Paul L. Caron
Dean



Tuesday, November 24, 2020

Americans Increasingly Are Leaving High-Tax States For Low-Tax States

Cato Institute, Will High‐​Tax “Superstar Cities” Finally Need to Consider — Gasp! — Their Residents?:

As my Cato colleague Chris Edwards documented here a couple weeks ago, interstate migration data from the U.S. Census Bureau indicate that state tax policy affects where Americans, especially wealthy ones, are choosing to live and work. The following charts ...  confirm Chris’ initial impressions: in 2018 there was a strong, statistically significant (p‐​values < 0.01) relationship between (1) personal state tax burdens — as measured by either the Tax Policy Center or the Tax Foundation — and (2) net interstate migration (ratio of inflows to outflows):

Cato 1

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November 24, 2020 in Tax, Think Tank Reports | Permalink | Comments (2)

Thursday, October 22, 2020

What’s Wrong With A Wealth Tax

Allison Schrager & Beth Akers (Manhattan Institute), What’s Wrong with a Wealth Tax:

In the coming months, Americans can expect calls to tax the wealth of the richest citizens. There are four oft-cited justifications for such a measure: inequality is rising, and there is a need to restore fairness; more revenue is necessary to bring exploding deficits under control, and taxing the wealthy is the least harmful way to do so; extreme wealth disparities harm economic growth; and the rich use their wealth to rig the political system, so democracy requires leveling the playing field.

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October 22, 2020 in Tax, Tax Scholarship, Think Tank Reports | Permalink | Comments (2)

Saturday, August 22, 2020

The Economic Effects Of Wealth Taxes

John Diamond (Rice University) & George Zodrow (Rice University), The Economic Effects of Wealth Taxes:

In this paper, we estimate the economic effects of the wealth tax proposed by Senator Warren using a computable general equilibrium model of the U.S. economy under the assumption that all revenues are used to increase income transfers (excluding Social Security payments) that accrue primarily to lower income groups.

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August 22, 2020 in Scholarship, Tax, Tax Scholarship, Think Tank Reports | Permalink | Comments (4)

Tuesday, August 11, 2020

Brookings: Taxing Wealth Transfers Through An Expanded Estate Tax

The Brookings Institution:  Taxing Wealth Transfers Through an Expanded Estate Tax, by William G. Gale, Christopher Pulliam, John Sabelhaus, and Isabel V. Sawhill:

Brookings (2016)American political leaders are currently focused on policies to address the health and economic implications of the COVID-19 pandemic. Nevertheless, it is not too soon to consider policy changes that could be beneficial to implement after the crisis has passed.

The U.S. faces two related and persistent threats to long-term, shared prosperity: growing inequality and rising federal debt. Inequality, especially wealth inequality, has risen sharply over the past 40 years. Children from different socioeconomic backgrounds do not have the same opportunities to achieve the American Dream. The Black-white gap in social mobility is especially concerning. The government’s budget outlook has long been a concern, with the federal debt projected to rise continually relative to the size of the economy, because of an aging population, rising healthcare costs, and inadequate revenues. The pandemic has made each problem more difficult to solve.

Policy makers should be looking for ways to address both issues. One place to start is by raising taxes on the most well-to-do households. During the Democratic primary, there were several proposals for a wealth tax, which would target the richest Americans and raise substantial amounts of revenue. Although a wealth tax would face difficult questions regarding its administrability and constitutionality, proposals for such taxes have re-energized the debate about taxing the wealthy. In some ways, the discussion has shifted from debating whether the rich should pay more in taxes toward determining the best way to achieve that goal.

In this policy brief, we consider the virtues of expanding the estate tax. Coupled with the gift and generation-skipping tax, the estate tax directly targets the intergenerational transfer of wealth. Whether it is ultimately borne by decedents or inheritors, the estate tax is extremely progressive. Inheritances are a major contributor to growing wealth inequality—large inheritances tend to flow to already wealthy heirs. The top ten percent of households by wealth receive 56 percent of all intergenerational transfers, while the bottom half receives only eight percent.

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August 11, 2020 in Scholarship, Tax, Tax Scholarship, Think Tank Reports | Permalink | Comments (1)

Tuesday, February 25, 2020

New Tool Examines How U.S. Taxes And Spending Affect Income Inequality

Economic Policy Institute, New Tool Examines How U.S. Taxes and Spending Affect Income Inequality:

EPIToday, the Economic Policy Institute is launching a website aimed at shedding light on how the U.S. tax and spending system affects household income up and down the income distribution.

The U.S. Tax & Spending Explorer allows users to take a deep dive into the ways that the federal government affects the inequality of households’ incomes through taxes and through spending on social insurance and safety net programs. The explorer also examines so-called “tax expenditures,” sometimes referred to as the hidden federal budget. ...

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February 25, 2020 in Tax, Tax News, Think Tank Reports | Permalink | Comments (1)

Thursday, February 20, 2020

Journalist’s Resource Guide To The 2020 Democratic Policy Proposals: Carbon Taxes

Journalist's Resources Guide to the 2020 Democratic Policy Proposals: Carbon Taxes:

JR2In the lead-up to the 2020 elections, the Journalist’s Resource team is combing through the Democratic presidential candidates’ platforms and reporting what the research says about their policy proposals. We want to encourage deep coverage of these proposals — and do our part to help deter horse race journalism, which research suggests can lead to inaccurate reporting and an uninformed electorate. We’re focusing on proposals that have a reasonable chance of becoming policy. For us, that means at least 3 of the 5 top-polling candidates say they intend to tackle the issue. Here’s what the research says about carbon pricing.

Candidates Favoring Carbon Pricing

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February 20, 2020 in Tax, Tax News, Think Tank Reports | Permalink | Comments (0)

Friday, February 14, 2020

Migration to Low‐​Tax States Continues

Chris Edwards (Cato Institute), Migration to Low‐​Tax States Continues:

The Census Bureau has released estimates of state population changes between July 2018 and July 2019. One component of population changes is migration between the states. The new Census data show that Americans are continuing to move from high‐​tax to low‐​tax states.

This Cato study examined interstate migration using IRS data and found that people are moving, on net, from tax‐​punishing places such as California, Connecticut, Illinois, New York, and New Jersey to tax‐​friendly places such as Florida, Idaho, Nevada, Tennessee, and South Carolina. The Census data confirms the trends.

In the chart, each blue dot is a state. The vertical axis shows the one‐​year Census net interstate migration figure as a percent of 2018 state population. The horizontal axis shows state and local household taxes as a percent of personal income in 2017. Household taxes include individual income, sales, and property taxes. The red line is a fitted regression line.

Cato

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February 14, 2020 in Tax, Tax Scholarship, Think Tank Reports | Permalink | Comments (13)

Friday, December 20, 2019

Corporate Tax Dodging Happens Because Congress Allows It to Happen

Institute on Taxation and Economic Policy, Corporate Tax Dodging Happens Because Congress Allows It to Happen:

Trump TaxAs usual, corporate spokespersons and their allies are trying to push back against ITEP’s latest study showing that many corporations pay little or nothing in federal income taxes. One way they respond is by stating that everything they do is perfectly legal. This is an attempt by the corporate world to change the subject. The entire point of ITEP’s study is that Congress has allowed corporations to avoid paying taxes, and that this must change.

