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CFO Accounting

Pass-Through Businesses Q&A

Pass-through businesses are the dominant business structure in America. Pass throughs file more tax returns and report more business income than C corporations. Pass-through businesses are not subject to the corporate income tax, but instead report their income on the individual income tax returns of owners. This blog will address some frequently asked questions about […]

Taxable Income vs. Book Income: Why Some Corporations Pay No Income Tax

The introduction of Senator Elizabeth Warren’s (D-MA) “Real Corporate Profits Tax” has put a spotlight on the differences between book income, or the amount of income reported by corporations on their financial statements, and the tax code’s definition of income upon which the corporate income tax is assessed. Senator Warren, among others, argues that firms […]

How High are Other Nations’ Gas Taxes?

The U.S. federal government funds infrastructure projects through the highway trust fund. This trust fund receives revenue mainly from the excise tax on gasoline and uses the revenue to pay for transportation projects through grants to state and local governments. The taxes and spending associated with the highway trust fund are based on the benefit […]

Reliance on Individual Income Tax Revenue in Europe

Today’s map shows the extent to which European countries rely on individual income tax revenue, measured as a share of total tax revenue. According to a recent report on tax revenue sources, individual income taxes in 2017 were the third most important tax revenue source in Europe (27 countries covered), at an average of 22.9 percent […]

Anti-Base Erosion Provisions and Territorial Tax Systems in OECD Countries

Key Findings All OECD countries with territorial tax systems have designed provisions that seek to prevent base erosion and profit shifting by multinational corporations. Designing a territorial tax system requires balancing competing goals: completely exempting foreign business activity from domestic taxation, protecting the domestic corporate tax base, and creating a simple system. A system can […]

To What Extent Does Your State Rely on Property Taxes?

States and localities rely on property taxes as a major source of revenue. In fiscal year 2016, the last year where data is available, property taxes accounted for 31.5 percent of total U.S. state and local tax collections, more than any other source of tax revenue. In the same year, 26 states and the District […]

Will Rhode Island Offset Wayfair Influx with a Sales Tax Cut?

Years before the U.S. Supreme Court’s landmark 2018 South Dakota v. Wayfair decision, Rhode Island policymakers had the foresight to decide future remote sales tax collection authority would be accompanied by a reduction in the state sales tax rate. Now that such authority has been granted by the Court, Rhode Island’s recently-enacted remote sales tax […]

A Property Tax is a Wealth Tax, but…

Last week, Senator and presidential candidate Elizabeth Warren (D-MA) was quoted on Twitter as making a comparison between her proposed wealth tax and the traditional property tax. Addressing a crowd, she said: “You’ve been paying a wealth tax for years. They just call it a property tax. I just want their tax to include the […]

New Study Finds that High Tax Rates Lower the Chance of Business Survival

A new working paper from the International Monetary Fund (IMF) by economists Serhan Cevik and Fedor Miryugin shows that taxes have an economically important effect on whether firms survive in the marketplace. Amid concern by policymakers and scholars over the fall in business dynamism in the United States, the authors examine whether taxation influences how […]

Iowa Adopts a “Soft” Property Tax Cap

Within hours of the emergence of compromise language, legislation enacting a “soft cap” on property taxes passed both chambers of the Iowa legislature last week. The amendments, designed to assuage the concerns of localities that a “hard cap” would unduly limit local budget authority, require any property tax rates anticipated to increase collections by more […]

Analysis of H.R. 1757: A Proposal to Raise the SALT Deduction Cap

Under previous law, individuals who itemized their deductions could deduct certain state and local taxes they paid against their federal taxable income. To broaden the tax base, the Tax Cuts and Jobs Act limited the amount individuals could deduct in state and local taxes to $10,000. For high-income taxpayers, this cap increased federal taxable income. […]

Revenue Estimates for Digital Services Taxes

Following the failure of the EU to agree to a new tax on digital services at the end of 2018, several European countries have moved forward with plans to adopt their own unilateral measures. Though some of these efforts predate last year’s proposal from the European Commission, Austria, Belgium, France, Italy, Spain, and the United […]

