On Thursday, a subcommittee hearing on a proposed IRS rule veered towards the absurd when Citizens for Tax Justice and the Obama administration were accused of supporting dictators, kidnappers and terrorists.

CTJ’s Rebecca Wilkins testified before a House Financial Services subcommittee in favor of a proposed rule that would require U.S. banks to report to the IRS any interest payments made to foreign account holders in the same way they report interest payments made to U.S. resident account holders.

Read Rebecca Wilkins’s Written Testimony

Watch Rebecca Wilkins’s Testimony

The U.S. government taxes interest payments made to U.S. residents but not those made to foreigners, so it never bothered to require banks to report those made to foreigners. But the IRS has proposed to change that rule in order to reduce tax evasion by Americans directly (to help identify Americans who evade U.S. taxes by posing as foreigners) and indirectly (by helping other countries enforce their tax laws so that they’ll help us enforce ours).

Wilkins faced off against three witnesses opposed to the proposed rule and a panel of lawmakers controlled by bank supporters. Chairman Spencer Bachus read a letter from the Florida delegation, which apparently is protective of its banks even when they facilitate tax evasion. Many people who live in unstable countries and have U.S. bank accounts, the letter argues, are “concerned their personal bank account information could be leaked to unauthorized persons in their home country government or to criminal or terrorist groups upon receipt from U.S. authorities, which could result in kidnapping or other terrorist actions…”

In other words, Bachus and the Florida delegation believe we should help all foreign individuals break their home countries’ tax laws because some of those countries have corrupt governments.

Never mind that the IRS would only hand over information to foreign governments in response to a careful, limited request under a tax information exchange agreement, as Wilkins calmly explained. Even more important, Wilkins explained, is that the rule in effect now actually helps criminals, corrupt government officials, terrorists and money launderers by allowing them to hide their money in the U.S.!

“America should not be a tax haven,” Wilkins told the panel.

Towards the end of her opening statement, Wilkins addressed her opponents directly:

"Chairman Bachus said, ‘Do we want to have blood on our hands, as a result of these rules?’ I want to tell you, the U.S. already has blood on its hands. For every dollar of tax revenue that is taken out of the governments of developing countries, it impairs the ability of those countries to provide health and safety measures, to feed its citizens, to provide sanitation, to provide health care, to provide military and police that are not corrupt. Every time we facilitate a dollar coming out of those economies, we have blood on our hands."

Perhaps the most remarkable comment came at the end of the hearing from Bill Posey of Florida, who said to Wilkins, “Your advocacy for the government of Venezuela and, um, ultimately someday maybe Iran, North Korea and Cuba and the like, startles me, quite frankly. Most of us here try to put America first.” Posey then went on, not about putting Americans first, but about the plight of the people living under these dictatorships who hide their money in American banks. 

Wilkins had already explained that the IRS would not be required to provide foreign governments with the information it collects, but would be able to respond to a limited request under a tax information exchange agreement. Perhaps if Wilkins had been allowed to respond to Posey’s comments, she might have addressed some of his confusion, starting with his apparent belief that the United States has tax information exchange agreements with North Korea, Iran and Cuba.

The St. Louis Post Dispatch calls Missouri’s special legislative session that just wrapped up a fiasco. We’ve written about this saga of a special session that started September 6 and was convened with the promise of helping spur the Show Me State’s economy.  But from the Governor’s misguided support for eliminating a credit that keeps seniors and the disabled in their homes, to the debacle of a plan to make the St. Louis airport a futuristic hub for freight between China and the Midwest, this special session was doomed by a growing skepticism among the state’s lawmakers that tax giveaways for businesses will help grow the state’s languishing economy. Sensibly, many lawmakers refused to accept new tax breaks unless procedures (such as sunsets) were put in place to make sure these tax breaks actually work.

Despite having clear majorities in the Senate (26-8) and House (105-54), the state's Republican lawmakers weren't able to get much done, and it’s one of those times that stalemate was actually a good thing. 

