High tax rates don’t make many rich people move. That’s the conclusion of a new study by researchers at Stanford University and the Treasury Department. “Millionaire taxes” in some states may prompt a few millionaires—or billionaire hedge fund managers—to decamp to low-tax states, but “only at the margins of statistical and socioeconomic significance.” Indeed, high income people rarely move from state-to-state for any reason. TPC’s Howard Gleckman puts it like this: “Yes, some millionaires may move to reduce their tax liability. But not many.”
There are interesting online sales tax developments in South Dakota. The state enacted a law that says sales volume defines an online retailer’s South Dakota presence. If an online business sells more than $100,000 worth of goods or processes more than 200 orders from state residents, it must collect South Dakota sales tax. Online retailers have sued to overturn the law, but South Dakota and other states hope the case makes it to the US Supreme Court. The Court could then reconsider its 1992 ruling that sales tax must be collected only if a retailer has a store, warehouse or subsidiary in-state.
There are high taxes and high surpluses in New Zealand. Smokers will have to pay $20 for a pack of cigarettes under the government’s budget plan, an increase of 46 percent over the next four years. The budget would also require tax greenhouse gas emitting companies starting in 2019. New Zealand forecasts surpluses of $471 million for the fiscal year ending in June, and $4.4 billion by 2020. Those surplus forecasts may fall due to tax cuts that are likely to be announced before next year’s election.
Help those gig economy workers meet their tax obligations! National Taxpayer Advocate Nina Olson told the House Small Business Committee that Congress and the IRS need to do more. “Establishing the tax-compliance norms in this emerging industry in its infancy will benefit participants and the tax system as this segment grows.” Employers like Uber and Lyft could help a little more too, it seems. The National Association of the Self-Employed surveyed sharing-economy participants: 69 percent received no tax guidance from these firms.
Congress will be in its Memorial Day recess next week. The Daily Deduction will publish Tuesday, May 31. It returns to its regular schedule on Monday, June 6.
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