Daily Deduction

from the Tax Policy Center

Taxes: Supportive to Some, Desired by Others, and Absent for Many

By :: March 14th, 2014

Tax policy could help the middle class. TPC director Len Burman testified before the Senate Finance Committee yesterday and suggested several ways to  improve the middle class’ economic prospects: Increase  access to higher education and job training and consolidate and target education tax subsidies; slow the growth of health care spending; eliminate the carried interest loophole; and encourage retirement saving. He also proposed rethinking the way tax credits and other provisions are adjusted each year. Instead of indexing for inflation, he proposed indexing for inequality. You can watch the entire hearing here.

But folks are shopping whether or not, or wherever, they’re paying taxes. Retail sales are up, an online marketplace’s prime membership fee is up… and the House Judiciary Committee is considering an alternative internet sales tax: Impose the levy  based on the retailer’s home state rather than the consumer’s residence. But critics say it would be easy for online retailers to game such a tax.

And certain activities remain tax free. Prostitution is illegal (in states other than Nevada), unsafe, and untaxed. Yet, in just eight cities, it generated $1 billion in revenue in 2007, according to a landmark Urban Institute study. Even Nevada, where prostitution is legal in rural counties, does not tax the enterprise. But the recent weak economy prompted the state legislature to consider a sales tax for brothels, while some Nevada brothels recently tried and failed to pay state taxes in order to help solidify their legal status in the state.

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