About last night’s debate… Marco Rubio and Ted Cruz got into it over whether Cruz's tax plan is a Value Added Tax. Rubio says it is. Cruz says it isn't. Hint: It is. Otherwise, the GOP hopefuls had little to add about their tax plans. The basics of all the candidates' plans are here, on the TPC scorecard.
So much for that “innovation box?” It’s a key feature of many GOP international tax reform plans, but Council of Economic Advisers Chair Jason Furman isn’t convinced. In his conversation with The Wall Street Journal (paywall) he described the tax break on income from patents and other intellectual property housed in the US as economically inefficient. “A lot of the tax incentive is for research that has already happened, and it’s hard to get more research five years ago by giving it a tax break today.” If only an innovation box had a flux capacitor…
Guess who didn’t win big in the lottery? California, Florida, Tennessee—home to the three winning Powerball tickets that share a $1.6 billion jackpot—don’t tax lottery winnings. California exempts these prizes from its income tax. Florida doesn’t tax income at all, and Tennessee doesn’t tax income from wages or lottery winnings. Forty-four states sell Powerball tickets ostensibly to raise money for public schools, though states often simply reallocate general revenue funds from schools to other endeavors. Overall, lotteries increase education budgets, but only a little, as TPC’s Richard Auxier explains.
Will earnings taxes in two Missouri cities be repealed? Kansas City and St. Louis face repeal of their earnings tax in 2017 under a state bill. Supporters of the bill argue that the taxes are unconstitutional since they provide no credit for income taxes paid in other states. But Kansas City does offer a credit for taxes paid to other cities, like St. Louis, and levies its 1 percent earnings tax on both residents and nonresidents. Missouri offers a credit to residents for any taxes paid in other states.
General Electric wants a different New England address. The multinational will move its global headquarters from Fairfield, Connecticut to Boston in return for up to $25 million in property tax savings. In addition, Massachusetts will give GE up to $120 million in grants and other incentives. GE promises to add 800 high-paying jobs.
Will India have a GST this fall? Prime Minister Narendra Modi says yes, even though India’s parliament is deadlocked and Modi’s legislative agenda is in limbo. The Wall Street Journal reports (paywall) that an official in Modi’s government expects the goods and service tax could take effect between July and October. An Indian government panel suggests a rate of 17 percent.
This article first appeared at TaxVox.