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Richard Phillips
Senior Policy AnalystA recently released working paper from Kimberley Clausing of Reed College finds that U.S. corporations will avoid taxes on nearly $300 billion in offshore profits every year for the foreseeable future. The paper provides an informative new look into the level of offshore tax avoidance before and after the Tax Cuts and Jobs Act (TCJA). While advocates of the TCJA claimed the tax law would end tax haven abuse through lowering the statutory rate and other measures, Clausing’s analysis shows that the TCJA will still allow the vast majority of offshore tax avoidance to remain intact. -
Aidan Davis
State Policy DirectorA new federal proposal, the Livable Incomes for Families Today (LIFT) the Middle Class Act, would create a new refundable tax credit for low- and middle-income working families who were little more than an afterthought in last year’s federal tax overhaul. This proposal would take the place of TCJA, providing tax cuts similar in cost to the recent federal tax law but targeted toward working people rather than the wealthy. ITEP analyzed the bill, proposed by California Senator Kamala Harris, and compared its potential impact to TCJA. -
Steve Wamhoff
Federal Policy DirectorConversations about economics often take place on different planets, it seems. Economists and analysts note rising inequality in America. And it’s not just lefty analysts. The credit ratings firm Moody’s chimed in earlier this month, warning that inequality “is a key social consideration that will impact the U.S.’ credit profile through multiple rating factors, including economic, institutional and fiscal strength.” -
ITEP Staff
Earlier this week, the Treasury Department reported that the federal deficit this fiscal year climbed by 17 percent to $779 billion, and next year is expected to be at least $1 trillion. The increased deficit comes after Congress last December passed an unpopular tax cut (The Tax Cuts and Jobs Act) that will cost nearly $2 trillion over a decade. GOP leaders repeatedly claimed the measure would pay for itself and not increase annual deficits, in spite of multiple economic predictions to the contrary. -
Elise J. Bean’s Financial Exposure reiterates the point that tax avoidance and tax evasion were endemic to our financial system long before allegations against a sitting president brought them to the forefront of the public consciousness.
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Carl Davis
Research DirectorA proposed IRS regulation would eliminate a tax shelter for private school donors in twelve states by making a commonsense improvement to the federal tax deduction for charitable gifts. For years, some affluent taxpayers who donate to private K-12 school voucher programs have managed to turn a profit by claiming state tax credits and federal tax deductions that, taken together, are worth more than the amount donated. This practice could soon come to an end under the IRS’s broader goal of ending misuse of the charitable deduction by people seeking to dodge the federal SALT deduction cap. -
Steve Wamhoff
Federal Policy DirectorThis week, House Republicans have taken up bills they call tax cuts “2.0.” Most of the attention, so far, has focused on the bill that extends—at great cost—the temporary parts of the Tax Cuts and Jobs Act (TCJA). But other legislation in the package contains provisions that make the whole deal even more tilted toward the richest households, including one that would create “Universal Savings Accounts.” Far from being universal, these new savings vehicles would benefit the same high-income households that enjoy the bulk of the tax cuts from TCJA. -
Carl Davis
Research DirectorSeptember 25, 2018
An Unhappy Anniversary: Federal Gas Tax Reaches 25 Years of Stagnation
The federal gas tax was last raised on Oct. 1, 1993, the same year that the classic movie Groundhog Day was unveiled to the American public. In the film, Phil Connors (played by Bill Murray) gets caught in a time loop and spends decades reliving the same cold, February day in Punxsutawney, Penn. Those of us lamenting the 25-year stagnation of the federal gas tax can’t help but feel some of that same sense of repetition. Federal lawmakers occasionally discuss updating the gas tax, but top lawmakers have yet to put in the effort needed to shepherd such a change into law. In fact, after passage of a top-heavy income and estate tax cut last year, the chances of boosting the federal gas tax anytime soon are probably slimmer than ever. -
The report indicates, pharmaceutical companies have taken steps to hide their profits in low-tax countries, sapping billions in revenue from the governments that invest in the science that drives their products and safeguard the patents that undergird their business. Pharmaceutical companies made use of a familiar battery of methods to exploit the international system this way, including inversions to disguise an American company as a foreign one and passing profits into low-tax jurisdictions through artificial usage fees on intangible assets like intellectual property.
