Tag: tax

This week on Hubwonk (our debut video & audio edition), Host Joe Selvaggi talks with research analyst Andrew Mikula about the findings from his recent report, A Timely Tax Cut, in which he explored the relationship between state tax rates and policy and the direction of interstate migration.

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It’s unusual to think that Second Amendment proponents and members of the freedom movement would celebrate the day that a tax took effect. But that’s precisely what the Pittman-Robertson Act is – a tax often celebrated by gun enthusiasts, patriots and pro-freedom elements in the United States. Its story is one of the more fascinating in the history of American legislation. […]

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Hugh Hewitt, 65, hosts the second-longest-running radio talk show in the United States. With hundreds of affiliates in nearly every state, Hugh is also a former attorney, law professor, former Reagan Administration official, and perhaps the best interviewer in all media. I especially love how Hugh interviews journalists from the mainstream media and expertly schools […]

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Biden Tax Agenda Seeks to Turn Back the ‘Rising Tide’

 

It’s no secret that President Joe Biden has adopted an overtly progressive agenda. He has signed into law one $1.9 trillion stimulus package and has another $2 trillion plan waiting in the wings. His ambitions are far-reaching, with hopes of providing American parents with between $250 and $300 a month for each child for child care, regardless of parental employment status, and offering free community college education for all who request it.

How will this spending be funded? It has been widely reported that Biden will raise the top marginal income tax rate on ordinary income from 37 percent to 39.6 percent, and significantly increase the capital gains tax rate for high earners. Under current law, long-term capital gains are federally taxed at a maximum 23.8 percent rate—the 20 percent marginal rate plus a 3.8 percent levy to fund former President Barack Obama’s expansion of Medicare. Biden’s proposal would treat as ordinary income all capital gains of taxpayers earning more than $1 million, taxable at the new 39.6 percent marginal rate. Adding in the ObamaCare kicker would set a 43.4 percent capital gains rate, the highest capital gains rate ever. State and local taxes will bring that top rate above 50 percent—56.7 percent in California and 58.2 percent in New York City—in much of the country.

But not to worry. Biden press secretary Jen Psaki announced that Biden believes that he can finance these extensive programs “on the backs of the wealthiest Americans who can afford it and corporations and businesses who can afford it.” She adds that these tax hikes “won’t have a negative impact.” Psaki assures us the plan will impose no tax increases on those who earn under $400,000 per year and happily boasts that these increases “would effect just three of every one thousand taxpayers.”

Host Joe Selvaggi talks with legal scholar and George Mason University Law Professor Ilya Somin about the details, the merits, and the likely implications of the Supreme Court case, New Hampshire v. Massachusetts, on state taxation power, federalism, and the power to vote with one’s feet.

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Host Joe Selvaggi talks with Connecticut Business and Industry Association’s President and CEO, Chris DiPentima, about what policy makers can learn from Connecticut’s journey from the wealthiest state in the nation, to one with more than a decade of negative job growth.

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Host Joe Selvaggi talks with Stanford University Economics Professor Joshua Rauh about his research on the reaction of Californians to a tax increase, from his report, “The Behavioral Response to State Income Taxation of High Earners, Evidence from California.”  Prof. Rauh shares how his research offers tax policy makers insight into the likely effects of similar increases in their own states, including here in Massachusetts.

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The headline in the WSJ reads “Economy’s struggles will shape new term”.  The sense of the article is that, in a new “Biden” administration, the government will have to shepherd the economy that was ruined by the government, back to health. Will someone please tell me how such an administration, guided by a party which […]

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How to End Gov. Cuomo’s Tax Grab: Congress Should Enact Income Tax Reciprocity

 

You may have seen the stories over the past couple of days about New York Governor Andrew Cuomo promising to send tax bills to all the temporary workers who volunteered in or were deployed to his state to help their beleaguered hospitals and medical staff with coronavirus rescue and recovery.

There’s a way to fix that, and Congress can do it as part of their phase 4 recovery bill. Here’s how.