Anyone who reads ITEP’s corporate study will find detailed explanations of how Congress must change the law to ensure that corporations pay. Alright, we get it, the study is a little long. For your convenience, we also provided a two-page executive summary, and you will find that the recommendations on the second page all involve Congress changing those very laws that corporations use to avoid taxes.

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December 20, 2019 in Tax, Tax Scholarship, Think Tank Reports | Permalink | Comments (2)

Thursday, December 19, 2019

Wharton: Weighing The Costs And Benefits Of A Middle Class Tax Cut

Knowledge@Wharton, A Middle-class Tax Cut: Weighing the Costs and Benefits:

WhartonWharton’s Jennifer Blouin speaks with Wharton Business Daily on Sirius XM about the potential for “Tax Cuts 2.0” by the Trump administration.

In the run-up to the 2020 Presidential elections, the possibility that the Trump administration might offer a middle-class tax rate cut to 15% has set economists and other experts weighing the costs and benefits of such a move as well as its political implications.

To be sure, a tax rate cut to 15% for middle-income individuals would impose a higher burden on the federal debt, which is already weighed down by the 2017 tax cuts for corporations and individuals, according to experts at the Penn Wharton Budget Model (PWBM), a non-partisan research organization. Still, it would also inject a short-term boost and steady economic gains over the long run, they said.

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December 19, 2019 in Scholarship, Tax, Tax News, Think Tank Reports | Permalink | Comments (0)

Saturday, December 14, 2019

Penn Wharton: Warren's Wealth Tax Would Raise $1.5 Trillion Less Revenue, Reduce GDP And Wages

Penn Wharton Budget Model, Senator Elizabeth Warren's Wealth Tax: Projected Budgetary and Economic Effects:

Penn Wharton Budget ModelPenn Wharton Budget Model (PWBM) projects that Senator Warren’s proposed wealth tax, if implemented in 2021, would raise between $2.3 trillion (including macroeconomic effects) and $2.7 trillion (not including macroeconomic effects) in additional revenue in the 10-year window 2021 - 2030 while reducing GDP in 2050 by about 1 to 2 percent, depending on how the money is spent.

  • Senator Elizabeth Warren has proposed a wealth tax equal to 2 percent of net worth above $50 million and 6 percent of net worth above $1 billion, which her campaign estimates would raise $3.75 trillion over 10 years.
  • PWBM estimates that the proposal would raise about $2.7 trillion over fiscal years 2021-2030, not including macroeconomic effects. Including macroeconomic effects, PWBM estimates that the proposal would raise about $2.3 trillion over the same period.
  • PWBM projects that the proposal would reduce GDP by 0.9 percent in 2050 under the standard budget scoring convention that additional revenues reduce the deficit. If the revenues were instead spent on public investments, PWBM projects GDP in 2050 would fall between 1.1 and 2.1 percent, depending on the productivity of the investment. Average hourly wages in the economy in 2050, including wages earned by households not directly subject to the wealth tax, would fall between 0.8 and 2.3 percent due to the reduction in private capital formation.

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December 14, 2019 in Tax, Tax News, Think Tank Reports | Permalink | Comments (1)

Tuesday, December 10, 2019

OECD: Trump’s Tax Cuts Push U.S. Tax Burden To Near World's Lowest

Wall Street Journal, Trump’s Tax Cuts Push U.S. Burden Lower in World:

President Trump’s 2017 tax cuts reduced the U.S. tax burden to one of the lowest among major world economies, according to a Thursday report [Revenue Statistics 2019] by an intergovernmental organization.

U.S. tax burdens dropped by the largest amount among those countries in 2018, and the U.S. now has lower taxes than all but three countries in the Organization for Economic Cooperation and Development, the report said.

OECD

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December 10, 2019 in Gov't Reports, Tax, Tax News, Tax Scholarship, Think Tank Reports | Permalink | Comments (1)

Sunday, December 8, 2019

Close The Tax Gap By Ensuring Pass-Throughs Pay More Taxes They Owe

Samantha Jacoby (Center on Budget and Policy Priorities), Policymakers Should Ensure Pass-Throughs Pay More of Taxes They Owe:

High-income taxpayers drive much of the “tax gap” — the gap between what taxpayers owe and what they voluntarily pay on time — finds a new paper from Professor Natasha Sarin and former Treasury Secretary Lawrence Summers [Shrinking the Tax Gap: Approaches And Revenue Potential], citing new IRS data for 2011 to 2013. That’s unsurprising, because the tax gap’s single largest source is the underreporting of pass-through income (income from sources such as S corporations, partnerships, and sole proprietorships), which overwhelmingly flows to wealthy households. IRS auditors looking to curb tax evasion as well as policymakers looking to close tax loopholes should make pass-throughs a prime target. ...

Taxpayers who didn’t file a return and those underpaying the IRS accounted for 20 percent of the gross tax gap, and income underreporting the other 80 percent, the latest IRS data show. Pass-throughs accounted for nearly half (44 percent) of the underreporting gap, counting both underreported income and self-employment taxes.

CBPP 2

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December 8, 2019 in Tax, Tax Scholarship, Think Tank Reports | Permalink | Comments (2)

Wednesday, November 27, 2019

Most Wealth Taxation Is Voluntary; We Need To Make It Mandatory

Washington Post op-ed:  Most Wealth Taxation on the Rich Is Essentially Voluntary. That Must Change., by Jared Bernstein:

As a result of the Democratic primary, we’re having a robust debate about taxing wealth. The debate invokes tricky technical and legal issues, but it’s an overdue one: There are good reasons the United States needs to start taxing wealth.

You may think we already tax wealth, but that’s mostly not the case. As my colleagues at the Center on Budget and Policy Priorities, Chuck Marr, Samantha Jacoby and Kathleen Bryant, point out in an important new paper [Substantial Income of Wealthy Households Escapes Annual Taxation Or Enjoys Special Tax Breaks], for the very wealthy, taxes are essentially voluntary.

How can that be, when the rest of us have taxes withheld from our paychecks every few weeks, and then often pay more when we file our income taxes every April? Because wealth accumulation isn’t taxed unless you decide to sell the asset, and even then, it’s taxed at a favorable rate, compared with regular income.

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November 27, 2019 in Tax, Tax News, Tax Scholarship, Think Tank Reports | Permalink | Comments (4)

Claims That Taxes On The Rich Will Slow Economic Growth Are Fundamentally Flawed

Josh Bivens (Economic Policy Institute), Analyses Claiming That Taxes On Millionaires and Billionaires Will Slow Economic Growth Are Fundamentally Flawed:

EPIIn recent weeks, a number of policy analyses [by the Penn Wharton Budget Model and the Tax Foundation] of progressive economic policies—a surtax on high-incomes, a wealth tax, and Social Security expansion—have claimed these policies would damage economic growth. Policymakers should give these analyses very little weight in debates about these issues, for a number of reasons.

