The Tax Policy Blog

January 13, 2015

This week, Representative Chris Van Hollen (D-MD) spoke at a Center for American Progress event. At this event he outlined a new tax plan that he says will boost the after-tax income of low- and middle-income taxpayers and raise taxes on high-income taxpayers.

“Today, I am proposing policies that will raise wages, increase personal savings, and grow the economy. These policies are on top of the tax relief and tax fairness...

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January 12, 2015

The Treasury Inspector General for Tax Administration released a report on Earned Income Tax Credit Compliance. According to the report, the credit still faces a higher error rate.

“The IRS’s Fiscal Year 2013 EITC improper payment report to TIGTA estimates that in Fiscal Year 2013, EITC claims totaled approximately $60 billion and that 24 percent of the EITC payments were paid in error.”

A 24...

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January 08, 2015

Many expats have moved to Spain, lured by inexpensive housing and a mild climate. The struggling Spanish housing market has offered good deals and bargaining opportunities in prime vacation and retirement areas.

The bargain-seeking foreigners may have gotten a deal on the house but not on the taxes. The cash strapped Spanish government has declared that the property sales tax, known as...

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January 08, 2015

Earlier this week Noah Smith on Bloomberg View criticized the concept of Tax Freedom Day calling it “hogwash.”

His main complaint is that Tax Freedom Day does not take into account the incidence of taxation. He claims that because the incidence of taxation may fall on other people besides you, you don’t really pay all of the tax. Additionally, he thinks because taxes pay for services, they...

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January 08, 2015

Though taxes are the most common and recognizable source of state government revenues, it's important to remember that they're not the only source. In fact, state governments received 31.5 percent of their total general revenues from transfers from the federal government in the 2012 fiscal year.

That number varies pretty widely for specific states, however. For...

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January 08, 2015

One thing that the incoming Congress will need to address soon is the state of the Highway Trust Fund, which will run out of money sometime this year. Readers may be curious why this seems to be a perennial issue. Everyone is always talking about the Highway Trust Fund, and the issue never seems to go away.

The reason for this is simple; Congress doesn’t make permanent fixes to the problem. The most recent ...

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January 08, 2015

It’s worth remembering that the tax extender compromise approved three weeks ago is already expired again.

The “extenders,” tax provisions that are approved on a haphazard temporary basis, were last month approved retroactively only for 2014, leaving their 2015 status in doubt. Taxpayers, including small businesses with expansion plans, will need to plan around deciding whether some of these provisions...

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January 07, 2015

H&R Block expects a lot of new business from the Affordable Care Act – and that is, of course, a bad thing.

Simply put, while taxes take away money and resources from the private sector economy, tax preparation also takes away money and resources, in a way that is just as real.

Because of the Affordable Care Act, more Americans will spend their time dealing with Form 8965 (...

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January 07, 2015

On the first day of the 114th Congress, 60 senators introduced a bill that would approve construction of the Keystone Pipeline. Lawmakers in the House will likely take up the issue...

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January 07, 2015

The current federal top marginal capital gains tax rate in the United States is 23.8 percent (a 20 percent income tax rate plus the 3.8 percent net investment tax from Obamacare). Additionally, states tax capital gains, leading to an average marginal rate around 28.7 percent.

Compared to other industrialized nations, this is a high tax rate. The average across the OECD in 2014 was approximately 18.2 percent (22.9 percent weighted by GDP). 9 countries don’t even tax long-term capital...

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January 07, 2015

The new House-passed rule to require so-called dynamic scoring of substantive tax legislation has brought criticism from many quarters of Washington—lawmakers, pundits, and think tank types. Bloomberg quotes Representative Louise Slaughter of New York as saying that the new rule “cooks the books” in favor of Republican policies.

But accounting for the economic effects of tax policy is not new—economists have been modeling fiscal policy for decades—...

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January 07, 2015

Suppose a community wants to build a bridge across a river to connect to the neighboring community. Undoubtedly, the bridge will make the commute better for many people in both the towns. However, the project is estimated to cost $200 million, a pretty high price for the communities. Is the project worth it?

In order to determine this, the two communities utilize a cost-benefit analysis. They estimate the benefits of the project: reduced commute time, easier transportation of goods,...

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January 06, 2015

The latest critique of dynamic scoring comes from Edward D. Kleinbard, former staff director of Congress’s Joint Committee on Taxation (JCT). In a recent opinion piece in the New York Times, Kleinbard argues that dynamic scoring is impractical because “dynamic modeling relies on many simplifying assumptions…and different models’ predicted feedback effects vary wildly, depending on the...

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January 06, 2015

In a Politico op-ed, Rep. Chris Van Hollen (MD-D) and Rep. Louise Slaughter (NY-D) point to Kansas as an example of how “’dynamic scoring’ cooks the books.”

“In 2012, the Governor of Kansas enacted massive tax cuts tilted toward the wealthy, promising that they would provide a “shot of adrenaline” for the state’s economy. He shrugged off the...

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January 05, 2015

According to the tax preparation firm, H&R Block, as many as 3.4 million people, or half of all who received subsidies for health insurance through Obamacare exchanges, will have reduced tax refunds this year.

This is due to the fact that many individuals who purchased insurance policies on the healthcare exchanges received subsidies that were too large...

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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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