Michael Caryl Fair 55 Tax Reform

ENTERPRISE CONSUMPTION TAX (ECT)

In what, to some, may be the boldest aspect of the Fair 55 Tax Reform Plan©, it is proposed that, in an orderly and fiscally responsible manner, both the current Personal Income Tax (PIT) on individuals’ currently earned income, and the Corporation Net Income Tax (CNIT) on C corporations’ profits, would be repealed and replaced by the addition-method Enterprise Consumption Tax (ECT), imposed at the illustrated rate of 5.5%. The proposal does provide for the temporary imposition of a limited Deferred and Passive Income Tax (DPIT), to be applied only to non-social security/non-public employee retirement benefits such as deferred income, interest and dividends, received by higher-income individuals, but at the flat rate of 3%, which is the rate for the lowest bracket of the current state personal income tax. Read More

Michael Caryl Fair 55 Tax Reform Part 6

GENERAL CONSUMPTION TAX 

It is proposed that West Virginia significantly expand its reliance on consumption taxes by enacting a very broad-based consumer purchase excise tax entitled the General Consumption Tax (GCT). The GCT (illustrated in the Fiscal Scorecard with a 5.5% rate) would replace the current 6% consumers sales and service and use taxes by adopting those taxes’ current base and administration, and then by greatly expanding that base through the elimination of the majority of the presently mushrooming array of narrow, special interest exemptions. The long history of broad-based sales taxes in West Virginia is most instructive in considering this proposal. Read More

Michael Caryl, Fair 55 Tax Reform, West Virginia,

THE PLAN PROVIDES A MORE COMPETITIVE PROPERTY TAX AND RE-ALLOCATED PUBLIC SCHOOL FUNDING AND MANAGEMENT REFORM.

The Fair 55 Tax Reform Plan’s© proposed repeal of the property tax on motor vehicles, and the multi-year phase-out of the tax on all other types of tangible personal property (TPP), will greatly improve West Virginia’s economic competitiveness by removing its unusually heavy tax burden on job-creating capital investment. At the same time, because local governments (counties particularly) heavily depend on property tax revenues for funding their operations, it is essential that those entities (counties and municipalities) be given the entire regular levying authority over real estate (RE) and public utility (PU) property to make up for the loss of the TPP tax revenues. Read More

Nina Olson, IRS, Taxpayer Advocate Service, EITC

Recently, the IRS provided its response to my Most Serious Problem addressing EITC issues in the 2017 Annual Report to Congress. I want to reiterate my recommendation that the IRS should provide a dedicated toll-free Extra Help telephone line for EITC taxpayers.I’ve made similar recommendations here, here, and here. The IRS has not agreed to implement my recommendation. Instead, the IRS responded to my latest recommendation by saying, in part: Read More

Michael Caryl, Fair 55 Tax Reform, West Virginia, Michael Caryl

THE PLAN’S TAX REVENUE NEUTRALITY ILLUSTRATES ITS CAPACITY TO ACHIEVE ULTIMATE FISCAL RESPONSIBILITY

Precisely because the concept of “tax reform” often means little else than either lower tax rates and revenues to some, or higher tax revenues to support even more government spending to others, prudence suggests that any serious and objective effort at comprehensive structural tax reform must present its fundamental concepts in a revenue-neutral setting. Thus, this proposal seeks to avoid the distorting influence of the bigger government vs. smaller government philosophical debate. Indeed, it is only once a fair and efficient tax structure is in place that the deck is cleared for a principled discussion about both the proper general level, and the legitimate objects, of government spending. Thus, the final disposition of those issues can then best be implemented through such a reformed tax structure. Read More

Fair 55 Tax Reform, West Virginia, Michael Caryl

The nation’s most respected state public finance policy experts unanimously concur that an ideal state tax structure is one that is: characterized by a broad base and low rates, simple to comply with and to administer, stable as to revenue yield, transparent and predictable in its application to taxpayer and administrator alike, neutral as to economic resource allocation, adequate to generate sufficient revenues to fund necessary government operations and fair to all.8 That latter principle, in turn, embodies fairness among taxpayers (i.e. neutrality, ability to pay), fairness to the taxpayer community as a whole (i.e. simplicity, transparency, predictability) and fairness to the government acting as the people’s instrument to provide necessary public goods (e.g. infrastructure, education, community health, physical safety of persons and property) and to have the capacity to achieve a just and orderly society (e.g. the rule of law, social safety net, etc.). This proposal has been designed to fully honor and advance each of those guiding principles. Read More

Fair 55 Tax Reform, West Virginia, Michael Caryl

(Click here to read the Introduction to the Fair Tax Reform Plan.)

