Californians pay the highest sales tax in the nation. Their top-bracket earners have the second-highest income tax rate in the country. The middle class to upper class — those making $48,000 to $1 million — are right up there among the most highly taxed, too. California’s gas tax, at 35.3 cents per gallon, is third-highest in the nation. Corporations face the highest tax rates in the West.

California is famous for having high taxes, but they’re still a subject of perennial debate. Outside of California, the facts are pretty stark: state residents take home less of their paychecks than almost anyone else, and more gets taken out of the after-tax money they spend. Add that… Read more…

It’s happened to everyone: one day, your property taxes drop from $1400 a year to $50, and you, well, you figure it’s not a problem. Or if it is a problem, it’s somebody else’s problem.

Detroit City Council member JoAnn Watson has landed in hot water thanks to revalations that she saved a sweet $12,000 over the last nine years. A flurry of media attention forced her to explain exactly what was going on, and a thorough investigation (it lasted about a week). She didn’t exactly get a positive reception when she explained herself:

If anyone here in this circle received a bill and you’ve argued to pay

… Read more…

Coming soon: you can use your $8,000 new-home tax credit to make a down payment on your new home.

We’re now several years into a credit crisis caused by people buying homes they couldn’t really afford. And the response? Creating a new incentive to buy more homes — and to borrow money to do it. There is no way this will end up moving prices to an appropriate level, and no way it’s going to make the finance and housing industries change their behavior.

In fact, the main result is to make things even worse: in the past, the government just made borrowing cheaper (through the income tax deduction, which made interest… Read more…

Barack Obama has an exciting new plan to raise revenue: make companies pay taxes on the money they earn. Okay, so it’s not new, and it’s not that exciting. But it is a little more complicated than that.

Basically, the current plan is designed to tax income earned overseas, whether or not it’s returned to the US. Right now, if Apple sells an iPod in Italy, they pay Italian taxes on their Italian income. As long as they keep the money in Italy, they don’t have to pay US income taxes on it.

• The case for the plan is that it closes a giant loophole in the current tax scheme. And

… Read more…

Mr. Donald Trump, famous for announcing the line “You’re FIRED” on the popular NBC show The Apprentice, was interviewed today by Neil Cuvato from the Fox News Network. Mr. Trump announced that he doesn’t approve of the proposed New York Assembly Democrats’ Millionaire Tax, which will bring millions of dollars to the hemorrhaging MTA.

Under the plan, people who earn over $1 million in New York state will pay an income tax surcharge of about 3/4 of 1 percent for five years. In all, it would raise over $5 billion for mass transit.

Mayor Bloomberg and Mr. Trump would contribute to the transportation funds as will… Read more…

Nobody feels more strongly about high taxes than smokers do, and with good reason: it’s incredibly easy for politicians to raise taxes on smoking, and the average non-smoker doesn’t have a lot of sympathy. So it’s no surprise that the news is full of stories about planned cigarette tax hikes.

But why is it so easy to raise taxes on smokers? Why not bottled-water drinkers, car owners, or life insurance buyers? The reason is simple: cigarettes have the combination of addictive power and brand loyalty. Very few smokers give up if the cost of their smokes goes up 10% — in fact, basically no other product has the long-term resistance to price changes.

It’s also… Read more…

It’s an outrage — handing someone millions of dollars when his employer is nearly bankrupt? It’s ridiculous — larding paychecks with taxpayer dollars? It’s unacceptable — paying out a giant bonus in the face of a huge recession?

It’s just business. Even though Barney Frank expressed outrage over AIG’s recent bonuses, people are (deliberately?) forgetting that AIG is a massive company, with over 100,000 employees in 130 countries. And the team responsible for most of the offices was a remarkably tiny group of remarkably arrogant traders.

If AIG’s structured products team is collecting these bonuses, it is, indeed, an outrage. But it’s much more likely that the bonus recipients… Read more…

A single letter to the editor in a small Texas town has made it around the country in just a few weeks. Ed Barnett, a typical taxpayer, penned this justified rant to his hometown Wichita Times Record News (I am assuming their archrival is the Wichita Daily Weekly Recorder Courier Journal Democrat-Republican):

Dear IRS,

I am sorry to inform you that I will not be able to pay taxes owed April 15, but all is not lost.

I have paid these taxes: accounts receivable tax, building permit tax, CDL tax, cigarette tax, corporate income tax, dog licence tax, federal income tax, unemployment tax, gasoline tax, hunting licence tax, fishing licence tax, waterfowl stamp tax, inheritance

… Read more…

Today the IRS stopped using private tax collectors. That’s right: they won’t let a single tax mercenary collect overdue taxes.

This sounds great — less money spent on expensive government contractors, and less of our private information being leaked out of the government. But is it really the right decision?

The basic argument against private tax collectors is that we’re paying them to go after money people already owe the government. If they’re not afraid of the Feds, the argument goes, why would they fear some random company? If the companies don’t have any way to convince people rationally, it’s a fair assumption that they’re just using dirtier tactics than the IRS,… Read more…

Reid Hoffman (CEO of LinkedIn, and self-proclaimed ‘free-market socialist‘) says we should let startups bail us out. As an investor in more than sixty startups, he ought to know how effective they can be.

His plan comes in three stages:

1. He wants a program that will provide small loans (up to $50,000) for startups.
2. He wants to change the current skilled-worker visa system, so that instead of a quota (65,000 H-1B immigrants per year), there’s an unlimited number of immigrants and a 10% payroll tax on each, to be reinvested in job training for Americans.
3. He wants the government to match investments for venture capitalists and angel investors

… Read more…