First, and most important, is the fact that all of these analyses are grounded in an economic view of the world that sees growth as constrained by the economy’s productive capacity (or the supply side of the economy) and not by the spending of households, businesses and government (the economy’s demand side). These estimates have other problems too—they are not even particularly convincing supply-side estimates and even if the economy’s growth really was constrained by supply, these estimates would still be misleading about the effects of these policies on welfare. But the biggest reason why policymakers should give these analyses zero weight is because they assume that growth is almost never demand-constrained. ...

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November 27, 2019 in Tax, Tax News, Tax Scholarship, Think Tank Reports | Permalink | Comments (0)

Tuesday, November 19, 2019

Tax Justice Is Gender Justice: Advancing Gender And Racial Equity By Harnessing The Power Of The U.S. Tax Code

The Atlantic, Tax the Patriarchy:

The Rube Goldberg mess of the United States tax code picks winners and losers as it raises trillions of dollars for the federal government. It advantages unearned income over earned income. It advantages big, mortgaged homes over little, rented apartments. It advantages the richest of the rich over the merely rich. And, in many cases, it advantages men over women.

That last claim is the contention of three new reports produced by the National Women’s Law Center and several other research and advocacy groups. They analyze the tax code through the lens of gender and conclude that many provisions reflect, amplify, and entrench long-standing disparities between men and women.

But it need not be so. The tax code has profound power to close the gender wage-and-wealth gap, as well as to support equality in the workplace and help families thrive at home. As the country debates taxing billionaires out of existence, it might consider taxing the patriarchy out of existence, too.

National Women's Law Center, Tax Justice Is Gender Justice: Advancing Gender and Racial Equity by
Harnessing the Power of the U.S. Tax Code:

The tax code sets the rules that shape our economy, reflecting and perpetuating notions of who and what our society values. It’s an opportunity to fight inequality. But today’s tax code contains outdated and often biased assumptions about family structures, marriage, participation in the paid workforce, and more that work together to perpetuate structural barriers against women, families with low incomes, and people of color. The tax code can be a barrier for realizing gender justice – but it can also be a tool. It’s time we take advantage.

NWL Three

Ariel Jurow Kleiman (San Diego), Amy Matsui (National Women’s Law Center) & Estelle Mitchell (National Women’s Law Center), The Faulty Foundations of the Tax Code: Gender and Racial Bias in Our Tax Law:

This report ... examines the outdated assumptions and gender and racial biases embedded in the U.S. tax code. It highlights tax code provisions that reflect and exacerbate gender disparities, with particular attention to those that disadvantage women with low incomes, women of color, members of the LGBTQ community, people with disabilities, and immigrants.

  • Examined policies include the joint filing of spousal income, treatment of informal caregiving, incentives for business formation and wealth accumulation, and IRS enforcement patterns. 
  • Although perhaps facially neutral, many of these policies likely provide disproportionate benefit to men, may heighten pressure for women to leave the formal labor market, and reflect biased assumptions about gender, race, and family structure. 
  • This report offers recommendations for better data and analysis so that policymakers, advocates, and the public can fully understand the impact of the current tax code and proposed tax policies.

Katy Milani (Roosevelt Institute), Melissa Boteach (National Women’s Law Center), Steph Sterling, (Roosevelt Institute) & Sarah Hassmer (National Women’s Law Center), Reckoning With the Hidden Rules of Gender in the Tax Code: How Low Taxes on Corporations and the Wealthy Impact Women’s Economic Opportunity and Security:

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November 19, 2019 in Tax, Tax Scholarship, Think Tank Reports | Permalink | Comments (3)

Sunday, November 17, 2019

NY Times: Warren Wealth Tax Would Slow Economic Growth By 13% According To Penn Wharton Budget Model

New York Times, Warren Wealth Tax Could Slow Economy, Early Analysis Finds:

Penn Wharton Budget ModelSenator Elizabeth Warren’s proposed wealth tax would slow the United States economy, reducing growth by nearly 0.2 percentage points a year over the course of a decade, an outside analysis of the plan estimates.

The preliminary projection from the Penn Wharton Budget Model, which was unveiled on Thursday in Philadelphia, is the first attempt by an independent budget group to forecast the economic effects of the tax that has become a centerpiece of Ms. Warren’s campaign for the Democratic presidential nomination.

The assessment found that if the tax raised as much new federal revenue as Ms. Warren intends, and if the proceeds went toward reducing the federal debt, annual economic growth would slow from an average of 1.5 percent to an average of just over 1.3 percent over a decade.

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November 17, 2019 in Tax, Tax Scholarship, Think Tank Reports | Permalink | Comments (0)

Thursday, October 31, 2019

Taxing High Incomes: A Comparison Of 41 Countries

Tax Foundation, Taxing High Incomes: A Comparison of 41 Countries:

  • This report compares top effective marginal tax rates on labour income in 41 OECD and EU countries.
  • The top effective marginal tax rate is the total tax paid on the last dollar earned by a high-earning worker, taking social security contributions and consumption taxes into account in addition to income taxes. It is a measure of the degree of progressivity and redistribution in the tax system. As such, it is of great policy interest.
  • The highest marginal tax rate is found in Sweden, 76 percent, and the lowest in Bulgaria, 29 percent.
  • In general, the Nordic and the Western European countries have the highest effective tax rates.

Top Effective Marginal Tax Rates in 2019 and Their Composition
Tax Foundation

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October 31, 2019 in Scholarship, Tax, Tax Scholarship, Think Tank Reports | Permalink | Comments (4)

Monday, October 21, 2019

Taxing The “Rich” Won’t Pay For Politicians’ Promises

Manhattan Institute, Issues 2020: Taxing the “Rich” Won’t Pay for Politicians’ Promises:

The Narrative

"I believe that we should be asking the very wealthiest people in this country to start paying their fair share of taxes. That way, we will not only lower the deficit, but we will bring in enough revenue to invest in our economy and create the millions of new jobs we desperately need."[1]
— Bernie Sanders

"My vision for Medicare-for-All does not include a middle-class tax hike. I’m not prepared to do that."[2]
— Kamala Harris

"If we have enough money to pay for tax breaks for corporations. We have enough to invest in Medicare-for-All, Green New Deal and cancel student debt."[3]
— Ilhan Omar

Reality

Politicians claim that agendas costing approximately $40 trillion over 10 years can be financed mostly by taxing wealthy families and corporations. Essentially, they promise a European-style welfare state without Europe’s burdensome taxes on middle- and lower-income earners. This is not possible.

Combining popular proposals to tax the wealthiest Americans and corporations would likely raise $3.9 trillion over the decade. This revenue could not even eliminate half the $15.5 trillion budget deficit that is already projected over the next decade, much less pay for $40 trillion in more spending. The overwhelming majority of new tax revenue to finance such expenditures would have to be raised from the middle- and lower-income earners.

