Tuesday, September 16, 2014
Friday, September 12, 2014
Sunday, September 7, 2014
Tuesday, September 2, 2014
Wednesday, August 20, 2014
Wednesday, July 9, 2014
Tuesday, July 1, 2014
Friday, June 27, 2014
Sunday, June 15, 2014
- Americans for Tax Fairness, Press Release
- Americans for Tax Fairness, Executive Summary
- Americans for Tax Fairness, Pay Subsidies Among Walgreens' Top Executives
- Detroit News, Walgreens' Tax Cheat Could Make You Sick
- Huffington Post, Walgreen Ponders $4 Billion Tax Dodge
- New York Post, Move to Switzerland to Dodge IRS May Give Walgreen Blues
- Reuters, U.S. Activists Slam Possible Walgreen Tax Move as 'Unpatriotic'
- Tax Foundation, A Basic Lesson on the U.S.’s Corporate Income Tax System
Saturday, June 7, 2014
Monday, April 21, 2014
- Corporate Tax Returns and Audits Interactive Application
Individual Tax Returns and Audits Interactive Application
- Corporate Returns:
- Audit rates for largest corporations
Audits of "passthrough entities" (partnerships and S-corporations)
Audits of corporations
Corporate share of federal income tax collections
- Individual Returns:
- Individual Tax Returns and Audits Interactive Application
Audits of individual income tax returns
IRS results in document matching and in finding math errors on returns
- Collection Enforcement:
- Levies, liens and seizure activity resuming
IRS delinquent return investigations
Today is Tax Freedom Day, the day on which Americans will have earned enough money to pay all federal, state, and local taxes for the year:
Tuesday, April 8, 2014
Monday, February 24, 2014
Tuesday, January 28, 2014
Tax Foundation, Official Statistics on Inequality, the Top 1%, and Redistribution:
Inequality: CBO data shows that inequality today is slightly higher than the average of the past thirty years, but less that it was during the last two years of the Clinton administration.
Progressivity: According to the CBO’s progressivity index, the federal tax code is as progressive today as it has been at any time during the past thirty years.
The Top 1%: The Top 1% continues to pay a larger share of the federal income tax burden than the bottom 90 percent combined.
Redistribution: Using 2006 data, CBO found that tax and spending policies combined to redistribute $1.2 trillion in income from the top 40 percent of non-elderly households to the bottom 60 percent of non-elderly households.
Mobility: IRS panel data that tracked the same group of taxpayers between 1999 and 2007 showed that Americans can move from one economic group to another fairly quickly.
More than 50% of Taxpayers Moved Out of the Bottom Quintile Between 1999 & 2007
1999 Income Quintile/Percentile
2007 Income Quintile/Percentile
Tax Foundation calculations based on IRS data from the 1999-2007 SOI Individual Tax Panel.
Thursday, December 19, 2013
Reason Foundation, Unmasking the Mortgage Interest Deduction: Who Benefits and by How Much?:
Tuesday, December 17, 2013
- The Daily Caller: The Challenge Is Growth, Not Inequality, by Larry Kudlow
- Washington Post: Inequality Isn’t ‘The Defining Challenge of Our Time’, by Ezra Klein
- Washington Post: Is Inequality Bad for Economic Growth?, by Brad Plumer
Saturday, November 30, 2013
Saturday, November 9, 2013
(Hat Tip: Bruce Bartlett.)
Saturday, October 5, 2013
Prior TaxProf Blog coverage:
Tuesday, September 24, 2013
Citizens for Tax Justice, Tax Reform Goals: Raise Revenue, Enhance Fairness, End Offshore Shelters
Tuesday, September 3, 2013
Friday, August 30, 2013
Tuesday, August 27, 2013
Wednesday, August 14, 2013
Friday, August 2, 2013
Although capital income taxes penalize saving and slow long-run growth, the federal tax system imposes multiple such taxes. Seven increases in capital income taxes took effect at the beginning of 2013, and President Obama’s 2014 budget plan proposes further increases. In upcoming decades, rising revenue needs fueled by entitlement growth will create pressure to further expand capital income taxation despite its negative economic effects. Opponents of capital income taxation must reframe the policy debate by explaining the economic disadvantages of capital income taxes and proposing alternative budgetary measures that maintain tax fairness.
