The Tax Policy Blog

January 03, 2008

The U.S. has seen many debates over what constitutes art, especially with regard to taxpayer-funded projects.  This issue has come up in other countries, as well.  Any government that treats art differently from other goods or professions with regard to taxing and spending policies will face the unanswerable question, What is art?

From Vertex, Inc.'s Sales Tax State Activity Update...

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January 02, 2008

There has been a flurry of articles recently regarding the first-borns of 2008. Every article cites the fact that the baby being born on January 1st means the family will not be able to claim the child as a tax deduction and will also not receive the child tax credit for tax year 2007. For simplicity, there is no pro-rated system for exemptions or filing status under the federal income tax. For a family earning less than $100,000 who is in the 15% marginal tax bracket, a baby in 2007 would...

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January 02, 2008

California is in a budget crunch and politicians are looking for new sources of revenue. One legislative analyst has suggested the best way forward would be to eliminate some of the deductions in the state's income tax system, including the state's mortgage interest deduction. From the Vallejo Herald News:

California faces an estimated $14 billion budget deficit, but the state's independent fiscal...

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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 31, 2007

In a few hours, Chicago residents will be paying $10.5 million more for bottled water, due to the implementation of the 5-cent-per-bottle tax we blogged about here. We wrote:

So why did the council enact a five-cent tax on bottled water? Is it defensible under any principle of sound tax policy? ... [The mayor] just wanted to raise revenue via an arbitrary tax source that has no justification to be used as a general...

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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 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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