The Tax Policy Blog

January 21, 2016

If you’re a business owner or self-employed, you’ve probably noticed that the U.S. tax code has different rules for investments than it does for most other business expenses.

Usually, when a business spends money on an “ordinary and necessary” expense – like office rent, heating costs, and postage stamps – it is able to deduct the cost in the same tax year. However, when a business spends money on investments – such as machinery, buildings, or even farm animals – it is usually...

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January 20, 2016

This week, Senator Orrin Hatch (R-UT) announced that he is working on a plan to eliminate the double taxation of corporate income, according to Politico Pro. He hasn’t released any details, but he said he is thinking about allowing corporations to deduct the dividends they pay to shareholders. There are many benefits of corporate integration: it equalizes the treatment of debt and equity financed investment, it lowers the cost of capital, and moves towards treating all business forms...

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January 20, 2016

State tax discussions generally focus on two variables: the amount that a state collects in revenue, and the various marginal rates of taxation that a state charges. There is a third important factor to consider: a state’s tax burden. Tax burdens measure the percentage of total income that goes to taxes. Our new report, State-Local Tax Burden Rankings, calculates the tax burden for each state.

The...

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January 15, 2016

A new NBER working paper discusses the effects of corporation taxation on corporate risk-taking. The researchers find that corporations respond to tax increases by investing in fewer risky projects. Interestingly, they did not find that tax cuts incentivized corporations to increase their appetite for risk. They attribute this counterintuitive result to a set of shareholder constraints, which reduces a corporation's ability to assume...

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January 14, 2016

This week, Congressman Devin Nunes (R-CA) introduced the “American Business Competitiveness Act” (H.R. 4377). This plan would reform the business tax code. It basically enacts a cash-flow tax for businesses, which would greatly simplify the calculation of tax and would make the code much more pro-growth.

Details of the plan:

  • Cutting the corporate income tax to 25 percent;
  • Limiting the top tax rate on non-...
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January 14, 2016

In recent speeches and on his website, presidential candidate Marco Rubio has criticized rival Ted Cruz’s tax plan for its business flat tax. As we have explained in our analysis of the plan and in a...

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January 14, 2016

The sixth Republican presidential debate is already upon us, and the candidates are again expected to focus on business and the economy. Tax policy has been a driving topic in these debates, and several of the candidates have issued comprehensive tax reform plans. But, no soundbite or debate response can capture all of the details of candidates' plans, so if you’re looking for more information, our detailed analyses can fill the void.

Throughout the race, our economists have used our...

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January 14, 2016

As the dust settles from the recent Congressional tax and spending negotiations, policymakers and taxpayers are beginning to sort through the 887-page bill to figure out what it will mean for the 2016 tax year and beyond. Some of the provisions buried in the tax bill will have interesting consequences that have yet not been explored. For instance, one section of the bill that has not yet received...

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January 13, 2016

General Electric (GE) is expected to announce on Thursday that it is relocating its corporate headquarters from Connecticut to Boston. The move follows a contentious fight...

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January 13, 2016

Sooner or later, there will be at least forty-five big winners of the current Powerball game, and forty-four of them are already known. That’s because only about half of Powerball ticket revenue is returned in the form of prizes—like that $1.5 billion jackpot, but also including a range of...

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January 12, 2016

Update: The Powerball jackpot increased to $1.6 billion before the drawing, with a cash equivalent of $983.5 million. That increases the federal withholding amount to $246 million with another $144 million due when the winners file their tax returns. The winners are in located in California, Tennessee, and Florida, three states that do not tax lottery winnings. This leaves a true...

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January 11, 2016

The European Commission handed down a ruling to Belgium on their excess profit tax exemption today. The Commission concluded that the tax rule under article 185§2 of the Belgian tax code violates state aid rules under article 107(1) of the Treaty on the Functioning of the European Union (TFEU). The ruling requires the Belgian...

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January 11, 2016

Nearly every year, for over a decade, Congress has scrambled at the last minute to renew the tax extenders – dozens of temporary, constantly-expiring tax breaks for individuals and businesses. Now, the latest tax bill passed by Congress may put the saga of the tax extenders to rest once...

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January 08, 2016

Yesterday afternoon I spoke on a panel in Austin, Texas at the Texas Public Policy Foundation’s annual policy conference. The panel was on what makes a competitive tax code, and of course, Texas’ tax code has a lot of desirable elements. The state ranks 10th overall in our State Business Tax Climate Index, and going without an individual income tax is a major contributor to why the state scores so well.

What holds the state back, though, is its franchise tax, most commonly...

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January 08, 2016

This week Dr. Ben Carson released his tax plan. His plan would replace the current income tax code with a 14.9 percent flat tax on wage income and 14.9 percent tax on corporate income with the first 150% of the federal poverty level of wages exempt from taxation. It would eliminate taxation on capital gains, dividends, and interest income. All businesses would be able to fully expense capital investments and the estate tax would be eliminated. It would also eliminate a number of other taxes...

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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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