Institute on Taxation and Economic Policy Staff – Page 3

ITEP's Research Priorities

blog February 14, 2018
GOP Dilemma: Love the Tax Cut, Hate the Agency that Administers It

The president’s budget proposal would cut the agency’s baseline funding from $12 billion to $11.1 billion this year. This is almost a quarter less, in inflation-adjusted terms, than the $14.4 billion the agency received in fiscal year 2010. Not surprisingly, the long, steady decline of IRS funding during this period has led to a reduction in staffing: the agency’s 2016 employee total of 77,000 was 17,000 lower than at the beginning of the decade.
blog February 13, 2018
Amazon Inc. Paid Zero in Federal Taxes in 2017, Gets $789 Million Windfall from New Tax Law

The online retail giant has built its business model on tax avoidance, and its latest financial filing makes it clear that Amazon continues to be insulated from the nation’s tax system. In 2017, Amazon reported $5.6 billion of U.S. profits and didn’t pay a dime of federal income taxes on it. The company’s financial statement suggests that various tax credits and tax breaks for executive stock options are responsible for zeroing out the company’s tax this year.
blog February 9, 2018
The More Things Change: PG&E Records a Tenth Straight Year of No Federal Income Taxes

In the runup to last fall’s tax debate, it was commonly observed that corporate tax reform is both easy and hard: the easy part is cutting the rate, and the hard part is paying for it by closing loopholes. The real test of Congress’ determination to achieve tax reform would be whether they would stand up to corporate lobbyists and shut down loopholes like accelerated depreciation that allow profitable companies to pay little or no income tax. As is now widely known, Congress was not especially determined: lawmakers aggressively cut the corporate rate from 35 to 21 percent, but then expanded depreciation tax breaks instead of repealing them. This week the utility giant (and notable tax avoider) PG&E released its annual financial report assessing the short-term impact of the tax bill on its bottom line. The report shows that even after taking a short-term $147 million tax hit in 2017, the company still won’t pay a dime of current federal income taxes, on balance, on $2.1 billion of income overall.
blog February 9, 2018
How the Latest Budget Deals Expose the Failure of “Tax Reform”

If there was one thing that tax reform legislation was supposed to accomplish, it was to put an end to the scandalous semiannual ritual of extending and expanding the list of the temporary provisions in the tax code, known as tax extenders. During the passage of the last tax extenders bill at the end of December 2015, lawmakers on both sides of the aisle agreed that it was critical to have a tax code that provides “permanency and certainty” and to move forward with comprehensive tax reform that would decide the fate of the extenders once and for all. Unfortunately, the Tax Cuts and Jobs Act not only failed to eliminate the tax extenders, it significantly expanded the number of temporary provisions in the code.
blog February 3, 2018
How Much Will Typical Middle-Class Workers Really See Their Paychecks Change?

The campaign by Republican leaders in Congress to promote their new tax law has two prongs. One is the claim that corporate income tax cuts are already trickling down to workers, which, as we have explained, is believed by basically no economists anywhere. The other prong of their campaign is to argue that the personal income tax cuts will provide a noticeable decline in withholding from paychecks that middle-class people will notice soon. At this point, it’s helpful to look at some actual data and see how small the boost in take-home pay will really be for most Americans.
blog February 1, 2018
How the U.S. Became a Top Secrecy Jurisdiction

Sometimes, ranking near No. 1 in the world is not a badge of pride. According to the Financial Secrecy Index released by the Tax Justice Network (TJN), the United States is the second largest contributor to financial secrecy in the world, placing it in the company of infamous tax havens such as Switzerland (ranked No. 1) and the Cayman Islands (ranked No. 3). Financial secrecy is enabling people to hide income from the authorities to evade taxes or financial regulation, launder profits from crime, finance terrorism, or otherwise break the law.
blog January 31, 2018
How Exxon’s Empty $50 Billion Promise Made Its Way into Trump’s SOTU

Never one to let the truth get in the way of a good story, House Speaker Paul Ryan immediately published a press release with the headline, “ExxonMobil to Invest an Additional $50 Billion in the U.S. Due to Tax Reform.” The statement was completely faithful to ExxonMobil’s statement, except for the words “additional” and “due to tax reform.” Not to be outdone, President Trump implied during his State of the Union address that the company was investing $50 billion in response to the new tax law.

