There’s a new plan to tax online sales. House Judiciary Committee Chair Bob Goodlatte of Virginia has drafted a bill that would, reports The Wall Street Journal (paywall), require retailers to calculate remote sales tax by combining their home state’s tax base with a rate determined by the consumer’s state. The idea is getting mixed reviews. Amazon loves it, Main Street retailers are wary, and anti-tax conservatives are worried. The Senate Finance Committee’s top Democrat, Oregon’s Ron Wyden, gives it a thumbs down: “This proposal would create a logistical nightmare for states like Oregon that don’t have or want sales taxes.”
Hillary Clinton would simplify small business taxes. TPC’s Howard Gleckman takes a closer look, and finds they “have the potential to make tax filing vastly easier for owners of small firms.” He only wishes that she’d be as interested in simplicity when it comes to the rest of her tax agenda.
Donald Trump’s proposed rate cut on pass-through businesses would mostly benefit high-income taxpayers. Trump would cut the tax rate to 15 percent for partnerships and S corporations. That would overwhelmingly benefit the wealthy, according to new TPC analysis. TPC’s Howard Gleckman explains that two-thirds of this business income is reported by households making $292,000 or more, and half goes to those making $693,000 or more, the highest income one percent.
As for Trump and his pass-through businesses… TPC’s Steve Rosenthal says Trump (who does business through about 500 LLCs) should release his tax returns. They’d answer some key questions. Is Trump truly a successful business person? Does he give as generously to charity as he claims? Would Trump’s tax proposals benefit for his personal interests? Did Trump lower his taxes through legal tax avoidance, or illegal tax evasion? In the words of President Nixon, “People have got to know whether or not their president is a crook.”
More high-income small business owners say “no thanks” to a tax break in Kansas. In 2012, Kansas lawmakers voted to allow 300,000 independent business owners to pay no state tax on most of their income. One of them, attorney James Zakoura, calculates the state loses tax revenue on $11 billion in annual business income. State officials say the number is closer to $7.5 billion. Still, repealing the provision could raise $260 million a year, and a growing number of well-off Kansans are urging the state legislature to do so. “I’d give [the tax break] up in a second,” said Zakoura. “I don’t need it.”
And a venture capitalist says “no thanks” to the carried interest loophole. “We should not be receiving a tax break meant for investors when our work does not involve the risk of our own investment of capital,” writes Alan J. Patricoff in The New York Times.
Healthcare-related tax expenditures tend to help the wealthy, too. A new TPC analysis shows that the majority of those tax breaks, focused on employer-provided health benefits, disproportionately benefit high-income households. TPC’s latest edition of Tax Line digs into the data.
Congress is in recess. The Daily Deduction will post Mondays until Congress returns.
Interested in subscribing to the Daily Deduction, the Urban-Brookings Tax Policy Center summary of the day’s tax news? Sign-up here to get the Daily Deduction delivered to your inbox every morning. If you’d like to tell us about a new research paper or have any comments about our feature, write us at dailydeduction “at” taxpolicycenter “dot” org.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
- © Urban Institute, Brookings Institution, and individual authors, 2020.