Photo of Missouri Capitol via David Shane Creative Commons Attribution License 2.0

On Tuesday, the Blue Ribbon Commission on Maryland Transportation Funding voted to recommend a set of tax and fee increases that would boost funding for the state’s roads and transit systems by some $870 million annually.  The largest component of those reforms is a long-overdue increase and restructuring of the state’s gas tax, which has been unchanged for nearly two decades and lagging behind the cost of everything else the tax pays for. These recommendations should have a major impact on the transportation funding debate expected when the legislature convenes in January.

The proposed 15 cent increase in the state’s gasoline tax, phased-in over a three year period, is smart because Maryland’s fixed-rate gas tax (23.5 cents per gallon) hasn’t been raised since 1992, and this change would return the tax roughly to its previous buying-power (that is, adjusted to consider the rising cost of road construction).

The proposal is something legislators and their constituents should get behind because poor road conditions and traffic congestion are estimated to cost the average Maryland driver over $2,200 in vehicle repair, gasoline, and safety costs each year.  The gas tax increase, however, should only cost the average driver about $77 per year according to a forthcoming Institute on Taxation and Economic Policy (ITEP) analysis.

But while the 15-cent increase is vitally important to Maryland’s roads and transit systems today, this change will only be a Band-Aid fix if legislators fail to combine it with another one of the Commission’s recommendations: allowing the rate to rise alongside the rising cost of construction.  Florida already links (or “indexes”) its gas tax rate to the general inflation rate, and thirteen other states allow their gas taxes to grow alongside gas price growth.  Just a few months ago, a commission in Pennsylvania proposed a similar measure that would allow their tax rate to grow over time with the price of fuel, and an influential Republican legislator there declared just last week that he would introduce legislation containing that reform.

These gas tax reforms are desperately needed because Maryland’s transportation system, like nearly every other state’s, is vastly underfunded, and for many daily commuters, time can be even more important than money.  Baltimore was ranked as having the 6^th worst traffic congestion in the nation, and the DC area as having the absolute worst.  Recognizing that these shortcomings have real costs in terms of lost productivity, both the Maryland Chamber of Commerce and the Greater Baltimore Committee have come out recently in support of the gas tax increase.  And Maryland Governor Martin O’Malley also appears likely to support the increase.

Enthusiasm for the gas tax increase, however,  is only justified if it includes provisions to protect the lower income Marylanders who are likelier to feel its effects. However overdue this tax may be, it remains, like many of the fee increases being proposed, a regressive change – meaning it will disproportionately impact low-income families relative to their incomes.  Seven states currently offer low-income tax credits designed to offset the effect of these sorts of “regressive” consumption taxes, and most states (including Maryland) offer similar credits that accomplish broadly the same goal. 

If Maryland’s gas tax update is paired with offsetting relief provided via low-income tax credits, it’s a winning proposal with widespread benefits that deserves support.

Photo of Maryland Road Construction via Bank Bryan Creative Commons Attribution License 2.0

In June of 2012, North Dakota voters will have the opportunity to vote on a proposed Constitutional Amendment that would eliminate all property taxes.  If passed, the initiative would make North Dakota the only state in the nation to completely abandon this cornerstone of local government finance. 

Although property taxes are somewhat regressive, they are a vitally important revenue source, and serve as an important complement to state income taxes by ensuring that families with large quantities of property wealth pay more than those without such reserves.  The initiative’s sponsors, Empower the Taxpayer (E.T.), gloss over these realities with simplistic arguments that “government has become too big,” and “property taxes penalize the homeowner.”

E.T. also contends that the state is empowered only to provide for the general welfare, and property taxes are currently being used to somehow provide kickbacks to “special interest” groups, three of which they identify as most egregious being the higher education system, state employees, and the health and human services system.

Since when did the public interest become a special interest?

E.T., we should mention, is spearheaded by Robert Hale, a successful lawyer in Minot, ND, who is also a builder and developer who, one can imagine, would benefit financially if he could legally avoid paying property taxes.

One final note: while E.T. calls for property tax elimination to be financed through deep cuts in public services, they also float local sales taxes as a more “democratic and fair” alternative to the property tax, never mind that they are a starkly regressive kind of tax, impacting the poor far more heavily than any other group.  

Regressive taxes, however, and massive service cuts are what we should probably expect from this organization which, as it happens, chooses that monocle-wearing millionaire from the Monopoly game, Rich Uncle Pennybags, for its logo.

