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The Tax Cuts and Jobs Act (TCJA), enacted by President Trump and Congressional Republicans at the end of 2017, has caused quite a bit of confusion, and a recent “Fact Checker” column by the Washington Post’s Glenn Kessler does not help. TCJA created real problems that can't be resolved without real tax reform. To begin that process fact checkers, lawmakers, and everyone else need to be clear about what TCJA did, and did not, do to our tax system.
Fear, Not Facts: Netflix Misleads Media Reporting on Corporate Tax Avoidance
February 13, 2019 • By Matthew Gardner
In an age when even the most incontrovertible facts are routinely dismissed as “fake news,” reporting on corporate taxes can be a daunting challenge for members of the media. ITEP’s recent analysis of the income tax disclosures made by Netflix in its annual financial report last week provide an excellent reminder of this.
On Monday a group of Senators and Representatives from the Northeast announced their latest proposal to repeal the cap on deductions for state and local taxes (SALT), this time offsetting the costs by restoring the top personal income tax rate to 39.6 percent. This is an improvement over previous proposals to repeal the cap on SALT deductions without offsetting the costs at all. But the new approach does not improve our tax system overall. Instead, it trades one tax cut for the rich (a lower top income tax rate) for another (repeal of the cap on SALT deductions).
Amazon in Its Prime: Doubles Profits, Pays $0 in Federal Income Taxes
February 13, 2019 • By Matthew Gardner
Amazon, the ubiquitous purveyor of two-day delivery of just about everything, nearly doubled its profits to $11.2 billion in 2018 from $5.6 billion the previous year and, once again, didn’t pay a single cent of federal income taxes.
A Tale of Two States: How State Tax Systems Perpetuate Income Inequality
February 11, 2019 • By ITEP Staff
To explain how state tax systems make income inequality worse, we compared tax systems in New Jersey and Texas which, before taxes, have similar levels of income inequality. This comparison provides an example of how policymakers’ decisions affect the economic wellbeing of their constituents.
This year is full of opportunity for state policymakers and advocates seeking to improve upside-down tax systems and generate needed funding for shared priorities. In a series of blog posts, ITEP staff summarize key trends we are watching in statehouses this year, with special attention to the many efforts underway to reduce racial and economic inequities and better prepare state budgets for the next recession and reduced federal investments. Along the way, we’ll also draw attention to some of the more destructive policy ideas to watch for in 2019.
Trends We’re Watching in 2019: Attempting to Double Down on Failed Trickle-Down Regressive Tax Cuts
February 7, 2019 • By Lisa Christensen Gee
It’s always troubling for those concerned with adequate and fair public finance systems when states prioritize tax cuts at the cost of divesting in important public priorities and exacerbating underlying tax inequalities. But it’s even more nerve-racking when it happens on the eve of what many consider to be an inevitable economic downturn.
Trends We’re Watching in 2019: Cannabis Tax Implementation and Reform
February 7, 2019 • By Carl Davis
Few areas of state tax policy have evolved as rapidly as cannabis taxation over the last few years. The first legal, taxable sale of recreational cannabis in modern U.S. history did not occur until 2014. Now, just five years later, a new ITEP report estimates that recreational cannabis is generating more than $1 billion annually in excise tax revenues and $300 million more in general sales tax dollars.
Trends We’re Watching in 2019: Consumption Taxes: the Good, Bad and the Ugly
February 7, 2019 • By ITEP Staff
Consumption taxes are a significant source of state and local revenue, and we expect that lawmakers will continue to adjust state consumption tax levies to adapt to budget needs and a changing economy.
Trends We’re Watching in 2019: Addressing Lingering Federal Conformity Questions and Opportunities
February 7, 2019 • By Dylan Grundman O'Neill
In our last update on state responses to the federal tax cut (Tax Cuts and Jobs Act, or TCJA), we noted that several states were waiting until 2019 to make their final decisions, giving them additional time to (hopefully) respond in ways that improve their fiscal situations and upside-down tax codes. The TCJA is affecting the 2018 federal taxes people are filing now, in some cases adding urgency and/or confusion to these debates.
Trends We’re Watching in 2019: Raising Revenue and Spending Surpluses to Prioritize Critical Public Investments
February 7, 2019 • By Lisa Christensen Gee
A second notable trend in 2019 is states raising revenue to address longstanding needs and states allocating their surpluses to invest in critical public priorities such as early childhood programs, education and other human services.
Trends We’re Watching in 2019: The Use of Targeted Tax Breaks to Help Address Poverty and Inequality
February 7, 2019 • By Aidan Davis
Continuing to build upon the momentum of previous years, states are taking steps to create and improve targeted tax breaks meant to lift their most in-need state residents up and out of poverty. Most notably, a range of states are exploring ways to restore, enhance or create state Earned Income Tax Credits (EITC). EITCs are an effective tool to help struggling families with low wages make ends meet and provide necessities for their children. The policy, designed to bolster the earnings of low-wage workers and offset some of the taxes they pay, allows struggling families to move toward meaningful economic…
Shared Prosperity: A Progressive Approach to Marginal Tax Rates
February 6, 2019 • By Steve Wamhoff
Panel: In recent years, economists have been engaged in robust academic debate over the top marginal tax rate, with leading researchers estimating the optimal rate to be 73 percent or even higher. Yet despite widespread public support for raising the rate from its current level of 37 percent, many policymakers and media figures have demonstrated misunderstandings over what marginal tax rates are and how they work.
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.
Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Taxes
February 5, 2019 • By Matthew Gardner
The popular video streaming service Netflix posted its largest-ever U.S. profit in 2018—$845 million—on which it didn’t pay a dime in federal or state income taxes. In fact, the company reported a $22 million federal income tax rebate.
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