More Recent Tax Foundation News: Page 3
In May, the U.S. Supreme Court will decide whether to hear the case of Centerior Energy Corp. v. Mikulski, an appeal from a lower court decision opening the door to fragmented state-by-state interpretations of the U.S. tax code. The Tax Foundation has filed a friend of the court brief urging the Court to take the case, which raises the question of whether taxes paid to the government can be recovered from a business instead of from the IRS.
Click here to read the brief.
Click here to read the Fiscal Fact, a short explanation of the issues in the case and the arguments in the brief.
Click here for more amicus briefs filed by the Tax Foundation.
Click here for more on the Tax Foundation's Center for Legal Reform.
With the 2008 election in full swing, a number of key domestic policy issues have come to the fore. Whether it is addressing health care reform, economic issues, climate change, or reforming the tax code, a lively debate is unfolding amongst the three remaining candidates. However, given the nature of the primary process, it is difficult to take an in-depth, side by side look at the various policies and plans of Senators Clinton, Obama and McCain.
Please join us for lively discussion on the domestic policy plans of the Presidential candidates at a half-day conference sponsored by American University, the Committee for a Responsible Federal Budget, the New America Foundation, and the Tax Foundation on Tuesday, April 29th from 8:30 a.m. to 12:30 p.m. Held at the Sewall-Belmont House and Museum, this forum includes top advisers to the campaigns, as well as leading policy experts from across the political and ideological spectrum. The event will examine the differences and similarities of the domestic plans, and explore the impact they would have if implemented.
Click here to view the details and to RSVP. Click here for a chart comparing the tax plans of Clinton, McCain, and Obama.
Most people have heard of Tax Freedom Day by now. For those who haven't, Tax Freedom Day is the day on which Americans have earned enough money to pay all their federal, state and local taxes for the year. On Tax Freedom Day, we have earned enough to pay the government and we can finally start keeping our paychecks for ourselves and our families. It's a great way to illustrate how much the nation as a whole pays in taxes. We also calculate a Tax Freedom Day for each state.
In 2008, Tax Freedom Day falls on April 23, which means Americans must work from January 1 until April 23—nearly a third of the year—just to pay taxes. That's more than we spend on food, clothing and housing combined.
Every year we publish a report explaining what Tax Freedom Day is all about and how we calculate it. The report is available here (if you'd like a hard copy, just send us an e-mail with your name and address) and a paper explaining the methodology is available here. This year, in addition to the Tax Freedom Day report, we thought it would be fun to illustrate the concept in a different way. So if you're done reading the report and you want to experience Tax Freedom Day in a whole new way, click here and take a look at our new YouTube video.
The Tax Foundation, in a friend-of-the-court brief filed with the South Dakota Supreme Court, urges that state to stop its discriminatory insurance tax system that taxes out-of-state companies at twice the rate of in-state companies. The case, Metropolitan Life Ins. Co. v. Kinsman, is currently before the court on a petition for rehearing.
Since explicit discrimination in rates was struck down as violating the Equal Protection Clause of the Fourteenth Amendment by the U.S. Supreme Court in 1985, South Dakota is one of eight remaining states that seek to protect their domestic insurance companies by imposing heavier taxes on out-of-state companies doing business in the state. While on paper all companies pay the same 2.5% rate, in-state companies automatically receive rate reductions, lowering their tax bill to 0.75% to 1.25%. The result is effective discrimination against out-of-state companies which violates the Equal Protection Clause, as the trial judge concluded.
While the trial judge invalidated the statute in this case, late last month the state Supreme Court reversed. Our brief argues that the court's decision is problematic because (1) it does not consider the Findings of Fact by the trial judge, (2) the standard adopted by the Court will be problematic, and (3) the statute does not survive rational basis review. A decision on the petition for rehearing is expected in April or May.
Click here to read the brief. Click here for more amicus briefs filed by the Tax Foundation. Click here for more on the Tax Foundation's Center for Legal Reform.
Fundamental reform of the U.S. tax system poses significant political challenges, but it offers the opportunity to rationalize many aspects of the tax system, according to Tax Foundation testimony before the Senate Finance Committee on April 15. Vice President for Economic Policy Robert J. Carroll told the tax-writers that fundamental tax reform has the potential to reduce the compliance burdens imposed on both households and businesses, and at the same time create an environment for greater economic growth in the long-term in a manner that is appropriately fair.
A fundamental issue highlighted by Carroll was the choice between income-based and consumption-based taxes. Consumption taxes generally reduce the tax on saving and investment, and Carroll stressed the importance of this way to boost economic performance and living standards in the longer term, in a way that retained the current progressivity of the tax system.
Among the federal government's most important challenges, Carroll said that reforming the corporate income tax is becoming more urgent as our major trading partners around the world take the initiative. This was the theme of a recent Tax Foundation Fiscal Fact by Carroll.
"By standing still, the United States can expect to see reduced inflows of foreign capital and investment because the United States will be a less attractive place in which to invest, innovate and grow," commented Carroll. "In the near-term, this would translate into slower economic growth, a slower advance in labor productivity, and less employment."
Read the testimony. Read the Fiscal Fact, The Economic Consequences of Being Left Behind: A U.S. Business Tax System that Is Out of Line Internationally.
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