Manhattan

Key Findings

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October 21, 2019 in Tax, Tax Scholarship, Think Tank Reports | Permalink | Comments (0)

Tuesday, October 1, 2019

The Financial Transaction Tax: A Progressive Tax With Beneficial Effects

Public Citizen, A Progressive Tax With Beneficial Effects:

A Small Levy on Financial Transactions Would Steer Clear of Struggling Americans, Raise Meaningful Revenue, and Possibly Retire An Abusive Wall Street Industry

A small tax on financial transactions, such as a one-tenth of 1 percent levy on the purchase of stocks and bonds, would likely end the viability of high-frequency trading while raising consequential sums for the U.S. Treasury. Opponents of this proposal have claimed it would hinder the ability of middle-class families to save for retirement. In contrast, we conclude that the costs of a modest financial transaction tax (FTT) would be little to nothing for middle-income families and would be easily manageable for average families in top income bracket.

FTT

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October 1, 2019 in Tax, Tax News, Think Tank Reports | Permalink | Comments (4)

Tuesday, September 10, 2019

IMF: The Rise Of Phantom Foreign Direct Investments And The Fall Of Global Tax Enforcement

Jannick Damgaard, Thomas Elkjaer & Niels Johannesen (IMF), The Rise of Phantom Investments: Empty Corporate Shells in Tax Havens Undermine Tax Collection in Advanced, Emerging Market, and Developing Economies:

According to official statistics, Luxembourg, a country of 600,000 people, hosts as much foreign direct investment (FDI) as the United States and much more than China. Luxembourg’s $4 trillion in FDI comes out to $6.6 million a person. FDI of this size hardly reflects brick-and-mortar investments in the minuscule Luxembourg economy. So is something amiss with official statistics or is something else at play?

FDI is often an important driver for genuine international economic integration, stimulating growth and job creation and boosting productivity through transfers of capital, skills, and technology. Therefore, many countries have policies to attract more of it. However, not all FDI brings capital in service of productivity gains. In practice, FDI is defined as cross-border financial investments between firms belonging to the same multinational group, and much of it is phantom in nature—investments that pass through empty corporate shells. These shells, also called special purpose entities, have no real business activities. Rather, they carry out holding activities, conduct intrafirm financing, or manage intangible assets—often to minimize multinationals’ global tax bill. Such financial and tax engineering blurs traditional FDI statistics and makes it difficult to understand genuine economic integration.

FDI 2

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September 10, 2019 in Tax, Tax Scholarship, Think Tank Reports | Permalink | Comments (1)

Monday, September 9, 2019

The Current State Of Sales Tax On Digital Products

Rice University Baker Institute for Public Policy, The Current State of Sales Tax on Digital Products:

Baker InstituteRecent technological advancements have transformed how people conduct their daily activities. These changes are not only affecting how people live and work, but they are also redefining how people entertain and learn. Today, it is common to remotely access files stored in Dropbox, read e-books downloaded on Kindle, watch TV shows streamed from Netflix or Hulu, and listen to music through Spotify. These technological developments are making state tax authorities assess the taxability of digital products. This report reviews the current landscape of state sales tax on digital products, court cases, administrative actions, congressional proposals, and potential future developments in the taxation of digital products. ...

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September 9, 2019 in Tax, Tax Scholarship, Think Tank Reports | Permalink | Comments (0)

Monday, September 2, 2019

Marginal Tax Rates For Pass-through Businesses Vary By State: 32.7% In TX, FL; 46.1% In CA

Tax Foundation, Marginal Tax Rates for Pass-through Businesses Vary by State

Pass-through businesses—businesses like sole proprietorships, S corporations, and partnerships that “pass” their income “through” to their owner’s income tax returns and pay the ordinary individual income tax—make up a majority of U.S. businesses. Marginal tax rates vary for pass-throughs depending upon the state in which they operate because of differences in how states tax individual income.

Pass-through businesses’ marginal tax rates vary by state, from a low of 32.7 percent (in seven states) to a high of 46.1 percent (in California). These rates include both state and federal taxes.

Tax Foundation

See also Libin Zhang (Roberts & Holland, New York), Marginal Income Tax Rates of the Passthrough Business Deduction, 159 Tax Notes 1139 (May 21, 2018).

September 2, 2019 in Tax, Tax News, Think Tank Reports | Permalink | Comments (3)

Monday, June 10, 2019

Ending Special Tax Treatment For The Very Wealthy

Alexandra Thornton & Galen Hendricks (Center for American Progress), Ending Special Tax Treatment for the Very Wealthy:

Over the past several decades, as concentrations of income and wealth have approached historic levels, taxes on the very wealthy have not kept up. In fact, taxes on the ultrarich have gone in the opposite direction. Tax changes enacted since the 1980s, including the recent Tax Cuts and Jobs Act (TCJA) passed in December 2017, have eroded taxes on the people who have benefited the most from the economy, thereby aiding and abetting the widely acknowledged and troubling increase in wealth inequality. These changes have worsened a structural defect in the U.S. tax code—specifically, its failure to tax massive accumulations of wealth.

Figure 1 Figure 2<

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June 10, 2019 in Tax, Think Tank Reports | Permalink | Comments (8)

Friday, January 11, 2019

2019 Tax Trends

Tax Foundation logoTax Foundation, Tax Trends Heading Into 2019:

  1. State tax changes are not made in a vacuum. States often adopt policies after watching peers address similar issues. Several notable trends in tax policy have emerged across states in recent years, and policymakers can benefit from taking note of these developments.
  2. The enactment of the federal Tax Cuts and Jobs Act (TCJA) expanded many states’ tax bases and drove deliberations on tax conformity. At year’s end, only five states conform to an older version of the federal tax code, though many have yet to resolve issues raised by their tax conformity regimes.
  3. Several states experimented with mechanisms to allow their high-income taxpayers to avoid the new cap on the state and local tax (SALT) deduction, efforts cast into doubt–though not entirely ended–by draft U.S. Treasury regulations.
  4. Three states and the District of Columbia cut corporate taxes in 2018, with rate reductions pending in two other states. Reductions in other taxes on capital are ongoing as well, with Mississippi beginning the phaseout of its capital stock tax.
  5. The U.S. Supreme Court’s Wayfair v. South Dakota decision ushered in a new era of sales taxes on e-commerce and other remote sales, but many states have yet to implement the provisions the Court strongly suggested would protect such tax regimes from future legal challenges.
  6. A second state (Arizona) adopted a constitutional amendment banning the expansion of the sales tax to additional services, with similar efforts–which have the effect of locking an outdated sales tax base in place–expected to emerge in other states in 2019 and beyond.
  7. A court ruling has states scrambling to legalize and tax sports betting, while shifting public attitudes continue to render the legalization and taxation of marijuana an attractive revenue option in a growing number of states. In 2018, seven states adopted sports betting taxes, while two legalized and taxed marijuana.
  8. States continue to grapple with the appropriate taxation, if any, of e-cigarettes, with two states adopting taxes at rates reflective of vapor products’ potential for harm reduction, while the District of Columbia increased its tax to a punitive 96 percent rate.
  9. Business head taxes came out of nowhere to become a key consideration for several cities, particularly those with thriving tech sectors.
  10. Consideration of gross receipts taxes continue as corporate income tax revenues decline, though concerns about their economic effects have generally helped stave off their adoption.
  11. Two states repealed their estate taxes in 2018, continuing a decade-long trend away from taxes on estates and inheritances.
  12. Revenue triggers, a relatively modern innovation, again featured prominently in tax reform packages and will continue to do so. 

