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U.S. tax agency investigates Facebook's Ireland asset transfer

Yahoo Tax - Fri, 2016-07-08 02:13

The U.S. Internal Revenue Service (IRS) said Facebook Inc may have understated the value of intellectual property it transferred to Ireland by "billions of dollars", unfairly cutting its tax bill in the process, according to court papers. The U.S. Justice Department filed a lawsuit on Wednesday in federal court in San Francisco seeking to enforce IRS summonses served on Facebook and to force the world's largest social network to produce various documents as part of the probe. The tax authority is examining whether Facebook understated its U.S. income by selling rights to an Irish subsidiary too cheaply.


Categories: Tax news

IRS probes Facebook over Ireland asset transfer

Yahoo Tax - Thu, 2016-07-07 13:33

The U.S. Justice Department filed a lawsuit on Wednesday in federal court in San Francisco seeking to enforce IRS summonses served on Facebook and to force the world's largest social network to produce various documents as part of the probe. The lawsuit said the documents relate to an IRS examination of the company's tax liability for 2010, when Facebook's tax return reported royalty income from transfers of intangible property to Facebook Ireland Holdings Unlimited.


Categories: Tax news

US tax authorities query Facebook on Ireland dealings

Yahoo Tax - Thu, 2016-07-07 12:17

US tax authorities are asking Facebook to turn over documents for an investigation into the social networking giant's dealings with its Irish subsidiary, court documents show. In a petition filed in federal court in San Francisco, the Internal Revenue Service said it is "conducting an examination of the federal income tax liability" for Facebook in 2010. Some of the firms have taken advantage of tax breaks offered from Ireland, Belgium and Luxembourg.


Categories: Tax news

IRS is investigating Facebook over its assets in Ireland - The Verge

Google IRS Federal Income Tax - Thu, 2016-07-07 11:20

The Verge

IRS is investigating Facebook over its assets in Ireland
The Verge
The investigation is part of an examination of Facebook's federal income tax liability in 2010. According to Law.com, the IRS says that Facebook's outside accountants valued the company's various intangibles (such as its user base and online platform ...
IRS investigating Facebook's Ireland asset transferUSA TODAY
IRS Investigating Facebook Over Ireland Asset TransferLaw.com (subscription)
Facebook faces US tax exam over Ireland asset tranfer: lawsuitCNBC
Phys.Org -Financial Times
all 21 news articles »
Categories: Tax news

New Hampshire On Track for Triggered Tax Cuts

Tax Foundation - Thu, 2016-07-07 09:15

When the New Hampshire legislature presented Governor Maggie Hassan (D) with a program of modest reductions to the state’s business profits tax (a corporate income tax) and business enterprise tax (essentially a value-added tax), she initially rejected the proposal, arguing that the reductions would “create a more than $90 million budget hole.” Eventually, however, the governor acquiesced on the tax reductions—with a further round of cuts subject to revenue triggers—and, six months in, the revenue outlook is highly encouraging.

For starters, that $90 million hole is currently a $100 million surplus.

Business tax receipts are 13.2 percent above projection, following a reduction in the business profits tax rate from 8.5 to 8.2 percent, and the business enterprise tax from 0.75 to 0.72 percent. Should current revenue trends hold for another year, further tax relief can be expected.

This next round of reductions relies on a tax trigger, proceeding only if biennial general and education revenues exceed $4.6 billion. One year into the biennium, revenues stand at $2.4 billion, putting the state more than on track to trigger a reduction in the business profits tax rate to 7.9 percent, while cutting the business enterprise tax rate to 0.675 percent.

New Hampshire is not the only state to make the implementation of tax reform contingent, in whole or in part, on meeting revenue benchmarks. Four other states and the District of Columbia are currently leaning on tax triggers to phase in rate reductions and other tax changes. Well-designed tax triggers can help states phase in tax reform while ensuring revenue stability, and can be a valuable tool in tax reform efforts. And in New Hampshire’s case, at least, tax triggers formed the basis of a compromise that appears poised to bring further tax relief in 2018. 

