Lunch Links: 44 Percent Pay No Federal Income Tax; California Property Taxes Grow Fast; New Jersey Gas Tax Standoff Continues

July 19, 2016

Today is July 19, which would have been the 94th birthday of George McGovern, who was a U.S. Senator and the 1972 Democratic presidential nominee. In 1972, McGovern called the federal tax system “basically sound” but proposed a minimum effective tax rate of 51 percent for high-income earners, maintaining the 48 percent corporate income tax, doubling the estate tax, more federal aid to the states, a tax credit for low-income workers, and no value-added tax. Later in life, though, McGovern became a small businessman and learned first-hand about costly and unnecessary regulations and “needlessly complicated tax forms for both the IRS and the state of Connecticut.” He became a good friend of the Tax Foundation, communicating with us regularly and privately supporting our mission until he passed away in 2012.

Here are some interesting links I came across:

  • Federal Income Tax Non-Payers Steady: 44 percent of federal tax filers pay no federal income tax, below the peak of 50 percent during the recent recession. About 18 percent pay no federal income tax or federal payroll taxes, half of whom are retirees with little income. (Christian Science Monitor)
  • Bernstein Wrong: Former Biden chief economist Jared Bernstein attacked our analysis of the House Republican plan, and my colleague Alan Cole responded. Bernstein forgot to account for $5 trillion of base broadeners in his criticism. (Washington Post / Tax Foundation)
  • Major City Sales Taxes from Chicago to Portland: Our new report looks at sales taxes in major cities. Topping the list are Chicago (10.25%), Baton Rouge (10%), Birmingham and Montgomery (10%), New Orleans (9.75%), Seattle and Tacoma (9.6%), and Oakland and Fremont (9.5%). Anchorage and Portland (OR) have no sales tax. (Tax Foundation)
  • California Property Taxes Grow 6 Percent: Strong growth in taxable values led the increase. There is $5.5 trillion in taxable property in the state. (Sacramento Bee)
  • Nebraska Sees Slower Revenue Growth: The state ended the fiscal year collecting $95 million less than they expected (the total was $4.308 billion, essentially flat from last year’s $4.305 billion). Gov. Ricketts (R) is telling state agencies to watch their spending, and the slow growth was likely due to low farm prices which might increase pressure to diversify the state economy. (Associated Press / Nebraska Department of Revenue)
  • Christie Rejects Gradual Gas Tax Proposal: Faced with stalled proposals to raise New Jersey’s gasoline tax by 23 cents and cut other taxes, Senate President Stephen Sweeney (D) proposed making the tax increase and offsetting tax cuts gradual over a number of years. Governor Chris Christie (R) rejected that as “ridiculous.” (Tax Foundation / North Jersey Record)
  • Bill Introduced to Codify Physical Presence: Rep. Sensenbrenner (R-WI) has introduced H.R. 5893, which defines nexus as physical presence for all taxes and thus restricts states from collecting taxes from people or businesses with no property or employees in the state. It would restrict collection of sales tax from residents’ purchases from out-of-state Internet vendors, which puts it in conflict with H.R. 2775 (Chaffetz) and S. 698 (Enzi). (U.S. Congress)
  • Tax Policy Center Needs New Director: A joint project of the Urban Institute and the Brooking Institution, TPC is looking for a new director to replace its current director Len Burman. Burman ran TPC from 2002 to 2009 and again since 2013, with Donald Marron running it from 2010 to 2013. (TaxProf)

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