Few proposals generate as much agreement among economists and tax reform advocates as expanding state and local sales tax bases to include purchases of personal services. While sales taxes typically apply quite broadly to tangible goods, purchases made in the nation's growing service sector are all too often left out of the tax base. As things currently stand, most states do not collect tax on sales of haircuts, carpet cleaning, massages, and swimming pool maintenance, to name just a few. And as we explain in an updated policy brief, these wide ranging exemptions make sales taxes less adequate, less sustainable, and less fair.
The tax-related proposals in the recently released Democratic Party platform represent a meaningful victory for progressives. From advocating for the expansion of poverty-reducing tax credits to condemning corporations that avoid taxation by stashing profits offshore, the provisions outlined in the platform would improve our tax system for ordinary Americans while holding tax-dodging corporations accountable. In terms of tax justice, this year's Democratic platform is one of the party's most progressive in modern history.
As the eyes of the U.S. turn to the Democratic National Convention this week, many people will be getting their first look at Hillary Clinton's recently announced running mate, Sen. Tim Kaine. As one of Virginia's current senators and the state's former governor, Tim Kaine has supported progressive tax reform efforts, though he has occasionally taken stances at odds with those efforts--including the repeal of Virginia's estate tax in 2006.
Kaine's most recent tax positions appear to be largely in sync with the proposals of the Clinton campaign. Like Clinton, he has favored legislation that would close the carried interest loophole as well as the corporate inversion loophole. Furthermore, Kaine has called for raising roughly one trillion dollars in new revenue over 10 years, which is relatively in line with Clinton's call for about $1.5 trillion in new revenue.
This week, the SEC closed its comment period for an exposure draft, which is part of its review of disclosure requirements. CTJ, in written comments, urged the SEC to mandate greater corporate transparency by requiring companies to publically disclose all their subsidiaries. Such a requirement would prevent companies from gaming which subsidies they disclose, and it would provide the public and investors with a clearer picture of how public companies operate.
Another critical failure in SEC disclosure requirements is that companies can avoid specifying how much they owe in U.S. taxes on their "offshore" income by claiming that providing this calculation is not practicable.
A new report by Institute for Policy Studies (IPS) finds that the U.S. government is failing to meet clean energy goals due in part to opposition from public utility companies, which account for a third of U.S. greenhouse gas emissions. What's more, federal and state tax policies that create inefficient business incentives lie at the heart of the problem.
The combined pretax income of 40 profitable public utility companies was $42.95 billion in 2015; however, these companies paid only $1.6 billion in federal and state corporate income taxes. From 2008 to 2012, these 40 utility companies had an effective tax rate of 2.9 percent, the lowest of any industry. The statutory federal tax rate on corporations is 35 percent. If utility companies paid the same effective federal rate as the retail sector, 29.6 percent, and paid the full state rates, the federal and state governments would have a total of $14.06 billion in additional revenue.
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.
The Republican Party's official 2016 platform, released on Monday, is wholly out of touch with reality. The plan would exacerbate the dual problems of rising inequality and continuous annual federal budget deficits with tax cuts that essentially put more money into the pockets of wealthy people and corporations and reduce federal revenues.
The theme of day two of the Republican National Convention was "Make America Work Again," but there was mostly fire and brimstone and little concrete discussion about how to boost workforce participation rates, create more good-paying jobs, and ensure American workers have the skills to access those good-paying jobs.
State Rundown 7/21: Tax and Budget News in Alaska, North Dakota, Massachusetts, Mississippi, and Cleveland, Ohio
This week we bring you tax and budget news in Alaska, North Dakota, Massachusetts, Mississippi, and Cleveland, Ohio. Be sure to check out the What We're Reading section for a grab bag of tax-related op-eds, new research and even a mention of Pokémon Go. Thanks for reading the Rundown!
The good news: Pennsylvania lawmakers took steps to fund state services, supporting an increase in basic education and likely guarding the state from a credit downgrade.
The bad news: rather than doing so through broad-based tax changes, they opted to rely on revenue-raisers that fall hardest on the average Pennsylvanian.