One of the issues I worked on a few years ago was preserving Pennsylvania’s and New Jersey’s personal income tax reciprocity agreement from 1977. Then-NJ Governor Chris Christie in 2016 infamously canceled the agreement in a budget dispute with the legislature, before reversing course. He underestimated how many people it adversely affected (some 250,000 in both states) and the political reaction to his antics.
What are reciprocity agreements? They allow citizens who live in one state while working in another to pay income taxes based on their legal residence, not where they work. If you lived, as I do, in Pennsylvania but work, as I did, in New Jersey, I paid PA (lower) income tax. Some 20 states have such agreements, most famously in the Washington, DC area between VA, MD, and DC, much to the chagrin of DC. Pennsylvania has six such agreements, including with Indiana.
So now we have Gov. Cuomo promising to send tax bills to emergency workers deployed to NY to help with coronavirus rescue efforts after he begged for (and received) such assistance. NY has no reciprocity agreements. It is not hard to figure out why.
New York City’s workforce includes tens if not hundreds of thousands of residents from neighboring Connecticut, New Jersey, and even Pennsylvania. All those workers pay New York income taxes (not to mention New York City’s infamous income or wage taxes). That’s a lot of money. A former New Jersey state treasurer once projected that the lack of a reciprocity agreement costs the state some $3 billion per year. Reciprocity agreements make a lot of sense since you’re likely using more public services (police, fire, schools, etc.) where you live than where you work.
So, if you work in NY for more than 14 days, even if you live in Virginia, you’ll get a tax bill from NY. Cuomo could ask his legislature to waive that requirement, but no, he wants your money.
If Congress insists on a phase 4 coronavirus relief/recovery package, they should, at a minimum, include personal income tax reciprocity for any emergency workers volunteering in, or deployed to another state to assist in coronavirus rescue, recovery, or mitigation. I think my friend, Senator Chuck Grassley (R-IA), chairman of the Senate Finance Committee, is just the person to champion it. New York and all states who have suffered revenue losses from this are likely to get some form of a taxpayer bailout from Congress, anyway, so this is a no-brainer.
Who are these people Cuomo wants to tax? Essential workers, like doctors, nurses, emergency medical technicians, ambulance drivers, etc. You know, heroes. I wonder he’ll try to tax the estates of those workers who died from contracting coronavirus while working in New York? It would not surprise me if he did.

Jim Geraghty of National Review and Greg Corombos of Radio America are glad to see France, Germany, and the UK conclude that Iran attacked Saudi Arabia earlier this month and that there is no other plausible explanation.  They also groan over the political circus about to begin as House Democrats appear to be moving en masse towards impeachment and even President Trump seems to like the idea of getting impeached because it would help him win re-election.  And they discuss the dystopian world Bernie Sanders wants us all to live in as he proposes a ludicrous wealth tax to pay for the massive expansion of government that he envisions.

Jim Geraghty of National Review and Greg Corombos of Radio America fume as President Trump says ISIS is defeated in Syria on Wednesday and Thursday he claims that Russia, Iran, and Syria can handle the fight.  They’re also disgusted as Trump’s insistence on $5 billion for a border wall seems to be shifting and congressional Republicans appear to have no interest in this fight despite promising one just before the midterm elections.  And they hold the door open for Sen. Jeff Flake to leave and never come back as the retiring Arizona lawmaker proposes a new carbon tax just days before leaving office.

SALT and Me

 

The congressman in my district (NJ 11) is retiring, which means the election to replace him is wide open. Though Republicans have held this seat for a long time, it could flip to the Democrats. The Democrat candidate is running ads saying we should vote for her because the Republican will raise our taxes. What? In my book, when a Democrat says they want lower taxes, they are lying. Not to jump to conclusions, I pulled out my tax information, ran the numbers for myself, and it turns out, Mikie Sherrill (D) is lying.

The issue is the new caps on the State And Local Tax (SALT) deduction. The Democrat’s ad states that her Republican opponent, Jay Webber, supports the cap. He does not. Webber has said many times that there shouldn’t be a cap on this deduction. What he does believe is that as a whole, the tax reform package will benefit New Jersey families. The numbers seem to bear that out on average, but the important question is, what about me?

I pulled out my 2017 tax return to see what the difference would be if I ran last years numbers using the 2018 rates and rules. The first thing to note is that the standard deduction is almost double what it was previously, which means fewer people will be itemizing their taxes now. Looking at my numbers, I will still be using the Schedule A itemization. Since my State and Local taxes exceed $10,000, I will be subject to the cap. That means fewer deductions than I had in 2017. Sounds bad, but because of changes to the rates my overall tax amount still ends up about $800 less than under the 2017 rules. So while the SALT cap did cost me a deduction, overall I still came out on top.

