Looking Again at A Non-Arithmetic Tax Question: What is a Sport?

Back in late June, in Another One of Those Non-Arithmetic Tax Questions: What Is a Sport?, I described a dispute taking place in Europe that focused on the question of “what is a sport?” for purposes of applying the value-added tax on competition entry fees. I explained:

The value-added tax does not apply to fees paid to enter sports competitions. The English Bridge Union paid the tax on tournament entry fees, and sought a refund. British tax authorities refused, arguing that bridge is not a sport. So the dispute has reached the European Court of Justice, whose top advisor concluded that bridge indeed is a sport. Though not binding, the opinions of the advisor usually are followed by the court.

When the court handed down its decision a few days ago, it demonstrated why the adverb “usually” was necessary in the last quoted sentence. According to this report, the court concluded that “bridge, which is characterized by a physical element that appears to be negligible, is not covered by the concept of ‘sport.’” The English Bridge Union expressed disappointment with the result, arguing that bridge incorporates many attributes found in typically recognized sports, such as organized competition, training, and exertion.” Using those characteristics, one could conclude that law students participating in moot court competitions are engaged in sports. I’ve never asked the students if they perceive themselves as athletes when they are arguing in front of moot court judges.

Oddly, some European Union countries treat bridge as a sport because, in accordance with European Union law, a competition is treated as a sport if it provides benefits to physical or mental well being. Yet other European Union countries reached the opposite conclusion. The decision by the European Court of Justice will probably cause that first group of nations to change their position.

Using “provides benefits to physical or mental well being” as a test for whether an activity is a sport is unwise. Remembering that activities qualifying as a sport are exempt from the value added tax, that test would sweep almost all activity into the definition of a sport. Does bridge provide mental well being? Apparently. So, too, do listening to music, watching movies, and doing crossword puzzles. So if those and similar activities were conducted in a competitive environment, they would qualify for the tax exemption.

What puzzles me is why the drafters of the value added tax legislation did not take time to craft a practical definition of sport that would eliminate the need to debate the matter, and that would preclude the current situation of different member nations reaching different conclusions. But sometimes legislators think that “everyone knows” what a word means, when, in reality, almost every word can generate a debate about its meaning. Would a formal debate about the meaning of the word “sport” in the value added tax statutes qualify as a sport?

I concluded Another One of Those Non-Arithmetic Tax Questions: What Is a Sport? with these words:

About a year ago, Newsweek published an article focusing on the definition of sport, in the context of the Olympics, and coverage of activities by ESPN, an acronym that includes “S” for “Sports.” As one might expect, people disagreed on whether particular activities qualified as a sport. Among those described as generating controversy were auto racing, cheerleading, cheese-rolling, chess, cup-stacking, ferret-legging, golf, hot dog eating, poker, spelling bees, video games (“esports”), and wife-carrying.

Perhaps arguing about taxes is a sport.

. And perhaps if I entered MauledAgain into a blog competition, I’d be engaging in a sport. Not that it matters, because the European Union value added tax isn’t applicable, but then I could call myself an athlete. Or something like that.

Another Halloween Treat? I Think Not

From the outset, I have made it a point to work Halloween into MauledAgain, usually looking for the silly or goofy but occasionally taking a more serious approach. The posts began with Taxing "Snack" or "Junk" Food (2004), and have continued through Halloween and Tax: Scared Yet? (2005), Happy Halloween: Chocolate Math and Tax Arithmetic (2006), Tricky Treating: Teaching Tax Trumps Tasty Tidbit Transfers (2007), Halloween Brings Out the Lunacy (2007), A Truly Frightening Halloween Candy Bar (2008), Unmasking the Deductibility of Halloween Costumes (2009), Happy Halloween: Revenue Department Scares Kids Into Abandoning Pumpkin Sales (2010), The Scary Part of Halloween Costume Sales Taxation (2011), Halloween Takes on a New Meaning and It Isn’t Happy (2012), Some Scary Halloween Thoughts (2013), The Inequality of Halloween? (2014), When Candy Isn’t Candy (2015), and Beyond Scary: Tax-Based Halloween Costumes (2016).

Now, just in time for Halloween, the Tennessee Department of Revenue has treated us to Notice #17-22. In this notice, the Department explains that the sales and use taxes apply to sales of candy, and are not eligible for a lower rate applicable to food and food ingredients, because state law “does not define candy as food or food ingredients.” The Department shared its definition of candy: “Candy is defined as a preparation of sugar, honey or other natural or artificial sweeteners in combination with chocolate, fruits, nuts or other ingredients or flavorings in the form of bars, drops or pieces. A candy preparation is made by means of heating, coloring, molding or otherwise processing any of the above ingredients.” The Notice provides definitions of bars, drops, and pieces, explains that the inclusion of certain items does not prevent an item from being candy, and that it doesn’t matter whether natural or artificial sweeteners are included. The Notice also explains that an item containing flour is not candy, and that items that must be refrigerated according to their label are not candy.

The Notice also presents a list of items considered to be candy. These include “Baking bars (sweet or semi-sweet), beer nuts, breath mints, cake decorations (excluding frosting), candy bars (without flour), caramel or other candy-coated popcorn, caramel or other candy-coated apples, cereal bars (without flour), chewing gum, chocolate chips (sweet or semi-sweet), chocolate covered or honey roasted nuts or seeds, chocolate covered potato chips, dried fruit (with sweeteners), peanut brittle, marshmallows, and yogurt covered raisins.”

This is not the first time I have wandered into the tricky question of whether an item is or is not candy. In Halloween and Tax: Scared Yet?, I described my surprise at discovering some candy bars contained flour and thus were not treated as candy for sales tax purposes in several states. In
When Candy Isn’t Candy, I revisited the issue, pointing out the silliness that telling a child standing at the door with a sack or pillowcase that the candy bar being dropped into the container isn’t candy. Talk about a frightening Halloween experience for a little one, to say nothing of the confusion and trauma that could afflict the youngster.

Just as those earlier discussions taught me something that I did not know, namely, that some candy bars contain flour, this time I learned that a person can purchase chocolate covered potato chips. Are they kidding me? Really? But here is the absolutely horrifying possibility. Telling a child that a candy bar containing flour is candy is bad enough. Imagine handing out chocolate covered potato chips tomorrow night and telling the children that it’s candy. That is beyond scary.

