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Author: Baneman, Daniel

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Changes in the Distribution of Top Marginal Tax Rates, 1958-2009 (Article/Tax Facts)
Daniel BanemanJim Nunns

The statutory rate structure of the federal individual income tax — the number and width of brackets and the level of rates — has changed significantly over time, as has the distribution of taxpayers across rates. This article examines how the top statutory marginal tax rate changed at various percentile breaks using data from all available years, 1958-2009.

Published: 03/06/12
Availability:   PDF

Distributional Effects of Individual Income Tax Expenditures: An Update (Research Report)
Daniel BanemanEric Toder

Tax expenditures on average raise after-tax incomes more for upper-income than for lower-income taxpayers. As a share of income, special rates for capital gains and dividends and itemized deductions provide the largest benefits for taxpayers in the top 1 percent of the income distribution, exemptions and exclusions benefit taxpayers in upper middle-income groups the most, and refundable credits provide the largest benefits to those in the bottom two quintiles of the distribution. Interactions among provisions make the revenue cost of all tax expenditures about 10 percent larger than the sum of the costs of the separate provisions.

Published: 02/03/12
Availability:   PDF

Curbing Tax Expenditures (Research Report)
Daniel BanemanJoseph RosenbergEric ToderRoberton Williams

This paper takes a broad look at tax expenditures in the context of revenue raising tax reform. It first reviews how tax expenditures have changed over the past 25 years and provides estimates of the distribution of tax savings resulting from tax expenditures today. The paper then examines three approaches for applying across-the-board limits to a selected group of the largest and most widely utilized tax preferences. The three options—a fixed percentage credit, a cap based on income, and a constant percentage reduction—can all be designed to raise significant revenue for deficit reduction in a progressive manner.

Published: 01/31/12
Availability:   PDF

Income Tax Paid at Each Tax Rate, 1958-2009 (Updated) (Research Report)
Daniel BanemanJim Nunns

The federal individual income tax has had many more brackets and much higher rates in the past than it does today. In 1958, for example, there were 24 brackets (versus 6 today) and the top rate was 91 percent (versus 35 percent today). The impact of more brackets and higher rates on taxpayers and revenues depends on how much taxable income falls in each of the tax rate brackets. We find that only a small fraction of returns was subject to rates above today’s top rate of 35 percent in any year since 1958, but a significant fraction of tax was paid at these higher rates in many years. For example, prior to 1982 (when the top rate was reduced to 50 percent), taxable income in brackets above today’s top 35 percent rate was taxed at an average effective rate of 49 percent. We estimate that increasing the effective tax rate on taxable income in the 35 percent bracket to 49 percent would have raised $78 billion of additional income tax revenue in 2007.

Published: 10/12/11
Availability:   PDF

Options to Reform the Deduction for Home Mortgage Interest (Research Report)
Daniel BanemanHang NguyenJeff RohalyEric Toder

Currently, taxpayers can deduct interest on up to $1 million in acquisition debt used to buy, build, or improve their primary residence or a second designated residence. In addition, taxpayers can deduct interest on up to $100,000 in home equity loans or other loans secured by their properties regardless of the loans’ purpose. We consider a proposal that would limit the amount of deductible interest to the amount incurred on the first $500,000 of debt on a primary residence only, and would replace the itemized deduction with a nonrefundable tax credit equal to 15 percent of eligible home mortgage interest.

Published: 08/16/11
Availability:   PDF

Options to Limit the Benefit of Tax Expenditures for High-Income Households  (Research Report)
Daniel BanemanJim NunnsJeff RohalyEric ToderRoberton Williams

This analysis measures the revenue and distributional impacts of three proposals to limit tax expenditures for higher-income households: the Obama Administration's plan to cap the value of itemized deductions at 28 percent; an effective minimum tax (EMT) to ensure that tax liability is at least a certain percentage of a taxpayer's income; and a modified version of a recent proposal to limit the value of specific tax expenditures to two percent of adjusted gross income (AGI).

Published: 08/02/11
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Who Itemizes Deductions? (Article/Tax Facts)
Daniel BanemanBenjamin H. Harris

Many taxpayers can lower their taxable income by itemizing deductions, which in turn lowers tax liability. Itemized deductions reduce tax burdens for taxpayers with decreased ability to pay taxes, such as those experiencing a catastrophic loss, or for taxpayers who spent funds on activities the tax code deems worthwhile, such as contributing to charity. In recent years, the largest itemized deductions were those for mortgage interest paid, state and local taxes paid, and charitable contributions.

Published: 01/20/11
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Alternative to the Alternative: The Economic Effects of AMT Reform (Article/Tax Notes Viewpoints)
Benjamin H. HarrisDaniel Baneman

This article examines the economic benefits of alternative minimum tax reform relative to the current policy baseline. The authors find that AMT reform can lead to improved progressivity, greater efficiency, and a lessened compliance burden while raising an equal amount of revenue.

Published: 12/01/10
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1-8 of 8     Back to Authors