to limit the tax benefit for employer-provided health care to $11,500 for families and $5,000 for singles. The recommendation, which has languished with the tax panel's other reform proposals, came after witnesses told the tax panel the existing federal tax subsidies for health insurance were benefiting rich workers while raising insurance prices for the poor and increasing the number of uninsured.