Flat tax chatter: Just small talk or a deeper conversation? The Hill examines GOP presidential hopefuls Rand Paul and Ted Cruz and their ideas for an across-the-board tax rate. A flat tax will disproportionately benefit higher earners, and even some in the GOP say that makes it a non-starter. But TPC’s Howard Gleckman noted, “This is almost theological among Republican primary voters… They really do think this is the only way to reform the tax code.” All GOP candidates want to cut taxes. Howard poses a key question: Will candidates choose to shift more of the tax burden onto low- and middle-income households to limit the impact on the deficit? Or will they decide to cut taxes for almost everyone, regardless of the deficit?
Minnesota House Republicans would like some income tax cuts. About $2 billion worth, to be exact. A proposed temporary personal or dependent exemption, the centerpiece of their proposal, would reduce revenue by $539 million over two years. It would also eliminate the state’s general property tax paid by corporations and other businesses, reducing revenue by another $453 million over two years. Minnesota currently runs a $2 billion surplus. Minnesota Democrats say the tax cuts are too business-focused.
Income tax cuts for lower-income taxpayers: A better option for growth? A new National Bureau of Economic Research working paper by the University of Chicago Booth School of Business’ Owen Zidar offers some evidence. Using tax return data from NBER’s TAXSIM, he finds that tax cuts for lower-income groups largely drive employment growth. By contrast, tax cuts for the top ten percent of earners have a small effect.
Oh, to be a tax-sensitive free-agent for the NFL… Tax rates vary by state, and some professional football teams use those differences when recruiting players. Professional players also pay state taxes in every state in which they earned money during the year. But, as TPC’s Richard Auxier has noted, “it’s debatable how much state income taxes affect job and living decisions—for professional athletes and other Americans.” For what it’s worth: Four states host NFL teams but do not have a state income tax: Florida, Tennessee, Texas, and Washington, home of the Seattle Seahawks. The Seahawks lost the Super Bowl to the New England Patriots a few months ago. Massachusetts’ has a state income tax (the top tax rate is 5.15 percent). Is there a message here?
Today on the Hill. The Senate Finance Committee continues last week’s hearing on US tariff policy with Tom Donohue of the US Chamber of Commerce and Richard Trumka of the AFL-CIO. The Senate Banking Committee holds a hearing on reauthorizing surface transportation services and projects.
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