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January 11, 2019 in Tax, Think Tank Reports | Permalink | Comments (0)

Tuesday, December 18, 2018

Taxing Teens: Working Children, Family Businesses, And The Kiddie Tax

Baker InstituteRice University Baker Institute for Public Policy, Taxing Teens: Working Children, Family Businesses, and the Kiddie Tax:

Being able to manage money is an important life skill, but many American youth are not well prepared to do so. A recent Organisation for Economic Co-operation and Development (OECD) study shows that more than 20% of U.S. high school students do not possess basic levels of financial literacy. This means they can at best identify basic financial products such as invoices or make simple decisions on every day spending. But the ability to create a simple budget, conduct calculations in percentages, appreciate compound interest on savings or loans, and understand income taxes are all beyond their comprehension.

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December 18, 2018 in Tax, Think Tank Reports | Permalink | Comments (0)

Thursday, December 6, 2018

How Should We Tax The Sharing Economy?

Baker InstituteRice University Baker Institute for Public Policy, How Should We Tax the Sharing Economy?:

Walking out of the airport lobby and getting into an Uber car booked through an app on a smartphone, hiring a handyman through the TaskRabbit website to repair a leaking kitchen sink, searching vacation rental accommodations on Airbnb—none of these functions was possible a decade ago. Yet today, with the development and growth of the sharing economy—which includes a number of mostly online enterprises that match service providers with clients—these are common transactions. This report reviews key federal tax considerations for companies and workers as the sharing economy becomes more prevalent.

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December 6, 2018 in Tax, Think Tank Reports | Permalink | Comments (0)

Tuesday, October 30, 2018

Can the TCJA Save The Corporate Income Tax?

Baker InstituteRice University Baker Institute for Public Policy, Can the TCJA Save the Corporate Income Tax?:

The tax cuts passed by Congress and signed into law by President Trump last year offer a starting point offer for revitalizing the corporate income tax (CIT), according to experts at Rice University’s Baker Institute for Public Policy.

Jorge Barro and Joyce Beebe, fellows in public finance, outlined their insights in a new issue brief,  Can the TCJA Save the Corporate Income Tax?. The brief provides a historical overview of the CIT, its key provisions and the implications of the 2017 Tax Cuts and Jobs Act (TCJA) for businesses. 

"Before the TCJA, the CIT was one of the most criticized taxes in the U.S.,” the authors wrote. “The statutory tax rate was high, the tax base was narrow and the tax could be avoided by switching to a different business structure or by shifting corporate profits to a different jurisdiction. However, practical and theoretical considerations indicate that the CIT is here to stay. Therefore, reform instead of repeal has long been the focus of CIT discussions."

The corporate income tax share of total federal government revenues has been steadily declining since the end of World War II.

Baker 1

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October 30, 2018 in Tax, Think Tank Reports | Permalink | Comments (0)

Thursday, October 25, 2018

2018 International Tax Competitiveness Index

ITCA2018 International Tax Competitiveness Index:

The International Tax Competitiveness Index ( ITCI ) seeks to measure the extent to which a country’s tax system adheres to two important aspects of tax policy: competitiveness and neutrality. A competitive tax code is one that keeps marginal tax rates low. In today’s globalized world, capital is highly mobile. Businesses can choose to invest in any number of countries throughout the world to find the highest rate of return. This means that businesses will look for countries with lower tax rates on investment to maximize their after-tax rate of return. If a country’s tax rate is too high, it will drive investment elsewhere, leading to slower economic growth. In addition, high marginal tax rates can lead to tax avoidance. ...

To measure whether a country’s tax system is neutral and competitive, the ITCI looks at more than 40 tax policy variables. These variables measure not only the level of taxes, but also how taxes are structured. The Index looks at a country’s corporate taxes, individual income taxes, consumption taxes, property taxes, and the treatment of profits earned overseas. The ITCI gives a comprehensive overview of how developed countries’ tax codes compare, explains why certain tax codes stand out as good or bad models for reform, and provides important insight into how to think about tax policy.

Table 1: 2018 International Tax Competitiveness Index Rankings
Country Overall Rank Overall Score Corporate Tax Rank Individual Taxes Rank Consumption Taxes Rank Property Taxes Rank International Tax Rules Rank
Estonia 1 100.0 1 1 9 1 6
Latvia 2 86.0 2 2 27 6 5
New Zealand 3 83.0 18 3 6 3 15
Luxembourg 4 80.5 21 17 2 18 1
Netherlands 5 77.5 19 8 12 10 3
Switzerland 6 77.0 6 9 1 34 8
Sweden 7 75.0 7 20 16 7 7
Australia 8 72.2 27 19 7 4 17
Czech Republic 9 69.6 8 4 33 13 9
Austria 10 69.6 15 21 10 9 13
Slovak Republic 11 69.4 10 6 32 2 27
Turkey 12 68.8 17 5 24 17 10
Hungary 13 68.4 3 15 34 26 2
Finland 14 67.7 5 27 14 11 18
Norway 15 66.2 13 11 18 24 14
Germany 16 65.3 24 28 11 14 11
Korea 17 64.4 28 10 5 25 31
Canada 18 64.0 22 23 8 20 22
Belgium 19 63.8 23 7 25 23 12
Ireland 20 63.7 4 33 23 12 21
Denmark 21 63.7 14 30 17 8 23
Slovenia 22 63.6 12 12 28 21 16
United Kingdom 23 63.1 16 24 22 30 4
United States 24 61.5 20 26 4 28 32
Iceland 25 60.2 11 31 19 22 20
Japan 26 59.5 35 25 3 29 25
Spain 27 57.4 26 18 15 31 19
Mexico 28 57.2 31 13 26 5 34
Greece 29 51.9 25 14 30 27 29
Israel 30 51.7 29 35 13 15 33
Chile 31 48.3 30 22 29 16 35
Portugal 32 48.2 33 29 31 19 28
Poland 33 47.7 9 16 35 32 30
Italy 34 46.9 32 32 20 33 26
France 35 41.4 34 34 21 35 24

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October 25, 2018 in Tax, Think Tank Reports | Permalink | Comments (1)

Monday, October 1, 2018

Evaluating the Changed Incentives for Repatriating Foreign Earnings

Erica York (Tax Foundation), Evaluating the Changed Incentives for Repatriating Foreign Earnings:

Prior to the Tax Cuts and Jobs Act (TCJA), the tax code created major disincentives for U.S. companies to repatriate their earnings, or bring earnings made overseas back to the United States. Changes in the TCJA eliminate these disincentives, thus, going forward, companies do not face the old barriers which discouraged repatriation.