Monday, July 29, 2013
Citizens for Tax Justice, Reforming Individual Income Tax Expenditures: Congress Should End the Most Regressive Ones, Maintain the Progressive Ones, and Reform the Rest to Be More Progressive and Better Achieve Policy Goals:
To restore funding for public investments, Congress should enact a tax reform that reduces tax expenditures (subsidies provided through the tax code) to raise revenue. Some lawmakers have debated whether or not revenue saved from reducing tax expenditures should be used to reduce tax rates rather than finance needed public investments, an issue that has been addressed in previous CTJ reports. Less attention has been given to how Congress should prioritize which tax expenditures should be limited or reformed. This is particularly true of tax expenditures for individuals. (A future CTJ report will address tax expenditures for businesses.)
Tax expenditures can be evaluated based on three criteria: cost, progressivity and effectiveness in achieving non-tax policy goals. This report takes cost into account by focusing on the ten most costly tax expenditures for individuals, illustrated in the bar graph on the following page. This report evaluates these tax expenditures based on progressivity and effectiveness in achieving non-tax policy goals — which include subsidizing home ownership and encouraging charitable giving, increasing investment, encouraging work, and many other stated goals. Based on data from Congressional Budget Office (CBO) and from the Institute on Taxation and Economic Policy (ITEP), this report
- Tax expenditures that take the form of breaks for investment income (capital gains and stock dividends) are the most regressive and least effective in achieving their stated policy goals, and therefore should be repealed.
- Tax expenditures that take the form of refundable credits based on earnings, like the Earned Income Tax Credit (EITC) and the Child Tax Credit, are progressive and achieve their other main policy goal (encouraging work) and therefore should be preserved.
- Tax expenditures that take the form of itemized deductions are regressive and have mixed results in achieving their policy goals, and therefore should be reformed.
- Tax expenditures that take the form of exclusions for some forms of compensation from taxable income (like the exclusion of employer-provided health insurance and pension contributions) are not particularly regressive and have some success in achieving their policy goals, and therefore should be generally preserved.
This report draws partly on recent data from the Congressional Budget Office on the ten largest tax expenditures affecting individuals, which CBO concludes will cost more than $900 billion in 2013 and make up two-thirds of the cost of all federal tax expenditures. The graph above illustrates the revenue foregone in 2013 for each of the top ten tax expenditures for individuals in 2013.
These revenue amounts do not necessarily indicate how much would be raised by repealing one or more of these tax expenditures. (This is because people may respond to the repeal of one tax break by utilizing another more heavily or changing their behavior in other ways.) Nonetheless, these figures are useful for comparing the relative importance of tax expenditures.
Saturday, July 13, 2013
Given the nation’s long-term fiscal pressures, increases in revenues need to make a significant contribution to deficit reduction, alongside reductions in spending for mandatory programs. Deficit-neutral tax reform would, as a result, be highly problematic.
Thursday, July 11, 2013
Tax Policy Center: Evaluating Broad-Based Approaches for Limiting Tax Expenditures, by Eric Toder, Joseph Rosenberg & Amanda Eng:
This paper evaluates six options to achieve across-the-board reductions to a group of major exclusions and deductions in the income tax: (1) limiting their tax benefit to a maximum percentage of income, (2) imposing a fixed dollar cap, (3) reducing them by fixed-percentage amount, (4) limiting their tax saving to a maximum percentage of their dollar value, (5) replacing them with fixed rate refundable credits, and (6) including them in the base of the existing Alternative Minimum Tax (AMT). We discuss issues of design, implementation, and administration, and simulate the revenue, distributional, and incentive effects of the various options.
Wednesday, July 10, 2013
Institute on Taxation and Economic Policy, Undocumented Immigrants’ State and Local Tax Contributions:
The potential fiscal costs of legalizing undocumented immigrants have been central to the immigration reform debate. This report contributes the most reliable figures available about the potential benefits to state governments, showing that the 11.2 million undocumented immigrants living in the United States are already paying a significant share of their income in state and local taxes, and that figure would rise under immigration reform.