Categories: Tax news

Lunch Links: Louisiana to Analyze Film Credit Program; Treasury Reg Comments Due; New Jersey Transportation Options

Tax Foundation - Thu, 2016-07-07 08:45

Today is July 7, the date in 1846 when a U.S. force landed in Monterey, California, and proclaimed California’s annexation to the United States. The settler-proclaimed California Republic would formally come to end two days later, after lasting 25 days. Check out California’s tax system here.

Here are some interesting links I came across:

Treasury International Tax Regulation Comments Due Today: The proposed overhaul of section 385 remains a top topic, with more entities filing comments calling the proposed regulations overbroad and likely to harm legitimate transactions. (Politico) Mexico Junk Food Tax Cuts Purchases A Bit: “Mexico’s 8 percent tax on high-calorie snacks has been successful in reducing junk food purchases, but only by a small amount and only among poor and middle-class households, a study said Tuesday.” (The New York Times) Puerto Rico Downgraded: Fitch now rates the island’s general obligation bonds at D. Louisiana Governor Begins Review of Film Tax Credit Program: The state will conduct an independent examination of the program’s economic impact in Louisiana. Every independent analysis of state film tax credits has found that their costs exceed their benefits, although industry-sponsored studies have found net benefits. The state pays out up to $180 million a year to film studios to cover their costs, and is one of the handful of remaining states spending large sums on such a program. (The Times-Picayune) New Jersey Can Achieve Something Out of Transportation Impasse: My colleague Matthew Crumb reviews where New Jersey is at with transportation funding and what it could do. (Tax Foundation) Illinois Appeals Court Rejects Taxpayer Claim, Saying Pizza Not Necessity: To challenge a tax in Illinois, you have to pay it under protest and then sue. If you don’t pay under protest, you have to show you either didn’t know you were supposed to protest or that the payment was so necessary that it amounted to duress. The Illinois Appellate Court, Fifth District, rejected an argument that the sale of pizza was necessary because pizza is food, although they previously held that feminine hygiene products are necessary and qualifies for the exemption. They should just let the taxpayers make their case about the tax. (State Tax Notes)
Categories: Tax news

Plea deals possible in tax case against restaurant owners - Milwaukee Journal Sentinel

Google IRS Federal Income Tax - Thu, 2016-07-07 08:34

Plea deals possible in tax case against restaurant owners
Milwaukee Journal Sentinel
His son-in-law is charged with filing falsified personal income tax returns. ... Federal prosecutors say they skimmed $100,000 a month from the businesses, while telling their bank that they were barely getting by. ... An affidavit from IRS Special ...

Categories: Tax news

IRS Proposed Rules Address Premium Tax Credits, Benchmark Premiums, And Pediatric Dental Plans - Health Affairs (blog)

Google IRS Federal Income Tax - Thu, 2016-07-07 07:20

Health Affairs (blog)

IRS Proposed Rules Address Premium Tax Credits, Benchmark Premiums, And Pediatric Dental Plans
Health Affairs (blog)
... people with incomes between 100 and 400 percent of the federal poverty level (FPL) afford marketplace coverage, the ACA offers them (if they do not have minimum essential coverage through a public program or an employer) advance premium tax credits ...

Categories: Tax news

Report Uncovers Stonewalling of Illegal Obamacare Payments - Americans for Tax Reform (blog)

Google IRS Federal Income Tax - Thu, 2016-07-07 07:07

Americans for Tax Reform (blog)

Report Uncovers Stonewalling of Illegal Obamacare Payments
Americans for Tax Reform (blog)
The Obama administration has been illegally funding Obamacare “Cost Sharing Reduction” (CSR) payments for years over the objections of IRS officials, according to a report released today by the House Ways and Means Committee and the House Energy and ...
GOP report calls ObamaCare payments unconstitutionalThe Hill

all 8 news articles »
Categories: Tax news

Looks like full steam ahead for 385 - Politico

Google IRS Federal Income Tax - Thu, 2016-07-07 07:02

Looks like full steam ahead for 385
Politico
They scoff at federal estimates that compliance costs will total $13 million, The Wall Street Journal's Richard Rubin reports. “The government's estimate assumes compliance .... MASS. DEDUCTION: Massachusetts is taking steps toward joining 34 other ...

