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| Tax Policy Blog |
| The Tax Policy Blog is the official weblog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. |
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| Nationals Ballpark Strikes Out |
| 2008-07-17 23:00:00 |
The DC Council is considering increasing the sales tax imposed on tickets, concessions, merchandise, and parking purchased at Nationals Ballpark by 5%, on top of the existing 5.75% sales tax and 4.25% extra tax. Councilman David Catania says that low attendance at Nationals games has shorted the city's stadium-based taxes and that the team owner refuses to pay $3.5 million in rent because the stadium is "incomplete." Pressured by payment deadlines for bonds used to finance the stadium, Catania says they have no choice but to raise taxes.There is a deeper problem here: Why is the city involved in the finances of a baseball stadium in the first place? Why is it acceptable to use public funds for private endeavors? Studies suggest that among possi...
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| Multiple-Choice Tax Proposal in Florida |
| 2008-07-17 23:00:00 |
The Florida Taxation and Budget Reform Committee placed an amendment on the upcoming ballot to eliminate the school portion of local property tax. According to one estimate, property owners would save $9.3 billion in 2011. But as the Jacksonville Business Journal reports, not everyone is happy about the measure.If passed, that part of the amendment would create a shortfall in the state budget. As a result, the proposal also calls for Florida lawmakers to make up the difference through one or more of four options:• Raise the state sales tax by a penny.• Eliminate state sales tax exemptions on a host of services such as legal fees, dry cleaning, advertising and haircuts.• Cut spending.• Use new or other revenue.Of the four options, (2) ...
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| New IRS Data Show Top 1 Percent's Share of Income and Income Taxes Paid at All-Time High in 2006 |
| 2008-07-17 23:00:00 |
The Tax Foundation has updated its annual summary of the latest federal income tax data given that the IRS has released the percentile data early this year (July as opposed to September).The basic story that comes from this newly available data for tax year 2006 is that the share of income (as measured by AGI) and the share of taxes paid by the top 1 percent of tax returns are once again at all-time highs.In 2006, the top 1 percent of tax returns paid 39.9 percent of all federal individual income taxes and earned 22.1 percent of adjusted gross income, both of which are significantly higher than 2004 when the top 1 percent earned 19 percent of adjusted gross income (AGI) and paid 36....
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| Show-Me Institute on Local Income Taxes |
| 2008-07-17 23:00:00 |
The Show-Me Institute in Missouri noticed our recent release of Tax Foundation Fiscal Fact No. 133: "County and City Income Taxes Clusters in States with Poor Tax Climates," and wanted to point out a few of their studies on local income taxes in that state: How an Earnings Tax Harms Cities Like Saint Louis and Kansas City"By adopting an earnings tax, a city gives businesses and residents an incentive to locate production outside the city. People go where they will obtain the highest after-tax return on their labor or investments. In order to raise the return, people locate more productive capacity outside the city limits in order to avoid the tax burden. This incentive ...
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| BATSA, the Amazon Tax, and the Physical Presence Rule |
| 2008-07-16 23:00:00 |
We're getting a good amount of interest in the issues surrounding New York's attempt to tax out-of-state sales and businesses with its "Amazon" tax, and impact that the Business Activity Tax Simplification Act (BATSA, H.R. 5267) would have on this and other state efforts. This morning's New York Sun has a lengthy piece on some of the issues as they affect New York.As a non-profit organization, the Tax Foundation takes no position on H.R. 5267. We believe that a sound tax system should tax like transactions alike while remaining simple, transparent, and stable. Limiting states to taxing only individuals within the state, and only businesses with property and employees within the state, protects interstate commerce from double taxation, preserves d...
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| Thursday Video: The Global Flat Tax Revolution |
| 2008-07-16 23:00:00 |
It's been a big week for Dan Mitchell of the Cato Institute on our blog this week. First we covered a Flat Tax vs. FairTax debate he participated in at FreedomFest, and then another event where he discussed the McCain and Obama tax plans. To make it an even three for the week, we bring you one of Dan Mitchell's videos for our Thursday blog post.Mitchell has made these videos for the Center for Freedom and Prosperity, on a number of subjects. This one discusses the recent trend of countries adopting flat taxes (24 as of May 2008, when it was produced).For more on income taxes, click here....
