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(AUDIO) Top 10 Mind-Boggling Taxes; Protecting Spending Caps - Speaking of Taxpayers, Aug. 16
Posted By: Douglas Kellogg - 08/19/13

Subscribe to NTU's podcast "Speaking of Taxpayers" via iTunes!

Pete & Doug discuss NTUF's "10 Most Mind-Boggling Taxes" list with author Austin Peters, NTU VP Brandon Arnold stops by to talk about his Washington Times op-ed advising the GOP to protect spending caps, and the Outrage of the Week!
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Top Ten Most Mind-Boggling Taxes
Posted By: Austin Peters - 08/13/13

Is there anything more confounding than someone who doesn’t think we are over taxed? While it may initially seem impossible for an individual to be so oblivious, the world does not have tax ‘price tags’ posted on everything to remind you.

Demonstrating the breakdown of who pays the burden of income taxes, for example, is clearly important – yet, sometimes it’s better to focus on the smaller, widespread, tax burdens we all face. After all, nobody is able to avoid the burden of government.

To that aim, we put together this collection of the “Top 10 Most Mind-Boggling Taxes,” perhaps your city or state has made the list!

10. Fountain Soda (Chicago)

In Chicago there is big difference if you are drinking out of a can or a fountain; if it’s the former, the additional tax is 3 percent while the latter is taxed at 9 percent. Around for over a decade, this tax aims to curb obesity by making the usually larger fountain sodas more expensive to purchase.

9. Blueberries (Maine)

Maine produces 99 percent of the blueberries picked wildly in the nation. They also slap a one-and-a-half cent tax per pound on anyone growing, handling, processing, selling or purchasing blueberries. For what it’s worth, this tax is one of the oldest on our list: blueberry harvesters have been paying this tax since 1945.

8. Tan Tax (United States)

This infamous piece of “Obamacare” is a 10 percent federal tax on tanning bed services. Arguably attempting to discourage the using of these bed services, the tax does not apply to spray on services. For those who were hoping the “temporary” tax would be removed, the tax was made permanent in 2010.

7. Tattoos (Arkansas)

While this tax seems like it should be a relic of a different era, Arkansas implemented this 6 percent tax on permanent body art in 2005. If this incentivizes you to opt for that piercing you have been eyeing instead, you’re out of luck there too; body piercings and electrolysis are included .

6. A New Kind of Death Tax (Seattle)

Starting in 2011, it began to cost more for handling a death in Seattle. In addition to any estate tax you may face, it costs $50.00 to report a death to the Medical Examiner’s Office. If you don’t pay up, you won’t receive the necessary paper work for burial or cremation.

5. “Bagel” Tax (New York)

Was that bagel you’re eating sliced when you received it? If so, New York considers it a prepared food and adds an eight-cent tax to the bill. On the books for quite a while, New York took the step to start enforcing the tax in 2010, enraging New Yorkers and bagel store owners in particular. While eight pennies may not seem like a huge increase, one store owner is reporting he owes thousands of dollars in back taxes as a result!

4. Tethered Hot Air Balloon Rides (Kansas)

Going hot air balloon riding in Kansas? Well, if you’re scared to be blown away to OZ and opt to have your balloon tethered to the ground, then you are subject to local amusement park ride taxes. However, if you take a ride on the wild side and your hot air balloon ride is determined to be “untethered, piloted, and travels for some distance downwind of the launching point”, then you are considered to be partaking in air commerce and consequently your ride not subject to the tax.

3. Playing Card Tax (Alabama)

Beginning in 2004, Alabama imposes a 10-cent tax on each deck of cards that contains up to 54 cards. In addition, if you wish to sell a deck of cards, make sure you purchase your playing card privilege license before you do so.

2. “Luxury” Coffee Lids (Colorado)

In March 2010 Colorado eliminated a tax protection for “non-essential” packaging for food and drinks bought at restaurants and convenience stores. The move led to several interesting classifications including coffee cups being deemed essential while coffee lids were determined to not be. As a consequence, coffee shops are subject to (and, therefore, coffee drinkers must pay) a 2.9 percent luxury item tax on sleeves and lids.

1. The Non-Governmental “Jock Tax” (Tennessee)

This $2,500 per-game tax (max 3 games) tops the list despite not being quite as obviously strange as the other taxes. That’s because despite many states having so-called “jock taxes,” this is the only tax on the list where the money does not even go to the government – rather it heads to stadium owners who likely already benefitted from taxpayer-backed deals and own the team. If you thought government getting one more cent of your money was frustrating, this odd tax situation manages to add insult to injury.

This list should settle it once and for all, if you make it or do it, they will tax it.


