The Tax Policy Blog

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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November 19, 2014

The Washington Examiner yesterday published an editorial that advanced a rather contrarian idea – that certain tax breaks should be made permanent so that they can be repealed.

If this logic sounds nonsensical to you, good! It is! But that is not because the staff of the Examiner are illogical people. It is because Washington is an illogical place, where nonsense arguments...

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November 19, 2014

The U.S. House of Representative’s leadership has chosen Rep. Paul Ryan to chair the House Ways and Means Committee. In the continuing debate over ways to fund the government and grow the economy, Ryan has remained a longstanding voice for reform.

The House Ways and Means Committee is the oldest committee in Congress,...

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November 19, 2014

Back in 2008, one of the Tax Foundation’s tasks was to fact-check the fiscal policy statements by the candidates. We documented a lot of the misleading rhetoric and advertisements that came from both sides. Personally, most of the work we did is forgotten, but one area of the 2008 campaign that is hard to forget is then-candidate Barack Obama's constant criticism of John McCain's health care plan. I was reminded of this again this week as the Jonathan Gruber story made headlines.

One...

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November 19, 2014

The financial crisis was most disastrous for housing, but it was terrible for all kinds of investment. After accounting for the wearing out of equipment and buildings, most sectors of the U.S. capital stock are barely being replenished fast enough to make up for depreciation. The U.S. is doing little to expand its capital stock and is instead mostly just holding on to what it has.

The chart below shows net investment, which is all investment in physical capital minus the lost value...

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November 19, 2014

This week, a new report from the Center for Effective Government claims that a number of corporations paid their CEOs more than they paid in federal income taxes. They claim that this reflects the fact that corporations are not paying their fair share and the corporate tax system is broken.

Leaving aside that their measure of corporate profits and taxes paid is flawed (see their FAQ #3 on page 18), the report...

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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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