Inversions have been in the news consistently this summer as multiple companies have looked for legal paths away from the U.S. corporate tax system. Burger King became the latest corporation to add to the list after they...
The Tax Foundation recently released a report outlining significant changes in state tax policy during 2010. Some states have enacted targeted tax increases or turned to the politically convenient option of one-time funds and accounting gimmicks to fill budget gaps. In this week's podcast, Tax Foundation Tax Counsel and Director of State Projects Joseph Henchman discusses the report and some upcoming changes for the rest of the year.
For more information, see Tax Foundation Fiscal Fact, No. 241, "A Review of 2010's Changes In State Tax Policy."
Last fall, the state of New York appointed its first Taxpayer Rights Advocate, Jack Trachtenberg, to act as an ombudsman between the public and the Department of Taxation and Finance in resolving taxpayer disputes. In this week's podcast, he discusses the role of his office and some recommendations after his first year on the job. Trachtenberg says his goal as Taxpayer Rights Advocate is to strike a balance between the needs of the department and taxpayers through "fair and reasonable enforcement."
A number of states are hold back-to-school sales tax holidays starting as early as Friday, Aug. 6. And with Gov. Deval Patrick's signature, Massachusetts will become the 19th state to offer a sales tax holiday in 2010, exempting tangible personal property costing up to $2,500 from its 6.25% general sales tax from August 14-15. In this week's podcast, Tax Foundation Staff Economist Mark Robyn discusses why sales tax holidays are bad tax policy.
The Tax Foundation recently issued an updated study, Tax Foundation Special Report, No. 182, "Sales Tax Holidays: Politically Expedient but Poor Tax Policy," which shows that the temporary, targeted periods of sales tax exemption are nothing more than political gimmicks that do little to help consumers. Instead, the holidays distort consumer choices while favoring certain industries over others, increase tax code complexity, and distract from real, permanent tax relief.
More on sales tax holidays.
Nevada policymakers are considering a number of tax reform proposals. These could include changes to business taxes as well as sales taxes. The Nevada Policy Research Institute recently released a report suggesting comprehensive fiscal reforms to improve the state's economy. Geoffrey Lawrence, a fiscal policy analyst for the Institute and author of the report, "One Sound State, Once Again," discusses the Institute's recommendations in this week's podcast.
For more information, see a related Tax Foundation report, Fiscal Fact No. 235, "Nevada Panel Considering Tax Reform Options, Including New Business Taxes," which discusses the harmful effects of enacting a corporate income or gross receipts tax on Nevada's tax climate.
More on Nevada.
The fate of the 2001 and 2003 Bush tax cuts is up in the air. President Obama has proposed extending all of the tax cuts for everyone but high-income taxpayers. Some members of Congress are arguing that none of the tax cuts should be extended given current deficit levels. Some are calling for a temporary extension, while still others are calling for a permanent extension. In this week's podcast, Tax Foundation President Scott Hodge interviews Douglas Holtz-Eakin, former Director of the Congressional Budget Office and current President of the American Action Forum, who recently testified at a Senate Finance Committee Hearing on how to address the Bush tax cuts. Holtz-Eakin also is a member of the Tax Foundation's Board of Directors.
For more on the expiration of the Bush tax cuts, see the Tax Foundation's Frequently Asked Questions on the Expiring Bush Tax Cuts.
There has been much discussion among policymakers and the media about the possibility of a value added tax, or VAT, in the United States -- either to help reduce the growing federal budget deficit or to offset other tax cuts. This week's podcast guest is Randall Holcombe, Ph.D., who has authored "The Value Added Tax: Too Costly for the United States," for the Mercatus Center at George Mason University. Holcombe discusses the VAT's negative impact on long-term growth rates, along with four major costs associated with the VAT: the excess burden, or deadweight loss, of the tax, as well as compliance, administrative and political costs.
