Tax Archives - Page 7 of 16 - Progressive Policy Institute

Weinstein for The Hill, “How CEOs could help pay for tax reform”

Posted on May 23, 2017 by The Progressive Policy Institute

When Congress passed the Dodd-Frank Act, it included a requirement that U.S. companies annually report the ratio between their CEO and median worker pay. This modest provision takes effect this year, but it’s unlikely to reverse America’s widening pay gap.

In fact, if President Trump has his way on tax reform, the earnings gap will get much worse courtesy of the federal government.

That’s not to say tax reform isn’t needed; in fact, it’s long overdue. But tax reform needs to put working families first, not overpaid CEOs and top executives. Furthermore, it shouldn’t add to the national debt, which means that lower corporate rates must be paid for by eliminating some of the trillion dollars in tax breaks handed out each year.

One way to ensure that CEOs and their firms don’t gouge the American taxpayer under the guise of tax reform – and offset the cost of lowering the corporate tax rate – would be for Congress to take a simple, straightforward step: eliminate the tax break for excessively high CEO pay.

Continue Reading at The Hill.

Flashback Friday: PPI in Hindsight

Posted on March 31, 2017September 18, 2024 by The Progressive Policy Institute

Just over a year ago, PPI unveiled a big ideas blueprint with a prescient subtitle: Unleashing Innovation and Growth: A Progressive Alternative to Populism. We knew that progressives in the United States and Europe needed better answers to the economic and cultural grievances that have fueled the rise of a retrograde populism and nationalism around the world. We did not foresee that Democrats would fail to offer a forward-looking plan for jobs and shared growth, opening the door to Donald Trump’s improbable victory.

Which makes the themes and ideas in PPI’s sweeping policy blueprint more important than ever. Populism today thrives in the political vacuum left by center-left parties that offer no clear vision for reviving economic dynamism and hope. “Winning the economic argument will be essential to victory in the 2016 elections and it starts by getting the diagnosis right,” the blueprint noted. Instead, Democrats ran a campaign that leaned heavily on identity politics, wealth redistribution and centralized, small-bore solutions.

Unleashing argued that America (and Europe) are stuck in a slow-growth trap that holds down wages and living standards. And it offered bold prescriptions for building on America’s competitive advantage in technology and entrepreneurship to spread innovation – now concentrated in a vibrant digital sector — to the nation’s physical economy, which continues to suffer from low productivity. In addition, the document proposed creative ways to modernize the nation’s economic infrastructure, improve the regulatory environment for innovation, build middle class wealth and empower poor Americans to work, save and chart their own course to social mobility and inclusion.

Crucially, the blueprint also urged progressives to reject anger and victimhood and offer voters a confident account for how America can build a new, inclusive prosperity:

What America needs is a forward-looking plan to unleash innovation, stimulate productive investment, groom the world’s most talented workers, and put our economy back on a high-growth path, It’s time to banish fear and pessimism and trust instead in the liberal and individualist values and enterprising culture that have always made America great.

That was the road not taken in 2016. Now it’s the road to political relevance and success for progressives here and elsewhere.

Marshall & Aldy for Democracy Journal, “The Great Swap”

Posted on February 15, 2017 by The Progressive Policy Institute

Does a deal now gaining momentum across the aisle actually have the potential to break the stalemate on climate change?

Is Donald Trump serious about keeping an “open mind” on climate change? Considering the “drill, baby, drill” cheerleaders he’s put in key Cabinet posts, it’s easy to fear the worst. They appear more than eager to roll back the Obama Administration’s energy and climate policies as soon as possible.

So the safest bet is probably to buckle up for four more years of intractable partisan warfare in Washington over dueling fuels and “alternative” climate science. And yet, there is rising interest, on both sides of the political spectrum, for an idea that has the potential to break this impasse in energy and environmental policy: swapping a carbon tax for many existing environmental regulations and using the revenues to support broader tax reform.

Last week, a group of Republican graybeards led by former secretaries of state James Baker and George Schultz called for a $40 per ton carbon tax, with the proceeds being turned into rebates in the form of dividends to all Americans. Senator Bernie Sanders endorsed a carbon tax during his campaign, and Trump and his daughter Ivanka discussed it with climate change crusader Al Gore after the election.

The Baker-Schultz plan also envisions swapping the carbon tax for an array of less comprehensive regulations—including the proposed Clean Power Plan—that most economists believe are less efficient than an economy-wide carbon tax. All this points to an opportunity for a President who calls himself a world-class dealmaker to craft a grand bargain that gets U.S. energy and climate policy unstuck. It’s a long shot, but the alternative is an endless game of political ping pong in which Republicans ram their energy preferences through Congress unilaterally, only to be reversed when Democrats return to power.

