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Tax Policy in Margaritaville: The Buffett Rule
I’m trying a new thing in the blog–imagining a debate between a smart conservative and liberal economist on a contentious tax policy issue. Here liberal economist Keynes and conservative economist...
View ArticleWhy Do U.S. Investment Funds Operate in Tax Havens?
Mitt Romney’s holdings in the Cayman Islands have generated lots of interest in investment funds that are managed from the U.S. but incorporated in foreign jurisdictions. But taxable U.S. investors...
View ArticleRomney’s Tax Plan Really Does Favor the Rich
Despite evidence to the contrary, there is a lingering view that Mitt Romney’s tax plan would primarily help middle-income households and not favor the rich. Yet TPC’s analysis of the plan clearly...
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No Obvious Relationship between Capital Gains Tax Rates and Economic Growth
If you read the editorial page of financial newspapers, you might conclude that no aspect of tax policy is more important for economic growth than the way we tax capital gains. You’d be wrong. The...
View ArticleFive Challenges for the IRS’s New Capital Gains Reporting Rules
Sellers of stocks and other assets have always had to calculate their cost basis (generally, what they paid for the investment) in order to figure their taxable capital gains. In the past, this was...
View ArticleUnderstanding TPC’s Analysis of Governor Romney’s Tax Plan
The Tax Policy Center’s latest research report went viral last week, drawing attention in the presidential campaign and sparking a constructive discussion of the practical challenges of tax reform....
View ArticleChairman Camp Agrees: Too Many Choices Burden our Tax System
Last week’s draft plan by House Ways & Means Committee Chair Dave Camp (R-MI) to reform the taxation of financial products includes two key changes that would simplify rules, reduce manipulation,...
View ArticleCamp’s Investment Tax Plan: Implications for Lower Rates on Capital Gains?
House Ways and Means Committee Chairman Dave Camp (R-MI) has proposed requiring most derivatives investors to pay tax on their annual returns even if they don’t realize their gains by selling their...
View ArticleWhy the IRS Should be Taxing the Profits of Private Equity Funds as Ordinary...
For years, the battle over carried interest has focused on how to tax the compensation of private equity managers. But a careful reading of the law suggests that all the business profits of these...
View Article“Common Sense” Aside, What Do We Really Know About Capital Income Taxes and...
If you’re discussing tax policy with someone who asserts that his or her point is “just common sense,” this could indicate one of two things: Either no deep thought is required—as the person would have...
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Was Buffett Right? Do Workers Pay More Tax than Their Bosses?
When Warren Buffett called for higher taxes on the wealthy in a New York Times op-ed last week, the billionaire investor argued that he and wealthy people like him face lower federal rates than the...
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Why Investors Pay Less Tax than the Rest of Us
After I wrote last week about Warren Buffett’s New York Times op-ed on the low tax rates paid by wealthy investors, Tax Policy Center visiting scholar Brian Galle pointed out that my graph showing the...
View ArticleWill Romney’s Modest Capital Gains Tax Cut Hurt With the GOP?
Welcome to the season of jobs plans. GOP presidential hopeful Jon Huntsman offered his last week. President Obama will propose his before Thursday night’s football game. But today is GOP presidential...
View ArticleDebating the Buffett Rule
On Monday, the Administration released its deficit reduction blueprint. One part of the Administration’s proposal, which has received enormous attention, is that the Joint Select Committee on Deficit...
View ArticleObama’s Buffett Rule: Keep Your Eye on Capital Gains
President Obama didn’t quite get around to saying so when he rolled out his latest deficit reduction plan on Monday, but his Buffett Rule—that no one making more than $1 million should pay a lower tax...
View ArticleThe Democrat’s Millionaire Tax: Smart Politics, Awful Policy
Senate Democratic Leader Harry Reid’s plan to fund a $445 billion stimulus, err, jobs bill with a 5.6 percent surtax on millionaires is not all bad. After all, Tax the Rich does make a nice campaign...
View ArticleHiking Dividend Taxes to Pay for a Corporate Rate Cut
Finland’s government recently announced a broad fiscal reform package that cuts corporate tax rates—financed in part by higher taxes on corporate dividends. The plan makes sense for Finland and is...
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What Changes in the Mortgage Deduction Would Mean for Home Prices
Tax preferences for housing are under fire, with mounting evidence that these preferences are inefficient, unequal, and too expensive to warrant a place in the tax code. Critics of proposed changes in...
View ArticleDo Private Equity Firms and their Partners Owe Ordinary Income Tax Under...
For a decade, Congress has been debating how to tax managers of private equity firms. The argument is pretty familiar to tax wonks: Should these partners treat this compensation (commonly called...
View ArticleIncoming Senate Finance Chair Wyden Outlines His Tax Agenda
Senator Ron Wyden (D-OR), about to become the new chairman of the Senate Finance Committee, said Friday that he aims to eventually rewrite what he described as a “dysfunctional, rotting mess of a...
View ArticleCamp Defines Private Equity as a Business, Would Boost Taxes on Carried Interest
In the tax reform roadmap he released yesterday, House Ways & Means Committee Chair Dave Camp (R-MI) targeted the trillion dollar private equity industry. Not only did he propose to tax the...
View ArticleYou Could Owe Capital Gains Taxes When You Spend Bitcoin
The IRS determined this week that Bitcoin and other digital currencies should be taxed as property, not currency. This means Bitcoin transactions will be taxed as capital gains, not as ordinary income....
View ArticleA Flash Tax for the Flash Boys
Michael Lewis spotlights high-frequency traders with his new book, Flash Boys. These traders use high-speed computers and fast connections to outrace investors, and other traders, to the market. They...
View ArticleState Taxes and the April Surprise
In recent months, several governors have complained about the April, 2014, surprise in state tax revenues. They say they were shocked when personal income tax payments fell far below expectations. They...
View ArticleAbuse of financial products by hedge funds
Today, I testified before the U.S. Senate Permanent Subcommittee on Investigations (the “Subcommittee”) on the abuse of structured financial products by hedge funds, in particular by the Renaissance...
View ArticleOne Downside Of Inversions: Higher Tax Bills For Stockholders
Corporate inversions are all the rage these days as U.S. businesses merge with foreign firms and then restructure the combined businesses as foreign-based corporations. That yields tax benefits and may...
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President Obama Targets the "Angel of Death" Capital Gains Tax Loophole
The President plans to announce in Tuesday’s State of the Union Address new proposals that would raise taxes on capital gains for the wealthiest Americans. The proposal would raise the top tax rate on...
View ArticleIs Obama Closing Retirement Savings Loopholes or Just Curbing Congress’...
In his upcoming budget, President Obama will propose to strip away the “loopholes” that permit wealthy individuals to accumulate large amounts in tax-favored retirement plans. He would prohibit a...
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Are Accrued Capital Gains Income in the Year You Die?
The Tax Policy Center’s tables showing the distribution of President Obama’s new income tax proposals indicate that some middle-class households would pay more tax than under current law. The...
View ArticleCutting Capital Gains Taxes is a Dead End, Not a Step on the Road to a...
One of the most useful insights of public economics is the "theory of second best." The idea is that adopting some but not all of the features of optimal policy—the seminal article on the subject...
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