Tax Foundation Releases Presidential Candidate Tax Plan Comparison
Posted on February 2nd, 2008 in Tax
Tax Foundation Releases Presidential Candidate Tax Plan Comparison
With the upcoming 2008 presidential election, tax policy will soon be on voters’ minds more than ever. Taxes are one of the central issues in any national election, and it is important for the public to understand candidates’ general views toward tax policy as well as their positions on specific issues, such as the alternative minimum tax (AMT) and corporate tax rates. While some candidates have been more forthcoming and specific than others about their stance on various tax issues, they will all need to divulge and elaborate on their positions as the race progresses.
To help voters sort through the details of each candidate’s proposal, the Tax Foundation has released a comparison of the candidates’ positions on the most important tax questions of this election. To use this page, simply check the boxes next to the names of the candidates whose plans you would like to compare and click "Compare." As the race narrows and the remaining candidates refine and expound their positions, we will expand this page.
New Mexico Proposes Video Game Tax to Punish Staying Indoors
Some people in New Mexico are skeptical of the Sierra Club’s proposal to tax people who make decisions with which they disagree:
Dave Gilligan remembers being pushed outside to play baseball and other sports, but feeling it just wasn’t for him.[…]
"If you take a kid that’s just playing his X-Box or whatever and you take him outside and you make him play baseball, he’s going to hate it," said Gilligan, co-owner of Gamers Anonymous, an Albuquerque video game store. "There’s nothing wrong with sitting at home playing games. Everybody’s doing it now."
But a coalition of groups, led by the Rio Grande chapter of the Sierra Club, is sold on the idea that outdoor education programs can inspire children in a way that video games and television cannot.
The coalition wants state lawmakers to create a No Child Left Inside Fund with a 1 percent tax on TVs, video games and video game equipment. The fund would help pay for outdoor education throughout the state.
Supporters of the tax—which would be the first of its kind in the nation—say outdoor programs have been shown to improve students’ abilities in the classroom, boost their self-confidence and teach them stewardship and discipline.
The fundamental purpose of taxes is to raise revenue necessary for programs, not micromanage people’s decisions with subsidies and penalties. If a tax targeting video games is justified, it should be on the basis of actual negative externalities, not the whims of social engineers picking things they don’t like at random.
We discussed a similar video game tax proposed by a Wisconsin state senator:
Why not put taxes on certain types of music, clothes, or entertainment? Or why not go directly at the source and put a special tax within the income tax system on people who work at ages 16 or 17, or raise the drivers license fees on people those ages? This may sound stupid and discriminatory, but that’s exactly what this proposal is.
Stimulus Bill Turning Into A Christmas Tree
The Senate will likely cave to the demands of AARP and others to expand the stimulus to include rebates to elderly Americans who pay little or no taxes (and the rebates dropping from $600 to $500 to keep the cost the same). As we noted:
When dealing with a policy that is designed primarily to stimulate the economy, any arbitrary policy can almost be justified to some degree. But what this shows is that there is a problem in trying to use the tax code as the main vehicle for fiscal stimulus and/or social policy. Everyone is always going to complain that they are being shortchanged, despite the fact that getting money to everyone is difficult.
On second thought… maybe we should just send helicopters over every major city in the country and drop out $20 bills. And we can even make AARP happy by putting double the money in the helicopters that fly over golf courses in Florida and Arizona.
Because the stimulus bill enjoys such broad congressional support, it’s a magnet for all sorts of silliness to be attached to it (the term is a "Christmas tree" bill). The Senate may seek to add additional unemployment benefits. A provision has been added to prevent a Child Death Tax. Some are now insisting on an amendment to prevent illegal immigrants from getting rebate checks. Mike Huckabee and Rep. Brian Baird (D-WA) think we should spend the money on infrastructure. The REALTORS® are happy with the stimulus bill, though. Contrast that with the Coalition [of Economists] Against Fiscal Stimulus, and those normally anti-tax congressmen who voted against it in the House.
AARP’s success at amending the bill makes this Canadian cartoon from 1985 seem apt:
The stimulus package just passed by the House and now under consideration by the Senate, is designed as a 2008 tax cut, with part of the refund you would normally get in spring 2009 advanced to be mailed out this spring ($600 under the House, maybe $500 in the Senate plan). But the House version sets income caps, and since that income hasn’t been earned yet, the IRS is left having to use 2007 numbers instead. So if you earn less than the cap in 2007, you’ll get the rebate even if you bust it in 2008.
It’s not easy to follow. After all, the federal income tax code is already a huge, burdensome, complex mess, with its W-2s, instruction booklets, calculations, brackets, AMT, and phaseouts of phaseouts. Taxpayers struggling with this mess often take out their ire, rightly or wrongly, on the tax collector.
It’s hard to have sympathy with the tax collector, but we almost did when we realized a glitch about the $300 child tax credit in the stimulus plan. Like the income caps, the IRS will rely on your 2007 return to determine if you have a "qualifying child." ("Qualifying child" is a term of art, but for the child tax credit, basically it’s someone you support who’s under the age of 17, and who lived with you at least half the year.) But the credit is part of your 2008 taxes, so if it turns out you’re not eligible when you file in 2009, you’d have to give the money back. We fretted that families grieving over the loss of their child in 2007 would get a $300 check this spring, only to have the IRS demand that they return it in 2009.
Luckily, that’s not the case:
If, however, the result is a positive number (because, for example, the taxpayer paid no tax in 2007 but is paying tax in 2008), the taxpayer may claim that amount as a credit against 2008 tax liability. If, however, the result is negative (because, for example, the taxpayer paid tax in 2007 but owes no tax for 2008), the taxpayer is not required to repay that amount to the Treasury. Otherwise, the checks have no effect on tax returns filed in 2009; the amount is not includible in gross income and it does not otherwise reduce the amount of withholding.
So any rebate you get this spring you get to keep, even if it turns out on your 2008 form that you weren’t eligible for it, so long as you were eligible in 2007.
And they wonder why we think the tax code is too complex.