Continue Reading at Democracy Journal.

Reforma Tributaria y la Econom’a App: El Ejemplo de Colombia

Posted on December 6, 2016September 18, 2024 by The Progressive Policy Institute

En los Estados Unidos hemos estado, con mucha razón, obsesionados con el resultado de las elecciones presidenciales. Pero el mundo sigue girando. Por ejemplo, la semana pasada Colombia ratificó un tratado de paz histórico entre el gobierno y el movimiento rebelde. PPI tuvo el privilegio de estar en Bogotá este octubre, donde realizamos un evento sobre la Economía App, el cual fue muy difundido, y describió cómo la Economía App de Colombia ha generado más de 80.000 puestos de trabajo.

Hay que felicitar al presidente de Colombia, Juan Manuel Santos por su éxito. Al mismo tiempo, él ha presentado una importante reforma tributaria que simplifica el sistema de impuestos corporativos mientras que recauda nuevos fondos. No es sorpresa que la medida de reforma tributaria sea controversial. Por ejemplo, las franquicias de la cadena de sandwiches Subway reclaman que el incremento en los impuestos puede terminar con el negocio.

De mayor impacto, la reforma tributaria de Santos afecta directamente al sector digital de Colombia y en particular a la Economía App. Incrementaría el IVA en dispositivos (teléfonos, tablets y computadoras) del 16 al 19% – solo las tablets y las computadoras menos costosas estarían exentas del IVA. La reforma ialzaría el IVA sobre los servicios móviles de datos del 16 al 19% y agregaría un 4% adicional de impuestos al consumo (un total de 23%). Finalmente, la reforma tributaria impondría un IVA sobre todo el contenido y servicios digitales que sean provistos por proveedores de origen extranjero.

Estas medidas tributarias podrían potencialmente restringir la continuación del crecimiento de la Economía App de Colombia, la cual depende de dispositivos asequibles y el banda ancha móvil, y del acceso a apps provenientes de cualquier parte del mundo. Más aún, esto podría afectar negativamente la competitividad en el resto de la economía, ya que la Economía App es mucho más que solo entretenimiento y aplicaciones de juegos. De hecho, se desarrollan y usan aplicaciones por grandes multinacionales, bancos, compañías de medios audiovisuales, tiendas minoristas, y gobiernos.

La importancia a futuro de la Economía App va incluso más lejos. Citamos de nuestra publicación de octubre 2016, «Siguiendo la Economía App de Colombia»:

Uno de los cambios más grandes que se aproximan es el Internet de las Cosas, el cual es el uso de Internet para ayudar a controlar objetos físicos y nuestro entorno físico. Los agricultores usarán cada vez más aplicaciones que ayuden a su producción agricultural, los enfermeros y doctores usarán aplicaciones para administrar el cuidado de los pacientes, y los productores usarán aplicaciones para controlar sus fábricas.

A nivel global, los países exitosos digitalmente como Vietnam y China aplican tasas de IVA relativamente bajas a los datos y servicios móviles para estimular el uso (Vea este informe reciente sobre la inclusión digital y los impuestos sobre el sector móvil).

Finalmente, como hemos mencionado en nuestra publicación de octubre de 2016:

Si los legisladores son serios con respecto a fomentar un ecosistema dinámico para nuevas empresas y la Economía App, entonces continuar con las políticas que apoyen la Economía App será lo que ayudará a Colombia a participar en la revolución móvil global como productor más que como consumidor. Aplicar demasiadas restricciones costosas sobre la Economía App de Colombia podría desviar el crecimiento hacia otro lugares. (énfasis añadido)

Tax Reform and the App Economy: The Example of Colombia

Posted on December 6, 2016September 18, 2024 by The Progressive Policy Institute

We in the US have been understandably obsessed with the outcome of the presidential election. But the rest of the world keeps moving forward. For example, last week Colombia ratified a historic peace treaty between the government and the rebel movement. PPI was privileged to be in Bogota just this October, where we held a widely publicized App Economy event, describing how Colombia’s App Economy has generated over 80,000 jobs.

Colombia’s President Juan Manuel Santos should be congratulated for his success. At the same time, he has introduced an important tax reform measure that simplifies the corporate tax system, while raising new funds. Not surprisingly, the tax reform measure is controversial. For example, franchises of the Subway sandwich chain are complaining that higher taxes will drive them out of business.