A report from the non-partisan Congressional Budget Office (CBO) estimated the impact the immigration bill passed in the Senate would have at the federal level and found that it would decrease the deficit and generate more than $450 billion in additional federal revenue over the next decade.
This report provides state-by-state estimates of the state and local tax contributions of the 11.2 million undocumented immigrants living in the United States.
The key findings are:
- Undocumented immigrants currently contribute significantly to state and local taxes, collectively paying an estimated $10.6 billion in 2010 with contributions ranging from less than $2 million in Montana to more than $2.2 billion in California. This means these families are likely paying about 6.4 percent on average of their income in state and local taxes.
- Allowing undocumented immigrants to work in the United States legally would increase their state and local tax contributions by an estimated $2 billion a year. Their effective state and local tax rate would also increase to 7 percent on average, which would put their tax contributions more in line with documented taxpayers with similar incomes.
Saturday, July 6, 2013
Saturday, June 29, 2013
The Brookings Institution hoasted a program yesterday on Tools for Supporting the Housing Market: Evaluating the Homebuyer Tax Credit and Other Policies:
After the bursting of the home price bubble in the mid-2000s sent the housing market into a downward spiral, the government introduced a variety of new measures aimed at sustaining the flow of mortgage credit and boosting housing demand. One such measure was a program that provided a tax credit to homebuyers of up to $8,000. Although advocates of the program argued that it was a critical tool for absorbing excess inventories, critics complained that it simply accelerated sales that would have occurred anyway. Other measures aimed at stabilizing the housing market included various foreclosure prevention and mitigation initiatives, programs that facilitated refinancing, and the Federal Reserve’s considerable efforts to reduce interest rates.
With several years of experience of these policies now behind us, it is time to take stock of their effects. Establishing a better understanding of how they worked will help us learn what tools to use to combat future episodes of housing market distress and what measures the government should have in place now to encourage the nascent housing market recovery that has emerged over the past year.
Co-Directors of Economic Studies Karen Dynan and Ted Gayer presented a new paper on the impact of the federal and state homebuyer tax credits [An Evaluation of Federal and State Homebuyer Tax Incentives (Presentation]. A panel discussion followed to discuss how it compared to other government efforts to help the housing market:
- William G. Gale (Co-Director, Urban-Brookings Tax Policy Center) (moderator)
- Ed Brady (National Association of Home Builders)
- Jonathan Hanks (Sr. Vice President and COO, Utah Housing Corporation)
- Jed Kolko (Chief Economist and Vice President of Analytics, Trulia)
- Christopher J. Mayer (Professor, Columbia Business School)
Sunday, June 23, 2013
Wednesday, June 19, 2013
Curtis S. Dubay (Heritage Foundation):
- PEP and Pease Hurt Larger Families Most and Slow Growth: "In the fiscal cliff deal, President Barack Obama and Congress surprisingly reinstated two long dormant tax policies: the personal exemption phaseout (PEP) and “Pease,” a cap on itemized deductions. The 2001 Bush tax cuts rightfully abolished them because they are bad policies. Now they are back, raising taxes on larger families and reducing the incentives to work and save. These reduced incentives will slow economic growth and, like the tax increase, hit larger families hardest. Pease is similar to the cap on deductions and exemptions that President Obama has proposed in his budgets. Fundamental tax reform is the best way for Congress to fix its mistake of reviving these policies."
- CBO Report on “Tax Expenditures” Has It Wrong: "The Congressional Budget Office (CBO) released a report on the distribution of tax expenditures” that some are wrongly using to push for additional tax increases. This was inevitable because the report takes the wrong approach to the issue."
- E-sales Tax No Bargain: "Gov. Bob McDonnell’s transportation plan includes a unique provision. If Congress passes the Marketplace Fairness Act, Virginia would use the new revenue from Internet sales taxes for transportation projects, sparing Virginians an increase of the gas tax. A respite from higher gas taxes sounds good. But Virginia’s businesses will pay a hefty compliance toll if the bill becomes law. And Virginians who shop online will pay the tab that drivers would’ve paid had the bill not become law."
