Proxy Tax

AAA

DEFINITION of 'Proxy Tax'

A tax on lobbying or political expenses that exceed an allowable amount set by the IRS. The proxy tax rate is set at the same rate as the highest corporate tax rate for that particular year. Organizations may be required to pay a proxy tax if they spend more on lobbying efforts than they initially estimated, or if dues used to pay for lobbying were lower than expected.

INVESTOPEDIA EXPLAINS'Proxy Tax'

A proxy tax is a penalty, and can also be accompanied by other charges or penalties. If an organization pays a proxy tax on all of its lobbying expenditures then it allows members, whose dues paid for those efforts, to be able to deduct the value of their dues from their taxes.

RELATED TERMS
  1. Formal Tax Legislation

    The process by which a proposed tax rule or tax change may become ...
  2. Tax Schedule

    A rate sheet used by individual taxpayers to determine their ...
  3. Internal Revenue Service - IRS

    A United States government agency that is responsible for the ...
  4. Proxy

    1. An agent legally authorized to act on behalf of another party. ...
  5. Bag Man

    Any person in charge of organizing, collecting and transporting ...
  6. Legislative Overkill

    A law enacted to stop or prevent the abuse of a loophole, but ...
Related Articles
  1. Taxes

    Tax Deductions You May Be Missing

    Knowing the tax deductions you're entitled to can make or break your bank account.
  2. Taxes

    5 Tax Credits You Shouldn't Miss

    If you're not taking advantage of these deductions, you could be missing out on tax savings.
  3. Taxes

    The History Of Taxes In The U.S.

    The number of taxes that we now consider a given did not always exist. Find out how they arose.
  4. Taxes

    10 Most Overlooked Tax Deductions

    The receipts you cram into your wallet could be replaced with cash come tax season.
  5. Taxes

    Give Your Taxes Some Credit

    A few tax credits can greatly increase the amount of money you get back on your return.
  6. Personal Finance

    Understanding the Influence of the Latino Vote

    Learn why the Hispanic vote, which quintupled in number between 1980 and 2012, is vital for any candidate to have a serious chance at capturing The White House.
  7. Economics

    An America with Donald Trump as President

    Take a closer look at some of policy proposals from Republican presidential candidate Donald Trump, and what a future with President Trump might look like.
  8. Investing

    Who Supports Donald Trump's Campaign?

    Explore the common characteristics among voters who prefer Donald Trump for the 2016 election, including youth, modest incomes and lack of education.
  9. Investing

    Can Donald Trump Really Win the Presidency?

    Understand why demographic trends and his lack of broad appeal are likely to keep Donald Trump from being a serious contender for the presidency.
  10. Professionals

    Are Stock Buybacks Always Good for Shareholders?

    Stock buyback programs aren't always done with the interests of shareholders in mind. It's important to try to understand the motivation behind such moves.
RELATED FAQS
  1. How is cost basis calculated on an inherited asset?

    Typically, the cost basis on inherited assets is the fair market value as of the time of the decedent's death or actual transfer ... Read Full Answer >>
  2. How does the role of Medicare/Medicaid affect the drugs sector in the U.S.?

    Medicare and Medicaid have enormous influence on the pharmaceutical, or drugs, sector in the United States. For instance, ... Read Full Answer >>
  3. In what instances does overhead qualify for certain tax allowances?

    Businesses are just as keen as anyone else to keep their tax burdens low by any means possible. Overhead expenses often qualify ... Read Full Answer >>
  4. What are the ethical arguments against government subsidies to companies like Tesla?

    The ethical argument behind government subsidies is that they should be put into place to help industries that will, in turn, ... Read Full Answer >>
  5. How can tariffs cause inefficiencies in domestic industries?

    Any government regulation naturally creates inefficiencies in a pure supply and demand marketplace. When it comes to the ... Read Full Answer >>
  6. How are write-offs recorded on my tax return?

    The way your write-offs are recorded on your tax return varies depending on whether you are filing a personal or business ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Nanny Tax

    A federal tax that must be paid by people who hire household help (a babysitter, maid, gardener, etc.) and pay them a total ...
  2. Dog And Pony Show

    A colloquial term that generally refers to a presentation or seminar to market new products or services to potential buyers.
  3. Topless Meeting

    A meeting in which participants are not allowed to use laptops. A topless meeting organizer can also ban the use of smartphones, ...
  4. Hedging Transaction

    A type of transaction that limits investment risk with the use of derivatives, such as options and futures contracts. Hedging ...
  5. Bogey

    A buzzword that refers to a benchmark used to evaluate a fund's performance. The benchmark is an index that reflects the ...
  6. Xetra

    An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!