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Articles by Nicole Kaeding
Net Operating Losses Aren't Handouts
Spurred by a flawed article from The New York Times, commentators keep describing a provision from the Coronavirus Aid, Relief, and Economic Security (CARES) Act as a handout for the rich. That characterization is misguided, to say the least. The provision at hand, a loosening of net operating loss rules, isn’t cronyism. Instead, it reflects Congress’s priority of helping affected individuals and businesses weather our economic crisis by smoothing out “lumpy” tax burdens over time.
Congress Needs To Step In To Delay Tax Filing, Not Just Tax Payments
The Treasury Department has suggested for several days that it would be delaying April 15, 2020 tax payments, per my suggestion from last week. This afternoon the administration released its guidance on the delay, answering a number of technical questions. Unfortunately, the guidance falls short of the relief and certainty taxpayers need in the face of the COVID-19 crisis. It will create headaches for filers and further confuse an already complicated tax filing season.
More Tax Delays Are Necessary
(pdf) Introduction As the COVID-19 crisis continues in the United States, Congress and the Treasury Department have experimented with policies to provide affected individuals and businesses with much-needed relief to help them weather the economic crisis. In March, Treasury announced that it would be delaying tax payment and tax filing requirements from April 15th to July 15th.
Why Fiscal Conservatives Should Support a Response to COVID-19
As Congress debates its response to COVID-19, understanding the roots of its financial impact is important. This economic downturn is unlike ones in the past, meaning that the economic response needs to be different too. Skepticism of market intervention is always warranted, but this is a prime example of an economic event where Congress has a carefully defined role to play.
Delaying Tax Filing Season due to COVID-19
Rumors are circulating that the Treasury Department is considering a delay of the April 15th tax filing deadline as the COVID-19 (popularly known as coronavirus) crisis progresses. Based on the trajectory of current events, there are good reasons those rumors should become facts. The Treasury Secretary has broad authority to delay both tax filing and tax payments.
A Framework for a COVID-19 Fiscal Policy Response
Former White House Chief of Staff Rahm Emanuel once said that you should “never let a good crisis go to waste,” and in traditional Washington, D.C.-style policymakers are releasing a panoply of ideas, such as large infrastructure and climate packages, hoping that their pet project can hitch a ride on any bill that would help blunt the economic impacts of the COVID-19 virus.
State Digital Advertising Taxes: A New Trend that Should End Quickly
(pdf) Earlier this month, Maryland Senate Bill 2 dropped, shocking the state tax world. The bill, inspired by an opinion piece in The New York Times, would create a new gross receipts tax on digital advertising within the state. Sponsored by Senators Thomas V. Miller Jr. and Bill Ferguson (D), the outgoing and incoming Senate Presidents respectively, the tax would create significant economic and legal ramifications if it’s adopted.
Tax Rates and Smoking: A Delicate Balance
Vapor products have dominated the news for the last several months. States and the federal government have tried to restrict access to the products and many have debated creating new taxes on them too. Policymakers should tread lightly, however. A new working paper published by the National Bureau of Economic Research finds that vapor taxes have a significant impact on adult smoking rates. Under one such proposal, higher taxes could dissuade up to 2.75 million adult smokers from quitting.
The Problem With the Dems' Attacks on 'Fossil Fuel Subsidies'
The Problem With the Dems' Attacks on 'Fossil Fuel Subsidies' While the leading Democratic candidates duke it out over their policy differences, a rare point of agreement is an end to tax policies they decry as fossil fuel subsidies. Top candidates such as Joe Biden, Elizabeth Warren, and Bernie Sanders have all pledged an end to these so-called subsidies. Read Full Article »
The problem with Bernie Sanders' attacks on ‘fossil fuel subsidies’
While the leading Democratic candidates duke it out over their policy differences, a rare point of agreement is an end to tax policies they decry as “fossil fuel subsidies.” Top candidates such as Joe Biden, Elizabeth Warren, and Bernie Sanders have all pledged an end to these so-called subsidies. This sounds like a reasonable position: The federal government should not pick winners and losers in energy markets.
The Tax Proposals by Elizabeth Warren Are Simply Not Realistic
The Tax Proposals by Elizabeth Warren Are Simply Not Realistic The combined costs of her various proposals would amount to an unrealistic amount of money.
The tax proposals by Elizabeth Warren are simply not realistic
As Elizabeth WarrenElizabeth Ann WarrenFive takeaways from the Democratic debate Sanders, Warren exchange underscores Iowa stakes CNN's Van Jones: Democratic debate was 'dispiriting,' no evidence party can defeat Trump MORE likes to say, she has many plans to solve our issues. She claims she can fix the economy, create affordable housing, forgive student debt, and expand child care without breaking a sweat. Unfortunately, the core theme to every proposal is new higher taxes.