There have been years when children have stepped away from the house yelling, “Make sure you stop here. He’s handing out four-pack Reese’s Peanut Butter Cups.” I just cannot wrap my head around kids yelling, “Make sure you stop here. He’s handing out chocolate covered potato chips.” Now watch. Someone will email me and tell me they’re quite the treat and are all the rage. Boo.

What If Everyone Said, “No Tax Breaks For You”?

During the past several weeks, mainstream media, social media, and every other sort of publication has been filled with discussion about what I call the Great Amazon Giveaway. Amazon announced it wants to move some of its operations to a new location. States and cities are tossing all sorts of what theyc call incentives in attempts to get Amazon to relocate to their particular corner of the world. According to this report, New Jersey is offering $7 billion in tax credits, and California is putting $300 million or $1 billion in tax breaks on the table depending on whose proposal one considers. According to this story, Pennsylvania, buried in a budget crisis and facing deficits, plans to offer $1 billion in tax incentives. According to another report, 238 cities and states have jumped onto the Amazon tax break bandwagon.

The rationale for dishing out tax breaks to successful businesses is the belief that by enticing the business to transfer or begin operations in a particular place, that area will become awash in economic benefits, particularly jobs. In Amazon’s case, the number being tossed about is 50,000 new jobs. What’s often left out of the equation is the increased burden on the area in question when those 50,000 jobs bring tens of thousands of people moving into a place that doesn’t have the capacity to handle the demands of a population surge. In addition to the direct costs of providing services to a larger population, such as the need to hire more police, firefighters, sanitation workers, and teachers, there are indirect costs, such as more traffic congestion. Who pays for these increased costs? The people who live in that area.

So I wonder what would happen if no one offered any tax incentives. Perhaps Amazon would expand its existing facilities, though apparently there are business reasons why it wants to move some of its operations to another part of the country. What would Amazon do if there were no tax incentives? It would do what businesses did for decades before the great tax break giveaway game commenced. It would determine its needs, in terms of transportation, climate, population demographics, geography, and similar factors. It would analyze various locations, measuring the extent to which each potential site matched well with Amazon’s business needs.

Of course, it won’t play out that way. There’s too much potential gain for politicians, and because at least one or some are willing to play the game with taxpayers’ money, others will jump in for fear of losing out, even though, eventually, only one location will become the selected site. The only way the game stops is taxpayer-motivated amendment to state Constitutions to put an end to handing out tax breaks to specific recipients when those breaks are not available to taxpayers generally. That, too, will not happen, because too many people are easily convinced that giving money to someone else will make them economically prosperous.

Still, wouldn’t it be fun to watch what would happen if all of the politicians said to all of the successful businesses looking for more money, “No tax breaks for you”? Though the businesses arguing for these benefits often argue to the contrary, there is no doubt that the world would not end.

No, It’s Not Hard to Say No to Tax Cuts for the Wealthy

According to numerous reports, including this one from Bloomberg, Treasury Secretary Steven Mnuchin announced that, contrary to the President’s assertion that the Republican tax plan would not generate net tax cuts for the wealthy, the plan will include such cuts. Mnuchin explained, “it’s hard not to give tax cuts to the wealthy.” Really? It’s very easy to craft a tax plan that leaves the wealthy with the same overall tax burden, even if it includes removal of some deductions and credits offset by rate adjustments.

Mnuchin drags out the worn-out cry that the top x percent of taxpayers pay more than x percent of income taxes. Of course they do. That’s what the income tax was designed to do. It was designed to prevent the increasingly accelerating income and wealth disparity cycle that crushed the nation in the 1890s and will crush the nation again if people continue to misunderstand economic reality, and continue to worship disproven economic theory.

Mnuchin also claimed that, “The math, given how much you are collecting, is just hard to do.” Nonsense. If Mnuchin is confounded by this sort of math, perhaps he can find less challenging tasks in another career track. The math claim is an obvious deflective mechanism offered in defense of what has been the plan all along, namely, shifting increasing amounts of income and wealth into the hands of a self-chosen elite.

Another comment by Mnuchin’s also demonstrated his misunderstanding of the federal tax system. Referring to the proposed repeal of the estate tax, Mnuchin supported the idea by asking, “Why should people have to pay taxes again when they die?” The answer, Mr. Secretary, is that they don’t. The bulk of what is taxed under the estate tax reflects unrealized gains that were never subject to the income tax. As readers of this blog know, I would support a repeal of the estate tax if it were coupled with taxation of unrealized gains at death. Why? Because removing an entire tax system, the estate tax, would simplify the tax system and simplify people’s lives. What looms ahead is going to wreck many lives.

Just say no.

Putting Funding Burdens on Those Who Pay the Soda Tax

Though its advocates continue to praise its existence, the soda tax fails to get my support because it is both too narrow and too broad. It applies to items that ought not be subjected to this sort of “health improvement” tax, and yet fails to apply to most of the food and beverage items that contribute to health problems. I have written about the soda tax for almost ten years, in posts such as What Sort of Tax?, The Return of the Soda Tax Proposal, Tax As a Hate Crime?, Yes for The Proposed User Fee, No for the Proposed Tax, Philadelphia Soda Tax Proposal Shelved, But Will It Return?, Taxing Symptoms Rather Than Problems, It’s Back! The Philadelphia Soda Tax Proposal Returns, The Broccoli and Brussel Sprouts of Taxation, The Realities of the Soda Tax Policy Debate, Soda Sales Shifting?, Taxes, Consumption, Soda, and Obesity, Is the Soda Tax a Revenue Grab or a Worthwhile Health Benefit?, Philadelphia’s Latest Soda Tax Proposal: Health or Revenue?, What Gets Taxed If the Goal Is Health Improvement?, The Russian Sugar and Fat Tax Proposal: Smarter, More Sensible, or Just a Need for More Revenue, Soda Tax Debate Bubbles Up, Can Mischaracterizing an Undesired Tax Backfire?, The Soda Tax Flaw in Automotive Terms, Taxing the Container Instead of the Sugary Beverage: Looking for Revenue in All the Wrong Places, Bait-and-Switch “Sugary Beverage Tax” Tactics, How Unsweet a Tax, When Tax Is Bizarre: Milk Becomes Soda, Gambling With Tax Revenue, Updating Two Tax Cases, When Tax Revenues Are Better Than Expected But Less Than Required, The Imperfections of the Philadelphia Soda Tax, When Tax Revenues Continue to Be Less Than Required, How Much of a Victory for Philadelphia is Its Soda Tax Win in Commonwealth Court?, and Is the Soda Tax and Ice Tax?.

