Tuesday, November 3, 2015
Monday, November 2, 2015
Thursday, October 29, 2015
Friday, October 16, 2015
Saturday, October 10, 2015
- Hillary Clinton Fact Sheet
- Barron's, Clinton Tax Proposal Puts HFT’s Influence On ETFs Back In Spotlight
- Bloomberg, Hillary Clinton to Propose High-Frequency Trading Tax
- Huffington Post, Hillary Clinton's High-Frequency Trading Mistake
- Points and Figures, Hillary and the HFT Tax
- Reuters, Clinton to Propose Tax on High-Frequency Trading
Friday, October 9, 2015
Wednesday, September 30, 2015
Following up on Monday's post, Trump's Tax Plan: 'Tax Reform That Will Make America Great Again': New York Times Deal Book: Trump Tax Plan a Triumph of Showmanship Over Common Sense, by Victor Fleischer (San Diego):
Monday, September 28, 2015
Thursday, September 24, 2015
Monday, September 21, 2015
Would The IRS Revoke The Catholic Church's Tax Exempt Status If Pope Francis Endorses Bernie Sanders?
Tuesday, September 15, 2015
Wednesday, September 9, 2015
- Jeb 2016, Reform & Growth Plan
- Jeb Bush Wall Street Journal op-ed, My Tax Overhaul to Unleash 4% Growth
- John Cogan (Stanford), Martin Feldstein (Harvard), Glenn Hubbard (Dean, Columbia Business School) & Kevin Warsh (Stanford), An Assessment of Governor Jeb Bush’s “Reform and Growth Act of 2017”
- Atlantic, Jeb Bush's Tax Plan Nods to Trump
- Bruce Bartlett, Jeb's Tax Plan Makes George W. Bush's Policies Look Good
- Bloomberg, Four Hard Questions to Ask About Jeb Bush's Tax Plan
- Citizens for Tax Justice, Jeb Bush's Tax Plan Is a Corporate Giveaway Disguised as Tax Reform
- Financial Times, Jeb Bush Proposes Slashing Tax Rates
- FiveThirtyEight, Jeb Bush’s Tax Plan Is Pretty Weird; Mixing Romneyism with Populism
Tuesday, September 8, 2015
Monday, August 31, 2015
Monday, August 24, 2015
Friday, August 21, 2015
Tuesday, August 11, 2015
Harvard Law Prof Larry Lessig Mulls Presidential Bid, Would Resign After Passage Of Campaign Finance Reform And Let VP Bernie Sanders Or Elizabeth Warren Take Over
Saturday, August 1, 2015
Hillary Clinton Releases Her 2007-2014 Joint Tax Returns Reporting $139 Million Income; 99% Of Charitable Contributions Went To Clinton Family Foundation
Hillary Clinton late Friday afternoon released her 2007-2014 tax returns, showing that she and Bill reported $139.1 million in adjusted gross income, paid $43.9 million in taxes (a 31.6% tax rate), and made $15 million (10.8% of their AGI) of charitable contributions, $14.9 million of which went to the Clinton Family Foundation and the Clinton Global Initiative.
- Financial Times
- Huffington Post
- National Journal
- New York Times
- U.S. News & World Report
- Wall Street Journal
- Washington Post
I previously blogged the Clintons' tax returns for prior years:
Friday, July 31, 2015
Clintons Reaped Millions From Foreign Bank After Hillary Intervened In UBS Tax Case To Reduce IRS's Requested Disclosures Of Americans' Offshore Accounts By 91%
Tuesday, July 28, 2015
Following up on Sunday's post, Hillary Clinton's Capital Gains Tax Plan:
- Hoover Institution: Hillary Clinton’s Upside Down Tax Reforms, by Richard A. Epstein (NYU)
- Human Events: Hillary’s Inconceivably Stupid Capital-Gains Tax Scheme, by Lawrence Kudlow (CNBC)
- Investor's Business Daily: Clinton Cap-Gains Plan, by Stephen Moore (Cato Institute)
- New York Times: Hillary Clinton’s Capital Gains Tax Change Misses the Mark, by Victor Fleischer (San Diego)
Sunday, July 26, 2015
Wednesday, July 22, 2015
Tuesday, July 14, 2015
- Bloomberg, Hillary Clinton’s Claim That a Democratic President Would Have Paid Down the National Debt
- Bloomberg, A Sneak Peek at Clinton's Capital Gains Tax Plan?