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| Economic Stimulus: Take Two |
| 2008-07-15 23:00:00 |
According to a recent Bloomberg article, Speaker Pelosi has suggested another round of economic stimulus (no details reported). The first round of stimulus checks, according to some, was gobbled up by rising energy prices. In addition to rebates, another stimulus package may include additional funding for infrastructure, unemployment benefits and state aid. This sounds more like an appropriations bill.Every time the government collects revenue, holds it, then sends it back in the form of rebates, some of that money disappears. The first round of stimulus checks will cost up to $862 million in lost enforcement revenue and administrative costs, an absolute deadweight loss to the economy. Instead of utilizing this "revolving door" of taxation, per...
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| Vermont Governor Praises Economic Inefficiencies of Sales Tax Holidays |
| 2008-07-15 23:00:00 |
More economic ignorance when it comes to sales tax holidays:Gov. Jim Douglas is praising Vermont's first two-day sales tax holiday and is hinting he'd support making it an annual event.It will be months before the full impact of the sales tax holiday are known.But Douglas says one retailer told him sales last weekend were 20 times what they were a year ago.And Douglas says waiving the 6 percent tax has a ripple because retailers boost staff, pay overtime and buy advertising and food for shoppers.Douglas is praising the extra costs that businesses must incur because of the sales tax holiday, arguing that such a cost is an economic benefit. Unbelievable....
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| Maryland's County Income Taxes |
| 2008-07-15 23:00:00 |
Our recent report on local income and wage taxes notes that all 23 Maryland counties impose an income tax on residents, but does not break them out. Based on a few requests, we do so here. A side note: Nonresidents are not subject to the county income tax, but must pay to the state an amount equivalent to the lowest county tax rate (currently 1.25% - Maryland residents should thank Worcester County for keeping this low!). Here are the local income taxes by county: Table 1Maryland County Income TaxesCountyCounty Income Tax Rate(for Residents) Allegany2.93% Anne Arundel 2.56% Baltimore County2.83%Baltimore City3.05% Calvert2.80% Caroline2.63% Carroll3.05% ...
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| MEGA-Silly Tax Credits in Michigan |
| 2008-07-15 23:00:00 |
The Michigan Economic Growth Authority (MEGA) doles out tax credits and grants ostensibly to encourage out-of-state businesses to expand and relocate in Michigan. However, MEGA's seven-person board seems to believe virtually any relocation is worthy of a grant and a tax credit. As one example, MEGA announced today that International Bancard Corporation (IBC) received $50,000 in grants for training approximately 50 new workers. In addition, IBC will receive $1.1 million in tax credits, including a technology tax credit and waiver of planning and building fees associated with its move from Royal Oak, Michigan to Clawson, Michigan—a distance of 3.5 miles (at $314,285.71 per mile!). It might be a different story if the move were from one end of the st...
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| Happy Tax Freedom Day, Israel |
| 2008-07-14 23:00:00 |
Happy Freedom-Day">Tax Freedom Day to our freedom-loving friends in Israel. According to the non-profit Jerusalem Institute for Market Studies, July 15th marks the day in which Israeli citizens have finally worked to pay off all of their tax bills and can now begin to work to pay their own bills. Click here for the details. In case you are trying to do the math, Israelis worked 197 days into the year to pay their taxes, or 54 percent of the year. This is 32 days longer than in Great Britain and 80 days longer than in America. The good news for Israelis is that this year's Tax Freedom Day is three weeks earlier than last year because of lower economic growth and slightly lower taxes. "Do...
