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Author Topic: Tax Policy  (Read 46436 times)
Crafty_Dog
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« Reply #550 on: January 03, 2014, 10:54:55 AM »

13 Tax Hikes in 2013

Now that 2013 is history, here's a recap of some of the taxes that went up last year: Payroll tax (from 4.2% to 6.2%); payroll taxes on those earning more than $250,000 rose another 0.9% on top of the other rate increase; top marginal rate (from 35% to 39.6%); personal exemptions began phasing out for couples earning more than $300,000; ditto for itemized deductions; capital gains and dividends tax increased from 15% to 20%; the death tax on estates larger than $5 million rose from 35% to 40%; taxes on business investment increased; the ObamaCare surtax of 3.8% kicked in for those earning more than $250,000 per year; medical device manufacturers now pay 2.3% excise tax on their products; the deduction for medical expenses was reduced; the corporate deduction for Medicare Part D subsidy expenses was eliminated; and health benefits deductions for corporate executives were limited.
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Crafty_Dog
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« Reply #551 on: January 06, 2014, 10:50:24 AM »

http://www.nytimes.com/2014/01/06/opinion/abolish-the-corporate-income-tax.html?nl=todaysheadlines&emc=edit_th_20140106&_r=0
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G M
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« Reply #552 on: January 06, 2014, 10:55:53 AM »

No kidding

http://www.telegraph.co.uk/news/worldnews/francois-hollande/10546181/Francois-Hollande-concedes-taxes-too-heavy-in-admission-that-annoys-all-sides-in-France.html

"the unpopular socialist president - weakened by tax increases, rising unemployment and a shrinking economy..."

They got one too!
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ccp
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« Reply #553 on: February 15, 2014, 03:37:17 PM »

Well I was mad when I read about the Olympic medal tax.  I thought just another example of government ripping off people.   But now I am more mad @ the response.  The "notion" [using the bamster's favorite word] that suddenly Olympians should not have to pay what most everyone else has to pay is illogical, unfair and again manipulating tax codes for political gain.

And for the records.  Olympians aren't going to the Olympics to represent the US.  Maybe is was that way 100 years ago.  Now they all go to cash in.  Nothing wrong with that.  But why cannot I not make a stock gain without being ripped off.  Why do I have to pay taxes on everything?   

This whole thing wherein politicians pick and choose who pays and who doesn't and how much has got to go.

****February 13, 2014, 04:29 pm
WH: Don't tax Olympians on medals
   
 By Justin Sink

The White House said Thursday that President Obama still believes American Olympians shouldn’t have to pay income taxes on the medals they win.

“The president believes we should support efforts to ensure that we’re doing everything we can to honor and support our Olympic athletes who have volunteered to represent our nation at the Olympic Games,” White House spokesman Bobby Whithorne told Yahoo News. “We still support this effort.”

During the 2012 presidential campaign, the White House said those who medaled in the summer games should be exempt from taxes on their winnings.
“If it were to get to his desk, he would support it," White House press secretary Jay Carney said of proposed legislation.

But a bill by Sen. Marco Rubio (R-Fla.) never moved in the Senate.

"Our tax code is a complicated and burdensome mess that too often punishes success, and the tax imposed on Olympic medal winners is a classic example of this madness," Rubio said in 2012. "Athletes representing our nation overseas in the Olympics shouldn't have to worry about an extra tax bill waiting for them back home."

U.S. athletes are paid cash prizes when they place in Olympic events: $25,000 for a gold, $15,000 for a silver and $10,000 for a bronze.

How much athletes pay back to Uncle Sam will depends largely on what other income they report for the year. But according to an analysis by the anti-tax group Americans for Tax Reform, gold-medal winners in the top tax bracket could see nearly $10,000 of their $25,000 winnings taken by the government.

Even athletes in the lowest tax bracket could fork over as much as $2,500 on a gold medal prize, $1,500 on a silver and $1,000 for a bronze.

