> Missing or Kidnapped Children: You may be able to claim a child who was kidnapped by a non-family member. IRS treats a kidnapped child as living with you for more than half of the year if the child lived with you for more than half the part of the year before the date of the kidnapping.
https://www.eitc.irs.gov/other-refundable-credits-toolkit/un...
The original topic about stolen property is the patch for the same kind of loophole. Without this rule, you could arrange to have something of value stolen in order to avoid a taxable transaction. Imagine your employer giving a bonus by leaving an envelope of cash conspicuously unguarded.
This is the kind of unhinged batshit economic thinking that leads to people dying because they can’t afford insulin.
So, first, the "cobra effect," like most economic proverbs, is apocryphal. It didn't happen. It's a story economists tell their kids to keep them from sharing.
Second, there's a big damn difference between "I'm going to grow a snake because I'm getting paid for it" and "I'm going to get my kids kidnapped so I can collect a tax credit without actually having to pay for the kids." It may not appear that way if one's working model of people is "dispassionate rational actor," but it turns out in the real world most people have some kind of irrational emotional attachment to their kids.
Finally, I'd submit that "Cobra Effect"-type problems arise as a factor of two errors - the first is misunderstanding the cultural group for which you're designing practices, and the second is a weirdly inflexible view of society that accepts someone manipulating the system as just a sort of thing that happens and not an egregious breach of the social contract warranting a response.
Don’t assume that everyone else subscribes to your morality, ideology or “ethics”. It’s a brutal world out there and some people value power much more than you do.
Health care for profit rewards companies who limit supply, increase prices, and set the goal of having long-term “customers” because each of those things brings in more cash.
It’s not economic thinking that’s driving the ship though.
People dying because they can't afford insulin are usually not dying because they have insurance where the prescription co-pays for insulin is too high, but because they either are actually uninsured, are effectively uninsured because of a high deductible, or have insurance that works on a coinsurance rather than co-payment model.
And even then that's usually not really the problem, the problem is usually that they can't afford a more basic life necessity (often food or shelter) for themselves or their dependents, and voluntarily forego (or limit use of) insulin to afford the other need. Which is a real problem (and a real public economic policy problem), but usually not fundamentally a healthcare policy problem.
(On the other hand, it's often a problem where moral hazard arguments of the type at issue here contribute to the failure to solve, so the argument about that being the problem may still be correct by a less direct route then seems to have been intended.)
Some tangential articles to show that people exploit children for money. https://www.newyorker.com/magazine/2021/10/25/how-an-adoptio... https://www.npr.org/2019/10/09/768533784/arizona-official-ar...
Since Veblen goods are defined as anything where the demand curve slopes upward, that would only be a result of an empirical study if the study was designed to test, and strong enough to confidently disprove, the existence of goods with a flat demand curve. But it's not meaningful in any case.
> Veblen goods, which kidnapped children most certainly are not.
[citation needed]
Look at the other things that are Veblen goods. They are status symbols. Handbags, rare cars, etc. Kidnapped children are clearly not a member of this category.
> [citation needed]
Please. This is a ludicrous demand for rigor, and not how science actually works.
Captives and slaves, which kidnapped children are the first and often also the second, can be either tools or status symbols (or both simultaneously).
Obviously, flagrantly illegal (and not wink-wink-nudge-nudge tolerated in public) goods tend to only be status symbols in particular criminal subcultures, but those subcultures very much exist.
Yes, that's true. But that's the wrong side of the transaction. This IRS policy is disincentivizing false kidnapping. Not actual kidnapping.
The IRS policy is designed to prevent you from claiming a child as a dependent indefinitely after they have been kidnapped. So, for this to be a Veblen good, it'd have to be a status symbol in your social circle to have had a child kidnapped from you.
There's no reward, you'd be getting the same tax break if the child was not kidnapped. The rule is about how long it takes to lose the tax break in case of kidnapping.
Except if the kid was not kidnapped, you have to pay for the kid's expenses and welfare.
I expect somebody who wants to keep the tax break without the kid is not too worried about the kid's intrinsic welfare.
Who would even agree to kidnap somebody else’s child for this purpose? I’d suspect the first 9 out of 10 convicted felons would still tell the police your plans. Most people would be too suspicious that you’re trying to entrap them, asking them to kidnap your child.
And what can you offer someone to agree to do this if your own reward is a temporary tax break? At this point, you might as well kidnap your own child.
Using a corner case of behavior to justify systemic suppression of otherwise rational behavior just perpetuates the cycle of pain. Welfare royalty exist. But not nearly in numbers high enough to ethically justify hamstringing the system.
If they exist, it's nowhere near the levels portrayed in popular media.
So, part of the problem is where people choose to draw the line on "royalty". If refrigerator ownership meet your criteria then sure, you're going to see royalty everywhere.
