The Tax Policy Blog

May 28, 2014

This week, the Citizen’s for Tax Justice released a report titled “American Corporations Tell IRS the Majority of Their Offshore Profits are in 12 Tax Havens.” According to their analysis of IRS data, they found that U.S. controlled foreign corporations only paid an effective tax rate of 7 percent on their foreign earnings in 12...

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May 28, 2014

The House Ways and Means Committee will markup a permanent extension of bonus depreciation on Thursday. Permanently extending bonus depreciation would spur investment, lift wages, grow the economy, and increase federal revenue.

What you need to know about bonus deprecation:

  • ...
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May 27, 2014

This week, residents of Virginia seeking to stock up on hurricane supplies are believed to be in luck: Virginia’s Hurricane Preparedness Tax Holiday is in full swing. From May 25-31, the purchase of certain items deemed “needed for hurricane preparedness” by the Old Dominion are exempt from the state’s sales tax. The annual tax holiday is promoted by state policymakers as a means of encouraging...

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May 27, 2014

The House Ways and Means Committee will consider this week a permanent extension of 50 percent bonus expensing. Also known as bonus depreciation, bonus expensing allows all businesses to immediately deduct (expense) 50 percent of investment in equipment and software. Bonus expensing expired at the end of last year, along with a slew of other “tax extenders,” and since then businesses have been operating under the normal...

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May 27, 2014

Public Law 110-343 is most famous for the Troubled Asset Relief Program (TARP) and the Emergency Economic Stabilization Act of 2008. However, it also included some other provisions – ones that did not inspire heated debate at the time.

The Heartland Disaster Tax Relief Act of 2008 was designed to provide disaster relief to those...

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May 27, 2014

Politico reports that the House Ways and Means committee will take up bonus depreciation this week as part of their tax extenders markups. This is good news.

In the absence of comprehensive tax reform, the next best option to create jobs, increase wages, and grow the economy is a permanent extension of bonus depreciation.

Bonus...

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May 27, 2014

The North Carolina House last Wednesday passed a bill that applies an excise tax to electronic cigarettes at a rate of 5 cents per milliliter of nicotine liquid. The tax has been opposed by some notable entities, but was “essentially asked for” by...

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May 27, 2014

In 1898, the United States went to war with Spain and enacted an excise tax on telephone service to help pay for it. Repealed in 1902, re-enacted in 1917, repealed in 1924, and re-enacted in 1932, the tax was “temporarily” extended a further 29 times until it was made permanent in 1990.

In all other respects, the substantive provisions of the federal excise tax on telephone service has not changed since 1966. The tax is imposed on (1) local telephone service, (2) long-distance...

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May 27, 2014

The U.S. Supreme Court has announced that it will hear the appeal in Comptroller v. Wynne, on whether states must provide a credit against its own taxes for taxes a resident pays to another state. Maryland allows such a credit against its state income tax but not against its local county and city income taxes.

The taxpayers in the case, Mr. and Mrs. Wynne, owned 2.4 percent of a company doing...

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May 23, 2014

The Treasury Inspector General for Tax Administration released last week a report detailing the discrepancies between alimony deductions taken and alimony income received. 567,887 tax returns recorded an alimony deduction in 2010, with those deductions totaling over $10 billion. In other words, this deduction is reasonably substantial.

What Treasury found was that 47% of the alimony deductions...

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May 23, 2014

Gary Leff of the View from the Wing blog digs into hints that something is coming soon from the IRS on taxation of loyalty points. Currently, airline and hotel companies award miles and points to their customers and record it on their books as a liability....

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May 23, 2014

After my series on interstate migration ended last week, I received a number of questions from people curious about a few points I made. One in particular was noteworthy: if people migrate to improve their incomes, why do people seem to leave high-...

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May 22, 2014

The Washington Post’s Wonkblog has a new post today titled The ‘1 Percent’ isn’t America’s biggest source of inequality—college is. In reviewing a new research paper, the author reports a major driver in inequality is the increasing benefits of a college education, stating that in the past 35...

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May 22, 2014

U.S. headquartered corporations pay an effective tax rate of 27.2 percent on income earned in foreign countries. Not surprisingly, this rate varies widely by industry.

The petroleum and coal industry faces the highest effective tax rate on foreign earned income at 36.1 percent, with a reported $42.7 billion in taxes paid on $118.2 billion in taxable income. The mining industry has the second highest effective tax rate at 35.3 percent.

The industry with the lowest effective tax...

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May 21, 2014

In response to Pfizer and many other U.S. companies openly planning to leave the U.S. for tax reasons, yesterday Senator Levin introduced the Stop Corporate Inversions Act of 2014. Corporate inversions are where a U.S. company buys a smaller foreign company and takes its headquarters...

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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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