The Tax Policy Blog

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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June 06, 2014

An article from the Austin American Statesman has been making the rounds lately, discussing how property values in Austin have risen precipitously, and thus taxes have risen too. Property taxes form the lion’s share of taxes for Texan local governments, so tend to be a...

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June 05, 2014

Early this week, the Robert Wood Johnson Foundation touted a new study which found that taxing a sugary drink based on the amount of calories it contains rather than its size would be more effective in reducing caloric consumption.

According to the study, a .04 cent per-calorie tax on sugary drinks would reduce beverage-based calorie...

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June 05, 2014

The U.S. Public Interest Research Group (USPIRG) and the Citizens for Tax Justice (CTJ), have released a report called “Offshore Shell Games 2014,” which claims that Fortune 500 companies use more than one thousand subsidiaries in foreign countries in order to avoid U.S. corporate taxes. It also claims that the average effective tax rate of 55 corporations was under 10 percent on their foreign...

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June 05, 2014

Earlier this week, the Environmental Protection Agency outlined a new plan to reduce carbon emissions. This “Clean Power Plan” is based on what is, for the EPA's CO2-related initiatives if not for other pollutants, a new strategy: outlining broad state-level goals for reducing emissions-per-megawatt hour of electricity, instead of regulating power plants directly. This “...

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June 05, 2014

Sometimes IRS publications go to unexpected places:

Kidnapped child.  You may be able to treat your child as meeting the residency test even if the child has been kidnapped. See Publication 501 for details.

This comes across awkwardly, to say the least. In response to a kidnapping, the best condolences the IRS can offer are that your son or daughter may still count...

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June 05, 2014

Last Thursday, state lawmakers in North Carolina passed legislation building upon the comprehensive tax reform passed in the Tar Heel State last year, notably eliminating all municipal privilege taxes and reforming the treatment of net operating loss carryforwards in the corporate income tax code. Just hours after it was approved by the legislature, Governor Pat McCrory ...

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