TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Wednesday, July 27, 2016

Chodorow & Johnston:  Trump's Wrong-Headed Call For Tax-Subsidized Politicization Of The Pulpit

Trump (2016)Following up on Sunday's post, Trump's Call To Repeal The Johnson Amendment And Allow Churches To Endorse Political Candidates:  

Adam Chodorow (Arizona State), Donald Trump Wants to Politicize the Pulpit:

One of the biggest applause lines of the Republican convention was Donald Trump’s call to repeal the so-called Johnson Amendment, which, among other things, conditions churches’ tax-exempt status on ministers refraining from political speech at their pulpits. Critics such as Trump argue that ministers have First Amendment speech rights, which they say the government is infringing by restricting religious organizations in this manner. ...

In truth, it’s a lot more complicated than that. With Trump, it always is. Because on closer inspection, it’s clear that the Johnson Amendment, made law in 1954, serves an important function: preventing the government from subsidizing political speech. And repealing the law could lead to more entanglement of church and state—not less. ...

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July 27, 2016 in Political News, Tax | Permalink | Comments (1)

Sunday, July 24, 2016

Trump's Call To Repeal The Johnson Amendment And Allow Churches To Endorse Political Candidates

Friday, July 22, 2016

Trump Family Would Get $7 Billion Windfall From Estate Tax Plan

Trump (2016)The Hill, Trump Family Would Get $7B Windfall From Estate-Tax Plan: Analyst:

Donald Trump's family would get a $7.1 billion tax cut under the Republican presidential nominee's proposal to eliminate the federal estate tax, a centrist think tank estimated.

"The staggeringly high value of the tax cut for the Trump dynasty alone carries the same price tag as multiple high-value national priorities," Third Way said in an analysis Wednesday.

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July 22, 2016 in Political News, Tax | Permalink | Comments (5)

New York Terminates The Tampon Tax

TamponFollowing up on my previous posts:

Newsweek, New York Terminates the Tampon Tax:

There are plenty of things you can buy in the U.S. tax-free: bagged salads in Colorado, seasoned croutons in Texas, manicures and massages in West Virginia. But in 40 states, menstrual products—used to care for a normal bodily function that occurs every month, for 30 to 40 years—are taxed anywhere from 4 to 10 percent. Meanwhile, we can all participate in rodeos tax-free (thanks, South Dakota!)

On Thursday, however, New York became the 11th state without a tax on menstrual products when Governor Andrew Cuomo signed legislation eliminating local and state sales taxes on them.

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July 22, 2016 in Political News, Tax | Permalink | Comments (0)

Tuesday, July 19, 2016

Johnston:  Donald Trump And Kids Named In $250m Tax Scam

Trump (2016)The Daily Beast:  Donald Trump and Kids Named in $250M Tax Scam, by David Cay Johnston:

Four Donald Trump-licensed real-estate developments are at the center of a huge income tax evasion scheme, according to allegations in a lawsuit unsealed Thursday afternoon by a judge in Manhattan.

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July 19, 2016 in Political News, Tax | Permalink | Comments (6)

Sunday, July 17, 2016

IRS Rejects 501(c)(3) Status For DNC Convention As Too Partisan, Causing Donors To Pull Out Due To Lost Deductions; DNC Devises Workaround To Funnel Contributions Through Philadelphia Convention Bureau

DNCFollowing up on my previous posts (here and here):  Philadelphia Inquirer:  Turned Down by the IRS, Philly's DNC Host Committee Goes for Plan B:

The IRS has turned down the long-running effort by the Democratic convention's Philadelphia host committee to win a tax exemption.

Word of the decision, a setback for efforts to raise the last of the $60 million needed to help pay for the July 25 to 28 convention, came Friday from its adviser, David L. Cohen.

When the decision came - and why - is less clear. Cohen would say only that the IRS "recently" turned down the application for tax-exempt status under section 501(c)3 of the tax code, which the committee had sought for more than a year.

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July 17, 2016 in Political News, Tax | Permalink | Comments (6)

Wednesday, July 13, 2016

NY Times Debate:  Was It Proper For Justice Ginsburg To Denounce Trump?

NY Times Room for DebateNew York Times Room For Debate, Can a Supreme Court Justice Denounce a Candidate?:

“I can’t imagine what this place would be — I can’t imagine what the country would be — with Donald Trump as our president,” Supreme Court Justice Ruth Bader Ginsburg said in an interview on Friday. Trump’s election would have led her late husband to say, “‘Now it’s time for us to move to New Zealand,’” she added.

Her comments raised eyebrows even among her fans in the legal community. Is it ever appropriate for justices to announce a partisan position in an election?

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July 13, 2016 in Legal Education, Political News | Permalink | Comments (11)

Thursday, July 7, 2016

DNC Lacks 501(c)(3) Exemption For Philadelphia Convention, Putting Donors' Charitable Deductions At Risk

DNCFollowing up on my previous post:  Philadelphia Inquirer, With DNC Just Weeks Away, Host Committee Still Waiting for Green Light From IRS:

The local fund-raising committee for the Democratic National Convention still has not received tax-exempt status from the IRS, and that could affect donors who want tax deductions.

