Tag Archives: taxes

State Taxation of Internet Businesses

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The Supreme Court is hearing a case, South Dakota v Wayfair Inc, that seeks to overturn an older precedent that prevents States from taxing businesses doing business in the State that don’t have a physical presence there.  South Dakota is claiming that

…the 1992 precedent harms state treasuries and disadvantages taxpaying home-grown businesses.

That argument might hold water if the States were powerless. They’re not. There’s nothing at all preventing them from lowering the tax rates they impose on the brick-and-mortar and home-grown businesses resident in those States so they can compete. There’s nothing at all preventing the States from lowering their spending rates and thereby protecting their treasuries.

There’s nothing at all preventing the States from taking advantage of the increased economic activity that would result.

Tax Cuts, Deficits, and Economic Growth

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The hype is that the tax cuts enacted at the end of last year will lead to trillion dollar Federal government deficits.

On the other hand, there’s this bit about economic growth in the CBO’s report that also carried that deficit forecast [emphasis in the original].

  • Last June, the CBO said GDP growth for 2018 would be just 2%. Now it figures growth will be 3.3%—a significant upward revision. It also boosted its forecast for 2019 from a meager 1.5% to a respectable 2.4%.
  • [T]he CBO now expects GDP to be $6.1 trillion bigger by 2027 than it did before the tax cuts.
  • before accounting for economic growth, the tax cuts Trump signed into law late last year would cut federal revenues by $1.69 trillion from 2018-2027.
    But it goes on to say that higher rate of GDP growth will produce $1.1 trillion in new revenues. In other words, 65% of the tax cuts are paid for by extra economic growth.
  • CBO now expects GDP to be $6.1 trillion bigger by 2027 than it did before the tax cuts.

Blame tax cuts for deficits?  No, Federal government deficits are caused by the Federal government spending more than it takes in from its various revenue sources, of which taxes are a prominent part.  And there’s still no concrete justification for the spending levels, just glittering generalities.  And every special interest has an especially sparkling generality to justify its spending.

Here’s some tax cut-created spending reduction (because of economic growth and the resulting increased prosperity of some of our poorer friends, not because of any Congressional courage in doing outright cutting):

[F]aster growth will also reduce federal entitlement spending keyed to the economy—unemployment insurance, food stamps, welfare and the like—by $150 billion, the CBO says.

But increasing prosperity isn’t a proper topic for hyping.

 

ht/ Powerline

Taxing vs Spending

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In a Wall Street Journal piece about Tennessee’s required closure of failing bridges problem, a Leake County Democrat supervisor, Joe Andy Helton, had this:

…he was frustrated by politicians being afraid to raise taxes—even to pay for basic services like roads and bridges.

“There’s only but one way to fix things on the local, state or federal level and that’s taxes,” he said.

Of course. Reallocating spending is utterly inconceivable to him.

The two bridges in Helton’s county that must be closed until repaired would cost, at most, a bit over a half-million dollars, together.  That’s not pocket money for a rural county like Leake, but it’s not that much, either.  County and State spending could be (re)directed toward the repairs.

This is a local failure of performance, but rising taxes and no spending responsibility nationally are what we can expect if Progressive-Democratic Party politicians like this one gain the majority in the House this fall.

Messaging and the Midterms

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Here’s a bit about income taxes, via Laura Saunders in Friday’s Wall Street Journal.

For 2018, households in the top 20% will have income of about $150,000 or more and 52% of total income, about the same as in 2017. But they will pay about 87% of income taxes, up from about 84% last year.

And

[T]he lower 60% of households, who have income up to about $86,000, receive about 27% of income. As a group, this tier will pay no net federal income tax in 2018 vs. 2% of it last year.

And this:

…the top 1% will pay for 43% of income tax, up from 38% in 2017.

So much for tax cuts being for the benefit of the rich.

Here’s another bit about who pays and who benefits:

[I]ncome includes earnings from wages and investments plus untaxed amounts, such as from health coverage. These additions nearly double the income of people in the lowest tier and add about 20% for those in the highest tier.

Republicans are shockingly silent about this in their respective local press outlets.  If they don’t start getting these messages out to their constituents early and often, each mid-term candidate needs to fire his communications director and replace him with someone who knows how to talk to local folks.

Credit Reports and Tax Liens

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The thee major credit reporting firms, Experian, Equifax, and TransUnion, are moving to eliminate records of tax liens from their credit data and credit reports.

The three companies, which provide vital, behind-the-scenes services in consumer credit, have been grappling with class-action lawsuits over their handling of consumers’ tax liens and judgment information.

This is a mistake.  The right answer is to defend, actively, those suits that are wrong, rather than to surrender to the extortion of lawfare, and to correct the mishandlings of the tax liens in their data and reports.

Running away from the matter altogether can only further deprecate the usefulness of these credit reporting agencies. All debt needs to be reflected in the reports so that accurate pictures of an individual’s credit risk can be developed.

Beyond that, a tax lien cuts two ways: it’s the result of a serious failure, whether of the one with the lien or of events beyond the person’s control. With the other slice, like any credit card, a record of prompt payments, keeping the lien current until it’s paid off, would reflect favorably in the minds of lenders reading the reports.

Absent the data, though, a loan’s interest charge would need to be increased to reflect the greater uncertainty, or the loan denied altogether, and either of these outcomes will harm far more consumers far more deeply than the numbers and injuries claimed by the suits.