Three Republican lawmakers — Reps. Blake Farenthold (R-Texas), Walter Jones (R-N.C.) and Pete Sessions (R-Texas) — proposed a bill similar to Rubio's before this year's games, but it has also failed to gain traction.
.

Read more: http://thehill.com/blogs/blog-briefing-room/news/198372-white-house-dont-tax-olympians-on-medals#ixzz2tQdVmVUp
Follow us: @thehill on Twitter | TheHill on Facebook
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Crafty_Dog
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« Reply #554 on: March 01, 2014, 06:07:22 PM »

http://madworldnews.com/couple-who-found-10-million-in-gold-coins-gets-another-surprise-and-its-not-a-good-one/
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DougMacG
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« Reply #555 on: March 03, 2014, 12:55:33 PM »

Camp's proposal is not exactly what I am looking for, but I respect him for stepping forward with a real plan.  John E. Sununu comments on it in the Boston Globe today.

Tax reform: Ski it if you dare
By John E. Sununu    March 03, 2014
 
When David Camp, chairman of the House Ways and Means Committee, released tax reform legislation last week, the first thing that sprang to my mind was Mount Washington’s Tuckerman Ravine. Looming just 2 miles or so from the Pinkham Notch visitor center, the greatest natural snow bowl east of the Mississippi beckons thousands of hardened skiers every year. The ravine’s 50-foot snow pack entices them with the promise of beauty and exhilaration. For those who conquer it, there’s a sense of achievement to which nothing else compares.

In Washington, the siren of tax reform calls out to devoted policy wonks in the same way. Designing a simpler tax system, like skiing the ravine, allows suitors to take on as much as they dare: corporate taxes, personal income taxes, or the entire 75,000-page code. At Tuckerman, the higher you climb, the steeper the grade. The ultimate thrill is reserved for those willing to attack the sheer face from the snowfields above.

Approaching the steep headwall from that relatively flat terrain, the slope falls away so abruptly that skiers cannot possibly see what awaits below — until they pass the point of no return. Tax seminars, hearings, and speeches are the Washington version of those snowfields. Everyone gets the opportunity to posture, talk about what could be, and pretend they know what lies over that horizon. But as Camp found out last week, talking and doing are different things. Once you crest the lip and are clinging to a 55-degree slope, the mountain becomes a lonely place.

Camp’s loneliness has nothing to do with ability. The Michigan Republican is an outstanding congressman with an effective, inclusive leadership style. But the “discussion draft” he made public contains something that makes most members of Congress uncomfortable: details. Every deduction, credit, exemption, and loophole makes the tax code more complicated, and simplification demands that they must go. Meaningful tax reform requires trade-offs. But when confronted with hard choices, most members of Congress start looking for a way to bail out.

Camp’s bill demonstrates the courage of his convictions. Rafts of deductions are capped, phased out, or eliminated altogether. The bill reduces the number of personal income tax brackets from seven to three: 10 percent, 25 percent, and an additional surcharge on income over $400,000. The corporate tax rate would drop from 35 percent today — one of the highest in the world — to 25 percent.

Wisely, Camp designed his bill to be revenue-neutral. It doesn’t attempt to raise or cut tax collections overall. Perhaps more important, it is “distributionally” neutral; he makes no effort to raise or lower taxes for the rich, the poor, or the middle class. This debate should be about how we pay, not how much — and about making the code and our entire economy more efficient, productive and fair.

Avoiding class warfare rhetoric makes for a smoother trail, but those who benefited from the code’s complexity will still be unhappy. Every wrinkle in the current tax code has its own constituency. Farmers, ranchers, teachers, caregivers, and gamblers — an endless list — are singled out within the law. Everyone loves the idea of simplicity, but getting there will require that we think of ourselves as taxpayers, not part of a special group.

To date, few in Congress have been willing to support the bill publicly. The more narrow-minded have clung to their opposition to the bill’s “bank tax,” which was designed to pay for future bailouts under the Dodd-Frank regulations passed in 2010. If that’s the biggest flaw they can find, fine. Drop that piece and get on with it. At least we’ll learn who has genuinely committed to reform and who just wants to pay lip service.

