Check out the Citizens for Tax Justice Digest
Although this blog is now inactive, we are postings lot of new and dynamic content at our new blog the "Tax Justice Digest."
Go check it out now: http://www.ctj.org/taxjusticedigest/
This blog is now defunct. Check out our new blog at http://www.ctj.org/taxjusticedigest/
Although this blog is now inactive, we are postings lot of new and dynamic content at our new blog the "Tax Justice Digest."
We've all heard Mark Twain's quip that "there are three kinds of lies: lies, damned lies, and statistics." For those of us who think accurate statistics need to be a guidepost for sound economic policy, this line rankles a bit-- if people distrust all statistics, then how can we ever gain popular support for sound policies? But it's much easier to understand why Twain's putdown rings true with so many Americans when you read the latest anti-tax diatribe from the Wall Street Journal's editorial board. In an editorial about the alleged disappearance of Oregon's upper-income taxpayers in response to a recent tax hike, they trot out this old chestnut:
All of this is an instant replay of what happened in Maryland in 2008 when the legislature in Annapolis instituted a millionaire tax. There roughly one-third of the state's millionaire households vanished from the tax rolls after rates went up.The Journal first broke this story in an editorial in May of 2009, when they breathlessly declared that "[o]ne-third of the millionaires have disappeared from Maryland tax rolls" between 2007, when the state increased its top income tax rate on high-income families, and 2008. This was, as it turns out, not even close to true. A report from the Institute on Taxation and Economic Policy, published a few days after the Journal's editorial, showed that in fact, the most likely explanation for the decline in the number of Marylanders with taxable incomes over $1 million during this period was that they stopped being millionaires: while preliminary data available at the time did show the number of millionaire filers dropping by 13% between 2007 and 2008 (far less than the "roughly one-third" claimed by the Journal), the same data also showed a sharp increase in the number of filers earning less than $1 million, and a net increase in the overall filer population.
One-in-eight millionaires who filed a Maryland tax return in 2007 filed no return in 2008.One-in-eight is 12%-- so the good news is that they were now at least using the correct number ITEP had identified a year earlier, in lieu of the clearly-inaccurate "one third" figure. But the bad news is that by this time, the bean-counters in Maryland's tax-collection agency had released revised numbers which showed quite clearly what had really happened to upper-income filers during the year in question. And again, an ITEP report gave the real scoop: in fact, of the millionaires who filed as Maryland residents in 2007, just 6.8 percent had not filed as Maryland residents in 2008, far below the 12% figure the Journal was reporting (and, of course WAY below the "one-third" figure the Journal had originally touted).
All of this is an instant replay of what happened in Maryland in 2008 when the legislature in Annapolis instituted a millionaire tax. There roughly one-third of the state's millionaire households vanished from the tax rolls after rates went up.
From Sunday's edition, in which David Gregory tries, and tries, and tries to get John Boehner to answer the f***ing question at hand, which happens to be an eminently answerable one (do tax cuts pay for themselves). And then stops trying.
MR. GREGORY: ... I'm sorry, you're -- that -- you're not,
you're not being responsive to a specific point, which is how can you be for cutting the deficit and also cutting taxes, as well, when they're not paid for?REP. BOEHNER: Listen, you can't raise taxes in the middle of a weak economy without risking the double-dip in this recession. President Obama's favorite Republican economist, Mark Zandi, came out several weeks ago and made it clear that raising taxes at this point in, in the economy is a very bad idea.
MR. GREGORY: But do you agree that tax cuts cannot be paid for...
REP. BOEHNER: You cannot balance the budget without a...
MR. GREGORY: But tax cuts are not paid for, is that correct?
REP. BOEHNER: I am not for raising taxes on the American people in a soft economy.
MR. GREGORY: That's not the question, Leader Boehner. The question...
REP. BOEHNER: And the people that the president wants to tax...
MR. GREGORY: ...is, are tax cuts paid for or not?
REP. BOEHNER: Listen, what you're trying to do is get into this Washington game and their funny accounting over there. You cannot get the economy going again by raising taxes on those people who we expect to create jobs in America and to get the economy going again. If we want to solve the budget problem, we've got to have a healthy economy and we have to get our arms around the runaway spending that's going on in Washington, D.C.
