taxes

Bryce Harper, Tax Exile?

Has California lost another centi-millionaire because of its high tax rates? Washington Nationals superstar Bryce Harper just signed a 13-year, $330 million contract with the Philadelphia Phillies, the largest contract in the history of major North American sports.

All Your Money Are Belong to Us

In his State of the City Address, New York mayor Bill de Blasio laid out his governing philosophy succinctly:

Here’s the truth, brothers and sisters, there’s plenty of money in the world. Plenty of money in this city. It’s just in the wrong hands!

The money, of course, is in the hands of those who earned it. In de Blasio’s view, people who earn too much are “the wrong hands.”

How Can Republicans Entrench the Tax Cuts?

The peculiarity of Congressional 10-year budgeting has left its mark on the tax debate. In the UK, if something like the Republican bill had passed, it would be regarded as a significant tax cut, pretty much across the board. And rightly so.

As JCT analysis has shown, in 2019, 44 percent would see tax cuts of more than $500, 17 percent tax cuts between $100 and $500, with just 8.1 percent seeing tax increases greater than $100. Even by 2025, just before most of the individual income tax cuts would expire, 56 percent would see tax cuts of more than $100, with just 13.5 percent seeing tax increases of $100 or more. And this includes as “tax rises” the reduction in subsidies paid out as the removal of the individual mandate penalty leads to fewer people opting for health insurance.

As Chris Edwards has explained, even on the JCT’s own figures (which attribute most of the burden of corporate income taxes to the rich), the biggest financial winners in terms of a reduction in the proportion of federal income and corporate taxes they bear will be the middle-class.

Two Problems with the CBO’s Score of the DREAM Act and One Solution

The Congressional Budget Office (CBO) recently released a fiscal impact score for the DREAM Act.  It found that the DREAM Act would increase deficits by about $25.9 billion over the next decade.  There are at least two problems with this CBO score and a solution that should make fiscal conservatives and DREAM Act supporters happy.    

What is the Baseline?

Lower the Corporate Tax Rate As Much As We Can, While We Can

The recently concluded tax reform conference report draft includes a one-percentage-point increase in the corporate tax rate above what both the House and the Senate passed, with some of the revenue savings being used to keep a portion of the deduction for state and local taxes as well as forego delaying its implementation until 2019, as the previous bills proposed. There remains a chance the rate may tick up yet again before negotiations are concluded, especially if other targeted tax breaks get some traction in the Congress over the next few days.

However, even this small diminution in the rate reduction is a mistake: while a one point increase may seem to be a trifle, each uptick in the corporate tax rate represents a large opportunity cost that Congress won’t be able to easily rectify in the future.

Johnny Hallyday: Also Bucked Establishment on Taxes

French rocker Johnny Hallyday—the “French Elvis—has passed away at 74. I do not know his music, but it appears that he was an innovator. His sounds were apparently new to French ears, and his willingness to adopt rock styles from the English-speaking world upset the French establishment. But the people adored his music, and he sold 110 million records.

College: Ragnarok

For the second week in a row, Thor: Ragnarok was the big winner at the box office, pulling in $56.6 million in North America last weekend and bringing its worldwide take to more than $650 million. Ragnarok is the mythological destruction of Asgard and the Norse gods, but in real life it has been a huge, money-making win for Marvel Studios. Meanwhile, American higher education has been declaring that it is facing its own Ragnarok in the form of the House Republican tax plan. This end time, in stark contrast to Thor: Ragnarok, will come from a distinct lack of money. As a Washington Post headline asks, is this “The Last Stand for American Higher Education?”

What the Hela

I have qualms about some of the GOP proposals. For instance, the plan would tax “tuition discounts”—basically, prices not actually charged—for graduate students. That’s not technically income, so on normative grounds I’m not sure it should be taxed. The plan also calls for an “excise tax” on the earnings of endowments worth $250,000 or more per student at private institutions. It would impact but a nano-handful of institutions—around 50 out of thousands—and amounts to little more than a politicized, “Take That, Harvard!”

That said, the idea that higher ed is somehow teetering on the edge of financial destruction is ludicrous.

Consider revenues at public colleges since the onset of the Great Recession, during which we supposedly saw massive “disinvestment.” While it is true that total state and local appropriations dipped, total public college revenue rose markedly, from $273 billion in academic year 07-08, to $347 billion in 14-15, a 27 percent increase. Even on an inflation-adjusted, per-pupil basis revenue increased: From $31,561 per student in 07-08, to $32,887 in 14-15, a 4 percent rise. To put that in perspective, per-capita income in the United States is $28,930.

Federal data on private colleges is pretty volatile—it’s not clear why, for instance, between 07-08 and 08-09 total revenue dropped from $139 billion to $69 billion—but it, too, shows little sign of penury. Between 07-08 and 14-15 total revenue rose from $139 billion to $200 billion, a 44 percent increase, and inflation-adjusted per-pupil revenue went from $51,629 to $59,270, a 15 percent increase.

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