and more »
Categories: Tax news

IRS Damper on Medical Marijuana, Smokes Clinics - ValueWalk

Google IRS Federal Income Tax - Thu, 2016-07-07 06:04

ValueWalk

IRS Damper on Medical Marijuana, Smokes Clinics
ValueWalk
“Interestingly, while the Drug Enforcement Administration has stepped aside on the enforcement of this still illegal substance in states where allowed, the IRS (using Section 280E of the tax code) has not. ... The taxpayer is arguing that the code was ...

and more »
Categories: Tax news

Virginia Man To Serve 4 Years For ID Fraud Scheme - PYMNTS.com

Google IRS Federal Income Tax - Thu, 2016-07-07 04:19

PYMNTS.com

Virginia Man To Serve 4 Years For ID Fraud Scheme
PYMNTS.com
Court documents confirm that the overall case involves the filing of at least 12,000 fraudulent federal income tax returns in order to obtain roughly $42 million in total funds. A statement from the U.S. Department of Justice states that King pled ...

Categories: Tax news

Dentist pleads not guilty to tax fraud - Citizens Voice

Google IRS Federal Income Tax - Thu, 2016-07-07 01:01

Citizens Voice

Dentist pleads not guilty to tax fraud
Citizens Voice
Charles Musto pleaded not guilty Wednesday to felony charges of filing false tax returns and impeding the administration of tax laws. Federal prosecutors allege Musto tried to swindle the IRS by concealing income in multiple bank accounts at many banks ...

and more »
Categories: Tax news

How to hunt for buried US savings bonds - Detroit Free Press

Google IRS Federal Income Tax - Wed, 2016-07-06 20:41

Detroit Free Press

How to hunt for buried US savings bonds
Detroit Free Press
You'd receive an IRS Form 1099-INT. Save your ... Some tax tips: Do not somehow think you can use savings bonds issued in 1986 to pay for a child's college education and cleverly avoid federal income taxes on your interest earned. The special tax break ...

Categories: Tax news

Despite Impasse, New Jersey Has Good Options for Transportation Funding, Tax Reform

Tax Foundation - Wed, 2016-07-06 14:45

New Jersey Governor Chris Christie (R) has shut down most highway projects in the state after lawmakers could not reach a deal last week to revamp its nearly empty Transportation Fund. Last week, the state passed a budget, but the state Senate rejected an Assembly-passed gas tax increase/sales tax decrease tradeoff deal, so the impasse continued on transportation projects.

The Assembly plan, AB10 and AB12, trades a 23-cent gas tax increase for a sales tax cut. The Senate’s plan, by contrast, also increases the gas tax by 23 cents, but features a phaseout of New Jersey’s estate tax instead of lowering the sales tax.

Here’s a breakdown of the proposals with their revenue impacts:

Both Plans:

Increase the gas tax by 23 cents and include other fuel-related tax increases. Assembly revenue impact: +$1.1 billion in 2017, +$1.2 billion annually by 2022. Senate revenue impact: +$1.2 billion in 2017, +$1.3 billion annually by 2022. Increase pension and other retirement income exclusions from state personal income tax. Revenue impact: -$60 million to -$90 million in 2018, -$135 million to -$193 million by 2022.

Assembly Plan (AB10, AB12) (Fiscal Note here):

Decreases sales tax from 7 percent to 6.5 percent for 2017 and to 6 percent for 2018. Revenue impact: -$376 million in 2017, -$1.74 billion annually by 2022. Total revenue impact: -$699.4 million to -$757.4 million by 2022.

Senate Plan (S2411) (Fiscal Note here):

Phases out estate tax over four years (eliminated in 2020). Revenue impact: -$120 million in 2018, -$550 million annually by 2022. Adds charitable deduction for personal income tax Revenue impact: -$140 million to -$280 million in 2018 and thereafter. Expands Earned Income Tax Credit Revenue impact: -$122 million in 2017, -$137 million annually by 2022. Adds new 7 percent tax on jet fuel Revenue impact: +$123 million to +$160 million Total revenue impact: +$1.1 billion in 2017 and +$140 million to +$375 million by 2022.

The Assembly plan results in a sizable net tax cut for New Jersey residents, while the Senate plan is an overall tax increase, with a heavier tax increase in 2017 being tempered in later years by the phaseout of the estate tax and the phase-in of a more generous pension income exclusion.

