More Recent Tax Foundation News: Page 16
Senator Clinton and several other presidential candidates have taken up billionaire Warren Buffett's call for heavier taxes on capital gains and dividends, possibly even taxing them as wages. A new Tax Foundation primer on capital gains and dividend taxation shows that retirees and high-income workers will bear the brunt of any new taxes on investment, and those people are concentrated in a handful of states.
While the residents of California, New York and Florida earn 18 percent of the nation's wages, they earn 36 percent of the nation's capital gains and dividends. Some smaller states like Wyoming, Nevada, Connecticut and Arizona also have very high investment income per tax return, either because many retirees live there, as in Arizona, or because of pockets of high-income people, as in Jackson Hole, Wyoming.
Read the full report. View the data.
Rising even faster than property taxes, cigarette taxes are harder on the poor than any federal tax, according to two new publications about the Congress's current effort to raise the federal cigarette tax.
Because the Senate is currently planning to raise $35 billion more in tax revenue, author Gerald Prante compares that tax source to six other federal taxes. All the others are much easier on the poor.
"The burden of the proposed cigarette tax hike on the lowest-earning 20 percent of households is 37 times heavier than it would be if the government raised the money with the federal income tax," asserts Prante. "Put another way, the proposed cigarette tax hike will hit the poor with the same force as cutting the Earned Income Tax Credit (EITC) by one quarter."
Author Curtis Dubay also debunks the argument advanced by some that the tobacco tax has lain dormant for so long that it is overdue for a raise.
Read State Tobacco Tax Rates Have Skyrocketed Since Last Federal Tax Increase. Read Options for Funding SCHIP Expansion: Cigarette Taxes Least Defensible Alternative.
Almost 60 percent of U.S. children and many childless adults would qualify for government-provided health insurance under an expanded State Children's Health Insurance Program (SCHIP) if plans popular on Capitol Hill become law, according to a new Tax Foundation study of poverty levels.
"Gov. Spitzer in New York has just proposed that the program there purchase health insurance for families that earn 400 percent of the poverty level, over $82,000 for a family of four," said study author Gerald Prante. "New York is an outlier in this, but even the more popular 300-percent threshold would convert a program for low-income people into a program for middle-income people, possibly undermining support for the program."
Read the full study. Read the news release.
A new Tax Foundation Fiscal Fact ranks the United States' individual income tax rates relative to other countries' rates and analyzes the effect that a repeal of the 2001 tax cuts and an AMT fix would have on our place in the international rankings.
The 2001 tax cuts that lowered U.S. individual income tax rates were part of the broader tax-cutting trends in the OECD from 2000 to 2006, and they succeeded in dropping the U.S. from 15th to 21st in the OECD rankings on marginal income tax rates. If lawmakers in Congress impose a surcharge as part of AMT reform and allow the 2001 tax cuts to expire, the U.S. will jump to 9th in the rankings. This will not only reverse the positive economic benefits from the 2001 tax rate reductions but will also harm the international competitiveness of our individual income tax system.
Read the whole study.
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