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The Post-Midterms Tax Policy Outlook: Small Ball and Real Tax Reform Debate
• 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)…
New Report Finds Tax Transparency Is Not Just Ethical: It Has a Real Fiscal Impact
• 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…
Post-TCJA, International Corporate Tax System Still Leaking Hundreds of Billions in Profits
• 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…
Shaking up TCJA: How a Proposed New Credit Could Shift Federal Tax Cuts from the Wealthy and Corporations to Working People
• 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…
Tax Policies Have Increased Inequality, and So Would Entitlement Cuts
• 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
• 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,…
‘Financial Exposure’ Showcases Tax Misconduct by Powerful Individuals and Corporations
• 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
• 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…
So-Called “Universal Savings Accounts” in Tax Cuts 2.0 Are a Giveaway to the Most Affluent Taxpayers
• 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…
An Unhappy Anniversary: Federal Gas Tax Reaches 25 Years of Stagnation
• 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…
Oxfam Report Finds Pharmaceuticals Profiteering Off Crises in Developing Countries
• 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…
IRS Reopens Tax Loophole Sought by Sen. Toomey, but it Won’t Work in Pennsylvania
• 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.
Observations from Census Data on Poverty and Income
• By Jenice R. Robinson
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.
We Crunched Some Numbers to Show What Tax Reform for Working People Really Looks Like
• By 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…
Repealing the Federal Tax Law’s Cap on State and Local Tax (SALT) Deductions Is No Improvement
• By Steve Wamhoff
National 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 […]
New Study Confirms Offshore Earnings are Flowing into Stock Buybacks, Not Jobs and Investments
• By Richard Phillips
A 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.
1964: Unconditional War on Poverty; 2018: Unconditional War on the Poor
• By Misha Hill
During 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 […]
How Opportunity Zones Benefit Investors and Promote Displacement
• By ITEP Staff
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.
Insult to Injury: Why Tax Cuts 2.0 Makes No Sense
• By ITEP Staff
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.”
The Preferential Tax Treatment of Capital Gains Income Should Be Curbed, Not Substantially Expanded
• By Richard Phillips
For 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.
How to Fix the Broken International Corporate Tax Code
• By Richard Phillips
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.
The Immediate Economic Impact of the Tax Cuts and Jobs Act Could be Even Less Than Expected
• By Richard Phillips
Now, 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.
An Update on State Responses to the Federal Tax Bill
• By Dylan Grundman O'Neill
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…
Rigging the System and Poor Shaming (Rightly) Are Incompatible Political Strategies
• By Jenice R. Robinson
The 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 […]
New Legislation Would Close Significant Offshore Loopholes in the Tax Cuts and Jobs Act
• By Richard Phillips
One 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.
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