The Tax Policy Blog

May 04, 2008

The current high price of gas has led to a lot of crazy proposals from gas tax holidays to creating a tax deduction based upon energy consumption. But Rep. Paul Kanjorski's (D-PA) may top them all in terms of its stupidity. From the Times Leader, Kanjorski's plan would do the following:

• H.R. 5800 would tax industries’ windfall profits.

• The bill would set up a Reasonable Profits Board to...

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May 03, 2008

Whenever government gets its hands on something, it will attempt to control more and more of it, typically with purse strings. A New York Times article today shows how politicians in Canada are trying to use the subsidies of film tax credits to censor film content by giving only certain films the handout. Here's a clip.

Most Canadian films and non-news...

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May 02, 2008

ExxonMobil's recent announcement of first quarter profits of $10.9 billion has prompted the predictable political demagoguery about "obscene" profits and the need for a new windfall profits tax. Exxon does not need our help to defend itself against such charges but I remain amazed that none of the major news outlets have highlighted the fact that these are net profits, meaning profits after taxes.

If reporters were to dig just a bit deeper into the company's earnings...

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May 02, 2008

Amazon has filed suit in New York state court seeking to invalidate the recently passed "Amazon tax", which requires any out-of-state online retailer collect sales tax on purchases if the business does at least $10,000 worth of business with in-state affiliates, even if it has no property or employees in the state.

...

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May 02, 2008

Using data on who owns shares in U.S. oil companies combined with household financial data in the Survey of Consumer Finances, the Tax Foundation has done a distributional analysis of the proposed gas tax holiday and windfall profits taxes. Note that the report shows how the estimated savings from a gas tax holiday under both assumptions: (1) that the tax cut is merely capitalized into higher prices for gasoline (the economists' consensus) and (2) that...

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May 01, 2008

Today's Politico had a story detailing how the National Association of Home Builders yields excessive influence in the tax policymaking process, seeking to have resources flow its way at the expense of economic efficiency. 

The nation’s home builders are switching lobbying tacks as the industry seeks relief from the mounting housing crisis.

The National Association of Home Builders announced...

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May 01, 2008

We present to you the worst of the gas tax and windfall profits tax debate:

(1) “Barack Obama doesn’t understand the effect of high gas prices on the American economy,” McCain spokesman Tucker Bounds said in a statement. “Sen. Obama voted for a gas tax reduction before he opposed it, he has no plan for relief from record-high gas prices for Americans this summer and he’s the empty-tank candidate in this race.

On the issue of the gas tax holiday,...

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May 01, 2008

Here's the logic of our elected representatives in Congress when it comes to taxing profits:

Oil companies are benefiting from the higher price of an asset (oil), some of which is driven by speculation. So the proper policy prescription is to impose a special windfall profits tax on them during that boom period.

Home builders benefited from the high price of an asset (housing), some of which was driven by speculation. So the proper policy prescription is to allow them to ...

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April 30, 2008

Yesterday, Democratic presidential candidate Hillary Clinton made the following statement in support of her windfall profits tax on oil companies to finance a temporary gas tax holiday:

“We will pay for it by imposing a windfall profits tax on the big oil companies. They sure can afford it."

They can afford it? What...

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April 30, 2008

In testimony before the governor's tax commission in Jackson, Mississippi, experts from the Pew Charitable Trust and the Tax Foundation agreed that taxes on phone companies are a terrible burden on the companies and their customers.

Every new service the hyper-competitive phone companies offer spawns a new tax that is grafted onto old taxes left over from when Ma Bell was our one monopoly phone company.

Just today we received a...

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April 29, 2008

In May, the U.S. Supreme Court will decide whether to hear the case of Centerior Energy Corp. v. Mikulski, an appeal from a lower court decision opening the door to fragmented state-by-state interpretations of the U.S. tax code. The Tax Foundation has filed a friend of the court brief urging the Court to take the case, which raises the question of whether taxes paid to the government can be recovered from a business instead of from the IRS.

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April 29, 2008

For the second time this month, a major British firm announced that it will reincorporate in Ireland to lower its tax bill. United Business Media (UBM) joined the pharmaceutical company Shire in the exodus of UK firms seeking relief from the country's 28 percent corporate tax rate—which is low compared to the 39.4 percent overall rate in the U.S., but is high by E.U. standards. Ireland's corporate tax rate is currently the lowest in Europe at 12.5 percent.

The common trait...

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April 29, 2008

In suburban Chicago, some enterprising retailers are encouraging taxpayers to spend their stimulus payment checks in their shops:

About 75 merchants in Geneva's downtown area along and off State Street are looking for you to visit them today and Sunday.

If you do, they'll pick up the sales tax on your purchases.[...]

"Everybody is...

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April 28, 2008

As Senators Obama and McCain spar over whether a temporary gas tax suspension is a "solution" or a "scheme," the Bloomington Pantagraph has an editorial pointing out the often-ignored problems with temporary tax suspensions:

Members of the Illinois Senate seemed to be thinking more...

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April 28, 2008

Tax Foundation Chief Economist Patrick Fleenor has written an op-ed in the Boston Globe on cigarette taxes and smuggling:

Massachusetts is awash in bootleg cigarettes.

High state cigarette taxes have turned packs of cigarettes into pots of gold for criminals, spawning a massive black market supplied by...

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