I’ve yet to hear an explicitly stated argument for why I’m supposed to think someone who has access to a refrigerator, internet, food, etc. is impoverished, except for, “Somesuch CEO earns 100000000x more than they do.”
That said, sure, “welfare royalty” seems like a misnomer. I assume they typically live like regular, “middle-class” people without the job part.
Maybe we are talking about "welfare" in different ways? In the US, welfare is a constellation of programs, not just one single program that gives $$ each week/month. Everything from subsidized school lunches, medicaid (CHIP for additional care for children), SNAP... your comment about "without the job part" indicates that you might not be aware that a very large number of people are on one or more of these programs and work fulltime+ jobs. Where I live it was a real crisis during COVID school closures because the poorest children had parents with jobs that could not be done remotely and parents could not find or afford alternatives, at the same time that any internet they had was through cell phones (usually the parents phones) so the school district needed to send out wifi hotspots & chromebooks so that students at least had the basic tools to learn... but had to be left alone (if they were old enough) or parents quit their already low-paying jobs to watch over their kids.
None of the above sounds like middle-class without the job part. As you began your comment: I hear people bring up your sort of argument to scoff at the idea that significant % of the population may fall through the cracks or just get left behind. I don't understand the point of view except as lack of direct experience with people living in these not-middle-class positions of poverty on the brink of collapse.
A lack of agency and security. Often their situation is such that they cannot change it. For the employed, there is no time or energy to improve life. For the unemployed, employment often has a negative net income (once accounting for transport costs, reduction in benefits and costs they can currently pay with time such as food prep which would have to be paid in money).
There are no spare resources for education or entrepreneurship. No resources for fulfilling hobbies or self development.
Even if you accept the negatives for long term growth, getting an entry level job from that position requires grovelling and outright lying to your 'betters' about how you want to dedicate your life to breaking your back stacking shelves for $8/hr on a split shift 100% availability basis (that doesn't give you enough time to get home in your 3hr 'break') because you love it so much.
Then there's the precarity that poverty brings. Not knowing how you'll afford an emergency, and constantly weighing eating vs. paying the power is mentally draining and incredibly harmful to your mental health. Not conceding to your landlord's insane demands could leave you permanently homeless, and now debt collectors are calling you for a bill you have receipts of paying every 3 hours.
A car is unaffordable, public transit is underfunded, demeaning and unreliable, and pedestrian or cycling infrastructure is unaffordable.
No level of government will listen to your concerns, in fact their decisions are actually anticorrelated with public support.
On top of that you are constantly told that everything wrong is your fault, and you just have to drink fewer lattes and vote with your wallet more.
Public space is stolen and turned into space for cars or privately owned malls.
Anything your community does build for mutual benefit is torn down and rebuild to be extractive.
This is not the life of nobility. It's basically just the same as a peasant with easier access to propaganda, protein, calories, and mentally destructive dopamine buttons.
In many ways it is worse because it is so isolating, and the source of the harm is so nebulous.
Many people are way more against crimes which offer them little returns than against crimes that may happen in their social circles.
Edit: I want to clarify that it's not some kind of conspiracy, it's that we simply are more empathic with people in a similar position to us
you already have a tax break for the kid, it's a dependent, all that was being said if your kid gets kidnapped you can still claim it as a dependent for half a year and the commenter thought it would be reasonable to allow longer.
The people applying the tax code can make exceptions at their discretion. It's a difference.
Presumably the rule is there to subsidize child-rearing. When the child is gone (kidnapping, death, ascention to heaven, etc), the law would logically not apply any more, so there will be details about where the cuttoff falls. If people wanted want to give cash to unfortunate parents, judges interpreting the laws should tell you to pass another law for it.
Edit: @toolz: I can both be satisfied how they provide customer service and dissatisfied that they were in bed with Intuit preventing obsoleting commercial tax prep services. Nuance! (HN throttled, had to reply here to your comment)
When someone asks a question that requires clarification, they go get the answer through whichever channel(s) are required, then they not only respond directly to the customer (taxpayer) but they also format the response for public consumption.
If more companies treated documentation this way, life would be a whole lot easier.
No it's not. The IRS didn't make it that way, Congress did (bought and paid for by Intuit & Co.).
Legal custody seemed to be whomever had the kid in whichever state at any given time.
One episode ended when her bio dad showed up at air port with a shotgun and bio-mom had convinced the out of state police to be on her side. After a night in jail anyway. Police made the bio-dad go home.
My mom tailed her at school for a few years. Stopping another attempt before it ended.
Was messed up every way possible.
If a family member kidnaps them the it follows the usual formula of who cared for the kidnapped person for half the year plus a day.
To claim someone as your dependent child, they must be either:
- Your son, daughter, stepchild, foster child, or a descendant (for example, your grandchild) of any of them; or
- Your brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant (for example, your niece or nephew) of any of them.
