Source: Kim Rueben and Carol Rosenberg, Urban Institute, April 14, 2008
From the abstract:
State and local revenues have been relatively stable over the last 30 years, growing from 13.5 percent of GDP in 1972 to 16.3 percent in 2005. However, as shown in the table, the composition of revenues has changed, with property taxes declining from 25.6 percent of revenues to only 16.6 percent. Much of this decline occurred in the 1970s.
Source: American Lung Association/Robert Wood Johnson Foundation
The annual update of State Legislated Actions on Tobacco Issues--SLATI, for short--is now in its 20th year of publication.
Published by the American Lung Association with support from RWJF, the report tracked the passage of legislation and other state policies related to tobacco control and prevention, including tobacco taxes, youth access and funding for tobacco control programs during 2007.
SLATI 2007 showed an increasing number of states taking strong action against tobacco during the year--including five states which took steps to counter the harmful effects of secondhand smoke.
Indeed, eight states passed increases in their tobacco taxes in 2007, bringing the average state cigarette tax up to $1.11 a pack--a dramatic increase from the beginning of 2002. Back then, the average tax was only 44.6 cents per pack.
Full Report (PDF; 3.7 MB)
Source: Matt Fiedler, Center on Budget and Policy Priorities, April 14, 2008
Over the next several years, policymakers will face important choices about the level of government revenues. Since the government collects taxes in order to finance public services, it is useful to examine where tax dollars go when thinking about these crucial tax-policy decisions.
Source: PBS NOW, April 11, 2008
This month, millions of Americans are filing their taxes and hoping for the best, but are rich people actually paying a smaller percentage of taxes than the poor? NOW looks at plans in many states to raise sales taxes and lower property taxes in an effort to generate revenue. But those changes may come at an even bigger price. Anti-poverty advocates say this shift would place the heaviest tax burden on the poorest households--and benefit higher-income Americans. Despite the charge, it's a model many states have long embraced. NOW travels to one of these states, Alabama, to document the personal impact of regressive tax policies on three very different families. They include a working Mom who shows us how a ten percent sales tax on groceries makes a significant difference in what her family eats; a couple living in a ramshackle house in the backwoods who've always held jobs but still face hunger; and a well-to-do suburban couple who benefit from huge tax breaks.
Source: U.S. Congress, Joint Committee on Taxation
The Senate Committee on Finance has scheduled a public hearing for April 15, 2008, entitled "Tax: Fundamentals in Advance of Reform." This document,1 prepared by the staff of the Joint Committee on Taxation, provides a summary of the present-law Federal tax system as in effect for 2008.
The current Federal tax system has four main elements: (1) an income tax on individuals and corporations (which consists of both a "regular" income tax and an alternative minimum tax); (2) payroll taxes on wages (and corresponding taxes on self-employment income); (3) estate, gift, and generation-skipping transfer taxes, and (4) excise taxes on selected goods and services. This document provides a broad overview of each of these elements.2 A number of aspects of the Federal tax laws are subject to change over time. For example, some dollar amounts and income thresholds are indexed for inflation. The standard deduction, tax rate brackets, and the annual gift tax exclusion are examples of amounts that are indexed for inflation. In general, the Internal Revenue Service adjusts these numbers annually and publishes the inflation adjusted amounts in effect for a tax year prior to the beginning of that year. Where applicable, this document generally includes dollar amounts in effect for 2008 and notes whether dollar amounts are indexed for inflation.
In addition, a number of the provisions in the Federal tax laws have been enacted on a temporary basis or have parameters that vary by statute from year to year. For example, the Tax Relief and Health Care Act of 2006 extended a number of expired or soon to expire provisions on a temporary basis. In addition, many of the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 initially were to expire at the end of 2010; some provisions of that Act have been modified subsequently or made permanent. For simplicity, this document describes the Federal tax laws in effect in 2008 and generally does not include references to provisions as they may be in effect for future years or to termination dates for expiring provisions. A list of expiring tax provisions may be found in Joint Committee on Taxation, List of Expiring Federal Tax Provisions 2007-2020, (JCX-1-08), January 11, 2008.