MR. GREGORY: I just want to clarify this. I mean, if you -- I'm relying on what Chairman Greenspan said. Maybe -- if you're accusing him of funny Washington games. He says that tax cuts that aren't paid for are not -- they are not cutting the deficit, that they are not actually paid for, it's borrowed money. And so do you believe tax cuts pay for themselves or not?
REP. BOEHNER: I do believe that we've got to get more money in the hands of small businesses and American families to get our economy going again, and the only way to get that economy going again is to do that and to get our arms around the spending.
MR. GREGORY: All right. [Moves on to another topic.]
So why was this exchange even worth HAVING?
Wonder no more: a new report from Citizens for Tax Justice examines the "Economic Freedom Act," which would add an additional $7 trillion to the national debt over the next decade while managing to give the poorest 80 percent of Americans just 12 percent of the tax cuts in 2012 and thereafter.
GOP gubernatorial candidate Mike Montandon is making his views on Nevada property tax reform known-- and so far they all seem quite sensible.
In January, Louisiana lawmakers will be hearing a lot about exactly how big that state's transportation funding shortfall is, as a committee releases the findings of a long-term study of this problem. But House Transportation Committee Vice-Chairman Hollis Downs (R) gave a sneak preview yesterday.
Louisiana needs $750 million per year in new revenue to address road and bridge needs, the vice-chairman of the House Transportation Committee said Monday.To put this in context, Louisiana raises a bit less than this annually from its entire gasoline tax right now. So if the money were all coming from own-source gas tax revenues, Louisiana would have to more than double its gas tax to meet its needs.
This week Hawaii Governor Linda Lingle released the outline of her budget proposal for next year. It's not a pretty picture: the two most prominent tax policy changes in the Lingle plan are a money grab from county governments and a money grab from... the future.
It's a re-occurring pot of money, which is good.That's right. Once you've taken the counties' lunch money in one year, you can go right back and do it again as long as you want! This isn't really what advocates of sustainable taxation have in mind when they urge states to find recurring (as opposed to one-time) revenue sources...
Earlier today, the House of Representatives passed its most recent version of the "Tax Extenders" package (H.R. 4213). The "tax extenders" consist of about 50 temporary tax provisions that, as their name suggests, need to be extended every 1-2 years to prevent their expiration. While multiple theories exist as to why these provisions aren't simply made permanent, it is clear that relatively little thought has been given to their effectiveness in promoting the multitude of goals for which they've been supposedly been enacted. The House bill seeks to remedy this problem by requiring that the Joint Committee on Taxation (JCT) conduct studies of each of these provisions using 10 different criteria explained in the bill's language. Addressing each of these 10 criteria would provide valuable insights into these provisions' worth. The full list is quoted below, though items #3, 4, 7, and 10 are of particular note:
(1) An explanation of the tax expenditure and any relevant economic, social, or other context under which it was first enacted.
(2) A description of the intended purpose of the tax expenditure.
(3) An analysis of the overall success of the tax expenditure in achieving such purpose, and evidence supporting such analysis.
(4) An analysis of the extent to which further extending the tax expenditure, or making it permanent, would contribute to achieving such purpose.
(5) A description of the direct and indirect beneficiaries of the tax expenditure, including identifying any unintended beneficiaries.
(6) An analysis of whether the tax expenditure is the most cost-effective method for achieving the purpose for which it was intended, and a description of any more cost-effective methods through which such purpose could be accomplished.
(7) A description of any unintended effects of the tax expenditure that are useful in understanding the tax expenditure’s overall value.
(8) An analysis of how the tax expenditure could be modified to better achieve its original purpose.
(9) A brief description of any interactions (actual or potential) with other tax expenditures or direct spending programs in the same or related budget function worthy of further study.
(10) A description of any unavailable information the staff of the Joint Committee on Taxation may need to complete a more thorough examination and analysis of the tax expenditure, and what must be done to make such information available.
In Louisiana, the answer is probably "yes, they could."
shift of tax burdens directly onto owners of business and commercial property. It also would shift more of the property tax burden onto renters, rather than homeowners; renters pay property taxes through their monthly checks to landlords, without benefit of a homestead exemption.This isn't an argument that Louisiana's homestead exemption actually needs to be reduced. But it certainly makes a good case that further increases ought to be the last thing on state policymakers' minds at this time.
The count is in: the recently-ended Louisiana tax amnesty brought in $303 million in revenue for the state.