Most important, everybody needs to realize no one can possibly agree with every element in such a comprehensive bill. You need to believe that the fundamental economic fairness that comes from taking the plunge makes it worth the trouble . . . and then push over the edge.

A good friend once described his favorite Tuckerman moment, watching an enthusiastic father encourage a group of young teenagers to take on the headwall. “Come on guys!” he waved while crossing the upper lip. Catching an edge on his crucial first turn, he bounced and slid like a rag doll several hundred yards to the floor of the ravine. The young gaggle behind followed without incident, no worse for having witnessed the spectacle.

Camp’s tax reform effort is unlikely to pass, but his willingness to take the plunge with honesty and substance deserves enormous credit. Most important, if he inspires just a few to follow his courageous path, we may remember his pioneering run for a long time.

John E. Sununu, a former Republican senator from New Hampshire, writes regularly for the Globe.
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DougMacG
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« Reply #556 on: April 16, 2014, 12:05:11 PM »

https://www.facebook.com/photo.php?fbid=706895529372881&set=a.118181601577613.18975.103806706348436&type=1&theater

"I know that I do not know whether or not my tax returns are accurate."

Suggests tax simplification!
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Crafty_Dog
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« Reply #557 on: April 21, 2014, 07:13:41 AM »

How to Energize a Lackluster Recovery
Allowing the full and immediate deductibility of capital investment would spur growth and raise wages.
By Edward P. Lazear
April 20, 2014 5:35 p.m. ET

April always brings complaints about the pain of paying taxes—and the complaints are justified. According to the Bureau of Economic Analysis, over 30% of U.S. gross domestic product is taxed away to fund federal, state and local governments. Tax compliance costs are also large, estimated to be around 1% of GDP.

The hidden cost of the tax system is the biggest of all—namely, the slower economic growth that results from taxing investment, which impedes the formation of capital and hinders productivity and wage growth. An easy way to remove the impediment to growth is to move toward a consumption tax by allowing the full and immediate deductibility of capital investment.

The argument rests on two points. First, consumption taxes are better for economic growth than are income taxes. Second, allowing full expensing (immediate deductibility) of investment turns the current tax system into a consumption tax.

Consumption taxes are better for economic growth because they create stronger incentives to save and invest than do income taxes. Under an income tax, a person who consumes what he earns immediately is taxed once, specifically on the earnings that he receives in that year. If instead he invests what he earns, the interest on that investment, which is compensation for deferring consumption, is also taxed. This pushes him toward consuming more now and saving less.


The reduced incentive to save that results from taxing returns drives up interest rates and retards investment. Incentives to invest would be improved if the returns were untaxed. By contrast, a consumption tax does not tax the returns to investment. It taxes only once, at the time that actual consumption occurs. Moving to a consumption tax eliminates the tax on returns to investment and improves investment incentives.

Allowing investment expenses to be fully and immediately deductible turns an income tax into a consumption tax, but the logic is subtle. All of an economy's output is used to produce either current consumption or investment goods. If all income, which must equal output, is taxed, then both consumption and investment are taxed. But if we tax only the part of output that is not investment by allowing investment expenditures to be deductible, all that remains is consumption so only consumption is taxed.

There is no need for any complicated new tax laws or bureaucracies to make this change. Investments in plants, equipment, R&D and even human capital would be deductible from profits when paying taxes, and the deduction could be used now or against future or past tax liabilities.

The potential benefits of moving away from taxing investment to a consumption tax are well documented. A 2005 Tax Advisory Panel appointed by President George W. Bush estimated from Treasury data that moving to a consumption tax by removing taxes on investment would result in a 5%-7% increase in GDP. (Its scoring included lower and flatter individual and corporate rates, though expensing accounted for most of the gain.) A 2001 study in the American Economic Review by David Altig, Alan J. Auerbach and others estimates that GDP would rise more than 9% by moving to full expensing of investment spending (with a flat tax).