Reforming a state’s tax structure and the planning, meetings, and discussions that go into such a monumental and consequential project shouldn’t happen behind closed doors.  After all, taxes are fundamental to government and its activities and they impact everyone.

But apparently Kansas Governor Sam Brownback’s administration sees it differently.

The media has been reporting that the Governor will come out with a new tax reform proposal before the end of the year. We know that he’s enlisted the help of mega-supply sider Arthur Laffer to assist him and that Laffer is getting paid about $75,000. But that’s where the information stops. We can assume a task force or committee of some type is meeting, but that’s really all anyone knows.

The Lawrence Journal-World recently sent an email to the Brownback administration to attempt to gain “access or copies of minutes, agendas and policy papers of the task force.” But the governor’s people are throwing up bureaucratic excuses and indicated they might need seven weeks to comply. At which point the task force might be disbanded and Governor Brownback’s plan already complete.

Governor Brownback, his administration and his task force group should abandon this secrecy strategy.  The Wichita Eagle points out that given the political climate in Kansas, transparency is of paramount concern: “With the 2010 election having left the Legislature rich with conservatives ready to implement Brownback’s sweeping agenda without much second-guessing, transparency and scrutiny are needed now.”

State Senate President Steve Morris, R-Hugoton, agrees. “Right now,” he said, “there are a lot of ideas being floated around, but what they all seem to be missing is citizen input.”

You know what they say about sunlight – it’s time for Governor Brownback to let it shine on this important policy-making process.

Photo of Art Laffer via Republican Conference and photo of Sam Brownback via KDOTHQ Creative Commons Attribution License 2.0

For much of the last century, estate and inheritance taxes have played an important role in helping states to adequately fund public services in a way that exempts middle- and low-income taxpayers. This is an especially vital role at the state level because most of the taxes levied by state and local governments fall most heavily on low-income families. Recent changes in federal estate tax laws give states an opportunity to re-examine the design of their own estate and inheritance taxes.

Read more about options for making state tax structures more fair though estate and inheritance taxes in the Institute on Taxation and Economic Policy's updated policy brief.

Labor unions, small business associations and good government groups have lined up to oppose proposals to exempt corporations' offshore profits from U.S. taxes on a permanent basis (by enacting a "territorial" tax system) or temporary basis (by enacting a "repatriation" amnesty). These organizations also oppose any overhaul of the corporate income tax that fails to raise significant revenue.

The organizations spell out their positions on corporate tax reform in a letter sent to members of the Joint Select Committee on Deficit Reduction (commonly called the "Super Committee") today.

Read the letter.

These positions put the organizations at odds with House Ways and Means Chairman Dave Camp, who today proposed a corporate tax overhaul that includes a territorial system and that would be "revenue-neutral."

The letter asks the Super Committee to do four things:


1. Reject any proposal to exempt U.S. corporations’ offshore profits from U.S. taxes permanently (by enacting a “territorial” tax system).

2. Reject any proposal to exempt U.S. corporations’ offshore profits from U.S. taxes temporarily (by enacting a “repatriation” amnesty).

3. Require any overhaul of the corporate income tax to raise significant revenue.

4. Require that the revenue-positive result be estimated using traditional revenue scoring procedures as opposed to controversial alternative procedures (often called “dynamic” scoring).

To learn more, see CTJ's fact sheet about raising revenue through corporate tax reform and CTJ's fact sheet about territorial/repatriation proposals.

Photo of Rep. Dave Camp via Michael Jolley Creative Commons Attribution License 2.0

Like many other presidential candidates, Texas Governor Rick Perry proposes massive tax cuts for the richest Americans, but he proposes to do so in the most complicated way possible. His plan would have taxpayers calculate their taxes twice — once under the existing rules, and again under an optional 20 percent “flat tax,” to see which would be a better deal.

This would not make anyone’s life easier on tax day — except the wealthy Americans whose investment income would be exempt from taxes under Perry’s optional flat tax. These lucky taxpayers would quickly find that the optional “flat tax” actually has two tax rates: zero percent for the investment income that mostly goes to the rich and 20 percent for the types of income that most of us depend on.