Due to the old disincentives, companies had built up large amounts of earnings abroad. Given the change in the incentives, many have speculated that this will lead companies to repatriate large shares of the earnings that they have been holding overseas. While we have seen a significant uptick in repatriation since enactment of the TCJA, it’s important to understand the context and intent of the TCJA’s reforms, as well as the composition of the cash held abroad, to appropriately analyze the effects of deemed repatriation.

Tax Foundation

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October 1, 2018 in Tax, Think Tank Reports | Permalink | Comments (0)

Wednesday, September 12, 2018

Trump Tax Cuts Will Spur Even Greater Migration From High-Tax States To Low-Tax States

Chris Edwards (Cato Institute), Tax Reform and Interstate Migration:

This report looks at changes to individual income taxes, particularly the state and local tax (SALT) deduction. The 2017 tax law cut individual tax rates and roughly doubled standard deductions, but it also imposed a $10,000 cap per return on SALT deductions. Those changes are expected to reduce the number of households that deduct state and local income, sales, and property taxes from 42 million in 2017 to 17 million in 2018.

Millions of households will feel a larger bite from state and local taxes and will thus become more sensitive to tax differences between the states. The tax law may prompt an outflow of mainly higher-earning households from higher-tax states to lower-tax states.

Even before the new tax law, a substantial number of Americans were moving from higher-tax to lower-tax states. Looking at migration flows between the states in 2016, almost 600,000 people with aggregate income of $33 billion moved, on net, from the 25 highest-tax states to the 25 lowest-tax states in that single year. 

Of the 25 highest-tax states, 24 of them had net outmigration in 2016. Of the 25 lowest-tax states, 17 had net in-migration. The largest out-migration is from high-tax New York, whereas the largest in-migration is to low-tax Florida. Florida is enjoying an influx of wealthy entrepreneurs and retirees looking for a tax climate that boasts no income tax or estate tax.

Figure 1

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September 12, 2018 in Tax, Think Tank Reports | Permalink | Comments (2)

Wednesday, August 15, 2018

New Law Has Made The Tax System More Progressive

Goodman Institute for Public Policy Research, Study: Most of The Benefits of Tax Reform Are Not Going to The Wealthy:

Although widely reported in the national news media, the claim that most of the benefits of tax reform are going to the wealthy is wrong according to economists whose ideas were used in shaping the legislation that was enacted last year.

In a report for the Goodman Institute, Boston University economist Laurence Kotlikoff says that under the new tax regime, the top 1 percent of income earners will actually bear a larger share of the tax burden than they did under the previous system.

“There was no give-away to the rich,” he said. “If anything, the tax system has gotten slightly more progressive.”

The Tax Policy Center (sponsored by the Brookings Institution and the Urban Institute) says that 82.8% of the benefits of tax reform will accrue to the wealthiest taxpayers.  But according to FactCheck.org, that claim is more than misleading. The Center’s own numbers show that if the individual tax cuts are made permanent, the share going to the top 1 percent will receive 25.3% of the benefits. And most people in Washington think the tax cuts for individuals will be made permanent.

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August 15, 2018 in Tax, Think Tank Reports | Permalink | Comments (2)

Tuesday, July 17, 2018

Democratic Criticism Of The 2017 Tax Act Grows More Incoherent

E21Brian Riedl (Manhattan Institute), Criticism of Tax Cuts Grows More Incoherent:

The 2017 Tax Cuts and Jobs Act (TCJA) remains controversial, with public opinion evenly split and many Democrats campaigning on repeal. However, the Democratic critique of the tax cuts has grown increasingly incoherent. The party excoriates the “tax cuts for the rich” while trying to tilt them even further to the wealthy. Democrats slam the deficit effect of the tax cuts while working to worsen budget deficits. In addition, they erroneously describe the law as a “middle-class tax hike” while proposing policies that would truly raise middle-class taxes. ...

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July 17, 2018 in Tax, Think Tank Reports | Permalink | Comments (2)

Wednesday, July 11, 2018

Tax Cuts Under Bush, Obama & Trump Have Increased Ineqality

Institute on Taxation and Economic Policy, Federal Tax Cuts in the Bush, Obama, and Trump Years:

Since 2000, tax cuts have reduced federal revenue by trillions of dollars and disproportionately benefited well-off households. From 2001 through 2018, significant federal tax changes have reduced revenue by $5.1 trillion, with nearly two-thirds of that flowing to the richest fifth of Americans, as illustrated in Figure 1. The cumulative impact on the deficit during this period is $5.9 trillion, including interest payments.

ITEP

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July 11, 2018 in Tax, Think Tank Reports | Permalink | Comments (1)

Saturday, July 7, 2018

How Small Business Tax Expenditures Impact Women Business Owners

AUTax Policy Center (Kogod School of Business, American University), Billion Dollar Blind Spot: How the U.S. Tax Code's Small Business Expenditures Impact Women Business Owners:

This report, in keeping with the mission of the Kogod Tax Policy Center (KTPC) to conduct non-partisan policy research on tax and compliance issues specific to small businesses and entrepreneurs, provides an initial assessment of how the Code’s tax expenditures targeted to help small businesses grow and access capital impact women-owned firms. The results are eye-opening.

  • We report that while women-owned firms have increased to total more than one-third of all U.S. firms, the majority of women business owners are small businesses operating in service industries and they continue to have challenges growing their receipts and accessing capital.
  • At the same time, three of the four tax expenditures we assessed that Congress targeted to help small businesses grow and access capital are so limited in design that they either (i) explicitly exclude service firms, and by extension, the majority of women-owned firms; or (ii) could effectively bypass women-owned firms who are not incorporated or who are service firms with few capital-intensive equipment investments altogether.

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July 7, 2018 in Tax, Think Tank Reports | Permalink | Comments (0)

Tuesday, June 19, 2018

Charitable Giving And The Tax Cuts And Jobs Act

AEI (2016)Alex Brill & Derrick Choe (American Enterprise Institute), Charitable Giving and the Tax Cuts and Jobs Act:

This paper investigates how the Tax Cuts and Jobs Act affects household charitable giving in the United States. We find that the law will reduce charitable giving by $17.2 billion (4.0 percent) in 2018 according to a static model and $16.3 billion assuming a modest boost to growth. Four-fifths of this decline is driven by an increase in the number of taxpayers who claim the standard deduction.

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June 19, 2018 in Tax, Think Tank Reports | Permalink | Comments (0)

Thursday, June 14, 2018

Corporate Tax Cuts Could Lead To Modest Decline In Wealth Inequality

Baker InstituteRice University Baker Institute for Public Policy, Corporate Tax Cuts Could Lead to Modest Decline in Wealth Inequality:

The Tax Cuts and Jobs Act of 2017 could lead to a modest decline in wealth inequality due to the act’s corporate tax cuts, according to an analysis by experts at Rice University’s Baker Institute for Public Policy.