Taxing investment reduces after-tax returns to investing. Investors care about after-tax returns and a tax policy that lowers investment returns is especially harmful to long-term economic growth. For example, a 2001 report by the Organization for Economic Cooperation and Development, "Tax Policy Reform and Economic Growth," found that corporate taxes are the most harmful type of tax for economic growth, followed by personal income taxes and then consumption taxes, with recurrent taxes on immovable property being the least harmful tax.

Capital taxation introduces the most distortions because capital can move across international borders easily. If one country overtaxes investment, the marginal investor will move money to a country that treats investment more favorably. It is more difficult for labor to move so taxing labor has fewer adverse incentives. Finally, land is truly locked in and land taxes are the least problematic from an economic efficiency standpoint.

Lower corporate tax rates is a move in the right direction, but it is not as effective in stimulating investment as is full-expensing. The bang-for-the-buck was estimated by Treasury to be about four times as high for full-expensing than for lowering rates. The reason? Lowering corporate rates reduces taxes for all capital, old and new alike. An investment that was made 10 years ago gets the benefit of lower rates as does one that is made tomorrow. But full expensing applies only to new investment because it is only investment going forward that is deductible. As a result, all of the power of reducing taxes works for new investment in the case of full expensing.

Full expensing will likely be labeled a "trickle down" policy that will not help the working American. This is unfortunate because labor would benefit greatly. Investment is crucial for increasing labor productivity and higher productivity is necessary for higher wages. Productivity and wages move together. Without productivity increases wages cannot grow.

There are many changes that would improve the efficiency of the tax code, but cutting the tax on investment heads the list.

Mr. Lazear, chairman of the President's Council of Economic Advisers from 2006-09, is a professor at Stanford University's Graduate School of Business and a Hoover Institution fellow.
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G M
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« Reply #558 on: April 21, 2014, 03:21:08 PM »

Why would we need to do anything? The economy is back! Just ask Wesbury...
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DougMacG
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« Reply #559 on: April 23, 2014, 10:03:05 AM »

How to Energize a Lackluster Recovery
Allowing the full and immediate deductibility of capital investment would spur growth and raise wages.
By Edward P. Lazear
April 20, 2014 5:35 p.m. ET

April always brings complaints about the pain of paying taxes—and the complaints are justified. According to the Bureau of Economic Analysis, over 30% of U.S. gross domestic product is taxed away to fund federal, state and local governments. Tax compliance costs are also large, estimated to be around 1% of GDP.

The hidden cost of the tax system is the biggest of all—namely, the slower economic growth that results from taxing investment, which impedes the formation of capital and hinders productivity and wage growth. An easy way to remove the impediment to growth is to move toward a consumption tax by allowing the full and immediate deductibility of capital investment.

The argument rests on two points. First, consumption taxes are better for economic growth than are income taxes. Second, allowing full expensing (immediate deductibility) of investment turns the current tax system into a consumption tax.

Consumption taxes are better for economic growth because they create stronger incentives to save and invest than do income taxes. Under an income tax, a person who consumes what he earns immediately is taxed once, specifically on the earnings that he receives in that year. If instead he invests what he earns, the interest on that investment, which is compensation for deferring consumption, is also taxed. This pushes him toward consuming more now and saving less.


The reduced incentive to save that results from taxing returns drives up interest rates and retards investment. Incentives to invest would be improved if the returns were untaxed. By contrast, a consumption tax does not tax the returns to investment. It taxes only once, at the time that actual consumption occurs. Moving to a consumption tax eliminates the tax on returns to investment and improves investment incentives.

Allowing investment expenses to be fully and immediately deductible turns an income tax into a consumption tax, but the logic is subtle. All of an economy's output is used to produce either current consumption or investment goods. If all income, which must equal output, is taxed, then both consumption and investment are taxed. But if we tax only the part of output that is not investment by allowing investment expenditures to be deductible, all that remains is consumption so only consumption is taxed.

