Governor Wonders if Bad Tax Policy Has Something to Do with Bad Economy After learning that yet another large employer was closing its doors, the Governor of Wismichigillinoserseyania was overheard brainstorming with an aide about possible causes.
"I'll admit our tax code isn't that friendly to the individuals who create jobs," pondered Governor Doyrendholmzinejevich. "Could that be the reason that all the individuals who create jobs stay away from our state?"
Among the features of the state's tax code are the sales tax, which requires a book to understand the exemptions inserted by special interests; the state's corporate income tax, which is higher than that of France and Japan; and the state's individual income tax, which is designed to drive high-income earners across state borders.
"I've followed all the good advice," the Governor lamented. "We impose every major tax and have high rates on high earners. We hand out subsidies to politically powerful industries, and offer gimmicks like sales tax holidays to trick people into thinking tax burdens aren't that high."
The Governor also reflected on the state's services, which cost a huge amount but actually are pretty mediocre. "We spend like water on roads and education," he noted. "Doesn't everyone support free iPods for students, taxes on bottled water, video games, and arbitrarily designated "windfall profits," and shaking down out-of-state companies on the state line?"
The Governor's admission came after graduation ceremonies at the University of Wismichigillinoserseyania, which is made up mostly of out-of-state students taking advantage of low tuition rates. A poll of graduates found that most graduating students would be moving out of the state to find jobs elsewhere.
"We love the tax system here," said a representative of Out-of-State Movers.
A governor from a bordering state agreed.
"Our federalist system means that states can choose to offer inviting tax climates or punitive ones," said the Governor of Delaflornevianashire. "I firmly support their decision. Now if you'll excuse me, I have to go to a couple of office park ribbon cuttings this evening."
Despite the several minutes of reflection, Governor Doyrendholmzinejevich eventually dismissed his concerns.
"All those experts couldn't possibly give us advice designed to worsen our tax climates, right? Hey, why don't we exempt edible pumpkins from the sales tax, but not decorative pumpkins?"
(Note: This blog was posted on April Fool's Day. Parts of this article may not be factual.)
New Podcast on Corporate Capital Gains Taxes A new Tax Foundation Tax Policy Podcast delves into the problem of the Untied States' high corporate capital gains tax rate.
Jim Tisch, President and CEO of Loews Corporation, and Ed McClellan, Tax Counsel at PricewaterhouseCoopers, talk to Tax Foundation President Scott Hodge about the difference between the individual capital gains rate and the corporate capital gains rate, the problem of "locked-in" assets and their detrimental impact on business decisions and job creation, the Untied States' decreasing global competitiveness in the face of European nations' cutting or eliminating the corporate capital gains tax, and the proposal to cut the 35 percent rate to 15 percent.
Click here to listen (18 minutes, 2 seconds).
Tax Revenue from Chicago's New Bottled Water Tax Way Off According to the Chicago Sun-Times, revenue from the 5 cent per bottle tax is running 36% under projection since it went into effect on January 1. The city says it's because people don't buy water in cold weather; the industry notes that suburban bottled water sales (without the punitive tax) have skyrocketed:
January collections were $554,000. That's far short of the $875,000-a-month needed to meet the city's $10.5 million-a-year projection.[...]
David Vite, president of the Illinois Retail Merchant's Association, acknowledged that bottled water consumption rises with the temperature.
But that doesn't explain away what Vite calls "enormous increases" in suburban bottled water sales, particularly in stores near the Chicago border.
We discussed the silliness of singling out bottled water for a special tax here, and the less silly legal problems associated with the tax here.
Shoe Salesmen Lobby Seeks Tax Deduction to Help Stabilize Struggling Industry Today, the National Association of Shoe Salesmen® (NASS) took to Capitol Hill and called on Congress to give much needed relief to the footwear industry. NASS® is calling on legislators to implement a one-time above-the-line tax deduction for those who purchase a qualifying new pair of shoes through the end of 2008.
"Our industry hasn't been this devastated since the terrible rubber workers strike of 1976," said NASS® Lobbyist Gary Voiganella. "Help is needed for this industry that is vital to the U.S. economy and part of the American dream, and the best way is through a tax deduction equal to 25 percent of the purchase price for each pair of shoes purchased this year.”
NASS®, which is famous for establishing the unwritten rule that shoe salesmen must receive a 6 percent commission on all sales, said in a statement from NASS® Chief Economist Larry Nuy that this deduction would create 20 million new AMERICAN jobs (emphasis in original), wipe out global poverty, end all prejudice, ensure lasting world peace, and cure cancer.
On Capitol Hill, there is strong support among most congressional Republicans for the deduction. One aide to a senior Republican member when asked whether he'd support the proposal said "it's a tax cut, isn't it?" He added, "This is a no-brainer. Cutting taxes on shoes will revitalize the shoe industry by so much that the nation's economy will grow and revenues will actually increase as a result of this tax cut, not fall." But that aide also added that this member would only support the deduction under two conditions -- illegal immigrants are not allowed to claim the deduction and border agents who use special shoes to run down those trying to cross the border receive double the deduction.
On the other side of the aisle, a spokesperson for one Democratic lawmaker said that while the industry does deserve government assistance, he's concerned that such a proposal could be tilted in favor of the wealthy that are more likely to buy new and expensive shoes. Spokesperson Mike Wilson said, "In principle, Democrats would be willing to support such a bill because so many of the 47 million uninsured in America don't have access to quality shoes. But as for this deduction, we can't allow wealthy Americans who have already benefited disproportionately from the tax cuts over the past eight years to buy six pairs of Gucci loafers and write them off at their higher tax rates, while poor families must purchase shoes at Payless and get a small tax benefit. Give us a refundable credit that was capped at a $150,000 income level and we'd be on board."
Other Democrats were concerned that the bill did nothing to further regulate predatory shoe salesmen, and they questioned the impact the deduction would have on the U.S. trade deficit, arguing that by not restricting the deduction to "Fair Trade Shoes," this proposal is just part of a continual assault on the middle class because higher shoe consumption would drive more good-paying, health care-providing American jobs overseas. Some Republicans sang a similar tune, saying that this proposal would do little to reduce U.S. dependence on foreign shoes.
The White House was the most boisterous in its opposition to the proposal, arguing that since Malaysia is a large producer of rubber and at the same time contains a strong Al-Qaeda presence, supporting this measure would allow the terrorists to win. "We can't play shoe politics with America's security," said one White House spokeswoman.
Despite these mixed reviews the proposal is receiving in Washington, NASS® vows to fight on. "Wearing shoes is part of the American dream," said one shoe salesman. He added, "It's amazing anyone is buying shoes at all right now in the absence of the tax preference. People right now are just wearing old shoes that are uncomfortable, causing our health care costs to skyrocket. We put in office our elected officials to prevent this type of catastrophe from occurring, and we demand action."
(Note: This blog was posted on April Fool's Day. Parts of this article may not be factual.)