Sources of Tax Revenue: U.S. vs. OECD

A recent report on tax revenue sources shows the extent to which the United States and other OECD countries rely on different taxes for government revenues. Policy and economic differences among OECD countries have created differences in how they raise tax revenue, with the United States deviating quite substantially from the OECD average. In the […]

Firm Variation by Employment and Taxes

Understanding business employment and taxes is essential to crafting informed tax policies that affect businesses, their employees, and their customers. In light of policies aimed at influencing the decisions of specific companies—for example, Sen. Bernie Sanders’ (I-VT) “Stop BEZOS Act” and “Stop Walmart Act,” both proposed last year—it is especially valuable for policymakers to know […]

Reliance on Corporate Income Tax Revenue in Europe

A recent report on tax revenue sources shows the extent to which OECD countries rely on different tax types. Today’s map looks at the corporate income tax, which, compared to individual taxes, social insurance taxes, and consumption taxes, generates a relatively small share of tax revenue in Europe. In 2017, the most recent year for […]

How High Are Taxes on Recreational Marijuana in Your State?

As the public grows more supportive of legalizing recreational marijuana, more and more states must figure out their approach toward taxing legal cannabis sales. Ten states (Alaska, California, Colorado, Maine, Michigan, Massachusetts, Nevada, Oregon, Vermont, and Washington) and the District of Columbia have legalized the use and possession of recreational marijuana, but only eight of […]

Minnesota Considers $1.35 Billion Biennial Tax Increase

Minnesota is running a surplus, but you wouldn’t know it given that House leaders are pushing a $1.35 billion tax increase, larger and more aggressive than the revenue-raising measures already proposed by Gov. Tim Walz (DFL). The proposal (H.F. 2125), which is advancing in the legislature, contains a laundry list of tax changes, including dramatically […]

Connecticut Lawmakers Mull Capital Gains Surtax

Governor Ned Lamont (D) is sounding a skeptical note, but in Connecticut’s legislature, a capital gains surtax proposal may be gaining steam. Under the proposal, capital gains—both short- and long-term—for filers subject to the state’s current top rate (6.99 percent) would be subject to an additional 2 percent on the income tax, yielding a capital […]

Corporate and Pass-through Business Income and Returns Since 1980

Businesses in America broadly fall into two categories: C corporations, which pay the corporate income tax, and pass throughs—such as partnerships, S corporations, LLCs, and sole proprietorships—which “pass” their income “through” to their owner’s income tax returns and pay the ordinary individual income tax. Understanding the composition and characteristics of American businesses provides important context […]

Sources of Government Revenue in the OECD, 2019

OECD countries have on average become more reliant on consumption taxes and less reliant on individual income taxes. These policy changes matter, considering that consumption-based taxes raise revenue with less economic damage and distortionary effects than taxes on income.

Germany Proposes First R&D Tax Break

Last week, German Finance Minister Olaf Scholz finalized his proposal for a new research and development (R&D) tax credit. The German federal cabinet is expected to pass the measure in mid-May, after which both houses of the German Parliament will vote on it. The bill would allow businesses to claim a tax credit worth 25 percent […]

Why State-for-Local Tax Swaps Are So Hard to Do

Tax reform is hard. But sometimes local tax reform makes it look easy, particularly when those reforms involve a state-for-local tax swap. Currently, both Texas and Nebraska are considering state-for-local tax swaps, but they’re running into an old problem: frequently, only a net tax cut can ensure that most taxpayers are not worse off, while […]

Tax Treaty Network of European Countries

In an increasingly globalized world, many individuals and corporations work and do business abroad. As a result, jurisdictions need to define how income earned in foreign countries is taxed. Otherwise, income could be taxed in more than one country, resulting in double taxation. To avoid this, countries have negotiated double tax agreements (DTAs). These tax […]

An Overview of Capital Gains Taxes

Key Findings Comparisons of capital gains tax rates and tax rates on labor income should factor in all the layers of taxes that apply to capital gains. The tax treatment of capital income, such as from capital gains, is often viewed as tax-advantaged. However, capital gains taxes place a double-tax on corporate income, and taxpayers […]

Who Wants a Tax Increase?

