Posts Tagged ‘Tax Policy Center’

Tax Roundup, 9/30/15: Taking from rich doesn’t give to the poor; state incentives favor the big.

Wednesday, September 30th, 2015 by Joe Kristan

Today we have two instances where policy tanks that I usually disagree with make important tax policy points.

TPC logoFirst, The center-left Tax Policy Center, a project of the Brookings Institution (which I castigate below), makes an important observation about the overrated problem of income inequality in their paper, Would a significant increase in the top income tax rate substantially alter income inequality? The summary (my emphasis):

The high level of income inequality in the United States is at the forefront of policy attention. This paper focuses on one potential policy response: an increase in the top personal income tax rate. We conduct a simulation analysis using the Tax Policy Center (TPC) microsimulation model to determine how much of a reduction in income inequality would be achieved from increasing the top individual tax rate to as much as 50 percent. We calculate the resulting change in income inequality assuming an explicit redistribution of all new revenue to households in the bottom 20 percent of the income distribution. The resulting effects on overall income inequality are exceedingly modest.

I have zero hope that politicians will heed this. Just because you take from the rich doesn’t mean it goes to the poor. It goes to the well-connected, as in the next item.

Second, the not-so-center-left Good Jobs First takes the side of the angels in the battle against state tax incentives, with a survey of small businesses called In Search of a Level Playing Field:

A national survey of leaders of small business organizations reveals that they overwhelmingly believe that state economic development incentives favor big businesses, that states are overspending on large individual deals, and that state incentive programs are not effectively meeting the needs of small businesses seeking to grow. 

I think they have this exactly right. It’s not start-ups that get the big deals from the legislature and the Economic Development bureaucrats. It’s the well-connected and wealthy companies that know how to work the system. The rest of us get to pay for it.




Jason Dinesen, The Iowa School Tuition Organization Tax Credit. “Iowa offers dozens of obscure tax credits. The one I get asked about most is the tax credit available for donations to a ‘school tuition organization’ or STO.”

Kay Bell, Maryland issuing court-ordered county tax credit refunds. If you don’t want to repay illegal taxes, don’t collect illegal taxes.

Russ Fox, How to Wynne Your Money Back in Maryland

Paul Neiffer, IRS Provides List of Counties Eligible For Additional Extension on Livestock Replacement

Jim Maule, Taxation of Prizes, Question Two. He quotes a post from a sweepstakes message board:

 I won concert VIP tickets, there is no value on the tickets, so I can’t sell them. If no value is on them, why am I paying taxes on them? 

Mr. Maule explains that there is a value. If there isn’t, then why didn’t the winner give them away?





InsureBlog, Yes, The New York Obamacare Co-op [squandered*] $340 Million. *The actual headline uses a more colorful term.

Robert Wood, Hillary Backs Cadillac Tax Repeal


TaxProf, The IRS Scandal, Day 874. Today’s edition features IRS agents abusing their power on everyday taxpayers. But we can trust them to regulate their tax preparer adversaries, right?

Arnold Kling, Hypocrisy and Cowardice at Brookings. Arnold addresses the firing by the Brookings Institution of Robert Litan, a scholar accused by Senator Elizabeth Warren of “writing a research paper to benefit his corporate patrons.” He is appalled:

1. Robert Litan is one of the most decent individuals in the whole economics profession.

2. Giving Litan’s scalp (sorry for the pun) to Elizabeth Warren does nothing to bolster the integrity of Brookings. It amounts to speaking cowardice to power.

There’s more. The episode is appalling, and it shows the totalitarian tendencies that are barely beneath the surface of Senator Warren’s populism.




Alan Cole, Donald Trump’s Tax Plan Will Not Be Revenue-Neutral Under Any Circumstances (Tax Policy Blog)

Jeremy Scott, Trump’s Tax Plan Is Pretty Much GOP Orthodoxy (Tax Analysts Blog)

Matt Gardner, How Donald Trump’s Carried Interest Tax Hike Masks a Massive Tax Cut for Wealthy Money Managers (Tax Justice Blog)

Peter Reilly, Trump Tax Plan Would Increase Deficit By Over $10 Trillion

Tony Nitti, Love Trump, Hate Romney, But Their Tax Plans Are One And The Same

Renu Zaretsky, Thirty days, goodbye September, shutdown talks—maybe in December. Today’s TaxVox headline roundup covers shutdown politics, plans to use reconciliation procedures to pass bills repealing pieces of Obamacare, and tax Trumpalism.