Holcombe is the DeVoe Moore Professor of Economics at Florida State University and Senior Fellow at the James Madison Institute, a Tallahassee-based think tank that specializes in issues facing state governments. He served on Florida Governor Jeb Bush's Council of Economic Advisors from 2000 to 2006 and was president of the Public Choice Society from 2006 to 2008. He is interviewed by Tax Foundation Staff Economist Kail Padgitt, Ph.D.
The U.S. Supreme Court recently denied requests to review two separate cases addressing tax retroactivity and related tax law controversies. In this week's podcast, Arushi Sharma, a clerk with the Tax Foundation's Center for Legal Reform, interviews Paul Frankel, a partner at the New York-based law firm Morrison & Foerster. Paul Frankel co-chairs the firm's Tax Department as well as its State and Local Tax Group. He has represented taxpayers in major tax controversies in nearly all of the 50 states. He has also negotiated settlements in hundreds of cases and won significant state Supreme Court cases in numerous states.
"There should never be retroactive tax laws," Frankel says. "People should have a right to rely on the law at the time they file their tax returns."
Rhode Island Gov. Donald Carcieri (R) recently signed into law sweeping changes to the state's individual tax system. The reform reduces the state's top income tax rate from 9.9% to 5.99%, increases the standard deduction and eliminates the optional flat tax. In this week's podcast, Governor Carcieri discusses the changes with Joseph Henchman, the Tax Foundation's Tax Counsel and Director of State Projects. "We've been beating this drum for several years now," Carcieri said of the tax reform plan.
More on Rhode Island.
On January 1, 2010 the federal estate tax was completely repealed - but only for this year. Come 2011, the tax is scheduled to return at a rate of 55% with the lower exemption level of $1 million. On this week's podcast, Dick Patten, President of the American Family Business Institute, discusses how we got here, alternative proposals and what his organization is doing to promote permanent repeal.
"This battle really comes down to a battle between those of us who believe in free enterprise and property rights and families and family businesses versus those who believe with a religious-like fervor that it's the government's job to redistribute," Patten says.
For more on the estate tax, visit Tax Foundation Special Report, No. 179, "The Federal Estate Tax: Will it Rise From the Grave in 2011 or Sooner?" or visit the estate and gift taxes section of the Tax Foundation's website.
In this week's podcast, Josh Barro, the Walter B. Wriston Fellow at the Manhattan Institute for Policy Research, discusses his recent report examining the effect of Massachusetts' Proposition 2.5, a property tax cap, on the quality of state education. Barro suggests that Massachusetts' success at limiting property tax growth without necessitating other tax increases or sacrificing educational performance could serve as a good example for New Jersey, which is considering a similar property tax limit, "Cap 2.5."
When Proposition 2.5 was enacted in 1980, Massachusetts had the second highest property taxes in the country and second highest state and local tax burden in the country. Since then, real-dollar property tax growth from 1980 to 2007 in Massachusetts was just 22 percent, compared to 68 percent nationwide and 102 percent in New Jersey. Despite decreased property tax collections and decreased education spending in Massachusetts, however, Massachusetts public school students outperformed New Jersey in both reading and math in grades four and eight as measured by the National Assessment of Educational Progress exams administered by the U.S. Department of Education - across a number of demographic groups.
For more, see the Manhattan Institute's Civic Report No. 62, "Do Property-Tax Caps Work? Lessons for New Jersey from Massachusetts." The report was cosponsored by the Common Sense Institute of New Jersey.
U.S. Rep. Jim Jordan (R-OH) has introduced the Economic Freedom Act of 2010, which would reduce the federal corporate income tax rate from 35 percent to 12.5 percent, cut payroll taxes in half, eliminate the capital gains and estate taxes and provide immediate business expensing. Interviewing Congressman Jordan is Rob Shrum, the Tax Foundation's Manager of Development and State Affairs.
Jordan admits it's an ambitious package that has little chance of enactment, but says it can help set the tone for an important larger debate. "Frankly we know that our bill is not going to pass with this Congress," he says. "We think it helps set the context and the framework for this fall's election, this fall's debate as we move closer to the November election. Are we going to continue down the big government, big taxation, big regulation road or are we going to look at what we know will actually foster job creation, what we know will actually promote economic activity - reducing the taxes on small business owners and on families?"