Tallying Elizabeth Warren's Tax Increases
(pdf) The policy challenges facing the country are immense. Economic growth hasn’t reached its full potential, individuals and businesses pay too much for health care, and red tape holds back innovation and entrepreneurship, among many other concerns. But presidential candidate Senator Elizabeth Warren (D-MA) has a plan for all of them: Raise taxes.
Nicole Kaeding: Tax this but not that at Halloween, depending on where you live -- There is a lesson here
In New Jersey, baking pumpkins aren’t subject to sales tax, but carving pumpkins are. Massachusetts doesn’t subject carving or baking pumpkins to sales tax -- but if the pumpkin is pre-decorated, it’s hit with sales tax. Iowa exempts all pumpkins from sales tax -- but not decorative gourds. Welcome to the terrifying world of sales tax complexity.
Sanders & Warren Base Tax Plans on Misleading Numbers | RealClearMarkets
Sanders & Warren Base Tax Plans on Misleading Numbers Wealth tax proposals from Democratic presidential candidates, Sens. Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont, are underpinned by the idea that the economy is rigged in favor of the wealthy, and new data from two liberal economists claim the richest 400 Americans had a lower… Read Full Article »
Bernie Sanders and Elizabeth Warren base their wealth taxes on misleading numbers
Wealth tax proposals from Democratic presidential candidates, Sens. Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont, are underpinned by the idea that the economy is rigged in favor of the wealthy, and new data from two liberal economists claim the richest 400 Americans had a lower tax rate in 2018 than the poorest among us.
New capital gains tax hike poses threat to Americans everywhere
Senator Ron Wyden of Oregon, the highest-ranking Democrat on the Senate Finance Committee, released details this week on a new plan to raise taxes on investment. The proposal, known in tax circles as “mark-to-market,” would impose taxes on an asset every year based on its market value, not just when that asset is eventually sold. This idea, while not a new one, has never taken hold and, given the multitude of issues with the proposal, it should stay that way.
New Capital Gains Tax Hike Poses Threat to Americans Everywhere – InsideSources
Senator Ron Wyden of Oregon, the highest-ranking Democrat on the Senate Finance Committee, released details this week on a new plan to raise taxes on investment. The proposal, known in tax circles as “mark-to-market,” would impose taxes on an asset every year based on its market value, not just when that asset is eventually sold. This idea, while not a new one, has never taken hold and, given the multitude of issues with the proposal, it should stay that way.
A Financial Transactions Tax Is A Retread of Bad Ideas
Sen. Kirsten Gillibrand (D-NY) recently endorsed a proposal to implement a financial transactions tax of .03 percent on every Wall Street transaction. This proposal is not new: Sen. Bernie Sanders (I-VT) proposed one in his tax plan when he ran for president in 2016, and many other progressive lawmakers have championed this idea.
The Social Security 2100 Act: The Wrong Approach to Entitlement Reform
(pdf) Introduced by Congressman John Larson (D-CT) and cosponsored by more than 200 members of the House of Representatives, the Social Security 2100 Actwould dramatically raise taxes, increase Social Security benefits, and only marginally improve Social Security’s finances.
A Preliminary Look at 2018 Tax Data
Erratum: Data used in an earlier version of this blog did not account for the refundable portions of the Earned Income Tax and Child Tax Credits. This data is now included. At the end of June, the Internal Revenue Service released the first set of tax return data from 2018. These are the first numbers on the effects of the Tax Cuts and Jobs Act (TCJA), which was passed in December of 2017.
Impact of Limiting the SALT Deduction Cap
The Impacts of Limiting the State and Local Taxes Paid Deduction Chairman Thompson, Ranking Member Smith, and members of the Committee, thank you for the opportunity to speak to you today regarding the recent changes to the state and local taxes paid deduction and its impact on communities. The Tax Foundation is the nation’s oldest organization dedicated to promoting economically sound tax policy at the federal, state, local, and global levels of government.
Impact of Limiting the SALT Deduction
Nicole Kaeding, Vice President of Federal and Special Projects at the Tax Foundation, testifies before the House Ways and Means Select Revenue Measures Subcomittee on the impact of limiting the SALT deduction. See her full testimony below.
Taxable Income vs. Book Income: Why Some Corporations Pay No Income Tax
The introduction of Senator Elizabeth Warren’s (D-MA) “Real Corporate Profits Tax” has put a spotlight on the differences between book income, or the amount of income reported by corporations on their financial statements, and the tax code’s definition of income upon which the corporate income tax is assessed. Senator Warren, among others, argues that firms maximize the profits reported to shareholders while minimizing their taxes owed to the federal treasury.
Recapping the 2019 Arkansas Tax Reform
The Arkansas General Assembly concluded its 2019 session after accomplishing one of its key priorities, tax reform. After two years of intense debate and study, the Natural State has passed a series of tax reforms to improve the competitiveness of the state’s tax code. Individual Income Tax Reform The General Assembly pushed through its third phase of individual income tax cuts.
