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Opening The Post on Monday morning it was as if the 2026 election campaign had gotten underway already, even as we sit waiting for the new government to form. Under the headline “An answer to National’s revenue gap” was a column by the CTU economist, and former Grant Robertson adviser, Craig Renney suggesting that National … Continue reading “Windfall” taxes

The Department of Justice is suing several tax preparers for filing fraudulent returns, but even honest filers risk running afoul of tax laws.

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Benjamin Franklin famously said, "In this world nothing can be said to be certain, except death and taxes." Unfortunately, in the UK they arrive simultaneously in the form of what is called "Inheritance Tax," but is in fact a Death Tax.  There is a moral case and an economic case for abolishing the Death Tax (IHT). Both are valid.  The moral case is that people have already paid tax on their income and capital gains during their lifetime. To tax those assets again is double taxation, akin to taxing people who buy spirits VAT on the excise duty they have paid.One of the strongest human motives is the love for our children and the desire to improve their lot in life. We want the freedom to pass on to them the saving we've accrued in our own lives so that theirs might be better, and we want to do so without the state seizing a large part of that wealth before it reaches them.Abolishing the Death Tax will incentivize investment and economic growth. When individuals know that their assets will be subject to significant taxation upon their death, they are less inclined to accumulate wealth or invest in long-term ventures. Removing this tax burden could thus encourage entrepreneurship, risk-taking, and investment, leading to economic expansion and job creation.The UK tax system, including the Death Tax, can be complex and burdensome to navigate. It is estimated that IHT accounts for 10 percent of the tax code, while generating only 0.2 percent of revenues. Abolishing it would simplify the system and reduce administrative costs for individuals and families. The time and resources currently spent on estate planning and tax avoidance strategies could be redirected to more productive activities, benefiting the economy as a whole.Abolishing the tax will help reduce tax avoidance and evasion. Wealthy individuals often employ complex legal structures or transfer assets to offshore entities to mitigate their exposure to IHT. Its abolition would reduce the incentive to engage in these practices, leading to a more transparent and fairer tax system overall.The Death Tax puts a significant burden on family businesses and assets, potentially leading to their liquidation or breakup to meet tax obligations. Abolishing the tax could help preserve intergenerational businesses and assets, allowing families to continue their legacies without the fear of hefty tax bills.It is likely that abolishing the tax could incentivize charitable giving. When individuals are not burdened by the prospect of a significant tax liability on their estates, they may be more ready to donate to charitable causes.Given all of this, it is not surprising that IHT is reckoned to be the least popular tax levied in the UK. The Adam Smith Institute has been publishing papers against it for decades, and it now senses a rising tide of hostility to it. The time is long overdue for the Death Tax to be quietly put down and given a decent burial.

Wealthier Americans pay a record share of federal taxes, but voters (and President Joe Biden) believe they're freeloading.

The current US fiscal trajectory is unsustainable. Eventually, taxes will need to rise, or spending will need to fall.

Last night, eight Republican presidential hopefuls faced one another on stage to vie for primary voters' support. The debaters discussed the economy, foreign policy, education, crime, abortion, and climate change. Despite a few passing mentions, tax policy was almost entirely absent.

There are many pervasive myths about the U.S. tax code. Here are a few.

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By borrowing, legislators push the costs down the road for future legislators and taxpayers to deal with.

One of the bills Congress punted to the new year is a package of "tax extenders" normally considered at year's end when temporary tax laws are about to expire. But the agreement announced yesterday is notable for far more than its timing.
The post Tax Extenders Package Would Cut the Child Tax Credit's Annual Work Requirement in Half appeared first on American Enterprise Institute - AEI.