But a closer examination of ExxonMobil’s recent history of domestic spending finds that the “new” $50 billion investment is less than what the company invested over the previous five years.
blog January 31, 2018
Fact-Checking Trump’s State of the Union Address on Tax Issues

Here are some claims the President made during his State of the Union address, along with the facts.
blog January 26, 2018
Moody’s and Conservative Economists Agree: The Trump Corporate Tax Cut Is Not Helping Workers

Moody’s does not believe that corporate tax cuts are trickling down to working people as bonuses and pay raises. The real problem with the corporate PR campaign is that even those economists who supported Trump’s corporate tax cut and claimed it would help workers do not believe that it works this way.
blog January 25, 2018
IRS Can and Should Block “Charitable Contribution” Schemes

States’ attempts to work around the new federal tax law and ensure their residents continue to maximally benefit from state and local tax (SALT) deductions have been in the news since the beginning of the year. At a panel discussion for tax professionals in Washington Thursday, Thomas West, tax legislative counsel at the Treasury Department, cast doubt on proposed work-around schemes that would convert state income tax payments into “charitable contributions.”
blog January 24, 2018
It’s a Small Bonus After All

The Walt Disney Corporation announced this week that in the wake of the new tax bill’s passage, it will spend $125 million on one-time bonuses and $50 million on an education program for some employees, all in 2018. This $175 million spending commitment is notable for two reasons: it’s temporary, and it’s a drop in the bucket for a company that’s likely to see annual tax savings of $1.2 billion a year and has already committed to a $50 billion-plus corporate acquisition of 21st Century Fox’s assets.
blog January 18, 2018
Apple Gambled on Congressional Spinelessness on Tax Policy— and Won

Now, Apple Inc. would like the American public to know that it has “a deep sense of responsibility to give back to our country” a small fraction of its multi-billion-dollar tax cut haul. However, the company’s splashy press release is devoid of any specifics on the jobs it will create as a result of the tax bill. Like other corporate announcements, the company’s recent proclamation of newfound patriotism should be viewed as a public relations ploy designed to convince a skeptical public that working families will see some trickle-down benefit from this historic corporate giveaway.
blog January 17, 2018
State Rundown 1/17: Budget Deficits, Online Sales Tax, and More

The big news this week in state tax law is that the U.S. Supreme Court has agreed to take on the issue of online sales, nexus, and sales tax collection. States have increasingly lost out on sales tax revenues as more transactions have shifted online from brick-and-mortar stores and the laws determining who is required to collect and remit sales taxes haven’t kept up. This is potentially good news for states—25 of which National Association of State Budget Officers (NASBO) reports started the new year with budgetary deficits. In other news, grappling with the local impact of federal tax reform remains front and center in states including Idaho, Michigan, Montana, and New York as reported below.
blog January 17, 2018
Repealing, or Working Around, the Cap on State and Local Tax Deductions Would Make the Trump-GOP Tax Law Even More Unfair

A bipartisan proposal in Congress to eliminate the new $10,000 cap on federal deductions for state and local taxes (SALT) would cost more than $86 billion in 2019 alone and two-thirds of the benefits would go to the richest 1 percent of households. Unfortunately, “work around” proposals in some states to allow their residents to avoid the new federal cap would likely have the same regressive effect on the overall tax code.
blog January 12, 2018
The Problems with State Workarounds to the Federal SALT Deduction

From the outset, states—particularly wealthier states—objected to the GOP’s proposal to limit SALT deductions in part because it reduces the amount of state and local taxes that the federal government essentially picks up for taxpayers (by allowing a SALT deduction, the federal government is, in effect, paying part of taxpayers’ state and local tax bill), which could hinder states’ ability to raise revenue. Simply focusing on SALT, though, misses the bigger picture. The fact remains that the overall tax bill disproportionately benefits higher-income taxpayers even with the $10,000 SALT cap in place. Responding to federal tax cuts that disproportionately benefit the rich with state proposals that help bestow more tax cuts on upper-income taxpayers is irrational.
blog January 12, 2018
The Walmart Smiley Face Is Lying: Corporate Tax Cuts Are Not Causing Pay Raises and Bonuses

Last night, Yahoo reported that 81 corporations had announced pay raises and bonuses that they claim result from the Trump-GOP tax law’s reduction in the official corporate tax rate from 35 percent to 21 percent. Of these 81 corporations, 13 were included in ITEP’s most recent corporate tax study, which focuses on the Fortune 500 companies that were profitable every year from 2008 through 2015. These 13 companies had a combined effective tax rate of just 19.1 percent, which undermines the idea that the federal corporate tax rate was holding back their ability to pay workers.
blog January 12, 2018
Walmart’s Minimum Wage Hike: Did the Tax System Make Them Do It?