A Tradition Unlike Any Other: The Masters Tax Exemption
This week, the world’s best golfers are descending on Augusta, Georgia for the 83rd edition of the Masters golf tournament. Augusta National Golf Club is famous for more than green jackets and pimento cheese sandwiches—legend has it that it’s the impetus for one of the tax code’s many exemptions. Section 280(A) of the Internal Revenue Code outlines the tax treatment of residential property.
A Tradition Unlike Any Other: The Masters Tax Exemption
This week, the world’s best golfers are descending on Augusta, Georgia for the 83rd edition of the Masters golf tournament. Augusta National Golf Club is famous for more than green jackets and pimento cheese sandwiches—legend has it that it’s the impetus for one of the tax code’s many exemptions. Section 280(A) of the Internal Revenue Code outlines the tax treatment of residential property.
General Electric Leaves Connecticut
General Electric (GE) is expected to announce on Thursday that it is relocating its corporate headquarters from Connecticut to Boston. The move follows a contentious fight in Connecticut over the state’s corporate tax structure. In 2015, Governor Dan Malloy and the legislature pushed through a slew of corporate income tax increases. The state’s budget included $500 million in new corporate tax revenue. The largest change was switching the state to combined reporting.
Taxing Transactions a Few Too Many Times
Yesterday, Representative Peter DeFazio (D-OR) and Senator Brian Schatz (D-HI) introduced the Wall Street Tax Act, which would create a financial transactions tax of 0.1 percent on stocks, bonds, and derivatives.
Implementing Phase Three of Individual Income Tax Cuts in Arkansas
Yesterday, Governor Hutchinson and legislative leaders in Arkansas announced their final plan for restructuring Arkansas’s individual income tax brackets. After more than 18 months of study, the Arkansas General Assembly will consider the plan starting next week. The plan would lower tax liabilities for a number of filers in Arkansas and implements the third phase of tax cuts in the Natural State.
Don’t Judge Your Taxes by Your Refund
Tax filing season for 2018 opened yesterday, leaving many individuals to wonder: Did my taxes actually go down in 2018 as policymakers promised? Too many will be tempted to compare their 2017 tax refunds to their 2018 tax refunds and make a judgment that way. But that sort of analysis misses a key part of the equation: the impact that changes in tax withholding have on an individual filer’s tax refund (or taxes due).
Sen. Warren’s Wealth Tax Is Problematic
Today, Senator Elizabeth Warren (D-MA), Democratic presidential hopeful for 2020, announced plans for a wealth tax on high-net-worth individuals, a type of tax that is flawed economically and administratively.
Contra AOC, I'm Not Longing for the Days of 70% Tax Rates
Contra AOC, I'm Not Longing for the Days of 70% Tax Rates Sunday night, Rep. Alexandria Ocasio-Cortez, D-N.Y., appeared on 60 Minutes to promote her policy agenda, including a so-called Green New Deal. According to Ocasio-Cortez, the easiest way to pay for her deal is to raise individual income tax rates. She suggested that individuals with incomes at… Read Full Article »
Opportunity Zones: What We Know and What We Don’t
Key Findings The Tax Cuts and Jobs Act created the Opportunity Zones program to spur investment in economically distressed census tracts. Opportunity zones reduce capital gains taxes for individuals and businesses who invest in qualified opportunity zones. Opportunity zones were estimated to cost $1.6 billion in revenue from 2018-2027.
Contra Ocasio-Cortez, I'm not longing for the days of the 70 percent income tax rate
Sunday night, Rep. Alexandria Ocasio-Cortez, D-N.Y., appeared on “60 Minutes” to promote her policy agenda, including a so-called “Green New Deal.” According to Ocasio-Cortez, the easiest way to pay for her deal is to raise individual income tax rates. She suggested that individuals with incomes at the “tippy-top,” defined as $10 million in income, should pay a 70 percent tax rate, a rate not seen since the beginning of the Reagan administration.
The Impact of Tax Cuts on Arkansas Households
The Arkansas Tax Reform and Relief Task Force concluded its work earlier this month, referring several tax changes to the General Assembly for its consideration in January when the legislative session begins. Amidst the flurry of activity, it’s difficult for everyday Arkansans to know how these tax reforms will impact their budget and their tax bills.
The Tax Cuts and Jobs Act After A Year
This week is the first anniversary of the passage of the Tax Cuts and Jobs Act. The first meaningful reform to the federal tax code in a generation, the Tax Cuts and Jobs Act was historic, but it was not perfect. A year after its adoption, it’s important to take a step back to review the reforms’ impacts on individuals, businesses, and the U.S. economy. The Impact on Individuals The Tax Cuts and Jobs Act lowered tax rates and simplified the individual income tax for most filers.