Behind the transportation funding problem in New Jersey is a gas tax that has lost much of its revenue productivity. In 1968, the 7 cent-per-gallon tax was worth an inflation-adjusted 47.5 cents per gallon, but the value has dropped by 66 percent since because of inflation. New Jersey’s current combined gas tax rate of 14.5 cents is second lowest in the nation. 

The 23-cent fuel tax increase is accompanied by an important constitutional amendment that would refurbish New Jersey’s Transportation Fund. The amendment wholly dedicates all revenue from motor fuel taxes and other petroleum taxes to transportation projects. New Jersey residents must pass the amendment on the upcoming November ballot, but it can become statutory until then if the legislature wishes.

Constitutionally setting aside the increased gas tax revenue to transportation is good policy. It would better tie road maintenance costs to road users who benefit, and would decrease the likelihood of general fund bailouts. In 2015, for example, New Jersey had to use $433 million of its sales tax revenue to shore up the Transportation Fund.

At the same time, the legislature shouldn’t lose sight of the two broad-based tax reforms that could make New Jersey residents better off. Lowering the sales tax by a percentage point is a laudable, straightforward effort to lessen New Jersey’s high tax burden.

The estate tax, a tax on death, should be reformed as well. New Jersey joins Maryland as the only states with both an estate tax and an inheritance tax. Phasing out the estate tax—which has increasingly come under scrutiny by some notable left-of-center economists—would be an important step for New Jersey for both competitiveness and economic growth.

Truly great reform could include all three of the blockbuster elements: gas tax right-sizing, sales tax reduction, and estate tax elimination. New Jersey, which has struggled to develop a concrete tax agenda in recent years, has a true opportunity for bipartisan reform here.

Categories: Tax news

Midyear Strategies to Cut Your 2016 Tax Bill - Kiplinger Personal Finance

Google IRS Federal Income Tax - Wed, 2016-07-06 12:42

Kiplinger Personal Finance

Midyear Strategies to Cut Your 2016 Tax Bill
Kiplinger Personal Finance
If you got a big refund, maybe you should adjust your withholding, if you're still working, or your estimated tax payments for 2016 if you're paying on investment and retirement income. The average ... The total is divided by a factor provided by the ...

and more »
Categories: Tax news

Lunch Links: Teamsters Say No to Soda Taxes; No Missouri Tax Cut; New Jersey May End Pennsylvania Tax Pact

Tax Foundation - Wed, 2016-07-06 09:45

Today is July 6, the 81st birthday of the present Dalai Lama. Tibet as recently as the 1950s had a quasi-feudal social system, with hereditary “treba” (“taxpayer”) families responsible for owning land and paying taxes, with lighter tax obligations owed by householder peasants and indentured peasants.

Here are some interesting links I came across:

Teamsters Oppose Soda Taxes: The Teamsters 29th International Convention approved a resolution putting the powerful union on record opposing soda taxes. The Philadelphia local, meanwhile, sent letters to politicians who voted yes on the soda tax to expect no further support from the union. (PR Newswire / Citified) Arkansas Ends Year With $177 Million Surplus: The surplus was driven by strong individual and business tax collections. (Arkansas Business Journal) California Income Tax Extension on Ballot: In November, California voters will decide whether to extend higher income taxes on those who earn more than $250,000 a year, with a top rate of 13.3 percent on income above $1 million (up from 10.3 percent). The taxes were approved in 2012 and will expire at the end of 2018 unless extended. (Sacramento Business Journal) San Francisco Muses Payroll Tax for Housing: Three legislators and some activists are pushing a 1.5 percent payroll tax on tech companies to pay for homeless and housing services but also transparently to punish them for sparking a housing boom in The City. San Francisco’s budget is currently a healthy $9.6 billion and there’s already a payroll tax on employers. The City is adding about 3,600 new housing units a year. (The New York Times / Curbed San Francisco) No 2017 Tax Cut for Missouri: Missouri’s 2014 tax package set into place 10 years of individual income tax cuts and a “small business” gimmick, but would only go into effect if tax revenue grew at least $150 million over last year. Actual growth was $77 million, so the first year of the tax cut will be postponed until at least 2018. (Tax Foundation / St. Louis Post-Dispatch) New Jersey May End Tax Reciprocity with Pennsylvania: Gov. Christie (R) directed his staff to investigate the impacts of ending the tax reciprocity agreement between New Jersey and Pennsylvania whereby the states agree not to tax each other’s residents. The pact, which dates to 1977, means New Jersey residents only pay New Jersey taxes even if they work in Pennsylvania, and Pennsylvania residents only pay Pennsylvania taxes even if they work in New Jersey. Back in 1977, New Jersey had a 2.5 percent top income tax rate and Pennsylvania had a 2 percent top income tax rate so there wasn’t much of a gap; today, New Jersey’s is 8.97 percent and Pennsylvania’s 3.07 percent. (NJVT)
Categories: Tax news