- The Economist, The Clinton Economic Plan: The Kitchen Sink
- FiveThirtyEight, The Numbers Behind Hillary Clinton’s Economic Vision
Thursday, July 9, 2015
- Jeb Bush Releases 33 Years Of Tax Returns (July 1, 2015)
- NY Times: Jeb Bush Tax Returns Recall Old Days Of Shelters, by Vic Fleischer (July 5, 2015)
Washington Post op-ed: Jeb Bush Paid Too Much in Taxes. So Did the Rest of Us., by Dorothy Brown (Vice Provost, Emory):
Sunday, July 5, 2015
Wednesday, July 1, 2015
Monday, March 24, 2014
Oklahoma For-Profit Corporation Not Subject to 501(c)(4) Rules Established to Support Republican Senate Candidate
Wednesday, September 11, 2013
Friday, May 3, 2013
Forbes: Pritzker Family Baggage: Tax Saving Offshore Trusts, by Janet Novack:
With President Barack Obams's nomination today of Chicago businesswoman and Forbes 400 member Penny Pritzker to be the Secretary of Commerce, her family’s legendary use of hundreds of offshore trusts to protect its wealth from taxes and the prying eyes of the IRS will be in the spotlight.
Or at least it will if Iowa Republican Senator Chuck Grassley has anything to say about it. In a memo to reporters Thursday afternoon, Grassley wrote: “Every nominee’s offshore tax avoidance activities should be examined as part of the nomination process. If the Commerce Committee doesn’t explore these questions with the nominee, I plan to do so, but I hope the committee will give the tax history a serious look.”
- The Atlantic, Penny Pritzker Is Obama's Mitt Romney
- Forbes, Pritzker vs Pritzker: One of the Sweetest Tax Deals Ever
- Politico, President Obama's Poke-in-the-Eye Picks
Sunday, April 28, 2013
Wednesday, April 17, 2013
Forbes: It's Time We Learned What Members of Congress Pay in Taxes, by Dorothy A. Brown (Emory):
On Friday President and Mrs. Obama released their most recent tax return for the entire world to see. They continued a longstanding tradition of sitting presidents releasing their returns, even though no law requires that they do so. The tradition began under the late President Richard Nixon. ...
Itemized deductions often come with a hefty price tag. The Joint Committee on Taxation has estimated that for 2013 the amount of revenue lost because of the three deductions the Obamas took (which happen to be among the most popular deductions taken) will be: $90 billion for mortgage interest, $47 billion for charitable contributions, and $46 billion for state and local income taxes. ... One part of the minority that benefits from itemized deductions is members of Congress.
Although Presidents have voluntarily released their tax returns for the last several decades, nothing could be further from the truth when it comes to members of Congress. McClatchy newspapers reported last July that of the 535 members asked to release their most recent tax returns, just 17 did. ... I suspect that if we looked at the tax returns of eavery member of Congress we would see something close to a 100% itemization rate. Compare that to only a third of the American public, and the numbers would suggest that repeal is the best way forward.
Given that I do not expect members of Congress to change their ways, one way to move closer to reform would be for the IRS to issue a new kind of report, which I call the “535 Report.” It would provide in summary fashion the information from the tax returns of all members of Congress. The 535 Report would be similar in concept to what the IRS currently produces for the tax returns of the 400 highest-income individuals.
No law is needed, because no privacy rights would be violated. All the IRS would have to do would be to crunch the numbers. Then we would know what percent of Congress itemized deductions and what the most popular deductions were. We could then compare the information with what the IRS already produces about the American taxpaying public in general, and hopefully encourage voters to demand change.
David Cay Johnston reported in The New York Times in June 2003 that the 400 report was begun in response to a professor asking for it. Let’s see if lightening can strike twice.