- Senate Immigration Bill Does Not Require Payment of All Back Taxes: "There are many serious flaws in the controversial Senate immigration bill, the Border Security, Economic Opportunity, and Immigration Modernization Act (S. 744). One such flaw is that it fails a standard of basic fairness to which immigration has long been held: It does not meaningfully require illegal immigrants to pay back taxes, interest, and penalties on all the income they earned while here in the U.S. illegally before being granted legal status."
Tuesday, June 18, 2013
Center on Budget and Policy Priorities: States Should React Cautiously to Recent Income Tax Growth April Surge Provides Opportunity to Invest in Infrastructure, Boost Reserves:
Recent tax collections are considerably higher than last year in most states and, in many cases, exceed states’ projections when they adopted their current budgets in the spring of 2012. In 32 states for which data are available, state tax collections in the first ten months of fiscal year 2013 were 5.7 percent higher than in the same period last year, on average.
A closer look into the tax collection reports reveals that:
- Much of the recent growth is in the income tax. With two months left in the fiscal year, the typical state has collected 8.9 percent more personal income taxes than it did in the same period last year. Sales taxes have grown more slowly. This is, in part, the latest demonstration of the fact than income taxes rise more rapidly than sales taxes during periods of economic growth.
- The revenue growth and particularly income tax growth is nationwide. Some 26 of the 30 states for which data are available experienced double-digit growth in income taxes between April 2012 and April 2013.
- While a portion of the income tax growth reflects the economic recovery, an additional portion reflects wealthy taxpayers shifting income into 2012 that they would have received in 2013 in anticipation of federal tax rate increases in 2013.
- Even with this recent growth, state tax revenues have not recovered from the Great Recession. Revenues likely still remain more than 3 percent below pre-recession levels, after adjusting for inflation. And because of the one-time nature of much of the recent revenue growth, revenue growth is likely to slow again.
Monday, June 17, 2013
Legislation in Congress that would address tax loopholes, raise revenue, increase the fairness of the tax code and provide stability to the financial system are subject to lobbying efforts that are overwhelmingly lopsided in favor of industry interests, a new Public Citizen report shows. The report analyzes lobbying disclosure data to illustrate the number of lobbyists that are working on each of three bills: the Cut Unjustified Tax Loopholes Act (CUT Loopholes), the Stop Tax Haven Abuse Act and the Wall Street Trading and Speculators Tax Act – finding that 331 of the 383, or 86 percent, of lobbyists who have worked on these bills in the past two Congresses represent industry clients.
(Hat Tip: Citizens for Tax Justice.)
Economic Policy Institute: Corporate Tax Rates and Economic Growth Since 1947, by Thomas L. Hungerford:
This brief examines corporate income-tax rates, and the argument linking low corporate tax rates with higher economic growth. The principal findings are:
- Claims that the United States’ corporate tax rate is uniquely burdensome to U.S. business when compared with the corporate tax rates of its industrial peers are incorrect. While the United States has one of the highest statutory corporate income-tax rates among advanced countries, the effective corporate income-tax rate (27.7 percent) is quite close to the average of rich countries (27.2 percent, weighted by GDP).
- The U.S. corporate income-tax rate is also not high by historic standards. The statutory corporate tax rate has gradually been reduced from over 50 percent in the 1950s to its current 35 percent.
- The current U.S. corporate tax rate does not appear to be impeding corporate profits. Both before-tax and after-tax corporate profits as a percentage of national income are at post–World War II highs; they were 13.6 percent and 11.4 percent, respectively, in 2012.
- Lowering the corporate income-tax rate would not spur economic growth. The analysis finds no evidence that high corporate tax rates have a negative impact on economic growth (i.e., it finds no evidence that changes in either the statutory corporate tax rate or the effective marginal tax rate on capital income are correlated with economic growth).
(Hat Tip: Citizens for Tax Justice.)
Saturday, June 15, 2013
Sunday, June 2, 2013
The Motley Fool: The 6 Most Generous States in America:
- Maryland (40.1% of tax returns; $2,969 median contribution)
- New Jersey (36.0%; $2,181)
- Connecticut (35.9%; $1,916)
- Utah (33.1%; $5,255)
- Minnesota (32.7%; $2,213)
- Virginia (32.5%; $2,790)
Friday, May 17, 2013
In two recent cases, the U.S. Supreme Court considered constitutional challenges to the federal Defense of Marriage Act—which denies federal recognition of same-sex marriage—and to California’s Proposition 8, a constitutional amendment banning same-sex marriage. Regardless of the outcomes of these two cases, the controversy over same-sex marriage highlights an important tax policy question: should the US tax code treat people as families, as it currently does, or as individuals? This paper considers the costs and benefits of switching to a tax system based on individual, rather than family, income.