Tax Proposals in the 2016 Democratic Platform, Explained (Part 1)

Tax Foundation - Tue, 2016-07-05 20:30

Last Friday, the Democratic National Platform Committee released a draft version of the 2016 Democratic Party platform.

While party platforms are usually inconsequential documents, a great deal of attention has been paid to this year’s Democratic Party platform, which was crafted jointly by representatives of Hillary Clinton and Bernie Sanders. Many observers believe that the platform will signal the future policy direction of the Democratic Party, following a contentious presidential campaign that divided the Democratic base on several issues.

One issue on which Clinton and Sanders had major disagreements was tax policy. As my colleague Alan Cole pointed out a few months ago, the tax plans issued by the Clinton and Sanders campaigns were so radically different that it’s almost difficult to believe that the two belong to the same party. To take one example, the Sanders tax plan would increase taxes by more than 15 times as much as the Clinton plan would.

As a result, it is fascinating to read through the tax policy proposals in this year’s Democratic platform and examine the extent to which Clinton’s or Sanders’ ideas won the day. On some issues, such as tax relief for the middle class and financial transactions taxes, the platform reflects Clinton’s priorities. On others, such as payroll taxes and the treatment of overseas profits, the document clearly mirrors Sanders’ proposals.

Over the next few days, we’ll be going through 18 tax policy proposals that are mentioned in the 2016 Democratic platform, in order of appearance. Alongside each proposal are a few lines of commentary about how each proposal might work, as well as its relationship to the Sanders and Clinton tax plans.

Here are the first six tax policy proposals listed in the Democratic platform:

1.      “We will make sure Social Security’s guaranteed benefits continue for generations to come by asking those at the top to pay more, and will achieve this goal by taxing some of the income of people above $250,000.”

Currently, the Social Security payroll tax only applies to each individual’s first $118,500 in wages and self-employment income. As a result, middle- and low-income Americans pay a higher share of their income in payroll taxes than high-income Americans. Many tax policy analysts have suggested broadening the payroll tax base by raising the cap above $118,500 or otherwise reducing the amount of wages that are not subject to the Social Security payroll tax.

The proposal referenced in the Democratic platform – taxing “some of the income of people above $250,000” – appears to be a toned-down version of one of Sanders’ proposals: to apply the Social Security payroll tax to all payroll above $250,000. A recent Tax Foundation publication found that this proposal would raise $720 billion in federal revenue over 10 years, with a relatively small amount of economic harm.

2.      “We support a financial transactions tax on Wall Street to curb excessive speculation and high-frequency trading, which has threatened financial markets. We acknowledge that there is room within our party for a diversity of views on a broader financial transactions tax.”

Over the past few years, as dissatisfaction with the American financial industry has grown, the idea of a financial transactions tax (FTT) has grown popular in left-wing policy circles. A FTT would levy a tax on individuals every time they trade a stock, bond, or other financial instrument. Opponents of FTTs note that they are likely to discourage trading, reduce liquidity, and tax the same economic activity several times.

The issue of a financial transactions tax was a point of major disagreement between Clinton and Sanders during this year’s campaign. Clinton favored a miniscule tax, specifically targeted at high-frequency trades, to discourage market volatility and unfair practices. Sanders called for a broad tax on nearly all financial transactions, with a top rate of 0.5%. While Sanders claimed that his FTT proposal would raise $300 billion a year, more credible estimates have placed the revenue from his proposal at $50 billion.

