Lunch Links: Tariff of Abominations, Europe to Tax Netflix, Tax Court Traps Disabled Workers

May 19, 2016

Today is May 19, the date in 1828 when the “Tariff of Abominations” was enacted. The tariff imposed a nearly 50 percent tax rate on imported goods, with the intention of protecting domestic manufacturing; opposition (primarily in the South) led to the Nullification Crisis which in turn was defused by tariff reductions in 1832 and 1833.

Here are some interesting links I came across:

  • Trump VP Hopefuls Must Submit Tax Returns: Trump may not be releasing his own tax returns, but his team wants to look at the tax returns of possible VP candidates being vetted. (NBC / Twitter)
  • Congress and D.C. Wrestle Over Budget Autonomy: Most of the District of Columbia government’s revenue is generated by its own taxes and fees, but it needs congressional approval to spend them. A judge has allowed D.C. to adopt and implement a 2017 budget without congressional approval, and Rep. Mark Meadows (R-NC) is moving legislation to stop it from happening. (Washington Post / The Hill)
  • Kansas Set Up For More Budget Trouble: Kansas policymakers may have patched up the budget with one-time money but have left a structural gap between revenues and spending that will reopen. (Kansas Center for Economic Growth)
  • Brownback Vetoes Tax Appeals Bill: Pizza millionaire Gene Bicknell says he was living in Florida in from 2005 to 2008, while Kansas says he was living in Kansas and owes the state $42 million in back taxes. The board of tax appeals ruled for the state, and Bicknell is appealing. Gov. Brownback (R) vetoed a bill to let him and other taxpayers get their day in court. Brownback wrote that he’d be fine with such a change going forward but it shouldn’t apply to pending cases. (Topeka Capitol-Journal / Governor Sam Brownback)
  • West Virginia Budget Debate Begins: Gov. Tomblin (D) says legislators must pick from a 1 point sales tax increase, higher taxes on telecom services, and raising the cigarette tax by 45 cents per pack. Some legislators say the state should use one-time funds, draw down the rainy day fund, and focus on long-term structural changes. (Charleston Gazette-Mail)
  • Louisiana Sales Tax Issue May Inundate Local Governments with Refund Claims: A company bought limestone for $46 million, and after using it in production, sold the ash byproduct for $7 million. The Louisiana Supreme Court ruled this month that the $39 million difference is not subject to sales tax. The amounts are sizeable for many local parishes. (The Advocate)
  • Europe to Tax Netflix, to Fund “Production of European Works”: The European Commission proposes rules to allow countries to tax on-demand networks and use the proceeds to subsidize production of European movies and TV programs. France is reportedly lobbying hard for the proposal. (Politico EU)
  • Tax Court OKs Tax Trap for Disabled Workers: Janet Novack tells the story of California postal worker John Thompson Jr. was injured on the job in 2009 and received worker’s compensation benefits, which are non-taxable. He later applied for Social Security disability benefits, which were eventually granted retroactively. Two problems. First, disability benefits are reduced by the amount of worker’s compensation benefits, and because he was getting more from worker’s comp, he actually got nothing from Social Security. Second, Social Security disability benefits are taxable. So Mr. Thompson got $0 from Social Security but now owes $30,519 in taxes on those phantom benefits. If he hadn’t applied to Social Security, he wouldn’t have owed anything. The Tax Court acknowledged Mr. Thompson’s understandable frustration but ruled that Congress knew this could happen when they wrote the law and did it anyways. (Forbes / U.S. Tax Court)

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