Taxes

This morning, a Senate subcommittee is holding a hearing on "Offshore Profit Shifting and the U.S. Tax Code," which will include testimony from Apple CEO Tim Cook, as well as Apple's CFO and Head of Tax Operations. 

You might ask why Apple is the subject of this congressional scrutiny; after all, Apple did pay about $6 billion in taxes in the U.S. last year on its American operations, which is more than some major corporations that managed to avoid paying any federal income tax at all. But as Senator John McCain observed, while "Apple claims to be the largest U.S. corporate taxpayer... by sheer size and scale, it is also among America's largest tax avoiders." 

Specifically, a new report from congressional investigators concludes that Apple used a web of offshore tax shelters to avoid paying billions in taxes to the United States and other countries. The investigators found that Apple's tax avoidance strategies shielded at least $74 billion from the Internal Revenue Service between 2009 and 2012. By officially locating subsidiaries in places like Ireland while managing them from company headquarters in California, Apple was able to, in effect, make the subsidiaries "stateless" — so they were exempt from taxes anywhere in the world. In its own analysis of Apple's financial reports, Citizens for Tax Justice found that "Apple has paid almost no income taxes to any country on its $102 billion in offshore cash holdings." 

Pretty sneaky, right? But that doesn't mean it's illegal. The U.S. tax code makes it awfully easy for Apple and other giant corporations to avoid paying taxes. Read more »

In my first Tax Day blog post, I focused on one really unfair aspect of our tax code: the wealthiest Americans often benefit more from all sorts of deductions and exclusions than middle-income taxpayers do.

But the super-rich aren’t the only ones who might be getting a better deal from the tax code than you. If you paid even a dollar of federal income tax last year, you paid more than Facebook did. And more than FedEx. And more than Southwest Airlines. Every year, these and many other large, profitable corporations manage to take advantage of loopholes and special preferences in the tax code to avoid paying their fair share of taxes; in fact, these companies often end up with a big tax rebate. Today, Citizens for Tax Justice is calling out these tax dodgers, making the rounds in D.C. with a giant mobile billboard:

Happy Tax Day, everyone! When it’s time to pay my taxes, I try hard to focus on all of the important programs and services those dollars support. (You can see exactly how your own federal income taxes are spent using this nifty Tax Receipt from the National Priorities Project.)

But I have to admit – I’m also thinking about the people who make a whole lot more money than I do and get a better deal from the tax code. The fact is, super-rich taxpayers currently benefit much more than ordinary taxpayers like me from many federal income tax deductions and exclusions. For example, for a wealthy taxpayer in the top tax bracket (39.6 percent) who pays $10,000 in mortgage interest, the mortgage interest deduction is worth $3,960. For a middle-income taxpayer in the 15 percent tax bracket who pays the same $10,000 in mortgage interest, the deduction is worth only $1,500.

This post is the eighth in a series of weekly posts containing tax information and filing tips. Check back next week for our next post, or click here to read past posts. 

April 15th is fast approaching, which means the time to file your taxes is running out. I know what you’re thinking – “I’d rather watch paint dry.” I felt the same way. Filing my taxes ranks high on my list of most boring life activities, but unlike waiting in endless airport lines or sitting in traffic, it comes with a great reward.

After filing my taxes, I felt accomplished – I crossed off a big item on my to-do list, I was now compliant with the law, and I had fulfilled my civic duty. But best of all, I knew I had a nice refund coming my way. Little did I know how quickly it would arrive. I filed my federal tax return online on March 26 and by April 3 the U.S. Treasury Department had deposited my refund into my bank account. Read more »

Tax Day (April 15) is nearly upon us. Maybe you’re scrambling to file, or maybe you’re happy to have a refund on the way. Whatever your feelings about your own taxes, it’s important to remember that taxes are essential to fund critical investments – everything from roads and bridges to education and life-saving scientific research.

But perhaps you’re thinking, “Wait a second. The roads where I live are crumbling, and the schools aren’t in such great shape either. And Washington just cut funding we need to improve our roads and our schools and help families who are struggling. I don’t think our tax code is working the way it should.” Well… you’re right. The tax code contains a bunch of special-interest loopholes and preferences that are used by the wealthy and big corporations to avoid paying their fair share of taxes. Some of the richest Americans pay a lower tax rate than middle-class families do, and some very profitable corporations manage to pay no federal income tax at all.   Read more »

Did you see the first video from NWLC and the National Priorities Project explaining why budget and tax issues are women’s issues? No? Then stop what you’re doing and watch it here.

Now that you’ve seen it, you’re eager for more, right? Well, my friend, you’re in luck. In Part 2, you’ll learn how Congress can protect programs that serve women and families by requiring the wealthy and large corporations to pay their fair share of taxes. Watch the second video now:

After a couple of weeks of intense debate over budget plans proposed in the House and Senate, you may feel that this week’s Congressional recess is a welcome break from talk of taxes and spending, deficits and debt. But Congress is back in session April 8 – and the budget battles will return, too.

  Read more »

This post is the sixth in a series of weekly posts containing tax information and filing tips. Check back next week for our next post, or click here to read past posts. 

Taxes. Just saying the word can make people groan. But the reality is, this time of year can actually bring good news to low- and moderate-income families all over the country. Federal tax credits such as the Child and Dependent Care Tax Credit (worth up to $2,100), the Child Tax Credit (worth up to $1,000 per child), and the Earned Income Tax Credit (worth up to $5,891), can give a boost to families whose incomes are too low to owe taxes. 

One family in Dallas took advantage of free tax preparation at a United Way VITA site and was rewarded for their effort. They qualified for the federal EITC and received nearly a $6,000 refund! Less than two weeks later, the refund was in the family's bank account and helped to pay for things that the family really needed: children's clothes, a crib, and a new car.  Read more »

This post is the fourth in a series of weekly posts containing tax information and filing tips. Check back next week for our next post, or click here to read past posts.

Not to make you panic, but there’s about a month left before the April 15 tax-filing deadline. State and federal income tax refunds can provide a significant economic boost for families. If you work with families (including your own!), you should know about some of the ways that families can use their tax refunds to build up their economic security, other than paying bills or making long-deferred purchases. If families file their taxes electronically and choose direct deposit for their refunds, they can:

• Put some of their refund in up to three different accounts, including checking and savings accounts, but also passbook savings, IDAs, IRAs, HSAs, Archer MSAs, and Coverdell education savings accounts. That means that they can save not just for a rainy day, but specifically for retirement, medical costs, or educational expenses.
• Buy a U.S. Savings Bond worth up to $5,000.
• Families can choose how much to put in the different accounts or the Savings Bond.

Today House Budget Chairman Paul Ryan (R-WI) released his vision for the next ten years. Despite having a section entitled "Fairness Restored," Ryan’s budget does anything but put forward a fair and equitable plan.

Chairman Ryan’s plan balances the budget on the backs of vulnerable women and their families. It would:

• Cut the funding available for programs like Head Start, child care, K-12 education, job training, and domestic violence prevention.
• Cut Medicaid and turn it into a block grant, allowing states to restrict eligibility and eliminate benefits. About two-thirds of adult Medicaid beneficiaries are women.
• Repeal the Affordable Care Act, eliminating the Medicaid expansions critical for low-income families, tax credits to help moderate-income families purchase health insurance, help with the cost of prescription drugs in Medicare and preventive health care services (including contraceptive services), and protections against discriminatory insurance company practices.