Jorge Barro, fellow in the institute’s Center for Public Finance, and Anne Dayton, research manager in the institute’s McNair Center for Entrepreneurship and Innovation, outlined their insights in a new issue brief, Long-term Macroeconomic Effects of the 2017 Corporate Tax Cuts. The brief presents the results of a dynamic model similar in nature to the macroeconomic models used by the Congressional Budget Office and Joint Committee on Taxation in evaluating the tax reform legislation.

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June 14, 2018 in Tax, Think Tank Reports | Permalink | Comments (1)

Tuesday, May 15, 2018

For Your Own Good: Taxes, Paternalism, And Fiscal Discrimination

For Your Own GoodFor Your Own Good: Taxes, Paternalism, and Fiscal Discrimination in the Twenty-First Century (Adam J. Hoffer (Wisconsin) & Todd Nesbit (Ball State), eds., 2018):

An Introduction to Selective Taxation, p. 1
Adam J. Hoffer (Wisconsin) & Todd Nesbit (Ball State)

Part I: Public Finance and Public Choice: Establishing the Foundation
Ch. 1: Selective Consumption Taxes in Historical Perspective, p. 19
William F. Shughart II (Utah State)
Ch. 2: Welfare Effects of Selective Taxation: Economic Efficiency as a Normative Principle, p. 41
Justin M. Ross (Indiana)
Ch. 3: The Theory and Practice of Selective Consumption Taxation, p. 59
Adam J. Hoffer (Wisconsin) & William F. Shughart II (Utah State)
Ch. 4: The Language of Taxation: Ideology Masquerading as Science, p. 77
Richard E. Wagner (George Mason)

Part II: The Political Economy of Public Budgeting

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May 15, 2018 in Scholarship, Tax, Think Tank Reports | Permalink | Comments (0)

Tuesday, May 8, 2018

GOP Tax Law Could Reduce Corporate Tax Revenue By 40%

Baker InstituteRice University Baker Institute for Public Policy, Long-term Macroeconomic Effects of the 2017 Corporate Tax Cuts:

The Tax Cuts and Jobs Act of 2017 could lead to a total corporate tax revenue decline of about 40 percent, but nearly 20 percent of that decline will be recaptured through increased personal income tax revenue, according to an analysis by an expert at Rice University’s Baker Institute for Public Policy.

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May 8, 2018 in Tax, Think Tank Reports | Permalink | Comments (0)

Saturday, April 28, 2018

The Estate Tax After the 2017 Tax Act

Baker InstituteRice University Baker Institute for Public Policy, The Estate Tax After the 2017 Tax Act:

Although Benjamin Franklin once stated that death and taxes are the only certainties in life, the timing of death and the amount of taxes owed are certainly not. The Tax Cuts and Jobs Act of 2017 (TCJA, Pub. L. 115–97) leaves the federal wealth transfer tax system in place, but temporarily doubles the exclusion amount for estate and gift taxes to $11.18 million per individual or $22.36 million per married couple until the end of 2025. In 2026, absent congressional action, the base exclusion amount will revert to $5 million, indexed for inflation. This issue brief examines the implications of this change for taxpayers as well as its impact on federal and state governments.

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April 28, 2018 in Scholarship, Tax, Think Tank Reports | Permalink | Comments (0)

Thursday, April 26, 2018

Rich States, Poor States

RSPSArthur B. Laffer, Stephen Moore & Jonathan Williams, Rich States, Poor States (11th ed. 2018):

The 11th Edition of Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index reveals a pro-growth trend across the nation for 2018.

The 11th edition of Rich States, Poor States is characterized by great movement in state economic performance and outlook as a result of federal tax reform and the resulting actions of certain states. In the past five years alone, 30 states have significantly reduced their tax burdens. Those that fail to adapt to this competitive environment can fall behind by simply standing still. The facts remain clear that pro-growth policies are working and there is a clear trend in favor of market-oriented reforms.

Rich States, Poor States examines the latest trends in state economic growth. The data ranks the 2018 economic outlook of states using 15 equally weighted policy variables, including various tax rates, regulatory burdens and labor policies. The eleventh edition examines trends over the last few decades that have helped or hurt states’ economies.

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April 26, 2018 in Tax, Think Tank Reports | Permalink | Comments (0)

Wednesday, April 18, 2018

Los Angeles Law Firms After The Financial Crisis

L.A.James Park (Lowell Milken Institute for Business Law and Policy, UCLA), Law Firms in Los Angeles After the Financial Crisis (Mar. 2018):

  • While the L.A. legal market has recovered from the economic slide of 2008, large L.A.-based firms now have 20 percent fewer lawyers here than they did in 2008.
  • Since 2008, several firms based in other major cities have opened in Los Angeles or increased the number of lawyers here. Overall, these firms have about 1,000 more lawyers in Los Angeles than they did in 2008.
  • Los Angeles firms have increased leverage by significantly reducing their associate-to-partner ratios.
  • Firms with their largest offices in Los Angeles have seen substantial increases in profits per partner and revenue per lawyer in the last decade.

LA1

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April 18, 2018 in Legal Education, Think Tank Reports | Permalink | Comments (0)

Wednesday, March 7, 2018

Tax Policy Center Hosts Conference Today On Wealth Taxation, Entrepreneurship, And Philanthropy

Tax Polcy Center Logo (2017)The Tax Policy Center hosts a conference today on Wealth Taxation, Entrepreneurship, and Philanthropy (live webcast from 9:00-10:30am EST):

Entrepreneurs strengthen the economy directly by innovating and taking risks, and indirectly through their contributions to philanthropic organizations. The tax code affects entrepreneurial activity and can encourage or stifle an entrepreneur’s philanthropic giving. At this forum, scholars will discuss new research that examines how estate and inheritance taxes affect entrepreneurship and how income and estate taxes affect the very wealthy. A discussion will follow about giving patterns among wealthy entrepreneurs and ways entrepreneurs are engaging in philanthropy in the 21st century.

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March 7, 2018 in Scholarship, Tax, Tax Conferences, Think Tank Reports | Permalink | Comments (0)

Tuesday, November 7, 2017

New 'Paradise Papers' Data Leak

Paradise PapersA new investigative report from the International Consortium of Investigative Journalists (ICIJ) and its media partners broke on Sunday. (ICIJ is the investigative journalist consortium that brought us last year's Panama Papers investigation, for which they won a Pulitzer for Explanatory Reporting.)

ICIJ: Offshore Trove Exposes Trump-Russia Links And Piggy Banks Of The Wealthiest 1 Percent:

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November 7, 2017 in Political News, Shuyi Oei, Tax, Think Tank Reports | Permalink | Comments (1)

Thursday, November 2, 2017

2017 International Tax Competitiveness Ranking: U.S. Is 6th From The Bottom

Tax Foundation Logo2017 International Tax Competitiveness Index:

The International Tax Competitiveness Index (ITCI) seeks to measure the extent to which a country’s tax system adheres to two important aspects of tax policy: competitiveness and neutrality. ... To measure whether a country’s tax system is neutral and competitive, the ITCI looks at more than 40 tax policy variables. These variables measure not only the level of taxes, but also how taxes are structured. The Index looks at a country’s corporate taxes, individual income taxes, consumption taxes, property taxes, and the treatment of profits earned overseas. The ITCI gives a comprehensive overview of how developed countries’ tax codes compare, explains why certain tax codes stand out as good or bad models for reform, and provides important insight into how to think about tax policy.

