Blog - Federal Policy
New ITEP Report Shows How Congress Can Meet Public Demand for Progressive Taxes
February 5, 2019 • By Steve Wamhoff
A recent headline tells us that bold tax plans proposed by lawmakers today reflect a “profound shift in public mood.” But, in fact, the public’s mood has not changed at all. Americans have long wanted progressive taxes but few, if any, lawmakers publicly backed this view. What’s happening now isn’t a shift in public opinion, rather it’s Washington finally catching up with the American people.
Progressive tax proposals are finally being discussed with the urgency and seriousness they deserve. Following Rep. Alexandria Ocasio-Cortez’s call for a much higher marginal tax rate for multi-millionaires and Sen. Elizabeth Warren’s proposal to introduce a wealth tax for those at the very top, Sen. Bernie Sanders has introduced a revised version of his proposal to reform the federal estate tax.
Why We Should Talk about Progressive Taxes Despite Billionaires’ Objections
January 30, 2019 • By Jenice Robinson
It was the tone-deaf remark heard ‘round the world. Last week on CNBC’s Squawk Box, Commerce Secretary Wilbur Ross suggested that furloughed government employees who hadn’t been paid in a month could go to a bank and get a loan to make ends meet. This was not a gaffe. It’s hard to fathom how a […]
Thoughts about a Federal Wealth Tax and How It Could Raise Revenue, Address Income Inequality
January 23, 2019 • By Steve Wamhoff
Wealth inequality is much greater than income inequality. The 1 percent of Americans with the highest incomes receive about a fifth of the total income in the United States. In contrast, the top 1 percent of wealth holders in the United States own 42 percent of the nation’s wealth, according to estimates from University of California at Berkley economists Emmanuel Saez and Gabriel Zucman.
How to Think About the 70% Top Tax Rate Proposed by Ocasio-Cortez (and Multiple Scholars)
January 8, 2019 • By Steve Wamhoff
The uproar deliberately steers clear of any real policy discussion about what a significantly higher marginal tax rate would mean. Her critics are mostly the same lawmakers who enacted a massive tax cut for the rich last year that was not debated seriously or supported by serious research. Meanwhile, multiple scholarly studies conclude a 70 percent top tax rate would be an optimal way to tax the very rich. Ocasio-Cortez has brought more attention to the very real need to raise revenue and do it in a progressive way.
Five Things to Know on the One-Year Anniversary of the Tax Cuts and Jobs Act
December 17, 2018 • By Richard Phillips
While it has only been a year since passage of the Tax Cuts and Jobs Act (TCJA), it’s clear the law largely is both a debacle and a boondoggle. Below are the five takeaways about the legacy and continuing effect of the TCJA. 1. The Tax Cuts and Jobs Act will substantially increase income, wealth, and racial inequality. 2. The Tax Cuts and Jobs Act will continue to substantially increase the deficit. 3. The Tax Cuts and Jobs Act is not significantly boosting growth or jobs. 4. The Tax Cuts and Jobs Act continues to be very unpopular. 5. Despite…
End-of-Year Tax Measure Would Give Deficit-Financed Tax Cuts to Wealthy Families and Corporations
December 12, 2018 • By ITEP Staff
Outgoing Ways and Means Chairman Rep. Kevin Brady (R-TX) today introduced legislation that includes $80 billion in tax cuts that are unpaid for and largely benefit the wealthy. The bill would, among its numerous provisions, expand retirement and education savings programs that offer very little value to low-income families, delay the Health Insurance Tax for an additional two years, and delay the Medical Device Tax for an additional five years.
Morgan Stanley Report Confirms Tax Cut Promises Made Are Promises Unkept
December 7, 2018 • By Matthew Gardner
Almost a year after lawmakers hastily enacted the Tax Cuts and Jobs Act, evidence continues to mount that it is providing far more tax cuts than jobs. A new Morgan Stanley report estimates that U.S. companies repatriated between $50 billion and $100 billion of offshore cash in the third quarter of 2018. This means companies […]
New Legislation Aims to Change Tax Law Provisions That Incentivize Outsourcing
November 29, 2018 • By Richard Phillips
Sen. Amy Klobuchar (D-MN) and several Senate co-sponsors this week introduced the Removing Incentives for Outsourcing Act, which curbs harmful new incentives created by the Tax Cuts and Jobs Act (TCJA) that encourage companies like GM to move their profits and operations offshore.