The Retirement, Savings, and Other Tax Relief Act of 2018
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State Tax Ballot Initiatives to Watch in 2018
Ballot initiatives and referenda are often an afterthought on Election Day, but in many states, voters going to the polls on November 6th, 2018 will have the opportunity to weigh in on significant—in some cases, momentous—policy questions. For this reason, ballot issues merit taxpayer attention. While not a comprehensive list, this page seeks to highlight the most impactful ballot initiatives on state tax issues across the country.
Fiscal Policy Report Card on America's Governors
Fiscal Policy Report Card on America’s Governors Governors play a key role in state fiscal policy. They propose budgets, recommend tax changes, and sign or veto tax and spending bills. When the economy is growing, governors can use rising revenues to expand programs, or they can return extra revenues to citizens through tax cuts. When the economy is stagnant, governors can raise taxes to close budget gaps, or they can trim spending.
Creating a Sales Tax in Oregon
The Portland Clean Energy Community Benefits Initiative, or Measure 26-201, will appear on the November 2018 ballot within the city of Portland, Oregon. This tax is the latest iteration of a gross receipts tax in Oregon, following debates in both 2016 and 2017 to create this type of tax. If adopted, the initiative would create a 1 percent gross receipts tax on retail sales and dedicate the proceeds towards clean energy projects.
Testimony: Arkansas Continues to Debate Tax Reform
Today, the Arkansas Tax Reform and Relief Legislative Task Force continued to debate how to implement much-needed tax reform in 2019. The newly released 2019 State Business Tax Climate Index illustrates just how important reform is to Arkansas. Arkansas fell again this year, largely as other states jump ahead of the Natural State. Arkansas is now ranked 46th, among the bottom five states. The task force asked me to present on two separate topics today.
Tax Reform 2.0 Takes Shape
This evening, Chairman Kevin Brady (R-TX) released a series of bills which have been dubbed “Tax Reform 2.0.” These bills modify and build upon the Tax Cuts and Jobs Act passed in December, whose individual provisions are currently set to expire at the end of 2025.
Pennsylvania: A 21st Century Tax Code
Today, Pittsburgh and Philadelphia are thriving cities, but in the early colonial era, Pittsburgh was a western outpost on the Forks of the Ohio. Life on the frontier was beset by strife, violence, and occasional open warfare, yet for years the region’s security was outsourced to volunteers from Virginia, since the colonial assembly would not appropriate funds for garrisons or defense.
Arkansas Tax Task Force Hones its Recommendations
The Arkansas Tax Reform and Relief Task Force is quickly approaching its September deadline for recommendations. Today, the task force revisited a number of its previous proposals to begin to craft its final recommendations. The task force started with the number with more than 20 distinct provisions, many of which were approved for final consideration later this month.
Mapping 2018 Tax Reform Jobs Map, Explainer
Several weeks ago, we projected the number of new jobs each state can expect in 2018, due to the Tax Cuts and Jobs Act. Using our Taxes and Growth model, we’ve expanded the analysis to cover the entire federal budget window. As we’ve written previously, the Tax Cuts and Jobs Act will increase long-run GDP, raise wages, and create jobs. These predictions show the cumulative job effect of the Tax Cuts and Jobs Act by year.
Senator Harris’s Rent Relief Tax Credit is a Well-Intentioned Misfire
Last week, Senator Kamala Harris (D-CA) introduced the Rent Relief Act of 2018 that would amend the tax code to “allow for a credit against tax for rent paid on the personal residence of the taxpayer.” The bill calls for tax credits to renters who earn less than $100,000 and spend over 30 percent of their income on rent and utilities.
Tax Reform 2.0 Framework a Good Start
The House Ways and Means Committee released its long-awaited tax reform 2.0 framework, which would make permanent the Tax Cuts and Jobs Act’s individual income tax changes and institute other reforms.
There's no case against medical device tax repeal
Despite the significant progress made last year in reforming the U.S. tax code, there are still a number of meaningful tax improvements left for Congress to address. The first is . Part of the Affordable Care Act, the medical device tax applies a 2.3 percent tax to device sales. Although the tax is currently suspended, the Joint Committee on Taxation estimated that it would have generated $3.2 billion in revenue in 2018.
State-by-State Job Impacts of the Tax Cuts and Jobs Act in 2018
Today, we’ve released updated state-by-state analysis of the Tax Cuts and Jobs Act. Our Taxes and Growth model estimates that the Tax Cuts and Jobs Act will create 215,000 full-time equivalent (FTE) jobs in 2018. As we’ve written previously, the Tax Cuts and Jobs Act is a pro-growth tax reform, which will increase long-run GDP, raise wages, and create jobs. While tax changes can take years to materialize, we do expect to see an increase in jobs within the first year.
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