More consequentially, the Santos tax reform takes direct aim at Colombia’s digital sector and App Economy in particular. It would raise the VAT on devices (phones, tablets and computers) from 16 to 19% – only the least expensive tablets and computers would be exempt from the VAT. The tax reform would raise VAT on mobile data services from 16 to 19% and add an additional 4% consumption tax (total of 23%). Finally, the tax reform would charge VAT on all digital content and services provided by suppliers based overseas.

These tax measures could potentially restrict continued growth of Colombia’s App Economy, which depends on affordable devices and mobile broadband, and access to apps from all over the world. Moreover, this could hamper competitiveness in the rest of the economy, since the App Economy is far more than just entertainment and game apps. In fact, apps are developed and used by major multinationals, banks, media companies, retailers, and governments.

The future importance of the App Economy goes even further. We quote from our October 2016 paper “Tracking Colombia’s App Economy:”

One of the biggest changes coming is the Internet of Things, which is the use of the Internet to help control physical devices and our physical environment. Farmers will increasingly use apps to aid their agricultural production, nurses and doctors will use apps to manage patient care, and manufacturers will use apps to control their factories.

Globally, digitally-successful countries such as Vietnam and China apply relatively lower VAT rates to mobile data and services to boost uptake (See this recent report on digital inclusion and mobile sector taxation).

Finally, as we note in our October 2016 paper:

If policymakers are serious about fostering a dynamic startup ecosystem and App Economy, then continuing with the types of policies that facilitate App Economy growth will allow Colombia to participate in the global mobile revolution as a producer rather than a consumer. Putting too many costly restrictions on Colombia’s App Economy could divert the growth elsewhere. (emphasis added)

A Note From PPI President Will Marshall on Obama’s “Way Ahead”

Posted on October 6, 2016September 18, 2024 by The Progressive Policy Institute

I’d like to draw your attention to this extraordinary essay by President Obama in The Economist. It stands out for two reasons. First, it provides what has been sorely missing from the bizarre 2016 presidential race – a progressive roadmap for restoring America’s economic dynamism.

Second, President Obama’s approach to reversing nearly two decades of slow economic growth is uncannily parallel to the Progressive Policy Institute’s policy blueprint for pro-growth progressives: Unleashing Innovation and Growth: A Progressive Alternative to Populism.

Both documents reject populist claims that the U.S. economy is a “disaster” or a game hopelessly rigged by Wall Street or billionaires and focus instead on the main driver of meager wage gains and growing inequality – slumping productivity growth. As the President notes, one reason for the slowdown is lagging private investment – a problem PPI also has been highlighting in multiple studies of the nation’s “investment drought.”

We also agree with many of the President’s key prescriptions for putting America back on a high-growth path. To highlight just a few:

Pro-growth tax reform, including lowering business taxes and closing special interest loopholes.
Expanding U.S. exports and passing the Trans-Pacific Partnership to strengthen global trade rules.
Lowering college costs, not just expanding education subsidies.
Making work pay by expanding tax credits for low-income workers.

Why is all this important? Because despite all the rhetoric about “inclusive growth,” in this election, we’re hearing a lot more about distributing existing wealth than creating new wealth. To speak to the hopes and aspirations of working families, Democrats need to balance that equation.

If You Can’t Income Average Across Good and Bad Years, Why Can Trump?

Posted on October 4, 2016September 18, 2024 by The Progressive Policy Institute

By all accounts, Donald Trump used huge real estate losses in the early 1990s to pay little or no taxes in subsequent years. In other words, he “income-averaged” his bad years and his good years. That seems to make perfect sense to many tax experts. And the eminently reasonable Megan McCardle of Bloomberg wrote a piece titled “Trump’s 1995 Return Shows Good Tax Policy at Work.”

But suppose you, as a typical American, took a big loss on your home, or had a bad couple of years because you lost your job? Could you cut your taxes by income-averaging, like Trump did?

No and no. First, if you buy your home today, and the value falls tomorrow, you are not allowed to write off your loss on your taxes. As the IRS says in its cheery way, a ” loss from the sale or exchange of a capital asset held for personal use isn’t deductible.”

But perhaps more important, the typical American wage earner who has a decent income one year (and pays lots of taxes!), and loses his or her job the next year, is not allowed to income average across years. That provision was taken out of the tax code in 1986 (there are some special situations where it still holds, but they don’t apply to most people).