See you at Hoyt Sherman Place tonight!



Tax Roundup, 8/21/2012: Branstad to push income tax rate cuts? Also, tax and marriage. Plus more masterminds!

Tuesday, August 21st, 2012 by Joe Kristan

Will Iowa finally do something about it’s horrendous income tax?  Governor Branstad provided a glimmer of hope, according to the Quad City Times’ Rod Boshart (my emphasis):

Gov. Terry Branstad said Monday that any legislative effort to raise the state’s gas tax would be contingent on Iowa lawmakers approving tax relief for property owners and income earners.

Branstad told reporters he intends to advocate for a reduction in the commercial/industrial property tax rate, a limitation on increases to residential and agriculture property tax rates and a reduction in Iowa’s individual and corporate income tax rates once the newly elected members of the 85th Iowa General Assembly convene their 2013 session next January.

So what does that mean?  It doesn’t sound like a bold call to reform Iowa’s high-rate, high-loophole income tax.  It sounds more like a trial balloon to tie a gas tax increase to income tax rate cuts; the rate cuts, possibly trivial, could provide political cover for a gas tax increase.  I hope I’m wrong.

Be bold, Governor!  Go big!  Go for the Quick and Dirty Iowa Tax Reform Plan!


Meanwhile, it’s business as usual on the Iowa corporate welfare front.  The Iowa City Press Citizen reports:

Development on the Iowa River Landing is moving full steam ahead in Coralville, aided recently by up to $2 million in state tax credits for four companies developing portions of the mixed-use development along Interstate 80.

The Iowa Economic Development Authority board approved the grants at a meeting Friday as part of its Brownfield and Grayfield Redevelopment Tax Credit Program, a series of tax credits the state doles out annually to redevelop properties around the state with environmental issues or other hindrances to development.


A Grayfield is an industrial or commercial property that already has infrastructure, such as a building, in place, but whose use is outdated, Iowa Economic Development spokesperson Tina Hoffman said. Tax credits for Grayfields can be for up to 12 percent of the qualifying investment.

“Grayfields”  then means “just about any place that has ever been developed.”

If a building doesn’t need government help to be built, it shouldn’t get it.  If it does need government money, it probably has no business going ahead in the first place.  The buildings developed with government help will compete with those already in place and paying taxes to help subsidize the new ones.

Related: State 29, Live By The Tax Credit, Die By The Tax Credit


Yesterday we noted how the IRS is being swindled to the tune of billions by petty thieves in Tampa.  News of another criminal mastermind who outwitted Doug Shulman’s IRS to get taxpayer cash comes out of Chicago:

The Department of Justice says 41-year-old Katrina Pierce was sentenced in federal court Monday. She pleaded guilty in January to fraud and aggravated identity theft.

The department says Pierce used a collection of stolen identities to defraud the Illinois Department of Human Services of more than $146,000 in child-care benefits between 2006 and 2010.

Pierce also filed about 180 fraudulent income tax returns from the 2006 and ’07 tax years and collected more than $60,000 in refunds.

We aren’t dealing with criminal geniuses here, but they are smart enough to fool Doug Shulman’s IRS for billions of dollars.  Remember, each of those 180 fraudulent returns come at the expense of a victim like Jason Dinesen’s client, who gets the IRS runaround while the thief gets her cash.


Thinking about a ring?  The Tax Policy Center has some advice for the lovelorn with TPC’s New Marriage Bonus and Penalty Calculator(TaxVox)

Still not sure?  The Tax Policy Blog’s Monday Map asks: Does your state have a marriage penalty?



TaxGrrrl, Romney’s ‘Number’ Is 13.9: What’s Yours?