Full report (PDF; 101 KB)
Source: Center on Budget and Policy Priorities, March 2008
The Center analyzes state budget issues including multi-state trends, the adequacy and equity of tax policies, structural budget issues, and budget transparency.
Series includes:
▪ Policy Points: Four Helpful Hints for States Dealing With Deficits
▪ Fiscal Stimulus at the State Level?
▪ Income Tax Surcharges Can Help States Close Budget Gaps
▪ It's Time for Many States To Use Their Rainy Day Funds
▪ and more.
Source: Congressional Research Service
• February 26, 2008 - Child Welfare Issues in the 110th Congress
• February 20, 2008 - Trade Adjustment Assistance (TAA) for Workers: Current Issues and Legislation
• February 19, 2008 - The Alternative Minimum Tax For Individuals: Legislative Activity in the 110th Congress
• February 14, 2008 - Largest Mergers and Acquisitions by Corporations in 2007
Source: Congressional Budget Office, Pub. No. 2906, February 2008
Since the inception of the federal income tax in 1913, federal taxpayers have been allowed to deduct certain state and local taxes in calculating their taxable income. In its final report, in 2005, the President's Advisory Panel on Federal Tax Reform recommended elimination of the state and local tax deduction, which provides a federal subsidy for some of the taxes levied by state and local governments. That subsidy is of substantial personal benefit to residents of the states and localities that receive it, but it is not shared equally among all federal taxpayers. In addition, the individual alternative minimum tax (AMT) increasingly eliminates the benefit of the state and local tax deduction for many middle-class taxpayers.
This Congressional Budget Office (CBO) paper, which was prepared at the request of the Ranking Member of the Senate Budget Committee, examines the arguments for and against the state and local tax deduction; how the benefits from the deduction are distributed among different groups of taxpayers and different governments; how the deduction and the AMT interact; and how modifying or eliminating the deduction would affect the federal budget, the finances of state and local governments, and federal taxpayers. In accordance with CBO's mandate to provide objective, impartial analysis, the paper makes no recommendations.
Source: Elizabeth McNichol and Andrew Nicholas, Center on Budget and Policy Priorities, February 21, 2008
States are on the brink of their worst fiscal problems since the 2001 recession. At least half the states are anticipating budget shortfalls for next year (fiscal year 2009). For those states that have estimated the size of the gap, estimated deficits range from $34 billion to $38 billion in total. Among affected states, these deficits represent between 8 percent and 9 percent of total state expenditures.
Source: Nicholas Johnson, Center on Budget and Policy Priorities, February 13, 2008
The federal "economic stimulus" package enacted today not only cuts federal taxes, but also threatens to reduce many states' corporate and personal income tax revenue this year and next year.
The potential revenue loss comes at a particularly problematic time for states, because about half the states are already facing budget shortfalls for the current year, the upcoming year, or both; more states will be in trouble if the economic downturn worsens. Some states are already enacting cuts in K-12 education, higher education, health care and human services, among other areas in order to balance their budgets.
Source: Aviva Aron-Dine, Center on Budget and Policy Priorities, February 13, 2008
Republican congressional leaders have sharply attacked House Ways and Means Chairman Rangel's proposal to replace the Alternative Minimum Tax with a tax surcharge for very-high-income households as a massive tax increase that would seriously damage, even "doom," the economy. In fact, however, the Rangel plan is not a tax increase. Moreover, it would create a tax system that is simpler, more progressive, and likely better for the economy than either current law or the idea favored by many of the plan's critics: eliminating the AMT without paying for it.
See also:
Fact Sheet
Source: C. Eugene Steuerle, Gillian Reynolds, and Adam Carasso, Economic Mobility Project, February 4, 2008
Today, the Economic Mobility Project released a report on the federal government's investment in economic mobility. The report, authored by C. Eugene Steuerle and Gillian Reynolds of The Urban Institute and Adam Carasso of the New America Foundation, finds that while the federal government makes a significant investment in economic mobility ($746 billion or 5.7 percent of GDP in 2006) the majority of that investment goes to middle and upper income households. Less than one-third (27 percent) of federal mobility spending goes to lower income households. While these households do benefit from many other federal programs, those programs generally are not aimed at promoting mobility and sometimes even discourage it. Between 2006 to 2012, under current law programs targeted to lower income households would decline as a percentage of GDP, while those targeted to the rich would increase over the same period.