Income-averaging would be a tremendous cushion to ordinary wage earners in times of economic tumult, like the recent deep recession. If you lost your job, those bad years could help lower your tax bill in other years where you earned more money. In an important sense, income-averaging is a protection against insecurity. (Full disclosure: I advocated income-averaging in my 1996 book, The High Risk Society).*

How much of a cushion would income-averaging prove in tough times? The amounts could be quite significant. Here’s an example. A married person earning $120K in a year with 1 small child and a non-working spouse would pay (after exemptions and the standard deduction) roughly $15,000 in federal income taxes. If they lose their job for two years, their income goes down to zero and they pay zero taxes.

But if this hypothetical person could income-average over the bad years–like Trump did–he or she would pay tax on $40K of income for three years, which would come to roughly $1500 per year, or a total of $4500 for three years. In effect, income-averaging would cut their three year tax bill by two-thirds, and give them $10K in their pocket–mighty handy to have when you are out of work.**

Now, not to belabor the obvious, putting income-averaging for ordinary Americans into the tax code could be expensive. Given all the other competing needs on the tax system, it’s not clear that allowing broad income-averaging is the best use of scarce fiscal resources. But as a philosophical matter of tax policy, income averaging both aids fairness, and helps cushion ordinary Americans against the ups and downs of a volatile economy.

So I ask the question: If the ordinary American can’t income average, why can Donald Trump? Or to flip the question around, if Donald Trump can income average, why can’t you?

*The pre-1986 version of income averaging, unfortunately, was restricted to the wrong people. As I wrote in 1996, “under the pre-1986 law, people could only average if their incomes spiked up substantially–a lottery winner, say, or an author whose book was suddenly a best seller. Those restrictions ruled out the people who really needed the help, the ones whose income suddenly took a big dip down because of a job loss. People need to be insured against actual losses, not the possibility of sudden gains.”

**The gain would be even bigger if the family is eligible for the EIC.

Where Should Multinationals Be Taxed?

Posted on August 24, 2016September 18, 2024 by The Progressive Policy Institute

Which countries should have the right to tax the profits of US-based multinationals that operate globally? A year ago we pointed out that this seemingly arcane question had the potential to become a major point of conflict between the US and the EU. Back then we warned of the potential for an “enormous job-and-revenue grab by Europe,” utilizing the international tax system to claim a larger share of tax revenues from US-based multinationals, and in the process reducing the tax revenues that could be collected by the US government.

Now the US Treasury is agreeing with our warning. In a paper released today, the Treasury raises objections to a series of so-called “state aid” cases launched by the European Commission. The cases would retroactively imposes billions of dollars of additional taxes on US companies–money that would go to European countries and could no longer be collected by the US government. Moreover, the cases are based on a novel interpretation of international tax rules.

Here’s what Robert Stack, Deputy Assistant Secretary for International Tax Affairs, says on the Treasury blog.

These investigations have major implications for the United States. In particular, recoveries imposed by the Commission would have an outsized impact on U.S. companies. Furthermore, it is possible that the settlement payments ultimately could be determined to give rise to creditable foreign taxes. If so, U.S. taxpayers could wind up eventually footing the bill for these State aid recoveries in the form of foreign tax credits that would offset the U.S. tax bills of these companies.

…we emphasize that the Commission should not seek to impose recoveries under this new approach in a retroactive manner because it sets a bad precedent for tax policymakers around the world. Finally, we explain that the Commission’s approach undermines U.S. tax treaties and international transfer pricing guidelines already accepted broadly in the global tax community, and undermines the work done as part of the BEPS project.

We agree:This is an extremely important principle that goes way beyond the particular case.

Some background here is useful. Several years ago, the finance ministers of the developed countries decided that multinationals, through legal means, were paying too little taxes. They commissioned a rewrite of the global tax rules called the BEPS project (for “Base Erosion and Profit Shifting”). The BEPS rules, when they came out, accomplished two tasks. First, they closed a large number of legal loopholes that companies had used to reduce their taxes. Second, the BEPS rules enunciated a basic principle for the future: That profits should be taxed “where economic activities generating the profits are performed and where value is created.”

While we’ve had our issues with the BEPS rules, this principle is basically a good one. However, it leaves open the delicate question of actually determining where economic value is created in a world of intangibles. For example, in a supply chain where the product design and marketing is done in the US, and the manufacturing is done in China, how should the profits be split for tax purposes? Should China be able to unilaterally decide that all the value was generated in China, and should all be taxable?

Obviously not. We wouldn’t want China unilaterally making this decision. The same is true for the EU.

To summarize: The European Commission has the right to impose whatever rules it wants on state aid. But it doesn’t have the right to unilaterally decide what share of multinational income it gets to tax.

