With resistance growing to the GOP’s border adjustment tax, The Wall Street Journal reports on a truly heinous plan B to fund a corporate tax cut. This half-baked plan comes courtesy of the American Enterprise Institute. The AEI plan would cut corporate taxes to 15% and pay for the reduction by taxing dividends and capital gains at ordinary income rates (that’s 39.6% pre-Obamacare taxes and over 43% post). Capital gains would be paid on a mark-to-market basis. If you bought a stock for $100 and it appreciated to $200 at the end of the year, but you held onto it, you would still owe $40 in … [Read more...]
These 14 Simple Tax Changes are Needed Now
America desperately needs a tax overhaul to fix a system that has become unwieldy and difficult for business. Reforms could boost the economy, and even the thought of tax reforms has sent markets soaring. Here, from Fidelity, are fourteen tax changes that could show up in any potential reform package. Tax rates: The Trump plan and the House plan would both cut the top rate to 33 percent from 39.6 percent, raise the lowest rate to 12 percent from 10 percent, and collapse the number of brackets — different tax rates at different income levels — to three from seven. The Senate leadership has … [Read more...]
Taxes Undermine, Exploit and Punish the Productive
Cato Institute's Dan Mitchell details the results of a European Policy Information Center study on how non-income based taxes, like consumption taxes and payroll taxes, affect high income earners. He begins: Back in 2014, I shared some data from the Tax Foundation that measured the degree to which various developed nations punished high-income earners. This measure of relative “progressivity” focused on personal income taxes. And that’s important because that levy often is the most onerous for highly productive residents of a nation. But there are other taxes that also create a gap … [Read more...]
Could a Risky New Tax Leave Retail Floundering?
There is a lot of uncertainty surrounding the proposed "border adjustment tax." Retail businesses are organizing to fight a tax that could make every imported good Americans buy 20% more expensive. CNBC's Krystina Gustafson writes: The NRF's forecast comes as retailers are eyeing the potential impacts of a border adjustment tax, a GOP proposal that threatens to slap a 20 percent tax on goods they import and sell in the U.S. The industry has banded together to fight the tax, which they argue could wipe out their earnings and raise prices for consumers. A recent analysis by Ernst and Young, … [Read more...]
Can a New Border Tax Protect America’s Place In the World?
The Wall Street Journal outlines President Trump’s plan for reducing the trade deficit and boldly slashing income tax rates: The Trump administration took a step toward a House Republican tax plan Thursday when it tentatively endorsed a proposal to tax U.S. imports and exempt exports from taxation, an idea known as “border adjustment.” House Republicans are banking on the idea to help pay for deep cuts in corporate and individual income-tax rates. “This president is looking at a very bold tax reform approach,” Rep. Kevin Brady (R., Texas) told Fox News. “Our competitors are already … [Read more...]
Can One Man Smash the Business Roadblocks in Teetering Illinois?
With the recent passage of a Right to Work law in Kentucky, Illinois is nearly surrounded by states with such laws. Only Missouri, far away from Chicago, the industrial heart of Illinois, remains a union state. With at least five Right to Work bills working their way through the Missouri legislature and headed toward the state’s newly elected Republican governor, it’s likely that soon Illinois will be an anti-business island in a sea of pro-business states. Additionally, three of Illinois’ neighboring states have lower corporate income tax rates. Today Illinois demands 7.75% from its … [Read more...]
These are 2 of the Best Ways to Boost American Business
The Cato Institute’s Dan Mitchell offers a menu of repeals and reforms he hopes Donald Trump can bring about. Here are two I especially like. Reform of healthcare entitlements - Republicans in 2017 will control Congress and the White House, so they'll have the power to fix our broken entitlement system and dramatically improve America's long-run outlook. And since the House and Senate GOPers have voted for budgets that presume much-need structural changes to Medicare and Medicaid, that bodes well for reform. The wild card is Donald Trump. He said some rather irresponsible things about … [Read more...]
Is This Revolutionary Tax Overhaul the Most Innovative Since 1986?
The WSJ outlines the innovative GOP tax plan in depth: As a rule, taxing a behavior makes people do less of it, and that principle applies to anything from cigarette smoking to realizing capital gains. That principle, though, isn’t so clear regarding a Republican proposal that for the first time would tax American imports while exempting exports from U.S. tax. And economists question whether such a policy, known as a border adjustment, would diminish imports into the country or increase exports. The GOP election sweep of Congress and the White House has given the idea of adopting a … [Read more...]
Small Gov’t and Lowest Taxes Stimulate Miracle Growth
Donald Trump would be wise to follow the lead of international tax expert Dan Mitchell of The Cato Institute. To be blunt, I don't think the World Bank should exist. We don't need an international bureaucracy to promote economic development in poor nations. Particularly since the policies that we know will work - free markets and small government - oftentimes are hindered by intervention from multilateral institutions such as the World Bank. For example, I've spent the past few days in Vanuatu, where I've been fighting against the adoption of an income tax. Perhaps most laudable, the … [Read more...]
Trump Tax Code Implications for Investors
There’s a lot to like about the Trump tax code reform, especially on the estate tax front: Republicans’ race to rewrite the U.S. tax code on the heels of this month’s election relies on years of work that is suddenly—and quite unexpectedly—poised to pay off. A 2017 tax overhaul would be a case study in the benefits of dead ends and behind-the-scenes preparation. Failure would show again how hard it is to reshape the U.S. tax system, even with rare political momentum and one-party control of government. Republicans have long sought a rate-lowering, base-broadening revamp of the tax code, … [Read more...]
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