Sources:

1. http://www.revenue.state.il.us/businesses/taxinformation/sales/softdrink.htm
2. http://www.cityofchicago.org/city/en/depts/fin/supp_info/revenue/tax_list/fountain_soft_drinktax.html
3. http://money.cnn.com/2003/01/06/pf/taxes/q_oddtaxes/
4. http://www.maine.gov/legis/ofpr/compendium/compend/compendium.htm
5. http://thehill.com/blogs/regwatch/healthcare/304453-irs-cements-obamacares-tanning-tax
6. http://money.cnn.com/2005/02/18/pf/taxes/strangetaxesupdate/
7. http://www.forbes.com/fdc/welcome_mjx.shtml
8. http://money.cnn.com/2010/08/25/smallbusiness/bagel_tax/index.htm
9. http://www.us.kpmg.com/microsite/taxnewsflash/2010/Jul/twist-072610-ks.pdf.
10. http://money.cnn.com/2004/03/31/pf/taxes/strangetaxes/
11. http://revenue.alabama.gov/tobaccotax/faqtt.cfm.
12. http://www.travelerstoday.com/articles/5763/20130411/travel-taxes-strange-unexpected.htm
13. http://probasketballtalk.nbcsports.com/2013/07/19/the-strange-tax-levied-against-players-in-grizzlies-games/

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What Tax System Do Taxpayers Want?
Posted By: Dan Barrett - 08/08/13

For this year’s Milton Friedman Legacy Day activity, NTU Foundation asked taxpayers across the country what federal tax system they want. At our in-person event in downtown Washington, DC and online at our special voting page, we had over 650 total votes on if the current system should be kept or replaced with a FairTax, Flat Tax, National Transaction Tax, or a Value-Added Tax.

If you are unfamiliar with these tax systems, we had some fancy posters made to show the basic points and contentions associated with each (you can click on each to see the full resolution):

Here are the results broken down by those who attended our physical event and those voting via our survey online:

What Tax System Do Taxpayers Want?
Results from NTU Foundation's Special Milton Friedman Legacy Day Poll
Tax Reform
Event Votes
Online Votes
Total
Percentage of Total
5
3
8
2.2%
25
466
491
72.6%
49
103
152
22.5%
5
5
10
1.2%
9
6
15
1.5%
Note: Votes do not reflect total participation. Some participants did not vote.

Put another way, here's an infographic put together by our fantastic Creative Content Manager, Tim Howland:

What do these results mean? Probably a few things:

  • A consumption-based system is gaining steam across the country.
  • Folks in DC are more rooted in an income-based system.
  • Taxpayers are tired of the current system but don’t want alternatives that might increase compliance costs or complexity.

We need more information and more taxpayers in the network of voting and voicing their preferences. Stay tuned, we here at NTU Foundation are working on another survey to get a more clear idea on what people want out of their tax system.

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The Nation Remembers Milton Friedman
Posted By: Dan Barrett - 08/06/13

One of the best parts about this year's Milton Friedman Legacy Day was reading all of the comments that taxpayers left on our special online voting page. Along with asking folks to vote on which fundamental tax reform they want, NTU Foundation provided a space for respondents to talk about why Milton Friedman's teachings are still vital and what specifics he brought to the world that they liked. Here are a few:

"The videos he created to teach even the most complex issues of economics and the economy in ways that everybody could understand." –JJ, Ohio

"... His contention that free enterprise will allocate resources better than any central planners. One's self interest is not an evil thing, but the natural motivator of man." –Roger B, Michigan

"His glasses." – Daniel M, Texas

"His PBS series Free to Choose changed the way I think about economics and freedom." – Robert S, Indiana

"Friedman pushed for school choice and vouchers so that you can send your children to the best school and the school of your choice rather than the public school you are assigned.  The money goes with the child and not to the school.  Giving parents the choice to select the best schools for their children would improve education and provide competition among schools.  Educational freedom is a win-win for everyone." –Mary A, Florida

"His emphasis on free-enterprise: 'The only way that has ever been discovered to have a lot of people cooperate together voluntarily is through the free market. And that's why it's so essential to preserving individual freedom.' Milton Friedman" –Ted B, Washington

"Mr. Friedman was a deep thinker, whose thinking produced positive, logical, meaningful results." –Charles R, Oklahoma

"[His] open discussions on variants of taxing systems has opened the eyes of millions of previously uninformed people. So many have only believed that what we currently have is all there is in the world when it is relatively new in our Country's history. We CAN change an unfair system into a workable & sustainable modern system that ensures ALL have some vested interest in our future as a Country." –Jeff M, Florida

"Wherever practical, people should be free to choose for themselves." –John R, California

Thanks to everyone who send us their votes and thoughts on Friedman! The winners of the $50 iTunes gift cards will be announced shortly.