The Philadelphia 2016 Host Committee, which is responsible for raising at least $60 million for the July 25 to 28 convention at the Wells Fargo Center, has not received the designation under section 501(c)3 of the tax code.

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July 7, 2016 in Political News, Tax | Permalink | Comments (5)

Tuesday, June 28, 2016

Why Won't Donald Trump Release His Tax Returns?

Vanity FairVanity Fair: The Great Trump Tax Mysteries: Is He Hiding Loopholes, Errors, or Something More Serious?, by Nicholas Shaxson:

Why won’t Donald Trump release his taxes? An investigation into the G.O.P. candidate’s finances—the extensive deductions he could claim, the F.E.C. filings from his Scottish and Irish golf resorts, and his declarations to the British government—reveals a disturbing pattern of mistakes, hype, and contradictions.

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June 28, 2016 in Political News, Tax | Permalink | Comments (5)

Monday, June 20, 2016

Trump Did Not Pay Any Taxes In At Least Five Years

Trump (2016)Politico Morning Tax, Make it Five:

Drip, Drip, Drip:  Well, there’s another two years that Donald Trump didn’t pay any taxes.

Politico's Shane Goldmacher, relying on New Jersey gambling records while Trump continues to keep his returns private, found out that it doesn’t look like Trump had any tax liability in 1991 or 1993. That means there’s now at least five reported years over the last four decades that Trump didn’t pay any taxes, counting also 1978 and 1979 (per The Washington Post) and 1984 (via the Daily Beast).

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June 20, 2016 in Political News, Tax | Permalink | Comments (3)

Saturday, June 18, 2016

Tax Moves To Make For A Clinton—Or Trump—Presidency

Hillary Trump (2016)Forbes:  Tax Moves To Make For A Clinton—Or Trump—Presidency, by Janet Novack:

Robert Gordon, the president of Twenty-First Securities Corp., is something of a guru when it comes to tax efficient investing. He writes and lectures widely on the topic, and has created the visualization below showing the likelihood of various tax outcomes depending on which political party controls the White House and Congress next year. Despite the uncertainty surrounding the November election, Gordon offers two pieces of specific advice for well off folks seeking to election proof their finances.

Forbes

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June 18, 2016 in Political News, Tax | Permalink | Comments (0)

Friday, June 17, 2016

Donald Trump Accused Of Using His Charity As A Political Slush Fund In Violation Of § 501(c)(3)

TrumpDaily Beast, Donald Trump Accused of Using His Charity as a Political Slush Fund:

The Trump Foundation, Donald Trump’s nonprofit organization, is under fire for allegedly operating as more of a political slush fund than a charity. The foundation is accused of violating rules prohibiting it from engaging in politics—prompting ethics watchdogs to call for public investigations.

On numerous occasions this year, Trump’s campaign work and his foundation work have overlapped—putting himself at risk for penalties and his charity at risk of being shut down.

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June 17, 2016 in IRS News, Political News, Tax | Permalink | Comments (1)

Wednesday, June 15, 2016

New Evidence Donald Trump Didn’t Pay Taxes

TrumpThe Daily Beast: New Evidence Donald Trump Didn’t Pay Taxes, by David Cay Johnston:

New questions about the integrity of Donald Trump’s income tax returns, and new indications that he does not pay income taxes, arise from rulings in two tax appeals that Trump filed in the 1990s. Trump lost both cases. ...

These two decisions should prompt new calls for Trump to release his tax returns. He claims, falsely, that he cannot release his returns since 2012 because they are being audited. But a tax return is filed under penalty of perjury and releasing a return has no effect on an audit, as many tax authorities (including a former IRS commissioner) have noted.

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June 15, 2016 in Political News, Tax | Permalink | Comments (5)

Wednesday, June 1, 2016

Trump Reaps Huge Tax Break By Moving Trademarks To Delaware

TrumpBloomberg:  Trump Gets Chance for Tax Cut Moving Trademarks to Delaware, by Lynnley Browning:

As Donald Trump prepared for the Republican primaries, he transferred dozens of his most prized assets, the “Trump” trademarks that adorn everything from hotels to ties to his U.S. golf courses, into a new Delaware-based company — a move that offers him a chance to cut his income-tax bills.

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June 1, 2016 in Political News, Tax | Permalink | Comments (2)

Wednesday, May 25, 2016

PolitiFact:  Hillary's Claims About Trump's Tax Returns Are 'Mostly False'

Tuesday, May 24, 2016

Trump Eschews Using Voter Analytics In His Campaign, Will Rely Instead On Personality, Rallies To Win Presidency

FiveThirtyEight, Trump’s Scorning Of Data May Not Hurt Him, But It’ll Hurt The GOP:

Big DataData doesn’t win elections; candidates do. Presumptive Republican nominee Donald Trump bet on that idea last week when he announced his plan to rely on his personality and rallies in the general election instead of collecting data on voters. Trump has a point: The effect of “big data” and improved analytics on elections is often overhyped. Even David Plouffe — the architect of President Obama’s 2008 and 2012 campaigns, the most data-savvy in history — agreed that Obama’s “data processing machine” was not responsible for his wins.