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| Cato Policy Forum on Presidential Candidates' Tax Plans |
| 2008-07-14 23:00:00 |
The Cato Institute hosted a policy forum today entitled McCain and Obama: Comparing Their Economic Platforms. One of the three speakers, Dan Mitchell, summed the future of the American tax burden up quite nicely: No matter who wins, it's going to grow.Mitchell also offered a fair comparison of the two distinct tax proposals. Obama's plan, according to Mitchell, means "higher taxes on work, savings, and investment." He pointed out that politicians understand the economics at play when they tax activities like smoking: higher taxes, less smoking. Why then, he asked, would we want to increase taxes on work, savings, and investme...
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| New Analysis of CaliforniaÂs Individual Income Tax Rates |
| 2008-07-14 23:00:00 |
California has the dubious distinction of being the only state with a double-digit individual income tax rate. A new Tax Foundation Fiscal Fact examines the state's changing tax rates over the years in light of the current debate in the legislature on whether to increase the top rate again. From Fiscal Fact No. 134, "California Legislators Push for More Double-Digit Income Tax Rates," by William Ahern:The next major change occurred in 2004 when a ballot initiative added a new top bracket, 10.3 percent of income above $1,000,000. Perhaps because it was not enacted by the legislature in a normal tax-writing procedure, or perhaps because the ...
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| State Lawmakers Promote Sound Tax Policy by Doing Nothing |
| 2008-07-14 23:00:00 |
We'd like to thank legislatures in Florida and Virginia for promoting sound tax policy by doing nothing at all.In June, Virginia Governor Tim Kaine (D) called a special legislative session that was intended to raise $1.1 billion in new taxes for transportation. Richmond policymakers had lots of different ideas about how to do that, most of them quite bad. Kaine and Senate Democrats each proposed a varying menu of localized and statewide increases in the general sales tax, plus higher taxes and fees on hotel rooms, car sales, car registration, and real estate transfers. Senate Democrats also wanted to raise the gasoline tax by six cents a gallon. House Republicans flirted with some locall...
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| California Releases Income Tax Rules for Same-Sex Spouses |
| 2008-07-14 23:00:00 |
State Tax Review (subscription required) reports that the California Franchise Tax Board has issued rules for income tax filing by same-sex married couples. As in other states that have legalized gay marriage or civil unions, same-sex married couples in California will face added tax complexity. This is because they will be required to file as single for federal income tax purposes, but jointly (or married-filing-separately) for state income tax purposes. The California process will include determining a dummy joint federal Adjusted Gross Income, representing what the IRS would have deemed a couple's AGI to be, had they been able t...
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| New Tax Foundation Report Looks at County and City Income Taxes |
| 2008-07-13 23:00:00 |
Beginning July 1, 2008, workers in Philadelphia will see a little bit more in their paychecks. That day marks the second reduction within a year in that city's wage tax imposed on both residential and nonresidential workers in Philadelphia, although it remains the highest in the nation. The new rates are 3.98% for residents (down from 4.219% in early 2008 and 4.26% in 2007) and (precise to the ten-thousandth digit) 3.5392% for nonresidents (down from 3.7242% in early 2008 and 3.7557% in 2007). Thus, a resident who earns $1,000 a week will keep $124 more per year; a nonresident earning that much will keep an additional $96. Local income or wage taxes can be a part of a sound tax system, ...
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| Kansas Governor Suggests Decoupling Could Have Prevented Budget Cuts |
| 2008-07-10 23:00:00 |
State Tax Notes (subscription required) reports that Kansas Governor Kathleen Sebelius regrets that the state missed out on $87 million in uncollected corporate income tax by staying in compliance with federal tax law. She believes Kansas's legislature should have voted to "decouple" from the recent federal stimulus package that permits companies "bonus depreciation"—that is, a chance to accelerate the write-off of their assets for tax purposes.For example, if a company was writing off the value of a large printing press over 20 years, a state that permits bonus depreciation (like Kansas) will allow the company to move up into the current year a large fraction of the write-off. However, in futur...
