The Tax Policy Blog

April 02, 2008

A man in York, Maine received his tax refund check for $5,666 a couple weeks ago, but he wasn't happy about it. He hadn't even done his taxes yet.

It turns out scammers, who had stolen the man's identity earlier in 2007, had done his taxes online, instructing H&R Block to forward the refund check to their bank in Utah. That's where the scheme went awry: the bank refused to...

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April 01, 2008

State-run lotteries are certainly popular (42 states and D.C. have them), with Arkansas's Lieutenant Governor Halter recently reviving the idea of starting a state lottery to raise money for scholarships. Legislators in that state have pledged to do him one better: rather than undertaking all the work needed to start up a lottery, they propose taking over a business that already exists in the state: selling cigarettes.

The legislative proposal would ban the sale of...

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April 01, 2008

After learning that yet another large employer was closing its doors, the Governor of Wismichigillinoserseyania was overheard brainstorming with an aide about possible causes.

"I'll admit our tax code isn't that friendly to the individuals who create jobs," pondered Governor Doyrendholmzinejevich. "Could that be the reason that all the individuals who create jobs stay away from our state?"

Among the features of the state's tax code are the sales tax, which requires a...

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April 01, 2008

Today, the National Association of Shoe Salesmen® (NASS) took to Capitol Hill and called on Congress to give much needed relief to the footwear industry. NASS® is calling on legislators to implement a one-time above-the-line tax deduction for those who purchase a qualifying new pair of shoes through the end of 2008.

"Our industry hasn't been this devastated since the terrible rubber workers strike of 1976," said NASS® Lobbyist Gary Voiganella. "Help is needed for this industry that...

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March 31, 2008

The Harrisonburg (Virginia) Daily News reports on a bill signed earlier this month which exempts income earned from space launches or space resupply services from corporate and individual income taxes, so long as the services supply missions are launched from Virginia:

The legislation amends the state tax code so that, starting in 2009, no tax would be charged...

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March 31, 2008

According to the Chicago Sun-Times, revenue from the 5 cent per bottle tax is running 36% under projection since it went into effect on January 1. The city says it's because people don't buy water in cold weather; the industry notes that suburban bottled water sales (without the punitive tax) have skyrocketed:

January collections were $554,000. That's far short of the...

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March 31, 2008

Presidential candidate Barack Obama has released a new ad that contains a lot of rhetoric designed to appeal to the masses, yet whose underlying economics is pure nonsense.

Obama seeks to impose a tax on the windfall profits of oil companies, which he implies in the advertisement is the cause of the high prices at the pump. The fact of the matter is that it doesn't work that way. The CEO of Shell doesn't get up one morning...

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March 31, 2008

A new Tax Foundation Tax Policy Podcast delves into the problem of the Untied States' high corporate capital gains tax rate.

Jim Tisch, President and CEO of Loews Corporation, and Ed McClellan, Tax Counsel at PricewaterhouseCoopers, talk to Tax Foundation President Scott Hodge about the difference between the individual capital gains rate and the corporate capital gains rate, the problem of "locked-in" assets and their detrimental impact on business decisions and job creation, the...

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March 31, 2008

Politicians in an election year will do anything to not raise taxes in a form that they should be raised (i.e. raising a broad-based tax). That's why they frequently do what is happening in Albany: raise taxes on an arbitrary product consumed by a minority of citizens (i.e. cigarettes).

Cigarette taxes should not be set at a given level for the sole purpose of...

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March 29, 2008

An article in today's New York Times highlights a growing trend in state tax policy: giving tax credits to the film industry to shoot movies in a given state. Such a phenomenon is a terrific application of countless economic principles to be highlighted by the next Greg Mankiw when writing his/her introductory textbook for freshman economics.

Foremost, it shows that economic actors (like owners...

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March 28, 2008

"Dear Taxpayer," it starts off. "We are pleased to inform you that the United States Congress passed and President George W. Bush signed into law the Economic Stimulus Act of 2008, which provides for economic stimulus payments to be made to over 130 million American households. Under this new law, you may be entitled to a payment of up to $600 ($1,200 if filing a joint return), plus additional amounts for each qualifying child."

You might have received this junk-mail-esque notice in...

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March 28, 2008

Tax Watch is the Tax Foundation's quarterly tax policy newsletter, presenting 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.

The Spring 2008 issue is now on our website. Highlights of this issue include:...

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March 28, 2008

"IRS: We've got what it takes to take what you've got."
—Author unknown

"Internal Revenue Service: The world's most successful mail order business."
— Bob Goddard

"Did you ever notice that when you put the words 'the' and 'IRS' together, it spells 'THEIRS'?"
—Author Unknown

"The flat tax would be so simple, you could fill it out on a post card. A post card that would say, in effect, having a wonderful time; glad most of my money is here."
—Steve...

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March 27, 2008

This morning, the Bureau of Economic Analysis (BEA) reported finalized GDP numbers for the fourth quarter of GDP, as well as figures for corporate profits and corporate income taxes paid for calendar year 2007. They show corporate income taxes growing at only a 2.1 percent pace in 2007, which is down by a lot compared to growth in 2006, which was 15.7 percent...

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March 27, 2008

The Politico has posted a transcript of a CNBC interview that Barack Obama did with Maria Bartiromo. In it, he talks about how he feels it is proper tax policy to raise taxes on capital gains, while cutting taxes for targeted groups like seniors and low-income homeowners. Here's an excerpt of the interview:

BARTIROMO: How do you plan to change the tax code when it comes to...

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