The Tax Policy Blog

March 21, 2008

Everyone knows that the Easter Bunny delivers Easter baskets to children every year. However, much remains unknown about the mysterious rabbit: his whereabouts the rest of the year, where he purchases his supplies, the source of his funding, etc. Since we focus on taxes here at the Tax Foundation, we decided, despite the lack of reliable data, to delve into the tax angle of this story and speculate on how much the Easter Bunny pays in sales taxes.

We will assume that he...

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March 19, 2008

Regarding yesterday's divided court ruling upholding the North Carolina Education Lottery, news reports indicate that the plaintiffs plan to appeal to the state supreme court. Because there was a dissent on the three-judge panel in the Court of Appeals, the right of appeal is automatic.

More on the Heatherly case ...

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March 19, 2008

Details here:

Under the proposal, the state would reduce the income tax rates by 10 percent over five years beginning July 1, 2008. Under that plan, the maximum 6 percent tax rate would drop the first year to 5.88 percent and so on until it reach 5.4 percent.[...]

Instead of freezing residential [...

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March 19, 2008

News stories from across the state of Georgia on Wednesday highlighted the current debate in the state on tax policy: should the state cut the car tax, cut income taxes, or cut neither?

The first question that needs to be asked is whether or not a specific tax on cars is justified in the first place, either for externality reasons or some benefit principle justification? Otherwise, it is just an arbitrary tax on a selected product, making it poor tax policy. Therefore, to...

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March 18, 2008

A new Tax Foundation Fiscal Fact shows that nearly half of U.S. states tax job providers at a higher rate than any other country in the developed world. Counting the federal rate alone, the U.S. has the world's highest corporate tax rate, but including average sub-national rates (federal plus state in the U.S.), Japan edges out the U.S. for the highest-tax location.

This study breaks the tax down by state, adding each state's corporate tax rate to the federal...

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March 18, 2008

The North Carolina Court of Appeals ruled 2 to 1 today that the state lottery is constitutional, because it neither pledges the credit of the state nor imposes a tax. The Tax Foundation had submitted an amicus brief supporting the constitutional challenge to the law brought by the North Carolina Institute for Constitutional Law....

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March 18, 2008

It appears as if the antiwar left and the the supporters of the FairTax have something they agree on: both want to shut down the IRS. Today's Washington Post reports that antiwar protestors plan to march all over Washington, including the offices of the Internal Revenue Service, to mark the 5th anniversary of the beginning of the conflict in Iraq.

Assuming their...

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March 18, 2008

When your stimulus check arrives depends on whether your 2007 tax return set up a direct deposit payment, and on the last two digits of your Social Security number, according to yesterday's IRS announcement:

Direct Deposit Payments

If the last two digits of your Social...

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March 18, 2008

A new study from three prominent economists finds that employees suffer most when their corporate employers must pay high corporate taxes. That contradicts the theory that has prevailed for decades -- that corporate taxes mainly hurt investors -- but it supports a recent CBO study by Randolph that found workers bearing 70 percent of the burden of corporate income taxes.

The new study's authors are Fritz Foley and Mihir...

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March 17, 2008

Maryland's recent tax increases, including the new tax on computer services, is the last straw for some:

Lawmakers' efforts to impose a new sales tax on the computer services industry may have permanently tarnished Maryland's reputation among some small-business owners there, raising the possibility that they will simply pack up and relocate across the border.[...]

"We're thinking about moving...

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March 17, 2008

Kentucky State Treasurer Todd Hollenbach visited the Tax Foundation's office last week to discuss tax reform in Kentucky and his ideas for promoting financial literacy throughout his state. He has enlisted the assistance of the Tax Foundation in providing research and data on tax policy proposals that might be used to education Kentucky's citizens. We will continue to keep in touch with the Treasurer's office and to offer assistance as his financial and tax literacy project gets...

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March 16, 2008
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March 14, 2008

Last year, Maryland legislators proposed expanding the state sales tax to a number of services, including real estate management, landscaping, tanning, massage therapy, auto repairs, and health club memberships. While lobbyists for those industries were successful in halting those taxes, a last-minute backroom deal imposed the 6 percent tax on the computer services industry, effective July 1, 2008.

Only nine states tax computer services...

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March 14, 2008

"People who complain about taxes can be divided into two classes: men and women."
         —Author unknown 

"The nation ought to have a tax system which looks like someone designed it on purpose."
        —William E. Simon, Secretary of the Treasury 1974-1977

"I believe we should all pay our tax bill with a smile. I tried but they wanted cash."
        —Author Unknown

"I ... shall never use profanity except in discussing house rent and...

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March 14, 2008

As shoppers leave Illinois to avoid Chicago's new 10.25% sales tax, Tax Foundation chief economist Patrick Fleenor was asked by the Chicago Tribune about the so-called use tax. Aren't shoppers legally required to file a tax form and submit the 10.25% payment even on out-of-state purchases?

"Technically, yes," said Fleenor. "It's basically tax evasion, and that's what officials should be...

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