Write-Off: The Tax Blog

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The minimum wage as a tax

Jeff Hoopes, UNC
February 18, 2020

Bernie Sanders is now leading in many polls to be the democratic nominee for President in 2020. Considering this fact, I pondered what I knew about Bernie’s tax plan. Some, but, not enough. So, I started searching. I searched for “Bernie Sanders tax plan” (yes, I omit apostrophes when I search on Google). The first link was the detail-less plan that highlights, as I have written about before, how if you are sick enough, Bernie Sanders favors redistribution that favors millionaires. The second link was a page entitled “Income Inequality Tax Plan - Bernie Sanders”. I clicked on the link, recalling Bernie has proposals for levying taxes on companies that pay their CEOs much more than their workers. But the image the Sanders campaign decided to pair with this article was the one to the left—of Sanders with a group that favored a $15 minimum wage in front of a McDonalds. What does this have to do with taxes?

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Luck and Redistribution

Jeff Hoopes, UNC
February 04, 2020

I recently listened to a great audiobook by a UNC professor, Keith Payne, called The Broken Ladder: How Inequality Affects the Way We Think, Live, and Die. Rather than merely highlight, as much of the economics literature does, that income/wealth inequality is bad (if indeed the problem exists), this book goes into great depth into the precise psychological mechanism that might make inequality have the outcomes it may have. I found one study the book mentions particularly interesting.

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Tax Dial-turning

Jeff Hoopes, UNC
February 03, 2020

Many of the democratic presidential candidates have proposed new tax plans. They are proposing completely new taxes, which would be written from scratch, tested and tried, with all the complication and administrative trouble that entails. But, one candidate recently came out with a plan that really has nothing dramatically new Michael Bloomberg recently announced the kind of tax plans he would stand by, and, most of it is dial-turning. He wants to change many rates, and turn off entirely several benefits that cost a lot of money, and mainly benefit wealthy taxpayers.

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The Pro-Millionaire Democrat

Jeff Hoopes, UNC
January 06, 2020

There is one presidential candidate who has always stood up for the little person. He has not bent to corporate interests, taken huge donations, and has always looked to improve the situation of every-day millionaires.  That is why his tax plan will help millionaires—he is a solid pro-millionaire candidate. Who is this democratic candidate out to increase the disposable income of your everyday millionaire? Bernie Sanders.

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Did Tax Reform “Work”?

Jeff Hoopes, UNC
January 03, 2020

I have talked to a handful of reporters who send emails, or start phone calls, with some version of “I am working on a story on whether tax reform worked?” They are pleasant calls, and I enjoy having them. I hope there are many more stories that attempt to answer this lofty question. But, I never know exactly what to say. Worked for what? What was the goal of tax reform?

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How is TCJA influencing the distribution of corporate effective tax rates?

Daphne Armstrong and Jake Thornock,
December 16, 2019

In this article, we show how the Tax Cuts and Jobs Act (TCJA) affected the distribution of corporate effective tax rates. To do so, we collect data on over 3,000 companies from Compustat over the past decade or so.  We create our sample after that of Dyreng et al (2017). It consists of nonfinancial, nonutility firms during the years 2010-2018 with at least $10 million in total assets. We exclude firms with negative pretax income and require each firm to have at least five years of data. Importantly, when the ETR is greater than 100% or less than 0%, we reset it to equal 100% or 0%, respectively, which helps reduce the effects of outliers on the figures below.

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(Discussion of) Income Inequality has been Increasing Dramatically for Decades

Jeff Hoopes, UNC
December 14, 2019

The rage over income inequality has reached a fever pitch. The existence of billionaires has been described as a “policy failure” or a “policy mistake”, and that they should “not exist”, that we should “cancel billionaires” or “ban billionaires”.  Some have proposed that there should be an absolute cap on the amount of wealth one can have, with the rest of the wealth being subsumed by the government. This inequality has been blamed for protests in the street. And, these concerns are what is behind much of the tax proposals put forth by the 2020 democratic presidential hopefuls. But, are concerns about income and wealth inequality new? Much has been made about the trends in income and wealth inequality. Depend on who you ask, it is either skyrocketing, or, kind of flat and boring. But, what about the trend in talking about the trend in income inequality?

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Everything I learned about income inequality I learned in school…

Jeff Hoopes, UNC
December 14, 2019

Income inequality is a hot topic now, and has been for decades. But, where does interest in this topic come from? Do people waiting in line at Walmart notice how much stuff the cart in front of them has, and start to seethe with anger at the extent of income inequality, and try to search out its roots? Do they listen to politicians talk about income inequality, and grow angry at the injustice inherent in the system, and so research how to combat it?

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Tax Bombs

Jeff Hoopes, UNC
December 05, 2019

Countries sometimes wage tax wars. Taxes exist in a complex global environment. Companies sell across the world, are supplied from across the world, and produce across the world. What is a country to do when another country implements a policy that will hurt that country (or the firms in it) by imposing high taxes on the foreign earnings of companies from that country?  Or, another country might impose a low tax rate, and as a result, capital might flee to that jurisdiction. What is a country to do?

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Biden Piles On! Some Thoughts on Taxing Book Income

Jeff Hoopes, UNC
December 05, 2019

Senator Warren has proposed a tax on book income, which I have discussed on this blog previously (and which I found it impossible to find an financial accounting scholar who would support the idea). Recently Democratic presidential candidate Joe Biden proposed several different corporate tax ideas, one of which was, just like Senator Warren, a tax based on book income. Some details are different, but, the general idea is identical--some firms that are profitable for financial accounting purposes pay no taxes, and that feels bad. So apply a tax to financial accounting income for firms above some threshold.

The major arguments against taxing book income are outlined here, in a piece I wrote with Michelle Hanlon about Warren's plan. The upshot is that book income and taxable income have very different goals. If you think taxable income, what we pay taxes on, is broken, fix it. Don't tax book income, which will end up breaking it.  As I wrote that piece, I had many other thoughts, and more more details, that were left on the editing room floor. Here they are:

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