But Republicans are worried, and for good reason: Trump’s assumption that the sole value of data is to win more votes is too narrow. His decision to limit the role of data probably won’t be the deciding factor in the 2016 election, but data organization and access are an investment in the future of the party. A presidential campaign presents a rare opportunity to cultivate the next generation of talent and collect a ton of new data on voters, and Trump’s refusal to do so means that Republicans may need to wait until 2020 or beyond to even the playing field with Democrats. ...

Democrats now hold a substantial expertise advantage in digital data-driven campaigning, and the GOP admitted as much in their 2012 election post-mortem. John McCain hired only 15 data staffers in 2008, compared with Obama’s 131. To his credit, Mitt Romney increased the number of data hires to 87 in 2012. (Obama had 342). In 2016, Republicans were positioned to build on this effort and narrow the analysis gap between the parties, pivoting off of two consecutive losses into an innovative data strategy — just like in 1964 and 2004.

But Republicans seem set to squander the opportunity. Trump currently employs as few as two staffers dedicated to data, according to reports.

Chart 2

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May 24, 2016 in Political News, Tax | Permalink | Comments (5)

Wednesday, May 18, 2016

Are We Ready To Raise Taxes On The Rich? History Says No.

Taxing the RichWashington Post op-ed:  Are We Ready to Raise Taxes on the Rich? History Says No., by Kenneth F. Scheve (Stanford) & David Stasavage (NYU):

Economic inequality is high and rising. At the same time, many governments are struggling to balance budgets while maintaining spending for popular programs.

That’s prompted some presidential candidates to argue it’s time to raise taxes on the rich. Bernie Sanders is leading the charge and would create a new top income tax rate of 54.2 percent, up from the current 39.6 percent. Hillary Clinton would institute the so-called “Buffett rule” to require individuals with adjusted gross incomes of more than $1 million to pay an effective rate of at least 30 percent, and she’d add a new 4 percent surcharge on anyone who pulls in $5 million or more.

As White House aspirants, other politicians and voters debate whether it’s time to once again soak the rich to spread their wealth around, it’s helpful to consider what prompted past governments — ours and others — to raise their taxes.

We investigated tax debates and policies in 20 countries from 1800 to the present for our new book, Taxing the Rich: A History of Fiscal Fairness in the United States and Europe [Princeton University Press, 2016] [blogged here]. Our research shows that it is changes in beliefs about fairness — and not economic inequality or the need for revenue alone — that have driven the major variations in taxes on high incomes and wealth over the past two centuries.

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May 18, 2016 in Book Club, Political News, Scholarship, Tax | Permalink | Comments (1)

Thursday, May 12, 2016

Trump Won't Release Tax Returns Prior To Election

Monday, May 2, 2016

LeBron James Pays All Of His Social Security Taxes Before Halftime Of His First Game

Wednesday, April 27, 2016

America Changes, But All the Presidential Candidates Want To Keep the Tax Code the Same

Final 5The Daily Beast:  America Changes, But All the Presidential Candidates Want To Keep the Tax Code the Same, by David Cay Johnston:

The tax reform plans of the five remaining presidential candidates tell us a lot about our outdated federal tax system, which was designed for the industrial economy of the last century. All five candidates promise reform, but their plans just tinker around the edges. None of the five addresses the major reasons the federal tax system imposes far more economic pain than necessary on most Americans.

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April 27, 2016 in Political News, Tax | Permalink | Comments (6)

The Hillary Speech Issue No One Is Talking About: Assignment Of Income

Hillary 2016Forbes:  The Hillary Speech Issue No One Is Talking About, by Robert W. Wood:

There are long lists of Hillary Clinton scandals, but the vortex of issues surrounding her speeches remains a major one. The speech issue is multi-faceted, raising questions about what she said to whom and at what price. In this sense, Hillary may be her own worst enemy. She has stalled endlessly, and has still failed to release the transcripts. That kind of stonewalling fuels more speculation, and it is hardly in her favor.

For example, you can read an amusing imagined text of Hillary’s speech to Goldman Sachs. We presumably will never see the real one, though it can hardly be worse than an imagined version. Arguably, though, just as major an issue is the money trail from Hillary’s speeches. The data has had to be teased out. However, the connections between a former President and Secretary of State hobnobbing with foreign government and corporate chieftains over U.S. policy issues remains of interest. The money was big for Bill and Hillary, with even some for Chelsea.

And just think of the tax treatment.

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April 27, 2016 in Political News, Tax | Permalink | Comments (7)

Tuesday, April 26, 2016

Hillary Clinton And Donald Trump Share A Delaware Tax Loophole Address

Gawker, Hillary Clinton and Donald Trump Share a Delaware Tax Loophole Address:

Thanks to Delaware’s strict corporate secrecy laws, more than 285,000 companies are registered, for tax reasons, at a two-story building in Wilmington—more than any other address in the world. Among them are holding companies belonging to Hillary Clinton and Donald Trump.

