The Tax Policy Blog

January 23, 2015

As part of his new tax plan, the president has proposed ending the “step-up” in tax basis for inherited assets, and, furthermore, requiring the capital gains tax to be paid at death rather than when an heir later sells the assets. There would be an exception for surviving spouses, with no tax due until the death of the second spouse, and an exemption for the first $200,000 of gains for a couple.

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January 23, 2015

It looks like I wasn’t the only one unhappy with the president’s economic proposals in the State of the Union. In a New York Times op-ed this week, Glenn Hubbard, too, voiced his disappointment:

“Our unwillingness to confront mounting inefficiencies in the nation’s tax code and growing...

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January 23, 2015

Last week, IRS Commissioner John Koskinen said at a news conference that the IRS may need to use furloughs in order to handle its budget issues. A well-functioning revenue service is necessary for an effective government, so it is worthwhile to consider the facts of the situation, and what they mean.

Congress indeed cut the IRS budget by $346 million...

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January 22, 2015

This week's tax map comes from a report we released this morning and takes a look at the amount of private sector employment that comes from pass-through businesses.

Sole proprietorships, S corporations, limited liability companies (LLCs), and partnerships are also known as pass-through businesses. These entities...

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January 22, 2015

The President’s latest proposal to raise taxes on capital gains and dividends, which follows two rounds of tax increases in Obamacare and the fiscal cliff deal, raises serious concerns about the impact on investment. That’s because corporations rely to a large extent on shareholders to finance investment. That’s in fact the essence of the corporate form!

And when...

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January 22, 2015

South Dakota Governor Dennis Daugaard has proposed a budget that includes annual motor fuel tax increases, joining a number of recent states that have increased or indexed their gas taxes.

Gas taxes align with the benefit...

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January 22, 2015

In his 2015 State of the Union address, President Obama laid out his vision for how to help the middle-class, dubbing it middle-class economics. His plan includes tax increases of $320 billion to pay for around $200 billion in new or expanded tax credits. Unfortunately, his policy prescriptions would continue years of slow economic growth and...

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January 21, 2015

President Obama is proposing tax increases on the capital income of upper income taxpayers and higher taxes on heirs to fund tax reductions for middle income families and college students. The biggest tax increase on the list involves a higher top tax rate for capital gains and dividends.  The Treasury estimates that the entire package of tax increases will raise $320 billion over ten years. The revenue will be used in part to pay for some $200 billion in middle income tax breaks.

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January 21, 2015

Last night during the State of the Union address, the president spoke briefly about taxes:

“Let’s close the loopholes that lead to inequality by allowing the top one percent to avoid paying taxes on their accumulated wealth. We can use that money to help more families pay for childcare and send their kids to college. We need a tax code that truly...

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January 21, 2015

The centerpiece of President Obama’s plan to increase taxes on the wealthy to fund tax credits for the middle-class is increasing the top tax rate on capital gains and dividends for high-income taxpayers.

Currently, the top capital gains and dividend tax rate for couples earning over $450,000 and singles with incomes above $400,000 is 20 percent. In addition, the Affordable Care Act subjects this investment income to an additional 3.8 percent Medicare Hospital Insurance Tax. This...

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January 20, 2015

In his State of the Union speech tonight, President Obama is said to propose $320 billion in new taxes on high-income Americans to finance tax cuts for the middle-class and free community college tuition for students. The White House says that this redistribution is an equitable way of stemming the rise of inequality in America while helping the middle-class whose incomes have stagnated in recent years.

While it is commonly acknowledged that Obama’s plan has little hope of being...

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January 16, 2015

Representative Chris Van Hollen (D-MD) has proposed a series of taxes, credits, and subsidies to redistribute the tax burden and income from the top one percent of income earners to middle-income workers, two-earner households, and savers. The plan would raise tax rates on capital formation, and would lower taxes on wages (although not generally at the margin). The net economic effects would be negative for the GDP, and could reduce pre-tax wages and job opportunities, offsetting some of...

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January 16, 2015

“Buck up,” Gov. Jay Inslee (D) said in introducing a budget calling for $1.4 billion in higher taxes over the coming biennium, including a new capital gains tax that is merely the latest in a string of efforts to introduce some sort of income tax in the state.

Inslee isn’t the first elected official to tell Washingtonians to get with the (higher tax) program. The state has twice adopted personal income taxes twice, and corporate income taxes...

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January 16, 2015

This post is also available as a column on Forbes here.

The 2015 legislative session started this week in most states and taxes are already proving to be a hot issue. Maine Governor Paul LePage made a splash in headlines last Friday with a well-thought out plan to lower individual and corporate income tax rates, a Nebraska think tank has a...

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January 16, 2015

The Internal Revenue Service has announced that they are overworked and underfunded so they are taking the "Service" out of the IRS.

In her recent report to Congress, National Taxpayer Advocate Nina E. Olson warns that “taxpayers this year are likely to receive the worst levels of taxpayer service since at least 2001 when the IRS implemented its current performance measures.”

The report points to a “combination of the IRS’s increasing workload, the erosion of public trust...

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