The Walmart corporation announced this week that it will increase its minimum wage to $11 an hour, in a move that the company attributed to the major corporate tax cut signed into law by President Trump last month. The $300 million the company will spend on the wage boost is just a fraction of the more than $2 billion a year ITEP estimates Walmart could net from the corporate tax rate cuts that took effect January 1—but even so, the company felt the need to make the wage boost more affordable by simultaneously closing 63 Sam’s Club stores and laying off thousands of employees. For all the press fanfare surrounding the wage announcement, the quiet layoffs are likely a more meaningful indicator of what awaits the American worker in the wake of the Trump tax cuts.
blog January 10, 2018
New Tax Breaks for Craft Beer Are a Drop in the Barrel: 76 percent of Tax Bill’s Beer Tax Cut Goes to a Handful of the Biggest Producers

The $1.5 trillion tax cut that took effect on Jan.1 was never really going to be about small businesses, despite President Trump’s transparently false claims to the contrary. However, one economic sector still appears happy, for now, to hoist a mug to Congress’s successful sleight of hand: craft breweries.
blog December 22, 2017
Corporate America, You Just Got a $650 Billion Tax Cut! What Are You Going to Do Next?

While many Fortune 500 CEO’s likely had to restrain themselves from preemptively shouting “we’re going to Disneyland” in an homage to the Disney Corporation’s trademark ad spot involving the winner of each year’s Super Bowl, it’s pretty understandable that several of them—including known tax avoiders AT&T, Boeing, Comcast and Wells Fargo—would preemptively make grandiose promises that they will reserve part of their tax cuts for the little people who made it all possible.
blog December 19, 2017
Final Tax Bill Hits Parents of College Students Harder than Other Taxpayers

While many provisions targeting higher education in previous versions of the tax plan were eventually dropped, little thought has been given to how the bill still raises taxes on parents at the time they are trying to pay for college tuition.
blog December 19, 2017
The Trump-GOP’s Big Giveaway to Multinational Corporations

The tax bill just approved by Congress was a golden opportunity to solve these problems for good—but turned out to be a colossal missed opportunity. Instead of addressing the hundreds of billions in lost federal tax revenue due to offshore tax avoidance schemes, the Trump-GOP tax bill would forgive most of the taxes owed on the profits held offshore right now and open the floodgates to even more offshore profit-shifting in the future.
report December 16, 2017
Multinational Corporations Would Receive $413 Billion in Tax Breaks from Congressional Repatriation Proposal

Rather than making companies pay what they owe, the final legislation reported out of conference proposes to tax accumulated offshore earnings at a rate lower than the 35 percent that they owe under current law. The final bill would tax offshore earnings being held as cash at a rate of 15.5 percent and tax all other offshore earnings at a rate of 8 percent. According to the Joint Committee on Taxation, this proposal would allow U.S. companies to collectively pay about $339 billion in taxes on their offshore earnings, rather than the roughly $752 billion that they owe, meaning that this proposal would give U.S. multinationals a tax break of $413 billion.
blog December 15, 2017
Final Tax Bill Reported to Provide Senator Rubio With Much Smaller Improvement for Children than He Demanded

The latest news on the GOP tax bill is that, in order to secure the vote of Senator Marco Rubio, Republican leaders have agreed to expand the child tax credit — but only by a fraction of the amount that Rubio initially demanded.
blog December 14, 2017
ITEP Resources for the Tax Reform Debate

ITEP researchers have produced new reports and analyses that look at various pieces of the tax bill, including: the share of tax cuts that will go to foreign investors; how the plans would affect the number of taxpayers that take the mortgage interest deduction or write off charitable contributions, and remaining problems with the bill in spite of proposed compromises on state and local tax deductions.
blog December 13, 2017
Latest “Compromise” for Tax Plan Is Even Worse than Previous Proposals, Would Reduce the Plans’ “Losers” by Less than 17,000 Taxpayers

Earlier this week, ITEP explained that two possible “compromises” to improve the Senate tax bill would accomplish very little other than make the plan more expensive. Incredibly, Republican leaders are…