For more, see Dorothy Brown, The 535 Report: A Pathway to Fundamental Tax Reform, 40 Pepp. L. Rev. ___ (2013). For the video of Dorothy's presentation of the paper at the January 18, 2013 Pepperdine/Tax Analysts Symposium on Tax Advice for the Second Obama Administration, see iTunes and YouTube.
Monday, February 18, 2013
Inside Higher Ed: A Professor vs. Fox News:
Students in a political science class at West Liberty University were given an assignment recently to keep a "politics journal" in which they would record their reactions to various articles they had selected.
The instructor at the West Virginia public institution included some possible news sources, such as The Economist, BBC, CNN and The Huffington Post. But the instructor also specified that two sources could not be used. One was The Onion, which the assignment notes "is not news" and "is literally a parody."
The other barred source is the one that got the instructor -- Stephanie Wolfe -- scrutiny this week. She banned articles from Fox News, writing: "The tagline 'Fox News' makes me cringe. Please do not subject me to this biased news station. I would almost rather you print off an article from the Onion."
- Daily Caller, Professor Bans Fox News, Claiming It Makes Her Cringe
- Mediaite, Professor Bans Students From Using Fox News As A Source: It ‘Makes Me Cringe’
Wednesday, November 28, 2012
CampusReform.org: 96% of Political Donations From Ivy League Faculty & Staff Went for Obama:
From the eight elite schools, $1,211,267 was contributed to the Obama campaign, compared to the $114,166 given to Romney.
The highest percentage of Obama donors came from Brown and Princeton, with 99% of donations from faculty and staff going towards his campaign.
Dartmouth and Pennsylvania’s faculty contributed to the President’s campaign in the lowest numbers, with only 94% percent donating to the Obama campaign.
- Brown: 129 Obama donors gave $67,728, 1 Romney donor gave $500
- Columbia: 652 Obama donors gave $361,754, 21 Romney donors gave $34,250
- Cornell: 282 Obama donors gave $141,731, 11 Romney donors gave $8,610
- Dartmouth: 90 Obama donors gave $51,018, 6 Romney donors gave $2,850
- Harvard: 555 Obama donors gave $373,556, 30 Romney donors gave $34,500
- Princeton: 277 Obama donors gave $155,008, 4 Romney donors gave $1,901
- Pennsylvania: 376 Obama donors gave $209,839, 26 Romney donors gave $22,900
- Yale: 399 Obama donors gave $186,834, 13 Romney donors gave $8,655
Wednesday, November 21, 2012
Within days of winning the election, President Obama announced that his victory gave him a mandate to raise taxes on the "rich."
Come again? This was a two-and-a-half-point election. It reflected a painfully divided electorate. The only mandate I saw was to unite a divided country.I voted for Obama. ... I did not vote for Obama because I think I am paying too little in taxes.
Like many people I know, I am "rich" by Obama's standards. I pay more taxes, percentage wise, than Mitt Romney and Warren Buffett, because I earn virtually every penny of my income.I work. And yes, all those deductions that allow the truly rich to not work, or at least to not work all the jobs I do, make me angry.
I am all for closing loopholes. I am all for ending deductions for things I don't even understand. But I am not for putting a low cap on deductions that would make it all but impossible for the charities I support to raise funds. I am not for putting a limit on the mortgage deduction that would mean, as a practical matter, that "middle class" (not rich) people in California would be priced out of the housing market, and the charities I support would not be able to raise what they need to survive.
And frankly, I don't think I'm alone. As a matter of fact, on this one, I don't think 51% of all Americans are to my "left" — if that's how you define the higher tax constituency.
Obama needs to be very careful. Yes, he was re-elected. But so were all those folks who blocked the extension of the Bush tax cuts if they excluded individuals and small businesses who make enough money to qualify as rich — but not enough to send their kids to college, or help their aging parents, or buy a home in a decent neighborhood.
We need to avoid going over the fiscal cliff. But Obama must also avoid the political cliff.