Tax Foundation

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November 2, 2017 in Tax, Think Tank Reports | Permalink | Comments (1)

Tuesday, October 24, 2017

2018 Business Tax Climate: Chilliest In Blue States, Warmest In Red States

Tax Foundation logoThe Tax Foundation has released the 2018 State Business Tax Climate Index, which ranks the fifty states according to five indices: corporate tax, individual income tax, sales tax, unemployment insurance tax, and property tax. Here are the ten states with the best and worst business tax climates:

1

Wyoming

41

Rhode Island

2

South Dakota

42

Louisiana

3

Alaska

43

Maryland

4

Florida

44

Connecticut

5

Nevada

45

Ohio

6

Montana

46

Minnesota

7

New Hampshire

47

Vermont

8

Utah

48

California

9

Indiana

49

New York

10

Oregon

50

New Jersey

Interestingly, eight of the ten states with the worst business tax climates voted for Hillary Clinton in the 2016 presidential election, and seven of the ten states with the best business tax climates voted for Donald Trump.

Tax Foundation
 

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October 24, 2017 in Tax, Think Tank Reports | Permalink | Comments (1)

Friday, August 4, 2017

Oregon’s New Bicycle Excise Tax: Tax Policy Center And Tax Foundation Commentary

TaxVox, The Case of Oregon’s Bicycle Excise Tax:

Road trips are a staple of my family’s summer. We load up the van and head to the nearest state park, flash our Michigan Recreation Passport and off we go, hiking and biking. That “passport” is an annual $11 fee that we add to our license plate renewal payment. In exchange, we get unlimited access to all state parks, and the state uses the money, along with day-trippers’ fees, to maintain and improve the facilities.

Oregon, one of five states with no sales tax, just passed such a tax on bicycles to help fund trail maintenance and improvement. That decision generated a good bit of controversy, and as a bicycle-riding, trail-loving taxpayer, I wondered why a bicycle tax that supports bicycle trail use is so contentious.

Here are some details: Starting in October, Oregon will collect $15 on the purchase of every bicycle that retails for $200 or more. The state expects the excise tax to generate $1.2 million annually that will be used to “expand and improve commuter routes for non-motorized vehicles and pedestrians, including bicycle trails, footpaths and multi-use trails.”

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August 4, 2017 in Tax, Think Tank Reports | Permalink | Comments (5)

Tuesday, July 18, 2017

Reforming U.S. Corporate Taxes

Veronique de Rugy (Mercatus Center), Reforming US Corporate Taxes:

The United States has fallen far behind other developed countries when it comes to corporate tax reform. In contrast to other developed nations, the United States has declined to reform the way it taxes corporations. Consequently, it now has the highest statutory corporate income tax rate of the G20 countries. The federal government needs to lower the corporate income tax rate-a reform that will improve the competitiveness of American businesses and encourage economic growth.

MC

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July 18, 2017 in Tax, Think Tank Reports | Permalink | Comments (9)

Tuesday, June 13, 2017

Billion Dollar Blind Spot: How the U.S. Tax Code's Small Business Expenditures Impact Women Business Owners

BillionCaroline Bruckner (Kogod Tax Policy Center), Billion Dollar Blind Spot: How the U.S. Tax Code's Small Business Expenditures Impact Women Business Owners:

In 1976, the U.S. Census Bureau (Census) released its first ever report on the state of women's business ownership in the United States that counted 402,025 women-owned U.S. firms representing only 4.6% of all firms and 0.3% of all U.S. business receipts, as of 1972. Today, women-owned firms have increased to 11.3 million businesses representing 38% of all U.S. firms.

During this period of extraordinary growth, Congress has acted to promote women's business ownership by passing legislation designed to eliminate discriminatory lending practices and promote federal contracting and counseling opportunities for women business owners. At the same time, Congress has also worked to enhance the U.S. tax code (the "Code") to aid small businesses with tax expenditures that will cost U.S. taxpayers more than $255 billion in the next five years under current law.

However, at no point have policymakers looked at whether this will be money well spent when it comes to women business owners and the challenges they have growing their receipts and accessing capital.

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June 13, 2017 in Tax, Think Tank Reports | Permalink | Comments (0)

Sunday, April 23, 2017

Today Is Tax Freedom Day — Earlier In MS, TN & SD, Later In CT, NJ & NY

Tax Foundation logoTax Foundation, Tax Freedom Day 2017 is April 23rd:

  • This year, Tax Freedom Day falls on April 23rd, 113 days into the year.
  • Tax Freedom Day is a significant date for taxpayers and lawmakers because it represents how long Americans as a whole have to work in order to pay the nation’s tax burden.
  • Americans will pay $3.5 trillion in federal taxes and $1.6 trillion in state and local taxes, for a total bill of more than $5.1 trillion, or 31 percent of the nation’s income.
  • Americans will collectively spend more on taxes in 2017 than they will on food, clothing, and housing combined.
  • If you include annual federal borrowing, which represents future taxes owed, Tax Freedom Day would occur 14 days later, on May 7.

Tax Freedom Day

Center on Budget and Policy Priorities, Tax Foundation Figures Do Not Represent Typical Households’ Tax Burdens: Figures May Mislead Policymakers, Journalists, and the Public:

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April 23, 2017 in Tax, Think Tank Reports | Permalink | Comments (0)

Friday, March 10, 2017

The 35 Percent Corporate Tax Myth: Corporate Tax Avoidance By Fortune 500 Companies, 2008 To 2015

New York Times, Profitable Companies, No Taxes: Here’s How They Did It:

Complaining that the United States has one of the world’s highest corporate tax levels, President Trump and congressional Republicans have repeatedly vowed to shrink it.

Yet if the level is so high, why have so many companies’ income tax bills added up to zero?

That’s what a new analysis of 258 profitable Fortune 500 companies that earned more than $3.8 trillion in profits showed [The 35 Percent Corporate Tax Myth: Corporate Tax Avoidance by Fortune 500 Companies, 2008 to 2015].

18 CorpsAlthough the top corporate rate is 35 percent, hardly any company actually pays that. The report, by the Institute on Taxation and Economic Policy, a left-leaning research group in Washington, found that 100 of them — nearly 40 percent — paid no taxes in at least one year between 2008 and 2015. Eighteen, including General Electric, International Paper, Priceline.com and PG&E, incurred a total federal income tax bill of less than zero over the entire eight-year period — meaning they received rebates. The institute used the companies’ own regulatory filings to compute their tax rates. ...

How does a billion-dollar company pay no taxes?

Companies take advantage of an array of tax loopholes and aggressive strategies that enable them to legally avoid paying what they owe. The institute’s report cites these examples:

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March 10, 2017 in Tax, Think Tank Reports | Permalink | Comments (6)