Anthony Nitti, Leave Romney Alone:

This is who Mitt Romney is, at least in part: a rich guy with rich guy tax problems and rich guy tax solutions. Romney wasn’t obligated to pay any more tax than the law required, and he very likely didn’t. His refusal to overpay the government shouldn’t be an indictment on his ability to lead a government.


Jack Townsend, Judge Apportions Restitution in a Massive Tax Shelter Case:

Judge Baer of SDNY imposed restitution against one of the individual defendants in the massive BDO Seidman tax shelter case, but apportioned the restitution so that the defendant, who pled to a conspiracy count for the large conspiracy, is liable for only a portion of the tax loss.


Russ Fox:  Not Only Were the Employees Outsourced, The Taxes Went Away, Too.  An “professional employer organization” that let employers outsource their payroll function is accused of swindling clients out of their payroll taxes:

From San Antonio comes word of a company that allegedly took care of small businesses’ taxes in a way that’s, well, arresting.  John Bean apparently owned a professional employer organization named “Synergy Personnel.”  Most PEOs become the actual employer and, for a fee, they relieve a small business of the duties of personnel including the payment of taxes.  Mr. Bean’s company allegedly had a unique and (if proven) very illegal method of dealing with those taxes: They didn’t.  The FBI and IRS allege that Mr. Bean’s company kept the money for taxes and workers’ compensation insurance.

The IRS will still want the taxes from the company’s clients.  Cases like this remind us how wise it is for employers to set up with EFTPS, the Electronic Federal Tax Payment System, even if they outsource the payroll function.  You can go online with EFTPS and make sure your tax deposits are really going to the IRS.  Nobody wants to pay their payroll taxes twice.  If your PEO arrangement doesn’t support this, you are taking a potentially-expensive leap of faith.


Peter Reilly, DOMA Takes the Security Out of Social Security for Married Gay Seniors


Kay Bell, 401(k) fee disclosure info due Aug. 30

William Perez, IRS Offers Tips for Correcting Tax Returns

Crisis!  Peter Luger: Steak Prices May Soar As Drought Culls Herds.  (via Going Concern).


Tax Roundup, 8/2/2012: You pay for everything. If you pay less, where’s my benefit? Plus beating the sales tax holiday to death, but missing the film credit story again.

Thursday, August 2nd, 2012 by Joe Kristan

TPC: Romney Plan Would Cut Taxes for Rich, Raise Taxes on Middle Class and Poor.  (Tax Prof).  Some news, folks: if spending doesn’t come down drastically, taxes are going up for the middle class and the poor anyway.  If you raised the rates on “the rich” to 100%, it still wouldn’t cover what the government is spending now.

How Did the Tax Code Get So Progressive? (William McBride, Tax Policy Blog) talks about the TPC study:

The main thing missing here is the context of our current federal income tax code.  Imagine a society with 5 people, where the two richest people pay all the taxes, the middle person pays nothing, and the two poorest people actually have a negative tax rate, meaning the rich are paying them through the tax code.  Then any cut in the tax rate will disproportionately benefit the rich guys.  This is the federal income tax code, in a nutshell.  According to the CBO, the top 20 percent of households pays 94 percent of federal income taxes.  The bottom 40 percent actually have a negative income tax rate, and the middle quintile pays close to zero. 

An illustration:


If “the rich”  pay all the taxes, then of course tax cuts will disproportionally benefit them.

We’ve cut government spending to the bone!  The bone just seems to keep getting bigger (Donald Marron, TaxVox)

 If you look at the two lines on the chart, you can see that spending on “goods and services” isn’t going up much.  That means they’re just taking a lot more of your money to give to their friends.

Still no media coverage of the last film tax credit trial.  Seeing that the Des Moines Register just jacked up home delivery for my usually-unread papers to $25 per month, it would be nice if they actually covered something.  Well, there’s this: Celeb tweets to Gabby Douglas.  Of course, they all missed the real story when the film tax credit was enacted, so at least they’re consistent.

Missouri Taxpayers paying taxes to cover the K.C. Royals payroll taxes.  (, via Going Concern)

In case you haven’t heard, Iowans, the Annual sales tax holiday is Friday and Saturday (Dar Danielson, Radio Iowa). It applies for clothes and shoes. Jason Dinesen reminds us about Back to School Supplies and the Iowa Tuition and Textbook Credit.