Slate: One Reason Tax Returns Are So Complicated? Because H&R Block and Other Preparers Like It That Way

Posted on April 18, 2016 by The Progressive Policy Institute

Slate columnist Helaine Olen references a PPI report in this article on the complexity and cost of filing taxes.

“According to the Progressive Policy Institute, the average recipient of the earned income tax credit loses about $400 of his or her refunds to the preparers who helped complete and submit his or her taxes. For some, that’s almost 25 percent of what they received back from the federal government.”

Read the article in its entirety at Slate.

The Atlantic: How the Tax-Prep Industry Takes Advantage of Low-Income Filers

Posted on April 14, 2016 by The Progressive Policy Institute

The Atlantic’s Gillian B. White wrote about the PPI’s recent report on the exploitation of low income workers by tax preparation services.

The Earned Income Tax Credit program has become one of the largest national anti-poverty programs in the country, distributing about $67 billion to around 28 million low-income workers and their families. By that measure, it may seem the EITC, implemented in 1975, is a success. But a recent study from Johns Hopkins finds that the dubious practices of some tax preparers mean that many families are losing a sizeable chunk of their annual credit to tax professionals who, aware of how much money was in play, didn’t hesitate to charge qualifying families excessive amounts for help filing.”

Continue the article at The Atlantic.

The Hub: Income tax preparation chains target low-income filers, study suggests

Posted on April 14, 2016 by The Progressive Policy Institute

A PPI Report by senior fellow Paul Weinstein is discussed in this article for Johns Hopkins University’s magazine.

National tax preparation chains continue to exploit the working poor, many of whom spend a significant portion of a key federal anti-poverty tax credit just to pay for filing their taxes, a new study concludes.

These large tax preparation companies tend to cluster their offices in low-income neighborhoods, according to the study, co-authored by Paul Weinstein, director of Johns Hopkins University’s Graduate Program in Public Management. ZIP codes with the highest level of taxpayers eligible for the Earned Income Tax Credit have about 75 percent more tax preparers per filer than neighborhoods with a more modest share of people eligible for the credit, researchers found.”

Read the rest of the piece at The Hub.

PRESS RELEASE: PPI Report: Tax Prep Chains Target Low-Income Workers

Posted on April 14, 2016 by The Progressive Policy Institute

FOR IMMEDIATE RELEASE
April 14, 2016

Contact: Cody Tucker, ctucker@ppionline.org, 202-775-0106,
or Steven Chlapecka, schlapecka@ppionline.org, 202-525-3926

PPI Report: Tax Prep Chains Target Low-Income Workers

Taxpayers eligible for the EITC spend as much as 22 percent of their refund to file

WASHINGTON—National tax preparation chains continue to exploit the working poor, many of whom spend a significant portion of a key federal anti-poverty tax credit—the Earned Income Tax Credit (EITC)—just to pay for filing their taxes, according to a report released today by the Progressive Policy Institute.

The report, coauthored by Paul Weinstein Jr., PPI Senior Fellow and Director of the Public Management Graduate Program at the Johns Hopkins University, and Bethany Patten, a policy and research manager at Excellent Schools Detroit, found that workers eligible for the EITC continue to spend large sums—averaging around $400—at national tax preparation chains.

In a recent survey of storefront operations in Baltimore and Washington, D.C., they found that those eligible for the EITC, who are typically low-income workers with children, would spend between 13 and 22 percent of their refund this year at local tax preparation outlets. In Baltimore, where the average EITC refund is $2,335, the cost to file ranged from $309 at H&R Block to $509 at Liberty Tax Service. In Washington, D.C., where the average EITC refund is $2,351, the cost to file ranged from $315 at H&R Block to $485 at Liberty Tax Service.

Additionally, Weinstein and Patten found that national tax preparation chains continue to target EITC filers by locating in areas where the largest numbers of EITC claims are made. ZIP codes with the highest level of EITC filers have approximately 75 percent more tax preparers per filer than moderate-EITC ZIP codes. The study found “a clear relationship” between the share of EITC filers in a ZIP code and the area’s saturation of tax preparation chains.

Lastly, government studies, as well as those by nonprofit organizations, consistently show a high error rate for returns filed on behalf of EITC beneficiaries by paid tax preparers. Two studies by the Government Accountability Office (GAO) found an error rate of 89 and 94 percent respectively. And last year the head of the GAO stated that in an analysis of IRS data, an estimated “60 percent of returns prepared by preparers contained errors.”