In today's Washington Post, Kenneth Harney reports evidence that some people are falsely claiming the new federal income tax credit for first-time homeowners.
Any company that makes a decision as to where they are going to be based on the tax rate is a company that won’t be around very long. If you’re down to that incremental margin you don't have a business.Same deal with first-time homeowners: if it really takes a tax credit to make this doable for them, what does that say about their ability to pay monthly mortgages in the long run?
Barack Obama's fiscal policy platform as a presidential candidate was hardly a profile in courage, but he had his moments. This, however, was not one of them:
"For the first time in American history, [John McCain] wants to tax your health benefits. Apparently, Senator McCain doesn’t think it’s enough that your health premiums have doubled, he thinks you should have to pay taxes on them too. That’s a $3.6 trillion tax increase on middle class families. That will eventually leave tens of millions of you paying higher taxes. That’s his idea of change."This was a fairly unprincipled thing to say, and begged the question: why shouldn't employer-paid health care be taxed? Obama never gave us an argument for this beyond the idea that it would be a "middle class" tax hike. In the end, you got the sense that he was saying this not because he believed it would be a bad idea to tax employer benefits, but because it was a good soundbite for him and allowed him to blur the distinction between the stereotypes of the tax-happy Dem and the tax-averse Republican.
MR. GREGORY: Will the president sign a bill that taxes healthcare benefits for employees?Once again, though, the question is: why take this position? Is there a principle behind it?
VICE PRES. BIDEN: We made it clear we do not think that is the way to go. We think that is the wrong way to finance this legislation.
MR. GREGORY: So if the bill comes with that...
VICE PRES. BIDEN: But--no, no, no.
MR. GREGORY: ...the president wouldn't sign it?
VICE PRES. BIDEN: I didn't say that. I said when the bill is going to come, this is the most--this is going to be one of the most comprehensive changes in law since Medicare in the beginning. We'll have to see what the whole bill says. But we made it clear we do not believe you should be taxing, taxing the benefits that people receive through their employers now.
A big tax fairness gain in Georgia today: after thinking on it for a few weeks, Governor Sonny Perdue has decided to veto legislation that would have cut the state's income tax on capital gains. The proposed tax cut, which the legislature had approved at the same time as a bill ending state funding for a property tax credit for homeowners, would have done little or nothing for most middle- and low-income Georgians. Viewed in combination with the property tax legislation, moreover, the combined effect would have been a tax hike on middle-income folks and a tax cut at the top! ITEP's analysis has details.
Georgia is constitutionally required to maintain a balanced budget: for every dollar in decreased revenue, we must correspondingly cut expenditures. We cannot deficit spend as the federal government does, even if those deficits generate economic growth in the long term.In other words, in a deficit environment, when the goal for the state has to be to make things balance in the current year, he's saying it's impossible to push a tax cut unless you can pay for it immediately. Cap gains tax cuts will still grow the economy, he's saying-- it's just that the growth will happen outside the single-year budgetary window. National anti-taxers don't need to get nervous-- Perdue is not rejecting supply-side principles. He's simply operating within a political framework that doesn't recognize that sometimes supply-side policies need a big canvas to work on in order to be effective. A reeaalllly big canvas.
While I appreciate the Governor’s position that the tax cuts included in the bill would have made balancing our state budget even more difficult, I believe that the economic benefits to our state would have outweighed these concerns.Taken at face value, Handel is saying one of two things here: either (1) Perdue is wrong because the cap gains cuts actually would have grown revenue immediately, offsetting the revenue loss, or (2) silly budget deficit rules don't matter and we can ignore them. Neither position speak well for Handel's abilities to manage a budget if she ever decides she'd like to hold a higher office than she currently does
Now is the time for us to cut taxes in order to help grow jobs and ignite our economy.
The debate over how to resolve Illinois' looming budget deficit has, so far, been an unusually gratifying one. A brand-new governor with little political capital to spend has made a gutsy (and, in our view, basically correct) decision to push for an increase in the state's personal income tax, which is bar-none the least fair in the nation and among the very lowest as well.
This kind of credit is especially valuable to low-income working families in Illinois, where the poorest one-fifth of Illinois families spend an average of nearly 13 percent of their earnings in state and local taxes while the wealthiest 1 percent of Illinois households spend less than 6 percent of their incomes likewise.All true. The underlying point here, unstated by the SJR, is that the EITC is valuable because it's an income-tax based credit that is refundable, meaning it can be used not only to offset income taxes but to offset sales, excise and property taxes paid by low-income families as well. And the main reason why the poorest Illinoisans pay such a huge chunk of their incomes in tax is because of these non-income taxes.
