Cage Match: Iowan Peter Fisher takes on the Tax Foundation. Mr. Fisher has written a study for Good Jobs First, a left side advocacy group. Mr. Fisher who shows up in The Tax Update occasionally, doesn’t care for the Tax Foundation’s Business Tax Climate Index:
The TF, on the other hand, despite claims to the contrary, ignores the consensus approach to assessing business taxes in the economic literature and attempts to portray the effect of state and local tax law on business profits in an entirely different fashion: by stirring together no less than 118 features of the tax law and producing out of that stew a single, arbitrary index number. That number turns out to bear very little relationship to what businesses actually pay.
Here Mr. Fisher makes the same mistake he makes when he defends Iowa’s highest-rate-in-the nation corporate income tax, which collects very little net revenue because it clobbers some taxpayers while paying generous subsidies to the well-connected and well-lobbied. He concludes that means Iowa’s corporation tax doesn’t matter because of the low net collection.
A good business tax climate, to the Tax Foundation, doesn’t take money from some businesses and give most of it to other businesses; good policy is based on “simplicity, neutrality, transparency, and stability.” I agree.
As the Tax Foundation explains in its response to Mr. Fisher:
The problem here is that we do not claim to measure business tax burdens. We measure and rank tax structures, and this because the size of a tax is less important than the economic distortions it creates. This is a fundamental error in Fisher’s understanding of tax policy.
Mr. Fisher seems more focused on “equity,” whatever that means. But even if you think the tax law should be used to punish the rich and reward low incomes, cross-border mobility makes state tax systems an awful place to to that.
Tony Nitti, Overview Of The New 3.8% Investment Income Tax, Part 3: Gains From The Sale Of Property. Tony discusses the ridiculous proposed rules on sales of pass-through businesses, among other things.
TaxGrrrl, IRS Rolls Out More Proposed Regulations On Health Care As “Train Wreck” Comments Continue To Make Rounds. “Train wreck” is a term that frequently makes the rounds in the vicinity of train wrecks. This batch of regs covers “minimum value” for determining whether coverage disqualifies individuals from premium credits.
Trish McIntire, First Time Penalty Abatement. The IRS will usually abate minor penalties for first-time infractions, but they don’t like to talk about it.
Jen Carrigan, Should You Expect an Audit? A guest poster at Missouri Tax Guy’s place explains the IRS exam process.
Jason Dinesen, Another Example of a Tax Scam E-Mail. The IRS never contacts taxpayers by e-mail.
Kay Bell, Tax moves to make in May 2013
Cara Griffith, Feeling the Impact of Impact Fees (Tax.com).
Paul Neiffer, From 80 to 45 in 40 miles. Temperature, not speed. I get to meet Paul tomorrow, it should be fun.
Catch a Thursday Buzz from Robert D. Flach.
Video! The Iowa Bar Association now is selling DVDs of “Notes from the Fiscal Cliff,” a January webcast I did with Roger McEowen of the ISU Center for Agricultural Law and Taxation. The outline is here. Supply your own popcorn.