The Tax Policy Blog

January 16, 2015

On May 5, Michigan voters will go to the polls to consider a constitutional amendment raising the state sales tax from 6 to 7 percent and trigger the enactment of a broader tax and spending modification package designed to raise an additional $1.7 billion a year for transportation, education, and low-income supports.

While most...

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January 15, 2015

Marginal tax rates are usually thought of as being about income – or perhaps about a specific type of income, like wages. And the structure of them is usually thought of as “if I earn a dollar more, my tax liability will increase.” Naturally, this concept means that taxes have some effect on peoples’ economic decisions.

This idea is a useful one in tax policy, but it can become an even more useful one once you start to relax the definitions a little bit. The basic structure of the...

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January 15, 2015

Last year, New York State made some exciting changes to its corporate income tax code (we outline them all here). Among them were the elimination of two tax bases, a rate reduction from 7.1 percent to 6.5 percent, merging of the duplicative bank tax into the general corporate tax, and restructuring of Net...

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January 15, 2015

Corporations have received a lot of scrutiny for their tax planning strategies, but what about shareholders? An article in yesterday’s Wall Street Journal sheds light on some of the planning techniques that are used to avoid high dividend taxes:

...

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January 15, 2015

This week, Representative Chris Van Hollen (D-MD) introduced a series of tax proposals aimed at redistributing income by cutting taxes for middle-and lower-income taxpayers and raising them on businesses and high-income taxpayers (Read more about it here). One of the revenue raisers/mechanisms by which this plan would increase after-tax income of low- to middle-income taxpayers is to...

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January 14, 2015

One particularly salient feature of the Representative Chris Van Hollen’s new tax plan – a feature that is, frankly, not so good – is the 0.1% financial transaction tax.

Simply put, financial transactions are a very poor tax base. For one thing, it results in “pyramiding:” taxing the same economic activity many times. For another, economists generally think of trades as highly-...

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January 14, 2015

One quarter of the European Parliament voted to form a committee of inquiry on tax evasion today. The 188 MEPs met the threshold needed for the Parliament’s president, Martin Schulz, to start the committee.

Committees of inquiry are meant to investigate breaches or poor application of law in the EU. This committee will be tasked with investigating the tax agreements between Luxembourg and multinational corporations (...

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January 13, 2015

This week, Representative Chris Van Hollen (D-MD) spoke at a Center for American Progress event. At this event he outlined a new tax plan that he says will boost the after-tax income of low- and middle-income taxpayers and raise taxes on high-income taxpayers.

“Today, I am proposing policies that will raise wages, increase personal savings, and grow the economy. These policies are on top of the tax relief and tax fairness...

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January 12, 2015

The Treasury Inspector General for Tax Administration released a report on Earned Income Tax Credit Compliance. According to the report, the credit still faces a higher error rate.

“The IRS’s Fiscal Year 2013 EITC improper payment report to TIGTA estimates that in Fiscal Year 2013, EITC claims totaled approximately $60 billion and that 24 percent of the EITC payments were paid in error.”

A 24...

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January 08, 2015

Many expats have moved to Spain, lured by inexpensive housing and a mild climate. The struggling Spanish housing market has offered good deals and bargaining opportunities in prime vacation and retirement areas.

The bargain-seeking foreigners may have gotten a deal on the house but not on the taxes. The cash strapped Spanish government has declared that the property sales tax, known as...

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January 08, 2015

Earlier this week Noah Smith on Bloomberg View criticized the concept of Tax Freedom Day calling it “hogwash.”

His main complaint is that Tax Freedom Day does not take into account the incidence of taxation. He claims that because the incidence of taxation may fall on other people besides you, you don’t really pay all of the tax. Additionally, he thinks because taxes pay for services, they...

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January 08, 2015

Though taxes are the most common and recognizable source of state government revenues, it's important to remember that they're not the only source. In fact, state governments received 31.5 percent of their total general revenues from transfers from the federal government in the 2012 fiscal year.

That number varies pretty widely for specific states, however. For...

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January 08, 2015

One thing that the incoming Congress will need to address soon is the state of the Highway Trust Fund, which will run out of money sometime this year. Readers may be curious why this seems to be a perennial issue. Everyone is always talking about the Highway Trust Fund, and the issue never seems to go away.

The reason for this is simple; Congress doesn’t make permanent fixes to the problem. The most recent ...

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January 08, 2015

It’s worth remembering that the tax extender compromise approved three weeks ago is already expired again.

The “extenders,” tax provisions that are approved on a haphazard temporary basis, were last month approved retroactively only for 2014, leaving their 2015 status in doubt. Taxpayers, including small businesses with expansion plans, will need to plan around deciding whether some of these provisions...

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January 07, 2015

H&R Block expects a lot of new business from the Affordable Care Act – and that is, of course, a bad thing.

Simply put, while taxes take away money and resources from the private sector economy, tax preparation also takes away money and resources, in a way that is just as real.

Because of the Affordable Care Act, more Americans will spend their time dealing with Form 8965 (...

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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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