The Tax Policy Blog

September 10, 2007

The September-October issue of Tax Watch is now available on our website. Tax Watch is our bimonthly tax policy newsletter, which presents our economic research and analysis in a simple, non-technical format—ideal for the non-economist looking for a clear explanation of current tax issues.

Highlights from the September-October 2007 issue include:

  • Paying for Public Schools: What's the Cost of Judicial Mandates?
  • U.S. Corporate Taxes...
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September 07, 2007

The global tax news today once again highlights how out of step U.S. lawmakers are with the trends taking place worldwide. As American newspapers recount yesterday's hearing in the House Ways and Means Committee on how the "carried interest" hedge fund managers receive as compensation should be taxed, the headlines in Malaysia were that the government will continue to cut their corporate tax rate while...

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September 07, 2007

The battle over Florida's property tax referendum is heating up given the news that the state is also facing an estimated $1 billion deficit. The news now is that one of the early supporters of the measure is backpedaling. From State Tax Notes:

Florida Republicans who voted to put what they called the largest tax cut in history on the January 29 ballot are...

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September 07, 2007

The FairTax has recently garnered the support of many candidates for president, the most ardent candidate being former Arkansas Governor Mike Huckabee. But did the FairTax movement orginate among the Scientology community? Columnist Bruce Bartlett takes a look at the issue in the latest issue of the New Republic.

The basic theological tenets of the Church of Scientology are well known: a fanatical hatred for...

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September 07, 2007

There's one type of tax competition that every state and local lawmaker seems to relish: Who can enact taxes that collect the most from non-residents? After all, non-residents don't vote.

Rental car taxes are among the favorites in this category, especially locations near the airport. Locals are told not to worry: people from out of state will pay the lion's share of these rental car taxes, and we'll get the government services.

But once the tax is enacted, all that...

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September 07, 2007

Tax Foundation Chief Economist Patrick Fleenor appears in a Wall Street Journal editorial today that analyzes the cigarette smuggling becoming more common with federal and state hikes in cigarette taxes:

Something similar is going on all over the U.S., where cigarette taxes have on average tripled in the last decade, but treasuries aren't getting the revenue boost. For consumers, tax-free online cigarettes are only a mouse click away, and these purchases now...

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September 07, 2007

Tennessee is one of twenty states that impose a tax on illicit drugs, at a rate of $3.50 per gram of marijuana, $50 per gram of cocaine, and $200 per gram of other controlled substances. We've previously noted that these "drug stamp taxes" or "crack taxes" became popular in the 1980's as an easy way for states to raise revenue from dealers and users who had plead guilty to drug offenses, since few pay the tax before they are arrested; convictions...

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September 06, 2007

Yesterday before a hearing on Capitol Hill, Minneapolis Mayor R.T. Ryback testified that the country hasn't spent enough on transportation infrastructure. From the Associated Press:

House Democrats feuded with Republicans and the Bush administration Wednesday over raising gasoline taxes to pay for safer bridges.

A month after an interstate bridge collapsed in...

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September 05, 2007

New bills in Congress would expand federal subsidies to higher education in a way that would likely help students little financially but would straighten out the current maze of federal subsidies, according to a new legislative analysis by the Tax Foundation.

"Any parent knows putting a child through college is a complicated and costly venture," said Gerald Prante, the study's author. "New legislation to simplify the college tax credits should get an ‘A' for helping make the process...

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September 05, 2007

The lead editorial of today's Washington Post ("The War on Poverty") applauds New York Mayor Michael Bloomberg's proposal to expand the Earned Income Tax Credit "as the next phase in the war on poverty." The presumption behind this proposal is that the tax system is not doing enough to help low-income Americans. Nothing could be further from the truth.

Over the past few...

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September 05, 2007

Our friend Jennifer Dunn passed away at her home today. Throughout her life, Ms. Dunn stood out as a bright and talented individual with a heart for public service. Her congressional career was one of great accomplishments, including being the first woman to run for House Majority Leader.

Congresswoman Dunn was an outspoken advocate for tax reform and overall tax relief. Accordingly, at our Annual Dinner in 2000, she was the first woman to be awarded the Tax Foundation's...

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September 04, 2007

The I.R.S. added a regulation today requiring that sponsors of poker tournaments withhold for taxes 25 percent of players' winnings above $5,000, and provide information to the I.R.S. The regulation, 26 C.F.R. § 31.3402(q), takes effect March 4, 2008.

An article on a poker trade website notes that online and offshore poker is not subject to...

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September 04, 2007

Indiana lawmakers are finding that abolishing property taxes is much easier said than done. A panel of legislators and tax experts has been examining various options for property tax reform and having a hard time coming up with a solution that would be palatable to most taxpayers, voters, and legislators. From the (Lafayette) Journal & Courier...

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September 01, 2007

As Americans prepare to celebrate the Labor Day and enjoy their day away from work, it is worth reflecting on how we spend the fruits of our labor—in particular, how much we spend on government in the form of taxes.

Of course, Labor Day is not intended to have anything to do with reelection on tax burdens (click here for a history of the holiday from the Department of Labor). But any serous discussion of Americans' work...

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August 31, 2007

It's no secret that income and sales taxes are often full of exemptions and deductions. We've noted before that, by exempting some items from taxation, the rates on everything else get pushed up. For instance, we found that the federal income tax system only taxes about half of all income—effectively doubling tax rates on the half that is taxed.

In New Hampshire, the town of Epsom was searching for new revenue, as governments often do....

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