The Tax Policy Blog

June 11, 2014

The New York Times’ The Upshot uses Dave Chappelle’s recent appearance on the “Late Show with David Letterman” as an opportunity to discuss the need for high top marginal tax rates.

From The Upshot:

"'So I look at it like this,” Mr. Chappelle said. “I’m at a restaurant with my wife. It’s a nice restaurant. We’re eating...

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June 11, 2014

This week, Americans for Tax Fairness, released a report on how much they believe the U.S. government would lose in revenue over 5 years if Walgreens were to merge with a Swiss company and move their headquarters to Switzerland.

The report claims that the deal would save Walgreens $4 billion in taxes over five years it would have to pay to the U.S. government, but it worries that Walgreens “would continue to take full advantage of all the benefits it gets from operating in America,...

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June 11, 2014

Back in April, I wrote that progressive tax proposals in Illinois had “stalled.” Failing to reach the vote threshold needed to get a constitutional amendment on the ballot for this November, it was widely assumed that progressive tax plans were probably over for this session. However, advocates of a progressive...

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June 11, 2014

This is big. The Taxpayer Bill of Rights may initially strike you as a meaningless gimmick. But Nina Olson, the National Taxpayer Advocate, has been pressing for it since 2007. She explains that taxpayers often don’t know what rights they have before the IRS, and the IRS is often ignorant of the rights taxpayers have before them. My own addition is that much as requiring police to...

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June 10, 2014

Representative Stephen Lee Fincher (R-TN) introduced a bill that would permanently extend the state and local general sales tax deduction. This deduction is part of the “extenders package” and expired at the end of 2013.

Under current law if a taxpayer itemizes, they are able to deduct the income taxes they paid to state and local governments. For instance, if a taxpayer had an AGI of $70,000 and paid $1,000 in taxes to their state and local governments (sales or income), they could...

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June 10, 2014

This week’s map is the adoption years of state individual income taxes. This information isn’t widely available on the internet, but we happened to have it in our archives in the 1994 edition of Significant Features of Fiscal Federalism, produced by the Advisory Commission on Intergovernmental Relations.

We’ve organized the states by decade here, and you can see that the most active one was the 1930s, where western states enacted the tax as an...

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June 10, 2014

Did you know there is a federal tax on archery equipment? Maybe not; IRS Form 720 is not a form most taxpayers are familiar with. It is the form for federal excise taxes, and it is only filed by those taxpayers - usually businesses - responsible for collecting the excise taxes. The most important use for Form 720 is for businesses that distribute various kinds of fuel; however, it has a motley array of other...

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June 10, 2014

Japan has been implementing some substantial economic reforms lately. This year might be a good experiment in tax policy, where a country trades an increase in one sort of tax for a decrease in another.

The tax hike happened earlier this year. As of April 1st, Japan's sales tax has risen from 5% to 8%. In the quarter prior to the tax increase, the growth was rate was extremely high. After revisions, the Cabinet...

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June 10, 2014

In a recent column, Larry Kudlow says a great way to grow the economy is to cut the corporate tax rate, or maybe even get rid of it:

Readers know that corporate tax reform is my single-favorite pro-growth policy. Actually, I’d like to abolish the corporate income tax altogether — including all the cronyist, big-government special favors,...

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June 09, 2014

The Rhode Island House Finance Committee approved a budget Thursday night which includes notable changes to the corporate tax rate and structure, the estate tax exemption, and transportation policy. At $8.7 billion, lawmakers say the 2014-15 fiscal year proposed budget would eliminate the current $67 million gap. The...

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June 09, 2014

Norway is an outlier among the 34 Member countries of the Organization for Economic Co-operation and Development (OECD) in one, interesting respect. Norway collects an equivalent of 10 percent of their GDP in corporate taxes, relying on these taxes for 25 percent of the country’s total revenue. This is compared to the OECD average corporate tax revenue of 3 percent of GDP and just under 9 percent of total tax revenue. Norway’s striking revenue statistic...

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June 09, 2014

Last week, the Institute for Policy Studies and Americans for Tax Fairness released a joint report claiming that "taxpayers subsidize much of the cost of Wal-Mart's executive pay." The news media ran with the taxpayer subsidizing Wal-Mart executives storyline, even though the use of the term "subsidy" is mostly sensationalistic.

Ordinarily, corporations (like any business) are able to deduct labor costs in...

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June 09, 2014

IRS Publication 17, which helps taxpayers determine how to report their income, is extremely detailed. Its section on "Other Income" has some of the most fascinating sorts of income you are obligated to report. Here are three that stand out:

            Bribes. If you receive a bribe, include it in your income.

Illegal activities. Income from illegal...

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June 06, 2014

In 2005, Congress created a large omnibus tax bill called the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA.) Like most large tax bills, it had some actually-important provisions, like its two-year extension of President Bush’s reduced rate on capital gains.

However, like most large tax bills, it had some trivial and weird provisions as well. One of these provisions was a small, barely-noticeable change to the foreign housing exclusion.

The foreign housing...

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June 06, 2014

Last month, Cleveland voters renewed county taxes on a variety of "sin" products (4.5 cents per pack of cigarettes, 1.5 cents per 12-ounce bottle of beer, 6 cents per 750-milliliter bottle of wine, 32 cents per gallon of mixed beverages, 24 cents per gallon of cider and $3 per gallon of hard liquor) that fund local sports stadiums for the Browns, Cavaliers, and Indians....

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