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April 26, 2016 in Political News, Tax | Permalink | Comments (2)

Friday, April 22, 2016

WSJ:  Goat Herd Helps Trump Lower Tax Bite

Wall Street Journal, Goat Herd Helps Trump Lower Tax Bite:

Donald Trump has found a solution that cuts both his grass and his tax bill: Goats.

The Republican presidential front-runner’s small goat herd, combined with hay farming and wood cutting, let him qualify for a New Jersey farmland tax break that saves him tens of thousands of dollars a year in property taxes on two golf courses, according to public records.

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April 22, 2016 in Political News, Tax | Permalink | Comments (1)

Saturday, April 16, 2016

Obama And Biden Release Their 2015 Tax Returns

2015 Obama

President Obama and Vice-President Biden yesterday released their 2015 tax returns. Here are charts putting the 2015 returns in context with their earlier returns:

Obama:

Year

AGI

Tax

Charitable Gifts

Gifts/AGI

2015

$436,065

$81,472

$64,066

14.7%

2014

$477,383

$93,362

$70,712

14.8%

2013

$481,098

$98,169

$59,251

12.3%

2012

$608,611

$112,214

$150,034

24.7%

2011

$789,674

$162,074

$172,130

21.8%

2010

$1,728,096

$453,770

$245,075

14.2%

2009

$5,505,409

$1,792,414

$329,100

6.0%

2008

$2,656,902

$855,323

$172,050

6.5%

2007

$4,139,965

$1,396,772

$240,370

5.8%

2006

$983,826

$277,481

$60,307

6.1%

2005

$1,655,106

$545,614

$77,315

4.7%

2004

$207,647

$40,426

$2,500

1.2%

2003

$238,327

$51,856

$3,400

1.4%

2002

$259,394

$68,958

$1,050

0.4%

2001

$272,759

$86,072

$1,470

0.5%

2000

$240,505

$63,732

$2,350

1.0%

Biden:

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April 16, 2016 in Political News, Tax | Permalink | Comments (0)

Tuesday, April 12, 2016

Harvey, Kleinbard Fact-Check Bernie Sanders's Claim That U.S. Multinationals Owe $620 Billion In U.S. Taxes On Cash Stashed Overseas

Sunday, April 3, 2016

89% Of Tax Executives Say Tax Reform Most Likely If Republicans Control Both House & Senate

Miller & Chevalier & National Foreign Trade Council, 2016 Tax Policy Forecast Survey:

As both the 114th Congress and President Barack Obama’s second term come to a close, respondents to the 10th Annual Miller & Chevalier/National Foreign Trade Council (NFTC) Tax Policy Forecast Survey expect 2016 to bring more conversation but little legislative action on tax policy. ...

Despite the increasing rhetoric, none of this year’s survey respondents believe tax reform will happen in 2016. An overwhelming number of respondents (82 percent) believe there will be no tax legislation at all this year. And, while believing that changes in government leadership should positively impact the likelihood of tax reform, respondents remain unsure whether tax reform will happen in the near future. Respondents are evenly divided as to whether tax reform will be enacted in 2017 or 2018, and almost 11 percent believe it will never happen.

Tax executives say divided government is one of the major impediments to enacting tax reform legislation. Nearly 90 percent believe that tax reform is most likely if Republicans control both the House and the Senate; just 7 percent think Democratic control of both houses of Congress would yield progress.

MC

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April 3, 2016 in Political News, Tax | Permalink | Comments (3)

Wednesday, March 23, 2016

DNC Failed To Get 501(c)(3) Exemption For Philadelphia Convention, Putting Donors' Charitable Deductions At Risk

DNC 2New York Post Page Six, DNC Chairman Messed Up Donors’ Taxes:

Ed Rendell, the former mayor of Philadelphia and governor of Pennsylvania, made a mistake that could cost some fellow Democrats big bucks.

Rendell — chairman of the Philadelphia 2016 Host Committee for the Democratic National Convention — failed to obtain 501(c)(3) nonprofit, tax-exempt status before collecting money, and now his donors can’t get tax deductions on their contributions.

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March 23, 2016 in Political News, Tax | Permalink | Comments (0)

Tuesday, March 15, 2016

Politics And The Church: What To Know In An Election Year

CoverPolitics and the Church: What to Know in an Election Year (2016):

Churches differ on opinions about whether they should be politically involved. The IRS, on the other hand, is clear on its stance: churches need to stay out of the political ring or risk losing their tax-exempt status. This download provides the tax and legal guidelines faith-based organizations need to know before jumping into the political fray.

The Politics of Religion
What it could cost your church for participating in political activity.
By Richard R. Hammar

When Church Meets Candidate
How churches can navigate candidate appearances.
By Emily Lund

Avoiding the Elephant (or Donkey) in the Pulpit
How pastors can preach about the important matters of the day—without becoming too political or risking a church's tax-exempt status.
By Bobby Ross Jr

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March 15, 2016 in IRS News, Political News, Tax | Permalink | Comments (2)

Tuesday, March 1, 2016

WSJ Debate:  Should The U.S. Adopt A Value-Added Tax?

WSJ2Wall Street Journal, Should the U.S. Adopt a Value-Added Tax?:

Supporters say a VAT can be good for economic growth. Critics say it encourages wasteful government spending.