- Washington Post, Obama’s Class War Against His Supporters
Wednesday, November 7, 2012
Tuesday, November 6, 2012
Huffington Post: Mitt Romney Haunted by Missing Tax Returns as Campaign Draws to Close:
As the GOP presidential candidate faced pressure over the past year to release more financial information, it was widely presumed that at some point he would buckle and follow a tradition started by his father, who released 12 years of tax returns. People who knew him, however, warned that there was no chance he'd release the returns.
They were right. Mitt Romney made it. But the journey has left him broken and battered. ...
"Romney's refusal during his campaign to release his past tax returns betrayed a contempt for the electorate and for the democratic process, which relies on voters having the requisite information to make informed decisions," said University of Southern California law professor Ed Kleinbard. "The reason for the tradition of releasing past tax returns -- not returns prepared in the years an individual is running for the presidency -- is to demonstrate that the candidate fully and fairly complied with the tax laws when the spotlight of the election was not already on him." ...
Both Bain and Romney flirted with the edge of legality by using sham derivative transactions to mask investments in U.S. stocks, lowering their American tax burden. The IRS has been cracking down on this activity since 2010, as HuffPost reported in August. Thousands of pages of Bain documents released by Gawker also reveal that Bain gamed its management fees in order to help its investors avoid paying taxes –- a tactic that is straightforwardly illegal, according to Victor Fleisher, a tax expert and professor of law at the University of Colorado. ...
The sheer scope of Romney’s personal tax avoidance efforts also shed light on iniquities in the tax code. Very wealthy Americans have many perfectly legal options to reduce their tax burden -– tactics not available to poor and middle-class taxpayers. ... "The most interesting thing he disclosed was what we saw initially on the 2010 return -– the vast array of offshore investment vehicles that plainly reflected a lot of aggressive tax planning," said New York University Law School professor Daniel Shaviro. ...
"Governor Romney's limited disclosures revealed hints of troubling issues, and his stonewalling of the electorate therefore left many troubled by the unknown breadth of the gulf between the carefully cultivated image of the candidate, on the one hand, and the authentic man, on the other," Kleinbard said. ...
In the closing days of the campaign, University of Texas law professor Calvin Johnson penned an op-ed for Tax Notes suggesting that Romney illegally undervalued his investments in order to dodge taxes on two enormous trust funds. Bloomberg detailed Romney's use of a bogus charity to reduce his tax burden, a tactic which the IRS banned just months after Romney had set up his own, which he continues to profit from.
- Linda Beale (Wayne State), Romney's Failure to Release Tax Returns and His Tendency to Misstatements of Fact
- Dan Shaviro (NYU), One Last Time on Romney's Taxes
Friday, November 2, 2012
Over the past several weeks, Tax Foundation economists have published a series of studies that analyze the long-term economic and distributional effects of the tax plans outlined by President Barack Obama and Governor Mitt Romney. These comprehensive assessments were done using the Tax Foundation’s Tax Simulation and Macroeconomic Model which measures how changes in tax policies affect the economic levers that determine economic growth, workers’ incomes, and the distribution of the tax burden.
New York Times: Nonpartisan Tax Report Withdrawn After GOP Protest:
The Congressional Research Service has withdrawn an economic report [Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945 (R42729) (Sept. 14, 2012), by Thomas L. Hungerford] that found no correlation between top tax rates and economic growth, a central tenet of conservative economic theory, after Senate Republicans raised concerns about the paper’s findings and wording....
The decision, made in late September against the advice of the agency’s economic team leadership, drew almost no notice at the time. ... But it could actually draw new attention to the report, which questions the premise that lowering the top marginal tax rate stimulates economic growth and job creation. ...
Senate Republican aides said they had protested both the tone of the report and its findings. Aides to Mr. McConnell presented a bill of particulars to the research service that included objections to the use of the term "Bush tax cuts” and the report’s reference to “tax cuts for the rich,” which Republicans contended was politically freighted.
They also protested on economic grounds, saying that the author, Thomas L. Hungerford, was looking for a macroeconomic response to tax cuts within the first year of the policy change without sufficiently taking into account the time lag of economic policies. Further, they complained that his analysis had not taken into account other policies affecting growth, such as the Federal Reserve’s decisions on interest rates.
