Tax swaps focus on substituting taxes with high excess burdens (deadweight loss or welfare cost) for ones with lower burdens.
Politicians would surely understand that hiking tax rates on those sources whose rates were reduced in the tax swap, as well as on carbon, would deliver more revenue for expanding government.
Right-leaning carbon tax proposals that are intended to be revenue neutral must take care that lower-income households are not adversely affected by the tax swap. Reductions in personal and corporate income taxes, as well as payroll taxes, will lessen burdens, so they must be compared to burdens on the poor that follow from taxing carbon.
are a good way to make the best of a bad situation.
In this article, part of a series of blogs I'm writing for ThinkAdvisor's 22 Days of Tax Planning Advice: 2015, we'll discuss bond swaps and, more specifically, tax swaps.
There are several types of bond swaps including quality swaps, yield swaps and tax swaps. We'll focus on the tax swap and explain how it reduces an investor's federal income tax liability.
A tax swap is one of the most common of all bond swaps.
It seems that many property tax swaps are being driven by school funding changes--states using broad-based taxes and assuming a larger share of funding so local governments can ease property tax burdens.
It is actually called the Food Tax-Adult Materials Tax Swap Act of 2007, and is sponsored by Representative Stacey Campfield and Senator DeWayne Bunch.
Business tax swap ideas are percolating in states like Illinois, where the governor wants to create a business gross receipts tax to fund property tax cuts, while House members would rather trade income and sales tax increases for property tax cuts and more education funding.
This isn't about cutting taxes per se; rather, this is the tax swap
to end all tax swaps
* Property Tax Swaps
: An intergovernmental trade that increases state taxes such as the sales or cigarette tax to provide aid to local governments.