Does Congress Really Care About the Deficit? Not When It Comes to Vets and Highways.

Next time a lawmaker starts to pontificate about the desperate need to reduce the budget deficit, remind him (or her) about what Congress did just before it left town last week. It passed two bills that are extremely important, but didn’t pay for either of them. And they are likely to add tens of billions […]


How Political Gridlock Encourages Tax Avoidance

In July, Treasury Secretary Jack Lew asked Congress to stop the current wave of corporate expatriations. The legislation is going nowhere, and Treasury and the IRS are unwilling to act on their own, though some legal experts believe they already have the authority to curb the transactions. This is just the most recent example of […]


Online Taxes: Searches, Storage, and Sales

Congress is in recess. The Daily Deduction will return to its regular schedule on Monday, September 8. Until then: We’ll see you every Monday morning. Abroad and online: One country brings a knife to a gunfight. Spain has passed a new law: Websites that link to Spanish newspaper association stories will pay a tax for […]


A New Way to Invest for Old Age, But How Many Will Buy?

A few weeks ago, with absolutely no fanfare, the Treasury Department announced what could be a major change in the way we save for retirement. It will now permit people to shift a portion of their 401(k)s or IRAs into a deferred annuity that provides a guaranteed stream of income once you reach old age. […]


“You Got to Know When to Fold ‘Em”

Gambling with the Highway Trust Fund: The House always wins? As expected, the House rejected the Senate’s four-and-a-half month $8 billion highway funding patch passed earlier this week. The House returned its own 10-month $10.8 billion patch—the one that includes pension smoothing—back to the Senate. The Senate approved it last night by a vote of […]


How REIT Spinoffs Will Further Erode the Corporate Tax Base

While Congress has been obsessing about tax inversions, it turns out another—potentially more important–tax avoidance technique is getting increased attention from the business community: Spinning off tangible assets into Real Estate Investment Trusts (REITs). If these deals become widespread, they’d be another nail in the coffin of the corporate income tax. Multinational firms already slash […]


What’s Love Got to Do with It? Not Much, in Congress

The Senate won’t “Bring Home Jobs…” at least not through the bill that would have denied tax deductions for costs of moving corporations out of the country. The Bring Home Jobs Act needed 60 votes to pass but received only 54. The House GOP may vote to put the estate tax to death. They’ve been […]


What Ronald Reagan Didn’t Say About the EITC

I like the Earned Income Tax Credit (EITC). It encourages work and allows millions of low-wage workers and their kids to escape a life of poverty. Democrats support it as a critical part of the safety net. Republicans back it because it rewards work and family. Just last week, House Budget Committee Chairman Paul Ryan […]


Reincorporation, Renunciation, and a Dose of Reality

There’s more than one way for a corporation to reduce taxes. It doesn’t have to reincorporate itself overseas. It could instead spin off a part of itself into a publicly traded real estate investment fund. As long as the new REIT distributes 90 percent or more of its income to investors as taxable dividends, it […]


Are Tax Inversions Really Unpatriotic?

President Obama and many congressional Democrats argue that U.S.-based multinational firms are being unpatriotic by moving their corporate addresses overseas in order to reduce their taxes. Obama even implied they are “corporate deserters.” These are powerful, emotionally-charged allegations. But are they fair? Is it unpatriotic to maximize tax savings? After all, companies and individuals do […]