The United States House of Representatives' Committee on the Judiciary's Subcommittee on Commercial and Administrative Law recently held a hearing titled, "State Taxation: The Role of Congress in Developing Apportionment Standards." In this week's podcast, Arushi Sharma, a clerk with the Tax Foundation's Center for Legal Reform, interviews Professor John A. Swain of the University of Arizona James E. Rogers College of Law, who testified at the hearing on the historical aspects of the apportionment of business income among states and the importance of uniformity in setting apportionment standards. Swain discusses how more states have moved away from a three-factor apportionment formula (property, payroll and sales) to a single-factor sales apportionment formula.
The Missouri General Assembly is considering a resolution that would allow Missourians to vote on a constitutional amendment to eliminate the state's individual income tax (which has a top rate of 6% on income over $9,000) and corporate income tax (6.25%) and replace the revenue with a broad-based sales tax on all consumer goods and services. The state's current general sales tax rate is 4.225%, and the new rate would be 5.11%. Missouri's current sales tax base includes about 30 percent of all consumer goods and services, according to Dr. Joseph Haslag, Executive Vice President of the Show-Me Institute and the Kenneth Lay Chair in economics at the University of Missouri-Columbia, who discusses the proposal on this week's podcast.
See more on Missouri.
Joseph Henchman, the Tax Foundation's Tax Counsel and Director of State Projects, recently testified before the United States House of Representatives' Committee on the Judiciary's Subcommittee on Commercial and Administrative Law. The hearing was titled, "State Taxation: The Impact of Congressional Legislation on State and Local Government Revenues." On this week's podcast, Joe discusses the role of Congress in preventing state taxation from harming the national economy.
The American Legislative Exchange Council (ALEC) recently released the third edition of Rich States, Poor States, which provides the 2010 ALEC-Laffer State Economic Competitiveness rankings of states based on their economic policies. The third edition examines why the economic crisis has been so rough on the states, what states should do to alleviate the fiscal pain, and what they should avoid. In this week's podcast, Tax Foundation Staff Economist Kail Padgitt, Ph.D., interviews Jonathan Williams, Director of ALEC's Tax and Fiscal Policy Task Force and co-author of the report, discusses the latest rankings.
State and local governments are looking for ways to fill budget gaps -- through tax increases, spending cuts or some combination of both. Or, in the case of some local governments, through increased fines for traffic violations.
In this week's podcast, Tax Foundation Staff Economist Kail Padgitt, Ph.D., interviews Dr. Michael Makowsky, an assistant professor of economics at Towson University, on factors that affect traffic citations. Makowsky co-authored a paper titled, "Political Economy at Any Speed: What Determines Traffic Citations?" which found that out-of-town drivers who are stopped in a municipality facing budget problems are much more likely to get a ticket.
The study looked at Massachusetts, which -- due to Proposition 2 ½ -- limits how much total tax revenue a town can raise each year, as well as how much a town can raise its revenue cap each year. Proposed increases are subject to voter approval. Makowsky's research found that in towns where the override vote failed, drivers who were pulled over were 11 percentage points more likely to get a ticket.
"If you hold everything else constant, if you have a 50-50 chance of getting a ticket if you got pulled over in a town that had an override failing vote, you had a 61% chance of getting a ticket," he says.
Those chances increase by as much as 26 percentage points if the driver is from out of town.
See the full paper here. Makowsky co-authored a related paper, "More Tickets, Fewer Accidents: How Cash-Strapped Towns Make for Safer Roads," which looks at the relationship among budget shortfalls, the number of traffic citations and traffic safety.
On this week's podcast, Representative Tom Price (R-GA), Chairman of the Republican Study Committee, discusses the new health care reform law, the RSC-supported alternative (H.R. 3400, the Empowering Patients First Act) and reforms to contain health care costs and lower the tax burden.