Big charitable contribution, no deduction?   My new post at covers traps in appreciated property charitable contributions.

Phil Hodgen is back from a scouting trip to Quetico Provincial Park, the Canadian side of the Boundary Waters wilderness, with Basis step-up on assets inherited from nonresident

Sort-of related: more pictures from my recent Boundary Waters scout trip.

Peter Reilly, IRA Rollovers – Let’s Be Careful Out There

Patrick Temple-West, Essential reading: Payroll tax cut on track to quietly expire (Tax Break)

Trish McIntire, Drought, Farms and Taxes.

TaxGrrrl, Marriage Or Divorce Can Be A Name Changer

Kay Bell, Tax moves to make in August 2012

The New Jersey Tax Guy is fleeing to Pennsylvania.  Good luck with the move, Robert!

Asking the tough questions: Why Am I Paying for a Prancing Horse? (Christopher Bergin, and  Should Our Olympic Heroes Pay Tax on Their Winnings? (Anthony Nitti)


Nope. Still doomed.

Monday, February 20th, 2012 by Joe Kristan

Congress just passed a bill to continue the 2 percentage-point reduction in employee Social Security tax through the end of the year. Meanwhile, the President and many pundits are obsessed with increasing taxes on “the rich,” even though they won’t and can’t come close to paying for our incontinent government, especially entitlements like Social Security. The center-left Tax Policy Center has a new paper out that makes the point diplomatically:

While the changes enacted in the Budget Control Act have moved projected deficits in the right direction, these deficit reductions still exist only on paper, with the lack of action since the Act’s passage leading one to question whether they will be sustained. Even if they are, the federal budget outlook is still unsustainable, primarily because of a rise in entitlement spending that is not accompanied by an increase in revenues. Under even the most optimistic scenario, the necessary adjustments must be several times the size of those adopted under the recent legislation.

In other words, the rich guy isn’t buying this round. You are.


‘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.


The President and the Teacher, revisited

Monday, October 3rd, 2011 by Joe Kristan and the Tax Policy Blog say that the President was wrong to say that he pays a lower tax rate than a schoolteacher, as I noted approvingly last week. Tax blogger Mary O’Keeffe says I shouldn’t be so hard on the President, because those analyses don’t count excise taxes or state and local taxes.
That strikes me as moving the goalposts. For example, excise taxes and state sales taxes are taxes on consumption, not income. Applying a consumption tax to an income tax base compares apples and oranges. Ms. O’Keeffe also compares the President’s 3% Illinois tax to teacher taxes in higher tax D.C. and New York, which is inapt.
If we bring enough other stuff into the equation, we can probably show that the President pays a lower rate than the teacher just because he is President. He gets a nice house, rent-free and tax-free, and pays no taxes. He gets personal bodyguards, drivers, gofers, and valets tax-free. He gets the most lavish private airplane there is tax-free. So maybe the President isn’t the best measuring stick. As Warren Buffett wouldn’t say, data trumps anecdotes. From the Tax Policy Center comes this table estimating true effective federal rates for 2011 for different income levels, accounting for all federal taxes:

At the “teacher” level — $50,000 — the effective tax rate is 12.5% to 15%. At the “President” level, the effective rate is 22.7%. Even working sales taxes and property taxes into the picture, that won’t get the teacher up to “Presidential” tax levels. And none of this counts government benefits; if you are counting every tax, you should also count government benefits, which skew towards lower incomes.
Related: Tax Policy Blog maximum rate calculator


The math on taxation of investment income

Thursday, September 1st, 2011 by Joe Kristan

TaxVox explains the math of tax breaks for dividends and capital gains. Of couse, a 35% corporation income tax is already embedded in dividends and in capital gains on corporate stock. The Tax Policy Center explains what these hidden taxes do for effective tax rates.