Source: Elaine Maag, David Merriman, Urban Institute, January 30, 2008
Every state except Vermont operates under some sort of balanced budget requirement. That means that to serve the increased need of distressed populations during recessions, states must either increase revenue or reallocate resources dedicated to other programs. Similarly, when revenue declines, states must raise taxes or reallocate resources. This report examines the extent to which rainy day and general fund savings were a significant factor in helping states cope with fiscal stress during and after the 2001 recession, a possible explanation for the lower than expected legislated tax increases and social welfare cuts.
Source: Aviva Aron-Dine, Center on Budget and Policy Priorities, January 28, 2008
In his State of the Union address this evening, President Bush is expected to renew his push to make his signature tax cuts permanent. In recent weeks, Administration officials have offered three major arguments for this policy -- (1) the tax cuts yielded strong economic growth over the past few years, (2) extending them would help the economy overcome its current weakness, and (3) extending them would improve the economy's performance over the long run. None of these claims bears up well under scrutiny.
Source: Internal Revenue Service
From press release:
The Internal Revenue Service today released the fall 2007 issue of the Statistics of Income Bulletin, featuring data from 134.4 million individual income tax returns filed for tax year 2005.
U.S. taxpayers reported $7.4 trillion of adjusted gross income less deficit in tax year 2005, up 9.3 percent from tax year 2004 when 132.2 million returns were filed.
Certain types of income posted strong gains between 2004 and 2005. Net capital gains climbed 41 percent and taxable interest rose 29.5 percent, while net partnership and S corporation income gained 27.3 percent.
Taxable income totaled $5.1 trillion in tax year 2005, up 10 percent from the prior year. Total income tax increased for a second straight year, rising 12.4 percent to $934.8 billion. Between tax years 2003 and 2004, total income tax rose 11.2 percent, the first increase in 4 years.
The alternative minimum tax (AMT) grew 33.7 percent between 2004 and 2005 to $17.4 billion. Four million taxpayers paid the AMT in 2005, compared to almost 3.1 million in tax year 2004.
Fall 2007 SOI Bulletin (PDF; 3.6 MB)
Source: Internal Revenue Service
The Internal Revenue Service today issued the 2008 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning Jan. 1, 2008, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be:
• 50.5 cents per mile for business miles driven;
• 19 cents per mile driven for medical or moving purposes; and
• 14 cents per mile driven in service of charitable organizations.
The new rate for business miles compares to a rate of 48.5 cents per mile for 2007. The new rate for medical and moving purposes compares to 20 cents in 2007. The rate for miles driven in service of charitable organizations has remained the same.
Revenue Procedure 2007-70 (PDF; 57 KB)
Source: Good Jobs First
State governments are improving their transparency practices, but many are still not taking full advantage of the Internet to inform the public. Online disclosure of corporate tax breaks and other economic development subsidies lags far behind reporting on procurement contracts and lobbying activities. These are the main findings of a report entitled The State of State Disclosure released today by the Corporate Research Project of Good Jobs First.
"The Internet makes possible an unprecedented level of government transparency and public participation." said Good Jobs First Executive Director Greg LeRoy, "But many states have been slow to adopt vigorous online disclosure, especially with respect to economic development subsidies. Twenty-seven states and the District of Columbia still provide no systematic online subsidy disclosure."
The Good Jobs First study evaluates the quantity and quality of state government online disclosure in three categories: economic development subsidies, state procurement contracts and lobbying activities at the state level. It rates each state's Web sites in the three areas on criteria such as ease of searching especially for company-specific data), level of detail, scope of coverage and currency of data. Using these criteria, it assigns a score (0 to 100 percent) to the states' performances in each of the three areas and overall, and translates the percentages into school-style letter grades (A through F).
