The Tax Policy Blog

May 25, 2008

With Memorial Day approaching, it's a good time to think about the tax treatment of veterans. While criticizing any policy that expands benefits to those who serve in the military is not likely to be very popular on the surface, policymakers and the general public who truly believe that it is in our country's interest to compensate those who serve in the military need to realize that the tax code is not always the best vehicle for doing so.

The federal tax code is filled with many...

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May 23, 2008

There's a new chapter in the Chicago tax saga. As if the Chicago sales tax were not high enough already, now online buyers of tickets to city events might face an amusement tax as well. From the Chicago Tribune:

Buyers who purchase tickets to Chicago sporting and cultural events online through eBay and StubHub could end up paying an...

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May 21, 2008

On Monday the Tax Foundation filed friend-of-the-court brief with the North Carolina Supreme Court in Heatherly v. State, urging the court to reverse a lower court ruling and hold that the North Carolina Education Lottery generates tax revenue, not "profits."35 percent of lottery revenues is dedicated to general state spending, equivalent to a 35-percent tax on the sale of each lottery ticket. If that revenue is found to be a tax under the meaning of...

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May 21, 2008

We have pointed out the flaws of state-run lotteries many, many times: they impose taxes paid disproportionately by the poor; they're not transparent, or honestly labeled as taxes; the revenue is often not spent as promised; they impose an unfairly high implicit tax rate on one particular consumer good; and they unnecessarily increase the overall complexity of a state's tax system. There's also a question of whether running a gambling enterprise, as a monopoly business, is an...

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May 19, 2008

The U.S. Supreme Court this morning upheld 7-2 Kentucky's discriminatory practice of taxing interest on non-Kentucky bonds, but not Kentucky bonds, as constitutional. The Tax Foundation had submitted a brief urging that the law be found unconstitutional as violating the Commerce Clause and other provisions of the Constitution. The brief also highlighted Tax Foundation...

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May 17, 2008

Tax Prof Blog writes of the ignorance of the Denver Post and Colorado Senator Ken Salazar regarding the fact that adjusted gross income for a business is income LESS expenses.

Denver Post: Plowing Into the Farm Bill, by Anne C. Mulkern:

Sen. Ken Salazar, a Denver Democrat who supports the bill, disputed the idea...
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May 15, 2008

We received word yesterday that the South Dakota Supreme Court has declined to rehear the Metropolitan Life Ins. Co. v. Kinsman insurance tax discrimination case; the Tax Foundation had filed an amicus brief in support of the petition for rehearing. South Dakota is one of 8 remaining states that seek to protect their domestic insurance companies by imposing heavier taxes on out-of-state companies that do business in the state. The...

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May 14, 2008

From today's State Tax Notes:

Michigan Final SB 1189 Amends Eligibility Criteria for Credit Under MEGA Act

Michigan SB 1189, signed into law as Public Act 110, amends the Michigan Economic Growth Authority (MEGA) Act by reducing, from 100 to 50, the minimum number of new jobs that a business must create or the number of retained jobs that a business must maintain to qualify for a business tax...

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May 14, 2008

From this week's Economist:

ITEM 100237099149 was a bargain. Offered for sale on eBay on May 5th, it was a CD of the “income-tax returns for 2005 of the entire Italian people”. Until it was removed after a few hours, it could have been bought for around $75.

Five days earlier Italians had learnt, to their varying dismay...

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May 13, 2008

North Carolina Gov. Mike Easley wants to raise the pay of teachers in North Carolina and improve government-provided mental health programs in the state. So who should pay for that? The general public who would theoretically benefit from the higher quality teachers that higher salaries would bring into the state and would also benefit from the greater spending on mental health care?

Not a chance. Easley doesn...

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May 13, 2008

We mentioned a few days ago that your stimulus check could be less than you expect if you have unpaid alimony, child support, or back taxes. According to the Washington Post today, 449,531 federal employees and retirees may see a smaller stimulus check due to $3.58 billion in unpaid back taxes. Over 100,000 current federal employees (out of 171,...

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May 13, 2008

The Council On State Taxation (COST) has recently released their annual Business Tax Burden Study for Fiscal Year 2007:

Results indicate that businesses paid $577 billion in state and local taxes in fiscal year 2007, representing 44.1% of total state and local taxes. The taxes include business property taxes, sales taxes on business inputs, gross receipts taxes, corporate income taxes, and other state and local taxes that are the statutory liability...

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May 13, 2008

At a Senate Finance hearing on Capitol Hill today on the issue of the individual side of tax reform, current Heritage Foundation scholar (and former Executive Director of the Tax Foundation) J.D. Foster took issue with the Joint Committee on Taxation's labeling of many of the education provisions of the tax code as "tax subsidies" for education. Foster argued that tax deductions for...

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May 12, 2008

Prepared for the "Hurricane Preparedness Sales Tax Holiday" in Virginia? From May 25 to May 31 only, sales tax will be waived on various hurricane preparedness equipment, and the Virginia Tax Commissioner has issued a 5,000-word advisory notice detailing every aspect of how retailers should do such sales during the holiday. (Title of the press release: "Prepare for the...

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May 12, 2008

Yours truly received his stimulus payment direct deposit on Friday (May 9), as scheduled. That day waiting for me in the mail was yet another notice from the IRS. After calming down from the near heart attack I get whenever I receive a letter addressed to me from the IRS, I began reading:

May 12, 2008

Dear Taxpayer:

Your Economic Stimulus Payment

You are entitled to an economic stimulus payment...

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