The Tax Policy Blog

November 26, 2014

In the Tuesday Wall Street Journal, Professor Alan Blinder wrote of his puzzlement at the very slow growth of productivity in the last three years. There is really no mystery. The rate of growth of investment in equipment in this economic recovery has lagged far behind that of a normal rebound. As a result, the workforce is not getting much additional capital to work with, wages are...

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November 26, 2014

The Washington Post’s Wonkblog yesterday got to write a dramatic lede: “This is what oligarchy looks like.” The data described in the blog post are, in fact, fairly dramatic, but Wonkblog does not do a good job describing the data.

The problem starts with the headline: “The top 400 households got 16 percent of all capital gains in 2010.” While...

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November 26, 2014

While over 90 percent of all firms have between 0 and 20 employees, these firms only employ 19.2 percent of all private sector workers. These small firms can be anything from coffee shops to small car dealerships and are organized as both pass-through businesses and C corporations.

On the other hand, while only 0.4 percent of all firms have over 500 employees, this small group of businesses employs 50.6 percent of the nation’s private sector workforce, with most of those employees...

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November 26, 2014

In the debate over the tax extenders, the 55 or so tax provisions that need to be extended year after year, it’s easy to just throw up your hands and say: “let’s just get rid of them all- they are just a bunch of wasteful loopholes that benefit the few at the expense of the many.” This is likely something you hear from proponents of a flat tax: a tax system with few loopholes and deductions.

It is easy to understand where proponents of a flat tax are coming from. A lot of our tax...

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November 25, 2014

The most immediate issue in U.S. Federal tax policy today is the issue of the “tax extenders:” orphaned, temporary tax provisions that get their name from the way they are “extended” by Congress on an ad-hoc basis.

They are likely to be used as bargaining chips against other temporary expansions of refundable tax credits that the Obama administration would like to keep. They...

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November 25, 2014

Looking to buy season tickets for your favorite college’s football or basketball games? Be prepared to spend more than you bargained for, because the biggest sports powerhouses require large donations in order to secure a season ticket. The benefit for these season ticket holders? The mandatory donations are 80% tax deductible.

History

Donations to sports...

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November 25, 2014

While there are significantly more pass-through entities than C corporations, corporations still earn the largest portion of total gross receipts. In 2011, corporations earned 62 percent of the $30.9 trillion in total business receipts. Meanwhile, pass-through businesses make up nearly 95 percent of all firms and account for the remaining 38 percent of gross receipts with $11.8 trillion.

It’s interesting to note, though, that despite earning $8 trillion less in total gross receipts,...

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November 24, 2014

According to Tax News, Spain’s legislature has approved a tax reform with the following changes:

  • The Spanish corporate income tax will fall from 30...
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November 24, 2014

Much of the growth in business income since 1980 has come from pass-through businesses. Pass-throughs now earn over 60 percent of all net business income. In 2011, pass-throughs earned $1.3 trillion in business income compared to around $800 billion earned by corporations.

Corporations saw a huge collapse in their income following the financial market crash, falling from nearly $1.3 trillion in 2007 to $450 billion in 2008.

...

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November 24, 2014

The Congressional Budget Office (CBO) has released its annual study on the distribution of household income and federal taxes. (See here.) The numbers are for 2011 (latest available data.) A valuable feature of the study is that CBO estimates the amounts and distributional effects of government transfers and federal taxes, in addition to looking at market income.

In CBO’s terminology, market income refers to labor, capital, and...

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November 20, 2014

There are five basic legal forms of business structures found in the United States: C corporations, S corporations, sole proprietorships, partnerships, and Limited Liability Companies (LLCs). In order to understand business income taxes, we can start with how the business forms are different.  We can divide the five business forms into two big groups: C corporations and pass-through...

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November 20, 2014

One important common-sense taxpayer protection in the federal income tax code is inflation-indexing. Inflation indexing means that tax brackets (and other important dollar-amount features of the individual income tax, like standard deductions or personal exemptions) are revised annually to reflect price increases...

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November 20, 2014

This week Switzerland became the 52nd country to sign an OECD initiative which will enable automatic exchange of financial account information among the tax authorities of each country. Among other things, that means the end of bank secrecy, a long standing Swiss institution dating back to 1934.

Bank secrecy in Switzerland has been under...

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November 20, 2014

After winning reelection this month, Maine’s Governor, Paul LePage, announced that he wants to completely eliminate the state’s individual income tax. He would replace the lost revenue by broadening the sales tax base.

This sort of swap is generally good tax policy. Individual income taxes have a few problems. One, they tend to create labor force disincentives and two, they are...

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November 20, 2014

In number of firms, pass-throughs are the dominant business type, with over 30 million tax returns in 2011. Pass-throughs are unique in that all pass-through business income is taxed at individual tax rates.

Over the last 30 years, the number of pass-throughs has increased substantially. Much of this growth comes from the doubling in number of sole...

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Subscribe to Tax Foundation - Tax Foundation's Tax Policy Blog The Tax Policy Blog is the official blog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.

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