The Tax Policy Center at the Brookings Institution has completed an analysis of presidential hopeful Mitt Romney’s tax platform, which basically lowers taxes for everyone, and it has one question: How is he going to make up for the revenue? “Without offsetting revenue increases or new spending cuts, Romney’s plan would significantly increase the budget deficit,” Howard Gleckman wrote on the Tax Policy Center’s blog.
Last week Romney went a step further in his proposed tax plan by slashing the income tax rates by 20 percent and doing away with the alternative minimum tax, which sets a floor on how small a tax rate an individual can have.
Republicans and Democrats in fact are shifting the debate from income tax reform to also include corporate tax rates. Both parties have introduced plans that will bring corporate taxes down below 30 percent from the current 35 percent rate. One big question involved in this debate, argues Christopher Papagianis for Reuters Opinion, is how each side will deal with how to tax consumption, and how the economy might or might not react differently to taxes on companies’ buying activity. A plan like the one already proposed by Rep. Paul Ryan “would have businesses determine their tax liability by subtracting total purchases from total sales. The BCT is then applied to the net receipts figure, which is also a way of expressing the added value contributed by the company.”
Tax Break highlighted a little surprise back in February that Citibank customers got when they began receiving 1099 tax forms in the mail from the bank. The taxable items, they found out, were the bonus frequent flier points that the bank was handing out as part of a “ThankYou Rewards” program. There seems to be a caveat behind every “thank you” a bank gives you, apparently. Now Citi customers have filed a class action lawsuit against the bank, while the IRS continues to ignore the entire situation. Forbes’ Kelly Phllips Erb looks on in confusion.
“Citibank is making it an issue. And I can’t for the life of me figure out why. It’s such a dogged pursuit of a tax matter that I’m willing to bet would not have been raised by the IRS otherwise.”