Reducing Income Inequality, Taxing Businesses to “Hire American”
Have Obama’s tax policies reduced income inequality? TPC has some new data, but the answer depends on who you compare him to. Relative to George W. Bush, who pushed major tax cuts for high-income households, Obama has reduced inequality. But compared to Bill Clinton, his policy is pretty standard Democratic fare. The Washington Post has one take. TPC’s Len Burman puts it in perspective.
Senate Democrats want tax legislation to help “bring jobs home.” They’ve advanced a bill that would give companies a 20 percent tax credit on expenses related to bringing jobs into the United States and deny deductions for outsourcing expenses. Republicans are opposed. The Joint Committee on Taxation says the tax credit would reduce revenue by $357 million over ten years, while denying deductions would generate $143 million. The bill is a drop in the bucket: The CBO projects corporate tax revenues of $4.5 trillion over the next decade.
Online sales tax legislation won’t be bundled with a ban on state and local internet access taxes, after all. Instead, Senate Majority Leader Harry Reid says he’ll move legislation in September to only extend the Internet Tax Freedom Act until early 2015. Finance Committee Chair Ron Wyden expressed relief, telling Roll Call that Reid’s move “reflects a growing awareness that as written, the two bills contradict each other.”
On the Hill today: The Senate may vote today on the House version of the $10.9 billion transportation bill to patch the Highway Trust Fund through May 2015. The Senate Finance Committee holds a hearing, “Social Security: A Fresh Look at Workers’ Disability Insurance.” The House Judiciary Committee will examine balanced budget amendments at its hearing.
Will tax reform help sustain Chile’s economic recovery? This week, the International Monetary Fund projected the country’s Gross Domestic Product will expand by 3.2 percent in 2014 and by 4.1 percent next year. Chilean President Michelle Bachelet’s tax reforms are designed to support education, health care and deficit reduction. Under her plan, the corporate tax rate would gradually rise from 20 to 27 percent by 2017. The IMF welcomed the reforms but noted a need for greater clarity on how the new tax regime will be implemented in order to evaluate any impact on growth and investment.
Will Russia tax its “1 percent” to pay for its annexation of Crimea? Draft legislation from its lower house of parliament would increase income tax for people earning more than more than 12 million roubles a year (or $344,400). If approved, the tax change could generate 300 billion to 500 billion roubles ($8.6 billion to $14.30 billion) a year. Less than two percent of the population—who earn more than one-third of the country’s total personal income—could be affected. Their flat tax rate of 13 percent could shoot up to 30 percent. The lower house majority backs President Vladimir Putin. Wonder if Russia’s oligarchs will support the tax?
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