Quick, important tips if you haven't filed your income tax return yet
CLEVELAND, Ohio -- If you're among the one-third of taxpayers filing your income tax return right before the Wednesday night deadline, there are a few important things you need to know. If you're filing electronically for ... Or else you must call the ...
Yesterday, Senator Marco Rubio (R-FL) announced his plans to run for the Presidency. One thing that sets him apart from the others that have announced so far is that he has a comparatively detailed tax plan that he released with Senator Mike Lee (R-UT). One of the advantages of that is we can really analyze the effects of what a Rubio tax plan would have on the economy and taxpayers.
His tax plan would make quite a few changes to the current code, but it’s easy to think of it as having two pieces: business-side reforms and individual-side reforms.
On the business side, the tax plan fixes a lot of problems with the current code.It reduces the corporate income tax rate (and the tax rate for pass-through businesses) to 25 percent. Allows all businesses to fully deduct the cost of investments the year in which they incurred the expense. Fully integrates the individual and corporate tax code to eliminate the double-taxation of corporate income. Moves to a territorial tax system that would exempt active foreign income of U.S. corporations from domestic taxation Eliminates most business tax credits and many special deductions
On the individual side, the plan would cut taxes for just about everyoneReduces the number of tax brackets to two (15 percent and 35 percent) Eliminates nearly all itemized deductions Creates a new $2,500 child tax credit Replaces the standard deduction and personal exemption with a fully refundable personal credit
The business side of the plan would greatly reduce the cost of capital, which would lead to much higher levels of investment. Thus, Rubio-Lee’s tax plan would net a 15 percent higher GDP in the long term. This would lead to a 12.5 percent increase in the wage rate and around 2.6 million more full time equivalent jobs.
On the individual side, all taxpayers, regardless of income level, would benefit from the tax plan. At the top end, the top marginal tax rate would go from 39.6 percent to 35 percent, which would boost the after-tax income of the top 10 percent of earners by 10 percent. At the bottom end, the loss of the standard deduction, personal exemption, and 10 percent income tax bracket is more than made up for with the new $2,000 refundable personal credit. For the lowest income earners, that would mean an increase in after-tax income of more than 40 percent.
While the plan promises a significant amount of economic growth and would net higher after-tax income for all taxpayers, someone still loses. In the case of this tax plan, the government ends up losing. The Rubio-Lee tax plan would greatly reduce the amount of tax revenue that the U.S. government will collect.
According to our analysis, the plan will cost $414 billion each year on a static basis, or more than $4 trillion over the next decade. Even if you assume that the plan results in a large amount of economic growth and thus a reflow of revenue from the large economy, the plan will still increase the debt by 8 percent in the next decade. Only after ten years would the plan start to net additional revenue each year. It would likely take over 25 years to start reducing the debt from its current point. This assumes that no other spending or tax policies change over this long period of time.
For more information on the Rubio-Lee tax reform plan, see here.
How the IRS repeatedly rewrites Obamacare tax credit provisions
Combined with other instances of the IRS and HHS disregarding the PPACA's plain text, it appears the federal government has little regard for what the PPACA actually says. In his first two posts, Professor Grewall explains how IRS regulations disregard ...
Do You Need to File a Federal Tax Extension? Here's How
The week of April 15 is the busiest single week for tax filings, according to data from the Internal Revenue Service, averaged from the last five years of tax seasons. Nearly 13 percent of taxpayers put off filing until the last week possible, more ...
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Christie fails to report income, avoids $152000 in taxes
By not declaring the allowances on their joint returns, Christie and his wife, Mary Pat, avoided roughly $152,000 in federal income taxes over four years. Despite an ... As such, it is not required to appear on his income tax filings, consistent with ...
Gov. Christie Fails to Report Income, Avoids $152000 in TaxesNewsmax
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Tax tips for those who wait for the last minute in Rock Hill
Those who haven't filed also are encouraged to seek free advice such as that offered by the Volunteer Income Tax Assistance Program. Certified federal tax preparers are at the center in the basement of Rock Hill's City Hall to assist. They plan to ...