“These realities demand a public response. But proposals to further complicate the tax code in the name of reducing fraud would only make the problem worse,” write Weinstein and Patten. “Instead, U.S. policymakers should establish a national goal of reducing the dependence of low-wage workers on paid tax preparers. Specifically, this would mean taking steps to simplify EITC rules and requirements, by requiring all paid preparers to take competency exams, increasing access to free filing programs, and/or streamlining the federal income tax code in its entirety. A combination of these reforms would allow low-income workers to keep more of their tax credit while also raising standards within the paid tax preparation sector.”

The report follows up on a 2002 study by researchers at PPI and Brookings Institution, which found that tax preparations services, clustered in low-income neighborhoods, cost workers eligible for EITC refunds about $1.75 billion.

The Earned Income Tax Credit was established in 1974 as an anti-poverty measure. It has become the federal government’s largest safety net program, last year providing $66.7 billion to 27.5 million Americans. It is especially valuable to low- and middle-income workers, since it provides a direct credit against taxes owed rather than a deduction from reported income. It is also a refundable credit, meaning an eligible worker can receive a refund even if the credit exceeds what would have been his or her federal income tax liability.

Download, The Price of Paying Taxes II: How paid tax preparer fees are diminishing the Earned Income Tax Credit (EITC)

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The Price of Paying Taxes II: How paid tax preparer fees are diminishing the Earned Income Tax Credit (EITC)

Posted on April 14, 2016 by The Progressive Policy Institute

In 2002, researchers from the Brookings Institution and the Progressive Policy Institute (PPI) wrote a groundbreaking study entitled “The Price of Paying Taxes: How Tax Preparation and Refund Loan Fees Erode the Benefits of the EITC.” This report was one of the first to highlight the costly dependence of low-wage workers on national tax preparation chains. The study found that tax preparation and other services cost eligible workers an estimated $1.75 billion in Earned Income Tax Credit (EITC) refunds; that paid preparer services tended to cluster in low-income neighborhoods where large numbers of families claim the tax credit; and, that EITC recipients in Washington, D.C. paid, on average, 10 percent of their tax credit refund to paid preparers.

Subsequent studies by the federal government as well as private researchers have reaffirmed several of the findings from the Brookings and PPI research, while also highlighting other problematic aspects of storefront tax preparers. These include significant error rates on filings and a heavy reliance on EITC filings to generate revenue. Since the “Price of Paying Taxes” study appeared, the practice of charging exorbitant extra fees for filing EITC forms with returns has persisted and grown.

As a longtime advocate for making work pay—PPI called for dramatically expanding the EITC in its very first policy report in 1989—the Institute decided to revisit the 2002 study and take a fresh look at what it costs low-income workers to file tax returns. Our 2016 update yields three major conclusions:

Workers eligible for the EITC continue to spend large sums—averaging around $400—at national tax preparation chains. In a recent survey of storefront operations in Baltimore and Washington, D.C. we found that low-income taxpayers can expect to spend between 13 and 22 percent of the average EITC refund to file their taxes.
National tax preparer chains continue to target EITC filers by locating in areas where the largest numbers of EITC claims are made. Zip codes with the highest level of EITC filers have approximately 75 percent more tax preparers, formally referred to as Electronic Return Originators or EROs, per filer than moderate-EITC zip codes. Large tax preparer chains tend to cluster in high-EITC zip codes.
Government studies as well as those by nonprofit organizations consistently show a high error rate for returns filed on behalf of EITC beneficiaries by paid tax preparers. Two studies by the Government Accountability Office (GAO) found an error rate of 89 and 94 percent respectively. And last year the head of the GAO stated that in an analysis of IRS data, an estimated “60 percent of returns prepared by preparers contained errors.”

Download “2016.04-Weinstein_Patten_The-Price-of-Paying-Takes-II.pdf”

PPI Tackles Tax Disputes in Europe

Posted on April 8, 2016September 18, 2024 by The Progressive Policy Institute

Last week, PPI led a bipartisan delegation of 10 high-ranking Congressional staffers to London and Brussels, which is still grieving in the aftermath of the March 22 terrorist attacks. Our visit there so soon after the atrocity was greeted warmly as an act of transatlantic solidarity.

The Digital Economy Study Group was the third such delegation PPI has taken to Europe in as many years. Our mission is to engage influential government and private leaders in exploring common ways to tackle our mutual dilemma of slow growth and stalled social mobility. We believe more innovation and growth are the best antidotes to the virulent strains of populism that are warping democratic politics on both sides of the Atlantic.

Our trip began last Tuesday in London at 10 Downing Street, where Daniel Korski, deputy head of policy for Prime Minister David Cameron, briefed our delegation on the government’s efforts—including a low-tax patent or innovation box—to encourage greater digital investment in the UK. Then it was on to Westminster, where Tory MP Ian Liddell-Grainger led the group on an entertaining tour of Parliament, which also included a brisk dissection of Britain’s controversial Pay As You Earn (PAYE) tax.