Yes, the rich do pay higher taxes

Monday, August 29th, 2011 by Joe Kristan

Whenever you point out that the rich do pay significantly higher federal taxes than the poor, somebody shoots right back: what about payroll taxes?
Whenever you say that the tax system already leans heavily on the wealthy, someone says “Warren Buffett wants higher taxes for rich people, so you should, too.”
The center-left Tax Policy Center has issued data that these folks should ponder. A sample:

Click chart to enlarge.
This data shows that even when you take the payroll taxes into account, the tax system is highly progressive. This data also usefully incorporates the effect of corporation income taxes into the equation, a factor Mr. Buffett famously ignores when pleading for higher taxes on other people — and it’s only on other people, as he already is free to give the government as much as he wishes.


Fact-checking the fact-checkers

Tuesday, September 28th, 2010 by Joe Kristan

An effort by “” passed on by the TaxProf doesn’t inspire confidence in their fact-checking prowess. This is part of their “fact check” on the Republican “pledge” election year platform:

Pledge, page 14: [Obama] also wants to raise taxes on roughly half of small business income in America.
Fact: This is an exaggeration. Republicans are equating “net positive business income” reported on individual returns with “small business income,” which isn


Make mine a double, the rich guy is buying

Friday, August 13th, 2010 by Joe Kristan

The Tax Policy Center has a bunch of new tables on how the expiration of the Bush-era tax cuts will affect different levels. It’s useful information, but the obsession with how taxes affect “the rich” is unhealthy. Listening to some politicians, it would be fine to burn taxpayers at the stake and sell their wives and children into slavery as long as it only affected the top 2% of the income distribution.
It would be clarifying if advocates of sticking it to the rich would discuss:
– Is there any limit to the amount of personal earnings that the government has a right to claim?
– Is there ever a point that taxing the “rich” hurts everyone because it damages the overall economy? What is that point?
– Is there some limit to ability of the government to solve the problems of the less well-off by taking money from the “rich”? Can you ever tell if that work is done?
– Are there any failed government programs?
Even though I suspect the answers would always be “no,” it would be clarifying.
Related: Peter Pappas, Because that


If by ‘success’ you mean ’embarrassing boondoggle,’ yes, it was a success

Friday, April 30th, 2010 by Joe Kristan

The First Time Homebuyer Credit expires today. At the moment it doesn’t appear that yet another extension is in the cards. The New York Times calls it “Successful, but Costly.”
Yes, it is a success, if the objective was to demonstrate that people will take free money if you give it to them. It was also a success in showing that people will try to scam refundable tax credit programs. But did it succeed in its goal of making housing more costly shoring up the housing market? TaxVox weighs in:

As my Tax Policy Center colleague Ted Gayer has noted, 85 percent of those who took last year


Can we just tax our way out of deficits?

Tuesday, January 26th, 2010 by Joe Kristan

From TaxVox:

Can we fix our budget problem by raising income taxes alone? With deficits as far as the eye can see, Rosanne Altshuler, Katie Lim, and I presented a paper at last week


Let’s make you spend more on me

Thursday, October 1st, 2009 by Joe Kristan

The TaxProf notes that the Tax Policy Center says 47% of households will pay no income tax this year. He includes a little chart:
Who does pay federal taxes? Those evil rich folks:
So what happens when only a few taxpayers bear the burden of federal spending? This:
Chart by Heritage Foundation via Fundmastery Blog.
More from Peter Pappas and TaxGrrrl.

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Another round, the rich guy is buying

Wednesday, August 26th, 2009 by Joe Kristan

Whenever you point out how much of the federal income tax burden is carried by the top 1% of the income scale, some progressive will point out that it’s misleading because it doesn’t take into account non-income taxes. Now the center-left Tax Policy Center has a thousand words on the subject, taking into account all federal taxes:
And another 1,000 words for those folks who embrace the David Cay Johnston thesis about how the really, really rich folks get away with murder:
These are, of course, the average rates. The marginal rate — the rate on each additional dollar — is much higher.
The results may be different for the top .001%, because you only get there normally by selling your business and having a big one-time capital gain, which will be taxed at a lower rate. Do we have a special tax system for a few hundred people just to deal with that sort of a statistical anomaly? Sounds dumb to me.
Via the TaxProf.
Related: Sure I’ll have another Crown Royal. Make it a double. The rich guy is buying.

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