The Tax Policy Blog

February 05, 2015

This week the President released his fiscal year 2016 budget. One of the major changes to the tax code in the budget is its alteration of the U.S.’s international corporate tax system.

As we wrote earlier this week, it represents a significant change to how U.S. corporations will pay taxes to the United States on their foreign income. Currently, U.S. corporations are required to pay taxes to the U.S. government on their worldwide income. However, they are able to defer the U.S....

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February 05, 2015

For this week's tax map, we're continuing our series on pass-through businesses. For the first map of the series, check out our two previous maps (here and ...

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February 03, 2015

One key takeaway from today’s Bloomberg BNA Tax Reform Outlook 2015 conference is that odds for reform of the U.S. tax code may be less favorable after President Obama released his 2016 budget. While comprehensive tax reform—including both individuals and businesses—might not be feasible in the near future, the president’s proposal for international tax reform will not...

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February 03, 2015

The European Commission announced today that it will open an in-depth investigation into a Belgian tax provision known as the "excess profit" tax rule. The commission charges that the provision is not available to stand-alone companies due to its structure. As such, the provision unduly benefits multinationals and violates principles of a competitive single market.

Belgian tax authorities argue that the excess...

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February 03, 2015

This week, President Obama released his fiscal year 2016 budget. Among the tax increases he previously announced, he has proposed several tax changes that will affect U.S. multinational corporations that operate overseas. Although the proposal would lower the corporate income tax rate to 28 percent, it would eliminate the deferral of domestic taxation of foreign income and enact a foreign minimum tax of 19 percent (with an allowance for corporate equity). The plan would also toughen many...

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February 03, 2015

The President’s budget has a proposed increase in the federal capital gains tax rate.

Under current law, the federal tax rate is 20 percent plus a 3.8 percent net investment tax. State and local governments in the United States also levy income taxes on capital gains as low as zero in states with no income taxes to as high as 13.3 percent in California. Combined, this leads to top marginal tax rates as high as 33 percent in California. The average tax rate across all states under...

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February 02, 2015

Part of the President Obama’s fiscal year 2016 budget is a 14 percent tax on foreign corporate income currently reinvested overseas. This proposal would retroactively tax income being held offshore in order to fund more than $400 billion in new infrastructure spending.

Retroactive taxation, such as the president’s deemed repatriation proposal, is bad tax policy. It is unfair to taxpayers, brings instability to the tax code, and could hit some cash-strapped corporations hard....

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February 02, 2015

One thing I notice about the debates on both tax policy and income inequality is that a lot of people seem to have relatively hazy ideas about how income is earned in America, and how much of each kind of income there is. For example, if someone is earning $300,000 a year, where is their income likely to be coming from? How much revenue is drawn from capital gains taxes? And how is income distributed between corporate shareholders and workers? People don't tend to have very strong priors...

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January 30, 2015

The Washington Post yesterday posted an editorial opposing the repeal of the Affordable Care Act’s medical device tax, on the grounds that it would constitute “caving in to special interests.”

That view of the situation is deeply troubling in a number of ways, and I feel especially compelled to comment on it...

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January 30, 2015

This post originally appeared as a Forbes op-ed here.

Ohio tax policy needs a lot of work, and Governor John Kasich talks about it a lot. The state ranks 44th in the Tax Foundation’s State Business Tax Climate Index, the municipal income tax system is...

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January 29, 2015

This afternoon, Nevada Governor Brian Sandoval proposed restructuring the state's existing $200 annual Business License Fee into a quarterly graduated tax that is calculated based on a business's total revenue and industry. In the proposal, there are 30 possible industry classifications and 67 possible options for each (based on total revenue), amounting to 2,010 possible rates. 

Below are details provided by the Governor's Office:...

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January 29, 2015

As President Obama prepares to roll out another tax increase proposal targeting capital gains and dividends, it’s instructive to look at what happened the last time he did that. Fortunately, the IRS just released preliminary data on tax year 2013, the year the top tax rate on capital gains and dividends went from 15 percent to 23.8 percent. The fiscal cliff deal raised the top rate to 20 percent and the...

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January 28, 2015

The Obama Administration yesterday backed down from its plan to tax the earnings on 529 savings accounts, a kind of saving account for higher education under section 529 of the tax code. At Bloomberg, Richard Rubin and Mike Dorning report: "A White House official, speaking on condition of anonymity, said the issue had become a distraction from the president’s...

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January 27, 2015

For this week's tax map, we're continuing our series on pass-through businesses. For the first map of the series, check out our map from last week

Sole proprietorships, S corporations, limited liability companies (LLCs), and partnerships are also known as pass-through businesses. These entities are called pass-throughs, because the profits of these firms are passed...

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January 26, 2015

The Congressional Budget Office (CBO) has released its 2015 to 2025 Budget and Economic Outlook. In this yearly publication, the CBO examines current laws (taxes and spending) and projects the outlook for the federal government’s budget for the next 10 years.

One of the topline projections the CBO makes is the budget deficit. This measures the difference between federal government spending and federal tax revenues (a higher deficit...

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Subscribe to Tax Foundation - Tax Foundation's Tax Policy Blog The Tax Policy Blog is the official blog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.

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