Daily Deduction

from the Tax Policy Center

Another Short-Term Rescue and a Misdiagnosed Problem

By :: July 29th, 2015

The latest on highway funding… Just before leaving town for its August recess, the House approved a three-month extension of highway funding until October 29. That is likely to push  the Senate to follow suit. The Senate is likely to act tomorrow. Lawmakers say they’ll use the extra time to work with the White House on a long-term funding solution.  Funding expires on July 31.

Also on the Hill. The Senate Judiciary Oversight Subcommittee holds a hearing today on the progress of agency reforms and congressional options in the wake of the IRS targeting scandal.

Is it better if investors hold on to assets longer? Democratic presidential candidate Hillary Clinton thinks it is, and she’s designed capital gains tax rates to encourage it. But TPC’s Len Burman explains how she’s misdiagnosed the problem as “activist investors” and concludes her plan isn’t likely to change corporate behavior very much.

In Maryland: Tax amnesty for a revenue boost. This fall, delinquent taxpayers have the chance to square up their tax debts and pay only half—6.5 percent—the annual interest due as penalty. Maryland will waive other penalties except in cases of fraud. Delinquent taxpayers owe the state about $800 million. The amnesty program could add at least $18 million to the state's general fund revenues for the 2016 fiscal year, and local revenues could grow by at least $4.5 million. Amnesty runs from September 1 through October 30.

But in Portland, Oregon: Failure to pay a new arts tax will bring the hammer down. Voters approved a $35 income tax in 2012 to pay for state arts teachers and programs. But a city audit finds that nearly 200,000 Portlanders either haven't paid their first bill or filed paperwork claiming they are exempt from the levy. The city has increased its collection efforts, but plans to refer delinquent taxpayers to a collection agency next year.

And in Ohio, Amazon invests in exchange for a tax credit. The online retailer promises to build distribution centers to the tune of $200 million and hire 2,000 people. Ohio has approved tax credits valued at about $17.5 million. Amazon’s new jobs are worth about $60 million.

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Hillary Clinton’s Off-the-Mark Proposal to Encourage More Patient Investors

By :: July 28th, 2015

Democratic presidential hopeful Hillary Clinton has proposed to radically rejigger top capital gains tax rates to encourage investors to take a longer-term perspective. But I think she’s misdiagnosed the problem and, even if she’s right, the proposal won’t work as she expects. Her idea: Give investors a tax incentive to support productive long run investments […]

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Running Out the Clock on the Hill?

By :: July 28th, 2015

Highway funding work continues. The Senate continues its work on highway funding legislation, scrambling to finish its work by the end of the week. If it doesn’t send a bill over by tomorrow, the House will not have to time to consider it before current funding expires on Friday. Neither the House nor the Senate […]

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How Did the Gas Tax Lose Its Mojo, Even Among Conservatives?

By :: July 27th, 2015

With just a few days left before federal funding for highway programs expires, the Senate is debating all sorts of amendments to an extension– from export subsidies to the Affordable Care Act. But there is one subject it will not debate—the gas tax. Except for a handful of lawmakers, nobody in Congress or the White House […]

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Compliance, Complications, and Competition

By :: July 27th, 2015

The latest from the Hill… The Senate continued its work on highway funding yesterday: It blocked Senator Ted Cruz’s effort to tie the bill to the Iran deal; approved reauthorization of the Export-Import Bank; and defeated a symbolic Affordable Care Act repeal amendment. The House and Senate both hope to pay for the road bill with […]

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"The Long and Winding Road... Will Never Disappear..."

By :: July 24th, 2015

The Senate’s six-year highway bill inches forward, after dropping a Social Security provision. Majority Leader Mitch McConnell won 14 Democrats’ votes for the bill after he agreed to drop a $2.3 billion offset. The money would have come from barring people with felony warrants from getting Social Security benefits. The Senate will keep voting on […]

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Who Benefits Most From Repealing the ACA Cadillac Tax?

By :: July 23rd, 2015

Republicans and some Democrats in Congress are pressing to repeal the Affordable Care Act’s Cadillac tax—a 40 percent excise tax on high-cost employer-sponsored health insurance plans. Backers of repeal argue that curbs on these generous plans would disproportionately hurt low- and middle-income workers. But a new Tax Policy Center analysis shows that story is overstated. In […]

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Big Talk, Growing Opposition

By :: July 23rd, 2015

Can the Senate pass a highway bill? Last night, the Senate finally voted to begin debate on its version of a transportation bill. But it is in for a tough slog thanks in part to two GOP presidential hopefuls. Ted Cruz has threatened to tie the Iran deal to the measure. The Texan wants an amendment that “ensures no Iranian nuclear deal unless Iran recognizes […]

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Reruns, R-Rated Reform, and Gimmickry

By :: July 22nd, 2015

Everything old is new again. It took the Senate Finance Committee about 90 minutes to move a bill to renew a slew of expired tax breaks for two years. The cost: $97 billion. Bloomberg notes that beneficiaries include Broadway producers, big banks, and wind-energy companies. Finance Chair Orrin Hatch said: “Each of these provisions have […]

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Hillary Clinton’s Complex, Gimmicky Profit-Sharing Plan

By :: July 21st, 2015

Democratic presidential frontrunner Hillary Clinton has offered a new tax subsidy to encourage firms to share profits with their employees. The idea of profit sharing is worth debating, but Clinton’s specific proposal is enormously complicated and depends on budget gimmicks to add up. Her basic idea: Give firms a 15 percent tax credit for each […]

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