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Congress is in recess. The Daily Deduction will return to its regular schedule on Monday, September 8. Until then: We’ll see you every Monday morning.
Walgreen might be the only one who’s tired of talking about inversions. The Illinois-based drugstore chain plans to keep its tax base in the US after purchasing Alliance Boots. But other companies have paid two former US Senators, Trent Lott and John Breaux, to lobby against any legislation that would block inversions. And SafeNet, a US-based data protection firm, plans to cut its tax rate not through a technical inversion but by selling itself outright to the Dutch firm Gemalto.
Why talk when you can act? TPC’s Eric Toder suggests a different way to deal with unintended corporate tax consequences like inversions: an annual “housecleaning” bill that might bypass political gridlock. Barring that, when it comes to the corporate tax code, Eric and his co-author Alan Viard urge Congress to schedule major surgery.
Retirees want to lower their tax burdens, too. Property taxes—though they vary widely by state and region—can be high in the United States. A growing share of retirees are collecting Social Security overseas and saving money on property taxes and health care costs. For what it’s worth, there has been no reported questioning of these retirees’ patriotism.
What’s the matter with Congress? TPC’s Howard Gleckman asks the perennial question. Congress claims to worry about the deficit, but continues to scramble and cry “emergency” in order to fund programs which are very necessary and very predictable. Both veterans’ health care and the US infrastructure, for example, now have money for the short-term, but the money isn’t offset in the budget. But as Howard reminds TaxVox readers, “The deficit is an issue lawmakers care deeply about, except when they don’t.”
Some in Missouri think they know what’s the matter with Kansas. Missouri’s Democratic Governor Jay Nixon continues to try to block income tax cuts put forward by the Republican-majority legislature. He vetoed measures that would exempt sales tax for particular groups and industries because he fears the revenue loss could reach $800 million annually. The legislature overrode his veto of a gradual income tax cut set to begin in 2017, arguing that the cuts—unlike those in Kansas—are contingent on continued revenue growth. They may try to override Nixon’s latest vetoes in September.
For some New Yorkers, two timely tax rebates. Next month, about a million New York households with incomes between $40,000 and $300,000 and children under age 17 will each get a $350 check in the mail as part of the state’s budget deal. New York homeowners will get a property tax rebate in October as part of a property tax freeze passed in March. The $750 million rebate programs each last three years. Coincidentally, both Democratic Governor Andrew Cuomo and the state Legislature are up for reelection in November.
What if carbon tax revenues were recycled as lump-sum rebates? Maryland Democratic Congressman Chris Van Hollen’s bill, the Healthy Climate and Family Security Act of 2014, would require companies to buy permits to produce or import carbon-containing fuels. Permit revenues would be distributed as equal lump-sum rebates to every American with a Social Security number. A new study from Resources For the Future compares three ways to distribute revenue from a carbon tax. The authors find a lump sum rebate to every American would be the most progressive option, but would be less efficient than using the revenue to cut either capital or labor taxes.
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