GM Announcement Confirms Tax Cuts Don’t Prevent, May Encourage Layoffs
November 27, 2018 • By Matthew Gardner
GM’s most recent quarterly financial report reveals the company has saved more than $150 million so far this year due to last year’s corporate tax cuts. So the layoffs announcement may seem especially jarring to anyone who believed President Trump’s claim that his tax cuts would spur job creation—including the Ohio residents Trump told directly “don’t sell your homes” because lost auto-making jobs “are all coming back.”
New ITEP Report on Depreciation Breaks: The Most Important Tax Giveaway that People Don’t Know About
November 19, 2018 • By Steve Wamhoff
Many Americans sense that the tax code is riddled with unnecessary and costly breaks for big business, but if asked to name one, few would reply “accelerated depreciation.” While they may seem arcane, tax breaks like “full expensing” and other types of accelerated depreciation are among the central problems in our tax code. A new report from ITEP makes the case that any serious tax reform would repeal or sharply curb these provisions.
Today Amazon announced major expansions in New York and Virginia, where it intends to hire up to 50,000 full-time employees. The announcement marks the culmination of a highly publicized search that lasted more than a year and involved aggressive courting of the company by cities across the nation. The following are three tax-related observations on the announcement.
15 Companies Report an Average 10.4 Percentage Point Drop in Effective Tax Rates Since 2017
November 13, 2018 • By ITEP Staff
Comparing the year’s first three quarterly filings of 2018 with those of 2017, we find that 15 of the largest Fortune 500 companies reported worldwide effective income tax rates declining by an average of 10.4 percentage points and by as much as 16 percentage points. In total these companies owed $22.3 billion less in taxes than they would have under their 2017 effective rates, saving an average of $1.5 billion each.
The Post-Midterms Tax Policy Outlook: Small Ball and Real Tax Reform Debate
November 8, 2018 • By Richard Phillips
With most of the results of the 2018 midterm elections in, the broad landscape for federal tax policy over the next couple years is coming into view. Democratic control of the House and Republican control of the Senate means a significant tax overhaul is unlikely, but minor tax changes may happen. And the run-up to the 2020 presidential election will force more robust debate over the impact of the Tax Cuts and Jobs Act (TCJA) and what aspects of the legislation should be repealed, reformed, or built upon.
New Report Finds Tax Transparency Is Not Just Ethical: It Has a Real Fiscal Impact
November 5, 2018 • By Monica Miller
A new report by Hubertus Wolff and Michael Overesch finds that public country-by-country reporting (CBCR) can have a significant fiscal impact. In fact, the report shows that new CBCR rules applied to European banks appear to have substantially increased the tax rates paid by banks that engage in tax-haven activities. This means that CBCR may not just improve the integrity of the tax system and provide critical information so investors can gauge investment risks, but may also have a much more immediate impact on curbing tax avoidance.
Post-TCJA, International Corporate Tax System Still Leaking Hundreds of Billions in Profits
November 5, 2018 • By Richard Phillips
A 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.
Shaking up TCJA: How a Proposed New Credit Could Shift Federal Tax Cuts from the Wealthy and Corporations to Working People
October 24, 2018 • By Aidan Davis
A 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.
Tax Policies Have Increased Inequality, and So Would Entitlement Cuts
October 23, 2018 • By Steve Wamhoff
Conversations 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.”
Lawmakers Want Working People to Foot the Bill for Top-Heavy Tax Cuts
October 18, 2018 • By 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.
‘Financial Exposure’ Showcases Tax Misconduct by Powerful Individuals and Corporations
October 10, 2018 • By Peter Della-Rocca
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.
Twelve States Offer Profitable Tax Shelter to Private School Voucher Donors; IRS Proposal Could Fix This
October 2, 2018 • By Carl Davis
A 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.
So-Called “Universal Savings Accounts” in Tax Cuts 2.0 Are a Giveaway to the Most Affluent Taxpayers
September 27, 2018 • By Steve Wamhoff
This 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.
An Unhappy Anniversary: Federal Gas Tax Reaches 25 Years of Stagnation
September 25, 2018 • By Carl Davis
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…
Oxfam Report Finds Pharmaceuticals Profiteering Off Crises in Developing Countries
September 20, 2018 • By Peter Della-Rocca
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.
IRS Reopens Tax Loophole Sought by Sen. Toomey, but it Won’t Work in Pennsylvania
September 20, 2018 • By Carl Davis
A 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.
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