STUMP » Articles » Taxing Tuesday: A Break from Coronavirus » 17 March 2020, 14:29

Where Stu & MP spout off about everything.

Taxing Tuesday: A Break from Coronavirus  

by

17 March 2020, 14:29

Just because. Some of the below will be irrelevant soon enough, as I compile these stories a long time ahead of time. I assume next Tuesday’s is going to involve a lot of coronavirus tax breaks, but that can wait til then.

TAXES: SURER THAN DEATH?

Well, maybe not.

Tax Foundation: Income Taxes Are More Volatile Than Sales Taxes During an Economic Contraction

At least in the short term, however, states must anticipate reduced tax collections as the economy slows. And here, not all taxes are created equal.

As a general rule, income taxes are more volatile than consumption taxes, as can be seen from aggregate state tax collections during and immediately after the Great Recession. By 2010, general sales taxes were down 8 percent from their 2008 peak, while individual income taxes fell 16 percent and corporate income tax collections plummeted a full 25 percent.

It makes sense, given how many purchases are of things like food, toilet paper, and other things people really use constantly. That’s a good, solid revenue source.

The relative stability of sales taxes compared to income taxes was not unique to the Great Recession, and indeed, it makes logical sense. While most of us curtail some expenditures during an economic downturn, there is only so much we can—or are willing to—cut. Even those with no wage income continue to consume, supported by savings and governmental assistance, while those whose incomes decline are likely to reduce savings rates more drastically than consumption.

There are people (like me), who can have booms & busts in my income. My booms are predicated on other people having booms and wanting to pay for the things I teach, and other things.

Another issue with income tax is that they really are concentrated on a few folks, when you look at where the revenue comes from. Sales taxes, however, are pretty much paid by everybody.

BERNIE JUST CAN’T GET ENOUGH OF TAXES

Speaking of irrelevant soon enough, Bernie Sanders’s Tax Plan Would Be Biggest Expansion of Taxation Since World War II

Presidential candidate Bernie Sanders is trying to expand federal taxation on a scale not seen since World War II, pursuing policies that would end the nation’s run as one of the industrialized world’s lowest-taxed countries.

And Bernie would say: yes, so?

Mr. Sanders’s combination of taxes on wealth, income, financial transactions, corporate profits, payrolls, estates and capital gains would hit rich Americans from every direction. If Congress were to pass all of his plans, the total U.S. tax burden — including federal, state and local taxes — would resemble Canada’s or Germany’s rather than being near the bottom of the pack of rich nations.

The Bernie bros are all yelling: we love Canada!

Okay, let’s skip ahead.

His proposed tax increases top $30 trillion over a decade, by the campaign’s own reckoning. That is more than 10% of gross domestic product and at least a 60% increase in taxes over what would happen otherwise.

That is a huge increase. That’s not 60% increase in taxes on rich folks, by the way. That’s a 60% increase in taxes overall.

To be sure, the very high income folks already pay the most in federal taxes.

The last U.S. tax increase of this magnitude occurred from 1942 to 1944, during World War II, when the income tax was expanded to the middle class, raising federal revenue to 20.5% of gross domestic product from 9.9%.

Again, the folks say “So what?”

Since World War II, U.S. federal revenue has stayed between 14.2% and 20% of GDP, and is slated to average 17.4% over the next decade.

That’s too low, yell the masses, yearning to grab somebody else’s money.

Mr. Sanders’s proposed tax increases would send that level past 28%.

Now, I will butt in: that assumes that they can actually grab that much.

Almost all of Mr. Sanders’s proposed tax increases — except for middle-class taxes designed to replace insurance premiums and out-of-pocket health-care costs — target the top of the income and wealth distribution, the millionaires and billionaires he castigates on the campaign trail.

The Progressive Policy Institute, a center-left group, estimates that his proposed spending would exceed revenue by $25 trillion over a decade, with much of the gap due to estimated costs of his Medicare for All program. Mr. Sanders’s aides say their plans add up.

….
“I favor higher taxes on high-income people,” said Austan Goolsbee, an economist who worked for President Obama and supported former South Bend, Ind., Mayor Pete Buttigieg’s campaign.

“I don’t think Bernie or the other Democratic candidates are wrong that we are in a historical abnormality of tax giveaways to high-income people and big corporations,” he said. “The question is: Is it conceivable to get $20 trillion of taxes just from high-income people?”

We’ll see.

TAX STORIES

It’s going to be impossible to keep coronavirus out of these.

Even the ones that don’t refer directly to coronavirus are touching on something adjacent to it.

TAX TWEETS

The tweets also will have a lot of coronavirus.

Hmmm, I already did my personal taxes.

I am not going to comment on this.

Harmeet went to my high school — she’s a lawyer with her own practice.

No, this is not reassuring. I leave that up to you to understand why.

No, it wouldn’t have (not really), but that’s a discussion for another time.

Ok, that one is amusing (if misleading).

See y’all next week!

via GIPHY


Related Posts
Taxing Tuesday: Don't Worry, Gamers...plus: Soda Tax Retrospective!
Taxing Tuesday: New Jersey Wants to Be Number One; More Federal Tax Comparisons
Theme for the Year: High Tax States Attempting to Avoid Effect of Federal Taxes