It’s also clear that the individual tax under Perry’s plan would lose a huge amount of revenue compared to the existing personal income tax. How could it not? If taxpayers are offered an alternative way to file, we assume they will choose this alternative only if it lowers their tax bills. The result will be, inevitably, a loss of revenue. If taxpayers truly preferred a simple tax over a lower tax, they could choose simplification right now by giving up the various adjustments, deductions and credits that lower their tax bills but make filing more complicated. We doubt many choose this.

Most plans to exempt investment income from taxes and shift towards a consumption tax result in tax increases for the poor. (This would be the result of the “flat tax” proposed by Senator Arlen Specter for several years and the “9-9-9” plan proposed by Herman Cain.) However, in recent years, Presidential candidate John McCain, House Budget Chairman Paul Ryan and other GOP leaders have tried to limit the terrible optics involved in raising taxes on the poor by making their regressive tax plans “optional.” This means that wealthy taxpayers with investment income would usually choose the alternative tax that exempts this income, while most ordinary people earning wages would end up sticking with the current rules.

What would stop taxpayers from simply switching back and forth each year, depending on which set of rules results in lower taxes? It’s unclear how Perry’s plan would address this, but some previous versions of this proposal claimed to address this by forcing taxpayers to choose which system to file under and then locking them into that choice for years to come. They would be allowed to change their minds one time during their lives and could also change whenever their filing status changes because they become married or divorced. For this reason, we have long thought of these proposals as a Divorce Lawyers Jobs Creation Act.

As more details of the plan become available, Citizens for Tax Justice will estimate its impacts on taxpayers at different income levels and its impact on revenue. But even the limited details available now make clear that this plan is not designed to help the working class.

Photos via Gage Skidmore Creative Commons Attribution License 2.0

New CTJ Fact Sheet Explains Why Congress Should Reject “Territorial” System

House Ways and Means Chairman Dave Camp is planning to release a “working draft” of a plan to adopt a “territorial” tax system, which is another way of saying a permanent tax exemption for corporations’ offshore profits.

On Tuesday, BNA’s Daily Tax Report (subscription required) informed us that

Lobbyists representing U.S. multinationals said they have not heard anything specific related to the timing of the proposal but they have heard that it will not be formal legislation, just a working draft. The idea behind this is that it would allow business interests to weigh in on a proposal before lawmakers turned it into actual legislation, multiple lobbyists said.

That’s about the closest thing we ever see to an admission that corporate lobbyists will decide what the Republican-controlled House tax-writing committee should enact.

Those lobbyists will be in an awfully good mood from the start because the “territorial” tax system that Chairman Camp is offering them will increase opportunities for their companies to lower their taxes by shifting jobs and profits offshore. To understand why, see CTJ’s new fact sheet on the international corporate tax rules.

Photo of Rep. Dave Camp via Michael Jolley Creative Commons Attribution License 2.0

A “study” claiming Congress can raise revenue by repealing the estate tax, which was criticized at length by Citizens for Tax Justice in 2009, has been updated to provide a “solution” for the budget deficit.

Anyone who is not familiar with tax debates might be wondering, quite reasonably, how repealing a tax could increase revenue. The answer is, of course, that it can’t.

One claim made in these reports, which are commissioned by the American Family Business Foundation, is that extremely wealthy people will simply spend away their fortunes if they know they will be subject to the estate tax after they die, but they will invest those fortunes if they know they will be untaxed after they die. In the latter scenario, their argument goes, the increased investment will boost the economy and result in increased profits and incomes, which in turn would lead to increased tax payments.

The reports ignore the fact that extremely wealthy people will save and invest most of their money in any event because there’s not much else they can do with it. In our 2009 report, we put the question this way:

Can extremely wealthy people really spend away their millions on expensive dinners and cruises? That’s a lot of dinners and cruises. In 2004 (the last year before the amount of estates exempt from the tax was increased), 72 percent of estate taxes were paid on estates worth more than $3.5 million. And 61 percent of estate taxes were paid on estates worth over $5 million… Let’s say you had this sort of money and you wanted to keep your estate from being taxed by the federal government. What would you do? You can’t put it in stocks or bonds or even a savings account. You can’t buy fancy houses, because they would become part of your estate. Even if you buy expensive cars or yachts, those would be part of your estate as well (even if they lose some of their value before you die).