Rubio plans to make Mitt Romney part of that infamous '47 percent'Atlanta Journal Constitution (blog)
Putting the big bite on the top 20 percent: Unlucky few pay 84 percent of all ...Catholic Online
SAMUELSON: Not much fuss these days about 'Tax Day'Asbury Park Press
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Tax filing deadline is Wednesday
Wednesday is the deadline for filing personal income tax returns for both federal and state governments. Done already? Waiting for a refund? There's an app for that at the Internal Revenue Service, which says it pays nine out of 10 refunds within 21 days.
What To Do When You Can't Pay Your Tax Bill In FullForbes
90 percent of Federal Income Tax Returns Filed Online: IRSUncover Michigan
Here's how to file a tax extension and links to the forms you needFox 28
Wall Street Journal -USA TODAY -Massillon Independent
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Taxes are time consuming and expensive for small businesses in the United States.
Nearly a quarter of small business owners in the United States spend over 120 hours each year dealing with their federal taxes, according to the most recent survey by the National Small Business Association. That’s three work weeks spent dealing with federal taxes. Additionally, over half of small business owners spend more than one work week (40 hours) on federal taxes each year, according to the most recent survey by the National Small Business Association.
According to the survey, these taxes come with a heavy cost as well, with over a quarter of businesses spending more than $10,000 each year on simply the administration of federal taxes. This does not include the actual tax burden, which 42 percent of respondents said creates the largest burden on their business.
Small business owners ranked payroll taxes and presenting the largest financial burden, followed by state and local tax compliance, income taxes, property taxes, and capital gains taxes. Nearly 70 percent of small business owners said that federal taxes have a moderate to significant impact on the day to day operations of their businesses.
The survey found that 70 percent of small business owners support tax reform that reduces corporate and individual tax rates and business and individual deductions.
Pass-through businesses make up the vast majority of businesses in the U.S. today (chart below). This makes it crucial that tax reform fix both the individual and the corporate tax system.
If you're among 34000 in N.J. due more than $30M from IRS, better hurry.
"Time is running out for people who didn't file a 2011 federal income tax return to claim their refund," said IRS Commissioner John Koskinen. "Some people may not have filed because they didn't make much money, but they may still be entitled to a refund.".
Eight Tax Myths -- Lessons for Tax WeekForbes
If you are American, you are almost definitely getting a tax refund this yearQuartz
10 smart ways to use an income tax refundNew Jersey Herald
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Acton Institute (blog)
Just Render Unto Caesar Already: The IRS and Frivolous Tax Arguments
Acton Institute (blog)
Some individuals or groups claim that taxpayers may refuse to pay federal income taxes based on their religious or moral beliefs, or an objection to the use of taxes to fund certain government programs. These persons mistakenly invoke the First ...
Wall Street Journal
A Guide to IRS Rules on Property and Theft Losses
Wall Street Journal
About two-thirds of all federal income-tax returns typically claim the standard deduction, which is a dollar amount that reduces your taxable income. They choose that instead of “itemizing,” which means listing deductions (such as charitable donations ...
and more »
Share “Oklahomans making six figures pay lion's...”
In Oklahoma, for instance, people who made over $100,000 paid 74 percent of all federal income taxes due in the state in 2012 — the latest year for which detailed Internal Revenue Service figures are available for states. People who made between $10 ...
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90 percent of Federal Income Tax Returns Filed Online: IRS
IRS has reported that more than 90 percent of the federal tax returns have been filed online this year. Online tax return filing is much easier compared to paper filing of returns. Procrastinators are facing tough time as the tax filing deadline is ...
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Last Minute Dash: When, Where & How To File Those Last Minute Tax Returns ...
No matter how close to the wire you get, as long as your return is postmarked by April 15, the IRS considers your federal income tax return filed on time. But if you're not quite ready just yet and are skimming this article in the hopes that I'll offer ...
