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. Here's a rundown of what we've been working on lately.
While multinational corporations frequently avoid taxation by shifting profits to offshore tax havens, big businesses have increasingly exploited one onshore tax-avoidance trick: the pass-through loophole. By registering as S corporations and partnerships, businesses boasting revenues in the tens of millions of dollars can enjoy benefits originally reserved for C corporations while avoiding the corporate income tax. A new report released by the Center for American Progress (CAP) notes that the U.S. government lost as much as $790 billion of revenue from 2003 to 2012 from this loophole.
"If lawmakers want to cut their state income tax, they should consider the fact that a significant percentage of that tax cut will not end up in their constituents' pockets because they will have a lesser amount of state taxes to deduct from their federal taxes and, thus, will have higher federal tax bills," said Carl Davis, research director at ITEP. "And even if it is sometimes politically unpopular, increasing income taxes has the opposite effect. Policymakers should keep in mind that if they raise state taxes, the federal government will shoulder some of that increase because state residents will receive larger deductions from their federal income taxes."
This week we are highlighting tax and budget news in New Jersey, Minnesota, Illinois, California and Colorado. Be sure to check out the What We're Reading section for the latest on marijuana laws, state film tax credits, and a new income equality report. Thanks for reading the Rundown!
Tim Cook is a persuasive CEO. In a wide-ranging interview published earlier this week in the Washington Post, he discussed his vision for the company, thoughts about leadership succession, and he humbly admitted he has made mistakes.
So it would be very easy to view as reasonable his declaration that Apple will not repatriate its offshore profits until the United States enacts a "fair" tax rate.
Apple Inc. is not only the world's leading cell phone designer, it is also number one when it comes to falsely asserting that most of its profits are earned in tax havens. The company has $215 billion in profits that it pretends are offshore, thus is avoiding an estimated $66 billion in U.S. taxes. Apple's enormous stash alone accounts for nearly 10 percent of the $2.4 trillion in profits that multinational companies claim are offshore for tax purposes.
With the exception of New Jersey, the dust has now settled on most state legislatures' 2016 tax policy debates. Many of the conversations that took place in 2016 were quite different than those that occurred over the last few years. Specifically, the tax cutting craze sparked by the election of many anti-tax lawmakers in November 2010 has subsided somewhat--at least for now. For every state that enacted a notable tax cut in 2016, there was another that took the opposite path and opted to raise taxes. And contrary to what you may expect, the distinction between tax-cutting and tax-hiking states did not always break down along traditional partisan lines.
This week we've got updates on tax and budget news in Oregon, Louisiana, Nebraska, Alabama and California. Be sure to check out the What We're Reading section for links about the latest on Kansas, an editorial from the Wall Street Journal and a new report from The Brookings Institution. Thanks for reading the Rundown!
When Bad Policy Meets Worse Policy: Mississippi's Solution to Revenue Hole Seems to Be 'Keep Digging'
A legislative study of Mississippi's tax code kicked off recently, with committee members giving special consideration to cutting overall taxes in the state and shifting away from the state income tax toward a “user-based system” (i.e. a heavier reliance on...
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. Here's a rundown of what we've been working on this week.