Posts Tagged ‘Buffett rule’

Tax Roundup, 2/27/2013: Snow surprise edition. And is tax migration a myth?

Wednesday, February 27th, 2013 by Joe Kristan

Well, that commute was fun.

Seventh Avenue, Des Moines, this morning.

Seventh Avenue, Des Moines, this morning.

They said we wouldn’t get snow.  It hasn’t really stopped since 7 am yesterday.

 

Kyle Pomerleau,  Is Tax Migration a Myth? (Tax Foundation).  Short answer: no.  He comments on a much-noted article by James B. Stewart claiming otherwise:

Mr. Stewart is off the mark if he believes he has uncovered a myth. Besides the posturing of celebrities, no one claims that at the very moment someone whispers “tax increase” one thousand millionaires head to the border. What really happens is that these higher tax burdens cause wealth and income to flee to states and countries with lower burdens and  higher economic growth over time. High-tax states such as Vermont, Michigan and Missouri have not been magnets for jobs over the long run. Look over at Europe which is once again scaring investors. It is a continent with excellent climate, culture and an educated workforce, but its high taxes and spending have stalled population and economic growth for a decade or more. America will go that way if we continue down the same path, driving out investment, businesses, and jobs.

Over the years I have seen people move out of Iowa for tax reasons.  Back in the 1980s, when Illinois was a low-tax state, I saw an S corporation owner pay for a fancy new house in East Dubuque in one year by the simple expedient of moving across the river from Dubuque.  Tax isn’t always the decisive factor, but to say it’s not a factor at all ignores the most basic tenet of economics: incentives matter.

 

 

Their hopes are fulfilled. At least that second one.  Wave the jazz hands and hope for the best-Politicians hope that voters are clueless about tax, writes Tim Harford

Richard Morrison,  Happy Birthday to the Kennedy Tax Cuts (Tax Foundation)

Congress took up Johnson’s suggestion and passed what became the Revenue  Act of 1964, which the President signed on February 26, 1964. The bill dropped the top marginal tax rate from 91% to 70% (and also reduced the corporate tax rate from 52% to 48%). In the wake of this reduction on high-earner households, federal revenue actually increased, rising from  $94 billion in 1961 to $153 billion in 1968, an increase of 33 percent in real terms.

Clearly the old rates were on the far side of the Laffer Curve.

 

Jana Luttenegger,  Unfortunate Reminder of the Need for Powers of Attorney (Davis Brown Tax Law Blog):

A recent news story in the Des Moines area  covered a family looking for assistance to cover legal bills for a family member who is in a coma following a car accident. The family is unable to get access to bank accounts or insurance information, and unable to pay her bills (or even know what bills exist) as they come due. The only way for family members to get access to this information is to go through the court system and have the court appoint someone to take care of those matters.

This sort of planning isn’t just for rich people.

 

Paul Neiffer,  How Step-Up In Basis Works.  On the resetting of basis at date-of-death value when a farmer dies.

Jason Dinesen,  A “Standard Deduction” for Sole Proprietors?

TaxGrrrl, 11 Changes You Must Know Before Filing Your Tax Return for 2012

Kay Bell, Tax reform is job 1.  Well, HR 1, anyway.

 

Jim Maule, Special Low Tax Rates Hurt the Economy and Thus the Nation.  He doesn’t like low capital gain and dividend rates.  How about this, professor: lower the top rate to 20% for all income, allow a corporation dividends-paid deduction, and I’m good with getting rid of a capital gain break.  Otherwise you are double-taxing earnings, and to the extent gains result from inflation, you are collecting a tax on treading water.

 

Andrew Lundeen,  Buffet Rule Still Not a Good Solution. (Tax Policy Blog) Never will be:

The low rates we sometimes see from wealthy individuals is because they derive much of their income from investments, which is double taxed anyway. A capital gain or dividend is first taxed at the corporate level, as a corporate profit, then at the shareholder level. The result is a combined average tax rate of 56.7 percent in the United States – higher than every developed country in the world except, France, Denmark, and Italy. This creates a huge disincentive to invest, ultimately slowing economic growth.

 

David Brunori, Capital Gains from Copenhagen to Bakersfield (Tax.com)

Patrick Temple-West,  EU financial transactions tax to go global, and more.  Bad idea, as this New York Times piece explains.

Howard Gleckman,  What if the Outrage over Excessive Welfare Extended to the Tax Code? (TaxVox).

Me from earlier: Hoarders, wreckers and the Accumulated Earnings Tax.  Will the administration use this tax law relic to force corporations to put their cash to work?

From yesterday: IRS issues 2013 vehicle depreciation limits

 

Mo’ Money might lead to Mo’ time in prison.  Mo’ Money Taxes employee pleads guilty to fraud

In case you were wondering. 10 Ways To Become A Victim Of Tax Identity Theft  (Janet Novack)

News you can use.  Jewish law permits informing on tax evaders.  And secular law can make it lucrative.

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Of course the “Buffett Rule” is futile. It’s a distraction, not a solution.

Thursday, March 22nd, 2012 by Joe Kristan

The Administration has spent so much time pushing a “Buffett Rule” to increase taxes on “millionaires and billionaires,” you’d think that it would actually close the $1 trillion+ budget deficit.  Think again.  The Congressional Joint Committee on Taxation projects that it would raise $46.7 billion — not in one year, but cumulatively over 10 years. (Via the TaxProf).

BuffetRule Chart

The talk of raising taxes on “the rich” isn’t serious.  They simply don’t have enough money to pay the bills, and the U.S. tax system is already highly progressive.  If spending doesn’t come down, only a broad-based tax increase, like a VAT, will cover the tab.  But the politicians don’t want to admit this, so they point fingers at the “1%” so we won’t notice how fast they are spending our money.

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‘Buffett Rule’ rates are already here

Friday, February 10th, 2012 by Joe Kristan

The Tax Policy Center, a non-partisan think tank on the center-left, has issued a wonderful little paper that cuts through much nonsense on the progressivity of federal taxes.
The Obama administration is embracing a “Buffett rule” tax, a sort of alternative alternative minimum tax of 30% on AGI over $1 million, so that everybody will pay as high a rate as Warren Buffett’s secretary allegedly does. Of course this ignores the tax that is paid on corporate income before it is distributed or realized as capital gains. The Tax Policy Center has looked at real rates on cash income when all federal taxes — payroll, corporate, income and estate taxes — are accounted for. On that basis, the “Buffett Rule” rates are already in place:

Source: Tax Policy Center. Full chart available here.
Not only are Buffett Rule rates in place, but the federal tax burden is already extremely progressivemore so than in Europe, where the tax system is much more dependent on regressive consumption taxes like value-added taxes.
Of course the demagogues will still promise more free federal cheese, paid for by the rich guy. Just remember, the rich guy has already gotten his bill; when taxes go up to pay for our incontinent government, they’ll go up for you, too.

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