To claim someone as your dependent relative, they must be either:
- Your child, stepchild, foster child, or a descendant of any of them (for example, your grandchild). (A legally adopted child is considered your child.)
- Your brother, sister, half brother, half sister, stepbrother, or stepsister.
- Your father, mother, grandparent, or other direct ancestor, but not foster parent.
- Your stepfather or stepmother.
- A son or daughter of your brother or sister.
- A son or daughter of your half brother or half sister.
- A brother or sister of your father or mother.
- Your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law.
[0] https://www.irs.gov/publications/p501#en_US_2020_publink1000...
[1] https://www.irs.gov/publications/p501#en_US_2020_publink1000...
The question that lingers in my mind is if your dependent is kidnapped and gone for too long (but not dead... let's say they're kidnapped on December 31st and returned 366 days later conveniently removing custody for an entire calendar year), are you ineligible to claim them as a dependent while they're missing? Seems like strictly and amorally speaking your financial burde has been lessened and you wouldn't need the tax relief for caring for that person.
lol yeah I'm imagining some skit (or real life situation!) where the kidnapper is calling in to the IRS and explaining the situation to the agent, who dutifully works through the flowchart about which statuses apply when, completely oblivious to the missing child they're dealing with.
And then they just sit there listening in while the kidnapper interrogates the child for the SSN before coming back and reporting that they "can't obtain it", followed by the agent reading off their options.
With that said, not all "kidnappings" in this context are the "masked men/unmarked van" type, I assume you have these same considerations for stuff like "other legal guardian picked up child three days before court authorized them to".
Though the IRS has other ways to inform the police if they can find anything you didn't tell them
The article described how the SCOTUS in 1927 resolved this question.
>>Manly Sullivan was convicted in 1922 of evading federal taxes on the income he earned through “running illegal whiskey” in violation of the Volstead Act, according to The Mob Museum.
>> A U.S. circuit court of appeals, however, reversed Sullivan’s conviction. It ruled that, while income from illegally trafficking liquor was subject to taxation, the Fifth Amendment to the U.S. Constitution — which protects against self-incrimination — protected Sullivan from declaring that income on his tax returns.
>> But the U.S Supreme Court in 1927 reversed the court’s decision.
>> “We see no reason to doubt the interpretation of the Act, or any reason why the fact that a business is unlawful should exempt it from paying the taxes that, if lawful, it would have to pay,” Justice Oliver Wendell Holmes Jr. wrote in the majority opinion, according to Justia. "
This is what got Al Capone convicted, not his widespread criminal and murderous enterprises, but his tax evasion.
So, yes, you are required to report all illegal income to the IRS. However, you don't need to go into any detail - just say "Self Employment Income = $XX,000,000" for your drug smuggling empire and pay the tax.
There are also, afaik, strict rules for the IRS to firewall this info from criminal (as opposed to tax) prosecutions. The motivation for these rules is to not discourage people from paying tax on all their enterprises.
[[[ obviously not legal advice, only general info, consult your attorney for actual advise, and maybe avoid crimes ]]]
I don't know how well that works in practice, but I feel like if it is used at all in criminal prosecutions then that would still be a 5th Amendment violation. That is, imagine this hypothetical:
- They have evidence you're a head gangster.
- They raid your warehouses and find a set of accounting books showing profits of $17,530,000.
- They subpoena tax records that turn out to have you saying "Misc income: $17,530,000."
- They argue in (criminal) court that, "aha, he must be running a criminal enterprise because his books show the very same income he reported on his tax forms."
There, even though you didn't report it as criminal income, they're still using compelled testimony (legal requirement to report that criminal enterprise income) against you in prosecution of said criminal enterprise.
Again, I don't know what happens in practice, just saying that if they did it like that, that would be a clear 5th Amendment violation.
Also, if it's any comfort, they wouldn't need to bother with your tax returns. Unexplained deposits and expenditures are often used to convict people of various crimes. So, I'd expect it to be quite an exception for them to bother with upsetting the IRS <-> criminal taxpayer equilibrium.
Hell, it seems pretty routine now for police, TSA, etc. to just find cash and seize it, forcing the owner to defend the legitimacy of the cash in court, as in funding the prosecution of "$12,345.67 vs State of Texas"; yup, you aren't even considered a party, the govt case is setup to be vs the cash pile itself, presumed to be guilty of being illegal proceeds.
Fun Stuff!
https://www.irs.gov/businesses/small-businesses-self-employe...
It's not like it's a line item on your 1040 "Crime: $4000". It's just self-employed income.
This conversation feels... familiar.
1) even if the kid is kidnapped, we still theoretically want the person watching that child to receive financial support (keep in mind most kidnappings are from ex-spouses or other family members).
2) It provides one more paper trail for authorities to track the child down.