You would have to spend your entire estate on caviar or cruises or cocaine or something that won’t be around after you die. It’s unclear whether anyone can eat away, cruise away, or snort up their nose $5 million.

This is just one of the many bizarre conceptual problems with the claims that estate tax repeal would result in increased revenue. For more, read the CTJ report.

Writing for Tax Notes, CTJ director Bob McIntyre recalls “my story of CTJ’s role in the process that led to the monumental Tax Reform Act of 1986. It’s a lightly edited version of notes I took in the fall of 1986, after the bill was enacted, to remind me later of what we had done to help cause that miracle. The piece has remained unpublished until now. Of course, many others played key roles in producing TRA 1986. This is mainly just CTJ’s story, as written in the exuberance of that stars-were aligned moment.”

Read the article.

Some commentators have suggested that, because people with incomes exceeding $1 million, on average, pay higher effective tax rates than middle-income people, the problem targeted by President Obama’s “Buffett Rule” does not exist. As demonstrated in a new report from CTJ, the problem is not the effective tax rates of millionaires across the board but a particular class of millionaires whose income is mostly from investments. Investment income is taxed less than other types of income, allowing millionaire investors to pay a smaller percentage of their income in federal taxes than do many working-class people.

The report demonstrates that this problem is not isolated to rare cases. In fact, almost one third of taxpayers with income exceeding $10 million fall into this category (of taxpayers who rely on investment income for over half of their total income). Over 90 percent of taxpayers making between $60,000 and $65,000 (which includes Mr. Buffett’s famous secretary) rely on investment income for less than a tenth of their income — and pay a higher federal tax rate as a result.

The report also explains what Congress can do to implement the Buffett Rule and solve this problem. The first step, perhaps surprisingly, is to prevent repeal of health care reform, which includes a change in the Medicare tax that will take a limited first step in addressing this unfairness. Additional reforms are needed, which may include eliminating tax preferences for investment income or a surcharge on income exceeding $1 million as recently proposed by Senate Democrats.

Photo of Warren Buffett and Barack Obama via The White House Creative Commons Attribution License 2.0

The Institute on Taxation and Economic Policy (ITEP) made a lot of noise (and news, news, news) about sales tax holidays during the recent back to school season. Seventeen states offer sales tax holidays. The rules vary widely, but in most cases they mean consumers don’t have to pay sales taxes on back to school supplies, clothes, etc. for a few days. This past August for the first time, Arkansas offered a sales tax holiday of its own.  While the sales tax revenue figures are still coming in, it’s now clear that holiday cost the state about $2.1 million in lost revenues and an additional $710,000 loss in revenues for cities and counties that collect their own local sales taxes.

Naïve state officials hoped to see an increase in sales tax revenue based on the assumption that consumers would go out and purchase more taxable items. Indeed, sales tax holiday proponents often argue that sales tax holidays actually generate new sales tax revenue, as in this report from the Florida Retail Association.

But so far the Arkansas revenue figures aren’t showing much offsetting revenue generated. The Deputy Director of the Department of Finance and Administration, Tim Leathers has admitted they “couldn't detect any increase in consumers spending more money while they were in there buying school supplies." Revenue officials have yet to tally September’s sales tax revenues to see if there were shifts in consumption by month, but either way it seems that the sales tax holiday didn’t provide a real and needed boost for state coffers.

John Shelnutt, an economist with the Department of Finance and Administration said, “If it did shift consumption from month to month, we'll have to see…. Even then, it's not a clear story. We were below forecast for the first two months of the fiscal year, which begins July 1."

Another reason that Arkansas jumped on the sales tax bandwagon was lawmakers’ belief it would lure shoppers from neighboring states to take advantage of the holiday, but again, the numbers don’t show any evidence for this. The economist, Shelnutt, sees no “growth rate to suggest there was a cross-border rush to take advantage of the holiday.”

Myths about the utility of sales tax holidays abound.  Lawmakers too often believe these events are helpful to cash-strapped consumers, result in increased revenues and add out of state dollars to the economy.  But too often, like in Arkansas, the costs to the state as a whole far outweigh the modest benefit a handful of consumers enjoy.