Nigel Lawson left us with the memory of a Chancellor, one of the greatest of all time, who not only cut taxes, but simplified them in every budget. There are lessons to be learned today from his record. One of the most disturbing features of the 2022 mini-budget was the announcement that the Office of Tax Simplification (OTS) would be abolished and replaced with a general mandate to HM Treasury and HM Revenue and Customs to focus on simplifying the tax code. A "general mandate" is meaningless unless there is a policy or series of policies with a team dedicated to implementing them. There is no such commitment within the Treasury and HMRC.Simplifying the UK tax system is a complex and challenging task that would require significant political will and resources. Nonetheless, there are some initiatives on how the tax system might be simplified in key areas.One option to simplify the income tax system would be to merge income tax and national insurance into a single tax, levied at the same rate and with the same threshold. This would remove some of the confusion around the different thresholds and rates for the two taxes and make the system easier to understand. The NI would simply be incorporated into current income tax, and if the misnamed "employer contribution" were to be retained, it could be done so as a payroll tax, which is what it is.Another approach would be to simplify the income tax system by reducing the number of tax rates and thresholds. This could involve introducing a flat rate of tax, or reducing the number of income tax bands to perhaps just two, just as Nigel Lawson did. This would make it easier for people to understand how much tax they need to pay and reduce the administrative burden on HMRC.The Treasury and HMRC will oppose this simplification because it would make more evident the level of tax that people are actually paying. The current complexity and confusion serve to hide that true level, and minimize the resentment that would be aroused if it were known. Nonetheless, it is a simplification that is long overdue.Simplifying business taxes could involve reducing the number of taxes that businesses need to pay, as well as streamlining the tax rules and regulations that apply to businesses. This could involve simplifying the rules around capital allowances and other deductions that businesses can claim to reduce their tax bill. Ideally, full expensing would be permanent to encourage long-term investment. And we could thereby reduce the number of tax reliefs and exemptions that are available to businesses, which can be complicated and difficult to navigate.If inheritance tax is not abolished, it could certainly be simplified. One option would be to greatly raise the threshold at which the tax is payable, meaning that fewer people would need to pay inheritance tax. It is the UK's most unpopular tax because it is levied on savings that have been taxed as they were earned. A higher threshold would reduce the need for complex exemptions and allowances.The rules on pensions are unnecessarily complex because they are based on a flawed system. Pensions can be taxed (T) or exempt (E) when payments into them are made, when they grow in funds, or when they are withdrawn in retirement. Currently the system is EET, allowing tax relief on in-payments, but taxing funds when they are withdrawn. This sets up a hugely complicated set of rules as to how much qualifies for tax relief. The system should be changed to TEE, so that payments into pension funds attract no tax relief, but no tax is levied thereafter on growth within the fund or subsequent withdrawals. This would not only simplify; it would be a massive boost for future investment.Nigel Lawson was not only the great tax cutter, he was also the great tax simplifier. The time for revisiting his legacy is long overdue. Taxes should be simple and transparent, and there are huge savings to be achieved by making them so.

Eduardo A. Baistrocchi (London School of Economics - Law School) has posted Global Tax Hubs (Florida Tax Review, Forthcoming) on SSRN. Here is the abstract: Global tax hubs are the black boxes of the international tax regime (ITR). The driving...

Restoring state and local tax deductions is both costly and bad policy.
The post The Next Tax Fight: SALT appeared first on American Enterprise Institute - AEI.

We are prepared to agree that good economics is often not consistent with good politics. We would insist that, in such cases of a clash, it's the politics that is wrong but there we are. The prime example is that the only economically rational approach to trade is unilateral free trade - we'll buy what we want, whenever, you can do what the heck you like - but politics just so rarely does work out that way. Perhaps the UK 1846 to the late 1860s and Hong Kong all the time it was getting rich.But we've now a new example. The vape tax. This is an idea of crushing stupidity. Taxing that substitute which leads to less smoking. That smoking that we've been trying to wipe out by ever higher taxes upon smoking. But, you know, politics. But this gives us the why Pigou Taxes might not be all that great. As shown here.OK, great, so smoking is Bad, M'Kay? So we'll impose that Pigou Tax which will price people out of doing it. Great economics! But the problem then becomes that politics becomes hooked itself on those revenues from that Pigou Tax. We've changed who is addicted to what but not the addiction problem. So, as smoking does actually decline - the reason we imposed the Pigou Tax - politics is looking for its now mainline fix of the cash to micturate up against the wall. At which point we get the tax on the substitute - recall, the tax was imposed in order to get people to substitute - imposed. Because there's nothing as crazed and angry as a politician deprived of a revenue stream to micturate up that wall. Cold turkey simply is not to be thought of, no way.As Dizzy points out this might not be quite logically sound, this tax upon vaping. But there we are. And just think, there are people who disagree with our idea that perhaps politics isn't the best way to run a place or economy. Not all of whom are politicians mainlining on other peoples' cash.