Recently, as described in this story, the Philadelphia City Controller conducted a survey of businesses in the city to determine the impact of the tax. The Controller contacted 1,600 businesses and 741 replied. Of those 741 businesses, 88 percent suffered revenue losses since the tax went into effect, and for almost 60 percent those losses exceeded 10 percent. One store saw its revenue drop 70 percent. This is not surprising. When people go outside the city limits, which in some cases means crossing the street, and in others, crossing a bridge, they not only shift their soda purchases to another business, they also shift other purchases.

Though some elected officials in Cook County, Illinois, which includes Chicago, followed Philadelphia’s example in enacting a soda tax, just two months later they had seen and heard enough. After some of those who had voted for the tax changed their minds, another vote was held and the tax was repealed. Apparently they didn’t wait for an extensive survey of businesses.

Defenders of the tax pointed to the various programs funded by the tax in an attempt to demonstrate positive economic impacts of the tax. Those impacts, even if they are as substantial as claimed, do not substitute for the need to have a connection between what is being taxed and what is funded by the tax. Do drinkers of certain beverages have some sort of deeper responsibility to fund pre-K schools than do people who drink other beverages or eat certain foods? Are the drinkers of certain beverages the only ones who benefit from the expansion of pre-K school programs?

Another Word for Fake Tax Math

On Monday, in Fool Us Once on Taxes, Shame on You, Fool Us Twice . . . , I criticized the unwillingness of those who advocate tax cuts for the wealthy to admit the failure of their approach to tax policy. Every time that federal income taxes have been cut, and the bulk of the cuts have gone to the wealthy, everyone else has suffered and the economy’s performance then exacerbated that suffering.

Now one of the chief advocates of enriching the wealthy even more, who happens to be a member of the wealthy elite, has trotted out another idiotic explanation, one that resonates with those who don’t bother to study history, examine tax reduction plans, and compute what the different proposals would do to their own financial situation. This time, according to this report, the claim is that if the nominal top corporate tax rate is cut from 35 percent to 20 percent, the average U.S. household will see its income increase by at least $4,000 each year and perhaps by as much as $9,000. Perhaps that average reflects $100 for one household and $7,900 for another. But aside from the distraction of “average,” the assertion has another flaw. There are roughly 126 million households in the United States. If the average household receives a $4,000 income increase – that isn’t $4,000 for each household but an average – the benefit would total $504 billion. Yet if the corporate income tax were eliminated, in other words, if the rate was reduced to zero, corporations would be spared only $300 billion. How can letting corporations stop paying $300 billion in taxes generate $504 billion for American households? Put aside the fact that even if $504 could be generated, most of it would not end up with the 98 percent whose consumer demand fuels the economy. The absurdity of the arithmetic becomes even more apparent if the $9,000 figure is used.

Advocates claim that corporations would use the $300 billion, though actually a cut of the rate from 35 percent to 20 percent would not generate a corporate tax reduction of $300 billion, to “create” jobs. There are two reasons this claim doesn’t withstand sharp scrutiny. First, jobs are not created unless workers are needed, and workers are needed if there is a demand, which provides revenue to fund the jobs. Second, if a corporation has the funds, and most do, it can hire an employee, thus reducing its taxable income and its taxes. Put another way, the tax rate on the portion of revenue channeled to worker pay is zero. Third, the reduction in tax payments by corporations will end up in the hands of shareholders and highly compensated executive employees. What that means is that $300 billion, or some lesser amount, but certainly not $504 billion, will end up mostly in the pockets of a small fraction of the population. Yet people hear this “cut taxes” chant and rush to join the rally, without stopping to figure out that there’s nothing in it for them, unless they happen to be corporate executives or big-time shareholders.

The chair of the White House Council of Economic Advisers argues that lowering the rate will encourage corporations to bring back profits held overseas, which would be used for salaries. Yet corporations can bring those profits back now, tax-free, if they use the money to pay workers. The profits get added to gross income and in turn the payments to the workers reduces taxable income. It’s a wash in terms of effect on taxes.

In 2012, the Treasury Department did an analysis that demonstrated how the reduction in corporate taxes would end up in the hands of investors, reaching the same conclusion as have many other studies. That report, which had been available online, was removed by the administration. I wonder why. Perhaps making it more difficult for people to get to the heart of the issue is a necessary prerequisite for railroading yet another tax break for the wealthy through the economic landscape of America.

Economists have called this particular claim “absurd” and “fake math.” I have another word for it. Three letters. Guess.

From Ignorance to Absurdity

Today is one of those occasional days when I turn away from tax issues. Today I focus on the First Amendment. Why today? Because several days ago, an Indiana state legislator drafted proposed legislation that leaves me staring in amazement at the ignorance and absurdity of the proposal.

As described in various news stories, including this one, Jim Lucas, an Indiana Republican has proposed that journalists register, be fingerprinted by police, and be vetted for “character and reputation.” Journalist would be defined as anyone writing or broadcasting news for a newspaper, magazine, website, television station, or ration station. Surely I fit this definition, and because there are people in Indiana who read this blog, I suppose Jim Lucas would want me to register, and then visit Indiana to be fingerprinted. Also included in the proposal is a provision treating “committing journalism without a license” within 500 feet of a school or on a school bus as a felony, rather than a misdemeanor. People with felony or domestic batter convictions would be denied journalism licenses. Though the proposal has not been introduced as a bill, Lucas did not promise not to do so.

Unquestionably, this proposal violates the First Amendment. If posed on a Constitutional Law exam, it would be classified as one of those “get these questions correct and you at least pass the course” question. So is Jim Lucas ignorant of the First Amendment and what it protects? Or is he being absurd, deliberately so or negligently?

Lucas claims that he took a state law requiring a license to carry a handgun in public, and tweaked it to apply to journalists. Apparently, Lucas doesn’t like the state gun licensing law. Apparently, he prefers letting anyone who wants to carry a gun to do so. That position is either ignorant or absurd. Perhaps it’s both. Lucas thinks that it is wrong to license Constitutional rights, though his interpretation of Constitutional rights receives far from unanimous agreement in this country.

It gets better. Someone pointed out to Lucas that courts have consistently held that the First Amendment prohibits licensing the press, Lucas explained that “he does not believe legal precedence and case law are important.” He dislikes the fact that the First Amendment protects journalists who lie. There are remedies for lies that cause damage, but a good guess is that anyone with no respect for judicial opinions and legal rules has no idea how that area of law works.