In discussions about changing the U.S. tax system, one topic almost always arises: the possibility of adopting a value-added tax.

After all, most of the industrialized world uses a VAT—which is not to say they all like it.

Unlike a traditional sales tax, a VAT is a levy on consumption that taxes the value added to a product or service by businesses at each point in the chain of production. Businesses along the chain collect the tax and send it to the government, which supporters say is a boon for the efficiency of revenue-collection efforts. But ultimately, it is the consumer who pays the tax, because the final price of the goods and services they buy reflects all of the taxes that have been charged up to that point. The taxes are all baked into the retail price.

In this way, a VAT taxes what people consume rather than how much they earn. But this is also a reason why some consider a VAT to be unfair—because, the critics say, the burden of taxation falls disproportionately on those with lower incomes.

Supporters of a VAT, meanwhile, say it is better for economic growth than an income tax because it doesn’t tax savings or investment. And governments like it because it tends to bring in more revenue, thanks in part to the role that businesses play in its collection. Incentivizing their efforts, businesses receive credits for the VAT they pay.

Arguing that a VAT can be good for governments and for the economy is Michael J. Graetz, a professor of law at Columbia Law School and author of 100 Million Unnecessary Returns: A Simple, Fair, and Competitive Tax Plan for the United States. Taking the view that a VAT encourages wasteful government spending is David R. Henderson, an economics professor at the Naval Postgraduate School and a research fellow with the Hoover Institution.

VAT

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March 1, 2016 in Political News, Tax | Permalink | Comments (3)

The Main Street Tax Plan

Main StreetWall Street Journal op-ed:  GOP Candidates Need Better, Pro-Growth Tax Plans, by Jeffrey H. Anderson (Hudson Institute):

The Republican presidential hopefuls are all offering tax plans that would boost the economy, which is encouraging, given that U.S. growth has slowed to a trickle over the past decade. The question is whether any of these proposals are politically viable.

Most are vulnerable to two lines of attack: Their biggest beneficiaries would be the top 1%, and they would substantially increase the $19 trillion national debt. Republicans must be able to answer these charges—and build widespread political support.

I would invite them to take a look at my Main Street Tax Plan, which was released by the Hudson Institute on Sunday. The proposal would give a tax cut to nearly all Americans: $2,153 to a single person making $60,000; $2,020 to a couple making $80,000; and $2,055 to a family of four making $95,000. The biggest beneficiaries would be middle-class Americans, who would fare twice as well as the top 1%.

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March 1, 2016 in Political News, Tax | Permalink | Comments (0)

Sunday, February 28, 2016

Johnston:  Nine Key Points About Trump’s Income Taxes

TrumpDavid Cay Johnston (The National Memo), 9 Key Points About Trump’s Income Taxes (And Many More Questions):

Donald Trump, challenged again to release his tax returns, offers a nonsense excuse for keeping them secret. But worse than that, the national political reporters covering Trump’s presidential campaign have, yet again, missed big, obvious stories about his conduct and character

Compounding these errors, some journalists have reported nonsense as egregious as Trump’s, concerning what his tax returns would tell us. Many seem certain that they will reveal his actual wealth even though tax returns measure income, not net worth, as I will explain.

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February 28, 2016 in Political News, Tax | Permalink | Comments (4)

Saturday, February 27, 2016

The IRS Scandal, Day 1024

Donald Trump claimed after Thursday's GOP debate that he has been audited for the past 12 years because he is "a strong Christian":

During Thursday's GOP debate, Ben Carson repeated his claim that he was never audited by the IRS until after he spoke at the National Prayer Breakfast in 2013 and was critical of President Obama:

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February 27, 2016 in IRS News, IRS Scandal, Political News, Tax | Permalink | Comments (2)

Saturday, February 20, 2016

WSJ Calls On Trump To Release His Tax Returns

TrumpWall Street Journal editorial, Donald Trump’s Tax Obligation:

One of Donald Trump’s claims to presidential competence is his business and financial success, and so he should want voters to see the proof beyond the gilded staircases. He could enhance his credibility on the point by releasing his tax returns. ...

Mr. Trump should release his returns going back at least a decade before Super Tuesday on March 1 so Republican voters can know what they’re voting for. In addition to showing how much he’s paid in taxes, the records would help clarify how much money he’s made or lost from his various businesses. Are his real-estate ventures as profitable as he purports?

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February 20, 2016 in Political News, Tax | Permalink | Comments (3)

Wednesday, February 10, 2016

NY Times:  The Academic Support For Bernie Sanders' Proposed 73% Top Tax Rate

73New York Times:  Bernie Sanders’s Tax Plan Would Test an Economic Hypothesis, by Josh Barro:

In the Democratic presidential primary, Bernie Sanders is calling for a political revolution, saying his movement can sweep in policy changes that would seem impossible in traditional American politics.

One of the ideas Mr. Sanders has advanced is more revolutionary than it looks at first glance: much higher taxes on the highest earners, so high they would reach or even pass the point after which higher tax rates mean less revenue instead of more.

