“Anything you can do I can do better.” Senator Bernie Sanders has upped the ante on the wealth tax debate. His latest plan would create a progressive rate structure starting at 1 percent for those with a net worth of $32 million, rising to 8 percent on net worth over $10 billion. Rival Elizabeth Warren’s wealth tax starts at 2 percent for assets in excess of $50 million and tops out at 3 percent for assets above $1 billion.
“Your love keeps lifting me higher…” to a new marriage penalty? Warren’s wealth tax on the 70,000 households worth more than $50 million may include a marriage penalty. Under the senator’s plan, a couple worth $100 million would pay a 2 percent tax on any wealth over $50 million. But if they divorce and split their assets down the middle, they’d each be worth $50 million—and pay no wealth tax. Harvard’s Greg Mankiw suggests that this design might give wealthy couples an incentive to divorce.
But will any wealth tax raise the revenue its supporters hope? The Tax Policy Center finds that wealth taxes are hard to administer and create many opportunities for avoidance and evasion. Depending on their design, they might collect between $800 billion and $1.6 trillion over 10 years. Are there better ways to tax the super-rich? Watch TPC’s Sept. 24 event on wealth taxes here.
Will impeachment open the door to congressional access to Trump’s tax returns? The president has tied up in court House efforts to get his tax returns. But some legal experts say a formal impeachment weakens Trump’s claims that Congress has no authority to see his returns and tilts the scales towards disclosure. The Supreme Court is likely to decide this and many other impeachment-related issues.
State tax revenue turbulence continues. TPC’s Lucy Dadayan explains the State Tax and Economic Review for the first quarter of 2019. State government tax revenues rebounded in the first quarter of 2019 after falling in late 2018. Year-over-year growth is weak, however, largely because of personal income tax cuts resulting from the Tax Cuts and Jobs Act. “States continue to face large fiscal uncertainties, particularly because of the unclear longer-term impact of federal tax policy changes and other actions on state economies and budgets,” Dadayan concludes.
As gig workers’ tax experiences go in California, so they may go across the country. TPC’s Howard Gleckman considers how the state’s new labor law will change the tax treatment of gig workers’ income. By reclassifying gig workers as employees for the purposes of labor law, the state likely will require firms to treat them as employees for tax purposes as well. That means reporting wages to the state and withholding state payroll and income tax. “…[O]nce firms set up systems to withhold state taxes, they will find it easy to do the same for federal taxes…. don’t be surprised if other states move aggressively to turn on-demand workers into employees.”
What if a gig worker wrote a nonfiction book in Rhode Island? The American Civil Liberties Union of Rhode Island has been assured that authors of nonfiction will get a state sales tax break. The group sued after the Rhode Island Division of Taxation prohibited nonfiction writers from using a tax break available to fiction writers for “creative and original” work. The local ACLU argued that tax breaks cannot be based on content. The taxing authority backed off and gave nonfiction writers the break.
Fiat loses, Starbucks wins, and Apple still waits… The European Union’s second highest court ruled that Fiat Chrysler must pay back $33 million in taxes saved in a deal with Luxembourg. But the EU General Court upheld Starbucks’ appeal of its tax deal with the Netherlands. What will this mean for Apple’s appeal of its $14 billion tax bill?
For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. Email Renu Zaretsky at firstname.lastname@example.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.