Nor does Lucas seem to have studied history. He claims, “The irony is that every despotic government has employed speech and propaganda in their rise to tyranny while freedom fighters use guns to fight them.” Actually, despotic governments have started their reach for power by strangling the free press, which opens the door to propaganda, and then used guns to repress democracy. It’s at that point freedom fighters have used both free speech and guns to fight back against those whose addiction to power, and money, trumps their sense of civilization, decency, humanity, and goodness.

One First Amendment expert noted that if the Lucas proposal were enacted, it would be struck down. He suggested, “Maybe we should license state legislators.” But isn’t one of the hallmarks of American democracy the Constitutional right of citizens to run for, and be elected to, public office even though they are ignorant of Constitutional or other law, uneducated with respect to the issues facing their constituencies, dismissive of the needs and concerns of those they consider unworthy, willing to violate the law, or supportive of principles and practices contrary to American Constitutional democracy? It is up to voters to screen out these sorts of candidates. Sadly, voters increasingly fail to do so, in part because they have become less capable of doing so and less willing to do so.

In the meantime, I have no intention of registering. I remain convinced that the First Amendment is first for a reason.

Fool Us Once on Taxes, Shame on You, Fool Us Twice . . .

Seven years ago, in Negotiating Tax Legislation: Lessons from Life, I opposed the attempts by those advocating tax cuts for the wealthy to extend the Bush tax cuts. Though the advocates of tax cuts for the wealthy claimed that the extension would created jobs, the track record belied their claims. In numerous commentaries, I have explained why tax cuts for the wealthy do not create jobs, why jobs are created by demand, and how demand is strengthened by boosting the economic position of the middle and lower economic classes. The only tax cuts that create the jobs that the nation needs are tax cuts for the bottom 98 percent.

Despite the failures of supply-side trickle-down voodoo economics, the current administration and some nostalgic members of Congress want to relive the failed experience of tax cuts for the wealthy. Recently, as described in this story, the chief cheerleader for making the wealthy even wealthier trotted out the disproven propaganda about enriching the rich. The plans being tossed about not only cut taxes for the wealthy, they will increase taxes for many people who are not wealthy, and not even close to being wealthy. Yet when the plan to enrich the rich is paraded in public, most of the people who show up don’t realize they are cheering for their own economic demise. One would think, and hope, that by now those who were fooled once by this nonsense would not fall again for the same trick. But as someone once told me, when I was young, if it weren’t for humans there would not be opportunities for con artists.

The hilarity of the recent tax cut rally wasn’t just the absurdity of people cheering for tax increases on themselves. It was the crass appeal to truckers, who were told that cutting taxes for the wealthy would create “more products to deliver.” First of all, as history has taught us, products are manufactured when there are people who want to purchase, and are economically in a position to purchase, those products. The wealthier wealthy have the products they need and want, and simply will stash their increased after-tax cash flow into their foreign bank accounts. Second of all, even if there were an increase in the number of manufactured products needing delivery, the impending flood of self-driving trucks, the flotilla of Amazon and other delivery drones, and the impending delivery of products by digital transmission to 3-D printers is writing on the wall for truckers nationwide. But, those who live in the past lack the ability to see, let alone understand, the future. When it comes to timing, the Future is Now always trumps Bring the Past Back Again.

It is frightening to watch people buy into claims that their taxes are going to be cut when not only is that not going to happen, their taxes are going to be increased. False promises are made because too many people are willing to bank on false promises. And when reality sets in, they seek to blame everyone except their own ignorance, their own failure to think, and their own unwillingness to grow intellectually.

Back in 2010, when I wrote Negotiating Tax Legislation: Lessons from Life, I suggested that the approach to jobs and tax cuts should be, “Give us jobs, and then we’ll give you a tax break.” As I expected, that approach didn’t find support among the wheelers and dealers who hold the nation’s purse strings and control its economy. I elaborated:

The tax-cut-extension advocates don’t like that sort of arrangement. Why? It compels them to put their money where their mouths are, so to speak. Yet that is how competent business entrepreneurs, savvy agents for athletes and other service-providers, and professional negotiators attain workable contracts.

The sort of deal-making underway in Washington resembles, not the approach of professional negotiators and seasoned business entrepreneurs, but the false promises of advantage seekers who populate not only every segment of the business world but a substantial part of personal life. Consumer complaints are replete with tales of vanishing businesses, warnings are issued regularly about the risks of dealing with fly-by-night home improvement companies and individuals, and it took the enactment of lemon laws to compel auto manufacturers to honor their contracts. Tales of woe sent to advice columnists are packed with familiar strains of the “he respected me in the morning .. not” song and the crushed hopes of those who believed what the other person said.

* * * * *

Years ago, the phrase “show me the money” entered into the vernacular. Perhaps it’s time to say, “show us the jobs.” Show us the jobs, the nation will reply in gratitude with a tax break. No jobs, no tax breaks. That’s how tax law inducement provisions work. The “no tax breaks, no jobs” threat is nothing more than bully posturing of the worst sort. There’s a reason the tax-cut-extension advocates don’t like the “show us the jobs, then get the tax break” approach. They know that they’ve created few jobs, particularly enduring jobs, in response to previous tax cuts, and that the nation will not see any sort of job surge with an extension of the tax cuts.

Despite warning after warning, people continue to hand over cash to home improvement con artists, and to engage in behavior they later come to regret when and because they discover they’ve been duped. Perhaps that explains why America continues to listen to, and even cave into, the siren songs of the pied pipers of tax cut grabbing.

America has been down this tax cut road at the turn of the century. It led the nation to the wrong place. Why would anyone want to do this again? Why would anyone want to be fooled yet again?

Does the Taxation of Social Security Benefits Constitute Double Taxation?

A reader directed my attention to a Brenton Smith commentary addressing the taxation of social security benefits. Smith shared the thoughts of one of his readers, who brought to Smith’s attention a proposal to repeal the taxation of social security benefits. Smith noted that the “reader is understandably upset with the current rules, which border on the bizarre.” Smith offered several observations. First, that the taxation of social security benefits was “intended to levy fees on people with ‘substantial outside income.’” Second, that the taxation of social security benefits subject “people slightly above poverty with marginal tax rates that are among the highest in the entire tax code.” Third, that the taxation of social security benefits “represent double taxation.” Fourth, that the rules for taxing social security benefits are “unfair and also horribly complex.” Fifth, the benchmark amounts applicable under current law are not adjusted for inflation, which causes lower income taxpayers to be taxed on social security benefits that would not be taxed if the benchmark amounts were adjusted for inflation . Smith explained why repealing the taxation of social security benefits “would solve the fairness problem by making the financial problem even worse.”