FAIR 55 TAX REFORM PLAN FOR WEST VIRGINIA © [TIESA 2017]

FISCAL SCORE CARD ILLUSTRATION

Proposal: (1) Repeal property tax on all vehicles and newly-acquired tangible personal property EXCEPT chattels real (TPP) and centrally assessed public utility (PU) property, and phase-out tax on existing TPP [=$453 million in 2017]; (2) Phase-out income taxes [=$2 billion in FY 2018], keeping only severance (1/2 rate), B&O, property transfer, insurance, beer, liquor profits and tobacco excise taxes, plus two replacement consumption taxes and a temporary, lower rate tax on passive and deferred income of individuals with AGI over $25,000; Read More

Michael Caryl, Tax Lawyer

Preface To The Fair 55 Tax Reform Plan – By Michael Caryl

A number of smaller states, particularly the author’s home state of West Virginia, face serious budgetary challenges as a result of two conditions: (1) obsolete and unreliable revenue systems which discourage growth-creating investment and (2) excessive per capita state and local government spending.  The Fair 55 Tax Reform Plan (“the Plan”) was inspired and built upon West Virginia’s Fair Tax Plan of 1999, and is designed to comprehensively address those adverse conditions. Read More

Charles Woodson - Tax Reform Is In The Works

The dust has not yet settled from the Tax Cuts and Jobs Act (TCJA), passed into law in December 2017, and the House Ways and Means Committee is already considering another round of tax changes. The committee chair, Kevin Brady, Republican from Texas, wants to include input from stakeholders such as business groups, think tanks and other relevant organizations. Historically, major tax reforms have been decades apart, so the committee chair is looking for another approach to the way Washington deals with tax policy.

As with all tax legislation, it begins with talking points. From what we can gather, it appears the focus of Tax Reform 2.0 will include:

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The Tax Cuts and Jobs Act (TCJA), signed by President Trump in Dec. 2017, has significant implications for how businesses will assess the choice of entity. Prior to reform, partnerships were a very common choice of entity, but with the new provisions in TCJA, the C corporation has become an appealing option once again (but with some caveats).

The assessment by the National Law Review provides details on these significant developments in choice of entity. In general it makes a helpful point: the entity choice will continue to involve a number of considerations, such as the makeup of the investor base, capitalization structure, borrowing requirements, likelihood of distributing earnings, state tax environment, compensation and benefit considerations, participation of owners in the business, presence of foreign operations, and sale or exit strategies.

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If you’ve formed certain habits related to how you handle meals, entertainment, transportation, and parking as it relates to your business and taxes, the time to change those habits has come.

As this report notes, tax reform law commonly referred to as H.R. 1 Tax Cuts and Jobs Act of 2017 has changed the deductibility of certain meals, entertainment and transportation expenses. Before 2018, a taxpayer could deduct 50 percent of business meals and entertainment and 100 percent of meals provided through an in-house cafeteria or meals provided for the convenience of the employer (i.e., also known as a de minimis fringe benefit).

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If you’ve formed certain habits related to how you handle meals, entertainment, transportation, and parking as it relates to your business and taxes, the time to change those habits has come.

As this report notes, tax reform law commonly referred to as H.R. 1 Tax Cuts and Jobs Act of 2017 has changed the deductibility of certain meals, entertainment and transportation expenses. Before 2018, a taxpayer could deduct 50 percent of business meals and entertainment and 100 percent of meals provided through an in-house cafeteria or meals provided for the convenience of the employer (i.e., also known as a de minimis fringe benefit). Read More