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Ac-“customed” to Waste?
Posted By: Pete Sepp - 08/05/13

All too many federal agencies can be cited for having budgetary skeletons in their closet, and U.S. Customs and Border Protection (CBP) is no exception. From poorly managing a drone fleet purchase, to making questionable demands for more employees, CBP has raised fears for the security of taxpayers’ wallets in the past. Yet, Congress has an opportunity to ease future fears, over a controversial new CBP project, before it can cause a fiscal fright.

Two years ago, the U.S. Department of Homeland Security (DHS) concluded a letter of intent with the United Arab Emirates to build a “pre-clearance” facility at Abu Dhabi airport which would allow travelers to the U.S. to clear customs before arriving on American soil. So far, so good: pre-clearance can not only save time and reduce congestion at U.S. points of entry, it can also help ease the way for tourists who contribute to economic activity while visiting here.

Now for the not-so-good:

  • According to Airlines for America statistics, Abu Dhabi airport accounted for less than 600 passenger arrivals per day to the U.S. in 2012, ranking it #80 on the list of top origin points to our country.
  • Right now, no U.S.-based carriers even fly from the Abu Dhabi International Airport back to here.  All other CBP pre-clearance zones in Canada, Ireland, and the Caribbean serve many airlines, including U.S.-flagged ones.
  • The primary beneficiary of the deal would be Etihad Airways, the state-owned airline of UAE. Thanks to this status Etihad enjoys an advantage over private airlines around the world that are subject to corporate profit taxes of their home countries. Which brings us to …
  • Another advantage conferred by the United States under the auspices of the Export-Import Bank (Ex-Im), whose risk-taking and subsidization have long been a concern for taxpayer advocates such as NTU. Etihad snagged $593 million in loan guarantees from Ex-Im last year for aircraft purchases, and could qualify for preferential financing that our own airlines (by definition) can’t get through Ex-Im.
  • Meanwhile, The Wall Street Journal is reporting that over the preceding year (before overblown sequester scare tactics), the wait times for getting through customs at stateside airports have “increased dramatically.”

All these drawbacks lead to one long question: Given CBP’s service challenges at existing airports, is it really a good idea to plow ahead with a facility whose use will be comparatively scarce in the near term, and give another leg-up to an airline backed by its own government as well as ours, at the expense of an already overtaxed flying public?

And “overtaxed” is an understatement. As NTU has often noted, the typical overall government tax and fee burden of 20 percent on a $300 domestic airfare is higher than the average effective rate a middle-class American is likely to pay on his or her 1040 income tax return. International air travelers can have it even worse, with impositions such as separate departure and arrival taxes along with a passenger agricultural inspection fee (which the Obama Administration ill-advisedly considered raising in 2009) and a customs fee.

Proponents of the CBP station at Abu Dhabi argue that the investment of U.S. tax dollars will be minimal since UAE will pick up 85 percent of the project’s expense under the current agreement. But that’s little comfort to tax-weary travelers in America (see above), who remain worried that whatever share they will be forced to commit could escalate if construction or operating costs are not contained. Meanwhile, there’s that pesky matter of how best to apply CBP’s fee collections as well as appropriations from general funds – should they be used to expedite higher-priority passenger and cargo entry-exit services?

Many Members of Congress seem to think so. In June, the House of Representatives passed an amended FY 2014 DHS Appropriations Bill specifically blocking the Abu Dhabi pre-clearance scheme. In May, a bi-partisan group of 11 Senators echoed the sentiment of their House colleagues in a separate letter to DHS Secretary Janet Napolitano, questioning whether the agency’s “decision was made as a result of a risk based analysis.”

Alas, earlier this month DHS announced it was moving forward with a data-sharing agreement that could pave the way for the facility’s activation, even as it faces a concerted petition effort from interested industry groups with considerable clout.

Regardless of the politics involved, the taxpayer aspects of the issue deserve further exploration – that goes not only for the Abu Dhabi pact but also the ever-troubling direction of the Ex-Im Bank. Allowing the free market and fiscal responsibility to sort out needs from niceties would provide some badly-needed bone-rattling for those accustomed to budgetary business as usual in Washington.

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A $46 Million Tax Refund?
Posted By: Michael Tasselmyer - 06/28/13

In a recent blog post, the Arlington County Taxpayers Association (ACTA) highlights a finding from the Treasury Department that in 2011, the IRS sent over $46 million in fraudulent tax returns to 23,994 recipients registered at a single Atlanta address.