Mr. Sanders has proposed a headline top tax rate of 52 percent, applying only to incomes over $10 million. But that’s just the federal income tax. When you combine it with other taxes that apply to income, like existing payroll taxes and new ones Mr. Sanders would impose to pay for Social Security, single-payer health care and family leave, and then add those on top of taxes levied by state governments, it would add up to a combined tax rate of over 73 percent on the highest incomes, more than 20 points higher than today. That’s in the average state — maximum rates in high-tax jurisdictions like California and New York City would be even higher.

It just so happens that in 2011, the economists Peter Diamond of M.I.T. and Emmanuel Saez of the University of California, Berkeley, drew attention with a paper estimating that the revenue-maximizing income tax rate on high earners — the combined state and federal rate after which further tax increases would actually cause revenue to fall — is 73 percent. [The Case for a Progressive Tax: From Basic Research to Policy Recommendations; see also Should the Top Marginal Income Tax Rate Be 73 Percent?, 137 Tax Notes 676 (Nov. 5, 2012).] ...

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February 10, 2016 in Political News, Scholarship, Tax | Permalink | Comments (6)

Tuesday, February 9, 2016

Fleischer:  What Is Hillary Clinton’s Attitude Toward Wall Street?

NY Times Dealbook (2013)New York Times Deal Book:  Hillary Clinton’s Attitude Toward Wall Street Is Subjective, by Victor Fleischer (San Diego):

What is Hillary Clinton’s attitude toward Wall Street? The question evokes ... heated and overly confident responses online, even among Democrats. Mrs. Clinton is deep in the pocket of Wall Street, as evidenced by her lucrative speeches to Goldman Sachs. Or she is a progressive fighter with a smart and sophisticated plan to rein in Wall Street’s excesses. ...

There is no right answer. She is either of these things, depending on how your brain processes information. On tax policy, Mrs. Clinton has a strong team in place and has put forth some sensible proposals, focusing the weight of her tax increases on those who earn more than $5 million annually. Some observers subtract the evidence of being too friendly to Wall Street, focusing on her detailed policy proposals. Consider her first major tax proposal of the campaign, on capital gains. Rather than suggest that we abolish the capital gains preference, she proposed a gradual step-down in rates depending on the length of time an investor holds assets, with the lowest rate of 20 percent available after five years.

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February 9, 2016 in Political News, Tax | Permalink | Comments (0)

Thursday, February 4, 2016

Johnston:  Was Involvement Of Private Foundation In Trump Event Illegal?

TrumpDavid Cay Johnston (Syracuse), Was Involvement of Private Foundation in Trump Event Illegal?:

Did Donald Trump violate the law January 28 by involving his private foundation in his campaign for the Republican presidential nomination?

Maybe -- and maybe not, according to three practitioners specializing in the nexus of tax and nonprofit law. But all agreed that Trump's actions put front and center why Congress needs to take a serious look at the growing connections between the charitable world and partisan politics, with a focus on what will make for sound policy.

Trump clearly used the charitable foundation under his control to further his campaign for the White House. But that may not be illegal.

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February 4, 2016 in Political News, Tax | Permalink | Comments (3)

Wednesday, February 3, 2016

Mitt Romney As IRS Commissioner?

RomneyPolitico, Kasich :Romney or Bloomberg Could Fix IRS:

Spit-balling about how to fix the IRS, Ohio Gov. John Kasich said an audience member’s suggestion to tap Mitt Romney to do it would be a “really interesting suggestion.”

“A Mitt Romney or a Michael Bloomberg would be great,” he said, musing about a one-year appointment to turn it around.

“He went out and took care of the Olympics and he did that for free,” Kasich added, recalling Romney’s highly praised effort to turn around the struggling Salt Lake City Winter Olympics in 1999. “I’m going to send him an email tonight.”

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February 3, 2016 in IRS News, Political News, Tax | Permalink | Comments (10)

Tuesday, February 2, 2016

When Will Donald Trump Release His Tax Returns?

TrumpFollowing up on last week's post, Mitt Romney Calls On Presidential Candidates To Release Tax Returns: Wonder Whose Yuuuge Tax Returns He Has in Mind:  Wall Street Journal, When Will Donald Trump’s Tax Returns Be Public?:

Most of the 2016 candidates have made their tax returns public. When will the GOP front-runner, Donald Trump, release his?

Mr. Trump has said for months that he intends to release his returns. He is cagey, however, about a firm date. In October, he told ABC’s George Stephanopoulos that he would release them “when we find out the true story on Hillary’s e-mails.”

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February 2, 2016 in Political News, Tax | Permalink | Comments (0)

GOP Candidates Seek Repeal Of State & Local Tax Deduction That Benefits Blue States Most

WSJWall Street Journal, GOP Candidates Seek End to a Federal Tax Break That Benefits Blue States Most:

The major tax break that Republican presidential candidates are most eager to ax happens to be one that disproportionately benefits Democratic states.

Repealing the federal deduction for state and local taxes would make 23.6% of U.S. households pay an average of $2,348 more to the Internal Revenue Service for 2016. But those costs—almost $1.3 trillion over a decade—aren’t evenly spread, according to new estimates from two researchers at the Urban Institute, a think tank.