We also know that not collecting sales tax on specific items for just a couple of days does nothing to help make a state’s overall tax structure more fair.  Lawmakers interested in really helping the most hard-pressed families and boosting their states’ economies have other tax reform options that offer long term and widespread benefits. Sales tax holidays, however, are more boondoggle than good policy. For  more on what they do and don’t accomplish, read ITEP’s brief.

With his recent dramatic rise to second place in the polls, Former CEO of Godfather’s Pizza Herman Cain and his infamous 9-9-9 plan were the belles of the ball at the last two Republican debates.

According to a full analysis by Citizens for Tax Justice, if Cain’s 9-9-9 plan was in effect in 2011 the poorest 60 percent of taxpayers would pay an average of $2,000 more in taxes, while the richest 1 percent of taxpayers would each pay an average of $210,000 less in annual taxes. Making matters worse, the plan would have actually raised $340 billion less in revenue in 2011, meaning that it would make our deficit much worse rather than better.

Since the CTJ analysis was released, the Cain campaign has been dribbling out additional details that change the plan in an ad-hoc fashion as he struggles to defend his tax proposals.

The Washington Post and Bloomberg economic debate on October 11 broke the record for most colorful tax policy jabs, as Former Utah Governor Jon Huntsman said he confused the 9-9-9 plan with “the price of a pizza”, while Minnesota Representative Michele Bachmann observed that “when you take the 999 plan and you turn it upside down, I think the devil is in the details.”

During the CNN Western debate on October 18, the candidates piled on the 9-9-9 plan, arguing that the imposition of a 9 percent new sales tax would ultimately lead to higher taxes because it would give the federal government another revenue stream and could be raised in the future. Interestingly, this particular charge is not borne out by the evidence from a plethora of countries that have imposed consumption taxes, including in Canada where total revenue collected actually went down after the imposition of its value-added tax.

As we have noted a few times, however, the regressiveness of the 9-9-9 plan is no joke. The plan would replace the entire federal tax code with a nine percent national sales tax, nine percent flat income tax, and a nine percent business flat tax. It’s important to note that although the last component is called a ‘business flat tax’, it’s essentially a payroll tax rather than a flat corporate income tax as the name would imply.

For his part, Cain defended the plan saying that reading his campaign’s full analysis of the 9-9-9 plan (which was only made available publically halfway through the CNN debate) would address the “knee-jerk” reactions to his plan.

His team’s own analysis directly contradicted Cain’s point during the debate that his plan does not contain a “value-added tax.” In reality, the report refers to the business flat tax as a “subtraction method value-added tax.”

Another problem for Cain is that his campaign’s own analysis provides no evidence that the 9-9-9 plan would not be extremely regressive, though it does include a previously unmentioned “poverty grant.”

Apparently, Cain himself knows that this “poverty grant” does not allay the concerns about the plan’s regressive impact, because Cain said the next day that he’s “not going to throw the people at the poverty level under the bus” and that he has “already made provisions for that,” but hasn’t “told the public and my opponents” about what those provisions are yet.

And just today Cain announced even more significant changes to his plan. His tax plan has always included “empowerment zones” that were not defined. The Cain campaign now calls these “opportunity zones” because the word “empowerment” sounded too liberal. It’s still unclear how living in or working in an “opportunity zone” would change one’s tax bill under Cain’s plan, but he announced today that these designated areas could be free of building codes and minimum wage laws.

The Washington Post reports that he will also change his individual tax from a single-rate tax to one with several brackets. If true, this means that Cain’s plan no longer consists of three flat 9 percent taxes… which means he has given up the “9-9-9” plan.

This week Kansas Revenue Secretary, Nick Jordan, said that by the end of the year Governor Sam Brownback will have recommendations for how to reform the state’s tax structure. He said, “We're looking at tax policy in a very comprehensive way. We're not just focusing on business or individual incomes, I don't know that we are targeting numbers. We're targeting what is the best economic growth policy for the state." This statement, combined with other media reports that the governor is working with supply side guru, Arthur Laffer, and that the governor seeks to reduce and eventually eliminate income tax rates, should cause grave concern for Kansas taxpayers.