Here, the Democratic platform appears to take Clinton’s position, by calling for a FTT specifically designed to “curb excessive speculation and high-frequency trading.” However, the platform throws a bone to Sanders supporters by acknowledging that some Democrats desire a “broader” financial transactions tax.

3.      “Democrats will claw back tax breaks for companies that ship jobs overseas…”

This line in the Democratic platform probably refers to a novel proposal that the Clinton campaign floated in March: denying certain corporate tax deductions and credits to companies that move their operations overseas.

It is unclear exactly how this proposal would work. From news reports, it seems that Clinton would deny the R&D credit, the domestic production deduction, and other tax incentives to companies that reduce their U.S. employment. Importantly, Clinton’s proposal would “claw back” tax benefits that businesses have already received, going back several years, making this proposal retroactive.

4.      “…eliminate tax breaks for big oil and gas companies…”

The federal tax code contains several provisions that treat oil, gas, and coal companies differently than other businesses. Most of these provisions allow fossil fuel companies to deduct more of their expenses up front, leading to lower taxes. The Congressional Research Service estimates that, in 2013, the federal government lost $4.8 billion due to tax preferences for fossil fuel companies (compared to $13.4 billion in tax preferences for renewable energy).

Both Clinton and Sanders would eliminate all tax preferences for fossil fuel companies. In addition, both candidates would also limit the ability of certain fossil fuel companies to claim foreign tax credits for their business activity overseas. The Democratic platform reflects the consensus of the two candidates on this issue.

5.      “…and crack down on inversions and other methods companies use to dodge their tax responsibilities.”

The U.S. tax code levies a higher tax burden on companies headquartered in America than on companies headquartered in other countries. It is relatively easy for a U.S. company to change the location of its headquarters, by having a foreign company purchase its shares or assets. This process is known as an inversion, and more than 20 U.S. companies since 2012 have used this maneuver to move their headquarters abroad and lower their U.S. taxes.

Since inversions became more popular a few years ago, many Democratic lawmakers have decried the trend (Clinton has gone so far as to call the practice a “perversion") and offered targeted measures to penalize companies that invert. Republicans tend to treat inversions as a symptom of larger problems with the corporate tax system, and argue instead for broader reforms.

Clinton and Sanders have both proposed numerous measures that would target companies that engage in inversions. The Clinton tax plan would categorize any companies with more than 50 percent U.S. ownership as domestic businesses, and would require companies leaving the U.S. to pay an “exit tax” on their tax-deferred profits. Sanders’ plan would redefine “domestic business” to include foreign companies that acquire U.S. businesses. The Democratic platform does not choose between one approach or the other.

6.      “We will end deferrals so that American corporations pay U.S. taxes immediately on foreign profits and can no longer escape paying their fair share of United States taxes by stashing profits abroad.”

Since the introduction of the corporate income tax in 1913, U.S. corporations have not been required to pay U.S. taxes on profits earned by their foreign affiliates until the profits are brought back to the United States parent. This provision is known as deferral, and it partially mitigates the double taxation that the U.S. tax system imposes on profits earned abroad.

Sanders has long advocated for repealing the deferral of foreign-source income, as a way of increasing taxes paid by U.S. corporations. This would be a radical and unprecedented change to the U.S. tax system. It would likely raise more than $850 billion in additional taxes on businesses over a decade. Ironically, it would also encourage more corporations to engage in inversions, because ending deferral would raise taxes only on corporations headquartered in the U.S.

Amazingly, the Democratic platform committee has incorporated Sanders’ call to end deferral into the draft 2016 platform. This is a major victory for Sanders’ ideas and policies. As things stand right now, most congressional Democrats and President Obama would be unlikely to support this proposal in the Democratic platform.

Categories: Tax news

UK Pledges Corporate Rate Reduction

Tax Foundation - Tue, 2016-07-05 13:15

Over the weekend, the United Kingdom’s Chancellor of the Exchequer, George Osborne, pledged to lower the corporate income tax rate to 15 percent from the current 20 percent. In pledging the rate cut, Osborne cited the need to keep the UK competitive as it exits the European Union.

