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How high are wine taxes where you live?
The treatment of wine differs extensively across the states, and at higher rates than beer because of greater alcohol content.
There are a lot of factors to take into consideration when looking at state wine taxes. Rates can include case or bottle fees dependent on the size of the container, as in states such as Arkansas, Minnesota, and Tennessee.
...Rates may also include sales taxes specific to alcoholic beverages and wholesale tax rates, as in Arkansas, Maryland, Minnesota, South Dakota, and the District of Columbia.
Many states even apply varying rates based on wine type, and wines with a higher alcohol content are often subject to higher excise tax rates.
See how your state compares here: http://tax.foundation/2s8INd8
Allowing businesses to fully expense their capital investments could grow the long-run size of the U.S. economy by 4.2 percent, boost wages by 3.6 percent, and create 808,000 full-time jobs.
This all sounds good, but proponents face a major challenge: “sticker shock”. Moving to full expensing would reduce federal revenue by $2.2 trillion over ten years. That’s a big number that gives lawmakers pause.
But only looking at full expensing over a ten-year window overstates the tru...e cost of the policy.
Here are 5 reasons the real cost of full expensing may be less than you think:
1. Full expensing is often proposed in conjunction with plans to cut business taxes. The lower business taxes are, the less that full expensing costs. For instance, full expensing costs about $700 billion less under a 20 percent corporate tax rate than under a 35 percent rate.
2. Full expensing is more costly upfront, but less costly as time goes on. While the policy would reduce federal revenue by 1.5 percent of GDP in the first year, it would only reduce it by 0.4 percent of GDP in the tenth year.
3. In the long run, full expensing is much less costly than other reforms, like cutting the corporate tax rate to 25 percent.
4. Based on past scores, it's likely that the Joint Committee on Taxation, Congress's official tax policy scorekeepers, will estimate that full expensing costs less than the Tax Foundation does ($2.2 trillion over 10 years).
5. It's likely that full expensing would grow the U.S. economy significantly. That additional growth would mean more taxable income, recouping a portion of the revenue loss.
For more information (and charts!) check out our full post: http://tax.foundation/2spTGIS
As federal lawmakers struggle to agree on tax reform, some have suggested that temporary (rather than permanent) corporate tax cuts could boost the economy while being easier to pass politically.
But the numbers tell a different story. In fact, a temporary corporate tax cut would do little to help the economy.
Temporary cuts may create a windfall for corporate shareholders, pension funds, and retirement accounts, but they would do little to grow the economy in the long run or... raise the wages of everyday Americans.
What's more, temporary corporate tax cuts would be harder on the budget than permanent ones. Due to increased economic growth, permanent cuts would cost $722 billion less over 10 years.
Learn more by reading our new report: http://tax.foundation/2th7j9M
The U.S. corporate tax is too high and hampers our economy, but how can lawmakers pay for a major rate cut?
Some of you (justifiably) wonder why we can't just offset the cost of a lower rate by closing all of the corporate tax loopholes and special preferences.
But this approach turns out to be less fruitful than you might guess.
...Here's a thought experiment. Imagine lawmakers are interested in putting together a corporate tax reform bill that satisfies three criteria:
1. It's “revenue-neutral,” leaving total federal revenue unchanged.
2. It's “corporate-only,” paying for the full cost of a lower corporate rate by eliminating tax breaks for corporations.
3. It's “non-structural,” leaving the basic nature of the current corporate income tax intact.
Under these constraints, if Congress eliminated all corporate tax expenditures, how low could they get the corporate tax rate?
Well, we crunched the numbers, and the results are...underwhelming.
It turns out that eliminating every single one of the 54 corporate tax expenditures that exist today would only raise enough revenue to lower the corporate tax rate to 28.5 percent.
In the context of current tax reform discussions, this isn't much. Congressional Republicans have long advocated for a 25% rate, Speaker Ryan set a goal for a 20% rate, and Trump called recently for a 15% rate.
If lawmakers are interested in paying for a large corporate rate cut solely by “closing corporate loopholes” or “repealing special preferences,” then they will be greatly disappointed.
So, what paths are available to lawmakers who are interested in a more substantial corporate tax rate cut? Well, that would mean relaxing one of the 3 criteria we laid out.
Lawmakers could either design a bill that loses revenue, pays for itself by eliminating tax breaks for individuals, or makes significant structural changes to our current system.
Learn more here:
Recently, the UK has been cited as an example of a country where corporate tax cuts “paid for themselves," but that's not true.
The UK's corporate tax reform package also included important base-broadening policies like rules to prevent corporations from shifting their profits abroad and lengthened asset lives for capital investments.
This last change was most significant. Asset lives determine how quickly a company is able to write off the costs of their capital investments ...(think factories and equipment). The longer asset lives are, the more the government is able to collect in taxes over the life of an investment.
