The voices of Tax Policy Center's researchers and staff
Tax reform: Go big or go home, or at least, not very far. TPC’s Len Burman says that senators Marco Rubio’s and Mike Lee’s proposal to eliminate the tax on capital gains would do more harm than good. The senators argue that it’s a step toward a consumption tax. But Len thinks some small steps aren’t worth taking. “If you want a consumption tax that eliminates taxation of the return to saving, go for it… [but] exempting capital gains from tax while leaving other capital income taxable and interest expense fully deductible… would likely hurt the economy.”
Will the sun ever set on an Edwardian-era tax break? In Britain, an old law allows certain Brits to be “sort of” British, and avoid taxes on foreign income or assets. They just have to prove that they are “non-domiciled:” Either one’s father was born outside Britain and one plans to return to their father’s birth country, or one has chosen a new permanent home country and can prove she plans to move there someday, by, for example, buying a burial plot. The number of “non-doms” has been growing, coincidentally with the introduction of an annual $46,000 tax that can be paid by any non-dom living in Britain more than seven of the previous nine years instead of taxes on foreign income and assets. The New York Times reports that the tax break is under more scrutiny now that British bank HSBC has been found to be hiding wealthy clients’ cash in off-shore accounts.
Meanwhile, Switzerland plans to share tax information with Australia. Reuters reports it’s the first such agreement under an Organization for Economic Development and Cooperation framework to automatically exchange tax information. The two countries will start collecting data from 2017 and will start sharing it in 2018.
Massachusetts’ GOP Governor Charlie Baker wants to kill a film credit and help low-wage workers. His budget will be released today, and he wants to double the state’s Earned Income Tax Credit. Low-income working families with three or more children would receive $1,873 annually in three years, double the $937 they get now. He’d cover the cost by phasing out the state’s film tax credit. He also hopes to raise $100 million next year through a tax amnesty program for those who have not filed their taxes. It’d be the third for the state in under two years, and the second under Baker.
In the High Court. The Supreme Court ruled that federal courts can hear a dispute over Colorado's Internet tax law, or “Amazon tax.” And Justice Anthony Kennedy, often a key swing vote, suggested that it might be time to reconsider the ban on state collection of sales taxes from companies outside their borders. On the Affordable Care Act front, the court hears King v. Burwell case today.
And on the Hill. Should the Supreme Court decide King v. Burwell to disallow federal tax subsidies for residents of states without state health exchanges in June, House Ways & Means Chair Paul Ryan and his GOP colleagues John Kline and Fred Upton have a plan. They’d ditch the ACA by getting rid of mandates to provide or purchase health insurance and offer “advanceable” and refundable tax credits to those whose insurance might be dropped under the Supreme Court decision. Also on the Hill today, Council of Economic Advisers Chaiman Jason Furman will testify before the Joint Economic Committee on the Economic Report of the President.
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