On spending and extending: A few more days to work out the kinks. The Senate approved yesterday and the House will likely approve today a five-day spending bill to avoid a government shutdown. As for the tax extender package: Bargaining continues.
A former CBO director would take a tougher tax stance on the affluent. Doug Elmendorf, now with the Brookings Institution after six years heading CBO, shares his thoughts on who should bear the burden of fiscal policy changes. If we make changes to federal spending and taxes, we should make them in ways that impose most of the burden on the affluent, because those are the people who have benefited the most from growth in output and income over the past few decades.”
Will Clinton’s tough stance on corporate taxation work in the long run? TPC’s Steve Rosenthal says the exact design of her proposals—as yet unknown—is critical to their assessment. Still, he shares her view “we cannot wait for [tax reform] to stop the hemorrhaging of our tax base.”
Or are inversions just the tip of that melting iceberg of a corporate tax base? TPC’s Eric Toder points to the more fundamental problem. “[I]t is too easy to manipulate the source of corporate income and the place of corporate residence because neither necessarily corresponds to the location of real economic activity.” In other words, tax bases can shift too easily, and that opens the door for companies to dodge a tax collector. Who has a harder time shifting their location overseas? Shareholders.
Banning Internet taxes, in a customs bill. The House is scheduled to vote today on a permanent extension of the Internet Tax Freedom Act that bars states from taxing Internet access. The Senate agreed to the measure after Senator Ron Wyden slipped it into a customs bill. Supporters of separate legislation to give states flexibility to require online retailers to collect sales tax are not pleased. They hoped to tie the two bills together.
Next Tuesday, tune in for a talk on the taxation of treats. The Urban Institute hosts a webcast event on December 15: “Should Governments Tax Soda, Sweets, and Junk Food?” Panelists Donald Marron and Maeve Gearing of the Urban Institute, Baylen Linnekin of the Keep Food Legal Foundation, and Y. Claire Wang of Columbia University’s Obesity Prevention Initiative will consider whether taxation will improve health, or have unintended side-effects. They’ll also address whether such taxes unfairly restrict consumer freedom. Margot Sanger-Katz of The New York Times will moderate the panel.
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