But the U.S. wouldn't want to copy that reform. Not only did this change help offset lost revenue, it also offset the economic benefit of cutting the corporate rate in the first place.
Tax reform should focus on reducing the corporate tax rate. However, lawmakers should be realistic about the trade-offs involved.
The UK’s experience tells us two things:
1. It's unlikely that a corporate tax cut would pay for itself. We will have to seriously consider ways to make up for lost revenue.
2. How you broaden the tax base matters. Offsetting a corporate rate cut with a policy that negates all of the pro-growth effects defeats the purpose.
More about the UKs experience and what we can learn from it here: http://tax.foundation/2rFHfa8
Every few years, someone comes along to claim that beer “gave us civilization.” (And then someone else comes along to say that it was salt, or milk, or, you know, a whole lot of things.)
What we certainly can say is that beer goes way back, and so do beer taxes.
Cleopatra is often credited with (or blamed for) imposing the first beer tax.
...In ancient Mesopotamia, by contrast, taxes could be paid in beer.
By medieval times, the French city of Aix-la-Chapelle was ordering the hands cut off brewers who neglected to pay their taxes, while in 1764, the British first extended beer taxes to the American colonies.
The history of U.S. beer taxes is long, and you can read more about it in our full post, but first, check out the state of beer taxes today with this map: http://tax.foundation/2rEvnVW
Taxes are complicated (often much too complicated), but they shouldn't be intimidating.
Our chart books provide taxpayers, legislators, and the media an engaging way to understand how their state's tax code works, and where it could use some work.
In our latest chart book, we pull back the curtain on Ohio's tax code through a series of detailed illustrations that cover individual income taxes, business taxes, sales & excise taxes, and property taxes.
...Check out the interactive book here: http://tax.foundation/2rLuj0U
Every summer, we host Tax Foundation University to give future generations of lawmakers the opportunity to learn from today’s leading experts on economics and tax policy.
Now, we want to give you the same opportunity.
Sign up for our Tax Foundation University Online course and for the next 6 weeks we'll send you the same lectures and course materials we give congressional staffers.
...This year, our lectures will focus exclusively on giving you the tools to engage with the once-in-a-generation opportunity we have to overhaul our tax code. Topics will include:
- Why is tax reform so important? Why is now the right time? If reform is so difficult, why not just cut rates and call it a day?
- What should you know about current proposals, including the House GOP Tax Reform Blueprint?
- What’s the deal with the border adjustment or the interest deduction?
- How will legislators navigate the budget rules?
Get an inside-perspective on this year's tax reform debate and learn how you can support reforms that will fix our broken tax code and grow our economy. Click here to enroll: http://tax.foundation/2sdGIxa
As West Virginia’s budget standoff drags on, an old flashpoint has reemerged: greyhound racing.
West Virginia is one of six states where greyhound racing is legal. Yet greyhound racing apparently can’t pay its own way. The state’s solution is to subsidize dog racing to the tune of $14 million.
On Monday, new legislation was introduced in an attempt to end this subsidy.
...Government and industry officials estimate that yanking the subsidy would result in a loss of 1,100 to 1,700 jobs.
But a study commissioned by the West Virginia Department of Revenue shows that attendance has fallen by 99 percent since 1983, and the total amount wagered on greyhound racing ($15.8 million in 2013) is scarcely more than the overall subsidy.
The tax revenue associated with greyhound racing barely covers the state’s expenses for regulating the industry.
Catch up on this latest West Virginia proposal (and others) here: http://tax.foundation/2scNxPK
With "Infrastructure Week" underway, the Trump administration is continuing its calls for increased spending on infrastructure projects. Infrastructure spending can produce some economic growth, but only a modest amount.
Earlier this year, the Tax Foundation used its Taxes and Growth Model to estimate the 10-year economic impact of a $500 billion investment in infrastructure projects.
Depending on how it's paid for, infrastructure spending could actually decrease economic gro...wth in the long-run.
Our study compared five different funding mechanisms: borrowing; cutting other government spending; raising excise taxes; raising the top tax rate on individual income; and raising the corporate income tax.
Here are some of the key findings from our analysis:
• Economists are all over the map when it comes to assessing the value of additional infrastructure. Estimates range from a zero to a 10 percent return on investment.
• Increasing infrastructure spending either through deficit-financing or lower government spending elsewhere would provide modest benefits. In these scenarios, infrastructure spending would boost GDP by 0.11 percent, wages by 0.1 percent, and employment by 21.4 thousand jobs.
• If funded by tax increases, new infrastructure has a range of economic impacts depending on the tax. New infrastructure funded by a broad-based excise tax would boost long-run GDP by 0.06 percent while the same investment funded by a corporate rate increase reduces long-run GDP by 0.41 percent.
Read our full report to learn more: http://tax.foundation/2qTBNh0
Soda taxes are highly regressive and volatile sources of revenue, but policymakers should also be wary of how complex these proposals are to implement, as Seattle is finding out firsthand.
