Taxes and last night's debate. Taxes were a small part of the debate, but they did come up. Trump appeared to concede that he does use tax write-offs to avoid paying federal income taxes. "Of course I do," he answered in response to a question. And, he added, "A lot of my write-off was depreciation....It's a wonderful charge." He added, without evidence, that wealthy Clinton supporters had done the same thing.
Did Donald Trump use the same payroll tax loophole as Newt Gingrich and John Edwards? TPC’s Steve Rosenthal thinks he may have. “Management companies are supposed to treat a reasonable portion of such compensation as salary and send their owners W-2s. However, the companies often ignore this requirement and distribute most of their owners’ compensation as profits to avoid payroll taxes on a large chunk of income…. [Trump] could have avoided payroll taxes on it for years… we will not know for sure unless Trump releases his tax returns.”
“Tax me, please.” Vanessa Williamson of the Tax Policy Center and the Brookings Institution notes in The New York Times that her studies reveal a clear picture of Americans’ attitude about taxes: “Americans do not think it’s smart to avoid your taxes; they think it’s unethical…. What upsets most people about taxes is not the amount they contribute. They are angry about the amount that the wealthy can avoid contributing.”
What’s the “just right” way to tax carried interest? TPC’s Donald Marron’s latest paper offers a recommendation: The carry should be taxed as labor income to fund managers but deductible against ordinary income for taxable investors.
The CBPP has a new paper on the “repatriation tax.” The updated report from the Center on Budget and Policy Priorities examines the differences between three different proposals: A transition tax, a repatriation holiday, or deemed repatriation. Says author Chye-Ching Huang: “All three types of proposals are sometimes referred to as ‘repatriation taxes,’ but it is important to distinguish among them because of their very different effects on revenue and multinationals’ incentives to shift profits offshore.”
What can Canada’s carbon tax plan teach the United States? TPC’s Howard Gleckman considers Canadian Prime Minister Justin Trudeau’s plan to require every province to adopt either a carbon tax or develop a carbon trading system by 2018. While Gleckman doesn’t think the US could adopt the Canadian model any time soon, the provincial option could be a useful model: “Don’t be surprised if a carbon tax gets a second look in the US.”
With a gas tax hike, New Jersey repeals its estate, but not its inheritance, tax. Forbes reports that the state legislature repealed the estate tax in the same bill that raised the gasoline tax by 23 cents per gallon. The state’s estate tax exemption will climb from $675,000 to $2 million in 2017 and the tax will be eliminated entirely in 2018. New Jersey’s inheritance tax remains in place, however, for siblings, nieces and nephews of the decedent.
Property tax assessment: Art or science? TPC’s Megan Randall enters the dark world of property assessment, and how property tax appeals affect local public finance. Some big-box stores say that their property assessments should use vacant, or “dark,” big-box stores as their closest comparable. Says Randall: “Successful appeals reduce an important source of revenue for local governments. The art of property assessment remains a moving target for local governments attempting to forecast revenues and pay for local services.”
Colorado property tax law hits mobile home owners especially hard. The Denver Post examines the issue. One couple, now filing a lawsuit in federal court, had to buy back their mobile home for $30,600 over a $63.74 tax bill. They had originally purchased the home for $8,000. Notices of tax debts, which are sometimes purchased by investors, don’t always make it to the actual mobile home owner. Local authorities do not always have the paperwork necessary to record mobile home title transfers in a timely manner.
Should all of our tax returns be public? The Tax Hound considers tax return transparency in Norway and Sweden—could it work in the US? With so much personal information already available to those who want to buy—or steal—it, do we need to add tax returns to the mix?
Congress is in recess. The Daily Deduction will post Mondays in the interim.
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