A Hail Mary or Two on the Hill

Congress is not quite “ready for some football.” With trouble in the Middle East, an Ebola outbreak in Africa, and mid-term elections, the National Football League’s tax-exempt status is not high on the Congressional to-do list. That’s not keeping some senators from trying to repeal it. Washington Democrat Maria Cantwell wants to punish the NFL since the Washington Redskins refuse to change their name. New Jersey Democrat Cory Booker’s effort targets the NFL’s level of response to domestic violence charges against players.

Pennsylvania edges closer to eliminating its school property taxes. The state’s Senate Finance Committee passed a bill to replace school property taxes. Those taxes would be replaced with $13 billion in additional state sales and income taxes. Two-thirds would come from raising the sales tax rate from 6 percent to 7 percent and applying the levy to more goods and services. The measure would hike the income tax rate from 3.07 to 4.34 percent. A companion bill has not moved forward in the state’s House.

State tax breaks: Could money be better spent? A new working paper by Jeremy Horpedahl for George Mason University’s Mercatus Center finds that state tax breaks cost $432 billion a year. Horpedahl provides a case study of Nebraska that spends about $2 billion a year on tax subsidies of all kinds. If the preferences such as sales tax exemptions and some income tax deductions were eliminated and overall tax rates  lowered, Horpedahl estimates the average family would keep an extra $3,200 a year. The paper, however, does not attempt to calculate the distributional effects of such a change.

Federal taxpayers might have a little more money next year. Thanks to inflation adjustments, if a taxpayer’s income stays the same, he or she may enjoy a lower effective tax rate and lower tax bill in 2015.

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Havens Abroad, Shelters Ashore

No more tax havens abroad? The Organization for Economic Cooperation and Development released its plan to limit corporate tax avoidance. All 34 OECD members plus 10 other countries including China and Russia have approved the proposals, though each nation must still implement them. The recommendations are designed to “ensure the coherence of corporate income taxation […]


Congress Cries Wolf Over Internet Access Taxes

Unable to do anything important before its election season recess, Congress is about to knock down a favorite digital straw man—It will extend for a few months the about-to-expire federal ban on state taxation of Internet access. The federal moratorium, called the Internet Tax Freedom Act, is scheduled to expire on November 1. The House has […]


Income Inequality and Time for State Action

Income inequality may shrink state tax revenues. A new report from Standard & Poor’s tells the tale. Incomes have grown rapidly among the wealthy, but have barely kept pace with inflation for many others. But high income earners both shelter their income from taxes and save more, reducing  state income and sales tax revenues. As […]


How Michigan Blocked a $1 Billion Tax Windfall for Corporations

For all the talk of political gridlock, it is amazing how quickly a state legislature can act when $1 billion in unexpected corporate tax refunds are at stake. The lawmakers are in Michigan. And their pistons were fired up following an unfavorable state Supreme Court decision in a lawsuit brought by IBM. The case involved the […]


Taxes Take Center Stage This Week—At Least on the House Floor

Shutting down talk of a shutdown… The House is expected to vote on a continuing resolution to fund the government—including the IRS—through December 11. The resolution would include an extension of the Internet Tax Freedom Act, which bars states from taxing Internet access. Unless Congress acts, the law expires November 1. Tax extenders are scheduled […]


Tax Policy in September: Racing to a Grinding Halt?

Have it your way… unless you’re Burger King. Five Senate Democrats—Illinois’ Dick Durbin, Michigan’s Carl Levin, Rhode Island’s Jack Reed, Vermont’s Bernie Sanders and Ohio’s Sherrod Brown—asked Burger King to not move its legal headquarters to lower-tax Canada. They accused it of trying to avoid paying its fair share for roads and other public services […]


Does the Export-Import Bank Make or Lose Money?

Suppose your aunt decides to start a business making pizza ovens. She will design and build the ovens, and her daughter will manage operations. A bank is ready to lend her $100,000 to get started, but it wants someone to co-sign and be on the hook if she misses any payments. She offers to pay […]


Rules, Reform, Taxes and Wealth: No Harm in Trying?

Maybe the duck will walk again? Lawmakers are putting down their markers on anti-inversion legislation. Top Senate Democrats Dick Durbin and Chuck Schumer have introduced a bill to curb “earnings-stripping” by multinational corporations—a practice where firms maximize U.S. tax deductions for interest payments and other business costs while shifting income to low-tax countries. Senate Finance […]


Don’t Count on Much Economic Growth From Individual Tax Reform…Or From Tax Rate Cuts

Can individual income tax reform that cuts rates and eliminates subsidies increase economic growth? How about tax cuts by themselves? The answer is: Maybe, but not by much, according to a new paper by the Tax Policy Center’s Bill Gale and Andrew Samwick, director of The Nelson A. Rockefeller Center for Public Policy and Social […]