With the Seattle City Council poised to vote on a tax of 1.75 cents per ounce on sugary beverages and syrups, questions have arisen about what beverages the city plans to exempt.
The mayor initially planned to exempt “in-store prepared coffee beverages.” Now it appears that the tax would ap...ply to syrups added to prepared coffee drinks.
Suffice to say, residents of Seattle—the birthplace of Starbucks—may have a different take on this tax depending on its treatment of sweetened coffee drinks.
In 2008, Maine voters ended up rolling back a soda tax after people realized that a famous Maine beverage—Moxie—was subject to the tax.
If Seattle is looking to curb consumption of sugary drinks, it’d be difficult to justify an exemption for Starbucks’ Unicorn Frappuccino. On the other hand, the city may decide to exempt coffee to appease the coffee constituency. After all, taxing coffee drinks in Seattle would be like Italy imposing an excise tax on pasta.
Learn more here: http://tax.foundation/2qKK9eU
What can a donut shop teach us about tax reform? Maybe quite a bit.
If you were making a little bit of money selling donuts at $1 a piece, would you make 300 times as much money by changing your price to $300 per donut?
Probably not and the same is true of taxes.
...Would the federal government have all of the money it needed if Congress just kept raising taxes? Possibly, but after a while, higher tax rates would actually bring in less money.
When it comes to evaluating tax changes, the most common way is to assume that no matter how different the tax code is in the future, the economy will continue to behave as if nothing had happened -- Americans will keep working and investing in the exact same way.
Obviously, this isn't realistic.
Instead, the Tax Foundation uses a sophisticated model to measure the effects of tax policy changes on the economy. This gives lawmakers a more realistic picture of how they can expect different policies to affect federal finances and American taxpayers.
Watch our fun video explainer below to learn more and happy #NationalDonutDay!
As public support for marijuana legalization rises, policymakers are left to figure out the best way to tax it.
Eight states have legalized recreational marijuana, each taking a slightly different approach to taxation.
Some states plan to levy an additional retail sales tax on marijuana, others have decided to levy a flat, per-unit tax, and still others have opted to use an excise tax to ease administrative burdens.
...Retail sales taxes are the most practical form of taxation because they're simpler than the alternatives and avoid the risk of double-taxation.
Taxes on marijuana can add up as the state excise tax rate is just one component of the final purchase.
For instance, in Colorado, marijuana may face up to five taxes:
- 15 percent excise tax
- 10 percent state tax on retail marijuana sales
- 2.9 percent state sales tax
- local sales taxes (the average rate in Colorado is 4.6 percent)
- local excise taxes on marijuana, such as the 3.5 percent tax in Denver
Read our full article to see how states currently tax marijuana and five lessons that can be learned from their experiences: http://tax.foundation/2qOhBfC
In addition to the federal estate tax of 40 percent, fourteen states and D.C. impose an additional estate tax, six states have an additional inheritance tax, and Maryland and New Jersey have both.
But states have begun to move away from these taxes.
Estate and inheritance taxes have large compliance costs. And these costs may only rise if the federal estate tax is eliminated, as has been proposed, leaving states with the full administrative burden instead of being able to rel...y on the IRS.
Estate and inheritance taxes also disincentivize business investment.
The handful of states that still impose them should consider eliminating them, or at least conforming to federal exemption levels.
Click here to see if you state imposes an estate or inheritance tax: http://tax.foundation/2r5M38M
Today, we were asked to submit testimony to the U.S. House Committee on Ways and Means for a hearing on the border adjustment, a central part of the tax reform plan proposed by House Republicans.
Our goal was to help lawmakers understand what a border adjustment is, how one would work, and what one would mean for the U.S. economy.
Here are three key points we made:
...1. The border adjustment would be a good way to prevent multinational corporations from shifting profits overseas.
2. It would greatly simplify our tax code and boost U.S. competitiveness globally.
3. It would raise revenue that would help fund other tax reforms that we estimate would grow the economy by 5.8 percent.
There's a lot more to consider about the border adjustments, including some shortcomings. Read our full testimony to learn more: http://tax.foundation/2qKXuCy
Last week, The House Ways and Means Committee held its first hearing this session on efforts to reform our tax code and boost the economy.
Here are 3 key takeaways from committee members and those who testified:
1. Lowering corporate tax rates can help grow the economy, but allowing for full expensing of business investments could provide greater benefits.
...2. Tax reform must be permanent to truly grow the economy. Our tax code needs to ensure certainty and predictability to spur investment.
3. Tax reform requires trade-offs. To make tax reform permanent under the budget rules, policymakers will need to consider various base-broadening provisions that can offset revenue losses from rate reductions and full expensing.
The next House Ways and Means Committee hearing, scheduled for tomorrow, will delve deeper into these issues.
Stay tuned for more updates and read our full overview of last week's hearing here:
