More Recent Tax Foundation News: Page 13
A new Tax Foundation Fiscal Fact, "States Should Avoid Sales Taxes on Nonprofit Hospital Purchases," provides a quick look at how each state taxes purchases made by nonprofit hospitals. While income tax exemptions for nonprofit hospitals may not be justified under the principles of sound tax policy, sales tax exemptions for the purchase of inputs are. Only seven states exempt inputs purchased by all hospitals, and six states do not exempt inputs purchased by nonprofit hospitals.
States seeking a neutral, transparent sales tax system should exempt all business-to-business transactions and impose sales tax only on final retail sales of goods and services. Because many states continue to impose sales tax on business-to-business inputs, examining the tax treatment of a variety of such transactions can provide insight into the neutrality and transparency of a state's overall tax system. For many states, exempting inputs from the sales tax should be a part of any tax reform effort.
Click here to read the Fiscal Fact. Click here for more on sales taxes.
Tax Freedom Day, the day on which Americans have earned enough money to pay all their federal, state and local taxes for the year, will fall on April 23 this year, according to the Tax Foundation's annual calculation using the latest government data on income and taxes. That's three days earlier than in 2007. Stimulus rebates and a projection of slow growth in 2008 are the principal reasons for the earlier celebration.
The new study, Tax Foundation Special Report No. 160, "America Celebrates Tax Freedom Day," by Tax Foundation senior economist Gerald Prante and Tax Foundation president Scott Hodge, also compares tax payments to other major consumer expenditures, traces the course of America's tax burden since 1900, examines the composition of today's tax burden by type of tax, and calculates a Tax Freedom Day for each state.
Read the full report. Read the news release. View the data.
Today Maryland Governor O'Malley signed into law the final piece of the state's major tax overhaul, an eighth tax rate and bracket on personal income. A new Tax Foundation Fiscal Fact, "Maryland Flouts Regional Tax Competition with Historic Tax Hike," points out that middle-income people in Maryland were and still are paying higher income taxes than in any border state, and that in only five U.S. states—California, Hawaii, Iowa, Maine and Oregon—could a couple with $75,000 in taxable income be in a higher tax bracket than an average Maryland couple. The Maryland rate for middle-income workers is about 7.5 percent (4.75% state plus 2.73% local).
"We see no record of any state having raised all three of its major tax rates in one fell swoop, but Maryland has done just that," said Bill Ahern, referring to the hikes in the sales tax, the corporate income tax, and the personal income tax that received its final change today.
Click here to read the Fiscal Fact. Click here for the news release. Click here for more on Maryland taxes.
Since 1937 the Tax Foundation has monitored America's tax policies, and our research and educational efforts on the economic impact of government policy have stood the test of time. Our annual calculation of Tax Freedom Day® remains one of the most widely used tools for illustrating America's tax burden to media professional, legislators, and—most importantly—taxpayers. As Tax Freedom Day® approaches, please let us remind you that none of our work, including Tax Freedom Day®, would be possible without the generosity of our supporters. By making a tax-deductible investment in the Tax Foundation, you become a valuable partner in helping to assure that our research and publications continue to shape sound tax policy in America—for the good of future generations of taxpayers, as well as our own.
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A recent Tax Foundation Fiscal Fact analyzes two new housing credits proposed by Sens. Johnny Isakson (R-GA) and Debbie Stabenow (D-MI). Faced with a choice between the two bad housing credits, the Senate merged the two and added several more unwise housing tax incentives.
"The bill of housing incentives going to the floor of the Senate today is a panicky effort to artificially keep the housing bubble from popping," commented Gerald Prante, senior economist at the Tax Foundation. "Would it have been wise in 2001 for the government to have given tech stock investors a huge tax credit for having bought overvalued stock during that bubble?"
Sen. Isakson had proposed a $5,000 tax credit that could be claimed for three years by buyers of homes that are vacant, occupied but in default, or foreclosed on. Sen. Stabenow had proposed a refundable, one-year credit of $6,000 ($3,000 for singles) for first-time homebuyers. The bill sent to the floor includes a $7,000 one-year credit for buyers of homes in foreclosure. On top of that provision, the Senate has added a "standard property tax deduction" of $1,000 for couples or $500 for singles.
Click here for the news release. Click here for the full study, "More Bad Ideas for Housing Tax Credits."
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