Also at Parliament, Labour MP Meg Hillier, Chair of the Public Accounts Committee, defended the government’s diverted profits tax as a response to public anger over the tax avoidance strategies of international companies. At breakfast the next day, veteran Labour MP John Spellar offered a trenchant analysis of how economic change and slow growth have scrambled British politics and led directly to June’s “Brexit” referendum. At UK Treasury, Financial Secretary David Gauke explained how recent reforms to corporate tax rules have resulted in greater foreign investment and business creation.

On Thursday, we took the Eurostar to Brussels, where the U.S. Mission to the European Union briefed us on difficult aspects of the US-EU economic relationship, including the new “Privacy Shield” agreement, international tax policy, and the TTIP trade pact. At the European Commission’s powerful Competition directorate, the group had a robust exchange of views with officials overseeing “state aid” investigations that have called into question tax agreements negotiated by EU member states and U.S. companies. We expect these issues resurfaced this week when Commissioner Margarethe Vestager visited Washington for talks with Congress and the administration.

Later, officials at DG CONNECT briefed the group on Europe’s efforts to establish a digital single market and plans for “platform regulation” to create space for European tech companies to grow. On Friday, the DG GROW team discussed their wide-ranging efforts to spur entrepreneurship and digital skills building across Europe. The growing gulf between U.S. and European views on tax policy also was the subject of a lunch with Bart Van Humbeeck, economic advisor to Kris Peeters, Vice-Prime Minister of Belgium, hosted by Paul Hofheinz of the Lisbon Council. Our last official meeting was with PPI friend Ann Mettler, Head of the European Strategy Centre, an in-house think tank for EU President Jean-Claude Junker.

These frank and in-depth discussions enabled us and Congressional staff to get a better understanding of the sometimes byzantine workings of the EU, as well as its often different perspectives on issues vital to both sides—privacy and cross-border data flows, digital innovation, trade, tax, copyright and more. The visits also have impressed on our European friends that U.S. policymakers are paying closer attention to such issues. PPI’s hope is to nudge these sometimes contentious conversations to common ground, and strengthen the fraying bonds of transatlantic economic cooperation.

Press Release: PPI Unveils New Blueprint for Shared Prosperity

Posted on March 15, 2016September 18, 2024 by The Progressive Policy Institute

FOR IMMEDIATE RELEASE
March 15, 2016

Contact: Cody Tucker, 202-775-0106
or ctucker@ppionline.org

A Progressive Alternative to Populism

PPI Unveils New Blueprint for Shared Prosperity

WASHINGTON—The Progressive Policy Institute (PPI) today released Unleashing Innovation and Growth: A Progressive Alternative to Populism, a new blueprint for renewing America’s economic dynamism.

The plan offers an array of creative proposals for accelerating the “digitization” of the physical economy; lowering regulatory obstacles to innovation and entrepreneurship; launching a new public works push; adopting pro-growth tax reform; grooming the world’s most talented workers; and enabling working families to escape poverty and build middle class wealth.

The blueprint also takes aim at the populist anger that has figured prominently in campaign 2016:

…[P]opulists do Americans no favors by claiming the economic game is hopelessly rigged against them, that the leaders they elect are incompetents, or that our democracy is rancid with corruption. None of these claims is true, and such demagoguery undermines public confidence in America’s boundless capacity for self-renewal. Populist anger fosters an ‘us versus them’ mentality that, by reinforcing political tribalism and social mistrust, can only make it harder to build consensus around economic initiatives that benefit all Americans.

“We believe progressives owe U.S. voters a hope-inspiring alternative to populist outrage and the false remedies of nativism, protectionism and democratic socialism,” writes Will Marshall, PPI President.

“I encourage anyone looking for optimistic ideas to create more jobs, wealth, and prosperity for hard working Americans to read PPI’s new report using innovation to spur growth,” said Congressman Ron Kind (D-Wis.), Chairman of the New Democrat Coalition. “This report is full of forward thinking policy initiatives that help grow the American economy.”

“In the midst of today’s populist uprising, it’s up to our leaders to recognize the real reasons why our economy isn’t working for everyone and to fight for effective solutions,” said Governor Jack Markell (D-Del.). “PPI’s blueprint gives policymakers a roadmap to create opportunity for all Americans by harnessing the unstoppable forces of globalization and technological innovation, while opposing the impractical, and sometimes dangerous, proposals offered by the political extremes.”