“There were a lot of problems with the report from a real, legitimate economic analysis perspective,” said Antonia Ferrier, a spokeswoman for the Senate Finance Committee’s Republicans. “We relayed them to C.R.S. It was a good discussion. We have a good, constructive relationship with them. Then it was pulled.”
The pressure applied to the research service comes amid a broader Republican effort to raise questions about research and statistics that were once trusted as nonpartisan and apolitical. ... “When their math doesn’t add up, Republicans claim that their vague version of economic growth will somehow magically make up the difference. And when that is refuted, they’re left with nothing more to lean on than charges of bias against nonpartisan experts,” said Representative Sander Levin of Michigan, ranking Democrat on the House Ways and Means Committee....
The report received wide notice from media outlets and liberal and conservative policy analysts when it was released on Sept. 14. It examined the historical fluctuations of the top income tax rates and the rates on capital gains since World War II, and concluded that those fluctuations did not appear to affect the nation’s economic growth. “The reduction in the top tax rates appears to be uncorrelated with saving, investment and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie,” the report said. “However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution.” ...
Mr. Hungerford, a specialist in public finance who earned his economics doctorate from the University of Michigan, has contributed at least $5,000 this election cycle to a combination of Mr. Obama’s campaign, the Democratic National Committee, the Democratic Senatorial Campaign Committee and the Democratic Congressional Campaign Committee.
Wall Street Journal editorial: Congressional Research Hit Job: Democrats Politicize a Supposedly Nonpartisan Think Tank:
The Congressional Research Service is supposed to be a nonpartisan research tool for the House and Senate, but like so many institutions in Washington it is now being hijacked for partisan ends. The dispute concerns a highly politicized CRS tax study that Democrats have been trying to use as a cudgel against Mitt Romney.
The tax study just happened to appear on the CRS website in September in the heat of the Presidential tax debate. Author Thomas Hungerford purported to show that 65 years of changes in "top tax rates have had little association with saving, investment or productivity growth." The timing couldn't have been better for President Obama, and the usual liberal media suspects picked it up. So did New York Senator Chuck Schumer, who used it in a speech to attack tax reform.
Mr. Hungerford tells us the study wasn't requested by a Member of Congress, so perhaps it was his idea. You won't be surprised to learn that Mr. Hungerford has donated to the Obama campaign and Senate Democrats and worked as an economist at the White House budget office under Bill Clinton.
Republicans understandably objected to this partisan exercise, especially because the study has statistical design flaws and ignores multiple peer-reviewed studies that have found a significant relationship between cuts in tax rates and the pace of capital formation, investment and economic growth.
CRS officials then pulled the report from its website. In a Sept. 28 email to a Republican Senate staffer, CRS deputy director Colleen Shogan wrote that "I decided to remove the Hungerford report from the CRS website for now." She added that she had given Mr. Hungerford's manager, Don Marples, "a list of concerns I would want addressed in a future version" and that "in particular, I want a better, more robust defense of the methodology in the paper."
Now Senate Democrats are trying to portray Mr. Hungerford as a victim of censorship due to GOP pressure, and Thursday they got an impressionable Jimmy Olson at the New York Times to buy the spin. The reality is that sometime after we called Mr. Hungerford, he or someone else at CRS talked to Senate Democrats, who decided to give the study one more propaganda run before Election Day. ...
This episode is nonetheless a significant blot on the CRS reputation for unbiased research. We're not sure why Congress needs a research operation when it already has a budget office, a tax committee and thousands of staff, but it surely doesn't need one that acts like an arm of the Democratic Party.
(Hat Tip: Ann Murphy, Mike Talbert.)
- New York Times: Gingrich and the Destruction of Congressional Expertise, by Bruce Bartlett
- New York Times: More on Tax Rates and Growth, by Economix Editors
- New York Times: Republicans Censor What They Can’t Refute, by Bruce Bartlett
Wednesday, October 31, 2012
Law Profs back President Obama over Mitt Romney 72% to 19%, according to Brian Leiter's poll.