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In Texas, we take pride in being the best. We like to think that Texas is a business friendly state that welcome new companies to Texas. However, the Tax Foundation newly released ranking of economic competitiveness lists Texas as the 15th most competitive state in the country (down from 13th place last year). The Tax […]

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Cheap gas. That, along with great pizza and bagels, was always one of the benefits of living in New Jersey. Even though there is no self-service gas in NJ, the price per gallon was still less than what I would see in any other state I drove through. Until the end of 2016, that is. […]

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Jim Geraghty of National Review and Greg Corombos of Radio America discuss new polling showing public perception dropping for businesses that are publicly breaking ties with the NRA, due entirely to a massive plunge in favorability among Republicans.  They also breathe a sigh of relief as Republicans in Arizona’s eighth congressional district reject the frontrunner in the primary after the married minister was caught exchanging inappropriate texts with a female staffer.  And they wish the best of luck to 20 state attorneys general who argue that all of Obamacare should be declared unconstitutional now that the tax provision that saved it at the Supreme Court in 2012 has been scrapped in the new tax law.

Oof. Seattle Sugar Tax Raises Soda Prices by 75 Percent

 

Seattle residents started the new year with a bad case of sticker shock followed by a sugar crash. A new tax of 1.75 cents per ounce was added to all sweetened beverages sold in the city. The move had public support in June when it was passed 7-1 by the Seattle City Council, but images of regret have been hitting social media as the bill came due Monday.

The prices at an area Costco showed that the tax increases the price of Gatorade by 65 percent and Dr Pepper by 75 percent. To avoid complaints from outraged customers, the discount chain posted an explanation of the steep price increase.

A Summary of the GOP Tax Reform Bill

 

On Friday, Republicans released the final version of their tax bill. It combines parts of both the House and Senate versions. Here are the details.

On the individual side:

  • We’re back up to seven tax brackets again, but the rates on each change slightly. They are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. (The current ones are 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%, respectively.)
  • It eliminates the individual health insurance mandate which, as we all know, is actually a tax.
  • The much-discussed state and local tax deduction remains, but the deduction is capped at $10,000.
  • The cap on the mortgage interest deduction is lowered from $1 million to $750,000.
  • The AMT remains, but the income exemption is raised to $70,300 for singles and $109,400 for married couples.
  • The estate tax remains, but the exception is raised so only 0.2 percent of estates will get it.
  • The standard deduction is almost doubled. From $6,350 to $12,000 for single filers and from $12,700 to $24,000 for joint filers. This probably means fewer people will itemize their deductions.
  • The personal exemption is eliminated. You can currently claim a $4,050 personal exemption for yourself, your spouse, and your dependents. That is gone now.
  • The child tax credit is double to $2,000 and is now available to higher earners, up to $200,000 for single parents and $400,000 for married couples.
  • There is a temporary tax credit for non-child dependents. People can take a $500 credit for non-dependent children, ailing elderly adults, or adult children with disabilities.
  • There are other smaller tax breaks that were gone in earlier versions of the bill but are restored for the final version. For example, allowing teachers to deduct supplies they buy with their own money.
  • There is a change to the inflation adjustment to the tax code. The new measure is slower than the current measure, so the net effect of deductions and credits will be worth slightly less.

On the corporate side:

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For many residents of Pennsylvania, and anyone interested in tax policies and how public schools are run, the result of a November 7th referendum vote on a PA Constitutional Amendment Question resulted in what I believe is good news. Pennsylvania is joining other states in trying to get a handle on escalating property taxes, with […]

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Greg Corombos of Radio America and David French of National Review cheer the many thousands of Americans marching for life and against abortion Friday in Washington.  They also shake their heads at President Trump’s suggestion that a 20 percent border tax on Mexican imports might be a good way to pay for a border wall.  And they discuss all the humiliating concessions and retractions Atlantic magazine has to make following its story suggesting ultrasound is used to deceive women into believing their unborn babies are people with heartbeats who can feel pain.

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I live in New Jersey. Here in Jersey we have crowded roads, corrupt politicians, expensive real estate, ridiculously high property taxes, and a very left leaning legislature. On the plus side, we have great pizza, great bagels, Taylor Ham (which government regulators renamed Pork Roll), and cheap gas. While you still won’t have any trouble […]

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