The legislation put forward by Democratic members of the House of Representatives would reverse many of the 2017 reforms while increasing burdens on businesses and workers.
On May 4th, Gov. Jay Inslee (D) signed legislation creating a 7 percent capital gains tax, to take effect next year. On November 2nd, Washington lawmakers will learn what voters think about it.
With corporate and individual rate hikes potentially out of the Build Back Better (BBB) reconciliation package, lawmakers are weighing alternative options to raise revenue. Rather than come up with untested proposals and complicated changes to the tax base, they should prioritize options that raise revenue while improving the structure of the tax code.
Raising taxes on stock-based compensation through a book income tax will disadvantage this form of compensation and produce more complexity in the tax system without providing benefits to workers.
One has to wonder how stable or sustainable the Democrats’ spending program can be if it must rely so heavily on the taxes paid by such a small number of taxpayers as in the top 1 percent.
Passage of Louisiana Amendments 1 and 2, which are aimed at the sales tax and individual and corporate income taxes, respectively, would substantially simplify the Pelican State’s tax code and provide tax relief in both the short and long term.
The Index provides lessons for policymakers when they are thinking of ways to remove distortions from their tax systems and remain competitive against their peers. The further up a country moves on the Index, the more likely it is to have broader tax bases, relatively lower rates, and policies that are less distortionary to individual or business decisions. Going the other way reveals a policy preference for narrow tax bases, special tax policy tools, and rules that make it difficult for compliance.