Executive Summary (PDF; 63 KB)
Full Report (PDF; 496 KB)
State Disclosure page
Source: Center on Budget and Policy Priorities
Since 2001, the Administration and Congress have enacted a wide array of tax cuts, including reductions in individual income tax rates, repeal of the estate tax, and reductions in capital gains and dividend taxes. Nearly all of these tax cuts are scheduled to expire by the end of 2010. Making them permanent would cost about $3.5 trillion over the next decade (when the cost of additional interest on the federal debt is included). Because important decisions about these tax policies must be made in the next few years, it is essential to understand their effects on deficits, the economy, and the distribution of income. Supporters of the tax cuts have sometimes sought to bolster their case by understating the tax cuts' costs, overstating their economic effects, or minimizing their regressivity. Here, we address some of the myths heard most frequently in recent tax-cut debates.
From the press release:
More than three-fourths of Maryland taxpayers would pay less in state income taxes under Governor O'Malley's income-tax restructuring plan, and only the highest-income 2 percent of taxpayers would pay more, a Center on Budget and Policy Priorities analyst told state lawmakers Thursday.
Source: Leonard E. Burman, Urban Institute, October 29, 2007
From the abstract:
In a tax code with no shortage of ironies, the alternative minimum tax (AMT) stands out. Created by Congress in 1969, it was aimed at millionaires, but relatively few millionaires pay it. It is billed as a low-rate levy, but most of its victims face higher taxes because of it. It undermines two widely lauded reforms of the income tax--restoring both bracket creep and the marriage penalty. And though nobody favors keeping this Frankenstein alive, it will be very difficult to kill. Welcome to the tax policy twilight zone.
Source: Michael Mazerov, Center on Budget and Policy Priorities, October 26, 2007
From the summary:
A growing number of states are adopting or considering a key corporate tax reform known as "combined reporting." Most large corporations consist of a parent corporation and its subsidiaries; combined reporting effectively treats the parent and most or all of its subsidiaries as a single corporation for state income tax purposes.
Almost half the states with corporate income taxes have adopted combined reporting. Five states have enacted the reform in the last three years, and several others have seriously considered doing so. A major reason for states' growing interest is their recognition of how badly corporate tax shelters that exploit the lack of combined reporting are eroding state corporate tax payments. Corporations have devised a wide variety of strategies to artificially shift profits to out-of-state subsidiaries. Combined reporting largely negates these strategies by enabling the state to tax a fair share of the profit shifted into a related, out-of-state corporation.
This report discusses some of the corporate tax-avoidance strategies to which non-combined reporting states are most vulnerable and explains how combined reporting can help a state preserve a strong and fair corporate income tax.
Source: Jonathan Williams, Tax Foundation, Background Paper, no. 56, October 2007
From the press release:
As the price of oil, and subsequently the price of gasoline, has continued to rise in recent years, many motorists have expressed outrage over the "pain at the pump." A new study released today by the Tax Foundation shows that drivers' ire should be aimed not only at oil and gas producers, but also at the uneven and increasingly unprincipled taxation of gas across the United States.
While there are legitimate concerns about the safety of the nation's infrastructure, increasing the federal gas tax is unnecessary and will ultimately hurt America's poor and low-income citizens. Fortunately, Congress can better ensure the soundness of the nation's bridges and overpasses without raising taxes, simply by shifting existing funds within the transportation budget.
Source: Elaine Maag, Urban Institute, October 11, 2007
There are two primary tax benefits parents use to offset childcare costs. The Child and Dependent Care Tax Credit (CDCTC) provides a tax credit of up to 35 percent on up to $3,000 of expenses per child ($6,000 total), for a maximum credit of $1,050 per child ($2100 total). Or, employees can arrange with their employers to exclude up to $5,000 from their salary to pay for child care. While benefits from the CDCTC swamped those available from the exclusion in 2006; benefits from the child care credit are projected to decline dramatically, largely due to the increase in the number of taxpayers subject to the Alternative Minimum Tax (AMT) beginning in 2008.
Source: C. Eugene Steuerle, Urban Institute, October 09, 2007
The Washington Post, October 8, 2007--Do you ever wonder why more conflicts seem to flare between charities and businesses? Just last year, the Senate Finance Committee and the House Ways and Means Committee began investigating questions ranging from whether nonprofit hospitals were really charitable to whether corporate-size salaries for some foundation board members and charitable officers were excessive. In the District, fights continue over the pending sale of Greater Southeast Community Hospital--initially a nonprofit, now owned by a money-losing for-profit and seeking to sell itself to another for-profit. The deal depends on millions in local government subsidies.
