Tax Justice Digest: Millionaire Myth -- Corporate Tax Watch -- State Rundown


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In the Tax Justice Digest we recap the latest reports, blog posts, and analyses from Citizens for Tax Justice and the Institute on Taxation and Economic Policy.

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State Rundown 5/26: Bad Ideas, Worse Budgets


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Thanks for reading the State Rundown! Here's a sneak peek: Kansas marks tax cut anniversary with budget cuts. New York governor expected to sign tampon tax repeal. Minnesota legislators pass tax cuts amid chaos. Tennessee repeals its Hall Tax. Massachusetts legislators give initial approval to millionaire tax.

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New Research Shows Millionaires Less Mobile than the Rest of Us


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A new study (PDF) released today provides the best evidence yet that progressive state income taxes are not leading to any meaningful amount of "tax flight" among top earners.

Stanford University researchers teamed with officials at the Treasury Department to examine every tax return reporting more than $1 million in earnings in at least one year between 1999 and 2011. They found that while 2.9 percent of the general population moves to a different state in a given year, just 2.4 percent of millionaires do so. Even more striking is that for the most "persistent millionaires" (those earning over $1 million in at least 8 years of the researchers' sample), the migration rate is just 1.9 percent per year. As the researchers explain: "millionaires are not searching for economic opportunity--they have found it."

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Google and Tax Avoidance: From the "Double Irish With a Dutch Sandwich" to "Delaware Alphabet Soup"


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You may have heard about Google Inc.'s restructuring last year, which resulted in the technology company becoming a wholly owned subsidiary of a new Delaware corporation called Alphabet Inc. What you may not know is how this restructuring can help the company potentially avoid millions in state taxes.

In a recent academic paper "Google's 'Alphabet Soup' in Delaware", the authors explain how Alphabet Inc. will allow Google to take advantage of the "Delaware loophole" to lower its corporate income tax. The Delaware loophole, which is detailed in the 2015 Institute on Taxation and Economic Policy (ITEP) report "Delaware: An Onshore Tax Haven", is estimated to have cost states $9.5 billion in lost revenues over a 10-year period. It works like this:

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Nation's Most Irrational Tax Break Falls Out of Favor


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A constant refrain among advocates for tax reform is that there are too many special breaks built into our nation's tax system. While some tax breaks are worthwhile, far too many are ineffective, unfair, complicated, or politically motivated.

But even the most flawed tax break typically has some kind of rationale--however flimsy--that its supporters can trot out in its defense. Without a rationale or purpose, why would a tax break ever be enacted in the first place?

The answer is that sometimes tax breaks get enacted by accident.

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Corporate Tax Watch: Icahn Enterprises, Airbnb and Coca Cola Enterprises


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Most of the time CTJ and ITEP's corporate tax analysts are knee deep in corporate tax reports. We will come up for air every now and then to give quick updates on our findings. Here's a rundown of what we're watching.

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Tax Justice Digest: Trump -- Millionaire Migration -- Boom Goes Bust


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In the Tax Justice Digest we recap the latest reports, blog posts, and analyses from Citizens for Tax Justice and the Institute on Taxation and Economic Policy.

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Tax Migration Myth Refuses To Die


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Readers, let's establish a few facts for the last time. Santa Claus isn't real, and neither is the Easter Bunny. There is no pot of gold at the end of the rainbow. Mutant alligators don't roam the sewers of New York City. And the fabulously wealthy do not migrate from state to state in search of low tax rates.

We've dispelled the "millionaire migration" myth a number of times (see here, here, and here). But it seems thinly-sourced anecdotes beat empirical evidence.

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A Dividends Paid Deduction is the New Front in the Push for Corporate Tax Cuts


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It seems that each year there is a new "it" tax break for which advocates for cutting corporate tax breaks and their supporters rally. Last year the "it" tax break was a patent box and a few years back it was a repatriation holiday. This year the tax break du jour is the dividends paid deduction.

A dividends paid deduction would allow corporations to deduct from their corporate income taxes the cost of the dividends that they issue to shareholders. In other words, companies would get a tax break for paying out dividends to shareholders. Taken alone, this deduction would cripple the corporate income tax at an estimated cost of roughly $150 billion annually. At a time of growing income inequality and government austerity, enacting a massive cut in one of our country's most progressive revenue sources would be counterproductive, to say the least.

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Energy States Continue to Pay the Price for "Boom Time" Tax Cuts


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Alaska, North Dakota, Oklahoma, West Virginia, and Wyoming.

What do these states have in common?

These are the five states that are most reliant on the energy sector (mining, quarrying, and oil and gas extraction) for their economic output, according to data from the Bureau of Economic Analysis. All of them are also facing budget shortfalls brought on in part by the falling price of energy, and in part by short-sighted tax cuts made by lawmakers that failed to prepare for this decline.

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