The anger on which populists feed is rooted in a real economic problem: America has been stuck in a slow growth trap since 2000. This long spell of economic stagnation has held down wages and living standards and shrunk the middle class. What the nation needs is a forward-looking plan for moving the U.S. economy into high gear. Instead, as the PPI blueprint notes, today’s populists peddle nostalgia for our country’s past industrial glory but offer few practical ideas for building new American prosperity in today’s global knowledge economy.

Unleashing Innovation and Growth seeks to fill this vacuum in the presidential campaign, offering bold ideas for unleashing the collective ingenuity of the American people—harnessing disruptive change, raising skills, lowering tax and regulatory barriers to individual initiative and creativity, and experimenting with innovative ways to rebuild middle class wealth and enable more Americans to exit poverty.

Summary of Key Proposals

Unleash Innovation
• Spread innovation across the economy: Adopt a new “Innovation Platform” aimed at stimulating public and private investment in new ideas and enterprises, and at diffusing innovation across the entire economy.
• Improve the regulatory climate for innovation: Tackle the mounting costs of regulatory accumulation, the constant layering of new rules atop old ones; Make systemic changes to regulatory agencies to make promoting investment, innovation and new enterprises part of their core mission; Rein in occupational licensing requirements that screen out many low-income entrepreneurs; Lift outdated restrictions on lending to small business; give businesses incentives to offer more flexible work, including paid leave.
• Innovate our way to clean growth: Implement a more innovative energy strategy that simultaneously advances two vital interests: powering economic growth and assuring a healthy environment; Recognize that, for the foreseeable future, the U.S. and the world will have to tap all fuels—renewable, nuclear, and fossil—to meet growing energy demand and sustain global economic growth; Institute a nationwide carbon tax to curb greenhouse emissions while driving investment to clean and efficient energy.
• Democratize trade: Sell more of America’s highly competitive exports to a growing global middle class; promote the free flow of data across global borders; support innovative trade agreements, like the Trans-Pacific Partnership (TPP), that lift labor, environment and human rights standards in developing countries and enable more Americans to benefit from trade; Seize new opportunities for U.S. small businesses and entrepreneurs to use low-cost digital platforms to tap into global growth.

Align Fiscal Policy with Innovation and Growth
• Embrace pro-growth tax reform: Advocate for a dramatic shift from income to consumption taxes to stimulate investment in productive economic activities rather than those favored by the current tax code; Close loopholes that benefit special interests and dramatically simplify taxes for most Americans; Raise enough money to cut corporate income taxes down to globally competitive levels, and reduce taxes that penalize innovation and hiring.
• Modernize public works: Accurately measure the true economic impact of infrastructure spending; open infrastructure markets to private capital; define a strategic role for Washington through a national infrastructure bank; impose firm deadlines on project approvals and licensing process.

Groom the World’s Most Talented Workers
• Reinvent public school: Champion new models of school governance that enable more school autonomy and innovation, more customized learning, rigorous standards, and genuine accountability and results.
• Create new pathways into middle class jobs: Create a more promising approach to “career pathways” by combining classroom training and work experience through a sequence of jobs, within or across firms in an industry, and a sequence of credentials that signal their growing skill levels.
• Cut college costs for everyone: Rein in costs and decrease debt by encouraging colleges to offer three-year degrees rather than the traditional four-year program and focus policies on competency, rather than credit hours.

Build Middle Class Wealth
• Narrow the wealth gap with universal pensions: Champion “universal pension” accounts that would enable all workers to save for retirement, navigate the maze of tax-favored retirement plans, and take their pensions with them when changing jobs.
• Help families save for homeownership: Tackle the twin problems of declining homeownership and souring housing costs for both owners and renters by creating a new, tax-preferred mechanism for down payment savings—“Home K”—to lower obstacles to homeownership, like tight credit and down payment requirements, for first-time homebuyers and to promote savings.

Fight Poverty with Empowerment
• Empower people with smart phones: Use modern technology to cut through bureaucratic barriers to government safety net programs, consolidate benefit streams, enable people living in poverty more access to the information they need, and apply online for social supports; Encourage federal, state, and local governments to create online H.O.P.E. (Health, Opportunity, and Personal Empowerment) accounts and action plans.
• Expand housing choices for low-income Americans: Convert some federal rent subsidies into incentives for homeownership to relieve the burden on low-income families of high housing costs and reduce the waiting list for subsidized housing, without raising taxes or adding to the federal deficit.

Download Unleashing Innovation and Growth: A Progressive Alternative to Populism.