Find out more about the Republican Study Committee at http://www.rsc.price.house.gov.
In this week's podcast, Tax Foundation Economist Kail Padgitt, Ph.D., discusses Tax Freedom Day ®, which will fall on April 9, 2010. Tax Freedom Day is the day on which Americans have earned enough money to pay all federal, state, and local taxes for the year. This year, Americans will work well over three months of the year -- from January 1 to April 9 -- before they have earned enough money to pay the nation's tax bill for the year.
If Americans were required to pay for all government spending this year, including the $1.3 trillion federal budget deficit, they would be working until May 17 before they had earned enough to pay their taxes -- an additional 38 days of work.
For more on Tax Freedom Day, please visit http://www.taxfoundation.org/taxfreedomday.
In this week's podcast, Tax Foundation President Scott Hodge interviews Jim MacDougald, president of the Free Enterprise Nation, an educational and advocacy organization representing individuals and businesses in the private sector -- or as MacDougald puts it, "the NRA for the free enterprise sector of the economy." He discusses the costs of health care reform, unfunded public employee pension liabilities and what the Free Enterprise Nation has identified as the "Top Five Economic Threats to America in 2010."
In this week's podcast, Tax Foundation Tax Counsel and Director of State Projects Joseph Henchman interviews San Diego attorney Edward Teyssier, who spearheaded the charge against the city for collecting a "processing fee" associated with the city's rental tax. In Weisblat v. City of San Diego, in which the Tax Foundation filed a friend-of-the-court brief, a California court ruled that the so-called "fee" was really an unconstitutional tax. Teyssier discusses the case, its impact on similar "fees" elsewhere in the state as well as the important distinction between taxes and fees.
For more, see Tax Foundation Fiscal Fact No. 160, "Charging Taxpayers for Tax Collection is a Tax: Weisblat v. City of San Diego" or see the Tax Foundation's amicus brief in the case.
In this week's podcast, Tax Foundation President Scott Hodge interviews Idaho Rep. Marv Hagedorn, who has introduced a tax reform plan to cut the state's personal and corporate income tax rates over 10 years. The bill would eliminate state's eight personal income tax brackets, bringing the top rate down from 7.8% to a single rate of 4.9% for taxable income over $5,000. The corporate tax rate would be reduced from 7.6% to 4.9%. Hagedorn says his plan "sends a clear message and signal to businesses that we're on a track to help them be successful."
Our friends at the Buckeye Institute for Public Policy Solutions in Ohio recently released a report titled "State of the State: Two Decades of Weak Job Growth and Skyrocketing Government Costs Pose Daunting Challenges for Ohioans." Buckeye President Matt Mayer returns to the podcast this week to discuss some of the main findings in the 111-page report, which includes detailed economic profiles of the state's 88 counties.
Federal, state and local government workers earn far more than their private-sector neighbors in the majority of those counties: in 87 out of 88 counties at the federal level, 85 out of 88 for state and 57 out of 88 for local.
More on Ohio is available here.
Returning to the podcast this week is Tax Foundation Senior Fellow Bob Carroll, Ph.D., who recently authored a report on tax deferral and international corporate tax competitiveness. Bob discusses the difference between worldwide and territorial corporate tax systems and the need for the United States to lower its federal corporate tax rate to be competitive with other industrialized countries.
This week's podcast guest is Joe Henchman, the Tax Foundation's Tax Counsel and Director of State Projects. Joe recently authored Tax Foundation Special Report No. 175, "Cities Pursue Discriminatory Taxation of Online Travel Services," which looks at efforts by local governments in many states to collect discriminatory taxes from online travel companies such as Orbitz, Expedia and Priceline. He explains that local government officials are merely trying to shift the tax burden to non-residents (and nonvoters), and that their actions ultimately harm interstate commerce.
