Archives For tax policy

What is important is that the financial sector, which bears a disproportionate share of the blame for the deep recession that is still affecting employment and growth, share in the costs of insuring against future bailouts and be forced to restructure itself to better insulate the rest of the economy from excessive risk.

-Jeremy Scott, Forbes

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A tax, which would cost you $1 for every 800 cups of coffee you bought, does not seem that bad at all. Continue Reading…

Screen Shot 2013-09-04 at 1.25.34 PMA New Department of Justice (DOJ) announcement is the latest in a series of events that suggest the federal government is serious about backing off enforcement of its marijuana laws. Continue Reading…

“The IRS sucks; Obama’s handling of the IRS sucks; Congress sucks (but not because they’re sucking on tax reform); wealth should be re-distributed, but it can’t be through a tax policy that re-distributes the wealth; I’m definitely paying too much in taxes, but I think my tax rate is fair.. did I just contradict myself?; oh well, I actually don’t care that much; you see, I don’t know much about taxes, but I definitely don’t like them!”

If you’re confused, you should be. If you think this is a joke, it’s not (not really, at least). Let’s break America’s sentiment down, phrase by phrase:

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Maybe two wrongs can make a right.

Internal Revenue Service watchdog Russell George said there is new evidence to suggest that Tea Party affiliated groups were not the only ones subject to cherry-picking by IRS employees for extra scrutiny based on their names.

George, a Republican, told a congressional committee on Thursday that the IRS also used “progressives” as a search term to flag organizations for added review in their applications for tax-exempt status. The news is the latest twist in the three-month-old controversy plaguing the IRS.

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A recent report to Congress revealed that effective tax rates (ETRs) for large corporations were lower than the statutory rates– a lot lower.

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The Supreme Court’s ruling that section 3 of the Defense of Marriage Act (DOMA) is unconstitutional should be good news for tax paying same-sex couples; but, they, along with their employers, are left in a cloud of uncertainty as to how the IRS and other tax authorities will implement the changes.

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The U.S. Senate’s Permanent Subcommittee on Investigations released a 40-page bipartisan report yesterday unveiling that Apple has been using legal loopholes in the United States and Ireland to skirt additional taxes. Senate investigators are reporting that Apple sheltered $44 billion in offshore, taxable income between 2009-2012.

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It’s no surprise that acting IRS Commissioner Steven T. Miller submitted his resignation this week. Many were calling for his head, others for the obliteration of the agency altogether. Miller’s departure is the first of many slaps on the wrist for an agency struggling to wipe away the stain on its already fragile reputation.

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Corporate tax evasion is a growing global phenomenon. The amount of money corporations stash in tax havens is greater than the size of the U.S. economy. What’s more absurd, 18,857 companies call a five-story building in the Cayman Islands “home.”

The U.S. alone stockpiles nearly $2 trillion foreign tax shelters to evade some of the highest effective tax rates in the world. Check out the following infographic on tax havens, which outlines some shocking figures concerning the state of foreign tax avoidance.

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New Hampshire: “Live free or die.”

As the only state without a sales or income tax, New Hampshire appears to live up to its motto.  But the state still has a functioning government and department of revenue, so the question bodes: Is New Hampshire a model for a tax-free society or is it just disguised as one?

First, let’s see how New Hampshire stacks up to other states, 1st being the best, 50th being the worst.

In a CNBC measure of competitiveness, developed with input from business groups including the National Association of Manufacturers and the Council on Competitiveness, states received scores based on 10 broad categories relevant to living and doing business there.  Here’s How New Hampshire ranked:

Overall Cost of Business Workforce Quality of Life Economy Infra & Transp. Tech. & Innovation Education Business Friendliness Access to Capital Cost of Living
19 35 44 1 34 46 26 8 2 19 40

Overall, New Hampshire ranked slightly above average.  On the good side, they scored first for quality of life and second for business friendliness.  On the other hand, they are in the bottom 10 for cost of living and near last in infrastructure/transportation – both of which could be the result of a crippled revenue stream.

Now, about all of this no tax stuff.  If you thought New Hampshire had no taxes period, you’re mistaken.  In fact, other states actually have smaller tax burdens when considering income, property, sales and auto taxes together.  In a report on major tax burdens for the largest city in each state, Manchester, New Hampshire ranked 31st for a hypothetical family of three earning $50,000/year.  The cumulative tax rate for this family was estimated to be 8.8%, just a few ticks lower than the national median of 9.4%.

Below is a list of all New Hampshire taxes:

So it’s not that New Hampshire doesn’t have taxes, they’re just better at hiding it.  Their property tax, for example, is the third-highest in the country.

Here’s another piece to the puzzle:  One reason New Hampshire can afford it’s modestly low tax rates to begin with is because their citizens are some of the wealthiest in the country.  According to data from the US Census Bureau, the 2008-09 average median income in New Hampshire was the highest in the country at $68,187.  In 2010-11, that figure dropped to $67,308, but was just a couple hundred dollars behind Maryland’s top national average of $67,551.

With higher incomes, overall tax rates can be lower; however, note that the state’s revenue per capita is still modest, according to the National Tax Foundation.  In 2011, New Hampshire’s revenue per capita was $4,746 – the 40th lowest and below the national average of $5,323.

In sum, New Hampshire’s overall tax burden is relatively low, but because their population has above average income and auto and property taxes are high, taxes paid per capita are normal, allowing the government to function without collecting sales or income tax.

200px-Free_State_Project_Logo.svgOne more thing: New Hampshire relies heavily on tourism as a source of revenue.  While there is no uniform sales tax, the state does collect tax on certain items including restaurant food, gasoline and hotel rooms – all things that tourists spend a lot of money on.

The tax portrait of New Hampshire isn’t as libertarian as its made out to be, but that doesn’t stop its attraction to some of the most die-hard anti-tax people in the country.  As the Free State Project, an “enthusiastic legion of libertarian activists,”  says, “choose New Hampshire, where freedom happens first.”

If you want to learn more about New Hampshire’s libertarian culture and vision of a no-tax society, consider attending the annual Porcupine Fest this summer.   Continue Reading…