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| The IRS Appears to Not Be a Yankees Fan |
| 2008-07-10 23:00:00 |
As we have explained many times before, providing subsidies for the construction of sports facilities is poor tax policy (here, here, and here). Specifically, the taxpayer receives few benefits from the millions of dollars required for the construction of a sports stadium. Furthermore, while many individuals tout the jobs created through the construction of the stadium and subsequent economic stimulus created by the stadium, one must wonder if the net job creation in the local community makes up for the cost of the stadium. The financing plan for both the Yankees' stadium and Mets' stadium back in 2006 was part of a plan created by Mayor Michael Bloomberg to employ tax-exempt bonds to fund these projects. The Internal Revenue Service (IRS...
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| State Taxes a ChildrenÂs Game |
| 2008-07-10 23:00:00 |
Like children squabbling over a toy, state policymakers attempt to take tax dollars from residents of other states. Tax Foundation Tax Counsel Joe Henchman's BATSA brief sheds some light on the situation:State officials [...] have every incentive to pursue beggar-thy-neighbor tax policies designed to shift tax burdens from voting in-state residents to out-of-state residents and businesses unable to resort to the ballot box. Not only does democracy not prevent harmful tax exporting from occurring, it actually worsens it, since services can be provided to a majority of voters, paid for by non-voters.Interestingly, taxing nonresidents often encourages other states to inflict the same poor policies in a legal "Oh, ...
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| Massachusetts Income Tax Repeal to Appear on November Ballot |
| 2008-07-09 23:00:00 |
The Massachusetts Secretary of State announced today that an initiative to repeal the state income tax has qualified for the November ballot, as "Question 1." A previous income tax repeal initiative appeared on the 2002 ballot, and received 45% of the vote (885,000 votes) even though every major state newspaper and many elected officials opposed the effort.The effort has been launched by the Committee for Small Government, which gathered 123,000 signatures to put the initiative on the ballot. One of its organizers, Carla Howell, spoke to me a few minutes ago and believes that the 2008 effort will be much stronger than the 2002 effort, with vocal endorsements and activi...
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| Fannie, Freddie Woes Predicted Long Ago |
| 2008-07-09 23:00:00 |
Government finance scholar Allen Schick, long of Brookings and the University of Maryland, is the employee of the day at the Department of IToldYouSo.See page 3 of this old scanned-in Tax Foundation newsletter to see the prescient, plain-English piece he wrote in 1989 about the alarming debt of Fannie Mae, Freddie Mac and other so-called government-sponsored enterprises.It'll be no surprise to Prof. Schick to be reading almost 20 years later today's articles about the debt-related woes of those unsound institutions:Bloomberg: "Fannie, Freddie `Insolvent' After Losses, Poole Says"MarketWatch: "Fannie, Freddie shares slump for third day; Freddie Mac falls 23% as capital fears persist"BusinessWeek: "Fannie, Freddie Resume Their Free Fall"We can only hope that Con...
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| Thursday Video: Tax Foundation at FreedomFest 2008 |
| 2008-07-09 23:00:00 |
Today's Thursday video is a bit different—a quick hello from State Relations Manager Tonya Barr and Tax Counsel Joe Henchman from the Foundation">Tax Foundation booth at FreedomFest 2008 in Las Vegas, Nevada.Throughout the year, the Tax Foundation appears at conferences and events with educational materials and ready to answer questions about sound tax policy. Here in Las Vegas, over a thousand attendees have gathered for the four-day conference, and we hope to reach many of them with some new outreach pieces! Check out the short 1-1/2 minute video for more information....
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| Tax Facts |
| 2008-07-07 23:00:00 |
In 2005, the estimated time and money cost of complying with the federal Internal Revenue Code was 6 billion man-hours worth $265 billion.The code that year stood at 7 million words in 736 code sections, up from 718,000 words in 103 code sections in 1955. By contrast, the King James Bible has 788,280 words in 66 books, the Harry Potter series has just over 1 million words in 7 books, and the English translation of War and Peace has 560,000 words. ...