Source: Aviva Aron-Dine and Arloc Sherman, Center on Budget and Policy Priorities, October 10, 2007
From the summary:
A number of bills currently before Congress would expand the component of the Earned Income Tax Credit available to low-income working adults who are not raising minor children. The most recent congressional proposal (H.R. 2951), introduced by Representatives John Yarmuth and Keith Ellison (and cosponsored by seven other representatives), is the most expansive of these proposals. Legislation to expand the childless workers' EITC also has been introduced this year by Senators Barack Obama and Evan Bayh, and by Senator John Kerry and Representative Bill Pascrell.
See also:
A Majority Of States With Income Taxes Have Enacted State Earned Income Tax Credits
From the press release:
Proposals to change the tax treatment of health insurance could mean the end of employment-based coverage as it now exists in the United States, according to a study released today by the nonpartisan Employee Benefit Research Institute (EBRI).
Currently, the vast majority of U.S. residents with health insurance receive coverage through an employer. The most recent data show that about 62 percent of workers and their dependents (161.7 million individuals under age 65) had some form of employment-based health benefits, while about 7 percent (17.7 million) bought insurance directly from an insurer, and 18 percent (46.5 million) were uninsured.
Of the various options to change the way health benefits are taxed, the EBRI report identifies the proposed "tax cap" on the health insurance exclusion that workers currently receive as most likely to cause the end of employment-based health benefits. This change would be likely to prompt younger and healthier workers to drop out of the employment-based system, causing adverse selection in the remaining pool of older and less healthy workers, thereby resulting in a so-called "death spiral" that makes employment-based group health insurance unsustainable.
Source: Chad Stone, Center on Budget and Policy Priorities, September 10, 2007
Key Findings
•Most assessments of the long-run fiscal outlook conclude that higher revenues will need to be a part of any serious effort to prevent budget deficits from growing to unsustainable levels.
•A recent CBO analysis shows that the economic benefits of achieving fiscal sustainability are substantial, and that the difference between the economic effects of reducing the deficit through tax increases and doing so through spending cuts would likely be very small by comparison.
•CBO also finds that any negative economic effects of tax increases can be mitigated by relying more on policies that broaden the tax base than on increases in marginal tax rates. CBO suggests that the economic effects of raising revenue by broadening the tax base can be similar to the effects of cuts in government benefit programs.
•CBO's analysis also indicates that no policy to restore long-term fiscal sustainability is likely to be successful if the rate of growth in health care expenditures is not reduced.
From the summary:
In this testimony Burman discusses the issues of tax fairness, the 2001 to 2006 tax cuts, and the individual alternative minimum tax. Burman argues that while the federal tax system mitigates economic inequality, the recent tax cuts have disproportionately benefited those at the top, while also increasing the number of people potentially subject to the AMT. He concludes with a brief discussion of how to fix the AMT in a fiscally responsible manner.
Related articles:
The Effect of the 2001-06 Tax Cuts on After-Tax Incomes
Source: Jason Furman, The Brookings Institution, Testimony Before the U.S. House Committee on Ways and Means, September 6, 2007
Source: Internal Revenue Service, Vol. 27 no. 1, Summer 2007
From press release:
The Internal Revenue Service today announced the release of the summer 2007 issue of the Statistics of Income Bulletin, featuring data from 21.5 million individual income tax returns that reported non-farm sole proprietorship activity in tax year 2005.
Profits from all non-farm sole proprietorships totaled $269.9 billion in 2005, up 9 percent from tax year 2004. After adjusting for inflation, profits rose by 5.5 percent in 2005, which is the biggest year-to-year increase since a 7.2 percent gain in 1998.
All but one sole proprietor industrial sector saw an increase in profits in tax year 2005.
The real estate and rental leasing sector posted a 19.4 percent gain in profits, which was the biggest in percentage terms among the sector categories. Transportation and warehousing was second highest with a 15.5 percent profit gain. Retail trade was third with a 14.6 percent increase. (The sector-specific figures have not been adjusted for inflation.)
