The Tax Foundation yesterday released its annual ranking of “State-Local Tax Burdens.” Iowa came in at 29th highest.
The Tax Foundation explains:
For each state, we compute this measure of tax burden by totaling the amount of state and local taxes paid by state residents to both their own and other governments and then divide these totals by each state’s total income. We not only make this calculation for the most recent year, but also for earlier years due to the fact that income and tax revenue data are periodically revised by government agencies.
In this annual study, our goal is to move the focus from the tax collector (how much revenue is collected) to the taxpayer (how much income is foregone).
This ranking differs from the Tax Foundation’s State Business Climate Index, where Iowa ranks a dismal 40th in business tax congeniality. While the two sets of rankings have different purposes, together they tell us that Iowa’s tax system is very poorly designed. It collects a middling amount of revenue with a system of very high rates, a boatload of preferences for the well-connected, and baroque complexity. You could collect the same revenue with a much simpler system with lower rates, and without the inherent corruption of special breaks for special friends of the politicians. That’s the approach of The Tax Update’s Quick and Dirty Iowa Tax Reform Plan.
Corporate welfare watch:
Senator fumes at idea to cancel tax credit (Des Moines Register)
Koskinen bemoans IRS funding, but doesn’t commit to taking the obvious step to restore it. IRS Commissioner John Koskinen gave a little speech yesterday at the National Press Club. He pointed out how the IRS is being given massive new responsibilities for running Obamacare and implementing FATCA, but faces funding cuts. What he didn’t point out was that the GOP-controlled house isn’t likely to change that as long as it thinks the IRS is acting as an arm of the other party. He defended the plodding IRS response to Congressional investigators in the Tea Party matter, and he offered what looks to me like a defense of the new Section 501(c)(4) rules proposed by the prior Commisioner:
While I was not involved in the issuance of this draft proposal, because it happened before I was confirmed as Commissioner, I believe it is extremely important to make this area of regulation as clear as possible. Not only does that help the IRS properly enforce the law, but clearer regulations will also give a better roadmap to applicants, and will help those that already have 501(c)(4) status properly administer their organizations without unnecessary fears of losing their tax-exempt status.
That’s too cute. The provisions of the proposal mirror the rules overturned by the Supreme Court in Citizens United, including a rule preventing any political activity in the run-up to an election. These items show that the current rules are an attempt to get around the Supreme Court to restrict political speech. That’s why they are poison to the Tea Party set.
Either he doesn’t get it, or he pretends not to. If the Commissioner wants to restore trust, the minimum he needs to do is to withdraw the proposed rules and start over, and to stop slow walking the investigation. Until he does, it’s futile to expect the GOP-controlled House to give him more funding. He’s quickly running out of time to do so.
Update: Washington Post gives Koskinen 3 Pinoccios: IRS chief: No ‘targeting’ of tea party groups, just ‘inappropriate criteria’ (Via Instapundit)
Kay Bell, 7 tax tasks to take care of by April 15
Annette Nellen, Filing season and rental activities
William Perez, Tax Reform Act of 2014, Part 3, Deductions
Stephen Olsen, Summary Opinions for 03/28/14, a roundup of tax procedure news, with a much-appreciated mention of the Tax Update post on the recent case on trusts and material participation.
Jim Maule, Tax Court and Eleventh Circuit Disagree on Interpretation of Section 36 Language. I think the couple got a raw deal, but I’m sure glad the first-time homebuyer credit has gone away.
Cara Griffith, Proceeding Cautiously With a Taxpayer Bill of Rights (Tax Analysts Blog):
The IRS is already struggling with administering our tax system. Perhaps issues of funding and employee training should be addressed before delving into a taxpayer bill of rights.
I disagree. Rights come before enforcement. We can start by a sauce-for-the-gander rule that requires the IRS to pay penalties it asserts to taxpayers if the taxpayers win on the contested issue.
Renu Zaretsky, Expirations, Compliance and Corporations. The TaxVox headline roundup talks about Commissioner Koskinen’s speech and the status of the expiring provisions.
Russ Fox, Bozo Tax Tip #8: Nevada Corporations. “Now, if you’re planning on moving to Nevada incorporating in the Silver State can be a very good idea (as I know). But thinking you’re going to avoid California taxes just because you’re a Nevada corporation is, well, bozo.”
News from the Profession. Sweatshop Saturdays: Rethinking Where We Work (Going Concern)
Tags: Annette Nellen, Cara Griffith, corporate welfare, economic development, Going Concern, Kay Bell, maule, News from the Profession, Quick and Dirty Iowa Tax Reform Plan, Renu Zaretsky, Richard Borean, sauce for the gander, State Business Tax Climate Index, Stephen Olsen, William Perez