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At times I really struggle to understand the way taxes are covered on Wonkblog, but a post yesterday, listing government handouts for the rich, reached a new level.
Some of the items listed seem like poor examples. (Do rich people really take lots of deductions for their gambling losses?) But the one that really threw me for a loop was the estate tax, a tax levied on only the most valuable estates. It is literally the opposite of a handout for the rich.
The authors justify its inclusion like this:
“The Estate Tax is a tax on your right to transfer property at your death,” according to the IRS. Without the estate tax, super-wealthy families would be able to hoard that wealth in perpetuity, becoming ever more powerful in the process. The tax, as it currently exists, only kicks in on estates worth $5.4 million or more, affecting about the top 0.2 percent of households. For everyone else in the top 1 percent, congratulations! You can pass on your riches to your heirs tax-free.
The estate tax is actually a pretty simple tax in some ways: it is an ad valorem tax with an exemption up to a certain amount, for progressivity. The authors prefer a different exemption amount, such that the tax would be levied on the top 1% of estates rather than the top 0.2% of estates. In other words, they apparently would like the same basic structure, but with slightly different parameters. Fine. But the absence of one’s preferred tax policy isn’t a handout.
On a purely mathematical level, the problem with this argument is that anyone can make it at any time. To say that a tax should hit Y% of people, not X%, and that this is a “handout” for the (Y-X)% of people that go untaxed, is an argument with no limiting principle. It could just as easily be applied to an estate tax on the top 1 percent of estates, as Wonkblog apparently proposes, or a tax on the top 5 percent of estates, or a tax on any other number of estates. Ironically, the only tax structure that could avoid this argument would be one that does away with progressive exemptions altogether.
The word choice, though, is the more striking problem. A progressive tax is a handout for the rich? Wonkblog takes us deep into Through the Looking Glass territory, where words have no meaning and paradoxes abound. Taxes are handouts, progressivity is a benefit for the rich, dogs and cats live together, and so forth.
There are two reasons an article can have perplexing language. Sometimes it comes from rushed writing or poor editing. At other times – such as in this blog post – confusing language just clearly reflects the confused nature of the thought behind it.
Marijuana Taxes Not a Panacea for Budgets, Utah Vapor Tax Scrapped, and a Proposed Cigarette Tax in Rhode Island
Lots of news this week on sin taxes. Here’s what I’ve been reading:Vocative reports that Colorado marijuana tax revenues are lower than expected. Originally projected to bring in $118 million, estimates have been revised to $69 million. Black markets and consumer tax avoidance are problems that policymakers should consider when examining such taxes, as we contended in recent testimony on D.C.’s recent legalization effort.
Utah’s proposed electronic cigarette tax bill ended up being modified to include licensing requirements for sellers but no new taxes on the product. I recently wrote a piece in Forbes arguing that the Governor’s premises for taxing these products is based on faulty premises.
Rhode Island Governor Gina Raimondo is drawing criticism for her tax package that would raise the state’s $3.50 per pack cigarette tax (currently third highest in the country) to $3.75. Other elements in the package include an income tax exemption on public employee pensions and social security benefits. Here’s our latest report on how high cigarette taxes can contribute to black markets.
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Many Americans will be filing their tax returns next week. As Americans work on this, it's worthwhile for us to consider why tax complexity still matters. There was a kerfuffle last month over this subject; Senator Ted Cruz, who advocates a simpler tax system, pointed out that the tax code has more words than the Bible (which is true), and the Washington Post's fact checker column took the opportunity to editorialize on the subject, asking "does any of this matter?"
The Fact Checker column was mocked on some conservative blogs for acknowledging a true fact, stepping into an editorial role, deciding that the fact didn't matter, and declaring it a nonsense fact, worthy of neither a Geppetto Checkmark nor a Pinocchio. Since this kerfuffle, Senator Cruz has at times fired back at fact checkers he deems untrustworthy.