Wednesday, May 15, 2013
American Enterprise Institute Podcast: Tax Policy and the Nobel Prize:
What will you do with your Nobel Prize Money? On the latest episode of Banter, AEI economist Aparna Mathur discusses the tax policy surrounding academic, scientific, and philanthropic prize winnings. America is the only country that taxes these earnings and as a result, many give their winnings to charity. Should these winners, who’ve contributed so much to society already, be allowed to keep the fruits of their labor or should they be encouraged to contribute to further social good? Plus, Stu and Andrew play a round of “guess the feminist critique.”
Saturday, May 11, 2013
Saturday, May 4, 2013
Friday, May 3, 2013
Good Jobs First: Grading Places: What Do the Business Climate Rankings Really Tell Us?:
Prominent studies that purport to measure and rank the states’ “business climates” are actually politicized grab-bags of data. They contradict each other wildly, have no predictive value, and should not be used to inform public policies. This is only the third such analysis of pseudo-social science “business climatology” in 27 years.
Press and blogosphere coverage:
- Citizens for Tax Justice, Rich States, Poor States and Fake Research: "Business Climate" Rankings Mislead Lawmakers by Design
- Crain's Chicago Business, Why State Business Climate Rankings Are Bunk: Study
For criticism of the Good Jobs First study, see:
- Tax Foundation, Response to Good Jobs First’s “Grading Places”
- Tax Update Blog, Peter Fisher takes on The Tax Foundation
Thursday, April 25, 2013
Earlier this year, Citizens for Tax Justice reported that Facebook Inc. had used a single tax break, for executive stock options, to avoid paying even a dime of federal and state income taxes in 2012. Since then, CTJ has investigated the extent to which other large companies are using the same tax break. This short report presents data for 280 Fortune 500 corporations that, like Facebook, disclose a portion of the tax benefits they receive from this tax break.
- These 280 corporations reduced their federal and state corporate income taxes by a total of $27.3 billion over the last three years, by using the so-called “excess stock option” tax break.
- In 2012 alone, the tax break cut Fortune 500 income taxes by $11.2 billion.
- Just 25 companies received more than half of the total excess stock option tax benefits accruing to Fortune 500 corporations over the past three years.
- Apple alone received 12 percent of the total excess stock option tax benefits during this period, enjoying $3.2 billion in stock option tax breaks during the past three years. JP Morgan, Goldman Sachs and ExxonMobil collectively enjoyed 10 percent of the total.
- In 2012, Facebook wiped out its entire U.S. income tax liability by using excess stock option tax breaks.
- Over the past three years, Apple slashed its federal and state income taxes by 20 percent using this single tax break.
How It Works: Companies Deduct Executive Compensation Costs They Never Actually Paid
Most big corporations give their executives (and sometimes other employees) options to buy the company’s stock at a favorable price in the future. When those options are exercised, corporations can take a tax deduction for the difference between what the employees pay for the stock and what it’s worth (while employees report this difference as taxable wages).
Before 2006, companies could deduct the “cost” of the stock options on their tax returns, reducing their taxable profits as reported to the IRS, but didn’t have to reduce the profits they reported to their shareholders in the same way, creating a big gap between “book” and “tax” income. Some observers, including CTJ, argued that the most sensible way to resolve this would be to deny companies any tax deduction for an alleged “cost” that doesn’t require an actual cash outlay, and to require the same treatment for shareholder reporting purposes.
But instead, rules in place since 2006 maintained the tax write-off, but now require companies to lower their “book” profits somewhat to take account of options. But the book write-offs are still usually considerably less than what the companies take as tax deductions. That’s because the oddly-designed rules require the value of the stock options for book purposes to be calculated — or guessed at — when the options are issued, while the tax deductions reflect the actual value when the options are exercised. Because companies typically low-ball the estimated values, they usually end up with much bigger tax write-offs than the amounts they deduct in computing the profits they report to shareholders.
