Daily Deduction

from the Tax Policy Center

A Pleading Bank, a Rejected Offer, and Taxing Gas and Pot

By :: May 20th, 2014

Credit Suisse pleads guilty. In the first plea of its kind in decades, the second-largest Swiss bank will pay about $2.5 billion to the federal government and New York financial regulators to settle a lengthy investigation. Credit Suisse will not have to divulge the names of any of its US clients, as that would violate Swiss law.

Pfizer hears “no.” UK pharmaceutical company AstraZeneca rejected the US pharmaceutical giant’s latest  offer to purchase it. Reuters reports that AstraZeneca chairman Leif Johansson stated, “Pfizer's approach throughout its pursuit of AstraZeneca appears to have been fundamentally driven by the corporate financial benefits to its shareholders of cost savings and tax minimization.” Pfizer says this was its “final” offer.

And so do inversions. Pfizer’s takeover bid has prompted policymakers to try and stop “inversions,” also known as changing a mailing address for a lower corporate tax rate. Senator Carl Levin and his brother, Representative Sandy Levin, will introduce identical bills today aimed at curbing the practice.

How low can a gas tax go? Pretty low, apparently: After adjusting for inflation, New Jersey’s gasoline tax, at 14.5 cents per gallon, is just over half its 1927 rate of 27.3 cents per gallon. The state’s gasoline tax has held steady since 1990, but state legislators are currently trying to raise the tax by 15 cents over three years to support the state’s Transportation Trust Fund. New Jersey isn’t the only state with a historically low gas tax. The Institute for Taxation and Economic Policy notes the top (or low) ten: Alabama, Alaska, Delaware, Idaho, Iowa, Nebraska, New Jersey, South Carolina, Utah, and Virginia.

How might one country compete with another country’s drug dealers? If you’re Uruguay, you exempt marijuana production and sales from taxes. The country hopes that its marijuana prices will remain low enough to beat black market pot smuggled in from Paraguay.

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  1. Michael Bindner  ::  12:40 am on May 21st, 2014:

    The Credit Suisse agreement is a slap on the wrist because no data is provided on American tax scoflaws. The fine should have included an estimate of how much was owed with CS making the US whole.

    Glad AstraZenica did the right thing – although incorporation may not have been the entire reason – unless it was all about PR. Corporate culture and CEO jobs are always part of the deal and probably what fell through.

    The Levin Bros. bills on inversion are nice, but have little chance of passage without a Democratic House – and even then, the Dems who support it with no chance of passage may not if the bill can realistically be passed.

    No shock that NJ and others have stable gas taxes. While the US pretty much has to do a gas excise tax in real numbers, there is no US constitutional provision stopping states from taxing at a percentage basis (although some states do constitutionalize such taxes).

    It is amazing that Uraguay and Paraguay are in a tax war on Herb. I’m not even sure this is an export issue – at least a US export issue. Mexico does do some imports, but most legal US pot is grown here.

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