The Tax Policy Blog

May 14, 2015

The ability to foresee that some things cannot be foreseen is, as Rousseau once observed, a very necessary capacity. Several states learned that lesson with regard to capital gains revenue during the last recession—but can Washington State benefit by their example?

I’ve written previously about Washington State’s budget debate, as Governor Jay Inslee (D) and his legislative allies seek...

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May 14, 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 30.0 percent of their total general revenues from transfers from the federal government in the 2013 fiscal year.

That number varies pretty widely for specific states, however. For example, Mississippi obtained 42.9 percent of its total state general revenues from the federal government (the largest...

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May 14, 2015

Dhammika Dharmapala is a Professor of Law at the University of Chicago Law School.

Professor Dharmapala is recognized as one of the leading experts on profit shifting, through his innovative research on the magnitude of profit shifting and his recent survey of the empirical profit shifting literature.

Professor Dharmapala’s research has been published in leading journals in the fields of law, economics, and finance...

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May 13, 2015

Yesterday I published a report on the way airports are funded. I believe the Passenger Facility Charge (PFC) - a fee passengers pay to help build airport improvements - is the best means of funding, and I chose to weigh in because there has been a lot of debate over it recently.

In any...

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May 12, 2015

Mihir Desai is the Mizuho Financial Group Professor of Finance at Harvard Business School and a Professor of Law at Harvard Law School.

An authority on tax policy, international finance, and corporate taxation, Professor Desai has on multiple occasions testified before the U.S. Congress on matters pertaining to corporate and international taxation. Professor Desai’s research on tax policy in a globalized economy...

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May 12, 2015

Kimberly Clausing is the Thormund A. Miller and Walter Mintz Professor of Economics at Reed College. A leading researcher on international taxation and tax avoidance, Professor Clausing has throughout her scholarly career consistently explored areas related to corporate taxation, multinational firms’ tax avoidance, and the profit shifting phenomenon. In particular, her estimates of the revenue effects of profit shifting have been...

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May 12, 2015

Making Sense of Profit Shifting is the 2015 and inaugural edition of Tax Foundation Forum, an annual interview series that aims to advance and cultivate a more informed discussion of a tax policy topic. Tax Foundation Forum aggregates the latest research and thinking through a set of interviews with leading scholars, policy experts, and practitioners.

With its focus on the profit shifting phenomenon, this year’s edition of Tax Foundation Forum...

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May 12, 2015

The National Federation of Independent Business released its latest survey data on the sentiment of small business owners. The results are always worth a look. I wouldn't recommend taking every opinion in it as gospel; business owners are but one type of contributor to the economy, and the perspectives of others are valuable in understanding the economy as well. But it has many great, long-running data series on the...

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May 11, 2015

The current tax code is heavily biased against saving and investment. One way to limit this bias would be to create universal savings accounts where income that taxpayers save would face only one layer of taxation.

Currently, a dollar can face up to four layers of taxation when all is said and done: 1) it’s taxed when you earn it and pay an income tax; 2) it’s taxed when a business you invest in earns a profit and pays a business income tax; 3) it’s taxed when you realize returns to...

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May 11, 2015

Senators Mitch McConnell (R-KY) and Rand Paul (R-KY) have introduced a bill that would change the tax treatment of interest for bourbon producers. According to the Senators, “This legislation will not only put Kentucky’s Bourbon industry on a level playing field with its competitors, but it is a pro-growth measure that will also help...

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May 08, 2015

In February 2009, the President signed into law a bill that included a large increase in federal excise taxes on tobacco. The biggest change in excise taxes was the more-than-doubling of the tax on cigarettes, from $0.39 per pack to $1.01 per pack. The tax increase was designed to help pay for the cost of children's health insurance under the State Children's Health Insurance Program (SCHIP.)

Initially, revenues more...

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May 08, 2015

On Wednesday, the North Carolina Legislative Services Office issued a revised revenue forecast showing a $400 million surplus over expectations (coverage at State Tax Notes).

In 2013, the state enacted...

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May 06, 2015

In commemoration of National Small Business Week, we are covering some facts on U.S. businesses.

Most small businesses are pass-through businesses. A pass-through business is a type of business where the owner pay the tax on his or her individual income tax return.

According to 2011 Census data, pass-through businesses employ 55.3 percent of the private sector work force of 119 million...

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May 06, 2015

Michigan voters have resoundingly defeated Proposal 1, a tax package designed to raise an additional $2 billion a year, largely through sales and gas tax increases. Our pre-election analysis of the ballot initiative can be found here.

As of this...

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May 05, 2015

This week is National Small Business Week. From the U.S. Small Business Administration (SBA) website:

“Every year since 1963, the President of the United States has issued a proclamation announcing National Small Business Week, which recognizes the critical contributions of America’s entrepreneurs and small business owners.”

Small businesses are important to the U.S. economy. According to the SBA, “more...

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