I agree with Smiths’ first, second, fourth, and fifth observations. I agree that repealing the taxation of social security benefits would make the financial problem worse. I disagree with the scope of Smith’s third observation, and I disagree in part with his conclusion that repealing the taxation of social security benefits would solve the fairness problem.

My reason for disagreement rests on how the social security system works. Employees and employers make payments into the social security trust fund. Employees, when they retire or become disabled, and in certain instances their spouses, when they retire, and their dependents, if they are minors when the employee dies, receive lifetime benefits. Sometimes an employee collects less than what the employee paid into the system. One example is an unmarried employee who has no dependents who dies shortly before reaching retirement age. Far more often, though, employees, or their spouses and dependents, collect more than what the employee paid into the system.

When an employee collects more than what the employee paid into the social security system, the employee has income. It is fair to tax that income. The sensible way of doing this is to permit the employee to exclude social security benefits from gross income until the employee has received what the employee paid into the system. At that point, all of the benefits should be included in gross income. If those benefits are the retired employee’s entire gross income, the effect of the standard deduction and the personal exemption deduction would be to generate either zero tax or tax computed at the lowest rates. If the retired employee has substantial amounts of other income, the social security benefits would be taxed at higher, and perhaps the highest, rates.

Under the current system, some social security benefit recipients do not include any social security benefits in gross income, even when they receive more than they paid into the system. There is no double taxation in that situation. Others include some portion of the social security benefits in gross income, and often they live long enough so that the portion of social security benefits not included in gross income over the years is at least the amount that the person paid into the system. Again, there is no double taxation. Double taxation exists when the recipient dies before receiving back what was paid into the system, and yet includes some of the benefits in gross income. The reason for this inconsistency is that current law measure social security gross income with a bizarre formula that reflects the recipient’s adjusted gross income, certain adjustments, and varying portions of the social security benefits. Thus, some social security recipients encounter double taxation, but most do not.

The fix is easy. It is what should have been done originally. Social security recipients should include in gross income any benefits that exceed what the recipient paid into the system. When taxation of social security benefits was first enacted, I advocated what I have just proposed. The response was a claim that people don’t know what they paid into the social security system. That doesn’t matter. It doesn’t matter because the Social Security Administration knows. That information is readily available to anyone who has ever paid into the social security system. The process of starting with the “total paid into the system” number, and subtracting benefits each year until zero is reached, and then including all benefits in gross income is much easier, far less complex, and certainly far less bizarre than the current law mechanism for computing the portion of social security benefits included in gross income. Taking the approach I suggest eliminates double taxation. It eliminates the imposition of high marginal rates on social security benefits received by taxpayers with low taxable income. It eliminates the benchmark amounts, and thus eliminates the problems caused by failure to adjust those amounts for inflation.

Simply repealing the taxation of social security benefits does not solve the fairness problem. Repealing the taxation of social security benefits would provide more of a benefit to taxpayers who receive more benefits over their lifetimes, because those taxpayers would be excluding from gross income more economic gain than would taxpayers who receive fewer benefits over their lifetimes.

Six and seven years ago, I made these same points, and discussed my proposal in greater detail, in Taxation of Social Security Benefits: Inexplicable Inconsistency and Hidden Tax Increases, Getting Specific with Tax-Related Deficit Reduction Ideas: Making Section 85 Fairer and Simpler, and Retirees, Social Security, and Filing Tax Returns?. Since I wrote those commentaries, nothing has happened, or written, or said, or argued, that has changed my mind.

When Claiming a Dependent Has Adverse Tax Consequences: A Follow-Up

A little more than a week ago, in When Claiming a Dependent Has Adverse Tax Consequences, I described the reasoning and outcome in Gibson v. Comr., T.C. Memo 2017-187. The taxpayers claimed their son as a dependent, and ended up having their tax increased by the advance payments of the premium assistance tax credit paid to an insurance company on behalf of their son. I then posed this question:

Would it not have been better to not claim the son as a dependent?

I then provide one answer:

If the taxpayers were entitled to claim their son as a dependent, which the facts suggest was the case, then failure to do so would not permit the son to claim the credit because the credit is denied to any individual with respect to whom a dependency exemption deduction is allowable to another taxpayer.

Then I asked a second question:

But would failure to claim the son as a dependent, even though he qualifies as a dependent, eliminate the requirement that the advance premium payments made on his behalf be added to the taxpayers’ tax?

I confessed the futility of my search for a definitive answer, and invited assistance:

I cannot find anything definitive that answers the question. If the answer is no, then failure to claim the son as a dependent, even though he qualifies, would be counterproductive. If the answer is yes, it still might not make sense to fail to claim the son as a dependent. Why? The son, not entitled to the credit because he could be claimed as a dependent, would be the one required to add the advance payments to his tax. Perhaps someone who has expertise in the intersection of tax law and health insurance law can share some insights.

And, fortunately for my readers and myself, assistance arrived. It came in the form of an email from Christine Speidel, who is the Director of the Vermont Low-Income Taxpayer Clinic, and a Staff Attorney with the Office of the Health Care Advocate of Vermont Legal Aid, Inc. Christine’s explanation takes us through the complex maze encountered where tax law meets health care law. Christine wrote:

I read your post on Gibson v. Commissioner, the recent premium tax credit case. In the post, you ask who would have the APTC repayment obligation if Mr. and Mrs. Gibson had decided not to claim their son’s dependency exemption. I believe the son would have the repayment obligation in that case. Dependents cannot qualify for a PTC, but this doesn’t mean they can’t be liable for excess APTC.

If nobody claims the personal exemption of an APTC recipient, Treasury Reg. § 1.36B-4(a)(1)(ii)(C) applies:

(C) Responsibility for advance credit payments for an individual for whom no personal exemption deduction is claimed. If advance credit payments are made for coverage of an individual for whom no taxpayer claims a personal exemption deduction, the taxpayer who attested to the Exchange to the intention to claim a personal exemption deduction for the individual as part of the advance credit payment eligibility determination for coverage of the individual must reconcile the advance credit payments.

