The Tax Policy Blog

August 13, 2008

The AP has issued a correction of the corporate taxation story we criticized yesterday.  The story had erroneously claimed that 25% of U.S. corporations paying no income tax in 2005 met the GAO's definition of a "large" corporation.  (The actual proportion was 0.28%).  The corrected version of the AP story is...

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August 13, 2008

Yesterday we criticized the errors in an Associated Press story about a recent report issued by the Government Accountability Office (GAO), which found that many U.S. corporations had no corporate tax liability from 1998-2005. The study had been requested by Sens. Carl Levin (D-MI) and Byron Dorgan (D-ND), who immediately seized it as evidence of widespread corporate tax evasion:

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August 13, 2008

On Townhall.com yesterday, Michele Bachmann wrote a blog post that implied correlation between those states whose Tax Freedom Days were later in 2008 with the existence of Right to Work laws in a state. Such an analysis, unfortunately, misses the point.

Don't get me wrong. There are legitimate arguments to be made against many labor market regulations. (There's no such thing as a free lunch.)...

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August 13, 2008

Tax Foundation President Scott Hodge this morning released the latest Tax Foundation Fiscal Fact in response to a new study from the Organisation for Economic Co-Operation and Development (OECD). The OECD study shows that for the 17th consecutive year, the average rate of corporate taxes in non-U.S. countries fell while the U.S. corporate tax rate stayed the same.

As a result of the U.S. failure to lower its corporate tax rate for more than two decades while other major...

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August 13, 2008

Yesterday, Huffington Post columnist Robert Borosage posted an article in response to a GAO report on the issue of corporate taxes. Did Borosage read the report? Who knows? But from what he wrote, one can tell that he is yet another journalist who should more carefully check his facts and limited knowledge of the topic before writing on corporate tax policy. Here’s one example of...

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August 12, 2008

Governor David Paterson proposed roughly $1 billion in budget cuts to resolve New York State's current budget crisis. The state legislature will consider the proposal during an emergency session focused on the $6.4 billion deficit.

The New York Times reports the Governor's proposals...

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August 12, 2008

The Tax Foundation's Patrick Fleenor made an appearance in a Wall Street Journal editorial yesterday on cigarette taxes and smuggling:

Maryland is only the latest state to prove the folly of trying to finance government with a tax on a shrinking pool of smokers. In New York City and State, tobacco taxes have been raised so many times that the retail cost can exceed $9 a pack...

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August 12, 2008

The GAO has a report out today on corporations with zero corporate income tax liability.  The upshot of the AP's digest of the report is that corporations pay no taxes while their executives dine on grilled human flesh with béarnaise sauce, or something.

Unfortunately, the AP's account is based in part on a serious misreading of one of the report's tables.  The AP notes:

About...

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August 12, 2008

The draft 2008 Democratic Party platform plank on taxes was leaked last week. It reads:

Restoring Fairness to our Tax Code
We must reform our tax code. It's thousands of pages long, a monstrosity that high-priced lobbyists have rigged with page after page of special interest loopholes and tax shelters. We will shut down the corporate loopholes and tax havens...

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August 12, 2008

An AP story posted yesterday analyzes one component of Sen. Obama's tax plan, which is to exempt all seniors who make less than $50,000 from having to pay federal income tax. The theme of the article is that tax policy experts agree it is bad tax policy. It's a gimmick, just like Sen. Obama (correctly) labeled John McCain's gas tax holiday.

The article also explains how there would likely have to be...

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August 12, 2008

This post is part of our ongoing Austan Goolsbee cognitive dissonance watch.

Austan Goolsbee, economic advisor to Barack Obama, has been given the unenviable assignment of defending the indefensible.  Last week, the Obama campaign sent him on cable news to defend the windfall profits tax as an economically sensible idea rather than the destructive gimmick that it is. ...

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August 11, 2008

In its "Ask Dow Jones" column this week, the Wall Street Journal's Tom Sherman answers a reader question pertaining to whether Barack Obama would subject sales of homes to capital gains taxation. Most are currently exempt from taxation.

In the article, Sherman quotes Obama economic advisor Jason Furman, who rightly points out that such a falsehood has been spreading as part of a...

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August 11, 2008

Obama economic advisor Austan Goolsbee wrote this paper back in 1997, which leads us to ask what, if anything, can Sen. Obama do to prevent such tax planning from taking place under his proposed tax hikes on high-income individuals. Here's Goolsbee's abstract:

What Happens When You Tax the Rich? Evidence from Executive Compensation

This paper reexamines the responsiveness of...

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August 11, 2008

When I wrote about Barack Obama's windfall profits tax proposal last week, I described it as "a tax on oil sold over the arbitrary price of $80 per barrel."  Like the Carter-era WPT, such a tax isn't really a tax on profits at all—it's a gross tax on production, better categorized as an excise tax.  However, since then, both the ...

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August 08, 2008

As any faithful reader of the Tax Foundation blog knows, our current tax system leaves much to be desired. The loopholes, the hidden taxes, the high rates, and the complexity are just some of its serious problems. However, our tax system has seen some improvements in the last 60 years, as a recent article by Professor J. Giertz of the University of Illinois,...

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