In anticipation of the governor’s tax proposals, the Institute on Taxation and Economic Policy (ITEP) recently issued a memo to media outlets in Kansas. ITEP’s analysis shows the impact of repealing the Kansas income tax and replacing part or all of the revenue with increased sales taxes.  For example, if every dime of an income tax repeal were ultimately paid for by increases in state sales taxes, the poorest 80 percent of Kansans would, as a group, see a tax hike overall and require a statewide average sales tax rate of a whopping13.5 percent.

Governor Brownback recently told the Kansas Chamber of Commerce that in terms of low taxes and regulation, “We’ve got to look more like Texas and a lot less like California.”

But Kansas shouldn’t want to look more like Texas! The Texas tax structure doesn’t have an income tax, making it the fifth most regressive in the country and chronically unable to fund public investments. Texas ranks 45th in SAT Scores and 50th in terms of the percent of the population with a high school diploma. Texas has the highest percentage of uninsured citizens, and the second highest percentage of the population experiencing food insecurity in the nation.

We will keep an eye on the governor’s plans for Kansas, but if he’s looking for a state on which to model his tax reforms, he should take a look at Connecticut.

Photo of Sam Brownback via KDOTHQ Creative Commons Attribution License 2.0

If the following actions were taken, some of the inequity that is driving the Occupy Wall Street and other affiliated protests would be eliminated. Suggestions include making corporations pay their fair share in taxes, ending the tax break for corporations that shift jobs and profits overseas, implementing the "Buffett Rule," and imposing a tax on the "too-big-to-fail" banks...

Read the fact sheet.

Photo of Occupy Wall Street via Eye Wash Creative Commons Attribution License 2.0

Today ITEP released three new updates of important Policy Briefs that explain timely tax topics in just two pages each. These are part of a series of Policy Briefs designed to provide a quick introduction to all the basic tax ideas that are important to understanding current policy debates:

• Tax Expenditures: Spending by Another Name

• Cigaratte Taxes: Issues and Options

• Uncertain Benefits, Hidden Costs: the Perils of State-Sponsored Gambling

The National Priorities Project, working in partnership with Citizens for Tax Justice, has unveiled a new website that presents a running tally of the cost of the Bush tax cuts for the richest five percent, who now receive almost half of the total tax cuts. The cost is also broken down for the richest one percent and the next richest 4 percent.

As the Joint Select Committee on Deficit Reduction (aka "Super Committee") considers drastic cuts in public investments and services that working people depend on, the amount of revenue lost due to tax cuts for the rich cannot be ignored. As CTJ has said for years, we will never have the revenue necessary to invest in the American people until these tax cuts are allowed to expire.

See the website: www.costoftaxcuts.com

Opposition to broad-based tax increases has caused state lawmakers to look, with increasing urgency, for additional revenue-raising opportunities outside of the income, sales and property taxes that form the backbone of most state tax systems. One of the most popular alternatives to those major revenue sources is state-sponsored gambling. But gambling revenues are rarely as lucrative, or as long-lasting, as supporters claim.

A recent Las Vegas Sun article, Nevada’s tax income from gaming well below other markets, shows clearly that gambling revenues aren’t a dependable revenue stream.  For many years, Nevada enjoyed a bit of a monopoly on the gaming market, but in recent years others states have begun to adopt their own forms of legalized gambling. Not surprisingly, “gaming latecomers have lured potential customers away from Nevada, and are now surpassing the Silver State in the tax dollars they generate for the state and local governments that sanctioned them.”

Nevada’s loss of gaming revenues is particularly dangerous because the state levies no corporate or personal income tax and is disproportionately reliant on gambling as a funding source.

Nevada’s tax structure problems don’t start or end with gambling, but it’s clear that as gambling revenues decline it’s going to become even more imperative that lawmakers come together to push for real tax reform that likely involves the implementation of a corporate and personal income tax.  

For more on the perils of state sponsored gambling read ITEP’s policy brief on the issue.

Photo of slot machines via Raging Wire Creative Commons Attribution License 2.0

Tennessee Governor Bill Haslam recently announced that Amazon