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| Obama Would Lift Social Security Earnings Cap, But At A Lower Tax Rate |
| 2008-07-07 23:00:00 |
Our most recent publication, Fiscal Fact 132: Hard Numbers on Obama's Redistribution Plan, estimates that the Obama tax plan would distribute $131 billion per year from the top 1 percent of taxpayers to all other taxpayers. After this shift, the top 1 percent of taxpayers (1.13 million filers) would pay more in taxes than the bottom 80 percent (128 million filers).These numbers do not include Senator Obama's proposal to remove the cap on earnings subject to Social Security taxes, currently $102,000 a year. He argues that removing the cap will bring in additional revenue that will prevent or at least postpone Social Security's move from surpluses to deficits expected to occur in the 201...
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| Three Tax Initiatives Removed from Nevada Ballot |
| 2008-07-06 23:00:00 |
According to the Las Vegas Review-Journal, three tax-related initiatives were removed from Nevada's November ballot by a judge despite having 100,000 signatures each (58,628 signatures, distributed from each county, is needed). The judge ordered the removal because the petitions failed to comply with new rules requiring signature gatherers to count the signatures and attest that all signatures were made in his or her presence. The requirements were adopted in July 2007 to combat fraud but have yet to be posted to the Secretary of State's website.The proposals:Two of the petitions sought to raise the room tax collected by the Las Vegas Convention and Visitor’s Authority from 3 percent to 13 percent. One would give the money specifically to public educ...
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| "Crocodile Dundee" Star Defiant About Income Tax Investigation |
| 2008-07-06 23:00:00 |
From E! Online:Actor Paul Hogan, star of the 1980s classic Crocodile Dundee, has some fighting words for the Australian tax man: "Come and get me, you miserable bastards."The 68-year-old actor is being investigated for tax evasion by the Australian Tax Office, which has asked the IRS in the United States to help obtain Hogan's bank records."I don't give a s--t about it—I've got nothing to worry about," he told reporters from his home in Santa Barbara, Calif. "I've paid more than every cent I owe, I paid too much, I paid tax there when I didn't have to." ...
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| Which States Tax Celebrations of Independence from Taxation? |
| 2008-07-02 23:00:00 |
One of the Tax Foundation's principles of sound tax policy is neutrality, which states that since taxes pay for general public services enjoyed by everyone, they should be levied broadly rather than on a group of people who happen to purchase a particular product or service. The fundamental purpose of taxes is to raise necessary revenue for programs, not to micromanage a complex market economy with subsidies and penalties. High taxes on certain goods only distort economic activity. Put another way, the principle of neutrality says that high tax rates on specific goods or services are simply unfair.The Fourth of July is in part a celebration of independence from unfair taxation, so ...
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| State Government Revenue Up in First Quarter 2008 |
| 2008-07-01 23:00:00 |
Earlier this week, the Census Bureau released its Quarterly Summary of State and Local Government Revenue for the first quarter 2008. The Rockefeller Institute of Government has parsed through the data and put together a report of findings. Some facts:State tax revenue is up 1.7 percent in the first quarter of 2008, as compared to the first quarter of 2007. This is the slowest rate since 2003, but still positive. For this fiscal year, revenue is up 3 percent over last year.State personal income tax revenue increased 4.4 percent over first quarter 2007. State corporate income tax revenue declined 5.1 percent over first quarter 2007.State sales tax collections were flat, declining 0.04 ...
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| Congrats to Chicago |
| 2008-07-01 23:00:00 |
Residents of Chicago are likely to notice that goods and services cost a bit more starting yesterday. On that day, Chicago assumed the highest metropolitan sales tax rate in the nation. The new 10.25 percent rate in Cook County, approved earlier this year, was accelerated to close a budget deficit. Additionally, dining within a special business taxing district in the heart of the city will include a sales tax bill of 11.25 percent. So, if a couple spends $100 on a romantic meal, taxes alone will be $11.25. Imagine what it would be on a big ticket item like a television or a car. Speculation that consumers will instead shop in surrounding suburbs where tax rates are much lower has already begun (see our take on it earlier this year). Congrats go out t...