Update #1: Brian Leiter closed the poll with 420 votes cast and a final tally of Obama 69%, Romney 22%. See The Law Professors Have Spoken:
I'm impressed (or distressed) by the strong showing for the Republican, and surprised by the tepid support for both Johnson and Stein. As further evidence that legal academics lean to the right, do contrast the results when I polled philosophers on the election!
Update #2: Ann Althouse (Wisconsin) has followed up with her own poll: the vote of her readers is currently Romney 88%, Obama 3% (the President is losing to Libertarian Gary Johnson (7%)).
Tuesday, October 30, 2012
Huffington Post: Tax Expert Calvin Johnson 'Skeptical' Of Mitt Romney's Taxes:
A respected tax attorney and deficit hawk wrote a letter to the editor of Tax Notes on Monday saying that, "There is good reason to be skeptical" of Mitt Romney's claim to have paid all the taxes he legally owes.
The letter, by University of Texas Law School Professor Calvin Johnson, focuses on two trusts Romney has set up: one for his children, which is worth over $100 million, and an $87 million retirement trust. These trusts have grown at an enormous rate -- Johnson notes that they have been more than 10 times as profitable as Warren Buffett's investments over the same time frame. Johnson writes that Romney may have played fast and loose with the law by undervaluing Bain Capital assets that were contributed to the trusts. By undervaluing the assets, Romney could avoid paying gift taxes.
(Hat Tip: Marty McMahon.)
Bloomberg: Romney Avoids Taxes via Loophole Cutting Mormon Donations, by Jesse Drucker:
In 1997, Congress cracked down on a popular tax shelter that allowed rich people to take advantage of the exempt status of charities without actually giving away much money. Individuals who had already set up these vehicles were allowed to keep them. That included Mitt Romney, then the chief executive officer of Bain Capital, who had just established such an arrangement in June 1996.
The charitable remainder unitrust, as it is known, is one of several strategies Romney has adopted over his career to reduce his tax bill. While Romney’s tax avoidance is legal and common among high-net-worth individuals, it has become an issue in the campaign. President Barack Obama attacked him in their second debate for paying “lower tax rates than somebody who makes a lot less.”
In this instance, Romney used the tax-exempt status of a charity -- the Mormon Church, according to a 2007 filing -- to defer taxes for more than 15 years. At the same time he is benefitting, the trust will probably leave the church with less than what current law requires, according to tax returns obtained by Bloomberg this month through a Freedom of Information Act request.
In general, charities don’t owe capital gains taxes when they sell assets for a profit. Trusts like Romney’s permit funders to benefit from that tax-free treatment, said Jonathan Blattmachr, a trusts and estates lawyer who set up hundreds of such vehicles in the 1990s. “The main benefit from a charitable remainder trust is the renting from your favorite charity of its exemption from taxation,” Blattmachr said. Despite the name, giving a gift or getting a charitable deduction “is just a throwaway,” he said. “I used to structure them so the value dedicated to charity was as close to zero as possible without being zero.” ...
Romney’s CRUT, which is only a small part of the $250 million that Romney’s campaign cites as his net worth, has been paying him 8 percent of its assets each year. As the Romneys have received these payments, the money that will potentially be left for charity has declined from at least $750,000 in 2001 to $421,203 at the end of 2011. ...
Romney’s trust was projected to leave to charity an amount with a present value of a little less than 8% of the initial contribution. ... Thus, the specifics of Romney’s trust wouldn’t have passed legal muster if it had been set up 13 months later. ... Because the trust’s investments have been earning a return far below its annual payouts to the Romneys, its principal has dwindled rapidly....
In 2001, five years after it was established, the trust had a value of between $750,000 and $1.25 million. Since then, it has pursued a conservative investment strategy -- regardless of the ups and downs of the stock market -- buying a mix of money- market funds, federally-backed bonds and federal bond funds. Since 2007, it has moved its assets entirely into cash. By 2011, its investments earned a return of $48, down from between $60,001 and $100,000 in 2001. It paid $36,696 to the Romneys in 2011. The current investing strategy favors the Romneys over the charity because they get a guaranteed payout. ...