Ranked by the average potential tax increase, the top 13 states (including Washington, D.C.), as well as 16 of the top 17, voted twice for President Barack Obama. None of the four early-voting states that will winnow the Republican primary field—Iowa, New Hampshire, Nevada and South Carolina—is higher than 26th. And nearly one-third of the cost would be paid by residents of California and New York, two solidly Democratic states. ...

“After you’re told that your tax plan will increase the deficit by trillions of dollars, you need something to be on the chopping block,” said the Urban Institute’s Kim Rueben, who analyzed the deduction in a draft research paper with Frank Sammartino. “And the fact that more of the [tax] benefits go to blue states rather than red states, I think, feeds into this.” ...

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February 2, 2016 in Political News, Tax | Permalink | Comments (14)

Monday, February 1, 2016

Judging The Presidential Candidates' Tax Plans

MooreStephen Moore (Cato Institute), Judging the Tax Plans:

With the first real votes being cast in the presidential race on Monday, this is an opportune moment to do some last-minute comparison shopping on the candidate tax reform plans. On this issue there’s a lot to cheer about. All the Republican candidates have crafted plans that would slash tax rates for everyone and most would vastly simplify the thousands of pages of IRS tax code too.

The chart shows how low tax rates would go under the Republican plans. ...

All of this contrasts sharply with the two Democratic candidate plans.

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February 1, 2016 in Political News, Tax | Permalink | Comments (0)

Clinton (47%), Sanders (54%) Propose Highest Capital Gain Tax Rates (Now 24%) In History

Friday, January 29, 2016

Bernstein:  We Need Achievable Tax Tweaks, Not Pie-In-The-Sky Fundamental Tax Reform

Washington Post LogoWashington Post: We Desperately Need Major Tax Reform! Or Maybe Not …, by Jared Bernstein:

Fundamental tax reform is a fantasy. Now, let's get to work on improving our tax code.

It is an article of faith in national politics that the reform of the federal tax code is what’s standing between us and faster growth, higher productivity, better jobs, and whatever other good outcome you want to ascribe to this endeavor.

Well, riffing off of a) my own observations from decades in the trenches of this argument and b) this speech by President Obama’s chief economist Jason Furman, I disagree. Sure, there’s a lot of brush in the tax code that ought to be cleared out, some of which I’ll discuss in a moment. But these days, “tax reform” mostly means selling big, regressive tax cuts that will breed magic ponies by the herd. Instead of getting bogged down in an argument that has and will continue to lead nowhere, we’d be much better off to consider tweaks that fall far short of large-scale reform but could help—and have helped—in important ways.

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January 29, 2016 in Political News, Tax | Permalink | Comments (1)

Tax Foundation Analyzes Clinton, Sanders Tax Plans

Hillary BernieKyle Pomerleau & Michael Schuyler (Tax Foundation), Details and Analysis of Hillary Clinton’s Tax Proposals:

Key Findings:

  • Hillary Clinton would enact a number of tax policies that would raise taxes on individual and business income.
  • Hillary Clinton’s plan would raise tax revenue by $498 billion over the next decade on a static basis. However, the plan would end up collecting $191 billion over the next decade when accounting for decreased economic output in the long run.
  • A majority of the revenue raised by Clinton’s plan would come from a cap on itemized deductions, the Buffett Rule, and a 4 percent surtax on taxpayers with incomes over $5 million.
  • Clinton’s proposals to alter the long-term capital gains rate schedule would actually reduce revenue on both a static and dynamic basis due to increased incentives to delay capital gains realizations.
  • According to the Tax Foundation’s Taxes and Growth Model, the plan would reduce GDP by 1 percent over the long-term due to slightly higher marginal tax rates on capital and labor.
  • On a static basis, the tax plan would lead to 0.7 percent lower after-tax income for the top 10 percent of taxpayers and 1.7 percent lower income for the top 1 percent. When accounting for reduced GDP, after-tax incomes of all taxpayers would fall by at least 0.9 percent.

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January 29, 2016 in Political News, Tax | Permalink | Comments (1)

Wednesday, January 27, 2016

Clinton, Sanders Would Bypass Congress To Tax The Rich Via Executive Action

Hillary BernieBloomberg:  Clinton, Sanders Would Bypass Congress to Tax the Rich—a Bit, by Lynnley Browning:

Most of the proposals that Hillary Clinton and Bernie Sanders have pitched for taxing the rich won’t go anywhere if Republicans keep control of the House of Representatives, as expected.

But spokesmen for both of the leading candidates for the Democratic presidential nomination said this week that they could take executive action, bypassing Congress, to go after a shorter list: the carried-interest tax advantage that investment-fund managers receive, corporate inversions that companies use to move their tax addresses offshore and -- in Sanders’s case, at least -- a few other parts of the tax code that benefit high-income taxpayers.

Their larger plans for individual income taxes include Sanders’s proposal to increase income-tax rates to levels unseen since 1981 and Clinton’s pitch for a 4 percent surcharge on the nation’s 34,000 or so highest-income taxpayers. Those are almost certainly dead on arrival. Without them, neither candidate could raise enough to finance their most expensive programs.