I work at Revenue. Under the current system, many people pay no tax and still get a refund of their EIC on their state return. This is a form of welfare. People are getting money from the state that is not theirs, and they did nothing to earn it.This tells me only that it's possible to work for the Department of Revenue and understands precisely zero about how the EITC works. It's based on earned income. If you have a job and a salary, you get the EITC. The more you earn, the more you get. So to say that EITC recipients "did nothing to earn it" is quite possibly the single most breathtakingly wrong thing one could ever assert about it.
Who knew Georgia lawmakers were such fans of the property tax? Only a year after giving serious consideration to a plan that would have repealed most local property taxes in the state, the state General Assembly has ratified, and sent to Governor Perdue, a budget plan that would provide a 50% exclusion for capital gains taxes that's estimated to cost north of $340 million a year, and pay for it by eliminating the state's $20,000 property tax homestead exemption (technically $8,000 of assessed value, but Georgia homes are valued at 40% of market value for tax purposes).
President-elect Barack Obama has proposed a change that would prevent the estate tax from disappearing in 2010, but which would also unnecessarily cut the estate tax below the level itwould reach in years after 2010 if Congress simply does nothing.Put another way, Obama's first estate-tax-related act as President was not to reject the Bush administration's estate tax cuts, but to allow even more of them to take effect at the beginning of 2009. Even estate tax proponents whose reform ambitions were limited to "first, do no harm" were disappointed by this stance.
Buried in President Obama’s recently released budget blueprint were four little-noticed and perhaps unexciting sentences that could signal the coming of a major change in the way the executive branch thinks about, evaluates, and reports on tax expenditures:
The Administration will fundamentally reconfigure the Program Assessment Rating Tool. We will open up the insular performance measurement process to the public, the Congress and outside experts. The Administration will eliminate ideological performance goals and replace them with goals Americans care about and that are based on congressional intent and feedback from the people served by Government programs. Programs will not be measured in isolation, but assessed in the context of other programs that are serving the same population or meeting the same goals.While the term “tax expenditure” isn’t explicitly included in this brief preview of things to come, a recently issued statement from Citizens for Tax Justice makes clear that meaningfully implementing the promises made above will have to involve shining a bright light on government programs hidden within the tax code.
Clinton’s Treasury Department, of which I was a part from 1998 to 2000, was unenthusiastic about performing these evaluations, reasoning that a comprehensive evaluation of tax expenditures would necessarily raise serious objections to measures enthusiastically advanced by the Administration … Although the menu of favorite tax expenditures changed when President Bush took office, the Office of Management and Budget has not published any new tax expenditure analysesIn order for real reform to occur, President Obama’s very visible push for greater government transparency will have to outweigh the coldly political calculations that have made for “politics as usual” up until this point.
- Len Burman. “Is the Tax Expenditure Concept Still Relevant”. National Tax Journal. September 2003.
Yesterday the National Retail Federation published an open letter to President-to-be Barack Obama urging that come January, Obama's stimulus package should including a national "sales tax holiday," three ten-day periods in 2009 during which states that normally collect sales taxes on retail purchases would stop collecting them.
The CTJ report is here.
Earlier this week, Virginia Governor Tim Kaine proposed doubling the state's cigarette tax from 30 to 60 cents per pack. Once upon a time, this would have been a pretty substantial hike. But with the wave of cigarette tax hikes nationwide over the past decade, this proposal would best be described as bringing Virginia's tax more in line with what the rest of the states currently do. As the Campaign for Tobacco-Free Kids reports, the nationwide average cig tax is now $1.19 per pack.
[Virginia House Speaker William] Howell and [U.S. House member Eric] Cantor argued that a cigarette tax hike would send the wrong signal to other states, which might be more inclined to raise their cigarette taxes. That could lead to job losses in the tobacco industry, especially in Virginia.The most obvious response to this rationale is that they're trying to close the barn door after the horses have gotten out. State lawmakers have looked--and continue to look, right now-- to cigarette taxes as their favorite source of new tax revenue for years now. The idea that other states are waiting for the official sanction of tobacco-producing states before further jacking up their cig taxes is pretty far-fetched.