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Analysis of the House Tax Cuts and Jobs Act
November 6, 2017 • By Matthew Gardner, Meg Wiehe, Steve Wamhoff
The Tax Cuts and Jobs Act, which was introduced on Nov. 2 in the House of Representatives, would raise taxes on some Americans and cut taxes on others while also providing significant savings to foreign investors.
House Tax Bill Would Reserve Charitable Giving Subsidies for a Small Subset of Wealthier Households
November 6, 2017 • By Carl Davis, Steve Wamhoff
In the tax policy framework released in September, President Trump and Congressional leadership insisted that their proposal would retain the tax incentive for donating to charity because doing so helps “accomplish important goals that strengthen civil society, as opposed to dependence on government.” Now that the House has released a more detailed proposal, it is finally possible to evaluate exactly how their plans would impact the incentive to donate to charity.
American Corporations Tell IRS that 61 Percent of Their Offshore Profits Are in 10 Tax Havens
November 5, 2017 • By Richard Phillips
Recent revelations that a Bermuda law firm helped facilitate offshore tax avoidance has heightened awareness of the vast amount of income and wealth flowing into tax and secrecy havens worldwide. The countries through which this firm helped funnel global elites’ assets also act as tax havens for multinational corporations. Recently released data from the Internal Revenue Service show that U.S. corporations claim that 61 percent of their foreign subsidiaries’ pretax worldwide income is being earned in 10 tiny tax haven countries.
Paradise Papers Underscore Why Lawmakers Should Focus on Offshore Tax Avoidance
November 5, 2017 • By ITEP Staff
Following is a statement by Matthew Gardner, a senior fellow at the Institute on Taxation and Economic Policy, regarding the release of the “Paradise Papers,” a series of documents from Appleby, a leading offshore law firm. The International Consortium of Investigative Journalists released the investigative report today.
Nike earned more than $10 billion in U.S. profits from 2008 to 2015 but only paid 18.6 percent in U.S. federal taxes during this time. This is just over half of the official U.S. corporate tax rate of 35 percent.
Since Facebook became a public company, its annual revenues have increased by 250 percent from around $8 billion in 2013 to nearly $28 billion last year. In the same time period, the company’s before-tax profits shot up four-and-a-half fold to $12.5 billion. But in this time it has also managed to avoid billions of dollars in U.S. taxes.
Apple is the most valuable public company of all time with a market value of more than $800 billion. Last year, it cleared $45.7 billion[iii] in profits after taxes, making it the most profitable company in the Fortune 500 for the third straight year.
Mortgage Interest Deduction Wiped Out for 7 in 10 Current Claimants Under House Tax Plan
November 5, 2017 • By Carl Davis, Steve Wamhoff
Throughout the ongoing federal tax debate, President Trump and Congressional leadership have insisted that while many tax deductions and credits would be wiped out, the mortgage interest deduction would be spared from the chopping block. But while the proposal recently unveiled by House leaders retains the mortgage interest deduction on paper, the actual substance of this policy would be nearly unrecognizable to today’s homeowners.
House Plan Slashes SALT Deductions by 88%, Even with $10,000 Property Tax Deduction
November 3, 2017 • By Carl Davis, Steve Wamhoff
One of the most contentious issues in the current federal tax debate is over what to do with the deduction for state and local taxes paid (the SALT deduction). Since the deduction’s benefits vary by state, the House proposal to drastically scale it back has led to an outcry among lawmakers from states such as New York, New Jersey, and California whose constituents would be impacted most dramatically by the change. In an attempt to address those concerns, House leadership agreed to partially retain the deduction for real estate property taxes paid (up to $10,000 per year) while still repealing…
A Chart Book on the U.S. Tax System
House Tax Plan Will Keep 39.6% Top Rate, But That Won’t Matter for Most Types of Income Going to the Rich
November 1, 2017 • By Carl Davis
In recent days, news that House tax writers will not seek to cut the top personal income tax rate below 39.6 percent on taxable income above $1 million has led some to question whether the newest iteration of the Trump-GOP tax plan will provide a major windfall to the wealthy—a fact that has so far been widely understood. Unfortunately, this second-guessing is unnecessary.
State Rundown 11/1: Connecticut Balances Budget, Leaves Tax Code Out of Whack
November 1, 2017 • By ITEP Staff
This week a "historic" but highly problematic budget agreement was finally reached in Connecticut, Michigan lawmakers banned localities from taxing any food or beverages, and Nebraska and North Dakota both got unpleasant news about future revenues. Also see our "what we're reading" section for news on 11 states that have run up long-term fiscal deficits since 2002 and the impacts of flooding on local tax bases.
Trump Administration Might Propose a Long-Overdue Gas Tax Increase
October 31, 2017 • By Carl Davis
The Trump Administration is reportedly considering backing a 7-cent increase in the federal gas tax next year to pay for improvements in the nation's infrastructure. While most of the tax policy ideas coming from the administration in recent weeks would undermine the nation's ability to fund core public services, this one is a notable exception.
The Manufacturing Deduction Is a Case Study in Tax Policy Gone Wrong
October 30, 2017 • By Richard Phillips
When you think of manufacturing, what comes to mind? According to the U.S. Congress, manufacturing may include things like the production of wrestling-rated films, assembling bouquets of flowers and even slicing cheesecake. These unusual definitions of manufacturing come from the domestic production activities deduction (better known as the manufacturing deduction), a tax break Congress created to encourage manufacturing in the United States.
The Domestic Production Activities Deduction: Costly, Complex and Ineffective
October 26, 2017 • By Richard Phillips
When the Domestic Production Activities Deduction (DPAD) became law in 2004, proponents described it as a way to help American companies manufacture in the United States and export products abroad. In recent years, the DPAD has grown into one of the largest corporate tax expenditures, with an estimated cost of more than $15 billion in 2016 and $174 billion over the next 10 years.
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