If the CRUT maintains the same investing strategy, assets will continue to shrink, said Jerome M. Hesch, a tax and estate planning attorney at the law firm Carlton Fields. The trustee acted prudently in protecting against losses during a stock market decline, he said.Nevertheless, “what’s going to go to charity is probably close to nothing,” Hesch said.
- Linda Beale (Wayne State), Romney's CRUT Tax Shelter
(Hat Tip: Bob Kamman.)
Monday, October 29, 2012
Austin American-Stateman op-ed: Romney Tax Plan Doesn’t Add Up, Helps Wealthy Too Much, by Calvin H. Johnson (Texas):
Mitt Romney has aggressively promised large tax cuts for the richest taxpayers. President Barack Obama opposes them. Romney has simultaneously promised not to increase the deficit or increase middle class tax, but he has not specified what tax loopholes and tax subsidies he would attack to fund his plan.
There are not enough tax subsidies to keep all of Romney’s promises. Romney, moreover, also defends some important and wasteful loopholes. ...
Our current tax system resembles a sponge with lots of holes, but not very much fiber left. Over the years, brilliant tax planners, indifferent IRS rules, and members of Congress who are trying to represent us have created the loopholes. There seems to be a great rule that empires fall because their taxes inevitably fall apart. Aggressive tax reform that goes after the tax loopholes in the federal tax system would do the country good. Romney gives at least lip service to ending loopholes and tax subsidies, but then to actually do it, we are going to have to get specific.
It does less harm to the sum of human happiness to take tax from the rich instead of the poor. The Little Match Girl had only her matches to keep her alive. Tax her and she is dead. Uncle Scrooge McDuck took his income in coins that were added to swimming pools of gold coins in various vaults. The coins were never very good swimming pools, so loss of one would not be missed much. If we need a dollar to pay for the Marines or close the deficit, it is better to take it from Uncle Scrooge. That will do less harm.
Friday, October 19, 2012
Tuesday, October 16, 2012
Mitt Romney and his running mate, Paul Ryan, are quite insistent that their tax plan is just the elixir that the economy needs to jumpstart growth. ... In principle, a change that holds revenues constant while lowering marginal tax rates – the rate on the last dollar earned – should increase growth. That is because, in economist-speak, both the income and the substitution effects are pushing in the same direction. ... What Reagan did and Mr. Romney proposes is to keep taxes constant but to reduce marginal tax rates. ...
[E]conomic theory is unambiguous that holding taxes constant and reducing marginal rates will increase growth. But it is important to understand that this effect is neither large nor instantaneous. At best, it will raise the long-term trend rate of growth by perhaps tenths of a percent. With compounding, the effect can eventually be large.
But the idea that tax reform will jump-start an economy suffering from the after-effects of a cyclical downturn is nonsense. This can be illustrated by looking at the impact of the 1986 tax reform.
Real gross domestic product growth was about the same after the 1986 act took effect in 1987 as it was before, and tax reform obviously did nothing to forestall the 1990-91 recession. Unemployment fell, but it had been trending downward before tax reform, and the 1986 act probably had nothing to do with it. Within a couple of years it was trending upward again.
By the mid-1990s, it was the consensus view of economists that the Tax Reform Act of 1986 had little, if any, impact on growth. In an article in the May 1995 issue of the American Economic Review, the Harvard economist Martin Feldstein, a strong supporter of tax reform who had served as chairman of Reagan’s Council of Economic Advisers, found large changes in the composition of income, but the only growth effect was a small increase in the labor supply of married women.
In a comprehensive review of the economic effects of the 1986 tax reform act, in the June 1997 issue of the Journal of Economic Literature, Alan Auerbach of the University of California, Berkeley, and Joel Slemrod, the University of Michigan economist, also found that the primary impact was on the shifting composition of income. They could find no significant growth effects. ...
Mr. Romney’s plan is not likely to be enacted in anywhere near the form he has proposed, if only because Congress is far more polarized today than it was in 1986, and the major political parties are much farther apart on the goals of tax reform. Consequently, there is little reason to think we will see tax reform any time soon, and even if Mr. Romney’s plan is enacted as proposed the growth effect will be small to nonexistent.