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| How Would ObamaÂs Tax Plan Affect Americans Living Abroad? |
| 2008-06-29 23:00:00 |
A recent article in the Wall Street Journal–Europe discusses the impact that Obama's proposed tax changes would have on Americans living abroad:Celebrity chef Alain Ducasse insists that his change of citizenship this week from high-tax France to no-income-tax Monaco wasn't a financial decision but an "affair of the heart." Right. But even if he's being sincere, plenty of other Frenchmen have moved abroad to escape their country's confiscatory taxes.Americans should be so lucky: Theirs is the only industrialized country that taxes its people even if they live overseas. That hasn't been a big problem as long as U.S. tax rates have been relatively low. But with Barack Obama promising to lift rates to French...
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| South Carolina Legislature Overrides Vetoes of Carcass Credit, Gun Tax Holiday |
| 2008-06-29 23:00:00 |
We're always on the lookout for strange tax policies, and Carolina">South Carolina has recently supplied two. The South Carolina Legislature assembled on June 25 to reconsider several bills that had been vetoed by Gov. Mark Sanford. Here is the information from South Carolina's revenue website on two of the more interesting vetoes that were overridden by the Legislature: The $50 Venison Income Tax Credit: "Section 12‑6‑3750. (A) Beginning with the year 2008, there shall be allowed a nonrefundable credit against taxes imposed by this chapter for a meat packer, butcher, or processing plant licensed or permitted by this State or the United States Department of Agri...
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| Tax Deductibility Initiative Qualifies for Oregon Ballot |
| 2008-06-29 23:00:00 |
In November, Oregon voters will vote on Initiative 3, which would allow taxpayers full deduction of federal income taxes on Oregon state income tax returns. Currently, the deduction is limited to about $5,500. Petitioners gathered some 82,000 signatures to qualify the initiative for the ballot.Before 1974, Oregon taxpayers could fully deduct federal income taxes on their state taxes, but that year a $3,000 limit was instituted (which would be about $13,000 in 2008 dollars). In 1980, the amount was increased to $7,000 ($18,000 in 2008 dollars), but reduced to $3,000 in 1987, and increased to $5,000 in 2000 with annual inflation adjustments. Also in 2000, voters rejected a measure 45% to 55% that also would have made federal income taxes fully deductible. (S...
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| Canadian Carbon Tax Proposal Getting Lackluster Reception |
| 2008-06-26 23:00:00 |
We've written a few times recently (here and here) about Canadian Liberal Party leader Stephane Dion's plan for a carbon tax, and the lackluster reception it is receiving. Dion has been trying to emphasize that the carbon tax will include redistributing tax cuts on other things, to little avail.Over at Filibuster Cartoons, Canadian cartoonist J.J. McCullough offers this take, writing:Liberal leader Stephane Dion has staked a great deal of his political future on a proposed Carbon Tax, which, should he be elected Prime Minister, will tax all gasoline purchases made in Canada.Dion wants the tax to be "revenue neutral," which is to say it won't actually bring any more money into the government, because he'll acco...
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| Job Openings at the Tax Foundation |
| 2008-06-26 23:00:00 |
The Tax Foundation is in search of a development manager able to start immediately. The development manager works closely with the director of development managing the majority of fundraising programs, including communicating with current and potential donors, preparing and revising foundation grant proposals and corporate invoices, maintaining records and donor database, and supervising the development associate with gift inputs.The candidate must have a commitment to free-market principles, be able to work both independently and as a team player, possess strong writing and communication skills, and be able to prioritize effectively. A B.A. or B.S. degree from an accredited university or college is preferred. This is not an entry level job, and salary...
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| Thursday Video: Spending for the Axis or Saving for Taxes |
| 2008-06-25 23:00:00 |
This Donald Duck cartoon from 1943 ("The Spirit of '43") has a message: work hard for the war effort, and use your money for income taxes and not for personal consumption. Takeaway line: "[E]very American should pay his or her income tax, gladly and proudly. This year, thanks to Hitler and Hirohito, taxes are higher than ever before." Check out the history of federal income tax rates here, including 1943 when rates ranged from 19 percent to 88 percent (they would increase to 23 to 94 percent in 1944). More on income taxes here....