On this week's podcast, National Taxpayer Advocate Nina Olson discusses her 2009 Annual Report to Congress, in which she outlines 21 problems focusing on the IRS's taxpayer service and tax collection practices. Olson has been a guest on the Tax Policy Podcast twice before, and also is a recipient of the Tax Foundation's Public Sector Distinguished Service Award.
The Tax Foundation released a Special Report last week taking an exhaustive look at movie production incentives -- such as film tax credits, cash rebates, grants and select tax exemptions -- which fail to spur economic growth or raise tax revenue. This week's podcast focuses on Iowa's film tax credits program, known as the Film, Television and Video Promotion Program, which a state tax credit review panel recently recommended eliminating in light of revelations of abuse and mismanagement.
Our guest is Joe Kristan of the CPA firm Roth & Company, PC in Des Moines. Kristan writes the company's Tax Update Blog, which has kept close tabs on the Iowa film tax credits scandal. He also wrote a sidebar in the Tax Foundation's film tax credits report.
For more information, see Tax Foundation Special Report No. 173, "Movie Production Incentives: Blockbuster Support for Lackluster Policy" or visit our film tax credits page.
A recent report from House Ways & Means Committee Republicans found that the major tax provisions passed by the Democrat-controlled House in 2009 amount to a net tax increase of more than $1 trillion over the next decade. In this week's podcast, Congressman Dave Camp (R-MI), Ranking Member on the House Ways & Means Committee, discusses some of those tax increases. He also explains why, based on the way the Joint Committee on Taxation and the Congressional Budget Office score bills, the $1.171 trillion figure may in fact be an underestimate.
"The current-law baseline essentially gives the majority credit for simple extensions of these expiring provisions by counting them as tax reductions, when in fact they only prevent a tax increase from taking effect," Camp says. "It still is a massive tax increase on the American people to say that in the midst of a recession, more than $1 trillion in taxes was raised."
Camp also addresses pending tax proposals to fund health care reform and priorities for 2010.
The combined federal and average state corporate income tax rate of nearly 40 percent in the United States is the second-highest among industrialized nations. This week's Tax Policy Podcast features Richard T. Page, who recently authored a note in the Tulane Journal of International and Comparative Law examining international trends in corporate income, personal income and estate taxes. In order for the United States to remain internationally competitive, Page argues, the federal corporate income tax rate should be lowered from 35 percent to 12.5 percent. This would match Ireland with the lowest rate among developed countries and send "a very loud signal to the world that the U.S. is back in business and that it's time for this recession to come to an end," Page says.
More on corporate taxes is available here.
What were the biggest tax stories of 2009? And what can we expect in 2010? In this week's Tax Policy Podcast, Christopher Bergin, President and Publisher of Tax Analysts, discusses the U.S. Senate's inaction on the estate tax, the IRS's efforts to crack down on tax evaders, health care reform, taxing the rich, a possible value added tax and more. Tax Analysts is a nonprofit publisher that provides tax news and analysis for more than 150,000 tax professionals in law and accounting firms, corporations, and government agencies.
There's been some talk recently of a second stimulus plan, but a recent Tax Foundation analysis shows that several states are taking advantage of one provision of the first stimulus bill -- increased federal matching rates for Medicaid -- at the expense of some health care providers in their own states and taxpayers in others. Twenty-two states have significant health provider or hospital taxes, six of which were enacted or expanded in the last year, and another four enactments or expansions are pending.
This week's Tax Policy Podcast guest is Tax Foundation State Policy Analyst Justin Higginbottom, who authored Tax Foundation Fiscal Fact No. 203, "State Hospital and Medical Provider Taxes: Not What the Doctor Should Order."
Missouri spends about $544 million a year on various tax credits. Recently, these tax credits have included $5 million a year for sausage casing manufacturers and $25 million for an indoor practice facility and parking lot enhancement for the National Football League's Kansas City Chiefs (which then doubled its parking fees for patrons). State Senator Jason Crowell, who represents the 27th district, wants to change this. He's planning to reintroduce legislation when the General Assembly convenes for its 2010 session early next month to subject all tax credits to the appropriations process. In this week's podcast, Senator Crowell discusses the state of tax credits in Missouri and his hopes for reform.