The Treasury regulations and HHS Marketplace regulations are designed to mesh, so that somebody will always be on the hook for excess APTC. The Marketplace regulations are quite detailed about this.

Marketplaces can only award APTC to a “tax filer.” 45 CFR § 155.305(f). That term is defined to exclude tax dependents. 45 CFR § 155.300(a). Tax dependents are not allowed go out and get APTC on their own. An applicant for APTC must attest that they are a tax filer, and they also must attest to the individuals in their tax household. 45 CFR §§ 155.310(d)(2)(ii); 155.320(c)(3)(i)(A). The Marketplace must try to verify the information through the federal data hub or other electronic sources, and if that fails, it must request additional documentation from the applicant. 45 CFR § 155.320(c)(3)(i). A Marketplace must get income information from the applicant’s entire tax household, and it must verify that information before granting APTC. 45 CFR § 155.320(c).

I presume the Gibsons’ son signed up for his Marketplace plan as a non-dependent, single individual. I assume this because he was awarded APTC without his parents’ knowledge. Under the Marketplace regulations, the Gibsons’ son should have made an attestation that he would claim his personal exemption when he applied for APTC. In that case, he would be liable for APTC under the Treasury regulation above, if his parents did not claim his exemption.

The regulations are much tighter than what happens on the ground, though. It is possible that the Marketplace fell down on the job, and awarded APTC even though the Gibsons’ son did not represent himself as a “tax filer.” I do not think this would happen today, but it is possible with a 2014 plan, when the system was brand new to applicants and eligibility workers alike, and when many exchanges had operational and technological problems. On the facts we have, it’s hard to tell whether the Gibsons’ situation is entirely the son’s fault, or whether the exchange also messed up.

It is also interesting to compare the Marketplace application with the attestations required by the regulations. HHS model applications and instructions are posted online. The regular application asks for information about every person in the applicant’s tax household. However, the shorter application for a single adult doesn’t have an attestation about filing status – it’s just stated in the form instructions that tax dependents can’t use the short form. If the Gibsons’ son used a paper application, he might not have made an attestation about tax filing status. Most people apply online or over the phone, however, in which case the applicant would get initial questions about tax filing status. Presumably the IRS would try to pin the son with the repayment obligation even if he applied on paper. The short application form should probably be revised to comply with the Marketplace regulations on attestations.

Having the son reconcile his APTC might not be a bad result for the family. If the Gibsons dropped their son’s dependency exemption, and their son filed his 2014 taxes as a dependent and reconciled his APTC, at least he would get the benefit of repayment limitations based on his income. Treas. Reg. § 1.36B-4(a)(3). He would likely have to repay much less than the full amount of APTC. Repayment limitations are based on “household income.” Fortunately for taxpayers, the definition of household income only considers individuals whose personal exemptions are claimed on the tax return. Treas. Reg. § 1.36B-1(e). If the son is actually a dependent for 2014, he probably has fairly low income and would only have to repay $300. This would be a better solution for the family overall.

As horribly complex is the federal income tax law, even worse is healthcare law. Getting a handle on both is difficult, and so to Christine Speidel, on behalf of my readers and myself, I offer appreciation for her assistance in navigating this particular maze.

Making Tax-Connected Identity Theft Even Easier

It’s bad enough the people in charge of cybersecurity at Equifax slipped up. The identifying information of almost every adult American, including social security numbers, is in the hands of people who do not have the best of intentions, and before long even more people intent on maliciousness will obtain these identifying details.

Now comes news that the IRS awarded a multi-million-dollar fraud-prevention contract to Equifax. That’s not unlike hiring an embezzler to conduct an audit. The IRS did not open the opportunity to any other company.

Reaction to the awarding of the contract has spanned the partisan gap. In this report, one can find statements made by members of Congress, all of which criticized both the IRS and Equifax. Objections were made not only to the fact that a company with insecure data protection continues to have access to tax information, but also to the process by which Equifax obtained the contract.

According to this story, the claim by the IRS that it had no choice but to award the contract to Equifax has been refuted by the Government Accountability Office. It turns out that another, unidentified, company had been awarded the contract, but Equifax protested having the contract shifted to another company. The IRS concluded that it had no choice but to allow Equifax to continue providing identify protection services for taxpayers accessing data through IRS websites, but the GAO explained that the unidentified company could have been awarded the contract pending resolution of the Equifax protest.

This is no way to run a business, to run a government agency, or to run a nation. The lack of care and the lack of accountability are diseases contributing to the overall decline of the nation’s economic health. Those who claims simplifying the tax system will reduce the risk of identity theft are wrong. It doesn’t matter whether a person’s tax return has 2 lines, 20 lines, or 200 lines, because no matter the number of lines, identifying information will be on the return.

It is time for change, throughout the private sector and government. It is time to protect Americans and hold corporations, corporate executives, government agencies, and government officials accountable for the mess that deregulation has enabled.

One-Time Revenue Grabs

Legislators who try to balance budgets are increasingly resorting to a technique that has also found followers in the business world. I call it the one-time revenue grab. To make up a shortfall between revenues and expenses, the business or legislature identifies a source of revenue that exists for only one moment in time. The flaw with this approach is that when the calendar turns and another shortfall looms, the one-time revenue grab no longer exists. Another one must be found. Eventually, there won’t be one to be found. The problem is structural. Revenue and expenses, for a business or government, must reflect continuous operations. If operating revenue consistently falls short of expenses, the business and the government will fail. It takes governments longer to fail than businesses, but failure is always around the corner.

An example of this one-time revenue grab made the news a few days ago. Though Pennsylvania legislators have been negotiating in secret, keeping their constituents and the public they are required to serve in the dark, word leaked that one proposed revenue raising provision would apply the sales tax to items purchased by businesses for sale to customers. In other words, the sales tax would be collected sooner. Items purchased this fiscal year but not yet sold would be subject to the tax. Of course, that would increase revenue this year. But what would happen next year? Because the sales tax had already been paid, when those items are sold, the revenue that would have been generated next year is reduced. It would be offset by imposing the sales tax on items purchased next year by businesses for the following year, so sales tax revenue next year would be the same as it would have been without the provision. That is why the proposal is a one-time revenue grab. Once word leaked out, opposition from businesses, unions, and others caused the legislators to set it aside.

