The Tax Policy Blog

July 11, 2014

Last week, Governor Chris Christie signed into law a $32.5 billion state budget for New Jersey – but not before using his line-item veto to cut back significantly on scheduled pension payments and strike down a pair of temporary tax increases.

The package of budget bills that originally landed on Christie’s desk included a millionaires’...

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July 11, 2014

A capital gain occurs when you purchase an asset—usually a company’s stock—and later sell it at a profit. For example, you purchase a stock at $100 and in a year you sell this stock for $150, your capital gain is $50. Under current law, this capital gain is taxed as income, but at a reduced rate (top rate of 23.8 percent top rate).

The classification and taxation of capital gains as income is based on the “Haig-Simons” definition of income. This defines income as consumption plus...

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July 11, 2014

This week’s map takes a look at when each state adopted its sales tax. The trend began with Mississippi in 1930 and continued rapidly throughout the Great Depression – a crisis which left states strapped for cash amidst declining property and income tax collections. By the end of the 1930s, 22 states had implemented a sales tax. Six states and the District of Columbia joined on in the 1940s, and five did so in the 1950s. The next decade brought twelve...

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July 10, 2014

This week Representative Cory Gardner (R-CO) will introduce a bill called the EARN act. This bill seeks to reduce the number of improper payments in the Earned Income Tax Credit (EITC) and use the savings to expand the credit for eligible taxpayers.

One of the biggest issues with the EITC is its high rate of error. From fiscal years 2003 to 2013, the rate of error—the percent of payments that were made to people not eligible, or overpayments to those who are eligible—accounted for...

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July 10, 2014

Last Wednesday, Governor of Connecticut Dannel P. Malloy (D) announced that the primetime game show Who Wants to Be a Millionare? had moved its production to Connecticut...

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July 10, 2014

California’s legislature voted this week to offer $420 million in tax incentives to Lockheed Martin in order to locate production of a new stealth bomber in California (specifically at Lockheed’s existing Palmdale facilities). The situation is complicated. Northrop Grumman and Boeing are competing for the rights to the $55 billion stealth bomber contract (Northrop Grumman currently...

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July 10, 2014

Rum, like all spirits, falls under a federal excise tax of $13.25 per proof-gallon. The federal tax revenue collected from rum produced in Puerto Rico, the U.S. Virgin Islands, or internationally is transferred to the governments of Puerto Rico and the U.S Virgin Islands. This transfer of revenue from the United States back to the location of production is called a “cover-over.”

Puerto Rico and the U.S. Virgin Islands each receive all of the revenue collected from rum produced in...

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July 09, 2014

The House is voting this afternoon (maybe this minute) on permanent bonus depreciation, which would allow all businesses to immediately expense 50 percent of investments in equipment and software with the remainder to be written-off according to the normal depreciation system. We have argued that expensing is ideal for investment and economic growth. Our simulations indicate that bonus depreciation...

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July 09, 2014

As of 2:30pm on July 9, 2014, Zack Danger Brown has amassed over $70,000 in pledges from donors using Kickstarter—a website that matches donors to projects—to make potato salad.

Nearly 5,000 backers from across the world have chosen Brown’s potato salad project, and tens of thousands of dollars will be dished to Brown on August 2. But once these funds...

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July 09, 2014

Senator John Walsh (D-MT) has reintroduced the Bring Jobs Home Act. The act would provide a tax credit for 20 percent of a firm’s costs incurred “bringing jobs back” to the United States (text here). Sen. Debbie Stabenow (D-MI) first introduced the act in 2012, though it ...

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July 08, 2014

This week the House will take up a bill that will permanently extend what is called “bonus depreciation,” or 50 percent expensing. 50 percent expensing was one of the over 50 “extender” tax provisions that expired at the end of last year.

50 percent expensing allows businesses to immediately write off, or expense, 50 percent of an investment in new equipment or short-lived structures. It does not apply to commercial or residential buildings or factories.

We find that...

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July 07, 2014

The U.S. House of Representatives is currently considering tax extenders, the renewal of expiring or recently expired tax provisions. Among other provisions, the House is considering a permanent extension of 50 percent bonus expensing, otherwise known as bonus depreciation.  This allows businesses to immediately deduct, or expense half of their investment in equipment and short-lived structures, unlike the current depreciation system that delays these deductions for years or decades.

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July 07, 2014

SB 2380, which substantially increases penalties for illegal cigarette sales in Rhode Island are now in effect after being signed by Governor Chafee. The legislation, signed into law last week, increases fines and imprisonment periods by as much as twenty times, and reclassifies violations as felonies. While such measures will discourage many potential criminals, they are not the most effective deterrent to...

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July 03, 2014

Washington Post columnist Catherine Rampell says “right now, the IRS desperately needs a champion.” Further, she says, “Our country’s fiscal future — not to mention taxpayers’ collective mental health — depends on it.”

Rampell is among a growing number of...

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July 03, 2014

Tax Foundation Economist Will McBride, PhD, and Fellow Michael Schuyler explain tax expenditures and the importance of saving and investment.

For more videos, click here, or ...

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Subscribe to Tax Foundation - Tax Foundation's Tax Policy Blog The Tax Policy Blog is the official weblog 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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