The Tax Policy Blog

February 11, 2015

President Obama recently presented his budget proposal for the 2016 fiscal year. The budget proposes $3.99 trillion in spending and $3.53 trillion in revenue for a deficit of $474 billion for 2016 and a number of new tax proposals.

In total, the plan includes $2.4 trillion in proposed tax increases offset by $713 billion in new...

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February 11, 2015

Inspired by Roosevelt’s New Deal in many regards, Senator Bernie Sanders (I-VT) recently outlined his vision for America, featuring expansionary government spending policies. A major federal jobs program, a hike in the minimum wage to at least $15, expansion of Social Security, Medicare, Medicaid, increased regulation of Wall Street, and protectionist trade policies are examples of initiatives Sanders emphasized. However, Sen....

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February 10, 2015

I have long maintained a skepticism of the ridiculous “wonk” hobby of obsessing over “Jobs Day.” The first Friday of every month, the Bureau of Labor Statistics releases a report on the employment situation in the country.

I am still skeptical. The cultural phenomenon of "Jobs Day," as practiced by economic journalists - where people obsess over small granular details that are likely to be revised substantially anyway...

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February 09, 2015

WMATA, the subway and bus system in the DC area, raises fares every other year (last year, they went up about 3 percent). In the off years, spending still goes up, so they seek additional subsidies from their member jurisdictions (the District of Columbia, Maryland, and Virginia). For FY 2016, Metro in November suggested that the members ante up $929 million in tax dollars as operating subsidies, a...

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February 09, 2015

In my recent report on personal income, I made sure to devote a section to the role that pensions, annuities, and IRAs play as a substantial source of income for the middle class. In 2012, taxpayers reported a total of $612 billion from pensions and annuities, and another $231 billion in IRA distributions.

I claimed that this income is often forgotten in analysis of income data, so I wanted to give an example of...

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February 09, 2015

In the United States, most businesses are not C corporations. 95 percent of businesses are what are called pass-through businesses. These businesses are called pass-throughs because their income is passed directly to their owners, who then need to pay individual income taxes on it. Contrast this with C corporations that need to pay the corporate income tax on its income before it passes its earnings to its owners. Combined, pass-through businesses employ 55 percent of all private-sector...

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February 09, 2015

Today’s map is from our report released today on cigarette smuggling rates across the states. In it, we find that large differentials in cigarette taxes across states create incentives for black market sales. Smuggled cigarettes make up substantial portions of cigarette consumption in many states, and greater than 20 percent of consumption in 15 states.

...

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February 06, 2015

Ways and Means chairman Paul Ryan communicated a clear message at the Washington International Trade Association on Thursday, in what was his first major public address on trade: The U.S. needs to get back in the driver’s seat. Highlighting the critical role of trade for the strength of the U.S. economy, Ryan stated his highest priority is to complete the many trade agreements the U.S. is currently...

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February 05, 2015

This post originally appeared as an op-ed on Forbes here.

Indiana has made notable strides in improving its tax climate in recent years. In 2011, the state started a phase down of its corporate tax rate from an uncompetitive 8.5 percent to what will in 2021 be the third lowest corporate rate in the country, 4.9 percent. In 2013, Governor Mike Pence...

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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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