From time to time, Pennsylvania legislators propose the sale of the state-operated liquor store system to provide revenue to offset spending. But how often can that trick be used? Once the system is sold, it’s not available for sale in the following year. Selling assets to fund operations is a signal that the entity’s finances are in trouble.

It’s not just governments that play this game. For the past several years, I have been getting a stream of postal letters from the water company, inviting me to pay a lump sum for insurance against damages to the water line from the main to the meter. The one-time payment would protect the line at least until the house is sold. Someone apparently came up with the idea of infusing the revenue stream with payments that, once made, would not be made again. So, if by some strange twist, every customer paid the lump sum premium, the company’s financial statements look good. But what happens the following year? There’s probably some other one-time revenue enhancement lurking in the wings.

The challenge, to governments and businesses, is matching revenue with expenses. Banks and other lenders, of course, encourage borrowing to make up the deficits, but that’s because the interest on those loans enhance the revenue of the banks and lenders. Borrowing works only if it is a timing or bridge assist, that is, the source of the revenue with which to repay the loan is in place. Too often, individuals, businesses, and governments borrow without having a stream of revenue available to pay the interest and principal.

It’s one thing for an individual to mess up with failing to match revenue and expenses. When a business miscalculates, its failure can cost employees their jobs, and customers their orders and service. When a government miscalculates, or more specifically, when legislators miscalculates, it can cost much more than jobs, safety, and health, as it already has in Pennsylvania while the legislative stalemate enters its fourth month. The price of legislative miscalculation can be the loss of freedom, and even national identity.

The Tax Policy That Worked for the Few and Not for the Many Last Time, and It Will Be a Repeat This Time

The constant cry by the wealthy for reduction, and eventually elimination, of taxes imposed on the wealthy has swelled to a deafening roar. Branded as tax “reform,” a worthy objective if truly pursued and not used as a diversionary tactic, the effort by the wealthy to shift the economic burden of civilization onto the non-wealthy and to shift the economic benefit of civilization onto the wealthy has picked up steam as the wealthy have acquired an even stronger grip on government.

Readers of this blog know that I have no faith in the promises advanced by proponents of tax cuts for the wealthy. The claim that the increases in after-tax flows accruing to the wealthy will trickle down to everyone else has been proven, to put it nicely, erroneous. The claim that tax cuts for the wealthy create jobs flies in the face of evidence that most job creation arises from overwhelming demand by consumers who have money to spend. I have written about the flaws of supply-side economics and trickle-down theory in numerous posts, including Job Creation and Tax Reductions and The Tax Fake That Will Not Die.

The state of Kansas has gifted the nation with a sad, but instructive, lesson in why tax cuts for the wealthy are so destructive economically and socially. In A Tax Policy Turn-Around?, I explained how the Kansas income tax cuts for the wealthy backfired, causing the rich to get richer, the economy to stagnate, public services to falter, and the majority of Kansans to end up worse than they had been. In A New Play in the Make-the-Rich-Richer Game Plan, I described how Kansas politicians have been struggling to find a way to undo the damage caused by those ill-advised tax cuts for the wealthy. In When a Tax Theory Fails: Own Up or Make Excuses?, I pointed out that the Kansas experienced removed all doubt that the theory is shameful. In Do Tax Cuts for the Wealthy Create Jobs?, I described recent data showing that the rate of job creation in Kansas was one-fifth the rate in Missouri, a state that did not subscribe to the outlandish tax cuts for the wealthy that Kansas legislators had embraced. In Kansas Trickle-Down Failures Continue to Flood the State and The Kansas Trickle-Down Tax Theory Failure Has Consequences, I described how large decreases in tax revenue, the opposite of what is promised by the supply-side theorists, triggered cuts in public education, and in turn stoked the fires of voter frustration. The voter reaction, however, did not push out of office enough supply-side supporters. In Who Pays the Price for Trickle-Down Tax Policy Failures?, I described how the governor of Kansas, who claimed that tax cuts for the wealthy would generate increased revenues, proposed to deal with the resulting revenue shortfall by cutting spending for essential services. In Kansas As a Role Model for Tax Policy?, I shared the news that the Kansas policy of cutting taxes for the wealthy with the unwarranted promise of resulting revenue increases and economic prosperity is on the verge of total collapse.

Now the effort to reduce, and eventually eliminate, taxes on the nation’s self-appointed nobility has again returned to the center of the Washington, D.C., spotlight. Proposals to repeal the estate tax offer nothing to the vast majority of Americans who are not subject to the estate tax because their economic situation does not contribute to the economic instability that the estate tax is designed to prevent. Proposals to reduce income tax rates do far more for the wealthy than they do for the rapidly shrinking middle class. Given the revenue cost of these giveaways, supporters of these foolish ideas are divided, with some willing to let federal budget deficits skyrocket and the anti-deficit segment seeking to reduce or eliminate tax provisions that chiefly benefit the middle class. Preliminary examination of different versions of the packages under consideration reveal that many middle-class individuals and families will face increases federal tax bills. Unfortunately, most of these people are unaware that they are about to be skewered by tax “reform” being peddled to them as reductions in their tax liabilities.

Though not everyone who is a taxpayer in 2017 was old enough to be filing tax returns the last time this nation fell for these false promises, most of today’s taxpayers should remember, and hopefully do remember, not only the claims made in 2002, the changes in tax law enacted that year, and the economic consequences that devastated the nation six years later after the bad plans had been given sufficient time to percolate below the surface.

If America falls yet again to these false promises, then because of the tremendously larger scale of what is being planned, what happens when the consequences show up in the early to mid 2020s will make the Great Depression pale in comparison. By then, the beneficiaries of this wealth transfer will have retreated to the safety of their private islands, protected by their private armies, and laughing at the ease with which they restored feudalism while people were so distracted by arguments over the definitions of socialism and fascism.

When Claiming a Dependent Has Adverse Tax Consequences

Contrary to what intuition might indicate, being able to claim someone as a dependent on a federal income tax return doesn’t always offer advantageous tax consequences. It’s understandable that people would think that the reduction in taxable income generated by the dependency exemption deduction reduces taxes. Usually it does. But sometimes, strange things happen.