The OECD recently released the 2018 results of their “Risks that Matter Survey.” This survey covers a broad range of policy issues that people face in countries around the world. The survey covered more than 22,000 people aged 18 to 70 years old in 21 OECD countries. Several of the survey questions elicited responses on […]

Texas Considers Options for Reducing Property Taxes

The Texas legislature is considering two pieces of legislation (Senate Bill 2 and Senate Joint Resolution 76) which are aimed at reducing local property tax burdens. SB 2 would cap property tax levy increases at 2.5 percent, while SJR 76 aims to mitigate property taxes by shifting part of the burden to sales taxes instead. […]

The First Filing Season under the TCJA

Today, April 15, brings to a close the first tax-filing season after the Tax Cuts and Jobs Act’s (TCJA) overhaul of the individual income tax system. Now that most Americans have filed their 2018 tax returns, it’s a good time to review what we know about the TCJA’s impact on individuals: Most Americans received a […]

Will North Carolina Reduce its Franchise Tax?

North Carolina Senate Finance Committee Chairs Ralph Hise (R), Paul Newton (R), and Jerry W. Tillman (R) this month introduced Senate Bill 622, the Tax Reduction Act of 2019. This bill includes several tax changes, but the most notable proposed structural improvement is a provision to reduce and cap the state’s franchise tax. North Carolina […]

Oregon Introduces Gross Receipts Tax Legislation to Beat the Clock

On Thursday evening, the Oregon Joint Committee on Student Success held a hearing on House Bill 2019 and two amendments. The first amendment outlines the Committee’s plans to improve Oregon’s public education system. The second amendment provides details on how the Committee will raise the $1 billion in annual revenue required to support the public […]

Recapping the 2019 Arkansas Tax Reform

The Arkansas General Assembly  concluded its 2019 session after accomplishing one of its key priorities, tax reform. After two years of intense debate and study, the Natural State has passed a series of tax reforms to improve the competitiveness of the state’s tax code. Individual Income Tax Reform The General Assembly pushed through its third […]

Notable Tax Policy Changes in Europe

The Tax Foundation’s International Tax Competitiveness Index (ITCI) seeks to measure the extent to which a country’s tax system adheres to two important aspects of tax policy: competitiveness and neutrality. A tax code that is competitive and neutral promotes sustainable economic growth and investment while raising sufficient revenue for government priorities. Published annually, the ITCI […]

How High Are Cigarette Taxes in Your State?

Cigarette taxes around the country are levied on top of the federal rate of $1.0066 per 20-pack of cigarettes. As of 2016, taxes accounted for almost half of the retail cost of a pack of cigarettes. On average, states charge $1.73 of taxes per pack of 20 cigarettes. If high taxes were the goal, New York and […]

A Tradition Unlike Any Other: The Masters Tax Exemption

This week, the world’s best golfers are descending on Augusta, Georgia for the 83rd edition of the Masters golf tournament. Augusta National Golf Club is famous for more than green jackets and pimento cheese sandwiches—legend has it that it’s the impetus for one of the tax code’s many exemptions. Section 280(A) of the Internal Revenue […]

Tax Freedom Day 2019 is April 16th

Tax Freedom Day represents how long Americans as a whole have to work in order to pay the nation’s tax burden. In 2019, Americans will pay $3.4 trillion in federal taxes and $1.8 trillion in state and local taxes, for a total bill of over $5.2 trillion, or 29 percent of the nation’s income.

Oregon Shouldn’t Adopt a Margin Tax in Its Search for Revenue

Oregon’s Joint Committee on Student Success Subcommittee on Revenue is moving closer to recommending a revenue option to fund Oregon’s education system. The subcommittee presented three options to the Student Success Committee last Thursday night, modeled on Ohio’s gross receipts tax and Texas’ margin tax, a modified gross receipts tax that allows for some deduction […]

Indiana Chips Away at Tangible Personal Property Taxes

This week, Indiana lawmakers advanced legislation to mitigate the impact of the state’s tangible personal property (TPP) tax. Senate Bill 233 was amended by the House and sent back to the Senate, where a previous version of the bill passed in January with no senators opposing. If enacted, this legislation would double Indiana’s TPP tax […]
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