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| First Hard Numbers on Obama Tax Plan Show Dramatic Tax Redistribution |
| 2008-06-25 23:00:00 |
Senator Obama's tax plan is a dramatic redistribution of the nation's tax burden, according to a new Tax Foundation analysis.In Tax Foundation Fiscal Fact, No. 132, Tax Foundation president Scott Hodge uses revenue estimates from the Tax Policy Center to show that Obama's plan would greatly accelerate the decades-long trend toward a federal government that depends for tax revenue almost exclusively on a few high-income people. This contrasts starkly with the McCain plan, according to Hodge, which would give every taxpayer a cut and leave the current tax burden distribution approximately where it is."Under the Obama plan for 2009," explains Hodge, "more than $131 billion would be shifted from the tax burden of all low-, middle- and high-income taxpayers to the burden of the h...
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| Great Tax Moment in Simpsons History |
| 2008-06-25 23:00:00 |
[Lisa Simpson, as President of the United States]Lisa:If I'm going to bail the country out, I'll have to raise taxes, but in my speech I'd like to avoid calling it a, "painful emergency tax."Milhouse: What about, "colossal salary-grab."Lisa:See, that has the same problem. We need to soften the blow.Milhouse:Well, if you just want to out-and-out lie ... [Lisa doesn't object] Okay, we could call it a, "temporary refund adjustment."Lisa: I love it.[Later, Lisa is on TV]Lisa: My fellow Americans and voting illegal aliens, I will not mince words. Your country needs you. That's why today I'm proposing a temporary refund adjustment.Moe: Refund adjustment? Hey, sounds good to me.Lenny: ...
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| Dubious BATSA Scoring from the NGA |
| 2008-06-24 23:00:00 |
At yesterday's hearing on H.R. 5267 (the Business Activity Tax Simplification Act or "BATSA"; see Joseph Henchman's post below for background), one of two groups testifying in opposition was the National Governor's Association. As part of its testimony, NGA resurrected its 2005 study on a similar bill, which estimated that BATSA would cost states $6.6 billion per year in business tax revenue.As the Council on State Taxation pointed out back in 2005, the NGA study uses an imprecise methodology and is biased to overstate the BATSA revenue loss. Highlights of COST's takedown of the NGA study include:Though the study is based on a survey of state governments, only 34 of 50 states actually provided responses.States with similar business tax systems forecast widely divergent changes ...
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| The Carbon Tax as a Tool for Redistribution |
| 2008-06-24 23:00:00 |
A growing number of conservative economists are becoming enamored with carbon taxes as a means of using market forces to address global climate change. One of the leaders of this movement is Harvard economist Greg Mankiw who has started a "Pigou Club" named after economist Arthur Pigou who developed the idea of using taxes to reduce negative externalities resulting from market activities. http://en.wikipedia.org/wiki/Pigovian_taxWhile acknowledging the serious impact a carbon tax could have on the entire economy, these economists argue that the substantial revenues generated by the tax could be used to cut other economically inefficient taxes such as the corporate income tax.Admittedly, there is a certain intellectual elegance in the idea of shif...
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| Thoughts on the BATSA Hearing |
| 2008-06-24 23:00:00 |
Yesterday, several Tax Foundation staffers and interns attended a hearing held by the House Judiciary Committee's Subcommittee on Commercial and Administrative Law. The subject of the hearing was H.R. 5267, the Business Activity Tax Simplification Act of 2008 (BATSA), and the Tax Foundation submitted testimony analyzing the issue of business presence for taxation purposes. As the world economy becomes more integrated, it is growing easier to move capital investment and job creation to states with better tax climates. As this occurs, it creates a dilemma for states that lose in-state businesses to this tax competition. It also makes it more difficult to answer the question of where a transaction occurs. If a seller is in Pennsylvania and a buyer in Colo...
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