Archive for the ‘Tax Foundation’ Category

The Impact of Piketty’s Wealth Tax on the Poor, the Rich, and the Middle Class

October 24, 2014 Comments off

The Impact of Piketty’s Wealth Tax on the Poor, the Rich, and the Middle Class
Source: Tax Foundation

In his bestseller Capital in the Twenty-First Century, Thomas Piketty recommends a wealth tax as a remedy to inequality. The basic version of Piketty’s wealth tax would impose a tax rate of 1 percent on net worth of $1.3 million and $6.5 million and 2 percent on net worth above $6.5 million. Piketty contemplates additional tax brackets, including a bracket of 0.5 percent starting at about $260,000.

We used the Tax Foundation’s Taxes and Growth (TAG) model, augmented with wealth data from the University of Michigan’s Panel Study of Income Dynamics, to estimate how the U.S. economy would respond to Piketty’s wealth taxes.

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2015 Tax Brackets

October 23, 2014 Comments off

2015 Tax Brackets
Source: Tax Foundation

Every year, the IRS adjusts more than 40 tax provisions for inflation. This is done to prevent what is called “bracket creep.” This is the phenomenon by which people are pushed into higher income tax brackets or have reduced value from credits or deductions due to inflation instead of an actual increase in real income.

The IRS uses the Consumer Price Index (CPI) to calculate the past year’s inflation and adjusts income thresholds, deduction amounts, and credit values accordingly. Rather than directly adjusting last year’s values for annual inflation, each provision is adjusted from a specified base year. For more information, see the methodology, below.

The Real Value of $100 in Each State

August 21, 2014 Comments off

The Real Value of $100 in Each State
Source: Tax Foundation

This week’s tax map shows the real value of $100 in each state. Because average prices for similar goods are much higher in California or New York than in Mississippi or South Dakota, the same amount of dollars will buy you comparatively less in the high-price states, or comparatively more in low-price states. Using data from the Bureau of Economic Analysis that we’ve written about previously, we adjust the value of $100 to reflect how prices are different in each state.

For example, Tennessee is a low-price state, where $100 will buy what would cost $110.25 in another state that is closer to the national average. You can think of this as meaning that Tennesseans are about ten percent richer than their nominal incomes suggest.

The states where $100 is worth the least are the District of Columbia ($84.60), Hawaii ($85.32), New York ($86.66), New Jersey ($87.64), and California ($88.57). That same money goes the furthest in Mississippi ($115.74), Arkansas ($114.16), Missouri ($113.51), Alabama (113.51), and South Dakota ($113.38).

How Much Do U.S. Multinational Corporations Pay in Foreign Income Taxes?

May 27, 2014 Comments off

How Much Do U.S. Multinational Corporations Pay in Foreign Income Taxes?
Source: Tax Foundation

Key Findings

  • The United States’ worldwide system of corporate taxation requires multinational corporations to pay taxes twice, first to the foreign country in which they do business and then to the IRS after they repatriate their profits.
  • Multinational corporations reported paying $128 billion in corporate taxes to foreign countries on $470 billion of taxable income in 2010, according to most recent IRS data.
  • Over the past eighteen years, foreign corporate taxable income has grown by about 250 percent and foreign corporate taxes paid by 265 percent, while the effective tax rate has remained around 26 percent.
  • The effective tax rate on foreign income was 27.2 percent in 2010, prior to paying additional taxes to the United States.
  • More than 60 percent of all reported foreign taxable income was earned in Europe and Asia in 2010.
  • The effective tax rate faced by U.S. multinationals abroad varies substantially by region and country and is higher than 60 percent in some nations.
  • While some corporations pay low effective rates in some countries on foreign income, U.S. multinationals faced effective rates over 20 percent on most income earned overseas, prior to paying taxes to the United States.
  • 60 percent of income earned abroad was by manufacturers. Most was income from petroleum and coal manufacturers, who paid an average effective tax rate of 36 percent.

Cigarette Smuggling: A National Problem and Lucrative Criminal Enterprise

April 24, 2014 Comments off

Cigarette Smuggling: A National Problem and Lucrative Criminal Enterprise
Source: Tax Foundation

Increased excise taxes on cigarettes have created lucrative incentives for black market trafficking between states, with illegal sales on the rise nationwide, according to the latest report from the nonpartisan Tax Foundation.

Released this morning, the report’s key findings include:

  • Large differentials in cigarette taxes across states create incentives for black market sales.
  • Smuggled cigarettes make up substantial portions of cigarette consumption in many states, and greater than 25 percent of consumption in twelve states.
  • The highest inbound cigarette smuggling rates are in New York (56.9 percent), Arizona (51.5 percent), New Mexico (48.1 percent), Washington (48 percent), and Wisconsin (34.6 percent).
  • The highest outbound smuggling rates are in New Hampshire (24.2 percent), Wyoming (22.3 percent), Idaho (21.3 percent), Virginia (21.1 percent), and Delaware (20.9 percent).
  • Cigarette tax rates increased in 30 states and the District of Columbia between 2006 and 2012.

Taxation — Facts & Figures 2014: How Does Your State Compare?

April 16, 2014 Comments off

Facts & Figures 2014: How Does Your State Compare?
Source: Tax Foundation

This morning, the Tax Foundation released the 2014 edition of Facts & Figures: How Does Your State Compare? Just in time for tax season, the latest edition of this popular pocket-sized handbook contains the rates and rankings of all 50 states on 39 different measures of tax and fiscal policy.

Topics include information on tax measures (such as revenue per capita, federal aid to states, and State Business Tax Climate Index rankings), individual income taxes, corporate income taxes, general sales taxes, excise taxes, property taxes, state debt, and population data. For a full list of all measures included in this year’s edition, click here.

Tax Freedom Day® Arrives on April 21, 2014

April 10, 2014 Comments off

Tax Freedom Day® Arrives on April 21, 2014
Source: Tax Foundation

Tax Freedom Day, the day on which American’s have collectively earned enough income to pay off the total federal, state, and local tax bill, will arrive 111 days into the year on April 21, according to the annual report released this morning by the nonpartisan Tax Foundation.

While the national date arrives 6 days after the deadline for filing taxes, each state’s total federal, state, and local tax burden varies greatly. Louisiana’s Tax Freedom Day is the earliest and arrives on March 30, and is followed by Mississippi (Apr 2) and South Dakota (Apr 4). New Jersey and Connecticut are tied with the latest date on May 9 and they are preceded by New York (May 4).

The study’s key findings include:

  • Tax Freedom Day is three days later than last year due mainly to the continuing economic recovery, which will boost federal tax revenue collected through the corporate, payroll, and individual income tax.
  • Americans will spend more on taxes in 2014 than they will on food, clothing, and housing combined.
  • Americans will spend 42 days working to pay off income taxes, 15 days for excise taxes, and 11 days for property taxes. Click here for a full breakdown.
  • Americans will pay $3 trillion in federal taxes and $1.5 trillion in state and local taxes, for a total bill of more than $4.5 trillion, or 30.2 percent of the nation’s income.
  • If you include annual federal borrowing, which represents future taxes owed, Tax Freedom Day would occur on May 6, 15 days later.

See also: Tax Foundation Figures Do Not Represent Typical Households’ Tax Burdens (Center on Budget and Policy Priorities)


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