TaxVox: Individual Taxes

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The voices of Tax Policy Center's researchers and staff

Individual Taxes

The Case of the “Disappearing” Offshore Subsidiary

May 7, 2009 –
When President Obama proposed international tax reforms on Monday, the biggest surprise was a provision that would prevent parent companies from making foreign affiliates “disappear” for U.S. tax purposes. How do you make an affiliate disappear? Since I have not taken the magicians oath, I’ll tell you. But here’s one clue: It is perfectly legal under the so-called “check-the-box” rules.
Individual Taxes

Stimulating the Stimulus: Helping New Homebuyers

May 6, 2009 –
This year’s stimulus bill offers a refundable tax credit of up to $8,000 for new homebuyers, generously defined as anyone who hasn’t owned a principal residence during the past three years. That’s a pretty sweet deal that could help boost sagging real estate markets.
Individual Taxes

A Few More Thoughts on Obama’s International Tax Initiative

May 5, 2009 –
International tax gives me a migraine, but President Obama’s new effort to tax overseas income has the wonkosphere buzzing, so I can’t resist adding to the cacophony. First, some of what Obama is proposing will be very useful. Some may be counterproductive. But whatever it is, it is not tax reform. I wish Obama would stop degrading the concept of reform by using the phrase to describe what is mostly a tax increase on multinational businesses. Tax reform implies a coherent structure for raising revenue. This is a complex package of international tax changes, but I don't see the all-important internal logic that makes it reform.
Individual Taxes

Will Paring Deferral Create Jobs?

May 5, 2009 –
President Obama’s new international tax proposals promise to “replace tax advantages of creating jobs overseas with incentives to create them at home”. The main offender is the so-called deferral provision. Under current law, U.S. corporations pay tax on their worldwide profits, but can defer tax on profits earned by their overseas subsidiaries until they “repatriate” the profits as dividends to the U.S. parent corporation. If the foreign subsidiary is located in a country with a corporate tax rate lower than the U.S. corporate tax rate, deferral makes the effective tax rate companies pay lower on foreign investments than here -- an incentive for U.S. corporations to invest in low-tax foreign countries instead of in high-tax foreign countries or at home. (Some of our major trading partners also allow their companies to defer tax on foreign profits, while many exempt most foreign-source income from tax entirely.)
Individual Taxes

Don't cry for me, Lord Lloyd Webber

May 4, 2009 –
Don't cry for me, Lord Lloyd Webber The government’s raising tax rates And taking more pounds From super-rich folk. Just leave the country Before you go broke.
Individual Taxes

Jack Kemp

May 3, 2009 –
The landmark Tax Reform Act of 1986 would never have happened without Jack Kemp. The voluble supply-sider, who died yesterday at 73, helped make tax reform, and not just tax cuts, acceptable to Republicans. As early as 1977, then-congressman Kemp and Senator Bill Roth (R-DE) pushed a bill that would have reduced tax rates across-the-board. In 1983, Kemp bucked many in his party by making back-channel overtures to Democratic tax reformer Senator Bill Bradley (D-N.J.)—an effort recounted in Jeff Birnbaum’s and Alan Murray’s Showdown at Gucci Gulch. Bradley and Kemp shared a key political insight: If you can get rates low enough, you will ease the pressure to create, and protect, tax loopholes.
Individual Taxes

Farewell Tom Petska

May 1, 2009 –
Government employees often get a bad rap. Conservative pundits like to characterize them as pampered deadwood—a waste of taxpayer dollars. The truth is that many work tirelessly under challenging conditions, earning a fraction of what they might in the private sector, to advance the public interest.
Federal Budget and Economy

Mañana Budgeting

April 30, 2009 –
President Obama said last night he was going to request $1.5 billion to help address the swine flu outbreak. I wish he had also promised to find the dough to pay for this initiative. But, he didn’t. This follows a troubling, and ongoing, pattern. Obama and the congressional Democrats say they recognize the consequences of burgeoning deficits and promise to address the problem—next time.
Individual Taxes

How Would Small Businesses Fare Under Obama’s Tax Plan?

April 29, 2009 –
Earlier this week the Washington Post published an article painting the Administration’s tax plan as one that would burden small business owners with soaring tax payments. In stark contrast, a Post editorial run just two weeks earlier—“The Small Business Myth”—debunked claims that Obama’s plan unfairly targeted business owners. Which Washington Post piece is right?
Individual Taxes

Swine Flu Tax Incentives Move Through Congress

April 28, 2009 –
A new package of anti-swine flu tax incentives was introduced in the House today. The three-pronged package would provide a new tax credit for businesses that purchase liquid hand sanitizers, make it easier for state and local governments to sell tax-exempt bonds to finance swine flu first-response teams, and provide a new deduction for automobile air handlers.