Mississippi lawmakers have been talking for months about spending some of the Magnolia State's revenue surplus next year on a tax cut, but that talk has been short on details until this week. On Monday, Gov. Phil Bryant released his budget plan for next year which includes a $79 million tax break for working families via enacting a 15 percent nonrefundable Earned Income Tax Credit (EITC). The EITC would be available for taxpayers if revenues increase by 3 percent annually and the state's emergency fund is fully funded.
Like the mythic Hydra of centuries old, the idea that people "vote with their feet" by intentionally leaving high-tax states for low-tax states is a monster that will not die. Each time the tax flight myth is shot down, two additional claims arise that espouse tax migration as gospel. Luckily, Michael Mazerov at the Center on Budget and Policy Priorities (CBPP) is on the case. I saw Mazerov's presentation on interstate migration and state income tax levels at this week's State Fiscal Policy Conference, and walked away impressed with his thorough debunking of the myths.
File this in the category of you can't make this stuff up. The U.S. Treasury Department's next high-ranking political appointee may be Antonio Weiss, a Wall Street dealmaker who helped orchestrate major corporate inversion deals. This comes just two months after the administration announced regulatory changes to address the inversion crisis. Needless to say, the nomination is not sitting well with some Democratic lawmakers.
On Wednesday, Senator Elizabeth Warren of Massachusetts took to Huffington Post to tear into the Obama administration for nominating Weiss to serve as Under Secretary for Domestic Finance.
The tax extenders legislation that Congress enacts every couple of years to extend dozens of tax breaks for businesses has been criticized from the right and the left as pork for special interests. Yet Congress is considering making some of these tax breaks permanent. The leading candidate is one of the most problematic of the bunch: the research tax credit, which subsidizes everything from the development of new soda machines to the invention of kitchen equipment that replaces staff in fast food restaurants.
Many business activities qualifying as "research" are not ones that Americans would not want to subsidize.
As you sip your morning latte, you should know that Starbucks has joined the list of multinational corporations whose tax-avoidance deals with European Union member states are being challenged by the European Commission, EU's governing body. The Commission released a report last Friday stating that Starbucks' tax arrangement with the Netherlands constitutes illegal state aid to the company.
The already overheated battle over immigration reform likely will become even more intense after President Obama yesterday announced executive action to give legal status to many undocumented workers.
But will the impending debate shed any light on the important question of how immigration reform would affect our tax revenues?
On Wednesday, the Washington Post's Wonkblog reported on new data from the Congressional Budget Office, explaining that "President Obama appears to have achieved at least one of his goals for the nation's pocketbook: The very richest Americans are finally shelling out a bit more in federal taxes." But it's important to not read too much into this. As the blog post illustrates with a graph from the CBO report, the average effective federal tax rate for the richest one percent was actually higher in the late 1990s when the economy was thriving.
The blog post also notes that people in other income groups are also paying a bit more than they were before enactment of the "fiscal cliff" law that allowed several tax cuts to expire. We provided figures in 2013 showing that it had little effect on the overall distribution of the tax system because Americans at all income levels were, in fact, paying a bit more than would be the case if tax policies in effect in 2012 had been extended.
Congress is considering two proposals related to taxes and the internet, one that would facilitate state and local governments in exercising their tax authority, and another that would restrict it. The first, a very good idea, would allow state and local governments to require internet retailers (and other remote retailers) to collect sales taxes from customers, just as any bricks-and-mortar store is required to do. The second, a bad idea, would continue and possibly expand a federally imposed ban on state and local governments taxing internet access the same way they tax other services.
A bill in the Senate combines these two proposals as a compromise, but the future of that legislation is cloudy given the vortex of political maneuvering and obstruction in that chamber.
Court cases in Kansas and Pennsylvania take on inequitable school funding; The Supreme Court hears a case from Maryland that could have ramifications on state taxing power.
On November 5, the International Consortium of Investigative Journalists revealed leaked documents demonstrating that Pepsi, IKEA, FedEx and 340 other multinational corporations received special deals from the government of Luxembourg allowing them to use the country as a tax haven.
The documents are private tax rulings from Luxembourg's Ministry of Finance to specific corporations pledging to respect complex arrangements that shift profits from normal tax systems into Luxembourg and, in some cases, then shift those profits on to zero-tax countries like Bermuda.