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January 27, 2016 in Political News, Tax | Permalink | Comments (3)

Monday, January 25, 2016

Mitt Romney Calls On Presidential Candidates To Release Tax Returns: Wonder Whose Yuuuge Tax Returns He Has in Mind

Huffington Post:   Mitt Romney Calls On Presidential Candidates To Release Tax Returns: Wonder Whose Yuuuge Tax Returns He Has in Mind:

Former Republican presidential nominee Mitt Romney on Sunday called on 2016 presidential candidates to release their tax returns ahead of the first nominating contests in Iowa and New Hampshire.

Romney

Forbes:  Trump Is Unapologetically Aggressive On Taxes, Like Buffett And Bono, by Robert Wood:

Donald Trump unapologetically boasts that he fully exploits the tax code. He wants to pay as little as possible to the government. “I mean, I pay as little as possible. I use every single thing in the book. And I have great people,” he said. Trump has not released his tax returns, though now he says he is “working on” it.

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January 25, 2016 in Political News, Tax | Permalink | Comments (1)

Friday, January 22, 2016

Bernie Sanders Releases Tax Plan: 54% Top Rate On Income, Capital Gains & Dividends, Double The Estate Tax

Feel the BernBernieSanders.com, Medicare for All: Leaving No One Behind:

How Much Will It Cost and How Do We Pay For It?

How Much Will It Cost?
This plan has been estimated to cost $1.38 trillion per year.

The Plan Would Be Fully Paid For By:

A 6.2 percent income-based health care premium paid by employers.
Revenue raised: $630 billion per year.

A 2.2 percent income-based premium paid by households.
Revenue raised: $210 billion per year.

This year, a family of four taking the standard deduction can have income up to $28,800 and not pay this tax under this plan.

A family of four making $50,000 a year taking the standard deduction would only pay $466 this year.

Progressive income tax rates.
Revenue raised: $110 billion a year.

Under this plan the marginal income tax rate would be:

  • 37 percent on income between $250,000 and $500,000.
  • 43 percent on income between $500,000 and $2 million.
  • 48 percent on income between $2 million and $10 million. (In 2013, only 113,000 households, the top 0.08 percent of taxpayers, had income between $2 million and $10 million.)
  • 52 percent on income above $10 million. (In 2013, only 13,000 households, just 0.01 percent of taxpayers, had income exceeding $10 million.)

Taxing capital gains and dividends the same as income from work.
Revenue raised: $92 billion per year.

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January 22, 2016 in Political News, Tax | Permalink | Comments (19)

Wednesday, January 20, 2016

Hillary Clinton’s Caymans Tax Dodge Hypocrisy

Hillary 2016New York Post editorial, Hillary Clinton’s Caymans-Tax-Dodge Hypocrisy:

Hillary Clinton last week lunged into her most flagrant fit of hypocrisy yet.

With Bernie Sanders surging, she took new aim at the rich — including their use of tax dodges.

She told MSNBC: “We can go after some of these schemes … the kind of misclassifying of income, trying to make it look like it’s a capital gain, when it’s really ordinary income, going ahead and routing income through the Bahamas or the Cayman Islands or wherever.”

Huh. Bloomberg News reported in 2014 on the Clintons’ use of a prime tax dodge: They put their Chappaqua home into a “residence trust” in 2010. Such trusts can save hundreds of thousands of dollars in estate taxes.

Meanwhile, the Clintons’ family wealth has grown big-time thanks to firms with significant holdings in places like . . . the Caymans.

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January 20, 2016 in Political News, Tax | Permalink | Comments (1)

Thursday, January 14, 2016

Hillary Clinton Proposes Raising The Estate Tax

Hillary 2016Wall Street Journal, Hillary Clinton’s Next Tax Target: Estates:

Democratic presidential candidate Hillary Clinton proposed raising the estate-tax rate and increasing the number of households that would face the tax.

The plan is the latest part of Mrs. Clinton’s strategy to raise taxes on high-income and wealthy Americans, which her campaign said would raise a total of $400 billion to $500 billion over the next decade. ...

In her plan, the tax would apply to estates exceeding $3.5 million per person and at a 45% top rate. Under current law, reached in a compromise between President Barack Obama and congressional Republicans, the per-person exemption is $5.45 million and the top rate is 40%. As a result, the tax would hit about 0.4% of estates each year, up from 0.2% today. ...

One idea from Mr. Obama she hasn’t embraced is repealing what’s known as the step up in basis, the tax rule that lets capital assets pass to heirs without paying income taxes on the appreciation in value.

Lynnley Browning (Bloomberg), Clinton's Estate-Tax Plan Doesn't Address Her Own Tax Planning:

Democratic presidential candidate Hillary Clinton’s call Tuesday to increase taxes on the wealthy and close “loopholes” didn’t address the candidate’s own moves to shield at least part of the value of her New York home from the estate tax.

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January 14, 2016 in Political News, Tax | Permalink | Comments (2)

Wednesday, January 13, 2016

Cruz, Rubio Spar Over Taxes

Tuesday, January 12, 2016

Hillary Clinton Proposes 4% Income Tax Surcharge On Incomes Over $5 Million