There is no need for any complicated new tax laws or bureaucracies to make this change. Investments in plants, equipment, R&D and even human capital would be deductible from profits when paying taxes, and the deduction could be used now or against future or past tax liabilities.

The potential benefits of moving away from taxing investment to a consumption tax are well documented. A 2005 Tax Advisory Panel appointed by President George W. Bush estimated from Treasury data that moving to a consumption tax by removing taxes on investment would result in a 5%-7% increase in GDP. (Its scoring included lower and flatter individual and corporate rates, though expensing accounted for most of the gain.) A 2001 study in the American Economic Review by David Altig, Alan J. Auerbach and others estimates that GDP would rise more than 9% by moving to full expensing of investment spending (with a flat tax).

Taxing investment reduces after-tax returns to investing. Investors care about after-tax returns and a tax policy that lowers investment returns is especially harmful to long-term economic growth. For example, a 2001 report by the Organization for Economic Cooperation and Development, "Tax Policy Reform and Economic Growth," found that corporate taxes are the most harmful type of tax for economic growth, followed by personal income taxes and then consumption taxes, with recurrent taxes on immovable property being the least harmful tax.

Capital taxation introduces the most distortions because capital can move across international borders easily. If one country overtaxes investment, the marginal investor will move money to a country that treats investment more favorably. It is more difficult for labor to move so taxing labor has fewer adverse incentives. Finally, land is truly locked in and land taxes are the least problematic from an economic efficiency standpoint.

Lower corporate tax rates is a move in the right direction, but it is not as effective in stimulating investment as is full-expensing. The bang-for-the-buck was estimated by Treasury to be about four times as high for full-expensing than for lowering rates. The reason? Lowering corporate rates reduces taxes for all capital, old and new alike. An investment that was made 10 years ago gets the benefit of lower rates as does one that is made tomorrow. But full expensing applies only to new investment because it is only investment going forward that is deductible. As a result, all of the power of reducing taxes works for new investment in the case of full expensing.

Full expensing will likely be labeled a "trickle down" policy that will not help the working American. This is unfortunate because labor would benefit greatly. Investment is crucial for increasing labor productivity and higher productivity is necessary for higher wages. Productivity and wages move together. Without productivity increases wages cannot grow.

There are many changes that would improve the efficiency of the tax code, but cutting the tax on investment heads the list.

Mr. Lazear, chairman of the President's Council of Economic Advisers from 2006-09, is a professor at Stanford University's Graduate School of Business and a Hoover Institution fellow.

Important and interesting work. I can't tell if he is suggesting raising tax rates on consumption in exchange for lowering taxes on capital, or is he simply saying these taxes are self defeating on the economy.

A piece that I found recently demonstrates that taxes on capital are a net-negative on the economy and on tax collection:  http://www.minneapolisfed.org/research/qr/qr2331.pdf

That said, we are not headed politically toward anything that looks like zero tax rates for investment income.  Every Republican contender for the Presidency in 2012, from Herman Cain to Jon Huntsman to Mitt Romney, had an aggressive proposal for lowering the tax on capital that would have grown the economy and increased the demand and pay for labor.  They all lost and we ended up instead with much higher tax rates on capital with a diminishing demand for labor.  The lesson to learn from the political failure of good ideas is perhaps unknown at this point.

Consumption taxes:  Heaping a regressive federal consumption tax on top of a revenue source relied on heavily by the states is not a good idea either.  The Herman Cain 9-9-9 plan was bold and tempting - and far better than our current system.  But it wasn't going to happen.

Still the professor is right.  We need people to know that the war on wealth and the taxes that prevent capital movement and formation mostly result in keeping more people from getting wealthy.  Those that were already wealthy survive just fine.

Real tax reform needs to done in conjunction with spending and entitlement reforms that make government's load on the economy smaller. 
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