New York Times editorial, Mr. Romney Needs a Working Calculator:
To the annoyance of the Romney campaign, members of Washington’s reality-based community have a habit of popping up to point out the many deceptions in the campaign’s blue-sky promises of low taxes and instant growth. The latest is the Joint Committee on Taxation, an obscure but well-respected Congressional panel — currently evenly divided between the parties — that helps lawmakers calculate the effect of their tax plans.
The Romney campaign claims it has six studies proving it can be done, but, on examination, none of the studies actually make that point, or counterbalance the nonpartisan analyses that use real math. ... It is increasingly clear that the Romney tax “plan” is not really a plan at all but is instead simply a rhapsody based on old Republican themes that something can be had for nothing. For middle-class taxpayers without the benefit of expensive accountants, the bill always comes due a few years later.
American Enterprise Institute: Obama’s Big Tax Increases on Small Business:
It is quite a stretch for President Obama to argue that he wants to cut taxes for small businesses. In reality, he is proposing to increase taxes on small businesses by around $49 billion. ...
While in the strictest sense it is true that the president has lowered taxes for small businesses 18 times, this does not accurately reflect the totality of his small-business tax policy. In fact, on net, the president’s policy proposals will inflict significant harm on small businesses.
First, to the 18 times. ... [H]is “tax cuts” for small businesses have not been across-the-board marginal rate cuts, but instead have been targeted and often temporary deductions, tax credits, and subsidies. ... Of the 18, only 10 of them are still in place. Half of these 10 are extensions of programs first enacted by President George W. Bush or even before his time in office. ... So we started with 18, but now we’re down to 5. Estimates from the Congressional Budget Office, the Joint Committee on Taxation, and the U.S. Treasury Department suggest that the sum total of the tax breaks created by the remaining five will amount to at most $3 billion in 2013. ...
[T]he president has proposed the expiration of the Bush tax cuts, which will increase taxes by 4.6 percentage points on incomes above $250,000. Obama will increase taxes by a further 3.8 percentage points on these same incomes through the Unearned Income Medicare Contribution. ... And we shouldn’t forget the reimplementation of the Pease provision, also scheduled for January 1, which adds an additional 1 percentage point to the effective tax rate for these businesses.
It should come as no surprise that these tax increases dwarf the $3 billion in tax decreases that the president has brought small businesses.
According to a report by the Joint Committee on Taxation, approximately $690 billion of business income will be reported on tax returns subject to the marginal rate increases. A very conservative estimate based on IRS figures of the distribution of partnership and S-Corp income shows that only about 80 percent of this income is actually subject to the highest marginal rate, which puts the size of the tax hike at around 9.4% of 80% of $690 billion, or about $52 billion.
That $52 billion is much more than the sum of all tax breaks, which was about $3 billion. So it’s quite a stretch for the president to argue that he wants to cut taxes for small businesses. In fact, he wants to raise taxes on small businesses by an order of magnitude.
(Hat Tip: Glenn Reynolds.)
Friday, October 12, 2012
What did voters learn about the future of tax policy?
- Joe Biden and the $500 Billion Tax Cut for the Wealthy
- How Do You Define Small Business?
- The Competing Goals of Focused Deduction Elimination and Tax Reform
Update: Citizens for Tax Justice: Top Ten Tax Moments from the VP Debate:
- Biden Highlights the Regressiveness of Extending All the Bush Tax Cuts
- Ryan Promises the Mathematically Impossible
- Biden Calls Ryan Out for Taking Capital Gains Tax Breaks Off the Table
- Ryan and Biden Dispute the Definition of Small Businesses
- Biden Takes on Romney and Ryan’s Commitment to Grover Norquist
- Ryan Misrepresents History of 1986 Tax Reform
- Biden Revives Romney’s 47% Remark
- Ryan Claims Obamacare Includes 12 Middle Class Tax Hikes
- Biden Stumbles on the Primary Cause of Great Recession
- Ryan Wrong on How Much Revenue Could Be Raised by Taxes on the Rich
Thursday, October 11, 2012