Individual and Consumption Taxes

Value-added Taxes in the Pandemic

Many governments have chosen to use VAT as a tool to provide tax relief for consumption in various sectors throughout the pandemic, but in the long term, VAT should not be used as a tool for relief.

What the GameStop Saga Can Teach Us About Mark-to-Market Taxation of Capital Gains

Whether you see the GameStop saga as a Robin Hood-style victory for the little guys or as a case of disruptive investor hysteria, it provides an interesting case study in just how badly the mark-to-market treatment of capital gains income could go awry.

Washington State Floats a Wealth Tax Which Relies Almost Exclusively on Four People

What happens if you create a tax and its base is, for all intents and purposes, four people? If some Washington lawmakers had their way, we might find out.

IRS Data Shows Who Benefited from the First Round of Economic Impact Payments

Newly published data from the Internal Revenue Service (IRS) shows that the first round of economic impact payments primarily benefited households earning less than $100,000.

To What Extent Does Your State Rely on Sales Taxes?

Consumption taxes (like sales taxes) are more economically neutral than taxes on capital and income because they target only current consumption. Consumption taxes are generally more stable than income taxes in economic downturns as well.

Latest CBO Report on Incomes and Taxes Shows that the Federal Fiscal System is Very Progressive

Joe Biden has proposed an ambitious agenda that would make the federal fiscal system more progressive, and the huge budget deficits caused by the numerous COVID-19 relief packages could heighten the call for more tax revenues. What is needed are benchmark facts to guide these debates.

Consumption Tax Policies in OECD Countries

Despite the potential of consumption taxes as a neutral and efficient source of tax revenues, many governments have implemented policies that are unduly complex and have poorly designed tax bases that exclude many goods or services from taxation, or tax them at reduced rates.

Who Benefits from the State and Local Tax Deduction?

Some lawmakers have expressed interest in repealing the SALT cap, which was originally imposed as part of the Tax Cuts and Jobs Act (TCJA) in late 2017. It is important to understand who benefits from the SALT deduction as it currently exists, and who would benefit from the deduction if the cap were repealed.

Using Carbon Tax Revenue to Grow the Economy

The economy and climate change are two challenges the Biden administration has identified as priorities. One way to address both issues at the same time is to enact a carbon tax to discourage carbon emissions, and to use the resulting carbon tax revenue to lower—or in the case of the TCJA’s individual provisions, avoid increases of—other, more distortive, types of taxes. This would not only address the challenges of climate change but also support the economy.

New York Governor Proposes THC-based Tax on Recreational Marijuana

Massachusetts Flavored Tobacco Ban Has Severe Impact on Tax Revenue

The Massachusetts flavored tobacco ban highlights the complications of contradictory tax and regulatory policy, the instability of excise taxes that go beyond pricing in the cost of externalities, and the public risks of driving consumers into the black market through excessive taxation or regulation.

To What Extent Does Your State Rely on Property Taxes?

New Hampshire and Alaska rely most heavily on property taxes. Neither have individual income taxes, and in New Hampshire, significant government authority often vested in state government is devolved to the local level, where services are overwhelmingly funded by property taxes.

President Biden Outlines Plan for Additional Coronavirus-Related Relief and Stimulus

President Biden’s plan builds on previous relief packages and would include larger payments to individuals, expanded relief for households and small businesses, funding for vaccine distribution, and aid to state and local governments.

Where Did Americans Move in 2020?

States compete with each other in a variety of ways, including in attracting (and retaining) residents. Sustained periods of inbound migration lead to (and reflect) greater economic output and growth. Prolonged periods of net outbound migration, however, can strain state coffers, contributing to revenue declines as economic activity and tax revenue follow individuals out of state.

Several States Considering Legal Recreational Marijuana

With most states experiencing reduced tax revenues due to the coronavirus pandemic, several are contemplating whether recreational marijuana legalization and taxation may be one avenue to raise new revenue. While states that have already legalized do raise meaningful revenue, lawmakers should remember that establishment of legal markets takes time.

How Expensing for Capital Investment Can Accelerate the Transition to a Cleaner Economy

Expensing for capital investments is a powerful tax policy for economic growth. But expensing can also help shift the economy to a more sustainable future through increased investment in new, less carbon-intensive technology. Expensing for capital investment would eliminate a tax bias against energy efficiency improvements that reduce operating costs but involve high upfront investments. It could also serve to accelerate the existing trend of movement towards more green energy power sources.

Digital Services Taxes

Over the last several years, policymakers in countries around the world have groped for new ways to tax e-commerce, social media, cloud-based, and other online businesses, in some cases stoking major international trade disputes in the process. In this episode of The Deduction, we explore the “digital services tax” (DST), one new and increasingly popular policy designed to address the digital economy.

The Drawbacks of State Taxes on Financial Transactions

Lawmakers looking to close budget shortfalls would be well-advised to consider other and more stable avenues for new revenue.

State and Local Sales Tax Rates, 2021

While many factors influence business location and investment decisions, sales taxes are something within lawmakers’ control that can have immediate impacts.

State Tax Changes Effective January 1, 2021

Twenty-six states and the District of Columbia had notable tax changes take effect on January 1, 2021. Because most states’ legislative sessions were cut short in 2020 due to the COVID-19 pandemic, fewer tax changes were adopted in 2020 than in a typical year.