Homeownership has come to be viewed as an integral part of The American Dream, and tax policy is just one way that politicians have sought to promote it. The mortgage interest deduction is the second most expensive tax subsidy, second only to the tax exclusion for employer-provided health insurance.
Dennis Ventry, a law professor at the University of California-Davis, recently authored an article on the mortgage interest deduction in the law journal Law & Contemporary Problems titled "The Accidental Deduction: A History and Critique of the Tax Subsidy for Mortgage Interest." In this week's podcast, Ventry discusses the history of the mortgage interest deduction, its problems and why - despite those problems - it still remains.
Which state will be "the next California"? The Pew Center on the States has attempted to answer this question by evaluating the factors that led to California's budget crisis and identifying other states that face similar problems. "Beyond California: States in Fiscal Peril" shows that Arizona, Florida, Illinois, Michigan, Nevada, New Jersey, Oregon, Rhode Island and Wisconsin join California as the most troubled states. In this week's podcast, Susan Urahn, Managing Director of the Pew Center on the States, discusses what these states have in common and other key trends of the study. "The interesting thing about this group of states is even though they face many of the same pressures that California does, they're all very different," Urahn says.
The New York Superior Court recently heard oral arguments in the state's so-called "Amazon tax" case. In April 2008, New York Gov. David Paterson signed into a law a budget requiring that out-of-state online retailers collect sales taxes on purchases if the company does at least $10,000 worth of business with in-state affiliates. Amazon.com filed suit shortly thereafter, but the New York State Supreme Court - the state's trial-level court - ruled in favor of the state and upheld the so-called "Amazon tax."
This week's podcast guest is Jeffrey Reed, an associate with the law firm McDermott Will & Emery, which filed a friend-of-the-court brief on behalf of the Tax Foundation in this case.
View Tax Foundation Fiscal Fact No. 187, "'Amazon Tax' Unconstitutional and Unwise," which provides a summary of the brief along with a link to a copy of the full brief. For more information, please see the Tax Foundation's Center for Legal Reform.
Both the House bill and Senate Finance Committee plan are expected -- according to Congressional Budget Office and Joint Committee and Taxation projections -- to reduce the deficit, but whether large cuts to Medicare spending will actually happen remains to be seen. Regardless of whatever health care reform proposal emerges from Congress (or when), it appears tax increases are on the table.
Outside discussions of health care reform, reducing the deficit - whether through spending cuts or tax increases or both - is a policy priority on both sides of the aisle. As the Tax Foundation has reported, higher taxes alone cannot erase the deficit.
This week's podcast guest is Jim Pethokoukis, the Money & Politics columnist and blogger for Reuters. Jim discusses health care reform, the deficit, economic recovery and the possibility of a federal value added tax (VAT).
The 2009 election is an off-year election for most states. Gubernatorial races in New Jersey and Virginia have taken the spotlight when it comes to election coverage. But several state ballots on Tuesday will feature taxpayer-related measures - notably, Maine's Question 4, which would institute a "Taxpayer Bill of Rights" to restrict state and local government spending an require voter approval for any tax increases or spending over the established caps, and Washington's Initiative 1033, a similar tax and spending limit.
Discussing these and other measures on this week's podcast is Josh Culling, State Government Affairs Manager for the National Taxpayers Union, which recently published a ballot guide outlining ballot measures in many states that would affect taxpayers.
New Jersey has the least-business-friendly tax climate of all 50 states. The Garden State has the highest median property taxes in the nation, the second-highest state-level sales tax rate, and the third-highest top individual income tax rate.
All of these factored in to New Jersey's recent last-place ranking in the Tax Foundation's 2010 State Business Tax Climate Index, which measure's states' tax-competitiveness.
New Jersey Senate Republican Leader Tom Kean discusses the state's current tax system and potential reforms in this week's Tax Policy Podcast.
