Taxing Toking: The Tax Implications of Marijuana Ballot Initiatives


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In addition to a number of tax proposals on the ballot this election, voters in Alaska, Oregon, and the District of Columbia will vote on ballot initiatives that would legalize marijuana for recreational use. These measures could also have future revenue implications. If these initiatives pass, they would set these jurisdictions on the path of Colorado and Washington, which already allow production and sale of marijuana to adults for recreational as well as medical purposes.

While Colorado and Washington marijuana markets are still a work in progress, both states have proven that taxes on marijuana can generate revenue. For example, since recreational marijuana sales began in January, Colorado has collected over $45 million in revenue from marijuana taxes and fees. Washington has collected $5.5 million in excise tax revenue from July 8 (the first day of sales) through October 7.

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Obscure Law Allows Wealthy Professional Sports Team Owners to Reap Tax Windfalls


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San Francisco Giants fans, giddy from their team's third World Series win in five years, would be forgiven for scoffing at the notion that their team's reputation will be worth nothing in 15 years.

Yet an obscure federal tax law allows professional sports team owners to make just that assertion--and to financially benefit from it.

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State Rundown 10/30: Ballot Measures and Bad Policy


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Income tax woes in Kansas, North Carolina and Ohio; Gas tax indexing ballot measure is close in Massachusetts.

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Tax Foundation's State Business Tax Climate Index: Is the "Tax" Silent?


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Earlier this week the Tax Foundation released its "2015 State Business Tax Climate Index," the latest in its annual series purporting to provide a single overall ranking of business tax structures in each of the 50 states. States scoring the best on the Index have one thing in common: there is a major tax, usually the income tax, which other states levy that the "best" states don't. But the report has two major flaws: the Index itself is constructed in a way that is arbitrary at best, and, more vitally, it essentially pretends that tax revenues aren't used for any public investment that businesses might find valuable.

As a 2013 report from Good Jobs First explains that the report's Tax Climate Index is arrived at by separately ranking each of the major taxes levied by state and local governments--including corporate income, personal income, sales and property taxes--and then merging those rankings together in an arbitrary way to create a single mega-ranking. There is, of course, no obviously correct way of weighting the importance of these various taxes, and in fact different types (and sizes) of businesses in any given state will likely have very different opinions of the various taxes they pay. But the single most basic flaw of the Tax Foundation report is clearly stated in its title: it purports to rank "State Business Tax Climate" as a free-standing policy choice.

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Senator Rob Portman: Case Study in Radical, Rightwing Arguments for Slashing Corporate Taxes


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Ohio Sen. Rob Portman's recent Bloomberg op-ed about corporate taxes reads like a catalogue of Chamber of Commerce talking points. He uses one misleading and inaccurate statement after another to argue that corporations will flee the United States unless we slash our corporate tax and adopt a so-called territorial tax system.

Portman makes use of the old canard that we have "the highest corporate tax rate in the developed world," which is untrue or at best misleading. The U.S. may have the highest statutory corporate income tax rate among OECD countries, but the effective corporate income tax rate is quite low. CTJ and ITEP examined Fortune 500 corporations that were profitable each year from 2008 through 2012 and found that collectively they paid just 19.4 percent of their profits in corporate income taxes. A third of the companies paid less than 10 percent.

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Senators Defend LIFO, a Tax Break that Obama and Camp Want to Repeal


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On October 21, fourteen Senators, including nine Republicans and five Democrats, sent a letter to Treasury Secretary Jacob Lew pleading to save a business tax break known as last-in, first-out (LIFO) accounting, which both President Obama and Republican House Ways and Means Chairman Dave Camp have proposed to repeal as part of tax reform. Over 100 members of the House sent a similar letter to Camp in May. Here's why defenders of LIFO are wrong.

LIFO is an inventory accounting method that allows some businesses to make their income for tax purposes look smaller than it otherwise would. We tend to think of profit this way: A company creates or purchases products at a cost of $90 and sells them for $100, resulting in a profit of $10. But consider a company that has built up an inventory of, say, barrels of whiskey at different points in time. The barrels it created or purchased five years ago may have cost $80, while those obtained this year cost $90. LIFO allows the company to tell the IRS that the barrels it sold today for $100 were those it most recently obtained (resulting in a $10 profit) rather than those it obtained five years ago (which would result in a profit of $20).

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What Horrors Await Us in Congress after the Election?


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There are two types of tax legislation Congress may enact after it returns to Washington for its lame duck session in November: bad policy and extremely bad policy. Let's start with the least terrible scenario, which would involve Congress enacting the Expire Act, the "tax extender" legislation approved by the Senate in May. This bill would extend for two years a list of tax breaks so long that almost no one understands them all, except us of course.

Not satisfied with the Senate's approach, the House voted to make several of these provisions permanent, which of course has a much bigger price tag and eliminates the possibility of ever getting rid of them, or at least reforming them. The question on everyone's mind is whether or not House Republicans will demand that tax legislation enacted during the lame duck session must include at least some of these permanent provisions.

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Putting a Face to the Numbers


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For years we've been telling you about the various tax cuts that have been signed into law by Ohio governors. Governor Bob Taft (who was elected in 1999) pushed through (among other tax changes) a 21 percent across the board income tax reduction. Those tax cuts were allowed to continue under Governor Ted Strickland. Current Governor John Kasich has pushed through his own series of tax cuts. We've written about and crunched numbers on these flawed plans often.

The numbers are certainly compelling. For example, ITEP found that since 2004 the various tax changes signed into law cost the state $3 billion and are currently reducing tax bills for the state's most affluent 1 percent of taxpayers by more than $20,000 on average, while the bottom three-fifths of state taxpayers as a group are actually paying more taxes now, on average, than they would if these tax changes had not been enacted.

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Two of Every Kind of Tax Giveaway


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Kentucky is the land of bourbon, horse racing, and - now - dubious tax cuts. Last week, The Courier-Journal reported that Ark Encounter, LLC, a company planning to build a facsimile of Noah's Ark to biblical specifications as the centerpiece of an amusement park, may lose $18 million in state tax incentives due to religious discrimination. State officials are concerned by a job position posted by Ark Encounter that requires "applicants to provide salvation testimony, a creation belief statement, and agreement with the "Statement of Faith" of Ark Encounter's parent organization, Answers in Genesis," the organization behind Kentucky's Creationism Museum.

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New Movie Aims to Scare Public by Depicting IRS as Jack-Booted Thugs


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Looking for a good scare this Halloween? Right-wing film producer John Sullivan will have you hiding under your covers with his portrayal of jack-booted IRS thugs going door to door looking for any Christian, veteran or true freedom-loving American that they can squash.

Pulling no punches, Lori Marcus, a commentator in the recently released documentary "Unfair: Exposing the IRS," says that if the IRS is not stopped then the next boxcar will be coming for you, an allusion to the boxcars used to carry Jews to Nazi concentration camps. Nazi allusions are part and parcel of Sullivan, whose right-wing propagandist films such as"2016: Obama's America" and "Expelled: No Intelligence Allowed," are chock full of factual errors and hyperbole in service of perpetuating a sense of mortal fear of all things Obama or progressive.

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