The Tax Policy Blog

June 07, 2007

Tennessee is the latest state to raise the cigarette tax as a general revenue source, largely because it is easy politically to pass tax hikes on a political minority. But they don't want to stop at 42 cents. They need another 3 cents out of smokers to give money to veterans. From the Knoxville News Sentinel:

House Democrats, in a surprise move, acted Wednesday to give...

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June 06, 2007

Remember the Cuno case? That was the case where the federal Sixth Circuit Court of Appeals struck down Ohio's investment tax credit--available to any company that made a physical investment in Ohio--as discrimination against interstate commerce. In striking down Ohio's credit, the Sixth Circuit adopted an "economic effect" test suggested by the plaintiffs:

"(T)he economic effect of the Ohio...

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June 04, 2007

Debates about tax policy often include assertions that a tax is progressive (rates rise on higher incomes, therefore high earners pay a larger proportion of their income in taxes) or regressive (usually flat rates, therefore low earners pay a larger proportion of their income in taxes). The federal income tax is often described as progressive, and state sales taxes are often called regressive.

We don't often hear about a tax with degressive rates...

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June 04, 2007

We've released a new report today exploring the distribution of federal, state and local tax burdens and government expenditures by age group in 2004. It’s a spin-off project from the larger fiscal incidence model we built back in March, and provides many new insights into the priorities of lawmakers and the impact of the nation's fiscal system over the course of a lifetime. Here are some key findings:

• As...
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June 04, 2007

It is the 11th hour in the debate over replacing the Michigan Single Business Tax. Both the House (controlled by Democrats) and the Senate (controlled by Republicans) have conceded that the replacement should be revenue-neutral and feature a tax on business profits. The major remaining point of contention is whether the replacement plan should also contain a tax on net worth (House) or gross receipts (Senate).

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June 01, 2007

The Tax Foundation has released a new study that takes aim at the political rhetoric that is taking place on the issue of the Alternative Minimum Tax. Many politicians on Capitol Hill want it both ways. They say the Bush tax cuts primarily benefited the wealthy and did little for the middle class, while they also say that AMT is now a significant burden on the middle class. This Fiscal Fact shows that the additional AMT hit that many taxpayers are...

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May 31, 2007

The Organisation for Economic Co-operation and Development (OECD) is a collection of 30 developed countries that embrace free markets and representative democracy. Every 1-1/2 to 2 years, the OECD publishes an Economic Survey on member countries and a few non-member countries. Each report, in the words of the OECD, "identifies the main economic challenges...

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May 31, 2007

The Wisconsin legislature has moved one step closer to bringing forth a special tax on oil companies, and the bill is similar to the energy policies of the 1970s in that it includes both price controls and windfall taxes. From the Green Bay Press-Gazette:

The state Legislature's budget committee is expected to clash today over Gov....

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May 29, 2007

Iowans who have not paid their state taxes will soon have a chance to atone, thanks to a new tax amnesty program in Iowa. From the Sioux City Journal:

Gov. Chet Culver signed a bill that allows a two-month tax amnesty, a period in which delinquent taxpayers don't have to pay any penalties and only have to pay half of...

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May 24, 2007

As we noted here yesterday, a three-judge panel of the North Carolina Court of Appeals in Raleigh heard oral arguments Tuesday in the Heatherly v. State case. The plaintiffs argue that North Carolina's rushed passage of a state lottery violated provisions in the state constitution that guarantee deliberation and public awareness for tax increases.

Since it's undisputed that 35 percent of lottery revenues are deposited in the...

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May 24, 2007

Michigan lawmakers, already busy attempting to replace the revenue from the $2 billion a year Single Business Tax (SBT) scheduled to be repealed at the end of the year, are currently scrambling to plug an alleged $800 million budget deficit.

Their focus is currently on raising the state's individual income tax from 3.9 percent of adjusted gross income to a rate somewhere around 4.5 percent.

From the...

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May 23, 2007

Ever since it was first debated in the legislature, North Carolina's lottery has been plagued by scandal, crime, accusations of underhanded machinations in the legislature, and a slew of other problems. But...

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May 23, 2007

With gas prices again approaching record highs, many lawmakers at the state level are responding with the "do anything" mentality, which typically includes short-run gas tax holidays. The latest comes from the state of Connecticut, courtesy of NBC-30 Hartford.

Republicans in the state...

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May 21, 2007

In a new report, the Tax Foundation has shown that the tax code has worse problems in its regular income tax than in its alternative minimum tax (AMT). Luckily, if we fix those problems in the regular income tax, we'll solve the annoying AMT at the same time.

People on the left and right try to portray the AMT as the bane of the middle class. In fact, people in the middle 20% of American earners ($42K - $64K in 2004) are almost never "in AMT." In...

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May 18, 2007

We published a new study on the Alternative Minimum Tax (AMT) yesterday, titled "Fixing the Alternative Minimum Tax," in which Tax Foundation Chief Economist Patrick Fleenor explains that the problem with the AMT actually lies in the regular income tax code:

Why do commentators routinely refer to our income tax code as Swiss cheese, and not cheddar? Because if American income were cheese, the untaxed portions of our income would be large holes caused by exclusions,...

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Subscribe to Tax Foundation - Tax Foundation's Tax Policy Blog The Tax Policy Blog is the official weblog 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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