The Tax Policy Blog

May 08, 2008

Residents of the Constitution State celebrate Tax Freedom Day today, after a very long wait. Connecticut's Tax Freedom Day is the latest in the nation, and significantly later than the notional Tax Freedom Day of April 23. The earliest state Tax Freedom Day this year, back on March 29, was celebrated in Alaska.

Residents of Connecticut are acutely aware of their high tax burden. We came across a blog post about the state's late Tax Freedom Day on a website called...

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May 07, 2008

Advisors to the three presidential campaigns appeared at a Tax Foundation conference in Washington, D.C. Tuesday, April 29. Brian Deese represented the Clinton campaign, Kevin Hassett the McCain campaign and Dan Tarullo the Obama campaign.

The spokesmen avoided controversial statements, and the audience of think tank personnel and reporters focused on questions of policy. Some subjects that drew attention were the McCain and Clinton plans for a temporary gas tax holiday, and the...

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May 07, 2008

An op-ed by Tax Foundation chief economist Patrick Fleenor appeared in the Wall Street Journal today. The op-ed, "Cigarette Taxes Are Fueling Organized Crime," discusses the damage inflicted on society by high cigarette taxes, which often cause consumers to turn to the black market. The amount of criminal activity related to cigarette taxes is staggering, as Fleenor explains:

While the problem first surfaced during the Great...

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May 06, 2008

The Government Accountability Office (GAO) has released a report examining Value-Added Taxes (VATs) in Australia, Canada, France, New Zealand, and the United Kingdom to look at compliance costs, how VATs work with subnational taxes, and what issues arose during transition to a VAT. About 130 countries have a VAT, including all of the OECD countries except the United States.

A VAT is similar to a sales tax,...

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May 06, 2008

Many states have taxpayer protections applying to tax increases. In North Carolina, for example, tax increases must pass three readings in the Legislature. In Virginia, taxes cannot be imposed by unelected officials without a public vote. And in California, Article XIII D, Section 4 of the state constitution requires that new taxes or increases to existing taxes must be approved by two-thirds of voters....

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May 06, 2008

Even if the federal gas tax holiday was implemented, it would not apply (fully) to gasoline sold in four states. That's because California, Nevada, Oklahoma, and Tennessee each has a provision in the state's tax law which states that if the federal gas tax is lowered, that state's own gas tax will increase by some amount. This is theoretically designed to maintain transportation spending in the state.

Here is a link to a...

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May 06, 2008

Your daily dose of twisted thinking courtesy of Hillary Clinton

Hillary Clinton today said that Sen. John McCain was wrong to say he would veto the 2008 farm bill as President, noting it would provide South Dakota family farms with priorities like permanent disaster relief, country of origin labeling, renewable energy advances and rural development broadband deployment.

...

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May 06, 2008

Huffington Post has posted a video clip of Sen. Menendez being interviewed on MSNBC, in which he says: "You know, thank God that we don't have economists making necessarily public policy, because they don't really feel the pains of average Americans."

What if economists did make public policy? You wouldn't see policy proposals like Sen. Clinton's gas tax holiday that may be well-...

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May 05, 2008

Daily Tax Report notes that House Republicans are preparing to offer a $10,000 tax credit for first-time home buyers as the Republican alternative to the housing stimulus bill (H.R. 5830), which will likely be voted on this week. This one-ups the Democrats, who were proposing something in the neighborhood of $5,000 to $7,500.

According to a press release from Rep. Lee Terry (R-Nebraska) (...

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May 05, 2008

As far as temporary gas tax holidays go, the Tax Foundation's position has long been that they're all bad. But even within gas tax holidays, there are bad and worse. And this one being suggested in the Missouri legislature is the worst.

You could get a break at the gas pumps in Missouri this summer if a bill gets the approval of the Legislature and the governor. It would lift the state’s gasoline...

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May 04, 2008

The current high price of gas has led to a lot of crazy proposals from gas tax holidays to creating a tax deduction based upon energy consumption. But Rep. Paul Kanjorski's (D-PA) may top them all in terms of its stupidity. From the Times Leader, Kanjorski's plan would do the following:

• H.R. 5800 would tax industries’ windfall profits.

• The bill would set up a Reasonable Profits Board to...

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May 03, 2008

Whenever government gets its hands on something, it will attempt to control more and more of it, typically with purse strings. A New York Times article today shows how politicians in Canada are trying to use the subsidies of film tax credits to censor film content by giving only certain films the handout. Here's a clip.

Most Canadian films and non-news...

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May 02, 2008

ExxonMobil's recent announcement of first quarter profits of $10.9 billion has prompted the predictable political demagoguery about "obscene" profits and the need for a new windfall profits tax. Exxon does not need our help to defend itself against such charges but I remain amazed that none of the major news outlets have highlighted the fact that these are net profits, meaning profits after taxes.

If reporters were to dig just a bit deeper into the company's earnings...

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May 02, 2008

Amazon has filed suit in New York state court seeking to invalidate the recently passed "Amazon tax", which requires any out-of-state online retailer collect sales tax on purchases if the business does at least $10,000 worth of business with in-state affiliates, even if it has no property or employees in the state.

...

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May 02, 2008

Using data on who owns shares in U.S. oil companies combined with household financial data in the Survey of Consumer Finances, the Tax Foundation has done a distributional analysis of the proposed gas tax holiday and windfall profits taxes. Note that the report shows how the estimated savings from a gas tax holiday under both assumptions: (1) that the tax cut is merely capitalized into higher prices for gasoline (the economists' consensus) and (2) that...

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