More on New Jersey is available here.
Ohio Governor Ted Strickland recently announced a plan to freeze income tax cuts for two years in order to fund education. The cuts, totaling 21 percent, were scheduled to be phased in over five years at a rate of 4.2 percent a year.
Matt Mayer recently was named President of the Buckeye Institute in Columbus, OH. He joins us for this week's Tax Policy Podcast to discuss the governor's proposal and alternative solutions for Ohio's budget problems.
More on Ohio is available here.
What is income redistribution? How would it change under President Obama's budget proposal? And what about health care reform?
Answering these questions and more on this week's Tax Policy Podcast is Tax Foundation President Scott Hodge, who recently authored three fiscal facts looking at income redistribution based on the Tax Foundation's fiscal incidence project.
View the latest reports on income redistribution in the Tax Foundation Fiscal Fact series: "Distributional Effects of the House of Representatives' Health Care Reform Bill," "Basic Facts on Redistribution and the Impact of Obama's Policies," and "Accounting for What Families Pay in Taxes and What They Receive in Government Spending."
The Tax Foundation recently released a report on property taxes compiled from the Census Bureau's 2008 American Community Survey, which found that homeowners in counties and states in the Northeast - especially New York and New Jersey - along with parts of the Midwest tend to pay the most in property taxes.
In this week's Tax Policy Podcast, Tax Foundation Senior Economist Gerald Prante discusses which counties and states have the highest and lowest median real estate taxes - both in dollars paid and as a percentage of median home value - and why.
View Tax Foundation Fiscal Fact No. 191, "New Census Data on Property Taxes on Homeowners." See the full county list, ranked by property taxes paid, online at http://www.taxfoundation.org/legacy/show/23649.html. See the full county list, ranked by taxes as a percentage of home value, online at http://www.taxfoundation.org/legacy/show/1888.html. See the list by state online at http://www.taxfoundation.org/legacy/show/1913.html.
This week, the Tax Foundation released its 2010 State Business Tax Climate Index, which measures how "business-friendly" a state's tax system is. Equally important to the question of how much states tax, which we answer in our annual State and Local Tax Burdens study, is the question of how those taxes are raised.
In this week's Tax Policy Podcast, Staff Economist Kail Padgitt, who authored Tax Foundation Background Paper No. 59, "2010 State Business Tax Climate Index," discusses which states have the best and worst tax systems for business, as well as some tax policy trends that contributed to this year's rankings.
After a several-month budget standoff between the Connecticut legislature and Governor Jodi Rell, the state budget became law two months after the new fiscal year began - without the governor's signature. In this week's Tax Policy Podcast, Fergus Cullen, Executive Director of the Yankee Institute for Public Policy in Connecticut, discusses the some of the new provisions.
With the majority of the debate on Capitol Hill focused on health care, cap and trade has seemingly slipped to the back burner -- for now. The Senate is expected to pick up cap-and-trade legislation this month.
A new analysis from the Heritage Foundation takes a look at the economic impact of the Waxman-Markey cap-and-trade bill that passed the House of Representatives in June. This week's podcast features Nick Loris, a Research Assistant at The Heritage Foundation's Roe Institute for Economic Policy Studies, and a co-author of the paper, titled "The Economic Consequences of Waxman-Markey: An Analysis of the American Clean Energy and Security Act of 2009." According to Loris, if enacted, Waxman-Markey would cause "very much economic pain for very little environmental gain."
Many state recently wrapped up back-to-school sales tax holidays, periods of time during which certain goods are exempted from the state (and sometimes local) sales tax. Sales tax holidays are politically popular not just for back to school items, but others such as energy-efficient products and hurricane-preparedness materials. However, they're also problematic for a number of reasons.
To explain why on this week's podcast is Tax Foundation Staff Economist Mark Robyn, who authored Tax Foundation Special Report No. 171, "Sales Tax Holidays: Politically Expedient but Poor Tax Policy."
