The Tax Policy Blog

July 16, 2014

This week’s map shows when each state adopted its gasoline excise tax. States began to adopt motor fuels taxes in 1919 (Oregon was first in February of 1919) and, by 1929, every state in the union at the time had one (Hawaii and Alaska implemented their taxes several years later, but prior to gaining statehood). Unlike many other major taxes, gasoline taxes spread with surprising speed and uniformity, covering the entire nation within a decade. The last holdouts in New York and...

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July 15, 2014

Governor Nixon (D) this week vetoed a Missouri bill that would have prohibited the sale of electronic cigarettes to minors, ostensibly because he was upset that the bill didn’t include new taxes on the products. The bill, SB 841, would bar sales to individuals under 18, continue to subject electronic cigarettes to the state and local sales...

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July 15, 2014

The CBO released their 2014 Long-Term Budget Outlook today. Here are a couple highlights:

  • Federal spending is projected to slowly increase over the next 25 years from 20.4 percent of GDP in 2014 to 25.9 percent of GDP in 2039.
  • Federal revenue collections is expected to increase over the same timeframe, from 17.6 percent of GDP in 2014 to 19.4 percent of GDP in 2039.
  • Over the same timeframe, marginal...
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July 15, 2014

A new paper from the Mercatus Center assessing the relationship between state taxes and economic activity has found that higher, more progressive state income taxes tend to be associated with slower economic growth, lower average incomes, less business formation, and worse migration flows. The sheer breadth of the study, assessing numerous different potential determinants of state economic outcomes...

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July 15, 2014

The developed world’s most punitive corporate tax regime (ours) continues to spawn new ways to escape it. Corporate inversions, in which the U.S. company buys a smaller foreign company and relocates abroad, have become increasingly common. Over 40 companies have left the U.S. in this way in just the last 5 years, according to the...

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July 15, 2014

The United States Highway Trust Fund is set to run out of money in less than a month. Congress has been working to address this problem; some long-term solutions have been proposed, but the House and the Senate appear to be converging on a short-term fix to the problem.

Both...

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July 15, 2014

Venture capitalist Tim Draper announced yesterday that he has gathered the 808,000 signatures necessary to place his proposal to split California into six states on ...

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July 14, 2014

The D.C. Council just voted 12 to 1 to override the Mayor's veto of the budget/tax reform bill. The bill reduces middle-class income tax burdens, cuts business taxes, and broadens the sales tax base to personal services, starting in 2015. All told, it is a revenue cut of $158 million over five years. We've spoken and written extensively on the benefits of this positive tax reform package; ...

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July 11, 2014

A Colorado based marijuana dispensary is suing the IRS. The Denver Post reports that a marijuana dispensary, Allgreens, is challenging the IRS for charging them a 10 percent penalty because Allgreen’s pays its federal income tax liability in cash—not electronically.

Since 2011, the IRS has required employers to deposit withheld income taxes through the Electronic Federal...

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July 11, 2014

Last week, Governor Chris Christie signed into law a $32.5 billion state budget for New Jersey – but not before using his line-item veto to cut back significantly on scheduled pension payments and strike down a pair of temporary tax increases.

The package of budget bills that originally landed on Christie’s desk included a millionaires’...

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July 11, 2014

A capital gain occurs when you purchase an asset—usually a company’s stock—and later sell it at a profit. For example, you purchase a stock at $100 and in a year you sell this stock for $150, your capital gain is $50. Under current law, this capital gain is taxed as income, but at a reduced rate (top rate of 23.8 percent top rate).

The classification and taxation of capital gains as income is based on the “Haig-Simons” definition of income. This defines income as consumption plus...

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July 11, 2014

This week’s map takes a look at when each state adopted its sales tax. The trend began with Mississippi in 1930 and continued rapidly throughout the Great Depression – a crisis which left states strapped for cash amidst declining property and income tax collections. By the end of the 1930s, 22 states had implemented a sales tax. Six states and the District of Columbia joined on in the 1940s, and five did so in the 1950s. The next decade brought twelve...

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July 10, 2014

This week Representative Cory Gardner (R-CO) will introduce a bill called the EARN act. This bill seeks to reduce the number of improper payments in the Earned Income Tax Credit (EITC) and use the savings to expand the credit for eligible taxpayers.

One of the biggest issues with the EITC is its high rate of error. From fiscal years 2003 to 2013, the rate of error—the percent of payments that were made to people not eligible, or overpayments to those who are eligible—accounted for...

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July 10, 2014

Last Wednesday, Governor of Connecticut Dannel P. Malloy (D) announced that the primetime game show Who Wants to Be a Millionare? had moved its production to Connecticut...

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July 10, 2014

California’s legislature voted this week to offer $420 million in tax incentives to Lockheed Martin in order to locate production of a new stealth bomber in California (specifically at Lockheed’s existing Palmdale facilities). The situation is complicated. Northrop Grumman and Boeing are competing for the rights to the $55 billion stealth bomber contract (Northrop Grumman currently...

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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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