What if your employer’s share of payroll taxes were replaced with a consumption tax? TPC’s Jim Nunns and Joe Rosenberg propose doing just that. They explain how a goods and service tax set at 4.1 percent could raise the same amount of money as the employer share of the Medicare and Social Security taxes. TPC’s Howard Gleckman sees the promise of the proposal: Households making less than about $26,000 would get an average tax cut of 0.8 percent of income. Households making between about $51,000 and $88,000 would get a tax cut of 0.4 percent of income. Those in the top 1 percent, who make about $850,000 or more, would see their average tax bill rise by 1.1 percent of their income.
The Department of Justice helps the IRS get documentation on Facebook’s asset transfers to Ireland. The IRS is examining the firm’s transfer of various rights to Facebook Ireland Holdings, Unlimited. The 12.5 percent Irish tax rate is far lower than what Facebook would pay on US income. So far the information collected by the IRS suggests a “problematic” valuation approach.
The consequences of government on autopilot. TPC’s Gene Steuerle told a House Judiciary Committee task force that permanent and growing mandatory programs and tax subsidies leave today’s lawmakers with little ability to revise priorities to keep up with a rapidly changing world.
And some fights over the few dollars not spoken for never end. Senate Democrats warned Majority Leader Mitch McConnell that they’ll block all spending bills if Republicans don’t agree to stick with the bipartisan budget framework Congress adopted in 2014. So far, Congress has yet to OK a single new spending bill.
The UK depends on London’s tax base. A lot. A new study from the Centre for Cities finds that London generated about 30 percent of the United Kingdom’s revenue from income tax, land and property taxes, and value-added tax in 2014-2015, compared to 25 percent in 2004-2005. Over that same time, other UK cities’ tax revenues remained mostly unchanged. Post-Brexit—which a majority of Londoners opposed—any slowdown in the local economy could be dire for the UK.
Next week: A discussion of corporate tax reform. TPC, the Oxford University Centre for Business Taxation, and the Robert D. Burch Center for Tax Policy and Public Finance at the University of California, Berkeley host the discussion among an international group of economists and attorneys at the Urban Institute on Thursday, July 14, from 9am to 2:45pm. The agenda is here. If you can’t make it in person, TPC will stream the event live.
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- © Urban Institute, Brookings Institution, and individual authors, 2016.