Yeah, really, I have my doubts about the likely net benefit of any plan that starts with "let's eliminate this benefit."
Cities have recently begun to implement PILOTs (Payments in Lieu of Taxes) with some universities and other large nonprofits (eg hospital systems). These are negotiated payments, not mandated, but get to the same general issue.
To the OP, my sense is that any attempt to change the status would result in a big game of musical chairs, as savvy large universities created new nonprofit subsidiaries and transferred ownership of properties to those subsidiaries, while smaller ones got caught in the gears. But I'm a grouch today, so take that with a grain of salt.
I agree with one, but only because nobody is taking swings at corporate tax breaks.
1.1: A huge one is mental health deinstitutionalization.
But what was EITC meant to replace? I thought of it as sort of a new thing. Or did it pave the way for welfare reform later?
Relatedly, coming soon to a university health plan near you:
http://afscme3800.org/afscme-talking-paper-2-health-insurance-university-minnesota
I remembered, after sending this in, that my grandparents who worked at a small college in Ohio hated Harvard, a little bit, for the amount of money that it had to throw around.
I agree with 1, that cutting the tax break would, ultimately, reduce funding available to most colleges and universities. But I also suspect that, like the mortgage interest deduction, the largest benefits go to the people who least need support.
It would be nice if government support reduced the resource disparity between institutions rather than exacerbating it.
And a pony.
It would be nice if government support reduced the resource disparity between institutions rather than exacerbating it.
I'd aim for reducing the resource disparity between people (which will often, but not always, line up with that between institutions).
And a pair of ponies! With feathers on their heads!
Semi-on-topic: what if students paid for public university education through a percentage of their future income? What a radical idea! Or, you know, we could just make public universities free, and fund them through, I don't know, progressively taxing income. It's so crazy that it just might work!
I agree that we definitely shouldn't simplify the tax code without taking care of all the other stuff that's done by tax breaks, just like how we should throw out most of the farm bill but not the food stamps. But on the other hand, don't other countries manage to navigate this minefield better than the US? I think some do, or have in the past. I remember one or two early-to-mid-April comment threads where UK commenters couldn't understand what we were all going through. Is the problem because other countries have put their legislative veto points in better places, or their culture idolizes the free market less, or both, or what?
The US taxes foreign assets. Almost no other country does this. Outside the US, it is much, much easier to cheat on taxes than for Americans. Consequently, foreign tax codes can be and are much simpler. Tax dodges extend all the way down to the middle class elsewhere rather than being the exclusive province of the extremely rich as they are here.
Oh, on the OP, I'm with kr in 1.
Transparency and simplicity are great in a world of procedural liberalism and fair play. That world's not the US this year.
I have no idea about foreign tax dodging and I assume the U.S. does better at collecting taxes than Greece or Italy, but that seems unpossible. The self-employed portion of the middle class has made declaring income into an art.
12: I've seen that idea getting more play lately for some reason. It's not insane (the percentage of future earnings plan, not the progressive income tax, which is also not insane but which is not that to which this sentence refers). I prefer it to the go-into-massive-debt approach currently in play, and it's nice from the standpoint of effectively subsidizing the more artsy side of things.
14 to the first sentence of 13. Other countries have simpler tax codes because the tax codes there are poorly enforced and intentionally porous.
In the US, the tax code is kept complex so that legal tax avoidance is possible for the very rich and political donors, but not for others.
To the OP, the idea is BS as a useful improvement for the US, but a great column for Felix Salmon. Something complicated and irrelevant to discuss.
17. Foreign tax dodging is the reason Switzerland is wealthy. Not easy for Americans, as it's necessary to lie or set up elaborate trusts to hide funds offshore.
Those types of dodges are middle class activities in France?
Americans dodge taxes like this, whereas topless enlightened Europeans dodge taxes like this.
Well, Switzerland can be a day trip from most of France.
Time magazine had a chart reflecting % GDP that is illegally untaxed. US is 8.6%, Switzerland 8.5%, Germany 16%, Korea 26.8%, Italy 27%, Greece 27.5%. Mexico 30%. Source World Bank 1999-2007. The accompanying text suggests that USians pay out of moral obligation due to religiousity. Ick.
I think lw's point is largely exaggerated or wrong. "Foreign tax dodging" is not in any meaningful sense why Switzerland is wealthy. Wealth in Swiss Bank accounts is not generally from middle class europeans. Also, a simpler tax code does not make a tax code easier to dodge -- it's generally the reverse. It's true that the US is more aggressive in going after income squirreled abroad than some other rich countries are, but of course those countries also have much higher rates of taxation of individuals and the wealthy, in particular, generally have a higher tax burden.
21: No, they mostly drive Peugeots and Citroëns.
"Foreign tax dodging" is not in any meaningful sense why Switzerland is wealthy. Wealth in Swiss Bank accounts is not generally from middle class europeans
You'd be surprised. I'd substitute "bourgeois" for middle class - but German* dentists, lawyers, mittelstand executives, basically the Merrill Lynch branch customer demographic, stashing cash in Switzerland is very much a thing.
*synecdoche for north-ish European here.
I think we have too many non-profits in the US. That said, I'm opposed to eliminating non-profit status of universities until after the same is done with churches.
28 -- You may be right, and I admit that I don't have much direct knowledge of the extent of hiding funds in swiss bank accounts by professional Germans.
However, I still think the more general point -- that a simpler tax code leads to more tax evasion -- is dead wrong. Simpler tax codes are, if anything, simpler to enforce. And I strongly suspect that even with substantial tax evasion the de facto tax burden on professionals in Germany is substantially higher than that in the United States.
We don't have too many "non profits." We may, and I think do, have way too generous tax treatment for charitable donations. As I mentioned the last time this came up, I generally support not taxing "income" to non-profits from non-commercial activity (because it's notoriously hard to figure out what that would be) but I am very much in favor of eliminating the charitable donation tax deduction and also in favor of enforcing property and other local use taxes against nonprofits.
29 -- Next year in Jerusalem. Or, from your mouth to God's ears.
In the US, people mostly don't evade taxes. If they have enough money they do what Mitt Romney did and set up complex networks of trusts. The complexity of the US tax code allows the extremely wealthy (which includes corporations) to engage in tax avoidance (unnecessary loans, capital appreciation rather than income, weird business and inheritance structures) different morally than tax evasion due to uh some reasons. In other countries, tax evasion is an option so people mostly do not bother with avoidance, though I believe speculatively that corporations do.
The US arrangement benefits both politicians who receive donations and the very wealthy. My claim is that other places, people bribe and cheat more-- here, instead, the tax rules are constantly being rewritten and negotiated so there are more of them.
Unless you count buying a house as evading taxes...
Dinosaur slash dark matter fanfiction.
Oops (but maybe I put here as a diversion...).
34: All the poor people waste money on rent.