A report from the Treasury Inspector General for Tax Administration also listed other instances of mass amounts of fradulent returns being sent to single addresses in Atlanta, including "11,284 refunds worth a combined $2,164,976 to... a second Atlanta address; 3,608 worth $2,691,448 to a third; and 2,386 worth $1,232,943 to a fourth," according to CNSNews.

The news comes in the wake of accusations that the tax-collecting agency may have unfairly targeted certain groups based on political factors. The errors apparently stemmed from innappropriate assignment of Individual Taxpayer Identification Numbers (ITIN) to questionable applications. According to the law, only those eligible to receive Social Security Numbers can receive an ITIN. Poor oversight and a lack of internal controls at the IRS lead to improper assignment of ITINs; in these cases, the errors were particularly costly.

For more, check out the ACTA's original post here.

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Taxing Everything under the Golden State Sun
Posted By: Lee Schalk - 06/07/13

After the recent $6.2 billion tax increase, one would hope that California legislators’ thirst for tax hikes would have been satisfied. But in recent weeks, we’ve witnessed various attempts by state “leaders” to ransack their constituents’ wallets yet again – even as the Golden State struggles to stay afloat.

Nothing is safe from the mad men in Sacramento, who are now fixated on tobacco, cars, oil, soda, ammunition, grocery bags and more. It wouldn’t be a stretch to say that the California Legislature has never seen a tax hike or government project it didn’t like. Meanwhile, the mass exodus of taxpayers and their income continues, and health care costs are beginning to soar.

Recent Left Coast lowlights:

  • The Senate passed a monstrous $2.3 billion car tax hike (SB 11) last week.
  • The Senate Appropriations Committee Chairman hopes to pass a whopping $2 per pack cigarette tax hike this summer (despite voters rejecting a $1 per pack hike last June).
  • That same committee just gave the nod to a brand new tax on ammo purchases (SB 53).
  • Oil and soda tax hikes are expected to be pursued in January.
  • Lawmakers have been pushing for a tax on grocery bags to reach further into Californians' pockets.

These tax hikes wouldn’t just hurt car owners, smokers, firearm enthusiasts, and grocery shoppers (though that probably covers quite a few Californians). This batch of tax hikes, if enacted, would scorch all citizens and businesses in the state, especially the working class. It’s time for lawmakers to pursue fiscal responsibility (the state increased spending by 42 percent from 2000-2010) as aggressively as they are pursuing these tax increases.

Tax fighters should continue to hold the line in the Golden State and can take action by clicking HERE.

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The Late Edition: May 28, 2013
Posted By:  - 05/28/13

Today’s Taxpayer News!

NTU’s Pete Sepp voices concern over the lack of transparency in public-private partnerships between the investment branch of the CIA and various for-profit companies. Read the full story from CRN News.

In the wake of Apple’s talking-to last week over its tax practices, it’s worth taking a look at the rates companies pay in corporate income taxes. See this interactive graph from the New York Times indicating the taxes paid by S.&P. 500 companies from 2007 to 2012.

Congress had a productive weekend, forming four separate investigation teams to dig to the bottom of the IRS scandal, says the Daily Caller.

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Internet Sales Tax Would Be Bad for Small Businesses
Posted By: Brandon Arnold - 05/22/13

Our former Director of Government Affairs, Paul Gessing, penned a great op-ed about the so-called “Marketplace Fairness Act,” which is better known as the internet sales tax bill. Opponents of this massive expansion of government power have claimed it is necessary to help the small business community. Paul, however, notes that some small businesses would actually be devastated by the legislation:

One Albuquerque-based business owner has stated he would no longer sell his product online under an Internet taxation regime as set up under the Marketplace Fairness Act. The issue is not an unwillingness to have his consumers “pay their fair share,” but the compliance costs that involve submitting documentation, often on a monthly basis even if his company has no sales in that particular jurisdiction.

He is by no means the only small business owner to face negative repercussions from Congressional overreach on Internet sales. It is one big reason why Ebay, Etsy, and their small, but numerous sellers oppose the Act while the online behemoth Amazon has become one of its primary advocates.

The “Marketplace Fairness Act” isn’t about helping small businesses. Paul pegs the bill for what it really is: an attempt by state tax collectors to get their hands on as much of your money as they possibly can.  You can read more about the issue here, here, and here.

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The Late Edition: April 24, 2013
Posted By:  - 04/24/13

Today’s Taxpayer News!

NTU joined a host of fiscal conservative organizations in support of the Helping Sick Americans Now Act, which offers market-based alternatives to some ObamaCare provisions.

Minnesota is considering adding a fourth-tier income tax bracket that would raise the rate from 7.9 percent to 9.4 percent for individuals beginning at the $80,000 income level.

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