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Carl Davis
Research DirectorA recent IRS clarification, which appears to have been a pet project of Sen. Pat Toomey (R-PA), has been widely interpreted as reopening a loophole the agency had proposed closing just weeks earlier. But while the announcement creates an opening for aggressive tax avoidance in many states, Pennsylvania, ironically enough, isn’t one of them. -
Jenice R. Robinson
Communications DirectorSeptember 12, 2018
Observations from Census Data on Poverty and Income
Today's poverty and income data show that income continues to concentrate at the top; in fact, the top 20 percent continue to capture 51.5 percent of income. Meanwhile, average income for the poorest 20 percent of households is less today than it was 18 years ago. -
ITEP Staff
Throughout President’s Trump’s presidential campaign and from his first day in office until now, his administration has favored and promoted policies that benefit the wealthy and corporations even as it claims to be the working people’s champion. If more recent economic data are a reflection of what we’ll see in the long-term due to the Trump Administration’s recent tax cuts, wealth will continue to accrue at the top while income remains stagnant or barely budges for low- and moderate-income families. Policy can make a difference: ITEP Staff shows how the Grow American Incomes Now (GAIN) Act would help millions of working families left behind by the Tax Cuts and Jobs Act. -
Steve Wamhoff
Federal Policy DirectorNational and State-by-State Data Available for Download Nearly Two-Thirds of Benefits from Repealing the SALT Cap Would Go to the Richest 1 Percent Lawmakers who opposed the Tax Cuts and Jobs Act (TCJA), the federal tax law enacted by President Trump and his allies in Congress last December, rightfully pointed out that the law benefits […] -
Richard Phillips
Senior Policy AnalystA new study by the Federal Reserve found that the evidence so far suggests that the new repatriation tax break has resulted in a surge in stock buybacks and little discernable impact in investment by its biggest beneficiaries, just as critics predicted. -
Misha Hill
Policy AnalystDuring his first State of the Union address in January 1964, Lyndon Baines Johnson declared a War on Poverty in response to a national poverty rate of more than 19 percent. The legislative result of this war was an early education program, expanded funding for secondary education, job training and work opportunity programs and the […] -
August 10, 2018
How Opportunity Zones Benefit Investors and Promote Displacement
The idea behind the new tax break is to provide an incentive for wealthy individuals to invest in the economies of struggling communities. Despite alleged intentions, it appears opportunity zones are turning into yet another windfall for wealthy investors and may encourage displacement of people in low-income areas, working against the provision’s intended goal. -
ITEP Staff
August 9, 2018
Insult to Injury: Why Tax Cuts 2.0 Makes No Sense
In this illustrated breakdown of the Tax Cuts and Jobs Act (TCJA) and Tax Cuts 2.0, ITEP staff examine TCJA's role in growing income inequality, broken promises from corporations pledging to invest tax savings into workers and wages, and the embarrassment of riches flowing to the wealthiest Americans as a result of these “middle-class tax cuts.” -
Richard Phillips
Senior Policy AnalystFor true believers in supply-side economics, however, one major flaw of the TCJA is that it did not further cut taxes for the wealthy by reducing capital gains tax rates. But now the Trump Administration is considering using executive action to remedy this by indexing capital gains to inflation for tax purposes. -
Richard Phillips
Senior Policy AnalystJuly 17, 2018
How to Fix the Broken International Corporate Tax Code
How should lawmakers fix the system? A new ITEP report breaks down how the international corporate tax code under the TCJA works, and how lawmakers can fix it. The report lays out three key principles for reform: equalize the rates, eliminate inversions, and create transparency. -
Richard Phillips
Senior Policy AnalystNow, new research from the Federal Reserve Bank of San Francisco finds that the Tax Cuts and Jobs Act may not be so much of a stimulus after all. In other words, lawmakers have left themselves with few options should the country face an economic recession, and the country may not receive a substantive economic benefit in the short term. -
Dylan Grundman O'Neill
Senior Policy AnalystJuly 3, 2018
An Update on State Responses to the Federal Tax Bill
With many state fiscal years beginning July 1, most states that will make decisions this year about federal tax conformity have now done so, so it is now time for an update on how well state policymakers have kept to, or veered from, the path we charted out earlier this year. Most states that have enacted laws in response to the federal changes have adhered to some but not all of the principles we laid out, with a few responding rather prudently and a handful charting a much more treacherous course of unfair, unsustainable policy based on unfounded promises of economic growth. -
Jenice R. Robinson
Communications DirectorThe absurdity of blaming poor and moderate-income people for their circumstances is close to running its course as an effective political tool, particularly as some elected officials more boldly assert their intent to cater to the whims of the wealthy. Take last year’s GOP-led drive to eliminate the Affordable Care Act (ACA), for example. House […] -
Richard Phillips
Senior Policy AnalystOne simple rule should drive the nation’s international tax policies: tax the offshore profits of American companies the same way their domestic profits are taxed. The latest legislation to approach that ideal is the Per-Country Minimum Act (H.R. 6015), from Rep. Peter DeFazio (D-OR). The DeFazio bill closes the loophole that allows corporations to use foreign tax credits to shelter profits in tax havens from U.S. taxes. No other bill addresses this. -
Richard Phillips
Senior Policy AnalystIn advance of its annual shareholders meeting on May 31, Facebook was confronted with a shareholder resolution asking it to endorse a set of principles to guide its tax policy and to ensure that such principles consider the impact of its tax strategies on local economies and public services. The resolution is a signal from a group of concerned shareholders that Facebook’s tax avoidance hurts its reputation, the communities in which it operates, and creates financial risks to the company’s shareholders. -
Carl Davis
Research DirectorA new ITEP report explains the close parallels between the new workaround credits and existing state tax credits, including those benefiting private schools. The report comes the same day that the IRS and Treasury Department announced they would seek new regulations related to these tax credits. It notes that the SALT workarounds are emblematic of a broader weakness with the federal charitable deduction. And it cautions regulators to avoid a “narrow fix” that will only address the newest SALT workarounds (which, so far, have only been enacted in blue states) without also addressing other abuses of the deduction, which have long been employed by red states.
Blog Categories
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