The Tax Policy Blog

December 31, 2007

Allegheny County, PA, the home of Pittsburgh, is set to ring in the new year tonight with a new tax on poured alcohol drinks. And a judge has ruled that the tax will go into effect at 12:01 a.m. (as scheduled) despite the fact that it may lead to administrative headaches for establishments. From Pennlive.com:

Allegheny County bars and restaurants...

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December 31, 2007

As we've reported before, Maryland's cigarette tax is doubling to $2 per pack as of Tuesday. The Washington Examiner lays out the math:

"Sales are going to drop all over Maryland, I'm sure," said Ragu Nanthan, an employee at TJ Beer Wine and Liquors on New Hampshire Avenue in Takoma Park. The regular price for a pack of...

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December 27, 2007

Every time you turn around, some ridiculous tax policy is being proposed in Wisconsin. Whether it's Governor Doyle's proposed tax on oil companies, Governor Doyle's proposed tax on hospitals, a proposal to tax soft drinks put forth by some legislators, a gigantic payroll tax hike to pay for universal healthcare within the state that would basically double the state's tax burden, or the state's continuous support of tax credits for specific industries and companies, the state is a...

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December 27, 2007

Press release from the Internal Revenue Service today on the delay in refunds caused by Congress's procrastination on passing a patch for AMT:

The Internal Revenue Service announced today that the upcoming tax season is expected to start on time for everyone except certain taxpayers potentially affected by late enactment of the Alternative Minimum Tax "patch."

Following extensive work in recent...

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December 27, 2007

Now that all the presents have been unwrapped and the holiday festivities are over, people's thoughts will soon turn to New Year's resolutions. Even those who don't make resolutions probably have some ideas about things they would like to do differently in the New Year.

We at the Tax Foundation have some thoughts about an area in which federal and state policymakers could use some improvement in 2008: tax policy. With this in mind, we have compiled a wish list for tax policy in the...

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December 27, 2007

Today's Wall Street Journal has an editorial piece discussing the Quill physical presence rule. That's the constitutional bar which prevents states from forcing out-of-state businesses to collect each state's sales tax on purchases. Overturning Quill would mean that retailers would have to collect taxes based on where the seller lives (not where the...

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December 26, 2007

An excellent Washington Post oped by Sally Pipes ("Brave New Diet") warns the public against scaremongering about our weight. She shines a light on the faults of the government's BMI Index by pointing out that Kobe Bryant, Tom Brady and other superfit athletes are overweight according to their BMIs. Oh, to be overweight like Kobe!!

And even if the BMI Index (ratio of height to...

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December 25, 2007

I hope Santa Claus brought you exactly what you wanted this morning. Oregon residents might have us beat, though, in that the state refunded part of their income tax payments just before the holiday:

Checks have arrived in mailboxes all over the state, thanks to an only-in-Oregon law that requires rebates to taxpayers when income tax collections top projections by more...

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December 21, 2007

Since taking office, Governor Mark Sanford of South Carolina has sought to cut his state's income tax, which tops out at a 7 percent rate. Yesterday, he unveiled a proposal to offer residents the option of sticking with the current code, or paying a 3.4 percent flat tax, with no exemptions or deductions.

He estimates the revenue loss would be $107 million, which he proposes to make up by increasing the state tax...

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December 21, 2007

There's a lot of talk of silly tax policy now-in-days. Every politician seems to have some funny gimmick that will tax some group to pay for a program for some other group. So with the holidays upon us, here's a list of new taxes we wouldn't be surprised (for better or usually for worse) to see proposed:

Egg nog and Christmas cookie "fat" tax

They are staples of the holiday diet, but they're also the cause of the ever-expanding American waistline. Therefore,...

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December 21, 2007

Inflation adjustments for tax brackets, exemptions, and deductions will mean that your first paycheck in 2008 will be slightly higher than your last paycheck of 2007, even if your salary remains the same. While the increase this January will not be nearly as large as last January, it will still be noticeable.

For a single person earning $50,000 per year (assume all wages/salaries and no adjustments), his federal individual income tax bill under...

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December 20, 2007

It has been a common theme recently for elected officials to go after cigarettes for a tax hike to pay for some spending program that is supposed to provide general public benefits. What is the justification of this type of policy from the perspective of sound public finance? Unless one wants to argue for an across-the-board switch to Ramsey Rule taxation, there is none. It's pure democratic politics: use the coercive power of the...

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December 20, 2007

Today, President Bush signed into law a new tax law that puts in place a three year exclusion from income of mortgage debt forgiveness. Currently, individuals who receive forgiveness of their mortgage must claim the forgiveness as income on their IRS tax forms. This change in tax law is bad tax policy for two reasons. First, it's temporary. If mortgage debt forgiveness should not be taxable income, then why should somebody who is in financial trouble in 2008 be more deserving of somebody...

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December 19, 2007

The House of Representatives has passed a patch for 2007 tax law to prevent about 20 million new tax returns from being hit with the Alternative Minimum Tax. The bill now awaits President Bush's signature. The bill passed 352-64. (All those opposing were Democrats.) Here is the roll call vote record.

Following Bush's signature, the AMT exemption amounts for 2007 are as follows:

Married Filing Jointly: $66,...

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December 19, 2007

A new survey on tax attitudes by Bankrate.com finds that despite the complexity of filing an income tax return, most Americans don't want the government to fill it out for them.

Two-thirds of Americans would prefer to maintain control over their tax returns (65 percent) rather than let the government prepare their returns, if given that option.

And the IRS doesn't want that responsibility either. They'd rather take whatever money would be required to...

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