The Tax Policy Blog

February 23, 2015

Five states have either eliminated or begun the phase-out of their capital stock taxes in the past five years. If Lt. Governor Tate Reeves has his way, Mississippi could be next in line.

Reeves is touting a tax relief package that decreases individual income tax burdens and phases out the state’s antiquated franchise tax over ten years. The proposal has the support of the...

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February 20, 2015

Puerto Rico introduced a bill in the Commonwealth’s House of Representatives yesterday to implement a Value Added Tax (VAT) while eliminating or reducing several other taxes. Given the economic and political integration between Puerto Rico and the United States, the bill could provides a test case for the viability of a VAT in the...

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February 20, 2015

On Wednesday, I was invited to present to the Pennsylvania House Majority Policy Committee as they conducted a hearing in York, Pennsylvania about the business climate in the state. A video of the event is here, and I've pasted the text from my handout below, and linked to a PDF of the handout below that.

Introduction

Since 1937, the Tax Foundation has monitored tax policy at the...

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February 19, 2015

A cut in the corporate tax rate would have large effects on GDP, but minimal effects on total federal revenue in the long run. The large boost to the size of the economy from a corporate tax cut comes from a lower cost of capital.

The corporate tax rate is, in effect, a tax on corporate investment; a high corporate tax rate discourages investment, whereas a low corporate tax rate encourages investment. Additionally, the competitive nature of the global economy corporate taxes makes...

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February 19, 2015

For this week's tax map, we're continuing our series on pass-through businesses. For the first map of the series, check out our two previous maps here, here, and...

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February 13, 2015

Brazil’s president, Dilma Rousseff, has implemented new taxes to stymie the country’s growing deficit. The taxes include a R$0.22 (US$0.07) per liter excise tax on gasoline and diesel fuel, a 1.5% tax increase on personal loans (a total of 3%), a 2.5% tax increase of the Pis/Cofins (types of social contributions) on imports (a total of 11.75%), and an increase in ...

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February 11, 2015

President Obama recently presented his budget proposal for the 2016 fiscal year. The budget proposes $3.99 trillion in spending and $3.53 trillion in revenue for a deficit of $474 billion for 2016 and a number of new tax proposals.

In total, the plan includes $2.4 trillion in proposed tax increases offset by $713 billion in new...

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February 11, 2015

Inspired by Roosevelt’s New Deal in many regards, Senator Bernie Sanders (I-VT) recently outlined his vision for America, featuring expansionary government spending policies. A major federal jobs program, a hike in the minimum wage to at least $15, expansion of Social Security, Medicare, Medicaid, increased regulation of Wall Street, and protectionist trade policies are examples of initiatives Sanders emphasized. However, Sen....

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February 10, 2015

I have long maintained a skepticism of the ridiculous “wonk” hobby of obsessing over “Jobs Day.” The first Friday of every month, the Bureau of Labor Statistics releases a report on the employment situation in the country.

I am still skeptical. The cultural phenomenon of "Jobs Day," as practiced by economic journalists - where people obsess over small granular details that are likely to be revised substantially anyway...

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February 09, 2015

WMATA, the subway and bus system in the DC area, raises fares every other year (last year, they went up about 3 percent). In the off years, spending still goes up, so they seek additional subsidies from their member jurisdictions (the District of Columbia, Maryland, and Virginia). For FY 2016, Metro in November suggested that the members ante up $929 million in tax dollars as operating subsidies, a...

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February 09, 2015

In my recent report on personal income, I made sure to devote a section to the role that pensions, annuities, and IRAs play as a substantial source of income for the middle class. In 2012, taxpayers reported a total of $612 billion from pensions and annuities, and another $231 billion in IRA distributions.

I claimed that this income is often forgotten in analysis of income data, so I wanted to give an example of...

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February 09, 2015

In the United States, most businesses are not C corporations. 95 percent of businesses are what are called pass-through businesses. These businesses are called pass-throughs because their income is passed directly to their owners, who then need to pay individual income taxes on it. Contrast this with C corporations that need to pay the corporate income tax on its income before it passes its earnings to its owners. Combined, pass-through businesses employ 55 percent of all private-sector...

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February 09, 2015

Today’s map is from our report released today on cigarette smuggling rates across the states. In it, we find that large differentials in cigarette taxes across states create incentives for black market sales. Smuggled cigarettes make up substantial portions of cigarette consumption in many states, and greater than 20 percent of consumption in 15 states.

...

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February 06, 2015

Ways and Means chairman Paul Ryan communicated a clear message at the Washington International Trade Association on Thursday, in what was his first major public address on trade: The U.S. needs to get back in the driver’s seat. Highlighting the critical role of trade for the strength of the U.S. economy, Ryan stated his highest priority is to complete the many trade agreements the U.S. is currently...

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February 05, 2015

This post originally appeared as an op-ed on Forbes here.

Indiana has made notable strides in improving its tax climate in recent years. In 2011, the state started a phase down of its corporate tax rate from an uncompetitive 8.5 percent to what will in 2021 be the third lowest corporate rate in the country, 4.9 percent. In 2013, Governor Mike Pence...

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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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