Interestingly, this time last year, Osborne had pledged to lower the UK’s corporate income tax rate to 18 percent by 2020. Already, the UK has some of the of the lowest corporate taxes when it comes to the community of developed nations. With this latest pledged rate reduction, the UK will continue to increase its competitive edge in the global business climate.

What does this mean for the United States? For one, it shows that we are far behind the rest of the industrialized world when it comes to reducing the tax burden placed on corporate income. Countries worldwide have been consistently cutting their top marginal corporate tax rates, while the United States has maintained its comparatively high rate. At 39 percent, the U.S. corporate income tax rate is behind only Chad (40 percent) and the United Arab Emirates (55 percent), and the highest among industrialized nations.

If the United States sticks to the trend of maintaining its high corporate rate as other countries lower theirs, our country will attract less and less investment, impacting wages and job growth. Most of the world has taken steps to lower corporate taxes, and there are voices in the United States calling for the same. When it comes to attracting business and income growth to our shores, the United States should take a page out of the UK’s (and the rest of the developed world’s) book.

Categories: Tax news

Lunch Links: North Carolina Boosts Standard Deduction; Bag Tax Impact Mixed; July State Tax Changes

Tax Foundation - Tue, 2016-07-05 07:45

Today is July 5, the 58th birthday of cartoonist Bill Watterson, creator of Calvin and Hobbes (1985-95). There are so many good C&H strips, but I suppose I should link to the one that lightly pokes fun at the IRS.

Here are some interesting links I came across:

Analysis of the House Republican Tax Plan: Our new report looking at the plan is out. Also see coverage from The Wall Street JournalPolitico, and The Hill. (Tax Foundation) GAO Looks at Overpaid Tax Credits: The Government Accountability Office calculated overpayment error rates for the Earned Income Tax Credit (29 percent), the Child Tax Credit (12 percent), and the American Opportunity Tax Credit (25 percent). The overpayments total $29.5 billion per year, and the GAO says the credits’ complexity and difficulty of verification are to blame. (TaxProf) Olympic Medal Tax Break Up Again: With the Summer Olympics in Rio around the corner, Reps. Blake Farenthold (R-TX) and G.K. Butterfield (D-NC) are pushing a bill to exempt the prize money that medal winners get from federal income tax. Gold medal winners get $25,000, silver medal winners get $15,000, and bronze medal winners get $10,000. (Roll Call) North Carolina Approves Budget: The approved budget includes an increase in the standard deduction, the amount of a taxpayer’s income not subject to income tax, effective this calendar year. The current standard deductions of $7,500 (single) and $15,000 (married filing jointly) will rise immediately to $8,000 (single) and $16,000 (married filing jointly), and rises again for 2017 to $8,750 (single) and $17,500 (married filing jointly). The state also changes service apportionment to market sourcing, and provides clarification when sales tax is due on repair, maintenance, and installation services. (Raleigh News & Observer / North Carolina General Assembly) Pennsylvania Still Debating: While Pennsylvania approved a record $31.6 billion budget (a 5 percent boost over last year), they didn’t agree on how to pay for the increase. The parties are as much as $150 million apart. (News Works) Bag Tax Impact Evaluated: Montgomery County, Maryland, imposed a 5-cent tax on disposable shopping bags in 2012. Four years later, some mixed results: plastic bags are issued less at convenience stores, pharmacies, and department stores, but are growing at grocery stores. Plastic bags trapped in streams have dropped 9 percent, from 856 in 2011 to 777 in 2015, but only 281 so far this year. Proponents can claim victory either way: if bag usage doesn’t go down much, it raises revenue. The tax has raised $10.4 million since going into effect. (The Washington Post) Illinois Topless Bar Tax Generating $500K a Year: In 2013, Illinois imposed a tax on businesses with adult live entertainment. The tax, either tiered-based on gross receipts or $3 a head, generates about $532,000 a year, barely half the original projection. The money goes to rape crisis centers. A similar tax in Nevada survived a constitutional challenge but one in Texas was struck down. (ABC / Associated Press / Tax Foundation) State Tax Changes Taking Effect July 1: We have a rundown. (Tax Foundation)
Categories: Tax news
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