- Forbes: Stock Options Meant Big Tax Savings For Apple And JPMorgan, As Well As Facebook, by Janet Novack
- Huffington Post: McDonald's, Starbucks, Apple Reaping Billions Of Dollars From Little-Known Tax Break: Study, by Jillian Berman
- Tax Update Blog: Is it a Loophole if it Increases Taxes?, by Joe Kristan
(Hat Tip: Francine Lipman.)
Thursday, April 18, 2013
Today is Tax Freedom Day, the day on which Americans will have earned enough money to pay all federal, state, and local taxes for the year:
Tax Freedom Day is the day when the nation as a whole has earned enough money to pay its total tax bill for the year. A vivid, calendar based illustration of the cost of government, Tax Freedom Day divides all federal, state, and local taxes by the nation’s income. In 2013, Americans will pay $2.76 trillion in federal taxes and $1.45 trillion in state taxes, for a total tax bill of $4.22 trillion, or 29.4 percent of income. April 18 is 29.4 percent, or 108 days, into the year.
Tax Freedom Day is five days later than last year, due mainly to the fiscal cliff deal that raised federal taxes on individual income and payroll. Additionally, the Affordable Care Act’s investment tax and excise tax went into effect. Finally, despite these tax increases, the economy is expected to continue its slow recovery, boosting profits, incomes, and tax revenues. ...
The total tax burden borne by residents of different states varies considerably, due to differing state tax policies and because of the steep progressivity of the federal tax system. This means higher income states celebrate Tax Freedom Day later: Connecticut (May 13), New York (May 6), and New Jersey (May 4). Residents of Mississippi will bear the lowest average tax burden in 2013, with Tax Freedom Day arriving for them on March 29. Also early are Louisiana (March 29) and Tennessee (April 2).
to Pay Taxes
Tax Freedom Day
Citizens for Tax Justice, Ten (of Many) Reasons Why We Need Corporate Tax Reform:
This CTJ report illustrates how profitable Fortune 500 companies in a range of sectors of the U.S. economy have been remarkably successful in manipulating the tax system to avoid paying even a dime of tax on billions of dollars in profits. These ten corporations’ tax situations shed light on the widespread nature of corporate tax avoidance. As a group, the ten companies paid no federal income tax on $16 billion in profits in 2012, and they paid zero federal income tax on $57 billion in profits over the past five years. All but one paid less than zero federal income tax in 2012; all paid exceedingly low rates over five years.
Sunday, April 14, 2013
Tuesday, April 9, 2013
The Transactional Records Access Clearinghouse at Syracuse University has released a report, IRS Audits Slump, Staff Down Long-term Impact Uncertain:
The IRS plans to expend 18% percent less effort auditing businesses with assets of $10 million or more compared with just two years ago, according to a very timely IRS planning document.
For the same period, the IRS also projects a 14% drop in the amount of available time for the specialized revenue agents it needs to conduct these audits in FY 2013 — the year ending on September 30 — compared to what it was in FY 2011.
These declines — neither of which take into account the probable impact of the sequestration cuts in the months ahead — were described in a special agency report now being made available to the Transactional Records Access Clearinghouse (TRAC) on a monthly basis. This series of internal IRS management reports — the last one covers the period ending in January 2013 — are provided by the IRS thanks to a court order granted TRAC as a result of a suit filed under the Freedom of Information Act.
IRS Large Business and International Division Direct Examination Staff Years
Change 2013 v. 2011
Annual Plan Total 3,567 3,320 2,935 -18% Individual 189 173 306 62% Corporations 1,103 1,043 807 -27% Partnership 191 196 159 -17% Subchapter S Corp 184 180 115 -37% Coordinated Industry Cases 1,083 1,081 1,011 -7% Other 816 647 537 -34% Actual Revenue Agent Years Total 3,319 3,155 2,852 -14% Individual 258 214 283 9% Corporations 864 912 762 -12% Partnership 211 215 179 -15% Subchapter S Corp 185 225 205 11% Coordinated Industry Cases 1,011 952 865 -14% Other 790 637 559 -29%