The number of words in the tax code is perhaps a mediocre proxy for the abstract concept that Senator Cruz was trying to address, but it's not an unreasonable one. The length of the tax code is certainly proportional in some way to tax complexity. The nuances of what merits a Geppetto Checkmark and what doesn't are apparently beyond me, but the question posed in the column - whether this matters - is actually worth answering.
The Fact Checker column asks another worthwhile question: "Do Americans actually read the tax code, especially now that software programs make it easy to file taxes with a few mouse clicks?" Or put more broadly, does tax complexity still matter if professionals or software allow taxpayers to navigate the code successfully. It does still matter. I have argued in the past that a muddled tax code reflects muddled thinking. Even if taxpayers file successfully, the complexity is itself evidence of poor design on the part of lawmakers. That remains true today.
However, Nina Olson, the U.S. taxpayer advocate at the IRS, had an even better answer to the same question: "Many people don't know why they're getting the results they're getting." This, I think, is a more immediately relevant argument. Regardless of one's views about economics or compliance costs or distribution or anything else pertaining to taxes, taxpayer understanding is a value worth consideration. Making the tax code understandable isn't just a means towards better compliance and efficient revenue raising. It is a good in itself for people to understand the laws under which they live.
An Extension Sends Tax Season Into Overtime
New York Times
So if you haven't filed your federal income tax return yet out of simple procrastination, it goes without saying that you should do so as soon as possible. But what if you had every intention of filing, yet you are missing necessary information? In ...
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Used daily by countless reporters, taxpayers, and legislators, this book is a one-stop data resource for state tax rates, collections, burdens, and more. The booklet contains 39 tables comparing rates and statistics on taxation and spending in all 50 states.
Topics in this year’s edition include:Taxes and Tax Measures; Individual Income Taxes; Corporate Income Taxes; General Sales Taxes; Excise Taxes; Property Taxes; Estate and Inheritance Taxes; State Debt; And more!
The ease-of-access and transparency of government data is crucial to an informed and honest debate on how to improve federal and state tax codes. Unfortunately, this data is often poorly formatted, spread out across many agencies’ websites, or is simply difficult to find. Facts & Figures is just one of the Tax Foundation’s resources that helps alleviate this problem, by providing clear and concise state data in a variety of formats to best fit each user’s needs.
This week’s tax map shows state and local sales tax rates in each state as of January 1, 2015 and comes from our larger report on sales taxes released earlier this week. While consumers might be aware of the statewide sales tax rate, local sales taxes can differ widely, so our population-weighted average allows for comparability across states.
This ranking is useful for a state like Colorado, where the statewide sales tax is 2.9 percent (very low), but local sales taxes add on an additional 4.54 percent on average, meaning consumers face a combined rate of 7.44 percent, the 15th highest in the country.
The five states with the highest average combined state-local sales tax rates are Tennessee (9.45 percent), Arkansas (9.26 percent), Alabama (8.91 percent), Louisiana (8.91 percent), and Washington (8.89 percent).
The five states with the lowest average combined rates are Alaska (1.76 percent), Hawaii (4.35 percent), Wisconsin (5.43 percent), Wyoming (5.47 percent), and Maine (5.50 percent).
These rates are important because sales tax policy is one of the ways that states can compete. At the statewide level, businesses sometimes locate just outside the borders of high sales tax areas to avoid being subjected to their rates. A stark example of this occurs in the Northeast, where even though I-91 runs up the Vermont side of the Connecticut River, many more retail establishments choose to locate on the New Hampshire side to avoid sales taxes. One study shows that per capita sales in border counties in sales tax-free New Hampshire have tripled since the late 1950s, while per capita sales in border counties in Vermont have remained stagnant.
The state of Delaware actually uses its highway welcome sign to remind motorists that Delaware is the "Home of Tax-Free Shopping." State and local governments should be cautious about raising rates too high relative to their neighbors because doing so will amount to less revenue than expected or, in extreme cases, revenue losses despite the higher tax rate.
Be sure to give our full report a read—it’s full of information, anecdotes, and a discussion of sales taxes as a part of the broader tax code.