Wholesale trade (merchant wholesalers) was the only sole proprietor industrial sector to post a profit decline in tax year 2005 of 3.5 percent.
Source: Congressional Research Service (via OpenCRS)
American taxpayers spend nearly $100 million a year to fund the Congressional Research Service, a "think tank" that provides reports to members of Congress on a variety of topics relevant to current political events. Yet, these reports are not made available to the public in a way that they can be easily obtained. A project of the Center for Democracy & Technology, Open CRS provides citizens access to CRS Reports that are already in the public domain and encourages Congress to provide public access to all CRS Reports.
• Integrating Medicare and Medicaid Services Through Managed Care
• Medicare Prescription Drug Benefit: Low-Income Provisions
• Primer on Disability Benefits: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI)
• Social Security Administration: Administrative Budget Issues
• Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI): Proposed Changes to the Disability Determination and Appeals Processes
• Supplemental Security Income (SSI): Accounts Not Counted As Resources
• Tax Benefits for Health Insurance and Expenses: Overview of Current Law and Legislation
Source: Karen Lyons and Iris J. Lav, Center on Budget and Policy Priorities, June 21, 2007
Several states (Connecticut, Florida, Minnesota, New Jersey, Rhode Island, and Texas) have recently considered imposing severe caps on property tax revenue. These caps restrict the amount that property tax revenue can increase from year to year to a low fixed percentage, a formula based on the inflation rate, or some combination of the two.
While such caps may hold down property taxes, they are likely to impair local governments’ ability to provide education, public safety, and other services residents demand and need. They also are likely to make the local revenue system more regressive.
Property tax caps do nothing to change the main drivers behind higher property taxes. They cannot slow the increase in the cost of health care or fuel, for example, which reflects forces outside of the control of local officials. Nor do they change the demand for local public services, such as quality K-12 education, public safety, and good roads.
Source: American City and County, August 8, 2007
The Internal Revenue Service (IRS) has ruled that employee contributions to a trust fund established by Bristol, R.I., to fund post employment benefits are tax exempt. The ruling sets a precedent for other cities seeking similar solutions to pay for Other Post Employment Benefits (OPEB).
Source: William G. Gale, Opportunity 08: A Project of the Brookings Institution, 2007
A good tax system raises the revenues needed to finance government spending in a manner that is as simple, equitable, stable, and conducive to economic growth as possible. But the challenge for the next President will be to make reform work not just in the abstract, but in the real world, where special interests often rule the roost. The next President should support reforms that would tax all income once (only) at the full tax rate, simplify and streamline the tax code, and, of course, raise sufficient revenues. To achieve these goals, the package of specific reforms proposed in this paper would:
tax all new corporate investment income only once
remove all corporate subsidies in the Code and strengthen corporate anti- sheltering provisions
integrate payroll and income taxes for individuals
introduce return-free filing for many taxpayers
consolidate and streamline tax subsidies for education, retirement and families
eliminate or revise various tax deductions
create a value-added tax that would, eventually, raise 5 percent of the gross domestic product (GDP) in revenues
+ Fact Sheet
Source: Alan Berube, The Metropolitan Policy Program, The Brookings Institution, July 13, 2007
Though most do not recognize it as an “urban” program, the Earned Income Tax Credit provides significant benefits to families in cities and suburbs, and stimulates local economic activity. In this presentation to Congressional staff organized by Living Cities, Alan Berube examines what Members can do to maximize the benefits of the EITC for lower-income families and communities in their districts.
Source: Joint Committee on Taxation, JCX-53-07, July 19, 2007
The House Committee on Ways and Means, Subcommittee on Oversight, has scheduled a public hearing for July 24, 2007, regarding an overview of tax-exempt charitable organizations.
This document, prepared by the staff of the Joint Committee on Taxation, provides a brief description of present law provisions relating to organizations described in section 501(c)(3) of the Internal Revenue Code of 1986 (the “Code”), and provides a summary description of the section 501(c)(3) organization-related provisions of the Pension Protection Act of 2006 and related proposed legislative proposals.