View Tax Foundation Special Report No. 171, "Sales Tax Holidays: Politically Expedient but Poor Tax Policy." More on sales and use taxes.
Even during Congress's August recess, the debate on health care reform continues to make headlines. The focus seemingly has shifted from a proposed surtax on the wealthy to fund an expansion in coverage to whether a public option insurance plan is "essential" to reform. But one issue has not received as much attention: the tax treatment of employer-provided health insurance.
In this week's podcast, Tax Foundation Manager of Media Relations Natasha Altamirano interviews Tax Foundation Senior Fellow Bob Carroll, Ph.D., on health care reform, how to pay for it, and the economic consequences of high tax rates.
Read Tax Foundation Special Report No. 170, "The Excess Burden of Taxes and the Economic Cost of High Tax Rates" or the shorter Tax Foundation Fiscal Fact No. 186 based on the same data, "Towards Understanding the Full Burden of High Tax Rates." Tax Foundation Fiscal Fact No. 178, "If Health Surtax Is 5.4 Percent, Taxpayers in 39 States Would Pay a Top Tax Rate Over 50%," contains more analysis of the proposed health care surtax.
This year, several states enacted "sin taxes" -- those targeting perceived negative behavior such as smoking or drinking - to help close budget deficits. The Tax Foundation has long argued against sin taxes as ineffective revenue sources; they're simply a way for government to micromanage the economy by punishing certain industries. Nonetheless, sin taxes have remained popular as politicians tout them as ways to discourage certain activities. A July paper from the National Bureau of Economic Research provides an interesting look at sin taxes and their impact on the apparent "sinful" behavior at question.
In this week's podcast, Tax Foundation Manager of Media Relations Natasha Altamirano interviews Dr. Jody L. Sindelar of the Yale School of Public Health, who co-authored the NBER working paper, "Sin Taxes: Do Heterogeneous Responses Undercut Their Value?"
Find out more about excise taxes.
California's Commission on the 21st Century Economy has until next month to finalize its recommendation for reforming the state's finances. This week's Tax Policy Podcast features Dr. Steven Sheffrin, a Professor of Economics at the University California Davis, Director of the Center for State and Local Taxation, and former dean of social sciences. Dr. Sheffrin is the author of many books and articles on state taxation and has served on the Board of Directors of the National Tax Association.
Dr. Sheffrin is interviewed by Tax Foundation summer fellows Micah Cohen and Kiran Sheffrin, who recently authored Tax Foundation Fiscal Fact No. 181, "Finding Stable Ground: California Reform Commission Puts Tax Overhaul on Table," which examines tax reform proposals currently being considered in California.
The Senate Judiciary Committee approved Judge Sonia Sotomayor's nomination to the Supreme Court Tuesday after a sometimes contentious confirmation hearing that covered a lot of ground. One area, however, that has not received as much attention is her judicial philosophy on tax issues. In this week's podcast, Tax Foundation Manager of Media Relations Natasha Altamirano interviews Travis Greaves, a law clerk with the Tax Foundation's Center for Legal Reform, who recently published Tax Foundation Fiscal Fact No. 178, which takes a look at Supreme Court nominee Sonia Sotomayor's judicial record when it comes to tax-related cases.
For more information, view Tax Foundation Fiscal Fact No. 178 "Past Sotomayor Opinions Not Encouraging for Opponents of State Tax Overreaching."
Pennsylvania is among several states that began the new fiscal year without a budget in place. As Matt Brouillette, President and CEO of the Commonwealth Foundation in Pennsylvania explains in this week's Tax Policy Podcast, it's been seven years since the state legislature has passed an on-time budget. Interviewed by Tax Foundation Manager of Media Relations Natasha Altamirano, Brouillette discusses the current budget battle in Pennsylvania, his organization's involvement in the fight, and potential solutions.
For more on state tax changes in the new fiscal year, view Tax Foundation Fiscal Fact No. 177, "Some States Respond to Budget Shortfalls with Tax Increases."