This week we are bringing you news about states seeking revenue-Alaska, South Dakota, and Utah all weigh the creation of or increases to state personal income taxes; the need, and in some cases the will, for transportation funding in West Virginia, Indiana, Montana, and Louisiana; and revenue shortfalls in Florida, Ohio, Oregon, and Kansas.
With united Republican control of the White House and Congress, 2017 may be a year that ushers in huge tax cuts for the wealthy and corporations. Both President-elect Trump and congressional Republicans have released plans for comprehensive tax reform, and one of the many areas where the two plans agree is repealing the estate tax. Such legislation would widen wealth inequality and persistent deficits.
Researchers have estimated that the wealthiest 1 percent of Americans hold 42 percent of the nation's wealth, up from 28 percent in 1989. The estate tax works to mitigate inequality by ensuring that large accumulations of wealth aren't passed from generation to generation without being taxed. There is no good reason an inheritance should result in a tax-free windfall to heirs while people who earn their wealth are taxed in full.
Tax Justice Digest: Bartering tax breaks for jobs, repatriation, tax breaks for seniors, and other state news
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.
Incoming Treasury Secretary Steven Mnuchin made waves this week with his announcement that the tax plan proposed by his boss, President-elect Donald Trump, will not cut taxes for the wealthy, promising "no absolute tax cut" for upper-income families.
This statement flies in the face of every available analysis of Trump's tax plan, from the truly huge high-end tax cuts Trump proposed during the 2015 primary battle to the trimmed-down high-end tax cuts he proposed earlier this fall.
This week we are bringing you news about transportation and infrastructure funding in Indiana, California, and South Carolina, next steps for New York's millionaire's tax, moves toward comprehensive tax expenditure review in Ohio, continuation of the income tax reciprocity agreement between New Jersey and Pennsylvania, and efforts for tax change in Nebraska and Arkansas.
An updated brief from ITEP finds that, in spite of their popularity, tax breaks for the elderly are often a poorly targeted, costly commitment for states that may not be accomplishing their desired effect. In many cases, wealthy elderly taxpayers reap the majority of the benefits from state income tax breaks designed for older adults. Further, with the nation's aging population, these tax breaks threaten to become unaffordable in the long-run.
"If doling out tax incentives is a shopworn strategy, giving these tax breaks to bad actors such as United Technologies should be seen as an outright capitulation by the incoming Trump administration, rather than as a savvy deal."
The Carrier Corporation Tuesday announced that it will not fully follow through on its threat to move 2,100 jobs from Indiana to Mexico, and instead will keep 1,000 of those jobs in the U.S.
The move comes in the wake of "wide-ranging policy talks" between representatives of the incoming Trump administration and Carrier officials. The New York Times reports that Carrier's reward for this apparent change of heart will include new tax incentives from the state of Indiana and a commitment from the Trump administration to aggressively pursue federal corporate tax reform in 2017.
President-elect Donald Trump has placed a heavy emphasis on the need to rebuild the nation's infrastructure, a plan that conceivably could secure bipartisan support with the right approach.
However, as outlined in a new ITEP issue brief, paying for infrastructure investments is a divisive topic, and there are copious reasons that Trump's plan should be met with a healthy dose of skepticism.
After years of false starts, the passage of a major tax legislation package next year is looking increasingly likely given the election of Donald Trump and unified Republican control of Congress. While lawmakers and commentators agree that something called "tax reform" will move next year, a number of fundamental questions have been left unanswered as to what legislation might look like. Below we review the most critical outstanding questions on the shape tax legislation might take in 2017.
Will tax reform be revenue-neutral or a substantial tax cut?
Will tax reform be passed on a bipartisan basis or through budget reconciliation?
How will lawmakers reform the international corporate tax system?
Last summer, Indiana-based Carrier Corp. incurred bipartisan wrath after announcing it would move 2,100 jobs to Mexico in 2017. Now, the Wall Street Journal reports that representatives of the incoming President-elect Trump's administration are engaging in "wide-ranging policy talks" with executives of United Technologies Corporation (UTC), Carrier's parent company, with a focus on reducing its federal corporate income tax rate.
Trump has pledged repeatedly to keep UTC and Carrier from offshoring jobs, and it now appears that UTC may want a lower tax rate as the price for complying with this demand. Saving middle-class jobs is an important and laudable goal. But policymakers should approach such consequential discussions with all the facts. And the fact is that Carrier's parent company already pays a relatively low effective tax rate.