A cautionary example of this unexpected consequence was provided recently by the United States Tax Court in Gibson v. Comr., T.C. Memo 2017-187. The taxpayers filed a joint return for 2014. During 2014 and 2015, their adult son did not live with them. He held a job, and at some point during 2014, the son used an address in another town, an address that was not the taxpayers’ address. For 11 months during 2014, the son obtained health insurance from Human Employers Health Plan of Georgia, which the son obtained though an application with the Health Insurance Marketplace. Humana collected premiums of $4,628.80, which were paid through the mechanism of advance payments of the premium assistance tax credit under section 36B. Monthly invoices for September through December of 2014 sent to the son at his separate address showed a gross monthly premium of $420.80, an offsetting Advance Premium Tax Credit of $420.80, and a balance due of zero. In mid-January of 2015, Form 1095-A was sent to the son at his separate address, showing the advance payments of the premium assistance tax credit that had been made to Humana in 2014. On January 1, 2015, the son enrolled in a Blue Cross Blue Shield plan offered by his employer.

On their 2014 joint income tax return, the taxpayers claimed their son as a dependent. The IRS did not dispute the son’s status as a dependent. The taxpayers claimed a refund of $6,880 on the return, reflecting the excess of the tax withheld from their reported income over the tax reported due. They did not report the advance payments of the premium assistance tax credit on their return. When they filed their return they were not aware that the son had obtained the Humana policy or that the advance payments had been made to Humana in 2014 for the son’s policy.

The IRS determined that the taxpayers tax should be increased to reflect the advance payments of the premium assistance tax credit to Humana on the son’s behalf during 2014. This caused a deficiency of tax that reduced the taxpayers’ claimed refund by $4,628.80.

As the Tax Court explained, section 36B permits eligible taxpayers, those with household incomes between 100 percent and 400 percent of the Federal poverty line, to claim the premium assistance tax credit for health insurance covering dependents, and dependents may not claim the credit on their own returns. Though advance payments of the premium assistance tax credit are made directly to the insurer during the taxable year, advance payments of the premium assistance tax credit made on behalf of a taxpayer or members of the taxpayer’s household, including dependent children, must be reported on the taxpayer’s federal income tax return. If the advance payments exceed the premium assistance tax credit to which the taxpayer is entitled, the excess increases the tax owed by the taxpayer and reduces any refund otherwise payable.

Because their income exceeded 400 percent of the federal poverty line, the taxpayers were not entitled to any amount of premium assistance tax credit. The entire amount of the advance payments of the premium assistance tax credit on their son’s behalf paid to Humana by the Health Insurance Marketplace during 2014 increased the taxpayers’ tax owed and reduced their claimed refund. It was on this basis that the IRS determined a deficiency and reduced the claimed refund.

The taxpayers did not deny that their reported income level made them ineligible for the premium assistance tax credit. They disagreed that their son received insurance from Humana, and therefore they disagreed whether any advance payments of the premium assistance tax credit were made to Humana on their son’s behalf. The son, unable to testify at the trial, provided a signed affidavit in which he claimed that he had only employer-provided Blue Cross insurance and that he did not receive a Form 1095-A showing advance payments of the premium assistance tax credit on his behalf to Humana. The Tax Court, however, pointed out that the reliable evidence presented to it established that the son’s recollection about his insurance coverage was “mistaken.” That evidence included business records from the son’s employer, from Humana, and from the Health Insurance Marketplace. It established that the son’s Blue Cross coverage did not begin until 2015, that he was covered by the Humana policy in 2014, and that Humana received advance payments of premium assistance tax credits to offset the son’s insurance premiums.

The court pointed out that it did not doubt the taxpayers’ testimony that they believed that their son did not have an insurance policy from Humana. The fact that their son did not live with the taxpayers led the court to conclude that it believed their testimony that they were unaware of the insurance coverage and any confirming information that was mailed to him. Thus, because the taxpayers did not dispute that their reported income level made them ineligible for the premium assistance tax credit, their tax was increased, and their refund reduced, by the amounts prepaid to Humana on their son’s behalf during 2014.

The dependency exemption deduction for 2014 was $3,950. Although the taxpayers’ adjusted gross income and taxable income was not provided by the opinion, at best it saved them roughly $1,600 in tax liability. The price that they paid was $4,628.80. Would it not have been better to not claim the son as a dependent? If the taxpayers were entitled to claim their son as a dependent, which the facts suggest was the case, then failure to do so would not permit the son to claim the credit because the credit is denied to any individual with respect to whom a dependency exemption deduction is allowable to another taxpayer. But would failure to claim the son as a dependent, even though he qualifies as a dependent, eliminate the requirement that the advance premium payments made on his behalf be added to the taxpayers’ tax? I cannot find anything definitive that answers the question. If the answer is no, then failure to claim the son as a dependent, even though he qualifies, would be counterproductive. If the answer is yes, it still might not make sense to fail to claim the son as a dependent. Why? The son, not entitled to the credit because he could be claimed as a dependent, would be the one required to add the advance payments to his tax. Perhaps someone who has expertise in the intersection of tax law and health insurance law can share some insights.

Age Is Not “Just a Number,” But Sometimes It Is the Wrong Number

About a month ago, in For Tax Purposes, Age Is Not “Just a Number”, I described the outcome in a case involving a taxpayer’s failure to prove that he was at least 59 and a half years of age when he withdrew money from his IRA. My introduction to that discussion included examples of age determination challenges encountered while doing genealogy and family history research. One example involved people making themselves a year younger on World War One draft registration forms. Another example involved people making themselves a year older on social security retirement benefits applications. Still another example involved people born in Europe who used the European rather than the American birthday counting convention.

About a week ago, a reader shared with me another example of how age determination challenges can arise. The story involves a now-deceased older relative of the reader. This relative was born early in January. The person at the hospital filling out the birth certificate made the same sort of error many people do when writing checks early in a new year. That person wrote the year that had closed. So instead of showing, for example, the birth as January 3, 2017, it was recorded as January 3, 2016. The reader’s relative knew that the certificate was wrong, but always used the correct birth date. When the relative retired from a teaching position and applied for social security benefits at the age of 65, both the state teacher’s pension system and the Social Security Administration insisted that the reader’s relative was 66, and computed benefits using the age of 66. According to the reader, his relative’s “protestations were ignored.”

Had the reader’s relative not have a sense of integrity, the relative could have obtained a driver’s license at age 15, and could have made alcohol purchases at age 20. Surely those things did not happen, not by a person with the integrity to protest use of the wrong age. I wonder if any other person born in January, especially early in January, has had the birth recorded with the wrong year for this same reason. And I wonder how many went through life as a year older than their true age. And I wonder if it worked to anyone’s disadvantage, such as being called up for the military draft a year sooner than ought to have happened.