Source: Michael Mazerov, Center on Budget and Policy Priorities, July 11, 2007
Key Findings
+ Making the 1998 “Internet Tax Freedom Act” permanent — as proposed by S. 156/H.R. 743 — could adversely affect state and local government revenues, and therefore the availability of funds for important services like education, health care, and law enforcement, in three ways:
+ Potentially block states and localities from extending their normal sales taxes to music, movies, and television programming delivered over the Internet, which is rapidly becoming a major marketplace for such services.
+ Allow Internet access providers to try to escape a host of general taxes that other businesses must pay, such as sales taxes on equipment purchases;
+ Deprive nine states of $80m-$120m in annual revenues from non-discriminatory and heretofore grandfathered taxes on Internet access services;
+ The enactment of this legislation is unwarranted:
+ Studies by GAO and U. of Tennessee economists show that existing taxes on Internet access have not adversely affected household subscriptions to access or the availability of broadband access in particular locations.
+ All of the 14 developed nations that outrank the U.S. in broadband adoption do tax Internet access services. Taxation is not the issue.
Source: John C. Scott, A Paper Submitted to the Conference on Empirical Legal Studies - November 9-10, 2007, posted to the web: July, 5 2007
abstract
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American workers are experiencing a long-term decline in the quality and quantity of retirement income security despite the enactment of dozens of tax laws supporting private pensions, hundreds of tax rules, and billions in lost tax revenue for over 40 years. Why is pension security eroding, and why is retirement income policy ineffective? I argue that the system of tax laws and institutions governing private pensions both directs political change as well as responses to such change in a way that is shifting risk onto workers. This paper grounds its review in the structure of pension law as found in the tax code. I first review general trends regarding retirement and retirement plans as well as the general pattern of tax legislation affecting pensions. In particular, I note the rise of the 401(k) plan, which has become the major type of private pension program in the United States. The combination of a diffuse set of tax laws governing pensions and the fragmented nature of key stakeholders creates an game-like environment in which each group and subgroup compete for changes in tax legislation at the expense of others. The paper concludes with an attempt to bridge fiscal sociology with the sociology of risk in the context of retirement policy.
Source: Laurence J. Kotlikoff and David S. Rapson, National Center for Policy Analysis, NCPA Study No. 298, June, 2007
Does it pay to save? The answer is often no. In fact, penalties for saving are astronomical for some households, particularly young, single-parent and lower-income families. But these are the very people who need the strongest incentives to save for retirement.
Determining the effective marginal tax on additional saving is difficult because of the complexity of the tax code and the interaction of different government tax and transfer programs (such as food stamps) that are limited to households below certain income and asset ceilings. Saving and wealth accumulation can put a family over an asset limit and cost thousands of dollars in lost benefits.
To calculate the effective marginal tax on saving, this study uses financial planning software that carefully determines tax and transfer payments at each stage of a person’s life, based in part on economic choices they make in prior periods. The model assumes people try to even out consumption over their lifetimes.
The results: For single parents with two children, effective marginal taxes on savings are regressive - lower-income households pay higher rates than high-income households.
Source: Internal Revenue Service, IR-2007-119, June 18, 2007
The Internal Revenue Service today announced the release of the spring 2007 issue of the Statistics of Income Bulletin. Highlights include articles on high-income individual income tax returns, taxpayers reporting noncash contributions, farm proprietorship returns, qualified zone academy bonds, international boycott reports and S corporations.
The article on farm proprietorship returns is the first published by IRS in more than 20 years. In addition, this issue of the Bulletin presents selected tax year 1990-2004 individual income tax return data that have been indexed for inflation and tax year 2005 individual income tax return statistics classified by state and size of adjusted gross income.
For tax year 2004, there were 3,021,435 individual income tax returns filed with adjusted gross income (AGI) of $200,000 or more and 3,067,602 returns with expanded income of $200,000 or more.
Download in sections or as full document
Source: Jennifer Burnett, State News, Vol. 50 no. 4, April 2007
In 1927, Oliver Wendell Holmes said “taxes are what we pay for a civilized society.” Eighty years later, one form of tax—the property tax—is being scrutinized by state and local governments, due in part to the meteoric rise of property values in recent years. A flood of legislation is being considered across the country to address concerns about property tax increases, how tax revenues are calculated and distributed, and local governments’ reliance on those revenues.