Issue Brief posted September 30, 2015
Taxation of Debt and Equity: Setting the Record Straight
The U.S. tax system treats debt financing and equity financing differently. In debt financing, a business raises money by issuing debt, usually by selling a bond. In equity financing, a business raises funds by selling a share in the business through the sale of stock.
The tax system provides a relative advantage to financing capital expenditures through debt because…
Issue Brief posted September 30, 2015
An Alternative Way to Treat Interest Properly in Tax Reform
Achieving the proper tax treatment of interest is critical to any effort in reforming the tax code. Specifically, it is important to keep tax policy regarding interest—and all tax policy—neutral. Neutrality holds that tax policy should not influence the economic decisions of individuals or businesses in either a positive or negative way.
Neutrality is the guiding…
Backgrounder posted September 29, 2015
Dodd–Frank’s Title XI Does Not End Federal Reserve Bailouts
A stated purpose of the Dodd–Frank Wall Street Reform and Consumer Protection Act was to end the too-big-to-fail problem. In other words, the Dodd–Frank Act was supposed to protect taxpayers from saving insolvent financial firms in the future as they did during the 2008 financial crisis. Title XI of Dodd–Frank amended the Federal Reserve’s emergency lending authority to…
Issue Brief posted September 29, 2015
The Federal Government Should Stop Limiting the Sale of Certain Fruits and Vegetables
In June 2015, the United States Supreme Court decided Horne v. Department of Agriculture, a case regarding the federal government’s authority to fine raisin growers who did not hand over part of their crop to the government. Fortunately, the court held that forcing growers to turn over their raisins was a taking of private property requiring just compensation.
Backgrounder posted September 16, 2015
Bits and Pieces: The Digital World of Bitcoin Currency
Bitcoin is an electronic currency that is neither issued by a government nor backed by a physical commodity. Bitcoin’s underlying technology allows users to transfer funds in an electronic payments network. Ultimately, the technology could have effects far beyond purchases of goods by, for example, improving processes that rely on time-stamped electronic records, such as…
Issue Brief posted September 11, 2015
Congress Should Not Use International Tax Reform to Delay Highway Trust Fund Insolvency
Some Members of Congress are considering a proposal that would reform international business taxation income and divert revenue generated to the Highway Trust Fund (HTF). Details of the plan are not yet public, but based on information released by the House Ways and Means Committee, chaired by Paul Ryan (R–WI), it would likely work as follows:
Backgrounder posted September 10, 2015
Energy Policy Agenda for the Next Administration and Congress
Energy policy will be a critical component of the agenda of the next Administration and Congress. Such an agenda should address, among other things, the Keystone XL and other pipelines, nuclear energy, renewable energy, climate change, offshore drilling, hydraulic fracturing and other energy technologies, energy exports, and more.
A successful energy agenda would unleash…
Issue Brief posted September 9, 2015
Boustany–Neal Innovation Box: Complex and Unsound Policy
Talk in Congress of establishing an innovation box (also called a patent box) has increased in recent days. An innovation box would lower tax on income earned from certain types of intellectual property (IP).
Innovation boxes exist in several countries around the world, including many major U.S. trading partners. The purpose of the boxes is to lower the tax rate on…
Backgrounder posted September 2, 2015
Blueprint for Congressional Fiscal Action in the Remainder of 2015
Congress has set the federal government budget on a dangerous trajectory and must take corrective action now. Taxpayers pay enormous amounts of money to the government, and the government borrows additional huge amounts of money. The government uses the taxes that it collects and the money that it borrows to pay for excessive spending, including spending for…